EU Commissioner Warns “Any ‘Sensible’ Person Should Oppose Further Russia Sanctions”

Obama won’t be happy! “It would harm everybody, the Europeans and the Russians,” warned Olli Rehn, the European Commissioner for Economic Affairs, adding that “any ‘sensible’ European Union citizen should oppose further sanctions on Russia because of the economic cost for Europe.” As Merkel and Obama cozy’d up for discussions this morning, we can only imagine the promises being made if only she will support his crusade (which she clearly was unwilling to judging from the press conference). Perhaps she should check in with her nation’s CEOs (who have vociferously demanded no more sanctions) and, as Rehn acknowledges, the slowing Russian economy is already having a “negative impact” on Finland and Austria, and “that economic fallout probably will spread to Germany, Poland and the Baltic countries.”

 

As Bloomberg reports, Europe should shun Russia sanctions on economic cost, according to Olli Rehn…

Any “sensible” European Union citizen should oppose further sanctions on Russia because of the economic cost for Europe, EU Commissioner Olli Rehn said.

 

It would harm everybody, the Europeans and the Russians,” Rehn, the European Commissioner for Economic Affairs, said in an interview in Vienna today. Yet “it can only be avoided if Russia is committed to avoiding aggravation and escalation of this crisis,” he said.

 

As EU governments weigh economic sanctions on Russia for failing to stop separatists in Ukraine, the slowing Russian economy is already having a “negative impact” on Finland and Austria, Rehn said. That economic fallout probably will spread to Germany, Poland and the Baltic countries, he said.

 

Ukraine’s conflict escalated as the army sent armored vehicles and artillery today in a bid to retake the eastern town Slovyansk, a stronghold of pro-Russian separatists. Russian President Vladimir Putin had demanded Ukraine pull back troops as his forces remain massed across the border.

 

Everybody should try to reduce tension in eastern Ukraine and thus try to prevent an escalation of this regional crisis into a European-wide crisis,” said Rehn, who is on leave from his EU post while running for a seat in European Parliament elections starting May 22.

And there it is… with Ukraine now operating its anti-terrorist campaign, any Putin reaction will leave the West useless as Europe is broadly and loudly against further sanctions… pitting the US against the rest.

Merkel confirmed that economic sanctions are unlikely before May 25th elections.




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The Last Two Times This Happened, The Stock Market Crashed

Wolf Richter   http://ift.tt/NCxwUy   http://ift.tt/Wz5XCn

The last two times when margin debt reversed and fell after a record-breaking spike, all hell broke loose. In 2000, it was simultaneous. In 2007, it was delayed by a few months. Today, on the surface, everything is still hunky-dory. The Dow is just fractions below its all-time high that it set on Wednesday. But beneath the surface, parts of the stock market are already coming unglued, and holders of momentum stocks have been eviscerated.

The Nasdaq Biotech Index had beautifully shot up along an exponential curve. Then the hot air hissed out of it, and it swooned 21% in six weeks. The index includes big players, like Biogen, not just startups with big dreams and no drugs. After some buying on the dip, the index closed on Thursday down "only" 15%. But that hasn’t saved smaller momentum stocks: Exelixis is down 58% from its 52-week high and 92% from its all-time high shortly after its IPO in early 2000; Halozyme is down 60% from its high in early January. And so on.

In the social media space, the bloodletting has been ugly. The Social Media ETF SOCL is down 23%, but stronger stocks like Facebook (down 16% from its high a month ago) paper over individual fiascos, like Twitter, which has plummeted 48% from its peak last year to below its IPO price.

Other momentum stocks are getting annihilated: Amazon down 25% since January, Netflix down 27% in just two months. From their peaks, Pandora crashed 39%, Gogo 63%, and Imperva, a Big Data security outfit, 65%.

