Author: Service2Client

Standalone 5G Networks: Potential Vulnerabilities that Could Result in Denial of Service for Customers

4 min read

Standalone 5G Networks5G networks promise high speeds, lower latency, and more robust security compared to its predecessors – and this has created a lot of buzz. As a result, there is a lot of competition among operators to roll out the network while manufacturers are already producing 5G devices.

The deployment of 5G around the world has also been facilitated by a need for always-connected computers, widespread internet of things (IoT), and dependence on smartphones. All of this is constraining the 4G LTE technology.

With the current uptake in remote working due to COVID-19, 5G is expected to see more deployment.

However, despite the promised benefits, there are varying concerns about the potential vulnerabilities of this network. Since there are various security concerns, this article will highlight those involving the standalone 5G networks.

What is 5G Standalone Network?

5G stands for the fifth generation of networks that are designed to address gaps and errors existing in the architecture of previous generation networks. However, its implementation is through a gradual phasing out of the existing networks.

Note that the 5G network involves two streams, which include the standalone (SA) and non-standalone (NSA). The NSA relies on the existing 4G infrastructure because 5G standards are not fully finalized.

On the other hand, the standalone is a completely new, end-to-end 5G network. To offer ultra-low latency and high capacities, service providers will have to fully implement the standalone 5G infrastructure.

Despite the radical and beneficial transformation promised by 5G networks, there are concerns that it might become a multidimensional cyberattack vulnerability.

Vulnerabilities for Subscribers and Mobile Network Operators

Unlike previous networks, 5G is a software-defined network and involves network function virtualization, which makes it more vulnerable.

The previous networks implement hardware choke points because they are centralized and hardware-based; whereas 5G digital routing lacks inspection and control chokepoints.

This new architecture has seen various research carried out to check its viability. As a result, industry professionals and government officials have already raised concern over the network’s security and overall architecture.

An investigation by global cybersecurity firm Positive Technologies focused on 5G standalone core in terms of its architecture security, the interaction of network elements, as well as subscriber authentication and registration procedures.

The examination revealed that “the stack of technologies in 5G potentially leaves the door open to attacks on subscribers and the operator’s network. Such attacks can be performed from the international roaming network, the operator’s network, or partner networks that provide access to services.”

The vulnerabilities were discovered in two protocols that are, PFCP and HTTP/2, which are used in 5G standalone networks.

Exploitation in Packet Forwarding Control Protocol (PFCP) would result in denial of service. This is because the PFCP is used to manage subscriber connections. A PFCP session includes three procedures: session establishment, modification, and deletion. It’s at this point that denial of service can be carried out by attackers through a session deletion request, a session modification request, or redirection of data through a session modification request.

For the HTTP/2, the Positive Technologies research found that an attacker could obtain the network functions profile and impersonate any network service. This is because the HTTP/2 protocol is responsible for vital network functions that register and store profiles on 5G networks. The attacker then would have access to authentication status, current location, and subscriber settings for network access. It’s also possible that an attacker would be able to delete NF profiles, which could result in a financial loss as well as damage subscriber trust.

If not handled correctly, the 5G standalone network security issues will place critical infrastructures such as hospitals, transport, and utilities at risk.

Solution and Conclusion

According to the report, the vulnerabilities would appear due to misconfigurations. With vendors competing to launch 5G networks, attackers will take advantage of poor configurations.

Therefore, it calls for proper configuration of the architecture to stop these types of attacks. Unfortunately, errors still might occur. To detect configuration errors in the networks, regular security audits should be performed.

It’s also vital that apart from ensuring proper equipment configuration, security monitoring, and enhancing the implementation of firewalls are also top priorities.

In conclusion, 5G’s high speeds, low latency, and high bandwidth will be highly beneficial. However, potential security holes could cost more than the cost of implementing this technology. As a business owner considering the 5G network, do not let your guard down just because the new network promises to address gaps and errors in previous generation networks.

How Will the Biden Administration’s China Policy Impact Markets?

4 min read

Biden Administration's China PolicyThe Obama and Trump administrations couldn’t have had a more different approach when it came to U.S. relations with China. As the Institute for China-America Studies (ICAS) explains, under the Obama administration, the United States favored a trade and investment approach when dealing with China, while the Trump administration had a national security focus. The ICAS believes the Biden administration will address trade and economic imbalances through a modified approach, including reducing tariffs on imported Chinese goods over time to decrease inflation for American consumers. Another example is maintaining pressure on China to cut government subsidies for competing industries, currency games, and exporting products to the United States at artificially low prices.

