The U.S Must Win the 5G Race by Any Means Necessary

By:


WHAT IS 5G?

5G stands for fifth generation cellular wireless. 5G will introduce three new revolutionary features in our world: exponentially greater wireless Internet speed (up to 100x faster than the current 4G), lower latency (will be more responsive), and the ability to connect lots of devices at once (for sensors and smart devices). To give an example, with 4G it would take 6 minutes to download a 2-hour movie. With 5G, it will take all of 3.6 seconds.

The race to 5G is a race that will dictate the world leaders of the next decade. For example, when US won the race to 4G in 2010, US experienced tremendous economic and job growth. 4G technology allowed the US wireless industry to increase related jobs by 84% from 2011 to 2014, which added $125 billion in revenue to American companies, with $40 billion coming from app stores. The first 4G phones in the US appeared in 2010, which enabled 4G applications that changed our world, such as Snapchat, Uber, AirBnB, video calls, etc. If the US would’ve lost this race, these industries, advances in technologies and revenues would have gone to other countries.

As the world’s long-time leader, the US wireless technology industry employs almost five million professionals and contributes $475 billion per year to the American economy. Winning the 5G race could cause those numbers to explode in the near future. Studies show that 5G has is likely to create almost three million new jobs— and add $500 billion to US economic growth. It is a big deal.

5G IMPORTANCE ON ECONOMY/WORLD/COMPETITION

As our world turns digital, wireless technology becomes the most important competitive advantage between nations. The race to 5G is the most important thus far because our essential infrastructure in this country will be built using wireless technology. Our civic, commercial and military life depends on it.

100x faster wireless speed than 4G and reduced latency, will allow us to exponentially improve our connection with all devices. This will create new opportunities in manufacturing, transportation, health care, education, agriculture, and more. 5G will enable new services that will drive economic growth and job creation for years to come.

Historically, Europe won the 2G era, Japan won the 3G era, and of course, the US won the 4G era. But now, China poses a severe threat to winning the 5G era, which will have countless negative implications for the U.S. At a hearing before the Senate Committee on Commerce, Science, and Transportation in 2018, Mississippi Sen. Roger Wicker stated that “failing to win the race to 5G would not only materially delay the benefits of 5G for the American people, it would forever reduce the economic and societal gains that come from leading the world in technology.”

5G-CURRENT AFFAIRS-CHINA-TRUMP-HUAWEI:

Although US has a great reputation for its mobile technologies, Asia is dominantly leading the way regarding 5G. Four of the world’s five most 5G advanced nations are China, South Korea, Japan, and India.

However, no one can tell with certainty who will win the 5G race. A 2018 Cellular Telecommunications Industry Association (CTIA) report claimed that US was in third place in the 5G race, behind China and South Korea, while a 2019 CTIA report claimed that U.S. now shares the number one spot with China. Other reports put China as the clear winner, with functional 5G technology by 2020, while they claim that the U.S. is 5 years behind. AT&T Chief Executive Officer Randall Stephenson declared in March 2019 that China isn’t beating the United States on 5G – but then again, AT&T deceptively branded their new 5G E network pretending it uses 5G technology, when it used the regular 4G technology.

While these reports do not provide any clarity, these investments will. Starting in 2015, China has doubled down on investments in 5G technology, and has outspent the US by $24 billion to construct 350,000 new, 5G-compatible cell towers. During the same time, the US has built only 30,000 towers.

The reason China has prioritized development of 5G is because they understand that the race for 5G is a race for world-wide control. Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, explained that China’s goal is to become the global innovation leader, and will do everything in its power to achieve this goal, legally or illegally.

One of the most important weapons for China to win the 5G race is the Chinese company Huawei. Currently, Huawei is spending a tremendous amount of resources on R&D (almost 40% of their workforce), most of which is dedicated to 5G. This is more than Microsoft, Intel or Apple’s R&D efforts.

