Despite Rising Mortgage Rates, Home Prices Jump Most In A Year

Despite soaring mortgage rates, US home prices rose at 5.58% year-over-year in December according to the latest (lagged) data from S&P Case-Shiller. The 0.93% monthly gain in the best for December in at least a decade. However, the lagged response (as seen in pending home sales this week) suggests this odd ‘stability’ in home price appreciation may be set to become more volatile at least…

Fastes price appreciation since Jan 2016… but what happens next?

 

Seattle and Portland dominate the price changes (thank you China) but it appears the “Landlord Land” is keeping prices bubbly even as rates make everything less affordable.

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Europe: Laughing At The Messenger

Via Douglas Murray of The Gatestone Institute,

  • Once again, an American has pointed to a failing in European society, and instead of focusing on the problem identified or even admitting that there is a problem, the European response has been to point at the American and blame him for creating the problem he has in fact merely identified.
  • We are being given an accurate representation of a serious problem.
  • If the response to every problem is denial, and the response to anyone pointing to the problem is opprobrium, legal threats or hilarity, it suggests that Europe is not going to make the softer-landing it could yet give itself in addressing these issues.
  • It might make us feel better, but every time we attack or laugh at the messenger, rather than addressing the message, we ensure that our own future will be less funny.

How can one excavate the minds of so many European officials and the extraordinary mental gymnastics of denial to which they have become prone?

One of the finest demonstrations of this trend occurred in January 2015, after France was assailed by Islamist gunmen in the offices of the satirical magazine Charlie Hebdo and then in a Jewish supermarket. In the days after those attacks, Fox News in the U.S. ran an interview with a guest who said that Paris, and France, as a whole, had "no-go zones" where the authorities — including emergency services — did not dare to go. In the wake of these comments, the Mayor of Paris, Anne Hidalgo, chose to make a stand. She announced that she was suing Fox News because the "honour of Paris" was at stake.

It appeared that Mayor Hidalgo was rightly concerned about the image of her city around the world, presumably worrying in particular about the potential effects on tourism.

Of course, Mayor Hidalgo's priorities were all wrong. The reason Paris's public relations suffered a dent was not because of what a pundit said on Fox News one evening, but because of the mass murder of journalists and Jews on the streets of the "City of Light." Any potential tourist would be much more concerned about getting caught up in a terrorist firefight than a war of words. Mayor Hidalgo's manoeuvre, however, turned out not to be a rarity, but a symptom of a wider problem.

Consider the almost precise replay of that 2015 episode after U.S. President Donald Trump referred in a speech to "what's happening last night in Sweden." Much of the press immediately seized the opportunity to claim that Trump had asserted that a terrorist attack had occurred the night before in Sweden. This allowed them to laugh at the alleged ignorance of the president and the alleged concoction of what has become known as "fake news." Except that it swiftly became obvious to anyone who cared that what the president was referring to — a documentary film about the situation in Sweden that had aired the night before on Fox News — showed the extent of the lawlessness in parts of Sweden. While every authority in Sweden was laughing at Donald Trump, a day after his comments. residents of Rinkeby, a suburb of Stockholm, obligingly had a car-burning riot and attacked police.

The troubles that Sweden has gone through in recent years, since mass migration began in earnest, are hard indeed to ignore. These troubles include the setting up of what the American scholar of Islam, Daniel Pipes, most accurately referred to as "semi-autonomous sectors." Although non-Muslims can enter, the areas are different from the rest of the country. These are areas where, for instance, police, fire and ambulance services refuse to enter because they and other authority figures representing the state frequently come under attack. The filmmaker, Ami Horowitz, experienced the downside of some of these areas. On a recent visit to Sweden he was attacked for taking a film crew into a suburb of Stockholm when some of the locals objected. We are being given an accurate representation of a serious problem.