While the Obama administration engaged China through trade and investments, it didn’t emphasize engaging the country on the national security side. The Trump administration looked to make American industries independent of Chinese production, especially for rare earth metals, pharmaceutical precursors, etc. With the inauguration of President-elect Biden, the incoming administration is expected to maintain the Trump administration’s quest to give many American industries a fighting chance of survival, albeit how it will be accomplished will likely vary.

The Biden administration is projected to lower tariffs on Chinese imports gradually. This is expected to be done to reduce the tension of the existing trade war. It’s also expected to be done to lower the rate of inflation and help businesses that import input materials from China.

Based on statistics according to the American Action Forum, approximately $57 billion was paid by consumers on an annual basis per 2019 import numbers, due to tariffs instituted by President Trump. This action is likely to increase consumer spending and increase companies’ earnings. However, the Biden administration is still expected to keep other forms of trade pressure on what many believe are unfair trade practices by China.

Biden also is expected to raise the same concerns the Trump administration did regarding Chinese trade and commerce, including China subsidizing its industries, flooding the American market with goods to undercut American producers, and requiring so-called forced technology transfers from U.S. companies.  

However, the trade deficit the U.S. has with China isn’t expected to see much attention. This could negatively impact how much China is ultimately expected to import from the United States.

When it comes to colleges and universities, research-based collaboration, and artistic-based areas, relations are expected to be more friendly. However, when it comes to fighting China’s human rights violations, individuals or business entities might be targeted. Based on Vice President-elect Kamala Harris’ proposed Uyghur Human Rights Policy Act of 2020, there’s an expectation the Biden administration will keep the pressure on China.

Beginning in 2017, Biden began to discuss plans for America and how some of America’s crucial industries could be more self-sufficient and less reliant on China. Examples include pharmaceutical products, medical equipment, and rare earth minerals.

Potential actions the Biden administration could implement against China include sanctions; U.S. government-sponsored legal action against Chinese firms; and becoming more involved in the World Trade Organization (WTO) and similar organizations. This is seen by some as the U.S. becoming more in-step with Europe to better pressure China in WTO and related disputes. It might also include courting America’s allies in reducing or prohibiting Chinese investment of domestic industries to make it more difficult for Chinese firms to obtain cutting-edge technology.

While there is no way to accurately predict how the Biden administration will treat China, there will likely be continued pushback on China. How these actions will ultimately impact trade and the markets will be seen in the near future.

Paying the Price for Vice: The Evolving Landscape of Excise Taxes in America

4 min read

Excise Taxes in AmericaWhile excise or vice taxes have long been a part of the American tax landscape related to alcohol and cigarettes, the recent invention of vaping and legalization of marijuana and other substances is changing the landscape.

What Are Excise Taxes?

Excise taxes are taxes on specific types of consumable products such as alcohol or tobacco for one of two reasons. First, as vice taxes in order to raise revenue to cover the costs related to consumption; and second, to deter consumption itself. Unlike other types of consumption taxes such as sales tax, these are specific to certain products.

Do They Change Behavior?

Theoretically, when you increase the price of a product such as alcohol through the addition of excise taxes, demand should go down. While this may be a deterrent and limit demand, excise taxes certainly haven’t proven to be a feasible way to eliminate behaviors. A pack of cigarettes can cost upward of $15 in major cities, but there are still people smoking. It’s a similar situation with drinking and gambling.

It’s All About the Benjamins

While we think of excise taxes as vice taxes today in many respects, the main point isn’t to change behavior – it is to raise revenue. Excise taxes pre-date the United States and were one of the main forms of government funding in America before income tax was created. Alcohol taxation goes back to George Washington’s presidency and incited the infamous Whiskey Rebellions. Cigarette taxes were introduced as a way to pay for the Civil War. In the end, it’s about the money generated as there are easier and more effective ways to regulate behavior.

New Products Equal New Taxes

The legalization of marijuana by states raises the issue of excise taxes on this product. Unlike tobacco, where one of the goals is to decrease consumption, the situation here is more one of legalizing something to raise consumption and generate revenue as a result.

