Porn in America Is a Story of ‘Freedom, Survival,” Says Adult-Film Awards Founder Paul Fishbein

“I watched friends get put on trial and go to jail just for selling an adult film,” said Paul Fishbein, founder of AVN magazine, at the annual AVN Awards Saturday night.

Known as the “Oscars of porn,” the awards show is a high-production value affair hosted in Las Vegas that almost could be the Oscars, if you overlook the myriad references to anal and the award categories like “best all girl group sex scene.” In any event, it’s the kind of out-and-proud celebration of pornography that would have been unimaginable when Fishbein and two friends founded AVN magazine in 1983 and the AVN awards a year later.

Back then, the AN awards ceremony was “a small wine and cheese reception held in a hotel meeting room,” as Georgina Voss writes in Stigma and the Shaping of the Pornography Industry

But the porn industry in America is a story of “freedom” and “survival,” Fishbein said Saturday night, accepting a “Visionary Award” from the company he sold in 2010. 

“The choice of Paul Fishbein as this year’s Visionary was an easy one,” said Tony Rios, current CEO of AVN Media Network. “Paul is someone who understood very early on the importance of the adult film industry, and that it was going to be a moving force in the consumer marketplace in those early days of home video. He has continued to deal with adult entertainment in a serious way, and … he’s not getting this award because he’s family—he’s getting this because he truly deserves it.” 

Fishbein has seen the industry adapt to many technological changes, as well as growing public acceptance of porn and shifts in the legal and political climate. But he warned awards-show attendees last night not to be complacent, mentioning the California condoms-in-porn mandate that will be on the ballot next November and the Department of Homeland Security’s recent takedown of gay escort site

“I’ve watched for 34 years as the adult industry has taken bullet after bullet,” said Fishbein. “Somebody somewhere is always trying to find a way to censor speech and prevent you from doing what you’re doing.” 

from Hit & Run

You Can Now Step Inside a Salvador Dalí Painting Thanks to VR

Salvador Dalí is known for his surrealist paintings featuring melting clocks and trippy landscapes. But now the Spanish painter’s work is going into another dimension with The Dalí’s Museum new “Disney and Dalí: Architects of the Imagination” exhibit.

Fast Company reports:

“To help celebrate the opening of its new exhibition ‘Disney and Dalí: Architects of the Imagination’ on January 23rd, which looks at the relationship between the artist and Walt Disney, the museum enlisted agency Goodby Silverstein & Partners to create ‘Dreams of Dalí’ to give viewers a new way to experience his work.

Users will be able to move around inside and explore the elements in the painting, and the VR experience also incorporates some of the recurring motifs from his other paintings in the museum’s permanent collection, including Weaning of Furniture Nutrition (1934), Lobster Telephone (1936) and First Cylindric Chromo-Hologram Portrait of Alice Cooper’s Brain (1973).”

The exhibit is fitting for Dali, who was unapologetic in his love of commerce. In the video below, Reason TV documents their visit to the Dali Museum to explore surrealisms most famous figure. 

Salvador Dali attained international acclaim as a young artist in the 1930s. In 1933, curator Dawn Ames described Dali as “surrealism’s most exotic and prominent figure.” Surrealist poet Andre Breton wrote that Dali’s name was “synonymous with revelation in the resplendent sense of the word.” In 1936, Dali made the cover of Time magazine.

Dali didn’t simply sit back and enjoy the acclaim. He exploited it. Dali was a shameless self-promoter and admitted to having a “pure, vertical, mystical, gothic love of cash.” Ultimately, it was Dali’s unapologetic drive for fame and fortune that proved to be too surreal for the Surrealists. Andre Breton, whose opinion of Dali soured over time, created an anagram of Dali’s name: Avida Dollars (“greedy for money”). Breton and the other Surrealists, many of whom were closely allied with the French Communist Party, expelled Dali from their group in 1939. Dali responded, “I myself am surrealism.”

Over the next several decades, Dali became increasingly flamboyant and controversial. He arrived at a lecture in Paris in a Rolls Royce filled with cauliflower. He did commercials for Alka-Seltzer and chocolate bars. He was thrilled when Sears sold his prints to the masses. He signed sheets of blank lithograph paper and sold them for $10 a sheet. As Dali became increasingly popular with the masses, however, his reputation among art critics suffered.

“There was an era when being a successful artist made you suspect, made your art suspect,” says Hank Hine, executive director of The Dali Museum. “When I was going through school, we were not shown Dali. He was not part of the canon. Yes, we would buy posters, we could find his images, but largely he was not part of the serious discussion of values, which is what constitutes serious art. I believe that has changed.” Others in the art world agree. The Philadelphia Museum of Art’s Michael R. Taylor, for example, believes that “Dali should be ranked with Picasso and Matisse as one of the three greatest painters of the 20th century.”

from Hit & Run

“How Bad Can Texas Get?” Goldman Answers

On Friday, we noted that at least some local businesses in Texas are sympathetic to the pitiable plight of the state’s beleaguered oil patch workers.

