Below is a rush transcript of this segment, it might contain errors.

Airing date: 03/09/2019

Trump Halts NSA Surveillance Program – AI Spotting Shoplifters – Autonomous Vehicles Police And Insurance

Craig Peterson: 0:00 
Hey, it’s that music must mean it is time for me to get going. Good morning everybody. Everyone who’s tuning in on the radio, listening on the iHeart app or even listening to the podcast. It’s a lot of fun. I’m honored to be here every week and I get so many great comments from people thanking me for everything I do and I do try hard as they say, right Avis – we try harder. I try hard to get you all of the information you need to know and help you out. From putting on those master classes for you and trying to do all of this stuff without the sponsorship, that personally I kind of find a little bit annoying but you know that’s the price right? You have to pay for the time on the air etc., etc. So I’ll

Anyhow, you are tuned in for the half hour we have today. We’re going to talk about automakers here giving police control over your car. What’s happening with that. Britain and some other European countries are moving towards a cashless society. How about ours? What does it mean? We get another warning out from the Secret Service about high tech thieves, and how they’re doing remote skimming now of your credit cards.

Auto insurance. This came up this week I was chatting with someone. So, I found a really great article on Bloomberg that I shared on my website. We’ll be talking about that and what’s happening with auto insurance when it comes to these new self-driving cars. Yes, indeed, this is going to be a very big deal especially for those smaller insurance guys who are out there. Ransomware what’s happening what’s happened to it, why don’t we heard as much about it anymore. The National Security Agency

NSA, they have halted that surveillance program. We will be talking about that they had that surveillance program that Edward Snowden really got in trouble for. These cameras are designed to spot shoplifters even before they steal. And the whole concept of artificial intelligence came up this week as well when I was chatting with a couple of different radio stations and also a little bit on my show last week. So, let’s get started with that. The NSA, we know that they threw a huge net out there, they were doing bulk data collection on U.S. domestic phone records. It was abused apparently by the feds multiple times. It looks like the Obama administration might have abused it as well. And under the so-called USA Freedom Act, which was put in place by the way to replace the act that had been in effect since 911.

So, the USA Freedom Act. It requires reauthorization at the end of the year, and President Trump is saying that he doesn’t want to extend it. Isn’t it interesting how the tables have turned? You know, we’ve had the Democrats screaming about privacy, about all of these things for so many years. And now it’s come out that of course, they are the party of no free speech. Just try and say something against them, see what happens to you. We just had had a case of a guy on campus out at UC Berkeley, getting just cold-cocked right in the face because of his exercise of free speech. And when it comes to free speech, of course, now the Democrats are introducing a law that would put in place an old FCC rule that they had under the Obama administration that actually hurt the development of the internet. Well, I’m sure I’ll end up talking about that in a future show as well.

But President Trump apparently is not looking to extend it. Not at all. That’s according to Luke Murray and he’s the National Security Advisor. And what’s interesting too, is he’s a security adviser to the Minority Leader, Kevin McCarthy.

Now, this didn’t come out of the White House. So, who knows exactly what’s going to happen. But the New York Times is reporting on this. CNN is reporting on this and if the left is reporting on it. Well, I guess they want it in place, right. They want to be able to monitor their opponents, their so-called enemies. Well, the NSA last year disclosed it had found technical problems with the program that led to the collection of records on U.S. persons didn’t have the authority to collect while da they were collecting absolutely everything. Remember, they said, oh, we’re just collecting phone metadata doesn’t really matter. It’s not a big deal. And then it turned out well, yes, metadata, in fact, can be used to figure out who you are who you’re talking to.

Where you were, track you around, okay. Very, very big deal to collect that metadata. Well, according to Murray, he said that the administration actually hasn’t been using it for the past six months because of problems in which way the information was collected. You remember last year and reported late last year in 2018, that the NSA had destroyed volumes, just tons of the data they had been collecting under the order. Of course, the new Trump administration because you can’t monitor people, right? We’re supposed to be safe. We’re supposed to have privacy in our papers and our persons. It’s just crazy how far it’s gone. He said, it possibly is collecting information on US citizens the way it was transferred from private companies to the administration after they got to FISA court approval. And we know there have been some serious issues with the FISA court approvals based on what we’re starting to hear about the FISA court warrants.