Marijuana taxation is more akin to alcohol in the years following prohibition. In both cases, you have large-scale illegal operations and illicit consumption with the aim of moving them to legitimate status. In this sense, it’s different than other vice taxes. 

Initially, at least, the authorized market will have to operate in parallel with the black market for the same product, limiting the amount of taxes that can be raised when there is still an unregulated and untaxed alternative.

Beyond Marijuana

Aside from marijuana, there are other new products that could be taxed and generate revenue, the most notable being vapor products. While vaping products are not really that new, the market is just growing to a substantial size.

Taxing vaping products is more complicated and problematic. Some consider these products to be just as harmful as cigarettes, while others not so much. There is evidence that nicotine consumed via vaping is less harmful than through smoking cigarettes.

Theoretically then, the government should apply less taxes as a result if the harm and therefore cost to society is less.  The problem with this is that less revenue is raised. As noted before, we come back to the issue that vice taxes are often revenue-raising tools disguised as public safety measures.

Too Successful For Its Own Good

Vice taxes can be too successful, with tobacco as the best example. While people may stop buying cigarettes, they don’t stop consuming cigarettes; instead, they buy them elsewhere.

For example, more than 50 percent of cigarettes consumed in New York are purchased out of state. If you push too far, people will react.

Conclusion

Excise and vice taxes are here to stay. While varying arguments can be made that they benefit society by shaping behaviors, it is undeniable that state, local and the federal government are addicted to the revenue generated.

Looking Ahead to 2021: Hope is Not Canceled

4 min read

Looking Ahead to 2021: Hope is Not CanceledDespite the fresh start that a new year promises, our world hasn’t changed much since last March. We’re still living in a new normal. We’re masking up, working (and schooling) from home, and social distancing. Furthermore, scores of community events and activities have been canceled. However, there is something that’s never been canceled: it’s called hope. Here are a few things to embrace that can lift your spirits and help you navigate all the uncertainty.

Be Happy: The COVID-19 Vaccine is Here

This is incredible news. To date, there are two vaccines: Pfizer-BioNTech and Moderna. Those who receive the Pfizer-BioNTech shot will be given two injections, 21 days apart. Those who receive the Moderna shot also will be given two injections, one month (28 days) apart. Both are given in the muscle of the upper arm and can cause mild side effects. However, clinical trials for both have shown a high level of efficacy. Learn more about each one here. The vaccine will be rolled out in phases. Healthcare personnel and residents of long-term care facilities will be offered the first doses. Learn more about who will get it and when here. The fact that we even have a vaccine available might well be the very definition of hope.

Feel Refreshed: Take a News Break

Since most of us are isolated to some degree, it’s only natural to turn to our devices. Games and social media both have the potential to take your mind off of the pain in our world. However, if you tend to veer toward newsfeeds that feature nothing but bad news (which can be addicting), perhaps it’s time to take a break. According to Verywell.com, a constant stream of sensational or disaster reporting, whether you are exposed actively or passively, can elevate stress levels and trigger symptoms like anxiety and sleep troubles, robbing you of your well-being. So, unplug. Step away from your laptop. Give your phone to a family member, partner, or friend. Get outside and soak in some vitamin D. Re-claim that part of yourself that sees the glass half full.

Ditch the Guilt: Plan Your Cheat Meals

If you’ve been looking to food for some much-needed comfort over the past year, you’re not alone. Being at home just a few feet away from a fully stocked kitchen is tempting every minute! Perhaps some of you have banished any guilt about indulging, but for those who just can’t seem to shake it, choose your moments to indulge. Satisfy your cravings a few times a week or just on the weekends. The less you do this, the more you’ll enjoy it. And when you want to splurge, why not support a local restaurant by ordering takeout? You’ll feel better in no time.

Chill Out: Spend Time Doing Nothing

With everything that’s going on and all the responsibilities of living life and crossing things off our lists, stopping to do nothing might seem counter-intuitive; but often, it’s the best remedy for eliminating stress and restoring your sanity. Carving out time to sit with the feelings you’re experiencing – whether that’s irritation, anxiety, or sadness – can help dissipate them. Take some advice from Winnie the Pooh who said, “Doing nothing often leads to the very best of something.” When you give yourself permission to let go and empty your mind, you’ll be rejuvenated and ready to begin again.

Even though the happenings of 2020 were unprecedented, the truth is you do have a new year ahead. One that can be anything you want it to be. Just grab hold of something that has always been there and will never be canceled: hope.