In addition to superior dedicated resources, Huawei has a long negative history of operating outside the international law and order. Huawei currently faces bans in Japan, Australia, New Zealand and the U.S. over fears that China’s government could use its systems to spy on their countries. The CIA, FBI and NSA publicly warned against Huawei. The Pentagon banned Huawei and its products. Huawei has long been accused of espionage, and for doing illegal business with Iran. Most recently, Canada helped the U.S. arrest Huawei’s CFO Meng Wanzhou, and President Trump signed an executive order banning any US company from doing business with Huawei.

It is extremely important that President Trump, the U.S. and its allies stop or slow down Huawei’s influence and operational capabilities throughout the world. As stated earlier, winning the 5G race will allow the development of exponential technology and booming economic growth for those who employ this technology first.

CONCLUSION:

If Huawei and China win the 5G race, they will undoubtedly use this technology to win over allies and dominate the world for a long time to come. They will offer this technology to other countries in exchange for trade deals, military partnerships, and economic prosperity. They could also choose to offer this technology to all US enemies, except for the U.S., leaving our country unable to compete. Thus, it is of the utmost importance that the United States wins the race to 5G.

President Trump must continue to put pressure of China and Huawei, in an intelligent way. There is no easy answer to do so, especially with the US and China locked in a tariffs war. All trade talks between the two countries will definitely include Huawei as a bargaining chip.

The Trump administration, US industry and government leaders, and allies must work in concert to win this race, by any means necessary, and make sure that all (or most) other countries will receive the 5G technology from the US, rather than from China.

SOURCES:

Tagged:

The Unprecedented Wealth Creation Opportunity of the Cannabis Industry is just getting started

By:


Cannabis prohibition is going to end much faster than most people anticipated, and this will allow for the biggest wealth creation opportunities in many lifetimes. When Prohibition ends, the dam holding back the Cannabis industry will have broken, and Cannabis will become ubiquitous in virtually every aspect of our society, worldwide.

Cannabis is extremely close being federally legal in the United States. 36 states have already decriminalized Cannabis, 11 of which have fully legalized it for medicinal and recreational purposes. In March of 2019, the House Financial Services Committee approved the SAFE Banking Act by 45-15. Earlier this month, 38 Attorney Generals from 38 U.S. states and territories signed a letter asking our Congress to pass legislation to increase Cannabis businesses’ access to banks, through the SAFE Banking Act.

Days earlier, the Treasurers of 17 states issued a separate call in support of the same bill. US Attorney General Barr stated he would not use federal resources to prosecute Cannabis businesses in states where it is legal. US Treasury Secretary Mnuchin urged Congress to pass the SAFE Banking Act. And finally, most Congressmen on both sides of the aisle are in favor of this Act passing through.

Cannabis products will disrupt multiple billion industries in the US, with the biggest changes taking place in medicine, pharmaceuticals, veterinary products, wellness and beauty, sleeping aids, packaging, banking, agriculture, advertising, food, alcohol, non-alcoholic beverages, tobacco, law, textiles and fashion/clothing, plastics, biodiesel and energy, paper, construction, sports products, tourism, and many more.

Most giants in each of these industries will inevitably become involved with Cannabis and adopt it within their existing offerings, as well as creating new Cannabis-based products and services. Food and soft-drink conglomerates like Nestle and Coca-Cola will create Cannabis-infused food, deserts and soft-drinks. Alcoholic beverage companies like Anheuser-Busch and Heineken will create Cannabis-infused alcoholic beverages. Textile companies like Admiral Sportswear, Nike, and Cone Mills Corporation will create hemp-derived shoes and clothing, and on and on. Thus, the companies that are currently establishing their footprint/territory and the technology of this industry will be prime acquisition targets for these giant corporations.

In addition to disrupting these existing industries, Cannabis will also create many new industries through new health and wellness products that combine CBD and THC substances. Cannabis and CBD are more commonly being used together in the creation a new worldwide health and wellness industry with a wide variety of plant-based consumer products.

Cannabis and hemp will become ubiquitous in our world. Almost everything in our lives as we know it will have a much improved, more durable, healthier version that is created with Hemp, Cannabis and its derivatives. There will be new infrastructure, new products, new healthcare (physical and psychological) treatment, new recreational activities, new foods, new productivity, new employment, new taxes and most important of all, a new life and culture.