And you know me I’ve been against these all of the time I’ve called them star-chamber proceedings because there’s there’s no way to defend yourself. Now it’s not quite the same as a grand jury we’re obviously you can’t defend yourself in a grand jury, either, right and the grand jury You know the old statement that you can indict a ham sandwich with the grand jury. Absolutely true. But when it comes to the grand jury, now it starts the whole legal process and it starts out in the open with the FISA court everything is top secret which is what? It’s an absolute probability that we are going to get some abuses of the system, right? Is it that the way that always ends up going so Murray also noted that reauthorizing the program would be challenging he says I’m not actually certainly administration will want to start that the back up where they’ve been the last six months in other words

The Trump administration came in saw the abuses that were occurring, saw the problems with the data and stopped the program. They destroyed a lot of the data that was illegally collected on US citizens, US persons. And they have not been using the data. And you remember testimony on this whole thing from the National Security director in front of Congress saying that they had not indicted a single person. Had not made a single arrest because of the data that had been collected in this program. And yet, there’s so much data being collected and stored that it actually drove up the price of hard disks in the United States. Because all of this data was being collected and stored there, most of it in Utah at the point of the mountain. The whole thing is just nuts. You know, anyways, you get me going here on a Saturday morning. Let’s move on to another topic here that’s going to get me going when it comes to shoplifters and AI

Well, you know, artificial intelligence, AI, what it’s all about. There’s a great article in Bloomberg, you’ll find on my website.

Okay. It’s from Bloomberg. And it’s talking about this Japanese startup called VAAK. VAAK has developed what they’re calling artificial intelligence software. And this software is designed to look at people to watch the footage. And from that footage, try to hunt for potential shoplifters. We’ve talked before about some of the programs that are in place, a software that’s being used by police departments here in the US and around the world. And the software that is trying to predict where crime is going to occur next. Frankly, pretty darn scary stuff there is no two ways about it. And now this startup is saying that they can use footage from regular security cameras.

And what it does is it looks for people who are fidgeting, who are restless, and other potentially suspicious body languages. And I’ll go into any detail about what that actually means. But this really does remind me of the movie Minority Report. We keep going back to that, don’t we? Where we’ve got algorithms here instead of the three people who can see into the future. We got algorithms analyzing the security camera footage and then what it does is alert staff about potential thieves and it does it via a smartphone app. So, think about what they’ve been doing over in Vegas for so long where they’re monitoring everybody on the floor the looking for people who are trying to game the gaming system out there. And they have the security guards running around and you do something they don’t like and you’re going to the very least be ejected Well, in this case, the goal is prevention. And what happens here is if the targets approached and asked if they need help.

They found that it’s a good chance that the theft never happens. So, they have a smartphone app that the security people are carrying around, the loss prevention people, and they see somebody is looking a little fidgety. The app automatically informs them. They go over and just say Hey, need any help. And that’s about all it takes. Now we’re talking about real money. Shoplifting costs the global retail industry about $34 billion in lost sales in 2017. It’s crazy and that’s the biggest shortage source, excuse me, of shrinkage. Of course, there’s a lot of shrinkages. It goes out the back door of the store as well. But the biggest one is people who are stealing and that amounts by the way to 2% of revenue. That’s a huge chunk of revenue when you get right down to it. And the whole retail industry is known for very narrow, very thin margins.

So, when you’re talking about 2% of revenue, it’s hurting them dramatically. But the other side is if they can stop it that opportunity is absolutely huge. And they’re projecting that retailers are going to invest about $200 billion in new tech this year. That’s according to Gartner. And they’ll probably become more open to embracing technology to meet consumer needs. Interesting stuff isn’t it and you know we’re being tracked as we walk around the stores our smartphones are being used to track as if you’ve got an iPhone a more recent iPhone they really can’t track you very well, they don’t know when you’re re-entering the store but this company got founded and funded to the tune of about a half a million dollars and it’s the middle of a series A seeking to raise $10 million or more courses all Japanese yen I’m doing quick comparisons and translations in my head, as we’re going along, so, we’ll see what happens there.

And you can expect to be monitored by this software or something very similar to it next time you go shopping because some of this is already out there. And they’re using it, the police departments to determine who might be a terrorist. They’re comparing our faces to the National Crime NCIC information computer system. Where all of our data is being shared. A lot of states take our drivers licenses and share that information. I still don’t have a regular driver’s license that has the TSA compatible components on it. Because I don’t want the state to keep my picture although that means I have to have a passport as well in order to in order to have that ability to fly.

Although I try not to fly, whenever possible. So, let’s talk about our cars here for a second and the police and these new autonomous vehicles.

By now everybody’s heard of Elon Musk, and you’ve heard of his cars, the Tesla’s and and I remember a few years back talking about how Consumer Reports, of course, reports on cars and how they had a very high rating and how the National Transportation Safety Board, when they tested the Tesla Model S for safety, it basically broke their whole system because it performed so well. They had to revise and to change the way they measure the safety of cars because Tesla was just so good. Well, now we’ve got a few issues with Tesla, first of all, Consumer Reports has put all models of Tesla on their lower, do not buy lists from their top list, which is kind of a shocker. And that’s due to the long term effects of owning a Tesla, the longevity.