Then there’s the “Cloud,” the single most hyped miracle-sector last year. Escalator up, elevator down. Workday, which sells cloud-based corporate software, went public in late 2012 and soared. Two months ago, it sprung a leak and the hot air hissed out of it. It’s down 36%. Veeve, which sells cloud-based healthcare software, has crashed 60% from its November high, shortly after it had gone public. Salesforce is down 22%. ServiceNow lost 30% over the past two weeks. LinkedIn reported a loss after hours on Thursday and got hammered. It’s now down 40% from its peak last September. Jive Software is down 71% from its high in 2012.

They aren’t just outliers. They’re included in the index of 37 publicly traded cloud companies that VC firm Bessemer Venture Partners put together and updates on a weekly basis. From the beginning of the data series in January 2012 to February 27, 2014, the index had soared 129%. But in the two months since then, the index gave up more than half of its gains and lost $58 billion in market cap! 

Dizzying hype, smoke, and mirrors allowed Wall Street and Silicon Valley to slap crazy blue-sky valuations on startups that are all now trying to go public, 34 of which, at last count, have valuation of $1 billion or more. Airbnb, a bed-and-breakfast site, and Dropbox, a cloud software company, top the list with valuations of $10 billion. CIA startup Palantir [read…. Surveillance Society: If You Drive, You Get Tracked] has a valuation of $9 billion.

By comparison, Box's $2-billion valuation doesn’t seem like a lot. But it’s a tiny money-losing outfit offering cloud-storage and collaboration software – a glorified online file cabinet – in a crowded sector with low barriers to entry, dominated by huge companies such as Google and Microsoft, and populated by startups such as Dropbox. Not exactly promising. In 9 rounds of funding, it raised a total of $399 million. One thing it does really well: burning cash. Last year, it burned $92 million. As of January 31, it had $109 million left. People are already projecting the out-of-money date. So it would be helpful if this thing could be dumped before then into the lap of a blindly adoring public.

But that blindly adoring public has evaporated apparently. And so Box decided to delay its IPO until June or later, the Wall Street Journal reported. "Since filing, we've planned on going public when it makes the most sense for the market," a spokeswoman explained. And apparently, Box’s $2-billion valuation in this crashing cloud market doesn’t make enough sense.

There may be another option for it. Surely if Facebook forked over $19 billion for WhatsApp which has negligible revenues and 50-some employees, or if Google blew $3.2 billion on Nest, which is trying to market a home thermostat, why not blow some megabucks on Box. But what if the big players are seeing what everyone else is seeing, which is a crash back to reality? They might not feel like propping it up singlehandedly.

Just then, the one thing that wasn’t supposed to happen happened. Margin debt declined.

Margin debt, after it has been spiking for months, has a nerve-racking habit of peaking right around the time stocks crash. In the last fifteen years, it had three majestic spikes, each greater than the prior one.

It began to spike in January 1999 during the final throes of the dotcom bubble. In March 2000, it hit a record of $278.5 billion, or 2.66% of GDP. In April, it declined. An epic stock-market crash had just started.

It began to spike in September 2006 to max out in July 2007 at $381.4 billion, or 2.60% of GDP. In August, it declined. In November, the fetid air started hissing out of the market. Momentum stocks got killed first, and as they plunged, margin calls went out, and forced selling set in, and the selloff turned into a rout.

In August 2012, margin debt spiked again, and this time, it turned into a phenomenal spike that set a new record in July 2013 and continued going for the stars. In February, it hit $465.7 billion, 22% above the prior all-time record. And 2.73% of GDP. The highest ratio ever!

It isn’t the spike per se that matters, but when the spike reverses. So in March – the New York Stock Exchange released the numbers Wednesday evening – margin debt declined by over $15 billion. Instead of plowing $15 billion in barrowed money into stocks, as they might have during the upward momentum of the spike, investors yanked out $15 billion – for a difference of $30 billion compared to prior months. And that moolah they yanked out doesn’t sit on the sidelines. It dissipated into thin air by being used to pay off debt. The last two times that reversal happened, the whole construct came tumbling down.

Parts of the market have already tumbled. Momentum stock traders have taken a drubbing, and some of those who trade on margin received margin calls and were forced to sell, and others dumped their positions to avoid getting wiped out. It’s bloody out there, in momentum stocks. They’re the ones that go first. And the last two times, they didn’t go solo.