Sources

https://www.cdc.gov/coronavirus/2019-ncov/vaccines/different-vaccines.html

https://stephanieyounger.com/blog/love-hope-kindness-and-community-have-not-been-canceled

https://www.verywellmind.com/is-watching-the-news-bad-for-mental-health-4802320#:~:text=A%20constant%20stream%20of%20sensational,like%20anxiety%20and%20trouble%20sleeping.

9 Quotes From Christopher Robin That Are Good For The Soul

What To Know About Filing For Bankruptcy

3 min read

What To Know About Filing For BankruptcyAbout one million Americans file for personal bankruptcy each year, with one in 10 households having filed at some point. Given the loss of jobs, reduced income, and the coronavirus recession in 2020, those numbers could increase this year if the economic recovery is not both swift and omnipresent.

There are two main types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7, which is the more common option, will liquidate the filer’s assets in order to discharge all or a portion of the outstanding debt. People generally choose this route because they are in way over their heads and do not earn enough income to pay their debts in any type of normal time frame.

Chapter 13, on the other hand, provides some immediate breathing room while helping the filer develop a payment plan based on a reduced percentage of the debt. This percentage is determined by how much he makes and what he can feasibly pay each month. While a Chapter 7 bankruptcy remains on your credit report for 10 years, while Chapter 13 bankruptcy is a bit less punitive staying on record for only seven years. As the filer works to pay down his debt and sticks to his plan, his credit score will gradually improve over time. In some cases, the debtor may be able to apply for an FHA, VA, or USDA home loan a year after his bankruptcy filing, or two to four years if applying for a conventional mortgage.

Bankruptcy can provide immediate relief from creditors calling and threatening to evict, foreclose, repossess, shut off, or garnish wages. However, be prepared for some level of pain, such as the bankruptcy court seizing property to be sold to pay your creditors, and/or your credit cards being canceled.

You may see television ads to get debt relief without having to file bankruptcy. Be aware that while these programs may negotiate a debt settlement to something you can better afford, they will not skirt the wrath of the dreaded credit rating agencies. Any time an entity negotiates a reduction in your debt, this will show up as a negative factor on your credit score, and will likely remain that way for many years. A more recent issue that not everyone is aware of is that some employers have started checking the credit reports of job applicants. This makes it all the more difficult to pay off your debt if you can’t get a job because of your past payment history. Your best option is to secure a reliable income before you work with a debt relief agency or file for bankruptcy.

Before entering any type of debt relief program, it’s a good idea to consult with a qualified, non-profit credit counseling agency for a free debt analysis. Don’t go to just anyone; make sure it is a legitimate resource which, by law, is required to serve your best interest. Shady debt counseling vendors are inclined to recommend a debt solution that works out better for the agency than their clients.

If you do decide to file for bankruptcy, be aware that court fees cost about $300, plus lawyer fees tend to run between $1,000 and $3,000 for a Chapter 7 filing and approximately $3,000 to $6,000 for a Chapter 13 filing.

A Flush of Protections for Veterans and Native Americans

3 min read

A Flush of Protections for Veterans and Native AmericansVeterans’ Compensation Cost-of-Living Adjustment Act of 2020 (HR 6168) – Introduced by Rep. Elaine Luria (D-VA) on March 10, this bill increases Vet compensation benefits by 1.3 percent (the same as for Social Security recipients). The increase impacts veteran disability compensation, compensation for dependents, the clothing allowance for certain disabled veterans, and dependency and indemnity compensation for surviving spouses and children. This bill passed in the House in May and the Senate in September, and was signed into law by the president on Oct. 20.

Veterans’ Care Quality Transparency Act (HR 2372) – Designed to improve mental health care for veterans and reduce suicide rates, this bill was introduced by Rep. Lauren Underwood (D-IL) on April 25, 2019. It requires the Government Accountability Office (GAO) to report on all arrangements between the Department of Veterans Affairs (VA) and non-VA organizations related to suicide prevention and mental health services. The bill passed in the House in May, the Senate in September, and was enacted on Oct. 20.

Improving Safety and Security for Veterans Act of 2019 (S 3147) – This Act was introduced by Sen. Joe Manchin (D-WV) on Dec. 19, 2019. The bill passed in the Senate in December 2019, the House in November, and is waiting to be signed by the president. Following the investigation of events that ended in tragic veteran deaths in 2017 and 2018, this legislation aims to increase VA health center accountability. Specifically, it requires the Department of Veterans Affairs to submit reports to Congress detailing VA policies and procedures relating to patient safety and quality of care. The first report is due within 30 days after the bill is written into law.

