China Buying Hundreds of American Companies per year

Chinese companies have been buying up foreign businesses, including American ones, at a record rate, and it's freaking lawmakers out.

There is General Electric's sale of its appliance business to Qingdao-based Haier, Zoomlion's bid for the heavy-lifting-equipment maker Terex Corp., and ChemChina's record-breaking deal for the Swiss seeds and pesticides group Syngenta, valued at $48 billion.

Most recently, a unit of the Chinese conglomerate HNA Group said it would buy the technology distributor Ingram Micro for $6 billion.

And the most contentious deal so far might be the Chinese-led investor group Chongqing Casin Enterprise's bid for the Chicago Stock Exchange.

A deal spree

To date, there have been 102 Chinese outbound mergers-and-acquisitions deals announced this year, amounting to $81.6 billion in value, according to Dealogic. That's up from 72 deals worth $11 billion in the same period last year.

And they're not expected to let up anytime soon. Slow economic growth in China and cheap prices abroad due to the stock market's recent sell-off suggest the opposite. This does not include hundreds of factories full of equipment that have shut down due to confiscatory regulations that walk and talk like a tax. Hundreds of consolidations have occurred, where companies take two factories and close one, absorbing part of the equipment and employees into the other plant and selling off the remaining equipment at auction. Painting, welding, stamping, bending and forging equipment has been acquired by the shipload and transported to China.

"With the slowdown of the economy, Chinese corporates are increasingly looking to inorganic avenues to supplement their growth," Vikas Seth, head of emerging markets in the investment-banking and capital-markets department at Credit Suisse, told Business Insider earlier this month. They accomplish two things by doing it this way. First, they get to start up their facilities in China years ahead of schedule and for a fraction of the cost. Second, they cripple America’s ability to rebound with used equipment when the economics get right. In other words, a powder coating line that would normally cost $250k and would be acquired and set up in 60 days will require $1 million and 18 months to acquire and set up.

There is no new inventory anywhere, for anything. There is no used equipment anywhere at any price. All that can be found are millions and millions of square feet of empty factory space that is also being acquired by Chinese investors. There are new buildings that have been empty for 6 years in North Carolina, although there have been numerous offers to lease or buy them. The financing simply cannot be found to meet the price of the banks that own them. The owners would rather the buildings remain empty, than collect anything less than full price for the lease. Because of this, hundreds of businesses are kept out of the market, due to absence of equity in the financial marketplace.

China's economic growth in 2015 was its slowest in 25 years, and still it was more than twice the growth rate of America, which has been generously valued at 1.2%. There is never a shortage of innovators and entrepreneurs willing to work 100 hours a week to make their business a success. There is only as absence of access to capital, which has been completely consumed by the very agencies that are purported to help get America’s economy moving again. Go figure.

The law firm O'Melveny & Myers recently surveyed their mainly China-based clients and found that the economic growth potential in the US was the main factor making it an attractive investment destination. If 94 million Americans sit out of the workforce much longer, they will not be fit for anything. Nearly 90% of the equity investment responsible for starting up business in America comes from outside the country. Hundreds of thousands of small businesses are asking the question, “What are American investors doing with their money, if they won’t invest in America?” The answer is simple. They play the Stock Market and buy software programmers.

Nearly half of respondents agreed that the US was the most attractive market for investment, but 47% felt that a recent avalanche of US taxes and regulations were a major barrier. They'd be right about that.

Forty-five members of Congress this week signed a letter to the Treasury Department's Committee on Foreign Investment in the US, or CFIUS, urging it to conduct a "full and rigorous investigation" of the Chicago Stock Exchange acquisition.

"This proposed acquisition would be the first time a Chinese-owned, possibly state-influenced, firm maintained direct access into the $22 trillion US equity marketplace," the letter reads.

"While it is unclear the level of influence the state holds over CCEG, the firm is involved in a number of important Chinese sectors that would likely require close ties to the state."

CFIUS is meant to vet deals for any national-security issues. It recently prevented the $3.3 billion sale of Philips' lighting business to a group of buyers in Asia, but its reasons for blocking that deal weren't disclosed.

Reuters

Also this week, California-based Fairchild Semiconductor refused an offer from the state-backed China Resources and Hua Capital, the Financial Times reported.