Car-burnings and riots do break out in Sweden today with considerable regularity, and sexual assaults have sky-rocketed in the country (although these figures are the subject of heated debate over whether they represent a rise in incidents or a rise in reporting). Either way, rapes carried out by immigrants remain a real and underreported issue. The authorities – including the Swedish media – have refused to run stories about these unpleasant facts

In Sweden, more than in perhaps any other European country, the media is homogenous in its support for the left-wing status quo in the country, and this includes a support for the views of recent governments on immigration policy. Anything which could give ammunition to critics of that policy is — as in Germanydeliberately underreported or actively covered over by the majority of the media.

The response to Trump's comments unfortunately demonstrated this yet further. The desire to pretend that the president had specifically claimed that there had been a terrorist attack the night before was one trick. Another was to simply mock and belittle him and his claims. Former Swedish Foreign Minister Carl Bildt took to Twitter to say, "Sweden? Terror attack? What has he been smoking?" The European press gleefully took up tweets by members of the Swedish public who responded to Trump's claims by sending photos of people putting IKEA furniture together. A joke which would have been funnier had a failed asylum seeker from Eritrea not stabbed and killed a mother and son in an IKEA store in Västerås in 2015. Elsewhere, the present Swedish foreign minister, Margot Wallström, in her familiar preaching tones announced that diplomacy and democracy "require us to respect science, facts and the media."

In response to US President Donald Trump's recent reference to "what's happening" in Sweden, Swedish Twitter users mocked him by posting photos of people putting IKEA furniture together. The joke would have been funnier had a failed asylum seeker from Eritrea not murdered Carola Herlin (left) and her son in an IKEA store in Västerås, Sweden, in August 2015.

So, once again an American has pointed to a failing in European society, and instead of focusing on the problem or even admitting that there is a problem, the European response has been to point at the American and blame him for creating the problem he has in fact merely identified. Such behaviour is a psychological affliction before it is a political one. It must stand somewhere along the continuum of the famed stages of grief. But it bodes exceptionally poorly for Europe's future. If the response to every problem is denial, and the response to anyone pointing to the problem is opprobrium, legal threats or hilarity, it suggests that Europe is not going to make the softer-landing it could yet give itself in addressing these issues. It might make us feel better, but every time we attack or laugh at the messenger, rather than addressing the message, we ensure that our own future will be less funny.

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US Economy Grew 1.9% In Q4, Unexpectedly Missing Expectations Despite Stronger Consumer Spending

Following a series of better than expected GDP-feeding prints, consensus had expected Q4 GDP to tick higher in the first revision released today, rising from 1.9% to 2.1%. However, that did not happen and instead, the revised print came in unchanged at 1.9%. Notable underlying revisions include: an upward revision in consumer spending, both in services and goods; a downward revision to business investment, mostly in intellectual property products and equipment; and a downward revision to state and local government spending, primarily in structures.

Despite the headline miss, the revised data showed a solid rebound in Personal Consumption Expenditures, which rose 3.0%, higher than the 2.6% expected; furthermore, printing at 2.05% annualized, Consumption alone was higher than the overall GDP of 1.86%.

The reason for the miss was a decline in Fixed Investment which slid from 0.67% to 0.51% as initial CapEx reads appear to have been weaker than expected, coupled with a negative revision to both Private Inventories, down from 1.00% to 0.94% and the contribution from Government, which subtracted another 0.15% point.

 

Net trade remained flat, and was the biggest detractor from Q4 growth, taking away some 1.7% as the Q3 surge of exports to China was offset.

Of note: PCE prices failed to hit the expected 2.2% increase in the quarter, rising 1.9%, after increasing 1.5% in Q3, thus giving the Fed some more breathing room before hiking. Additionally, core PCE rose 1.2%, after rising 1.7% in the prior quarter, suggesting to Janet Yellen there is still some price slack, and the possibility of a rate hike may be more remote.

For the year 2016, real GDP increased 1.6% , compared with 2.6% in 2015. The increase in real GDP in 2016 reflected increases in consumer spending, residential investment, state and local government spending, exports, and federal government spending. These contributions were partly offset by declines in private inventory investment and business investment. Imports increased.