Whole Veteran Act (HR 2359) – This bill was introduced by Rep. Connor Lamb (D-PA) on April 25, 2019. The purpose of this legislation is to expand VA Health efforts to deploy a holistic model of care that focuses on patient engagement and total health. It includes integrating non-drug approaches, such as hypnosis and acupuncture, with standard medical treatment. The bill passed in the House in May, the Senate in October, and was signed into law by the president on Oct. 30.

Vet Center Eligibility Expansion Act (HR 1812) – This legislation extends readjustment counseling and related mental health services to non-combat veterans. These benefits are now available to National Guard and Reserve troops whose service includes fighting national disasters and other emergency and crisis situations. Introduced by Rep. Phil Roe (R-TN) on March 18, 2019, this bill passed in the House in May, the Senate in September, and was signed by the president on Oct. 20.

A bill to nullify the Supplemental Treaty Between the United States of America and the Confederated Tribes and Bands of Indians of Middle Oregon, concluded on Nov. 15, 1865 (S 832) – This bill nullifies the supplemental treaty between the United States and this particular tribe in Middle Oregon, which was signed in 1865. The treaty restricted the tribe members from leaving the reservation, among other conditions. The Department of the Interior has stated that the treaty was never enforced by the federal government or Oregon. The legislation was introduced by Sen. Jeff Merkley (D-OR) on March 19, 2019, passed in both Houses, and signed into law on Oct. 20.

Native American Business Incubators Program Act (S 294) – This bill establishes a grant program to provide business incubation and other business services to Native American entrepreneurs and businesses. It was introduced by Sen. Tom Udall (D-NM) on Jan. 31, 2019, passed in both Houses, and signed by the president on Oct. 20.

2021 Social Security Tax and Benefit Increases Announced

3 min read

Social Security Administration 2021 increasesThe Social Security Administration recently announced 2021 increases to both benefits and the taxable wage base for FICA taxes.

Increases Announced for 2021

Workers are facing a 3.7 percent increase in the taxable wage base subject to Social Security taxes, increasing the amount from $137,700 up to $142,800. This means high earners who make as much as or more than the taxable wage base will pay $8,853.60 of the employee withholding portion or $17,707.20 in total for the self-employed – who pay both employee and employer portions of the tax.

Retirees receiving benefits will only garner a 1.3 percent cost-of-living (COLA) raise in 2021, resulting in a raise of $20 per month for the average single beneficiary and $33 per month for the average retired couple. COLA increases for beneficiaries have been low for a long time, with several years seeing zero increases in the past decade or so. You can see the historic trend of COLA increases in the chart below, going back to 1975.

Historical Social Security COLA Increases1
Year Increase Year Increase
2020 1.3% 1997 2.1%
2019 1.6% 1996 2.9%
2018 2.8% 1995 2.6%
2017 2.0% 1994 2.8%
2016 0.3% 1993 2.6%
2015 0.0% 1992 3.0%
2014 1.7% 1991 3.7%
2013 1.5% 1990 5.4%
2012 1.7% 1989 4.7%
2011 3.6% 1988 4.0%
2010 0.0% 1987 4.2%
2009 0.0% 1986 1.3%
2008 5.8% 1985 3.1%
2007 2.3% 1984 3.5%
2006 3.3% 1983 3.5%
2005 4.1% 1982 7.4%
2004 2.7% 1981 11.2%
2003 2.1% 1980 14.3%
2002 1.4% 1979 9.9%
2001 2.6% 1978 6.5%
2000 3.5% 1977 5.9%
1999 2.5% 1976 6.4%
1998 1.3% 1975 8.0%

Medical Expenses Outpacing COLA increases

Low COLA increases are putting pressure on retirees’ finances as medical expenses are rising at a much faster pace, with some believing they are given too little weight in the COLA calculation. Moreover, retirees need to consider Medicare Part B and Part D premiums.