Needless to say, the end of Cannabis prohibition will bring forth a political, economical, social and healthcare revolution in our world. We are entering an exciting new era, where Cannabis and hemp-based CBD are rapidly becoming an important part of an active healthier lifestyle. Patients will use medical Cannabis and receive much needed relief without the fear of going to prison for it. Adults can choose Cannabis for adult relaxation for a fraction of the cost and fewer of the negative effects of alcohol. Millions of people will sleep better and have less pain, children will be able to control their seizures and veterans will manage their PTSD.

This will create a new global health & wellness industry where hundreds of thousands are employed in an environmentally responsible new industry that produces a natural product, which is truly making the world a better and healthier place. New Frontier Data estimates that the legal Cannabis market in the United States will generate nearly 283,422 jobs by 2020. This will be more than the expected jobs created in all of manufacturing, utilities and government industries.

Such an unprecedented revolution to our world, will also bring unprecedented wealth creation opportunities. Just as most people underestimate the impact hemp and Cannabis will have on our real world, most investors underestimate the enormous investment opportunities this industry currently presents.

The most misunderstood element of this industry is the sheer scale of what the global Cannabis/CBD industry will be. What was projected to be a $25 billion global market is rapidly becoming $100 billion and could well go up to $1 Trillion over the next decade.

Grand View Research has published a study that shows Cannabis could become a $146 billion market (US and globally) by 2025. Based on a 20% profit margin and a 20x earnings valuation, the market cap of the global industry will be over $584 billion. In additional, there are approximately 180 Cannabis public companies in the US and Canada. If 100 of them become $1 billion dollar companies within the next decade, that could bring the total global Cannabis market cap to $1 trillion. From an investment prospective few new industries in history have offered the investment potential Cannabis offers in 2019.

Conclusion:

The Cannabis/CBD industry is entering a rapidly expansion cycle and the current market estimates are much too conservative. Cannabis prohibition will undoubtedly end, sooner rather than later. The myriad of recent positive developments in public policy suggests this will happen very shortly. Our politicians and Congressmen have the chance to create history, by bringing a long overdue end of Cannabis and hemp prohibition. They must vote to pass the SAFE Banking Act.

Investors realize the unprecedented opportunities for wealth creation in this industry, which is just getting started. This is an exceptional time to invest in the Cannabis market, as it seems to poised for a decade of remarkable domestic and international growth. Post prohibition, the Cannabis and hemp industry will go from today’s size of $10B, to the point where it will be absolutely ubiquitous throughout our society, products and markets – this exceptionally rapid development will create exceptionally large opportunities for Cannabis entrepreneurs and investors.

Sources:

Tagged:

The US Desperately Needs of a Department of Cyber Security

By:


As the world is turning digital, warfare is following suit in a very rapid and devastating way. Countless organizations in all sectors (Target, Equifax, DNC, IRS) are continuously reporting data hacks. According to the Government Accountability Office (GAO), federal civilian agencies reported 35,277 cybersecurity incidents, such as web-based attacks, phishing and loss or theft of computing equipment in 2017.

The public and private sectors in the US have not adapted to cyber threats. Instead of presenting a unified front for defending against these attacks, and have a plan to go on the offensive when necessary, most organizations are busy doing damage control by themselves, without any real long-term plan. This is done despite the fact that countless studies show year after year, that cybersecurity is the number one priority for all IT leaders.

A recent survey of government organizations, private sector and citizens in the U.S., China, Russia, and India found that more than 88% of participants believe that cyberspace threats are significant.

In the United States alone, state and local government IT leaders have maintained for years that cybersecurity needs to be the government’s priority. A 2018 Digital Cities Survey of city government IT leaders put cybersecurity as the top priority. The same survey of county government IT leaders placed cybersecurity at the top of the list for the past 5 years in a row. Lastly, the National Association of State Chief Information Officers (NASCIO) published their top 10 policy and technology priorities for 2019, and cybersecurity was named number 1.