Where part start to fail how expensive they are, if you bought a Tesla you probably notice how crazy expensive the insurance is. Because it’s expensive to repair a Tesla. Which I guess makes sense there aren’t a lot of them and there aren’t dealers everywhere. There’s no competitive market for Tesla parts. Now we’ve got Elon Musk, making a statement that truly got some people concerned. And he’s kind of backtracked that statement a little bit. But Elon Musk was talking about how our Tesla’s within a year or so, is going to be completely autonomous. They are going to be completely self-driving, even on side roads. And there’s debate as to whether or not that’s even possible at this point in time that Tesla doesn’t have the same sorts of sensors that the other fully autonomous vehicles that are currently on the road being tested. It doesn’t have the same types of sensors with LIDAR and other things.

So, can they actually do it? And, and that’s where he kind of backtracked a little bit. Well, when we have these autonomous vehicles, there are so many questions that come up, and we’re going to talk about two of them right now. One of them is should police have the ability to control your self-driving car? Bloomberg published a story last Wednesday about how our autonomous vehicle should interact with law enforcement. Because there was a story that came out back in December 2018 about a driver who fell asleep behind the wheel of a Tesla with his autopilot engaged. And apparently, the driver was drunk I guess is what was going on. But at any rate, he fell asleep. So, that Tesla is driving down the highway and the police are trying to pull it over and they cannot pull it over.

So, they’re trying to figure out what what-what do we do here, the drivers intoxicated, he’s falling asleep behind the wheel, the cars driving down the highway at whatever speed was driving at the time. This is a problem that autonomous vehicle manufacturers are going to have to address. And it’s also something Law enforcement going to have to try and figure out as well. Now it’s one thing if it’s a completely autonomous vehicle, you look at some of those stuff like Mercedes has, there’s no steering wheel, there’s no driver you get in where you are “fall on the floor” drunk or you are wide awake, working on business stuff, you have no responsibility to control the car. The car can be pre-programmed to take you somewhere which would happen in the case of like a like an almost a taxi service saying, pick me up here. Drop me off there and off it goes. Right. That’s what Uber is aiming for. We have also privately owned vehicles and we can do this thing like Take me home. And so the car just takes you home, right? And life hopefully is good.

Well, should the car be monitoring you? If you’re vomiting? Should the car redirect itself to the hospital should it be monitoring your pulse and respiration, to know that, hey, you just had a heart attack, I need to take you to the hospital. You know, how far does the responsibility of the autonomous vehicle and it’s manufacturer and software developer, how far does that responsibility actually extend.

Very, very good questions here and man, we are going to have some fun as time goes forward as we try and answer these. So, going back to December 2018, you got a drunk driver in a Tesla sound asleep. Normally what would happen that car would be involved in a wreck. Someone else might be terribly injured. A whole family might be killed. Heaven knows that

It’s happened before. Now that cars just driving down the road all by itself and the police officer notices the guys asleep. So what they did is the police went and blocked the car in. So they got in front of the car. They got behind the car. They got beside the car on both sides. And they just slowed down. And the Tesla sensors said okay, was nothing I can do here. I have to slow down I can’t change lanes. And so the Tesla ended up stopping which makes sense, right.

But should that Tesla notice those flashing lights? Should that Tesla have had the ability for the police officers to say, stop and pull over, Right? How far should have been able to go? and if that car has the smarts to stop for flashing light, what’s to stop a bad guy from just using the strobe in their car to have, you know the car in front of them pull over. So, that they can molest someone or what whatever it is the bad guy wants to do.

And even if it’s not based on the flashing lights, which it would kind of have to be, initially. Because we’re not going to have the control systems in the police vehicles, but if the police vehicles now do have those control systems and they can pull the car over with just a remote command. Wants to say that again, the bad guys aren’t going to try and hack those. So, very murky legal territory. If you own that car, should the police have the ability and the right to control that car and how far should that go?

Particularly, if that vehicle and or the driver of the vehicle is not doing anything illegal? So? you’re just driving down the road everything’s wonderful. You are being all the speed limits all of the traffic signs, you are not being erratic, you’re not zooming past people. Should the police be able to pull you over at that point?

Kind of goes back to, I guess, the checkpoint things, right? Should you have to stop at a sobriety checkpoint even though you know that you are sober. and I don’t like those personally either, because even though I never drink and drive, and I’ve never been drunk, even though that that has never happened to me, I still resent these things because it is truly an invasion of privacy.

Very interesting questions, Isn’t it? Very interesting. We already have police departments that have these remote controlled little race car type things that they can launch from underneath their car. And what happens is they drive it underneath the car in front of them. So, it’s this little, think of this little RC cars, you know that you had remote control cars, that you’re driving out there. Well, they have in the middle do 80 miles an hour. So, it goes right up under your car and then it sets off an electromagnetic pulse, which of course shut off your engine if you’re driving a modern car.