While the official 2021 premiums are not announced yet, there are estimates out there that Part B premiums (covering doctor and outpatient services) will raise $9 per month, or approximately 6.2% percent, from $144.30 to $153.30. These are just average figures, as there are income-related surcharges that apply to both Part B and Part D drug premiums. During 2020, for example, individuals making more than $87k per year and couples filing jointly making over $174k per year began paying higher premiums for Part B and Part D than other recipients, with those at the top of the surcharge paying almost $1,000 per month for Part B premiums alone.

Income Caps on Working Beneficiaries

Finally, there are new earnings limits for workers below full retirement age (age 66 for people born in 1943 through 1954). In 2021, those who are not at full retirement age will lose $1 in Social Security benefits for every $2 they earn over $1,580 a month ($18,960 per year). After reaching one’s full retirement age, there are no earning thresholds that will impact benefits.

Conclusion

The 2021 COLA increase continues the recent trend of coming in low and putting pressure on retirees’ finances, while medical expenses continue to rise at much faster rates. As a result, retirees will see less disposable income from their benefits, while high-earning workers will see continued tax increases that outpace benefit payouts. This puts pressure on all beneficiaries of the system.

1 Starting in 1975, Social Security benefit increases have been based on cost-of-living adjustments (COLAs). Pre-1975, the benefit increases were set by legislation.

How Will the Biden Administration Influence the Federal Reserve?

5 min read

Biden Influence the Federal ReserveWith the nation on the precipice of a transition of administrations on Jan. 20, 2021, there will need to be many roles filled both in and out of the White House. With the potential for Janet Yellen to replace Steven Mnuchin as the next treasury secretary, there is much speculation about how the Federal Reserve will be shaped by the Biden administration.

Predicting Changes to the Federal Reserve

When 2022 arrives, Chair of the Federal Reserve Jerome Powell’s term will expire. While presidents have historically given another term to first-term chairs who were appointed by the outgoing administration, there is no indication that Powell will stay on for another year. President Trump deviated from this norm when he appointed Powell to replace then-Chair Janet Yellen. Originally appointed by Obama to the Fed in 2012, Powell was first a Fed governor and a Republican politically.

First Vice Chair Richard Clarida’s term expires in January 2022. Vice-Chair of Banking Supervision Randal Quarles’ term expires in October 2021. Both vice-chairs are expected to be replaced when their terms are up.  

With two Fed board seats still unfilled, and if the Biden administration nominates Fed Governor Lael Brainard to become the next Treasury Secretary, it would create a third Fed board seat opening. Brainard is favored as a strong candidate because many economic experts see a need for the Fed and the U.S. Treasury to work together closely.    

While President Trump attempted to fill one of the empty Fed seats with Judy Shelton, on Nov. 17, the U.S. Senate declined her nomination to sit on the Federal Reserve Board of Governors; Christopher Waller still could be confirmed during the Senate’s post-election session. Assuming he doesn’t get confirmed before Congress adjourns and 2020 closes, the nomination will expire.

What’s Not Expected to Change

When it comes down to how the Fed handles monetary policy, chances are things won’t change much from the current status quo. Since the U.S. economy is still in a malaise due to the harmful effects of the COVID-19 pandemic, the Fed has made a crystal-clear statement that interest rates will remain at “near zero” for the next 36 months, at a minimum.

In August 2020, the Fed announced that it’s recommitting itself to maintain existing rates as the economy emerges from the downturn for a longer period of time, compared to past Federal Reserve efforts to spur economic growth. Then on Nov. 5, the Federal Reserve’s FOMC Statement reinforced that the federal funds rates will stay at 0 percent to ¼ percent, as long as economic growth is threatened.

Promoting Diversity

Part of the Democrats’ legislative agenda is for the Fed to take action to reduce racial inequality. The objective is for this to become part of the Fed’s existing mandate, which currently includes price stability and maximum employment. If President Biden endorses this legislation, it would likely have an even greater impact on the Fed.

Another thing to consider is that Biden is expected to appoint more minorities to the FOMC, which, with the exception of Janet Yellen serving a four-year term, has been all white men.

Many at the Fed already recognize the importance of including all Americans in opportunities to benefit from a robust economy. During August 2020, the Fed announced that it is taking its time boosting interest rates, in contrast to how it handled past economic challenges, in order to produce an economy that favors job seekers, especially minorities.

Chairman Jerome Powell explained to the media that the Fed is ready and able to implement its financial instruments to prop up the economy and ensure that the country’s emergence from COVID-19 will be assisted. Powell has called on Congress to pass more stimulus, especially to help those who lost jobs from the pandemic.