The conventional literature throughout our country claims that cybersecurity is everyone’s problem, and that it needs to be dealt with on multiple levels within the government, private sector, as well as individual citizens. While it is true that cybersecurity needs to be fought for on multiple levels, this fight is extremely inefficient when everyone does their own thing, without a leading organization to set the policy and bear full ownership of outcomes.

The reality is that our nation’s current organization for dealing with cyber-attacks is doomed to fail. Responsibilities, skills and talent are spread across too many different parts of the government, which creates confusion, and most importantly, a lack of leadership and ownership.

For example, the Department of Defense, through its US Cyber Command arm, is responsible for national defense. The FBI is responsible for investigating and enforcement. The Department of Homeland Security oversees damage control and recovery for cyber-attacks. Lastly, every military branch has their own individual cyber units. Lack of communication and too much bureaucracy makes our cyber security efforts extremely inefficient, putting our nation at risk with each second that passes. Each one of these organizations have many other responsibilities and are stretched too thin to give cybersecurity the focus and resources it desperately needs.

President Trump is trying to rectify this situation by further centralizing the management and oversight of federal civilian cybersecurity through the National Cybersecurity Strategy of September 2018. This strategy will enable the Department of Homeland Security to secure all federal department and agency networks, with the exception of national security systems, the Department of Defense and the Intelligence Community. This is a step in the right direction, but it needs to be taken further.

There needs to be a department that is one hundred percent responsible for our nation’s cyber security, in the same way our military is responsible for our physical security. This department could be called the “Department of Cyber Security” (DCS) and it should set the policy, provide the proper organizational structure, and work with all other parties (government, private sector, and citizens) to gain control of our nation’s cyber security.

The new Department of Cyber Security’s top priorities should be to:

I. Request and maintain adequate funding – this is a top national security priority.

II. Mobilize our country’s best talent and resources to operate under a single umbrella and a single coherent policy.

III. Fill in the talent gap by promoting cybersecurity workforce, training, economic development. According to the “Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure,” there is an estimated 299,000 shortfall in cybersecurity professionals across all industry sectors.

IV. Incentivize research, contests, hackathons – it must adopt and encourage ways of unconventional warfare.

V. Collaborate with the private sector to share threat intelligence on an ongoing basis, as well as new advances in the digital world.

VI. Outline liabilities, reporting requirements, and course of action for the other organizations to follow.

The United States must treat the issue of Cybersecurity with the same seriousness it treats the military. It must be organized from top down, it must be prepared to defend our networks and to attack at a moment’s notice. Not prioritizing cybersecurity policy leaves federal, state and local agencies, U.S. critical infrastructure, businesses and citizens extremely vulnerable to attacks that could be absolutely devastating.

Creating a new Department of Cyber Security that is one hundred percent in charge and responsible for our nation’s Cybersecurity is the only solution that allows our country to gain control of the cyber space, successfully defend our networks and be ready to go on the offense when necessary.

RESOURCES:

Tagged:

Credit Reporting Reform: Individual Consumers Must Take Responsibility of Their Own Data

By:


In September 2017, Equifax announced that the information of 143 million of Americans had been hacked. This was just one of the latest companies to be compromised, joining Yahoo’s 1 billion accounts, JPMorgan’s 83 million accounts, and Target’s 40 million accounts hacked, among others.

What made this hack very concerning was the fact that Equifax is one of the largest consumer reporting agencies that collects our very personal and actionable information, including our names, birthdates, social security numbers, addresses, personal finances, credit card numbers, student loans, insurance of choice, rent payments, and others, without us knowing or giving consent, into a centralized database. 143 million accounts (60% of all adults in US) have been compromised. Our data, which we never offered or given permission to be collected and used, has been made available to malicious strangers. This is a very important topic.

The Fair Credit Reporting Act (FCRA), a law that was last updated in 1970 currently governs Equifax and the other credit reporting agencies. Since then, there hasn’t been any changes or updates, except in 2010, when Congress created the Consumer Financial Protection Bureau (CFPB) as the first federal agency with authority to examine and regulate consumer reporting agencies. While this was a much-needed addition, it does not provide the necessary requirements to keep our data safe.