Houston-based Gramercy Cleaners on Richmond avenue, we observed, is demonstrating their compassion for the imploding energy sector by offering service discounts.

Much like Calgary and many other oil boom towns north of the border, many a Texas city is feeling the squeeze of rock bottom crude prices. As we documented in “The Next Chicago? Houston Faces Pension Crisis In Latest Example Of Local Government Fiscal Folly,” Houston is staring down a $3.2 billion funding gap and reduced revenue from oil and gas ops isn’t doing anything to help.

“Home sellers are slashing prices and offering incentives to keep buyers from walking away from contracts as an 18-month oil slump buffets this city’s once-booming housing market,” WSJ wrote last week, underscoring the impact “lower for longer” is having on the city. “Home-construction permits in the area plunged 26% from a year earlier in the third quarter, while December sales of existing single-family houses fell nearly 10% from the same month of 2014.”

In short, a year of crude carnage has wreaked havoc upon what, until last year anyway, was the engine driving the “robust” US labor market

As we showed in November, layoffs in Lone Star land far outrun job losses in any other state:

“The Texas recession is only in its early innings,” we said on Friday, because we are just now beginning to witness the bankruptcies and shut-ins that will soon become endemic and sweep across the entire US oil patch as revolvers are reigned in and Wall Street suddenly refuses to finance uneconomic producers’ funding gaps.

So what happens when the pain really begins to hit home in Texas, you ask? And what are the implications for the broader economy considering the state has for years served as a kind of counterbalance to a job market that increasingly resembles a feudal system as opposed to the manufacturing-led middle class utopia American enjoyed five decades ago?

Here with some answers is Goldman who sets out to address the US oil patch’s burning question: “How bad can Texas get?”

*  *  * 

From Goldman

The historical episode most similar to today’s ‘lower for longer’ environment is the oil bust of the 1980s, when WTI oil prices fell from $31/bbl in 1984 to $10/bbl in 1986. Given its high exposure to the energy sector, Texas experienced significant stress in the 1980s. The unemployment rate in Texas rose sharply to 9.2% in 1986, an all-time high for the state. Real house prices fell 30% peak to trough, and the number of bankruptcy filings (including both business and non-business filings) more than doubled from 1984 to 1986.

The experience of the 1980s has naturally raised concerns over oil and Texas today. When banks reported their 2015Q4 earnings recently, bank executives stated that they are increasing reserves in anticipation of losses in the energy sector. In this Global Markets Daily, we compare the experience of households and businesses in Texas during the two oil busts. We find that damages in Texas have been significantly more contained thus far relative to the 1980s.

Loans backed by properties in the oil-producing states of Texas, North Dakota, Oklahoma and Louisiana comprise 10% of US commercial mortgage-backed security collateral, so the performance of commercial real estate in these areas is in focus for structured product investors. The office vacancy rate in Houston increased sharply in the early 1980s, likely driven by a combination of two recessions, elevated supplies and the oil price plunge. In 2015, the vacancy rate of Houston office properties also moved up, but remains far below the levels seen in the 1980s. We expect the vacancy rate to climb further over the next few quarters, posing downside risk to loans backed by Houston commercial properties. But we do not think default rates will match the 1980s experience.

Turning to the residential sector, the 2014 oil price decline has so far manifested itself in the housing market quite differently from the 1980s experience. The right panel of Exhibit 1 shows that the share of residential mortgages in foreclosure in Texas increased sharply after the 1985 oil price peak. In contrast, the Texas foreclosure inventory has continued to edge down over the past year. One explanation for this difference may be that the housing market is still recovering from the 2009-2011 foreclosure crisis. The impulse from the healing process so far outweighs the shockwaves from lower oil prices.

The Texas housing market may be more resistant to mortgage defaults and foreclosures than other states in the US. Even with the large house price decline in the 1980s, foreclosure inventory in Texas peaked at below 2%. In contrast, foreclosure inventory surged to 6% in Arizona and California in 2009 and over 10% in Florida and Nevada in 2010. One reason for this difference may be the home equity restrictions in place in Texas. Texas residents are generally prohibited from taking out cash-out refinancings or second liens that would raise the total loan-to-value ratio to above 80%.