And now your engine shut off and you have to stop because there’s no engine anymore, right? Should they be allowed to do that? Well, they’re already doing that in some jurisdictions. Now we got another point here when we’re talking about self-driving cars and I think friends of mine that are in the insurance business and I start getting really kind of worried.

A Tesla Model X in Southern California. If you were to buy that, the insurance premium at least this is a few years ago, was about $10,000 a year.

Now, I mentioned already why Tesla’s are so expensive? Because they’re very expensive to fix. You can get into a five mile an hour accident, a fender bender basically in the Tesla and it can cost you five to 10 grand to get that fixed. Okay. It’s a very big deal, but there’s also the limited self-driving, what they call autopilot mode on the autonomous vehicles.

Now, there are more and more sensors that are getting built into these things, but the underwriters and the actuaries are trying to figure out, how do they handle this new type of risk before it was you, you were in control, and either your equipment failed. And you know, your brakes didn’t work, you couldn’t steer your tire blew out, whatever it might be, and they know what those numbers look like because they’ve got a century-plus worth of data.

Simple enough, right? Well, how about you as a driver? Well, they’ve got information on you as well and nowadays are using credit checks and everything else, which I think is nuts in order to come up with your insurance rate. But they’ve got all of this data and there’s very few Model X’s on the road. So, how do they figure that out? And then the bigger question when we start looking at this, it was addressed.

This is really great, Deloitte, you probably familiar with that company, in 2019 insurance outlook report, they said the rise of connectivity has generated a massive amount of real-time data and turned the insurer’s relationship with policyholders from static and transactional to dynamic and interactive.

So, what this means is basically everything has changed. We’re now transitioning that transitions is just starting now. If your autonomous vehicle is in an accident, who’s responsible? Do you even need to have insurance anymore? No, you might have medical insurance, you might have some sort of collision insurance kind of a gap insurance sort of thing for you. For your medical expenses or for the medical expenses of other people in your vehicle.

But even then, who should be responsible for the medical expenses, because the tables we have right now that the insurance companies are using to figure out our liability and how much they should be charging us, those are based on more than 90% of accidents are caused by human error.

So, if you take the driver out of the equation when it comes to the accident itself. We’re talking about big changes for insurers because 90% of that whole market transaction is changing. So, this is absolutely huge. They’re forecasting trouble for insurers as automation becomes more widespread. Premiums could drop, they’re saying maybe 12% or so by 2035. I think they should probably drop more than that. But who carries the insurance is the person who owns the vehicle? Is it the person who’s in the vehicle operating it? quote unquote, even though they may not even have a steering wheel.

Is it the manufacturer of the car, that should be liable? Is it the people who wrote the software? Is the company that was contracted to write the software? And remember, there isn’t just one piece of software, there are dozens of computers and I mean, dozens and dozens and dozens of computers in a modern car, each one of them could fail. Is that the manufacturer of the CANBUS or whatever the buses all of these computers are using to talk to each other? Who has the liability? So, as automation levels in these cars reach level.s four and five, where you have complete fully autonomous, no human involvement.

Insurance is going to change dramatically. So, what about the local guy that’s been selling new insurance for your vehicle, forever?

Isn’t that interesting? You’re still going to have some insurance I’m sure that’s never going to go away but in this case, the driver won’t be the risky part. The liability is really going to migrate to the manufacturer. The licensees of the software. It’s just going to change.

Nationwide is one insurance company that’s starting to think about the problem and I’m sure, frankly, all of them are but Nationwide’s come up with some interesting stuff. So, check out online Craig Peterson dot com, you are going to find an article here that you’ve got to read. This is from QZ dot com. Britain is moving to a cashless society. So, what happens to poor people who don’t have bank accounts, credit cards. Who doesn’t have access to that? Sweden already is a great example of how not to get rid of cash. Most of the banks in the country of Sweden don’t accept paper money or coins. Same things true of a lot of restaurants and stores, even public toilets. How about the elderly. The poor, people with handicaps. Okay, what’s going to happen

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of them in cash isn’t available. Got to think about all of this stuff. The government likes the idea because it’s easier for them to track and make sure people aren’t cheating. But on the other hand, I’m not sure that this is such a great idea. And you know me, right. I am a cash kinda guy. Anyhow, have a great day we will be back next week and tune in every day if you’re not already on my podcast. Have a look for it you’ll find me Craig Peterson dot com slash iTunes you can go to Craig Peterson comm slash almost anything Facebook or Twitter or I think SoundCloud TUNE IN JUST Craig Peterson dot com slash iTunes and let me know what you think. Leave a message say hello and have a great week. Make sure you check this morning’s email you should have gotten my newsletter which is at Craig Peterson dot com slash subscribe comes out every week.

Have a great day. Take care. Bye-bye.