That’s how it always starts: with a deadly mix. Home sales are collapsing while inventories are soaring in six housing markets that had been white-hot just a few months ago. Read…. Implosion of Housing Bubble 2 Hits Six Cities in the West




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David Harsanyi on John Kerry’s ‘Apartheid’ Myth

After The Daily Beast released
excerpts of his warning world leaders that Israel would devolve
into an “apartheid” state if it failed to agree to a peace deal,
Secretary of State John Kerry walked back his comments. “If I could
rewind the tape,” he explained, “I would have chosen a different
word to describe my firm belief that the only way in the long term
to have a Jewish state and two nations and two peoples living side
by side in peace and security is through a two-state solution.”

This shouldn’t make anyone feel better, argues David Harsanyi.
It’s not just Kerry’s incendiary use of “apartheid” that’s the
problem but the well-worn canard about Israel that Kerry rests his
position on.

View this article.

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Nick Gillespie Talking Donald Sterling, Brendan Eich, the “Politicization of Just About Everything,” and More

The
good folks at Ace of Spades HQ had
me on their podcast last night. It’s a fun, wide-ranging discussion
about libertarianism, racism, Donald Sterling, and “the
politicization of just about everything.”

Click here
to listen in.

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Washington’

Today the Washington State Liquor Control Board (LCB), which has
received more than 2,100 applications for the 334 marijuana
retailer licenses it plans to award, posted
the results of the lotteries it conducted to winnow down the list
for each locality. The applicants with the lowest lottery numbers
will be first in line for licenses, assuming they pass muster with
the state. In Seattle, for instance, the LCB picked 58 applicants
(out of more than 400) by lottery. Since it plans to license 21
stores in Seattle, the 21 applicants with the lowest numbers will
receive licenses if they meet the state’s requirements. If any of
them don’t, applicants further down the list will have a
chance.

Licensees will also need local approval before they can open
stores. Nearly 100 cities and counties have imposed
temporary or permanent bans on marijuana businesses. Washington
Attorney General Bob Ferguson
says
 those bans are permitted by I-502, the state’s
legalization measure. The jurisdictions with bans include Yakima,
where the LCB nevertheless picked seven finalists for five
licenses, and Walla Walla, where three finalists are vying for two
licenses that won’t be worth much. Fifty or so local governments,
including Seattle, Spokane, and Tacoma, have approved
interim or permanent zoning rules for cannabusinesses.

One of the retail license finalists is Scott O’Neill, manager of
Pacific Northwest Medical, a dispensary in Spokane owned by Sean
Green, who
received
Washington’s first marijuana cultivation license in
March. O’Neill ranks eighth on the lottery list for Spokane, which
had been allotted eight cannabis outlets. He hopes to open a store
at at 1919 East Francis Avenue, which is also the home of
Green’s Kouchlock Productions. The Spokane Spokesman
Review
 reports
that O’Neil “hopes to open the store by July if he can secure
marijuana from growers who are slowly being licensed.” So far the
LCB, which received more than 2,800 applications for cultivation
licenses, has awarded 25. The LCB
plans
to “begin issuing retail licenses no later than the first
week of July.” As O’Neill tells The Spokesman Review, “The
big question in the beginning is going to be getting product on the
shelves.”

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“Please Stop Me Before I Vote For A Bought-&-Paid-For Demopublican Again”

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

If we only voted for unbuyable candidates, money would become poison in politics rather than mother's milk.

The solution to money in politics is simple: stop voting for politicos who accept millions of dollars in bribes, ahem, campaign contributions and who court lobbyists. It's really that easy: stop rewarding those who collect millions and start punishing them by refusing to vote for any politician who accepts more than $100 from any entity in any one election cycle.

As with so many other issues, we have been well-trained to expect a centralized authority to save us from ourselves: in effect, we're asking the Supreme Court, Congress, etc. to please stop us before we vote for a bought-and-paid-for politico again.