They bid $2.6 billion for the company, but Fairchild turned it down, citing concerns about US regulators, and accepted a lower bid from a US-based rival.

While not all the companies doing the buying are state-owned enterprises, they do need to have the full backing of the Chinese government in order to close foreign deals. That's because they need approval to get enough foreign exchange to pay for the acquisitions, something the government monitors closely.

Given the recent volume of deals, though, it would appear that the Chinese government is supportive of the foreign-buying spree. That may be exactly what has folks so worried.

I know it is hard to swallow, but our nation is being dismantled from the top down. The White House has been working overtime to destroy industries at the heart of America. Oh, the mega rich, global corporations will do fine. They contribute millions to the campaign to wipe out their little competitors.

What must be done is a refusal to sell. Stop selling businesses to the Chinese. I don’t care if you need the money, and they are only ones making offers. Don’t sell. If you do, there will be nothing left with which to restart the country.

Fireball Crashes into Atlantic Ocean
A huge fireball crashed into the Atlantic earlier this month - and went almost unseen.

The event took place on February 6 at 14:00 UTC when a meteor exploded in the air 620 miles (1,000km) off the coast of Brazil.

It released energy equivalent to 13,000 tons of TNT, which is the same as the energy used in the first atomic weapon that leveled Hiroshima in 1945.

This was the largest event of its type since the February 2013 fireball that exploded over Chelyabinsk, Russia, leaving more than 1,600 people injured.

That fireball measured 18 meters across and screamed into Earth's atmosphere at 41,600 mph. Much of the debris landed in a local lake called Chebarkul.

The Chelyabinsk fireball had 500,000 tons of TNT energy - 40 times more than the latest impact, according to Phil Plait. 

‘As impacts go, this was pretty small,’ Plait writes in an in-depth report in his Slait blog. ‘After all, you didn’t even hear about until weeks after it occurred.

‘Had it happened over a populated area it, would’ve rattled some windows and probably terrified a lot of people, but I don’t think it would’ve done any real damage.’ Had it actually entered the water at that speed and energy, it could have created a tsunami a hundred feet high.

Plait estimates that, given the explosive energy of the most recent fireball, it was likely to be around five to seven meters wide.

It is unlikely that anyone saw it, but it was probably picked up by the military, who record atmospheric explosions.

‘Impacts like this happen several times per year on average, with most going unseen,’ Plait said.

It’s the much larger impacts that we should be worried about.

Nasa tracks around 12,992 near-Earth objects which have been discovered orbiting within our solar system close to our own orbit.

It estimates around 1,607 are classified as Potentially Hazardous Asteroids. There is a table listing these at spaceweather.com, but this fireball was not listed. That is because government tracking systems are all contracted for many years to come. It is amateurs who will find the planet killing rocks.

In September, Paul Chodas, manager of Nasa's Near-Earth Object office at the Jet Propulsion Laboratory in Pasadena, said: 'There is no existing evidence that an asteroid or any other celestial object is on a trajectory that will impact Earth.

'In fact, not a single one of the known objects has any credible chance of hitting our planet over the next century.  The key is the word known. It is clearly the unknown or undetected bodies that will cause the damage.

One such asteroid is 2013 TX68, which poses no threat to Earth, but could get very close to the surface, according to the space agency – although it adds there is a very slim chance of this happening.

The 100ft-wide asteroid, first spotted when it flew by Earth two years ago, will make its return On March 5 – and this time it could get incredibly close. The whale-sized space rock may skim past Earth at just 11,000 miles. That is just barely 5 times the distance as the satellites that bring you television and GPS guidance.

But Nasa admits this estimate may be widely inaccurate, and the asteroid may also pass Earth as far out as 9 million miles (14 million km). The variation in possible closest approach distances is due to the wide range of possible trajectories for this object, since it was tracked for only a short time after discovery,' Nasa explained. That is to say, it is a little like plotting the course of an ocean going vessel while using a yardstick.

Scientists have identified an extremely remote chance that this small asteroid could impact on September 28, 2017, with odds of no more than 1-in-250-million. Or it could be 1 in 6, depending on if you use a coin or not.