Five quarters after oil prices peaked, business and non- business bankruptcy filings increased 30% and 70%, respectively, in the 1980s. In contrast, both types of bankruptcy filings fell by about 10% from 2014Q2 to 2015Q3. In the case of non-business filings, the more limited response in the current episode may partly be due to effects of the 2005 US bankruptcy legal reform, which introduced tighter eligibility requirements for consumers filing for bankruptcy. 2015Q4 US bank earnings releases featured increases in loss reserves, in anticipation of possible future losses on energy exposures. However, the losses experienced by the banks to date have so far been limited. Our bank analysts believe the recent sell-off in bank equity is pricing in a worse loss scenario than is likely.

*  *  *

In other words, things are going to get bad but not, Goldman figures, as bad as they could be.

Muppets should take that with a grain of salt because as Scott Merovitch, Houston division president for builder Chesmar Homes told WSJ, Texas may have figured out “how to diversify [its industry makeup] a lot, but it’s still going to ebb and flow with oil and gas.”

via Zero Hedge Tyler Durden

New Jersey Kids Finally Have the Right to Shovel Snow

ShovelFast on the heels of the federal legislation granting kids the right to walk to school comes this new ordinance in New Jersey: The right of kids to shovel.

As reports:

Legislation sponsored by Senator Mike Doherty (R-23) ensuring that kids have the right to offer snow shoveling services before storms without municipal approval was signed into law by Governor Chris Christie.

The law was prompted by a sorry story from last year, when two Bound Brook, New Jersey, high school students tried to make some money shoveling their neighbors’ driveways, only to find out this was against the law:

School was closed for the blizzard that wasn’t, but there was still enough snow on the ground that two high school seniors thought they could make a few extra bucks.

In the process, Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations.

The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop.

The story was shared on a popular Bound Brook Facebook group by a resident who saw Schnepf being questioned by police after coming to his door.

The situation was this: Bound Brook had a law against unlicensed solicitors and peddlers.

In the end, the kids weren’t arrested and the police brass insisted the intervention was only necessary because the snow made being outside unsafe. What’s more: The pair managed to get five jobs by early Tuesday afternoon, earning between $25 and $40 per house.

That’s what my kids are charging, too, if anyone’s interested. We’re in Jackson Heights in Queens, New York City.

Fast on the heels of the Federal legislation allowing kids the right to walk to school comes this new ordinance in New Jersey: The right of kids to shovel.

As reports:

Legislation sponsored by Senator Mike Doherty (R-23) ensuring that kids have the right to offer snow shoveling services before storms without municipal approval was signed into law by Governor Chris Christie.

The law was prompted by the sorry story just about a year ago, when two Bound Brook, NJ, high school students tried to make some money shoveling their neighbors’ driveways, only to find out this was against the law:

School was closed for the blizzard that wasn’t, but there was still enough snow on the ground that two high school seniors thought they could make a few extra bucks.

In the process, Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations.

The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop.

The story was shared on a popular Bound Brook Facebook group by a resident who saw Schnepf being questioned by police after coming to his door.

The deal was simply this: Bound Brook had a law against unlicensed solicitors and peddlers.

In the end, the kids weren’t arrested and the police brass insisted the intervention was only because the snow made being outside unsafe. What’s more:The pair managed to get five jobs by early Tuesday afternoon, earning between $25 to $40 a house.

That’s what my kids are charging, too, if anyone’s interested. We’re in Jackson Heights, Queens. Give a shout!

from Hit & Run

Wrong For The Right Reasons: And Why It Matters

Authored by Mark St.Cyr,

There’s been a consistent theme of retort from many across the financial media. It consists of a two-sided response. The first sounds something like this: “How long have you been saying things were dire while the markets have continually risen?” This is a backhanded way of dismissing anything one has said previously, currently, as well as followup during the discussion. i.e., You’ve been labeled a scare monger. And a poor one at that.

The other is the outright or, blatant dismissive. It sounds something like this, “Well that’s your opinion. I should state there are many more who take the opposite view.”

Well, yes there are. However, that doesn’t mean they are either correct in their assumptions or, can argue why their view is correct. Yet, this is what’s done when someone wants to invalidate your point. It’s a snarky little way to dampen any legitimacy to one’s argument without further discussion. It’s a technique that’s used by many across the financial media as well as others. It’s subtle, however, to a trained ear – it speaks volumes about the user.

Personally I’ve had such things thrown at me and I detest them, for they’re vapid statements made by people who have either lost an argument they can not win or; think they are so smart they openly tout they don’t need deodorizers in their bathrooms. When I’ve been faced with the latter response my knee-jerk reaction has been to cite something similar to following:

“Well, that may be the case. But let’s just remember: Many a bull or pig believed based on valid assumptions that indeed; the farmer has their best interest at heart. After all who could argue otherwise based on all the free food, room, and board they receive? Unless you’re one of the few that escaped the “stock” yard and seen where the happy-trail ends. The one’s remaining in the yard can argue the other side all they want – it doesn’t mean they are right or, have a valid argument. Does it?”

