A computer program named Eugene Goostman made AI history by becoming the first machine to pass the Turing Test, the 65-year-old benchmark for human-level artificial intelligence. At a competition at the Royal Society London, the program successfully convinced a third of the competition’s judges that it was a human — albeit a 13-year-old Ukrainian boy whose first language was not English.
“What Goostman’s victory really reveals, though, is not the advent of SkyNet or cyborg culture but rather the ease with which we can fool others”, says cognitive scientist Gary Marcus. The program doesn’t have actually have human-level intelligence, which is what the Turing Test is really meant to look for, but is simply very good at deflecting questions using human-like speech patterns. As a result, Adam Mann argues Eugene actually got an F on the Turing Test.
The march toward legalizing gay marriage across the country continued last Friday, when a federal judge declared Wisconsin’s ban on it unconstitutional. Clerks in two counties started issuing marriage licenses on Friday, according to Reuters.
However, gay marriage in Wisconsin is still in limbo. Over the weekend there were still some questions related to whether the ruling would take effect immediately. The Wisconsin judge did not include a mandate to begin issuing licenses as judges in other states have done, and the state attorney general filed an emergency motion asking the judge to stay her ruling pending appeal. The stay hasn’t yet been granted — there will be a hearing this afternoon.
Yesterday, Securities and Exchange Commission chair Mary Jo White gave a speech about the current structure of US markets. Her comments directly addressed the controversy over high-frequency trading (HFT) and dark pools (trading outside of exchanges) brought up by Michael Lewis’s book “Flash Boys” and New York Attorney General Eric Schneiderman’s recent series of moves to try to ban HFT. Lewis’s one-sentence summary of his book on a post-release interview: “The US stock market… is rigged”.
White, however, disagrees. The structure “is not fundamentally broken, let alone rigged”, she said. However, she did announce a plan to reform market structure. The two most concrete new rules require high-frequency traders to register with the SEC and operators of dark pools to let the SEC know how they match buyers and sellers. Sam Mamudi and Nick Baker at Bloomberg Businessweek note that “praise for White and the SEC was almost effusive yesterday from exchanges and high-frequency firms”.
“The scariest jobs chart ever”, which Bill McBride at Calculated Risk has been updating month by month for years, is finally ready to be retired.
That’s right — with the 217,000 jobs added in May, the US economy is finally, finally back to the pre-recession employment level.
Europe has reached the zero lower bound. After its June meeting today, the European Central Bank announced a number of policy changes (a “swarm”, according to Joseph Cotterill). Bloomberg’s Maxime Sbaihi helpfully chartified the ECB’s actions:
But will it work? ¯\_(ツ)_/¯
“The lesson today: Don’t underestimate Mario Draghi. Or the ECB, for that matter”, writes the WSJ’s Moneybeat team. The biggest move is probably the -0.1% deposit rate — meaning banks have to pay the ECB in order to park their money there overnight (here’s a more detailed explainer of negative rates). This is for two reasons, says Neil Irwin: first, if it’s expensive to keep money at the ECB, banks will hopefully do something else with it, like lend it out. Second, if it is expensive in general to keep money in Europe, the ECB hopes the price of the euro will fall in currency markets and inflation will rise — something Europe desperately needs.
As it becomes more likely that the United States will be fining French bank BNP Paribas around $10 billion for evading US sanctions (over protests from French politicians), Credit Suisse’s (CS) banks research team released an updated estimate for litigation costs for major European banks (pdf). Things are looking less rosy 15 months later. The original estimate, from February 2013, was $58 billion in 38 areas of potential litigation for 10 European banks. CS now thinks these banks will end up paying $104 billion.
This is what Credit Suisse refers to as an “increasing headwind”. In other words, it’s going to costs the banks money. From the report:
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This week, the EPA unveiled its new rule to cut carbon emissions by 30% by 2030 (that is, 30% from 2005 levels). Most of those cuts will come from burning less coal, which is currently the source of about 38% of the United States’ electricity.
Conservatives rushed to oppose the new rule, calling it “Obama’s War on Coal”. However, the Washington Post points out, many Republicans relied on pre-prepared statements that leaned heavily on a Chamber of Commerce study, which came out last week and assumed the EPA rule would require a 42% cut in emissions. From a regulatory perspective, Tyler Cowen says the EPA plan reminds him a lot of the original version of the Clean Air Act, passed in 1963. It was so ineffective at that point, he writes, that it had to be amended in 1965, 1967, 1970, 1977, and finally again in 1990. Further, “a lot of actual progress in the fight against air pollution came through the replacement of dirty coal by natural gas”.
Volatility in financial markets is low, and that concerns New York Fed president William Dudley. Reuters reported he said last week, ”I am nervous that people are taking too much comfort in this low-volatility period and as a consequence of that, taking bigger risks.”
For instance, Treasuries volatility is really, really low:
As is equities:
And foreign exchange:
The Fed is worried that stable prices are encouraging investors to increase their borrowing and load up on risk, which could end poorly if the economy goes south. But what if this is simply the new normal? Izabella Kaminska has an interesting take:
The EU has finally wrapped up its parliamentary election results. Discontent in Europe runs high, mostly because of the persistently terrible economy. To the horror of many, populist euroskeptic parties continent-wide — nationalist, anti-immigration, anti-EU, and often openly racist — scooped up roughly 140 of the 751 seats, up from about 60 in 2009. (Here’s a decent rundown of six of the parties).
Voters are tired of austerity, high unemployment, and stagnation. “After five gruelling years, many of Europe’s citizens must wish they could dispatch the entire political class to hellfire and torment”, writes the Economist. Since that isn’t an option, most didn’t bother to turn out for the elections. Many of those who did came to back extremist candidates. Anatole Kaletsky calls it “a perfectly predictable — and justifiable — upsurge of populist anger after the euro crisis”. He says the varied extreme parties are unlikely to work with each other, anyway. Tyler Cowen predicts Europe doesn’t have the political coordination to keep itself from imploding.
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Just in time for the Friday afternoon news dump (on a holiday weekend!), the FT’s Chris Giles dropped a bombshell: Thomas Piketty’s “Capital in the Twenty-First Century,” he alleged, is full of data errors. After correcting the mistakes, he says (in a separate post), “two of Capital in the 21st Century’s central findings – that wealth inequality has begun to rise over the past 30 years and that the US obviously has a more unequal distribution of wealth than Europe – no longer seem to hold”.
Giles’ allegations boil down to three points, detailed in a long blog post: first, Piketty transcribed some numbers into Excel wrong. Second, Piketty made some unexplained changes to the data. Finally, Piketty used questionable methods to arrive at his conclusions. In addition, Giles takes very specific issue with Piketty’s data on wealth inequality in Britain, claiming that “once more reliable British results are included, there is no sign that wealth inequality in Europe is rising again”.