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A.M. Links: Trump Will Address Joint Session of Congress Tonight, Wilbur Ross Confirmed as Commerce Secretary, SpaceX Plans Moon Mission

  • President Donald Trump will address a joint session of Congress tonight.
  • Trump: “Nobody knew that health care could be so complicated.”
  • The Senate has confirmed Wilbur Ross as secretary of Commerce.
  • “The U.S. Justice Department said Monday it is abandoning its longstanding opposition to a key aspect of Texas’ toughest-in-the-nation voter ID law, costing voting rights groups their most important ally and possibly encouraging other conservative states to toughen their own election rules with President Donald Trump in charge.”
  • SpaceX is planning to fly two private citizens around the moon in 2018.

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

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Q1 GDP At Risk As Trade Deficit Balloons Near 9 Year Highs

On the heels of a disappointing revised Q4 GDP print, the US trade balance for January printed a $69.2 billion deficit. This is the second largest deficit since August 2008 (slightly smaller than the March 2015 plunge) as the dollar surge has not helped.

The biggest driver the deficit increase was  4.8% MoM increase in Consumer Goods (notably Auto exports rose 9.3%)

The $69.2bn deficit is considerably worse thanthe $66.0 billion expectations, and is lower than the lowest analyst expectation.

The USD strength has not helped…

 

So time for another rate hike to reverse that recent drop in the USD and stymie the US economy even more via its trade deficit?

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Virtue-Signaling The Decline Of The Empire

Via Charles Hugh-Smith of OfTwoMinds blog,

Virtue-signaling doesn't signal virtue–it signals decline and collapse.

There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, the status quo seeks to mask its self-serving rot behind high-minded "virtue-signaling" appeals to past glories and cost-free idealism.

Virtue signaling is defined as "the conspicuous expression of moral values by an individual done primarily with the intent of enhancing that person's standing within a social group," "the practice of publicly expressing opinions or sentiments intended to demonstrate one's good character or the moral correctness of one's position on a particular issue" and "Saying you love or hate something to show off what a virtuous person you are, instead of actually trying to fix the problem." Yes, yes and yes.

"Virtue-signaling" expresses two other key characteristics of an empire in terminal decline: complacency and intellectual sclerosis.

Michael Grant described these manifestations of decline in his excellent account The Fall of the Roman Empire, a short book I have been recommending since 2009:

There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. (The Status Quo) attitude is a complacent acceptance of things as they are, without a single new idea.

This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.

This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.

What are those "resisting Trump" proposing as solutions to the profound structural ills afflicting the empire? Gender-neutral bathrooms? A continuation of a dysfunctional immigration policy? Blaming Russia to mask the catastrophic failure of the past 25 years of neocon imperial over-reach? Cost-free "virtue-signaling" proclamations in support of diversity? "Safe places" on college campuses paid for by student loans crushing a vast indentured class of debt-serfs?

These status quo policies and cost-free diversions are the acme of a profound complacency and intellectual sclerosis that serve to defend a self-serving, morally corrupt political and financial elite.

Virtue-signaling pronouncements lack any recognition of the moral, political, social and financial crises facing the American empire, and are devoid of any practical, politically/financially painful first-aid measures to staunch the decline.

Glenn Stehle, commenting on 9/16/15 on a thread in the excellent website peakoilbarrel.com (operated by the estimable Ron Patterson) made a number of excellent points that I am taking the liberty of excerpting: (with thanks to correspondent Paul S.)

The set of values developed by the early Romans called mos maiorum, Peter Turchin explains in War and Peace and War: The Rise and Fall of Empires, was gradually replaced by one of personal greed and pursuit of self-interest.

“Probably the most important value was virtus (virtue), which derived from the word vir (man) and embodied all the qualities of a true man as a member of society,” explains Turchin.

“Virtus included the ability to distinguish between good and evil and to act in ways that promoted good, and especially the common good. Unlike Greeks, Romans did not stress individual prowess, as exhibited by Homeric heroes or Olympic champions. The ideal of hero was one whose courage, wisdom, and self-sacrifice saved his country in time of peril,” Turchin adds.

