[D] AI Policy Group CAIDP Asks FTC To Stop OpenAI From Launching New GPT Models

CategoriesAI-ML_, Issue 2023Q2, Site Updates_

Via the agile u/ vadhavaniyafaijan :

The Center for AI and Digital Policy (CAIDP), a tech ethics group, has asked the Federal Trade Commission to investigate OpenAI for violating consumer protection rules. CAIDP claims that OpenAI’s AI text generation tools have been “biased, deceptive, and a risk to public safety.”

CAIDP’s complaint raises concerns about potential threats from OpenAI’s GPT-4 generative text model, which was announced in mid-March. It warns of the potential for GPT-4 to produce malicious code and highly tailored propaganda and the risk that biased training data could result in baked-in stereotypes or unfair race and gender preferences in hiring.

The complaint also mentions significant privacy failures with OpenAI’s product interface, such as a recent bug that exposed OpenAI ChatGPT histories and possibly payment details of ChatGPT plus subscribers.

CAIDP seeks to hold OpenAI accountable for violating Section 5 of the FTC Act, which prohibits unfair and deceptive trade practices. The complaint claims that OpenAI knowingly released GPT-4 to the public for commercial use despite the risks, including potential bias and harmful behavior.

Source | CasePDF

China, Brazil reach agreement to ditch intermediary US dollar

CategoriesIssue 2023Q2, Site Updates_

China and Brazil have reached a deal to trade in their own currencies, ditching the US dollar as an intermediary, the Brazilian government said Wednesday.

The deal is expected to reduce costs, promote greater bilateral trade, and facilitate investment.

China is currently Brazil’s largest trading partner. China has similar currency deals with Russia, Pakistan, and several other countries.

Why does it matter? Because no currency lasts forever, and the dollar’s position as WRC (world reserve currency) is being challenged, in current events.

See the book that Peruvian Bull wrote on the topic, for further info: https://piousbox.com/author/peruvian_bull/

Calling All Apes in USA! The Senate Bill 686 “Anti-Tiktok” bill is coming for YOU! It needs to die!

CategoriesGamestop_, Issue 2023Q2, Site Updates_
On March 07, the bill to end all bills was introduced. This thing is Evil. Among other things The Senate Bill 686 Restrict Act:
  • (starting with Section 3)Gives the Secretary of Commerce the ability to call anything on the internet(hardware or software) a “Undue risk” of [broad spectrum of poorly defined “Crimes”](essentially whatever the secretary wants) and slap up to 20 years prison and a 1 million dollar fine for anyone using it. I must remind our folks that the secretary of commerce is an unelected position that is picked by the president and set for life unless impeached.

  • (Section 4) (subsection a) “The Secretary shall identify and refer to the President any covered holding that the Secretary determines, in consultation with the relevant executive department and agency heads, poses an undue or unacceptable risk to the national security of the United States or the security and safety of United States persons….”

    • (Subsection c.1) ” …with respect to any covered holding referred to the President under subsection (a), if the President determines that the covered holding poses an undue or unacceptable risk to the national security of the United States or the security and safety of United States persons, the President may take such action as the President considers appropriate to compel divestment of, or otherwise mitigate the risk associated with, such covered holding to the full extent the 8 covered holding is subject to the jurisdiction of the United States… “.

    • Do I even need to spell out why this is Bad? This isn’t even restricted to “foreign investment”, just and “Covered holdings”(see Section 2, subsection 3.B for definiton. it basically means “However the secretary of commerce defines it”).

  • (Section 8 Sub-section d) Allows Lobbyists and special interest groups to be added to any committees the secretary appoints that determine what websites to ban. Let that sink in. For a hyperbolic example: Apple and Microsoft could hire a shit ton of lobbyists to be added to the committee determining whether Linux should be removed.

  • (Section 11.a.2.2.F) BANS VPNS. Any action that could be construed as ” action with intent to evade the provisions of this Act”. This is so vague that even that it essentially bans all cybersecurity encryptions including VPNs, Onion Routing, Fucking SSL, and even having a Password because any of those can be spun as trying to avoid investigation under the bill.

  • (Section 12 sub-section b) Removes any action the secretary and associated committees have taken under this bill from being subject to the Freedom of Information Act. This means the secretary of commerce and his cronies can make any government document immune to FOIA by declaring it part of an “ongoing investigation”.

  • (Section 15 sub-section d) for those that don’t know ex parte means “used for one party to ask the Court for an order without providing the other party(ies) the usual amount of notice or opportunity to write an opposition.”. This, under the right circumstances, gives the prosecutor the right to submit information on a case without allowing the defendant time to make a defense. It also might imply the right to deny judicial review, but I’m probably wrong there(I hope).

All that and more.

Don’t believe me?
r/Superstonk - Calling All Ape in the US of A! The Senate Bill 686 Restrict Act/"Anti-Tiktok" bill is coming for YOU!