Nobody forces us to vote for the candidate who raises the most money and blows it on media buys to persuade us that they're not bought-and-paid-for. But think about it: the very fact this craven toady can afford to spend millions of dollars on advertising proves he/she is well and truly bought-and-paid-for.

The only exception is multi-millionaires who spend their own millions attempting to persuade us that they'll be more independent that the toadies begging for millions, but a cursory examination of the record of millionaires in office (gosh, the vast majority of craven toadies turn out to be millionaires) finds that once in power, these "I bought myself" millionaire politicos are no different than the bought-and-paid-for politicos.

Nothing will change until the candidates who raise and spend millions trying to persuade us they're not bought-and-paid-for lose elections, not on their platform or party ideology but on the simple fact that they're corrupt to the core.

Politics will change when the candidate who–

1. refuses donations above $100 from any entity–person, company, etc.
2. refuses anonymous donations or donations from slush funds that don't publicly list who operates and funds the slush fund
3. publicly lists every donation and donor on a website
4. refuses to meet paid lobbyists in any circumstance
5. refuses all gifts from anyone, including constituents–every gift is donated
6. refuses to sign secret "loyalty oaths" to powerful lobbies such as the NRA, public unions, Sierra Club, etc.

–wins the election not on ideology or platform issues but on the integrity of his/her campaign.

You want to clean up politics? It's easy: make sure every candidate who accepts millions of dollars for campaign advertising, welcomes gifts from paid lobbyists and makes secret promises to powerful national lobbies loses every election.

Alternatively, only vote for candidates who run a grassroots social-media campaign that costs next to nothing, who refuse all donations above $100, who leave footprints on the rear ends of lobbyists and who tell all the powerful lobbies to shove it where the sun doesn't shine because they're not pledging anything but not being for sale.

If we only voted for unbuyable candidates, money would become poison in politics rather than mother's milk. We don't need a centralized authority to save us, we can save ourselves if we throw out all the bought-and-paid-for politicos instead of rewarding them with our lemming-like approval of their corruption.




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Should Rand Paul Go on the Offensive?

Over at The American
Conservative,
 Leon Hadar
argues
that Sen. Rand Paul (R-Ky.), who he thinks “seems to be
playing defense on issues like Ukraine,” should go on the offensive
on foreign policy, given that recent polls show most Americans
agreeing with Paul when it comes to non-interventionism.

Hadar thinks that Paul’s positioning on foreign policy suggests
that he is cautious about annoying the GOP’s interventionists.
Paul, he argues, should hold a series of public events on foreign
policy in places such as Iowa and New Hampshire:

Here is an idea: Paul could convene a series of public forums
around the country to discuss the United States’s role in the
world, in which he could have a dialogue with “regular” Americans
in places like Iowa and New Hampshire on how the U.S. should
respond to the crises in Ukraine or Syria. Such forums could bring
together Republican and Democratic speakers as well as political
scientists and historians from local colleges, and could conclude
with the attendees voting for or against proposed resolutions.

Hadar is right to highlight that most Americans agree with Paul
on foreign policy. Reason‘s Ed Krayewski
blogged
 here recently about a Wall Street
Journal
/NBC News poll that Hadar mentions. The survey
shows that far more Americans today (47 percent) believe the U.S.
should be less active in world affairs than did in 2001 (14
percent). A Pew
poll
 from last year, also mentioned by Hadar, showed 53
percent of Americans believing that the U.S. “should mind its own
business internationally.”

These polls are good news for Paul, who since entering the
Senate in 2011 has made a name for himself as one of the most
outspoken non-interventionist lawmakers in the GOP. I agree that
Paul should highlight his non-interventionist credentials in Iowa
and New Hampshire ahead of his widely anticipated 2016 presidential
campaign. It would be refreshing to have a major presidential
candidate speak out in favor of a foreign policy much of the
American public, but not many of their representatives,
support.

That said, his arguments might be
heard by an indifferent public
. Americans may be fed up with
interventionist foreign policies, but it remains to be seen if
foreign policy will be a priority in the 2016 campaign.