Usually that’s when the conversation truly ends. There’s no further follow-up except for the ensuing stink-eye I’ll then be showered with. However, at least it ends with the snark now being called into question rather, than the other way around. (I know N. N. Taleb uses the turkey analogy which I’m of the same idea. It’s just my roots began in the beef business.)

Remember: These are techniques used or employed as to invalidate legitimate arguments with vapid reasoning. Once you understand and can discern them in real-time – you’ll never see an argument or discussion in the same light again. And these forms of discussions are now coming across both the financial airwaves, as well as print, at a fast and furious pace.

Why you might ask? Easy: everything you were told by that media that should no longer happen – is happening – at – an ever-growing fast and furious pace. So much so the “everything is awesome” crowd are now looking more like “deer in the headlights” with every passing market movement.

Let me illustrate it using the first line or technique I started with. The line of: “How long have you been saying things were dire while the markets have continually risen?” Well, let’s look at the most current example to show just how “dire” these markets truly are shall we?

As of today just how much worth (as well as wealth) has been wiped out as I iterated “at a fast and furious pace?” Suddenly, over the last 6 months; Trillions of $Dollars in market cap have been wiped out across the U.S. capital markets alone. If one uses a global index the wealth destruction is now double-digit Trillions. (e.g., $17 Trillion and rising) To put that into context:

In the last few months more than half, repeat, 50% plus, of the “wealth” affect everyone was so keen on singing its praises reminiscent of “happy times are here again” from 2011 till now globally: has been evaporated. i.e., gone, wiped out, you don’t collect $200 for passing Go. Thanks for playing.

All of this is happening against the backdrop where both the so-called “smart crowd” along with the Ivory Towered set expressed; a 25 basis point rate hike in the current climate was a non issue. In effect it was touted: It’s a good thing because the economy is in much better shape to withstand it. Or best yet, “just do it.” Suddenly all that “much better – just do it” emphasis has turned into “Please make it stop – things are going from bad to worse!”

This isn’t conjecture. To think 50% plus of capital being evaporated within months wiping out years of profits, principal, as well as interest assumptions for carry trades, let alone solvency concerns of counter party exposures or, currency upheavals throughout the global financial world won’t result in far more volatile market swings within the U.S. going forward, let alone what has already transpired just this year alone is nonsensical at best. Idiocy at worst. We just happen to be the laggard as to feel the full brunt of what is transpiring throughout the global markets in my opinion.

Something that was scoffed at as “unimaginable” is suddenly not only the opposite – it’s arriving on our shores with voracity to what appears a totally unprepared market. All taking place against the backdrop the so-called “smart crowd” touted for years things like this – were behind us. So much so that even the “smart crowd” is beginning to openly worry or, raise concerns. So, with that in mind: do you think things are about to get better or more stable? Let’s postulate that using the following:

Remember the above analogies? Who do you think has the valid argument? An escapee from the “stock” yard? Or, the bull that’s currently sitting with his fat profits, and snarky demeanor currently holding his position tagged at #436 in the middle of the line? After all, it would seem more agree with him than does you. So: Think he has a valid point? Again, as proof to bolster his argument he’ll also throw out, “Look at you! You’re now so skinny compared to him. How many meals have you missed since getting out?”

See what I mean? Doesn’t sound so “smart” or “definitive” as to back up any “everything is awesome” based argument any longer once you understand does it? Yet, that won’t stop many across the media from positing such an argument. While as much as the above may represent those remaining in the “stock” yard. What truly should be unnerving for many a bull is that the owners of those yards (i.e., the current guest list flying home via private jets from Davos) are themselves frantically trying to explain (or plead) why “everything is awesome” is not turning into a bona fide shite storm.

Premier hedge-funds are closing at an alarming rate. Once seemingly “can’t lose” funds (see Ray Dalio’s “All Weather” for clues) and strategies are doing exactly the opposite. Some funds have needed to gate their investors entirely until further notice. And there’s a whole lot more. And when has all this taken place? Or, better yet: what has been the catalyst for all this mayhem? The one thing people like myself and others have banged our fists and keyboards to anyone that would listen. The ending of the only thing that made up this “market.” QE (quantitative easing) along with a protracted stranglehold to remain at the zero bound. (e.g., ZIRP)

Over these ensuing years of Fed. interventionist monetary policy, all the one’s that donned their investing “genius” or, monetary policy analytic “brilliance” caps were the first and loudest to the TV cameras, microphones, or keyboards to denounce people like myself and others as “conspiracy whack jobs,” “gloom crew,” “tinfoil hatted kooks,” and a whole lot more. However, today?