Flybys in 2046 and 2097 have an even lower probability of impact. There is nothing known about whether they are traveling alone through space, or if they have been influenced by another other gravitational force while on their very long trajectory.

'The possibilities of collision on any of the three future flyby dates are far too small to be of any real concern,' said Paul Chodas, manager of CNEOS.

'I fully expect any future observations to reduce the probability even more.'

Asteroid 2013 TX68 is estimated to be about 100ft (30 meters) in diameter. 

If an asteroid the size of 2013 TX68 were to enter Earth's atmosphere, it would likely produce an air burst with about twice the energy of the Chelyabinsk event.

There are at least three ongoing investigations into Democratic presidential candidate Hillary Clinton's time as Secretary of State. Here's an explanation of who is investigating, and why. (Gillian Brockell/The Washington Post)

By Spencer S. Hsu February 23 at 4:02 PM

A federal judge on Tuesday ruled that State Department officials and top aides to Hillary Clinton should be questioned under oath about whether they intentionally thwarted federal open records laws by using or allowing the use of a private email server throughout Clinton’s tenure as secretary of state from 2009 to 2013.

The decision by U.S. District Judge Emmet G. Sullivan of Washington came in a lawsuit over public records brought by Judicial Watch, a conservative legal watchdog group, regarding its May 2013 request for information about the employment arrangement of Huma Abedin, a longtime Clinton aide.

Officials with the State and Justice departments said that they were aware of the order but declined to comment further, citing the ongoing litigation. Discovery orders are not readily appealable. An attorney for Abedin declined to comment.

Sullivan set an April 12 deadline for parties to litigate a detailed investigative plan--subject to court approval--that would reach well beyond the limited and carefully worded explanations of the use of the private server that department and Clinton officials have given.

Sullivan also suggested from the bench that he might at some point order the department to subpoena Clinton and Abedin to return all emails related to Clinton’s private account, not just records their camps previously deemed work-related and returned.

“There has been a constant drip, drip, drip of declarations. When does it stop?” Sullivan said, “This case is about the public’s right to know.”

In granting Judicial Watch’s request, Sullivan said that months of piecemeal revelations about Clinton and the State Department’s handling of the email controversy created “at least a ‘reasonable suspicion’ ” that public access to official government records under the federal Freedom of Information Act was undermined.

Sullivan noted that there was no dispute that senior State Department officials were aware of the email set-up from time Clinton took office, citing a January 2009 email exchange including Undersecretary for Management Patrick F. Kennedy, Clinton chief of staff Cheryl D. Mills and Abedin about establishing a “stand-alone network” email system.

Sullivan said the State Department’s inspector general last month faulted the department and Clinton’s office for overseeing processes that repeatedly allowed “inaccurate and incomplete” FOIA responses, including a May 2013 reply that found “no records” concerning email accounts Clinton used, even though dozens of senior officials had corresponded with her private account.

In a statement, Judicial Watch President Thomas J. Fitton called the ruling “a major victory” for the public, and did not rule out that Clinton could become one of the current and former department officials whose testimony his group would seek.

“The court-ordered discovery will help determine why the State Department and Mrs. Clinton, even despite receiving numerous FOIA requests, kept the record system secret for years,” Fitton said. “While Mrs. Clinton’s testimony may not be required initially, it may happen that her testimony is necessary for the Court to resolve the legal issues about her unprecedented email practices.”

Sutton’s group in court filings did not ask to depose Clinton by name, but targeted requests at those who handled her transition, arrival and departure from the department and who oversaw Abedin, a direct subordinate.

Sullivan’s decision came as Clinton seeks the Democratic presidential nomination and three weeks after the State Department acknowledged for the first time that “top secret” information passed through the server.

The FBI and the department’s inspector general are continuing to look into whether the private setup mishandled classified information or violated other federal laws.

For six months in 2012, Abedin was employed simultaneously by the State Department, the Clinton Foundation, Clinton’s personal office and a private consulting firm connected to the Clintons.

The department stated in February 2014 that it had completed its search of records for the secretary’s office. After Clinton’s exclusive use of a private server was made public in May, the department said that additional records probably were available.

How do You Feel About the Apple FBI case?