Depending on who is selected and confirmed as treasury secretary, there could be a renewed hope for recently discontinued stimulus programs, some in conjunction with the Fed. In a letter dated Nov. 19, Treasury Secretary Steven Mnuchin indicated to Jerome Powell the following Federal Reserve programs that will cease functioning on Dec. 31, 2020:

  • Program 1: Primary Market Corporate Credit Facility (PMCCF)
  • Program 2: Secondary Market Corporate Credit Facility (SMCCF)
  • Program 3: Municipal Liquidity Facility (MLF)
  • Program 4: Main Street Lending Program (MSLP)
  • Program 5: Term Asset-Back Securities Loan Facility (TALF)

Funded via Congress’ CARES Act, these programs give the Fed the power to loan as much as $4.5 trillion to markets.

Naturally, this move is currently opposed by the Fed because it takes away additional tools that can be deployed to support the economy and its underlying financial systems. Treasury Secretary Mnuchin’s actions will return $429 billion from the Fed to Congress to be re-appropriated.

One program that will be lost is the MSLP, which was recently modified to give loans as small as $100,000 per applicant. With no more access by year-end, this will likely impact smaller businesses.

It is noteworthy that the following programs were extended for an additional 90 days after Dec. 31, 2020. These include Commercial Paper Funding Facility (CPFF), Market Mutual Fund Liquidity Facility (MMLF), Primary Dealer Credit Facility (PDCF), and Paycheck Protection Program Liquidity Facility (PPPLF), used to shore-up money market liquidity. Though, depending on who is the treasury secretary in 2021, there might be a reconsideration of any or all of these programs. 

Last Minute Financial Moves for Year’s End

4 min read

Last Minute Financial Moves for Year's End 2020There are certain year-end financial transactions that must clear by Dec. 31 to be reported on the 2020 tax return. It’s important to take a good look at your financial portfolio in light of the plethora of unusual events that occurred this year. Now is a good time to see if you have fallen off track and reposition your portfolio for better opportunities in 2021.

Investment Portfolio

Despite the dramatic stock market drop that accompanied the outbreak of COVID-19 on our shores, markets have recovered remarkably well. This means the traditional strategy of harvesting gains and losses at year-end could be appropriate for many investors. When your capital losses are more than your capital gains for the year, you can claim up to $3,000 to reduce your taxable income and even carry over remainder losses on next year’s tax return.

Harvesting is also a good way to rebalance your asset allocation strategy, so you are well-positioned to meet long-term goals starting in the New Year. If you are interested in selling winners and losers to mitigate your 2020 tax liability, make sure, these transactions are fully completed by Dec. 31.

Tip: Some investors might be tempted to sell shares for a loss and then buy back into that position. However, take pains to avoid running afoul of the “wash rule,” which is when an investor purchases a “substantially identical” security within 30 days of a loss sale. Doing so diminishes the losses you can claim on your taxes, even if you buy it back in January. This also can occur inadvertently through automatic dividend and capital gains reinvestment purchases – so monitor your holdings and make sure there’s a 30-day lag between sale and reinvestment.

Retirement Accounts

For workers who invest in an employer-sponsored 401(k) plan, you have until the end of the year to defer up to $19,500 ($26,000 if you’re age 50 or older) from your paycheck. If you’d like to stash away more money, the combined annual limit for traditional and Roth IRAs is $6,000 ($7,000 for age 50+) for 2020. Note, however, that contributions for these accounts may continue to be made up until you file your 2020 tax return.

Tip: Given the potential for higher taxes under the new administration, it might be wise to max out after-tax Roth IRA contributions while taxes are low. When taxes are higher, traditional IRAs and 401(k)s tend to be more valuable because tax-deferred contributions help reduce current income. You also might want to convert a portion of traditional IRA funds to a Roth this year to take advantage of the lower tax environment. Convert only a strategic portion to avoid tipping your current income into a higher tax bracket.

Retirement Plan Withdrawals

You have only until year-end to withdraw up to $100,000 without penalty from a retirement plan if you have been directly affected by COVID-19 this year. Note, too, that subsequent income taxes on this withdrawal either can be spread out over a three-year period or avoided entirely if you re-contribute the funds over the next three years.