Unlike many a financial guru, next in rotation fund manager, Ivory Leagued or, Towered academic that touted their economic brilliance or, stock picks ad infinitum to anyone still listening. People like myself and others have consistently argued against the validity of manipulated data points (see “double seasonally adjusted” for starters) and expressed the consequences that would follow to anyone foolishly doing the opposite.

Again, unlike those aforementioned: We didn’t argue why adulterated data should be believed. We didn’t argue why people should take solace in the current employment picture of 5% as “a good jobs number.” We wouldn’t submit to the relentless brow beating or, ambush styled financial reporting (see any Bill Fleckenstein or a Peter Schiff CNBC™ interview for clues) handed out on many a financial channel and others. Quite the opposite. Regardless how high the “market” kept ascending.

What is currently transpiring in the markets today is exactly what the “everything is awesome” crowd stated wouldn’t happen – and exactly what people like myself and others argued – was inevitable. And, suddenly it is they who are finding out the rarefied air of “brilliance” the Fed. enabled them to breathe has indeed been shut off – and all that’s left to inhale is their own exhaust fumes.

I recommend this might be a good time they stock up on that much dismissed deodorizer. Because, in my opinion – they’re going to need it by the time this rout is over in the coming weeks and months. Unless it leaves them scared sh–less much like the poor investors and others that continued to believe their assertions are currently finding themselves.

via Zero Hedge Tyler Durden

Here Come The Blackouts: Largest Ever Muni Restructuring Falls Apart As Puerto Rico’s Power Authority Balks At $9 Billion Deal

Early last month, just as Puerto Rico Governor Alejandro García Padilla traveled to Capitol Hill in an ill-fated effort to convince lawmakers that the island’s various bankrupt public entities should be allowed to utilize US bankruptcy laws, PREPA (the commonwealth’s heavily indebted power utility) was busy cementing the largest restructuring in muni market history.

The deal was actually sealed months earlier, but the monolines were holding things up. Ultimately, all sides finally agreed that it was in everyone’s best interest to strike a deal and once MBIA and Assured Guaranty were on board, the stage was set for an $8.2 billion restructuring.

As part of the deal, creditors agreed to take a 15% haircut and the insurers would put up a $450 million surety bond. The agreement would have knocked $700 million off the utility’s debt service burden. It also would have reduced PREPA’s principal owed by $600 million.

We say “would have” because that deal is apparently off the table.

“Chances of Puerto Rico’s power utility PREPA reaching a deal with creditors to restructure its $8 billion debt were cast in uncertainty on Friday as one deadline passed and the utility baulked at the new terms offered for a new one,” Reuters reported on Saturday. “PREPA said in December that it had reached a deal with 70 percent of all creditors [but] for that to work, Puerto Rico needs to pass legislation enabling PREPA to create a new charge on customer invoices specifically to pay the debt, so that the new bonds could earn the higher ratings that creditors expect.”

Lawmakers needed to vote by Friday on the new tax and when that deadline came and went, creditors found themselves right back where they were last year: owed nearly $9 billion with no plan on how to get repaid.

“The group of bondholders negotiating with the Puerto Rico Electric Power Authority, known as Prepa, had accepted a 15 per cent haircut on the debt in exchange for new securitised notes after more than a year of discussion,” FT notes. “Prepa said on Saturday that it had offered to extend the restructuring deal by an additional three weeks with the ad hoc group of bondholders to give the legislative assembly additional time to review the act.”

Now, everyone is apparently confused as to what’s actually going on. 

We are disappointed that the ad hoc group did not grant our requested extension,” Lisa Donahue, Prepa’s chief restructuring officer said. “Prepa remains willing to continue discussions with the ad hoc group and other stakeholders.”

Bondholders, on the other hand, say they find the stalemate “extremely disappointing and perplexing.” 

“The creditors blamed the utility for scuttling the talks, saying Prepa officials had decided to let a critical expiration date pass without taking action,” The New York Times writes. “But Prepa said it was the creditors’ fault for trying to impose a requirement that Prepa had already rejected.”

“As part of their proposed extension, bondholders were also offering to provide $115 million of additional capital,” Reuters goes on to note. “PREPA said the bondholders changed the terms of that offer, conditioning it on regulatory approval by Puerto Rico’s energy commission for the imposition of the additional charges to customers.”

While all of this sounds like a petty dispute between recalcitrant Puerto Rican lawmakers and belligerent creditors, it actually has serious implications for the island’s prospects as it relates to restructuring a debt burden that amounts to some $70 billion. 

The market had held up the PREPA deal as a kind of blueprint for how the island’s other debt might be restructured. Now, it seems more likely that the effort will be presented as evidence of how difficult it will ultimately be for the commonwealth to strike deals with creditors. 