A reporter’s story of privacy

“I don’t really need to worry about online privacy,” I used to think. “I’ve got nothing to hide. And who would want to know what I’m up to, anyway?”

Sure, I’m a journalist, but I’m not an investigative reporter, not a political radical, not of much interest to anyone, really.

That was last week, when the standoff between the FBI and Apple seemed much more about principle than practice to me. That’s when I thought I’d write a column on whether this legal fight matters to regular folk — people like my mother, a retired social worker; my best friend, who works in retail; or even my 20-year-old niece in college. That was before I found out — in a chillingly personal way — just why it does matter. To all of us.

Just before midnight last Friday, my plane touched down in Raleigh after a three-hour flight from Dallas. As usual, I’d spent much of the flight working, using American Airlines GoGo in-flight Internet connection to send and answer emails. As I was putting on my jacket, a fellow in the row behind me, someone I hadn’t even noticed before, said: “I need to talk to you.” A bit taken aback, I replied, “It’s late … need to get home.”

“You’re a reporter, right?”

“Um, yes.”

“Wait for me at the gate.”

[I didn’t answer, but I did wait.]

“How did you know I was a reporter?” I asked while we started walking.

“Are you interested in the Apple/FBI story?” he responded, ignoring my question.

“Kind of. Why are you asking me that?” I thought he was some kind of creepy mind reader.

Then he dropped the bombshell.

“I hacked your email on the plane and read everything you sent and received. I did it to most people on the flight.” 2. He had verbatim detail of a long email that he repeated back to me essentially word for word.

In fact, as Steve Nolan, GoGo’s vice president of communications, told me, the service is “public” and “operates in the same ways as most open Wi-Fi hotspots on the ground.” He cautioned against “accessing sensitive materials while in flight.”

One of my emails was pretty explicit about the focus of my story and I had emailed Bruce Schneier, a security expert who had previously written in the Washington Post about this very issue.

"The current case is about a single iPhone 5c, but the precedent it sets will apply to all smartphones, computers, cars and everything the Internet of Things promises," Schneier wrote.

"The danger is that the court’s demands will pave the way to the FBI forcing Apple and others to reduce the security levels of their smart phones and computers, as well as the security of cars, medical devices, homes, and everything else that will soon be computerized. The FBI may be targeting the iPhone of the San Bernardino shooter, but its actions imperil us all."

That’s what my privacy-busting stranger had read. Back to my conversation:

“That’s how I know you’re interested in the Apple story,” he continued. “Imagine if you had been doing a financial transaction. What if you were making a date to see a whore?” My mind raced: What about my health records? My legal documents? My Facebook messages?

And then the kicker:

“That’s why this story is so important to everyone,” he told me. “It’s about everyone’s privacy.”

Then he headed down the escalator and I headed out the front door. I may have been wearing my jacket, but I felt as exposed as if I’d been stark naked.

With a newfound personal interest in the topic, the following day I called Alex Abdo, an attorney in the ACLU's Speech, Privacy and Technology Project, to talk about why ordinary Americans should care about the Apple case. At first he told me some of what I knew. If the government wins it would set a “dangerous legal precedent … that would force companies to build back doors into their products. It will be used hundreds and hundreds of times if it becomes lawful.”

Abdo made it clear why this matters to ordinary consumers like me — to all of us. “The risk is that it makes it more likely that individuals’ devices with no connection to any investigation will become less secure because companies will have established back doors …. that will fall into the wrong hands.” For emphasis, he added: “No back door is secure.”

But really, I pushed him, who is in actual danger here? The answer, apparently, is pretty much all of us. “Anyone who relies on the security of their devices,” he told me.

It should be up to each of us to decide what to make public, and what to keep private, he continued. For me, I felt as though the stranger on the plane had robbed me of my privacy—as was explicitly his intent. He took the decision of what to share out of my hands. He went in through the back door of the GoGo connection.

THE TAKEAWAY:

I asked Abdo what we could to do protect our privacy. This is what he told me:

1. 
   Call your representatives in Congress and on a statewide level and express your support for Apple in this case. Here’s a list of all U.S. members of the House and Senate. https://www.congress.gov/members
   
2. 
   Make sure your devices are using their built-in encryption features. That’s FileVault for Apple devices and BitLocker on Windows products.
   