And as Turchin goes on to explain:

"Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome’s total manpower, perished in the battle of Cannae, as mentioned previously, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….

The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion’s payroll….

The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen."

Now compare that to the situation in Late Antiquity when

"an average Roman noble of senatorial class had property valued in the neighborhood of 20,000 Roman pounds of gold. There was no “middle class” comparable to the small landholders of the third century B.C.; the huge majority of the population was made up of landless peasants working land that belonged to nobles. These peasants had hardly any property at all, but if we estimate it (very generously) at one tenth of a pound of gold, the wealth differential would be 200,000! Inequality grew both as a result of the rich getting richer (late imperial senators were 100 times wealthier than their Republican predecessors) and those of the middling wealth becoming poor."

Do you see any similarities with the present-day realities depicted in these charts? A self-serving class of Technocrats and bureaucratic Nomenklatura have garnered all the gains, while the bottom 90% have lost ground in wages, wealth and financial security.

This Technocrat/Nomenklatura class controls both private and public powers (media, finance, trade, industry, governance and institutions) which serve its own interests.

 

What we have now is a self-serving "virtue-signaling" technocrat class that works for a self-serving political/financial elite that avoids the imperial burdens of military service and taxes while imposing what amounts to an economic military conscription on the working class. This Imperial elite sends these military conscripts around the globe to defend their Imperial interests.

Virtue-signaling doesn't signal virtue–it signals decline and collapse. Just as in 5th century Rome–an empire careening toward collapse–those reaping the gains are complacently confident in their moral superiority while their hubris-soaked intellectual sclerosis blinds them to the systemic banquet of consequences that will soon choke their precious self-serving status quo.

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In Latest Tightening Move, China To Cut Money Supply Growth To 12%

For a majority of China watchers, while Beijing’s goalseeked GDP reports are largely dismissed as politburo propaganda, most of the attention falls on the PBOC and banking sector’s credit creation, and particularly, how this translates into broad money supply, or M2, growth: after all, in a nation which has roughly $35 trillion in bank assets, the biggest variable is how much cash is being injected into the system, and what happens with said cash.

Which is why a Reuters report overnight that China plans to target broad money supply growth of around 12 percent in 2017, down from 13 percent in 2016, has been promptly noted as the latest signal to contain debt risks while keeping growth on track. The M2 growth target was endorsed by leaders at the closed-door Central Economic Work Conference in December, according to sources with knowledge of the meeting outcome.

As a reminder, yesterday even the NY Fed released a note in which central bank researchers warned about the unsustainability of Chinese debt. Under the PBOC’s new “prudent and neutral” policy, the central bank has adopted a modest tightening bias in a bid to cool torrid credit expansion, though it is treading cautiously to avoid hurting the economy. 

“It’s not necessary to maintain last year’s high money supply growth,” said a source who advises the government. “A money supply rise of 11 percent should be enough for supporting growth, but we probably need to have some extra space, considering risks in the process of deleveraging.”

In 2016 China’s money supply target was 13%, roughly double the country’s GDP , though it ultimately grew just 11.3% due to the effects of the central bank’s intervention to support the yuan currency, which effectively drained yuan liquidity from the economy.  Last year’s M2 target reflected Beijing’s focus on meeting its economic growth targets, but top leaders have pledged this year to shift the emphasis to addressing financial risks and asset bubbles.

However, as we have shown in the past, M2 is just one aspect of liquidity injections: the PBOC injected more cash through its open market operations, medium-term lending facility (MLF) and standing lending facility (SLF), underpinning record lending of 12.65 trillion yuan ($1.84 trillion) in 2016.

Reuters has also reported that for 2017, China will lower its economic growth target to around 6.5% from last year’s 6.5-7 percent. The economy expanded 6.7 percent in 2016. Last week, state media cited a party statement issued after a meeting of the Politburo that China must maintain stable economic development and social harmony ahead of the 19th Communist Party Congress in the autumn. Key economic targets will be announced at the opening of the annual parliament meeting on March 5.