Here’s the bill for public viewing: https://www.congress.gov/bill/118th-congress/senate-bill/686/text

or here for no reason: https://docs.reclaimthenet.org/BILLS-118s686is.pdf

Or if you’re lazy, here’s the leader of the Right to repair movement tearing it a new one: https://www.youtube.com/watch?v=xudlYSLFls8

This thing needs to die. Unfortunately, it’s supported by All Political Parties in Office and is currently Backed by the White House.

Every American ape needs to Call/Text/Email/Snail-Mail/Sext/Telegraph their senators and representative…

Otherwise who do you think the Secretary of Commerce is going to be looking at post MOASS?

Find them here: https://www.congress.gov/members/find-your-member

And text them this way: https://resist.bot/ I.E.>Text RESIST to 50409. Answer the questions the bot texts you, and in about two minutes it’ll send your letter via text to your elected officials, like your members of Congress or state legislators.

A further discussion on the prices of gold

CategoriesSite Updates_

Anon contributes:

Re: the graph above. A slight correction to yesterday’s chart of gold prices, because I was like, wait, what? Did it really happen that way, that the price of gold was flat until 1971? So I looked up the gold price for 100 years, you can see it at https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart This graph looks accurate, I cross-checked against several sources.

The thickest gray vertical line is the Great Depression of 1929. Gold is a hedge (“insurance”) against the apocalypse itself – when everything is collapsing, gold remains a valuable rare commodity that is also necessary in production of electronics. As the Great Depression unfolded in 1930’s, people used gold to store value, and its price went up. A decade later, as people’s faith in government was slowly restored, they reduced their usage of gold as container of value, by half. In 5 more years, the shock of the Great Depression wore off and gold price returned to its then-balance of $400/oz. This seems reasonable. Gold also has its own economics: the largest gold mine sets the price worldwide.

But yeah, it appepars that the price of gold was indeed flat (excluding that one catastrophic exception) until the 70’s. Importantly, the first graph from yesterday seems to be gold price indexed to the nominal dollar. The graph from today is the gold price indexed to the real dollar (accounting for inflation). Observe the difference.

Lest We Forget: Why We Had [the 2008] Financial Crisis

CategoriesIssue 2023Q2, Site Updates_

Generously pasted from: https://archive.ph/n3plH

Steve Denning

Senior Contributor to Forbes
It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.
How then could the Mayor of New YorkMichael Bloomberg say the following at a business breakfast in mid-town Manhattan on November 1, 2011?
It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that. But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”
Barry Ritholtz in the Washington Post calls the notion that the US Congress was behind the financial crisis of 2008 “the Big Lie”. As we have seen in other contexts, if a lie is big enough, people begin to believe it.
Even this morning, November 22, 2011, a seemingly smart guy like Joe Kernan was saying on CNBC’s Squawkbox, “When the losses at Fannie and Freddie reach $200 billion… how can the ‘deniers’ say that Fannie and Freddie were enablers for a lot of the housing crisis. When it gets up to that levels, how can they say that they were only into sub-prime late, and they were only in it a little bit?”
The reason that people can say that is because it is true. The $200 billion was a mere drop in the ocean of derivatives which in 2007 amounted to three times the size of the entire global economy.
When the country’s leaders start promulgating obvious nonsense as the truth, and the Big Lie starts to go viral, then we know that we are laying the groundwork for yet another, even-bigger financial crisis.

The story of the 2008 financial crisis

So let’s recap the basic facts: why did we have a financial crisis in 2008? Barry Ritholtz fills us in on the history with an excellent series of articles in the Washington Post:
  • In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business.
  • Low interest rates fueled an apparent boom: Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).
  • Asset managers sought new ways to make money:  Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities.
  • The credit rating agencies gave their blessing: The credit ratings agencies — Moody’s, S&P and Fitch had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.
  • Fund managers didn’t do their homework: Fund managers relied on the ratings of the credit rating agencies and failed to do adequate due diligence before buying them and did not understand these instruments or the risk involved.
  • Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.
  • The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error.  By 2008, only two of the five banks had survived, and those two did so with the help of the bailout.
  • The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly.
  • Compensation schemes encouraged gambling: Wall Street’s compensation system was—and still is—based on short-term performance, all upside and no downside. This creates incentives to take excessive risks. The bonuses are extraordinarily large and they continue–$135 billion in 2010 for the 25 largest institutions and that is after the meltdown.
  • Wall Street became “creative”: The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations.
  • Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.
  • Financial gadgets milked the market: “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.
  • Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality.
  • Derivatives exploded uncontrollably: CDOs provided the first “infinite market”; at height of crash, derivatives accounted for 3 times global economy.
  • The boom and bust went global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”
  • Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.
  • Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.
  • It was primarily private lenders who relaxed standards: Private lenders not subject to congressional regulations collapsed lending standards. the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.