PREPA needs to make a $400 million payment on July 1. Without a restructuring agreement, it’s likely the utility will default, and event the utility’s chief restructuring officer says would be “a disaster.” PREPA “also owes about $700 million to two institutions that finance the shipments of fuel that Prepa burns to produce energy,” The New York Times continues, “if the utility failed to make those payments fuel shipments could then stop, and blackouts across the island would result.”

Yes, “blackouts across the island,” at which point the debt crisis will finally hit home for everyday Puerto Ricans who will promptly take to the streets to ask why the lights are out.

The real question here is this: did Puerto Rico deliberately undercut the PREPA restructuring deal in order to prove to US lawmakers that bankruptcy is the island’s only option? 

Remember, Padilla has long said the PREPA deal shouldn’t be seen as an excuse for denying the island access to bankruptcy proceedings.

We’ll leave it to readers to decide and simply close with a quote from the president of Puerto Rico’s Senate, Eduardo Bhatia.

“PREPA had no incentives whatsoever to be efficient. This is incredible. Our power plants look like the cars in Cuba.”

via Zero Hedge Tyler Durden

‘Oppression Studies,’ Actual Oppression Coming to American University

OppressionAs I reported previously, American University’s plot to reorient its core curriculum around social justice education and activism seems like it could be a nightmare for students—particularly if it extends to life in the dormitories.

In a recent column for The Daily Beast, I argue that such a plan resembles the University of Delaware’s reign of terror in the residence halls:

This plan, if approved, would add AU to the list of campuses attempting to turn its residence halls into re-education camps. The most famous example was the University of Delaware, which previously required students to submit to a rigorous and intrusive ideological training program with the explicit goal of changing their “incorrect” beliefs and transforming them into eager leftist activists. The almost unbelievably Orwellian program was centered on dorm life, where residential advisers routinely interrogated students (on the orders of the campus housing department) about everything from their sex lives to their political beliefs. 

The RAs kept files on individual students; those who didn’t show enough progress toward reforming their problematic views were publicly shamed at mandatory meetings, and even disciplined. Only the eventual involvement of the Foundation for Individual Rights in Education—which launched an advocacy campaign that persuaded Delaware to abolish the indoctrination program—liberated the students from enforced conformity.

AU would be wise to eschew the path of Delaware.

Read the full thing here.

from Hit & Run

What The Charts Say: “Similar Topping Process To 2000 & 2007”

The deterioration of the indicators highlighted below point to a downside break for the late-stage cyclical bull market from 2009, according to BofAML. Should 1,867 decisively give way, the 1820 (October 2014 low) provides additional support but the bigger risk is a top that projects down to 1,600-1,575; and derspite the last 2 days' bounce, volume and breadth suggest a market under distribution or selling pressure, not primed for new highs.

Many indicators have rolled over in advance of price

  • New year-long+ lows for S&P 500 on-balance-volume
  • S&P 500 VIGOR is breaking the October 2015/October 2014 lows
  • The US Most Active advance-decline line has completed a top. Similar tops precede/coincided with S&P 500 breakdowns in late 2007 and 2000.
  • Weekly global index-level advance-decline lines continue to hit new lows
  • A Dow Theory Sell Signal in late August. However, the Industrials are still above their August low in early 2016 (as of Jan 19) and not confirming downside in Transports yet.
  • Monthly MACD sell signal with the S&P 500 back below its 12-month MA near 2042. -The first weekly MACD sell signal below zero since 2008 in early January
  • A rise off extreme lows for net free credit (free credit balances in cash and margin accounts net of the debit balance in margin accounts) could exacerbate an equity market sell-off.

S&P 500 at risk for breakdown below 1867 toward 1600-1575

We are monitoring three supports on the weekly S&P 500 chart: the uptrend line from 2009 near 1900, the neckline of a potential 1-year+ top near 1890, and the August low of 1867.

As of Jan 19, the S&P 500 has not yet decisively broken this 1900-1867 support zone, but 1867 remains at risk for a downside break given the deterioration of the indicators continue to point to a late-stage cyclical bull market from 2009. Should 1867 decisively give way, the 1820 (October 2014 low) provides additional support but the bigger risk is for a 1-year+ top that projects down to 1600-1575. Holding resistances at 1950 and 1994-2023 on oversold rallies keeps the risk to the downside.

Head & shoulders top breakdown for the broad-based Value Line Arithmetic

The Value Line Arithmetic Index (VALUA) is a broad-based, equal weighted US equity market index of approximately 1700 stocks.

The VALUA broke down from a 2-year head and shoulders top. Sustaining the break below 4100-4200 keeps this bearish pattern intact and favors a deeper decline to 3250-3150 or the breakout point from late 2012/early 2013. Additional resistance comes in at 4240-4440.