Credit bureaus are treated much more loosely than banks, as they do not have the same regulatory oversight and do not have regular security audits. In the event of data breaches, such as Equifax’s, there is no specific federal entity designated to investigate the breach.

In response this tragedy, Rep. Maxine Waters has introduced the Comprehensive Consumer Credit Reporting Reform Act of 2017, which intends to be a complete overhaul the country’s credit reporting system. Among others, it plans to change the dispute process, switching the responsibility of proving accuracy of information from consumers to credit bureaus, restore the affected credit of victims of predatory activities and unfair practices, restrict the use of credit information for employment, rehabilitate the credit standing of struggling private education loan borrowers and limit the amount of time negative information can stay on a credit report.

The proposed changes of this act could positively impact consumers, but they do not specifically address the cybersecurity problem. This act does not provide a specific solution to preventing data breaches and protecting consumers’ information from hackers.

This is a new world defined by ubiquitous, overpowering cyberattacks that render all current cybersecurity systems inadequate and lacking. For the time being, unfortunately, it seems that there isn’t a hack proof solution of storing our data. So, if we cannot control who sees our data, we must at least be able to control, and limit the use of our data.

The best bet is to provide each individual person with their own ability to monitor and control access to their credit information. Regulators must require credit reporting agencies to provide free credit freezes to all people.

A credit freeze is a process that allows you to automatically block anyone from checking your credit, making it impossible for impersonators to open any line of credit under your name. If your credit has a freeze on it, you’ll be notified if someone even attempts to open a line of credit using your information. In the same way you have a 2-factor verification system for your email or cryptocurrency accounts, credit freezes can provide added security layers that consumers can monitor and control individually.

This way, you can keep your credit info in “dark mode”, and only open access to your credit in the exact instant you are applying for a loan, or do any other activity requiring access to your credit score. As soon as you were approved/denied, you can freeze your credit again.

Currently, credit freezes cost $20 each time you initiate it. And because you most likely must initiate a credit freeze for each of the big three credit reporting agencies (Equifax, Experian, and TransUnion), this cost adds up to $60 per credit freeze. Even more, there are hundreds other smaller credit reporting agencies, so this process can get rather complicated and tedious. New legislation needs to require this credit freeze process to be available, and preferably free (or much lower cost) for the consumer across all agencies.

This is a tremendous opportunity for the private sector to provide a much-needed solution: create a platform or application which connects with all credit agencies and offers consumers instant and painless options to take control over their data. Instead of logging on to multiple credit agencies websites each time they wish to freeze/unfreeze their credit profile, there should be a simple application that communicates with all credit agencies (or separate ones – depending on the consumers’ preference) and is able to freeze/unfreeze credit profiles with the simple push of a button.

This collaboration between the government and private sector must have the chief purpose of allowing individual consumers to control their own use of their credit profile, in the hopes of enhancing security. By definition, it is much more complicated, discouraging and fruitless for hackers to try to break into 143 million individual accounts, than it is breaking into one database holding 143 million accounts. As our banking and financial system is changing to provide consumers with more freedom over their money, perhaps it is time for the credit reporting agencies to do so as well.

Since the credit bureaus and regulatory organizations cannot protect our credit data, it is time to let the private market and individual consumers provide a smarter solution.

Sources:

Categories:
Tagged:

Nonbank Lenders: The New Risk in the U.S. Mortgage Industry

By:


The US housing market in the past 10 years has been characterized by unusually long-lasting low interest rates and robust government-backed mortgage programs. These market conditions have allowed nonbank lenders to boom in the last decade. In 2018 there are several proposals brought forth by regulators looking to agree on a final housing finance reform solution – the single largest piece of unfinished business 10 years after the housing crisis. The problem with these proposals is that they put too much emphasis on traditional lenders such as banks and depository institutions, and not enough on the new risk-takers of the U.S. economy: non-bank lenders.

In the aftermath of the 2008 crisis, regulators and lawmakers implemented a myriad of regulations on banks’ lending practices, in an effort to prevent toxic mortgages. As a result, over the past decade most banks decided to either completely exit the mortgage lending business, or severely limit their mortgage lending to only the worthiest borrowers with stellar credit. This created a very large gap in the lending market. Enter the nonbank lenders.