The driving force behind the crisis was the private sector

Looking at these events it is absurd to suggest, as Bloomberg did, that “Congress forced everybody to go and give mortgages to people who were on the cusp.”
Many actors obviously played a role in this story. Some of the actors were in the public sector and some of them were in the private sector. But the public sector agencies were acting at behest of the private sector. It’s not as though Congress woke up one morning and thought to itself, “Let’s abolish the Glass-Steagall Act!” Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers. These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits.

Why didn’t anyone say anything?

As one surveys the events in this sorry tale, it is tempting to consider it like a Shakespearean tragedy, and wonder: what if things had happened differently? What would have occurred if someone in the central bank or the supervisory agencies had blown the whistle on the emerging disaster?
The answer is clear: nothing. Nothing would have been different. This is not a speculation. We know it because an interesting new book describes what did happen to the people who did speak out and try to blow the whistle on what was going on. They were ignored or sidelined in the rush for the money.
The book is Masters of Nothing: How the Crash Will Happen Again Unless We Understand Human Nature by Matthew Hancock and Nadhim Zahawi (published in 2011 in the UK by Biteback Publishing and available on pre-order in the US).
In 2004, the book explains, the deputy governor of the Bank of England (the UK central bank), Sir Andrew Large, gave a powerful and eloquent warning about the coming crash at the London School of Economics. The speech was published on the bank’s website but it received no notice. There were no seminars called. No research was commissioned. No newspaper referred to the speech. Sir Andrew continued to make similar speeches and argue for another two years that the system was unsustainable. His speeches infuriated the then Chancellor, Gordon Brown, because they warned of the dangers of excessive borrowing. In January 2006, Sir Andrew gave up: he quietly retired before his term was up.
In 2005, the chief economist of the International Monetary Fund, Raghuram Rajan, made a speech at Jackson Hole Wyoming in front of the world’s most important bankers and financiers, including Alan Greenspan and Larry Summers. He argued that technical change, institutional moves and deregulation had made the financial system unstable. Incentives to make short-term profits were encouraging the taking of risks, which if they materialized would have catastrophic consequences. The speech did not go down well. Among the first to speak was Larry Summers who said the speech was “largely misguided”.
In 2006, Nouriel Roubini issued a similar warning at an IMF gathering of financiers in New York. The audience reaction? Dismissive. Roubini was “non-rigorous” in his arguments. The central bankers “knew what they were doing.”
The drive for short-term profit crushed all opposition in its path, until the inevitable meltdown in 2008.

Why didn’t anyone listen?

On his blog, Barry Ritholtz puts the truth-deniers into three groups:
1) Those suffering from Cognitive Dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.
2) The Innumerates, the people who truly disrespect a legitimate process of looking at the data and making intelligent assessments. They are mathematical illiterates who embarrassingly revel in their own ignorance.
3) The Political Manipulators, who cynically know what they peddle is nonsense, but nonetheless push the stuff because it is effective. These folks are more committed to their ideology and bonuses than the good of the nation.
He is too polite to mention:
4) The Paid Hacks, who are being paid to hold a certain view. As Upton Sinclair has noted, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
Barry Ritholtz  concludes: “The denying of reality has been an issue, from Galileo to Columbus to modern times. Reality always triumphs eventually, but there are very real costs to it occurring later versus sooner .”

The social utility of the financial sector

Behind all this is the reality that the massive expansion of the financial sector is not contributing to growing the real economic pie. As Gerald Epstein, an economist at the University of Massachusetts has said: “These types of things don’t add to the pie. They redistribute it—often from taxpayers to banks and other financial institutions.” Yet in the expansion of the GDP, the expansion of the financial sector counts as increase in output. As Tom Friedman writes in the New York Times:
Wall Street, which was originally designed to finance “creative destruction” (the creation of new industries and products to replace old ones), fell into the habit in the last decade of financing too much “destructive creation” (inventing leveraged financial products with no more societal value than betting on whether Lindy’s sold more cheesecake than strudel). When those products blew up, they almost took the whole economy with them.

Do we want another financial crisis?

The current period of artificially low interest rates mirrors eerily the period ten years ago when Alan Greenspan held down interest rates at very low levels for an extended period of time. It was this that set off the creative juices of the financial sector to find “creative” new ways of getting higher returns. Why should we not expect the financial sector to be dreaming up the successor to  sub-prime mortgages and credit-default swaps? What is to stop them? The regulations of the Dodd-Frank are still being written. Efforts to undermine the Volcker Rule are well advanced. Even its original author, Paul Volcker, says it has become unworkable. And now front men like Bloomberg are busily rewriting history to enable the bonuses to continue.
The question is very simple. Do we want to deny reality and go down the same path as we went down in 2008, pursuing short-term profits until we encounter yet another, even-worse financial disaster? Or are we prepared to face up to reality and undergo the phase change involved in refocusing the private sector in general, and the financial sector in particular, on providing genuine value to the economy ahead of short-term profit?