Mid caps show a head & shoulders top & big relative breakdown vs. large

The S&P Midcap 400 shows a fairly well-defined head and shoulders top, completed on the break below the uptrend line from October 2014.

Initial support comes in at the October 2014 low near 1269 but the top pattern counts down to 1150-1135 and remains firmly in place as long as the S&P 400 remains below 1372-1427. The late 2012 breakout point near 1000 provides additional support. Mid caps broke major support at the relative lows from October 2014, August 2012, and October 2011. This points to a longer-term loss of leadership from mid caps.

Small caps continue their absolute & relative losing ways

The Russell 2000 remains under pressure. The loss of multi-year relative support at the October 2014 and October 2011 lows could confirm a secular loss of leadership from small caps.

The Russell 2000 has also broken below its October 2014 low near 1040. There are some supports below this level, such as the 1010-1000 and 953-942 areas, but the most significant support comes in at the late 2012/early 2013 breakout point near 868-846. Given the major technical deterioration of small caps, we are not ruling out a test of that breakout point.
S&P 500 on-balance-volume continues to break down

The S&P 500 on-balance-volume (OBV), a measure of net accumulation, has lagged severely as volume did not confirm the May 2015 peak in the S&P 500. OBV has trended lower since late 2014 to suggest a lack of accumulation.

In fact, recent year-long+ new lows for S&P 500 OBV suggest a market under distribution or selling pressure. In our view, this increases the risk for the S&P 500 to follow the Value Line, S&P 400, and Russell 2000 and complete a year-long+ top on a break of the 2015 and late 2014 lows.

S&P 500 VIGOR: risk of top on break of Oct 2015 & Oct 2014 lows

S&P 500 VIGOR shows longer-term distribution (selling or down volume) dominating accumulation (buying or up volume) moving into early 2016.

This market has been under net distribution or selling. The break below the VIGOR lows from October 2015 and October 2014 confirms the weak readings for OBV as well as the risk for a deeper market correction below the S&P 500 lows from 2015 and late 2014.
Breadth Risk: A major breakdown for the US most active A-D line is bearish

The US 15 Most Active Advance-Decline (A-D) line is a daily cumulative A-D line of the top 15 most heavily traded stocks in the US by share volume.

When this A-D is rising, breadth for the most heavily traded stocks is bullish and reflects accumulation or buying. When this A-D line is falling, breadth for the most heavily traded stocks is bearish and reflects distribution or selling. The US most active A-D line topped out in advance of the S&P 500 with a peak in April and has since moved lower to complete a year-long top. This is a bearish signal for US equities in our view.

Similar Most active A-D line breakdown coincided with tops in 2000 & 2007

Big breakdowns in the most active A-D line preceded or coincided with big breakdowns for the S&P 500 in 2000 and 2007.

Moving into 2016, the Most Active A-D line has a big top breakdown in place and we view this as a risk to the cyclical bull market that began in 2009.

via Zero Hedge Tyler Durden

Why the Black Hole of Deflation Is Swallowing the Entire World … Even After Central Banks Have Pumped Trillions Into the Economy

Deflation Threatens to Swallow the World

Many high-powered people and institutions say that deflation is threatening much of the world’s economy …

China may export deflation to the rest of the world.

Japan is mired in deflation.

Economists are afraid that deflation will hit Hong Kong.

The Telegraph reported last week:

RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.




Andrew Roberts, the bank’s research chief for European economics and rates, said that global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings.

The Independent notes:

Lower oil prices could push leading economies into deflation. Just look at the latest inflation rates – calculated before oil fell below $30 a barrel. In the UK and France, inflation is running at an almost invisible 0.2 per cent per annum; Germany is at 0.3 per cent and the US at 0.5 per cent.


Almost certainly these annual rates will soon fall below zero and so, at the very least, we shall be experiencing ‘technical’ deflation. Technical deflation is a short period of gently falling prices that does no harm. The real thing works like a doomsday machine and engenders a downward spiral that is difficult to stop and brings about a 1930s style slump.


Referring to the risk of deflation, two American central bankers indicated their worries last week. James Bullard, the head of the St Louis Federal Reserve, said falling inflation expectations were “worrisome”, while Charles Evans of the Chicago Fed, said the situation was “troubling”.

Deflation will likely nail Europe:

Research Team at TDS suggests that the euro area looks set to endure five consecutive months of deflation, starting in February.




“The further collapse in oil prices and what is likely spillover into core prices means the ECB’s 2016 inflation tracking is likely to be almost a full percentage point below their forecast of just six weeks ago.”

(Indeed, many say that Europe is stuck in a depression.)