These nonbanks are usually private institutions that offer limited transparency into their lending activities, and don’t fall under the same regulations as banks. Nonbanks are regulated by state financials regulators such as the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. However, these organizations have not yet established uniform data and reporting standards – it is very much a work in progress. Thus, for the time being, nonbanks have the liberty to provide mortgages to less financially-qualified borrowers without much oversight.

As a result, in 2016, these nonbank lenders originated over half (53%) of all mortgages in the US. However, that 53% is mostly made-up of mortgage borrowers with lower credit scores. Most non-bank borrowers have less income/wealth, are less likely to have college degrees and are more likely to be minorities. They include 85% of all FHA borrowers, 64% of all black and Hispanic borrowers, and 58% of all low-to-moderate income borrowers. These groups tend to require loans with smaller down payments and have less inherited wealth to depend on in case of an economic downturn. The risk of defaulting on their payments is considerably higher.

While these nonbank lenders are filling in the funding gap and provide financing to a very large demographic that is not being serviced by the traditional lenders, they are exposing themselves and the lending industry to huge risks.

Unlike traditional banks, which handled all three main mortgage functions (origination, servicing and funding), nonbanks only handle the origination and servicing part, while using borrowed funds from banks. Nonbank mortgage lenders depend on credit to finance their origination costs and costs of mortgages in default. Most nonbanks are required to continue making payments to investors, insurers and tax authorities even when their borrowers skip or default on their payments. Also, nonbanks’ creditors – the warehouse lenders – can decide to pull or renegotiate their lines of credit, leaving nonbanks illiquid. Declines in house prices, a rise in mortgage defaults, or sustained rises in long-term interest rates, could each prove fatal to the nonbank lending companies. These multiple points of failure make it a very risky business.

While taking most of the risk, unlike banks, non-bank lenders have extremely limited resources available to survive an economic downturn. Only six percent of their assets are cash, while seventy percent of the nonbanks’ assets are mortgages held for sale. This means that they are used as collateral for their lines of credit and cannot be used by the company to cover any losses. To make matters worse, as of end of 2017, eighty-three percent of nonbanks’ debt was in lines of credit with maturities of less than a year. When that year is over, there is a high risk the interest rates will increase. Without the resources available to banks, such as the Federal Reserve and the Federal Home Loan Banks, nonbanks have no liquidity backstop – absolutely no safety net – in the event of an economic downturn. This could prove catastrophic to the U.S. economy.

The Housing Reform Act is currently underway but most of the rules and regulations proposed are focused on the traditional bank lenders and GSEs, while all but ignoring the rapid rise of nonbank lending and the risks that come with it. If nonbanks were to fail, the U.S. government (taxpayers) would still have to financially cover the losses through FHA, VA, GSEs or Ginnie Mae. From our perspective as taxpayers, it would be a similar situation as the 2008 crisis, but instead of bailing out banks, we would have to bail out nonbanks. We cannot let this happen.

The regulators must take a more active role to address the regulations of the nonbank lending sector, similar to the traditional banking regulatory framework. Regulators must find a way to either limit the nonbank’s sector exposure to risk, or ensure nonbanks secure the resources necessary to sustain themselves in an economic downturn, or a combination of both. Regulators must finalize the state prudential minimums for nonbanks. In addition to net worth, capital and liquidity requirements, this new regulation must consider all factors that determine the nonbanks’ risk, such as maturity and capacity of their debt facilities, business model, and their hedging strategies. To do so, regulators must immediately address and correct the lack of access to data (nonbanks are mostly private) and the lack of staff and resources dedicated to the regulation of nonbanks. They pose an enormous risk on the U.S. economy – comparable to that of the 2008 mortgage crisis – and thus, must be treated accordingly.

Sources:

Forbes: Banks Are Not Lending Like They Should

Federal Reserve: The Decline in Lending to Lower Income Borrowers by the Biggest Banks

Brookings Institute: Mapping the Boom in the Nonbank Mortgage Lending

Tagged:
Page 1 of 2
1 2