3. 
   Use a password manager to help you create and store different — and strong — passwords for all your accounts. Don’t use the same password repeatedly, and don’t ever use passwords like “password” or “123456.” Some popular ones include DashLane, LastPass, and Sticky Password.
   
4. 
   Download WhatsApp, Telegram, or Signal, messaging apps that go great distances in encrypting voice and electronic messages. Keep in mind that even they are not 100% secure.
   

Many of the possible penalties are discretionary to the court where the dispute is currently being heard. The case, at least for now, resides in the U.S. District Court for California's Central District. If Apple openly defies or ignores the demands in the order signed by Magistrate Judge Sheri Pym, the court would most likely wield a civil contempt-of-court charge as the mechanism to coerce Apple to comply, explains Cooper Levenson attorney Peter Fu in an email to Fast Company.

The court could also mete out civil punishments like fines. If such penalties aren't regulated by a statute, they have to be based on precedent, Fu says.

From Monetary Penalties To Jail Time

Apple attorney Theodore J. Boutrous Jr. told the AP Tuesday that the tech giant will challenge the government's use of the All Writs Act, as well as suggest that the whole matter would be better handled by Congress.

If the All Writs Act theory is allowed to stand, the federal district court can determine any reasonable amount deemed necessary to move Apple to comply with the demands in the order. "That could result in fines in the hundreds of thousands to millions of dollars," Fu says. The problem in this case is that there's just no clear precedent. Estimating possible penalties is difficult because it will be largely up to the discretion of the court.

Some legal experts believe it would be proper to base fines in the Apple case on the Communications Assistance for Law Enforcement Act of 1992. Under CALEA, fines are capped to $10,000 per day, but the fines keep accruing until a final determination, if a subpoena is challenged.

One possible guideline may come from a case in which the government threatened to fine Yahoo $250,000 a day if it refused to hand over user data to the National Security Agency, says Electronic Frontier Foundation staff attorney Andrew Crocker. And the size of the daily fine was set to double every week that Yahoo refused to comply.

Those are all possible civil penalties, but the court could also assign penalties associated with criminal cases.

Apple could be held in criminal contempt of court for defying the order signed by Judge Pym. This legal mechanism is often used when no amount of civil coercion (like monetary fines) can make the party in question comply with the court's demands," Fu explains. Courts can use this non-monetary punishment on journalists who refuse to divulge their sources, for example. The goal isn't to compensate an injured party, but rather to "punish the target party and to vindicate the authority of the court," Fu says.

If the case goes all the way to the Supreme Court, and Apple refuses to comply with a demand to adhere to the Pym order, then things get a little crazy. "Under these circumstances, there is a universe of possibilities where Tim Cook could actually go to jail for refusing to comply with a lawful order of the court," Fu says.

"This is because Apple has already publicly declared that it will not comply with a court order to unlock the iPhone," Fu says, "and as such, necessarily forces the courts to favor punishment over coercion."

How It Could End Up At The Supreme Court

Here's how Apple's dispute with law enforcement could find its way to the High Court.

Indeed, it's very unlikely that Apple will honor a court order won by the FBI demanding that Apple write code that would enable access to the data on Farook's iPhone 5c. And the FBI isn't likely to withdraw the order, which was signed by judge Pym in the federal district court in California's Central District last Tuesday, February 16.

Specifically, the order demands that Apple build for the FBI a custom version of the phone's operating system that would disable the device's native security features. Those features normally slow down, then prevent altogether, any attempts to guess the phone's password. A successful login to an iPhone running iOS 8.0 or after creates a one-time key that unlocks the encryption on the data. After 10 unsuccessful attempts, data on the phone is rendered permanently inaccessible.

Apple has until February 26 to file an application with the court, saying that compliance with the order would be "unreasonably burdensome." (If it neither files nor complies with the order, the FBI attorneys could ask the court to hold Apple in contempt.)

Apple will very likely file its "unreasonably burdensome" application to the court this week. The company will also make a broader policy argument in the filing that assisting the FBI in this way would set a dangerous precedent going forward, says the EFF's Crocker.