The U.S. might seem better, but a top analyst said last year: “Core inflation in the US would be just as low as in the Eurozone if measured on the same basis”.

The National Center for Policy Analysis reported last week:

Medical prices grew 0.1 percent, versus a decrease of 0.1 percent for all other items, in December’s Consumer Price Index.

In addition:

Trucking freight in the U.S. is in steep decline, with freight companies pointing to a “glut in inventories” and a fall in demand as the culprit.


Morgan Stanley’s freight transportation update indicates a collapse in freight demand worse than that seen during 2009.


The Baltic Dry Index, a measure of global freight rates and thus a measure of global demand for shipping of raw materials, has collapsed to even more dismal historic lows. Hucksters in the mainstream continue to push the lie that the fall in the BDI is due to an “overabundance of new ships.” However, the CEO of A.P. Moeller-Maersk, the world’s largest shipping line, put that nonsense to rest when he admitted in November that “global growth is slowing down” and “[t]rade is currently significantly weaker than it normally would be under the growth forecasts we see.”

Indeed, shipping seems to have totally collapsed, and Bloomberg notes that “hiring a 1,100-foot merchant vessel would set you back less than the price of renting a Ferrari for a day.”

And the velocity of money has crashed far worse than during the Great Depression.

And see this.

Why Didn’t the Central Banks’ Pumping Trillions Into the Economy Prevent Deflation?

But how could deflation be threatening the globe when the central banks have pumped many trillions into the world economy?

Initially, quantitative easing (QE) – instituted by most central banks worldwide – actually causes DEFLATION.

In addition, governments on both sides of the Atlantic have encouraged bank manipulation and fraud to try to paper over their problems.

Why’s this a problem?

Because fraud was one of the main causes of the Great Depression and the Great Recession, but nothing has been done to rein in fraud today. And governments have virtually made it official policy not to prosecute fraud.

Fraud is an economy-killer, and trying to prevent deflation while allowing a breakdown in the rule of law is like pumping blood into a patient without suturing his gaping wounds.

The government also chose to artificially prop up asset prices … while letting the Main Street economy tank.

Governments also pretended that massive amounts of public and private debt are healthy and sustainable … but they are not.

And the trillions in central bank money never really made into the real economy, but were handed under the table to the fatcats. For example:

  • The Fed threw money at “several billionaires and tens of multi-millionaires”, including billionaire businessman H. Wayne Huizenga, billionaire Michael Dell of Dell computer, billionaire hedge fund manager John Paulson, billionaire private equity honcho J. Christopher Flowers, and the wife of Morgan Stanley CEO John Mack

By choosing the big banks over the little guy, the government has doomed BOTH.

In addition, bad government policy has created the worst inequality on record … and inequality is an economy-killer.

What Do the Economists Say?

We asked three outstanding economists why central banks pumping trillions into the world economy hasn’t worked to prevent deflation.

Professor Michael Hudson – Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and economic advisor to governments worldwide – told Washington’s Blog:

The debts were left in place in 2008 instead of being written down. So the economy is now in a classic debt deflation. QE seeks to inflate asset markets, not the real economy. The choice in 2008 was whether to bail out the banks or the economy — and the former were bailed out — the political Donor Class.

Economics professor Steve Keen – the  Head Of School Of Economics, History & Politics at Kingston University in London – has previously agreed, saying:  we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”.

Professor Keen tells Washington’s Blog:

The simple reason is that, with the possible exception of the Bank of England, none of the Central Banks (and very few of the private banks themselves) understand how money is created. To create money, you have to put money into bank deposit accounts–thus increasing bank liabilities–at the same time as you expand the assets of the banks.


QE hasn’t done that.


In the USA, they’ve simply bought privately created bonds–normally MBSs–off the banks. This shuffles the asset side of the banks’s ledgers (by exchanging government-created money for overvalued private bonds) but doesn’t change the liability side directly–so no money is necessarily created.


In the UK, the CB buys those bonds off pension and insurance funds, which does create money–but it creates it in the deposit accounts of companies who are legally obliged to buy assets with that money (shares and other bonds) rather than goods and services produced by the real economy.


So QE as practised has been irrelevant to the real economy, leaving the deflationary forces created by the huge private debt bubble to rage on free.

And Professor Bill Black – Professor of Economics and Law at the University of Missouri,  America’s top expert on white collar fraud, and the senior S&L prosecutor who put more than 1,000 top executives in jail for fraud – tells Washington’s Blog:

Everything that criminology and economics teaches is that if financial elites are allowed to cheat with impunity they will make themselves rich at the people’s expense and corrupt democratic government.

Black previously explained that we’ve known for “hundreds of years” that failure to punish white collar criminals creates incentives for more economic crimes and further destruction of the economy in the future.

via Zero Hedge George Washington