Whether China adopts the target or not, it is merely the latest indicator of tighter monetary policy this year. As we discussed at the start of the month, the central bank raised interest rates on its reverse repurchase agreements (repos) and the SLF on Feb. 3, following a rise in rates on the MLF in late January. “The central bank could raise such policy rates further. But we cannot see any possibility of raising benchmark interest rates in the near term,” said one of the sources.

Meanwhile, reversing the tightening trend, new yuan loans hit 2.03 trillion yuan in January, the second highest on record, due to a rush among lenders to maintain market share, while M2 rose an annual 11.3 percent in January. The central bank said in a working paper published on Feb. 15 that the debt deleveraging process should be managed prudently to help avoid a liquidity crisis and asset bubbles.

China’s debt-to-GDP ratio rose to 277 percent at the end of 2016 from 254 percent the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a recent note. Meanwhile, total bank assets to GDP is now well over 300%.

The biggest problem facing the massively indebted economy, however, remains one of a declining marginal impact of every incremental yuan of new debt.

“A decline in driving force from capital investment on economic growth is behind the rapid rise in leverage,” Ruan Jianhong, head of the Survey and Statistics Department at the central bank, said in remarks published on Friday.

In 2011, capital investment of 1 yuan could yield an increase of 0.32 yuan in GDP, but that has fallen to 0.16 yuan in 2015, Ruan told the official Financial News in an interview.

“We need to maintain appropriate economic growth. If growth slows sharply, various risks may be exposed,” said one of the sources. Of which the biggest being that China has now reached the Ponzi financing stage, and any incremental slowdown in debt creation will usher in the next and final step: the Minsky moment. 

 

For more on this, please read “How Long Can China’s Debt Continue To Grow Before A Systemic Crisis Strikes?”

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Frontrunning: February 28

  • Trump Puts the Final Touches on His Speech (BBG)
  • Trump to Make Case for Higher Military Spending, Lay Out Vision in Speech (WSJ)
  • Trump on Hook to Clarify Policies With Speech to Congress (BBG)
  • Traders Are Glued to These Stocks Ahead of Tonight’s Trump Speech (BBG)
  • Trump Regulation Rollback May Threaten U.S. Firms’ EU Access (Reuters)
  • GOP Health Plan Suffers Blow With Rejection by Key Republican (BBG)
  • White House Dismisses Calls for Russia-Ties Investigation (WSJ)
  • Bitcoin’s Top Rival Is Up 90% and Ready to Ditch Mining (BBG)
  • Inside Harvard’s Radical Plan to Reverse a Decade of Poor Returns (WSJ)
  • JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours (BBG)
  • Greece Said to Expect Revised Bailout Draft as Talks Resume (BBG)
  • Target Forecast Trails Estimates Amid Foot Traffic Woes (BBG)
  • Zombie cull fuels China bankruptcy rise (FT)
  • President Xi: China aims to improve economy’s quality, efficiency (Reuters)
  • NYSE Said to Be Considering ‘Inverted’ Model for New Exchange (WSJ)
  • Malaysia to Charge Two Women for Murder of Kim Jong Nam (WSJ)
  • New Wave of Anti-Semitic Threats Rattle U.S. (WSJ)
  • Canadian town on front line of migrant crackdown (Reuters)
  • China Considering Financial Rewards to Encourage Second Children (BBG)
  • Turkey Said to Seek U.S. Support to Attack IS Syria Bastion (BBG)
  • Takata Pleads Guilty to Criminal Wrongdoing, Agrees to Pay $1 Billion (WSJ)
  • Samsung Group chief charged with bribery, corporate nerve center dismantled (Reuters)
  • California demands details of Trump administration immigration arrests (Reuters)
  • Indian Workers in U.S. Fear a Trump H-1B Crackdown (WSJ)
  • Tweeting accountant blamed for Oscar best picture blunder (Reuters)

 