The Central District Court in Riverside will hear the case again on March 22. Crocker explains that the court order that came down last Tuesday was "preliminary" and meant to elicit a response from Apple, and that the real order will come after the March 22 hearing.

While Judge Pym is the magistrate who reviewed the government's case and signed the order, she hasn’t officially been assigned the case, a court official said. She will, however, be the presiding judge when the case is reviewed again on March 22.

If either the FBI or Apple is unhappy with the magistrate judge’s final decision on the order (almost a certainty), the case will be transferred to another district court judge, also in the Central District’s Western Division.

For example, if Judge Pym agrees that compliance would be unnecessarily burdensome for Apple, the FBI’s attorneys would almost certainly ask that the case be transferred to the other district court.

It’s far more likely, however, that the judge will reject Apple's claim, on the grounds that Apple is in the business of making software, so creating the firmware to break into one iPhone wouldn't be that much trouble. In that case, Apple will very likely ask that the case be assigned to another district court judge.

If that other district court judge agrees with Pym’s original order, Apple could then appeal the case to the Ninth Circuit Court of Appeals. So could the FBI, if the new district court judge sides with Apple.

In the Ninth Circuit Court of Appeals, the case would first be heard by a three-judge panel. If either side was unhappy with the result, the case would become an "en banc" issue, and the full court would then hear arguments.

Another unhappy result for either side in the federal appeals court would leave only one other court to hear the case—the U.S. Supreme Court. But the High Court chooses to "grant cert" to (accept) very few cases out of the hundreds it considers each year. If the Supreme Court refused to hear the case, the appeals court decision would be upheld.

However, there’s reason to believe that if Congress doesn’t intervene during the long process of moving through the courts, the Apple v. United States case has a reasonably good chance of being heard by the High Court. It would, after all, bring to a dramatic head a fight that’s been brewing between law enforcement and the tech industry for a long time.

Congressional Action Was The FBI's First Choice

Congress was its first choice. Law enforcement has been pressing members of Congress to pass a bill for many months, and while some bills are circulating, nothing's expected to reach the president's desk any time soon.

Law enforcement also hoped that the president might get behind the issue, but that hasn't happened either—at least not publicly. "Up until last week the president hadn’t even weighed in on the issue," O’Brien said. And when the president finally did weigh in on the issue last week he didn’t come out strongly for a specific course of action, but only suggested more dialogue, he said.

This all leads to the question: Can a court battle centered around a device used in one of the deadliest terror attacks on U.S. soil really produce a set of rules that effectively balance the government's need to fight terror with the tech community's need to protect consumer data privacy?

Cybersecurity expert John McAfee, who has vehemently opposed the FBI's attempt to force Apple to create a back door into its iOS software, is taking his defense of the tech giant one step further.

McAfee claims the government is violating the 13th amendment, which abolished slavery and involuntary servitude, if it forces Apple to create the back door.

McAfee's legal team says the term involuntary servitude is "used in reference to any type of slavery, peonage, or compulsory labor. Two essential elements of involuntary servitude are involuntariness, which is compulsion to act against one's will, and servitude, which is some form of labor for another."

According to McAfee: 

The Government is demanding that Apple and its employees perform substantial work in order to create software that does not exist. Apple and its employees do not willingly want to do the work. Thus, the government is demanding involuntary servitude of Apple and its employees in regard to doing this specific work. The 13th Amendment clearly states:  

"Neither slavery, nor Involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

McAfee's accusation comes just over a week after he volunteered to decrypt the phone of one of the San Bernardino hackers for free so that Apple wouldn't have to create a back door that could potentially end up in the wrong hands.

McAfee has backed Apple CEO Tim Cook, who said in a statement last week that having to create a back door would "undermine decades of security advancements that protect our customers — including tens of millions of American citizens — from sophisticated hackers and cybercriminals."

In his Business Insider op-ed, McAfee went a step further, saying it would be "the beginning of the end of America." 

Both Apple and the FBI will testify in front of Congress on Tuesday before the House Judiciary Committee. FBI Director James Comey and Apple Senior Vice President and General Counsel Bruce Sewell will appear at the committee's hearing on "The Encryption Tightrope: Balancing Americans’ Security and Privacy." 

The FBI did not immediately respond to a request for comment on McAfee's suggestion.