Tip: Legislation passed early in the year permits retirees to skip taking required minimum distributions in 2020. However, because the stock market has recovered nicely, and in light of higher taxes in the future, it might be a good idea to go ahead and take this distribution before year-end.

Education Savings Accounts

If your college student received a tuition refund this year because the class experience moved online, be aware that any refunds of College Savings 529 plans must be deposited back into that account. Otherwise, that money is considered a distribution for non-qualified expenses. Make that deposit back into the 529 account by year-end to avoid any taxes or penalties.

Tip: Parents and grandparents can reduce their estates by making a year-end gift to a student’s 529 plan. You may gift up to $15,000 ($30,000 for married couples) per beneficiary without incurring gift taxes or affecting your lifetime gift tax exemption ($11.58 million).

Will StarLink be the Next Disruption to the Telecommunication Industry?

4 min read

StarLinkWith every new project comes expectations, uncertainties, questions, opposition, and more. Elon Musk’s StarLink internet is one such project.

Just last month, on Nov. 24, SpaceX launched 60 StarLink internet satellites – making a total of more than 900 of its flat-panel satellites already on low earth orbit (LEO). This also marked the company’s 23rd space launch since the start of 2020.

But just what is StarLink; why is it a big deal; and will it replace existing internet infrastructure?

Follow along for information already in the public domain that will help answer some of these questions.

What is StarLink?

StarLink is an initiative by SpaceX that aims to provide internet from space. Its goal is to do this through a low earth constellation of micro-satellites that promise high speed and low latency internet access to all parts of the world. What this means is that you can access fast internet from any corner of the world, whether in the forest, in the middle of the ocean, or anywhere else.

How Does StarLink Internet Work?

First, a little history. Product development started in 2015, and by February 2018, two prototype test flights were launched. In May 2019, the first large deployment made up of 60 operational satellites was launched. Since then, it has been a continuous process to send more satellites into space. SpaceX intends to have launched 12,000 satellites by 2028, with an ambitious target of 1,440 per year.

So how does StarLink internet work? Unlike other satellites that are placed in higher earth orbits, StarLink satellites are placed in low earth orbits. The high-placed satellites have to travel long distances, which leads to high latency – and this is what SpaceX intends to solve.

Will StarLink Replace ISPs?

Currently, service providers like Verizon and AT&T are already spending millions to reinforce their fiber infrastructure reach to cover more ground. In addition, 5G is already available in many areas and promises superior reliability, negligible latency, and high speeds. Yet more StarLink satellites are being sent to space.

In fact, if the project is successful, there will be a constellation of satellites surrounding the earth as Musk plans to have an additional 30,000 added to the initial approved 12,000 (although this doesn’t go well with astronomers, who have raised concerns that this will ruin the night sky).

So, will StarLink replace other ISPs? There is no telling the long-term plan that SpaceX has, but one thing that Musk has given an assurance on is that he intends to serve only remote areas and mobile applications, such as in planes, trains, and ships.

If we were to compare StarLink and 5G, you would find that they do have different characteristics. However, it would cost a lot more for 5G to cover large areas, while StarLink would be able to cover most of the world if all satellites are placed correctly. Nevertheless, the two may work together. For example, in situations where there is no internet connection, StarLink could provide internet backhaul to 5G remote towers.

If you are in a densely populated city, you will still need your ISP. According to Musk, StarLink can’t work in cities with dense populations due to bandwidth limitations.

When Will StarLink be Available to the Public?

On Oct. 26, 2020, a public beta test was launched in select areas in the northern United States and Canada. StarLink internet is expected to be available in more regions in 2021.

One of the few instances of when StarLink has publicly been reported on is by Washington emergency responders in early August when the organization offered the internet to areas devastated by wildfires. Following an interview with CNBC, emergency telecommunications leader Richard Hall praised StarLink as being quick to set up and reliable.

As we wait for the internet to go public, one sure thing is that there are a lot of interested people. In March 2020, SpaceX got a license for up to one million user terminals from the Federal Communications Commission (FCC). By August, there were already more than 700,000 people registering interest across the United States, and so the company asked for expansion for up to 5 million user terminals.

Final Thoughts

As already pointed out, the StarLink internet might not initially disrupt the monopoly of the telecom sector. Instead, it could be a beneficial project and even complement the telcos.

Keeping in mind that the internet has played a great role in improving economic opportunities and easing communication, StarLink could be the bridge to help solve the digital divide by providing internet to remote areas.