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Relatively Small Social Networks Responsible for Large Portion of Shootings in Chicago, New York City, According to Study, Police

can you count?A pair of stories touch on
similar issues of gun violence in New York City and Chicago. First,
a claim from the New York Police Department (NYPD) about who is
responsible for approximately 40 percent of shootings in the Big
Apple,
via the AP
:

There are more than 300 of them in New York — violent
crews of dozens of 12- to 20-year-olds with names such as Very
Crispy Gangsters, True Money Gang and Cash Bama Bullies.

Police say these groups, clustered around a particular block or
housing project, are responsible for about 40 percent of the city’s
shootings, with most of that violence stemming from the smallest of
disses on the street, Facebook, Twitter or Instagram.

“It’s like belonging to an evil fraternity,” said Inspector Kevin
Catalina, commander of the New York Police Department’s gang
division. “A lot of it is driven by nothing: A dispute over a girl
or a wrong look or a perceived slight.”

The trend of smaller, younger crews has also been seen in Chicago
and Northeast cities over the last few years as police have cracked
down on bigger, more traditional gangs, experts said. While the
Bloods, Crips and Latin Kings still exist, operating such
money-making schemes as drug dealing, their members are usually
older and understand the timeworn mantra of organized crime:
violence is bad for business.

For years police in New York City and other cities in the Northeast
and around the country have specifically targeted organized, or
“traditional,” gangs like the Bloods and Crips. It shouldn’t be
surprising that those efforts have led to the replacement of these
gangs by even more violent successors. Law enforcement also
understands violence is bad for business. It’s axiomatic for the
drug war, where drug use is combatted, literally, by introducing
violence into the otherwise non-violent acts of buying, selling,
and using certain subsatnces.

Meanwhile, a
research study out of Yale University
follows up on previous
research about the small homicidal social networks in Chicago by
extending it to non-fatal shootings.
Chicago Magazine explains
:

Papachristos constructs a social network—not a virtual
one in the Facebook sense, but a real one of social connections
between people—by looking at arrestees who have been arrested
together. That turns out to be a lot of people in raw numbers,
almost 170,000 people with a “co-offending tie” to one another,
with an average age of 25.7 years, 78.6 percent male and 69.5
percent black. It’s also a large percentage of all the individuals
arrested: 40 percent of all the individuals arrested during that
period.

Within the entire group, the largest component of that whole
co-offender group has 107,740 people.

Within the timeframe—from 2006 to 2010—70 percent of all shootings
in Chicago, or about 7,500 out of over 10,000, are contained within
all the co-offending networks. And 89 percent
of those shootings are within the largest
component.

The study’s results would suggest that assaulting the gun rights
of the broader communities in Chicago, New York City, or the rest
of the country is a nonsensical non-solution to gun violence. And
by the NYPD’s own assertions, neither is “stop and frisk” a
solution. The numbers of “crews” the NYPD estimates works out to
between 7,000 and 14,000 youths (depending on how many dozen are in
any crew) responsible for 40 percent of shootings. It’s
a tiny subset not only of the total population of New York City but
of any demographic group the NYPD might decide to
profile.

Neither of those rights-violating approaches, anti-gun
legislation or stop and frisk, make sense to curb violence, but
they are easier than the kind of police work (like walking beats)
or community work (like wider access to gun rights) that could
actually put a damp on gun violence.

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States Americans Want to Flee Kind of Suck on Freedom and Taxes

States to leaveLots of Americans want to get the hell out of
wherever they are—half of Illinois residents wish they lived
elsewhere, and almost as many Connecticut and Maryland residents
share similar sentiments. I’ve been to those places and, frankly,
who can blame them?

But as unerring as my judgment is on such matters, there are
more concrete reasons to put distance between yourself and the
White Sox or Martin O’Malley’s haunts in Annapolis. Checking the
list of states where people don’t want to be against similar lists
of states that suck on freedom and taxes finds some interesting
correlations.


According to Gallup
, an average of 33 percent of any state’s
residents want to move across the state line. But roughly half of
Illinois and Connecticut residents, and nearly as many (47 percent)
of Maryland residents want to hit the road.

State taxes too damned highAs it turns out, residents in
all three states appear toward the top of an earlier Gallup poll of
those who think their state taxes are too damned high. With average
state tax disgruntlement standing at 50 percent across the union,
76 percent of Connecticut residents say they’re overtaxed, as do 71
percent of Illinois residents and 67 percent of Maryland residents.

And, in fact, a
WalletHub ranking
of states by the degree to which they tax
their residents finds a remarkable degree of correlation between
the two. Illinois comes in at 47 on the list (the higher the
number, the worse the gouging)—38 when you adjust for cost of
living. Connecticut ranks at 48 (49 adjusted), and Maryland ranks
at 41 (44 adjusted).

WalletHub

Hmmm.

But that doesn’t mean it’s all about the money. There’s also an
interesting correlation between states people want to see in the
rearview mirror, and states poorly ranked for personal and economic
freedom by the Mercatus Center. Mercatus scores each state on over
200 issues including tax burden, property rights, marijuana laws,
gun restrictions, government spending, occupational licensing,
marriage freedom, and many more concerns.

Obviously, the final results of such rankings depend to some
extent on how you weight each type of freedom, and there’s a lot of
subjectivity inherent in such comparisons. But using Mercatus’s
default score,
Illinois ranks at 45 out of the 50 states in terms of freedom,
Connecticut comes in at 40, and Maryland takes its place at 44.

Gee. Places that boss you around and charge heavily for the
privilege tend to send people drifting toward the exit? Who would
have guessed?

Correlation across the lists is not exact. Some states rank
poorly on both personal freedom and taxes, and yet hold the
affection of their residents. For example, only 23 percent of
Hawaiians want to leave the state behind even though it’s at 47 on
the freedom index and 48 on the tax list, once adjusted for cost of
living. Perhaps awesome surfing and a gorgeous climate can offset a
host of other annoyances.

If that’s the trick, that’s going to be a tough model for
Illinois to emulate.

x x

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The New Call of Duty Trailer is a Monologue About the Perils of Nation Building

There’s a new entry in the massively
popular Call of Duty video game franchise coming later
this year: Call of Duty: Advanced Warfare. Judging by the
first trailer, which was released this morning, it appears to be
about, ah, the challenges of nation-building.

Also: shooting things. Lots and lots of shooting things.

And apparently the game’s single-player story stars House of
Cards’
leading man Kevin Spacey, or a digital version of him
anyway. Today’s trailer is built around a delightfully menacing,
scenery-chewing Spacey monologue about how setting up a democracy
in a foreign country is actually really hard because of various
cultural complications…which of course leads him to argue that
what’s really needed is a strong authoritarian leader. 

It’s a little silly, a little provocative, and a lot of fun, in
part because it appears to focus more on story and character than
the last few franchise entries, which have grown increasingly stale
even as the series has remained among the most popular and
successful in the video game market. (Although sales of last year’s
installment, Ghosts, were down somewhat and generally
considered disappointing.) 

Watch the complete trailer below:

I’ve played all of the Call of Duty games since 2007’s
Modern Warfare, and what’s always struck me about the
series, as well as other military shooters, is the way they are
reflexively pro-war, or, at the very least, pro-combat. It’s built
into the essence and structure of the gameplay: As a player, you’re
there to fight, and your only real choices are about how to go
about the process of shooting and stabbing and blowing stuff up.
Playing the games basically requires you to embrace their (virtual,
fake) wars, and the blustery combat ethos of the game
world. 

There’s a kind of exuberant militarism to the series—Modern
Warfare 2
interspersed
quotes from Dick Cheney and Donald Rumsfeld
into the
gameplay—that isn’t so much political as it is adamantly cynical.
The games aren’t really trying to make an ideological point;
they’re trying to provoke people while enthusiastically embracing
the various trappings and excesses of their playable-action-movie
premises. Judging by the new trailer, the next Call of
Duty
looks like more of the same. 

Be sure to
check out Reason‘s new Video Game Nation issue
, which
looks at many of the interesting and unexpected ways that games are
changing our politics and culture. 

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