Overnight Media Digest

WSJ

– In an address to Congress on Tuesday, President Donald Trump, will call for a $20 billion boost in current military spending and sharp cuts in other programs, and insist on raising budget caps that call for future cuts to defense outlays. on.wsj.com/2myTPmU

– The White House defended its decision to ask lawmakers and intelligence officials to help rebut allegations of ties between associates of President Donald Trump and Russia. The House and Senate intelligence committees both have begun investigations into Russian meddling in the 2016 presidential election, including contacts between Russian officials and former National Security Adviser Mike Flynn, who resigned this month after acknowledging he mischaracterized his contacts with Moscow’s ambassador to the U.S. on.wsj.com/2myZDgp

– South Korean prosecutors said they would indict the Samsung conglomerate’s de facto leader Lee Jae-yong on charges of bribery and four other offenses, setting in motion legal proceedings that could put the tycoon behind bars for years. Prosecutors accuse Lee of embezzlement, perjury, hiding assets abroad and concealing profit gained from criminal acts. on.wsj.com/2myXq4t

– AT&T Inc lowered the price of its unlimited-data plans less than two weeks after opening them up to all subscribers, and said it would give added discounts to customers who pay for one of its television services. The unlimited plan for a single phone now costs $90 a month, a drop of $10. Subscribers who choose one of the company’s DirecTV or U-verse television services will get a $25 monthly bill credit. on.wsj.com/2mz28PY

 

FT

Former Conservative prime minister John Major urged Theresa May on Monday to face down Tory Eurosceptics during Brexit negotiations, warning that they are fickle friends who want a damaging “total divorce” from the European Union.

The London Stock Exchange Group Plc has all but ended a planned merger with Deutsche Boerse AG to create Europe’s biggest exchange, which had faced growing opposition since Britain’s vote to leave the European Union.

The UK government is failing to recognise “clear warning signs” that public services are nearing a breaking point after six years of spending cuts, according to a new report from the Institute for Government, published on Tuesday.

A court case alleged “serious and widespread” financial failings during Brexit backer Arron Banks’s time as chief executive of insurance company Brightside Group. http://on.ft.com/2my2QNk

 

NYT

– Uber has asked a senior executive to leave the company for failing to disclose a sexual harassment allegation stemming from his tenure at Alphabet Inc’s Google. nyti.ms/2ltsB0n

– At least four automakers knew for years that Takata’s airbags were dangerous and could rupture violently but continued to use those airbags in their vehicles to save on costs, lawyers representing victims of the defect asserted in a court document filed on Monday. nyti.ms/2ltjLPS

– An alliance of about 30 companies, including Microsoft and JPMorgan Chase, has plans to standardize data gathering and tracking with software that is seen as harder to hack. nyti.ms/2ltkAs5

– The Chinese-owned brokerage firm CLSA Americas unexpectedly shut down its stock research unit and related functions on Monday, sending some employees and analysts scrambling to pack their things. nyti.ms/2ltmNDQ

– Renata Hesse, who headed the Antitrust Division at the Justice Department, is joining Sullivan & Cromwell as a partner in its Washington office, the law firm announced on Monday. nyti.ms/2ltmRDA

 

Canada

THE GLOBE AND MAIL

** Ontario’s inter-regional transit system, GO Transit, is looking at how they can make their downtown Toronto bus station safer for pedestrians after a woman was killed Sunday evening. https://tgam.ca/2mnTSFk

** Alberta Premier Rachel Notley met on Monday with governors and congressional leaders in Washington who could influence U.S. President Donald Trump’s agenda on trade, energy and pipelines – issues that are vital for the province’s economic recovery. https://tgam.ca/2mztVzw

NATIONAL POST

** Canada’s anti-money laundering watchdog is reviewing its policies after Manulife Financial Corp revealed on Monday its domestic banking unit was subject to an administrative penalty meted out by the Financial Transactions and Reports Analysis Centre of Canada. http://bit.ly/2m1M6Qw

** Canadian luxury retailer Holt Renfrew is closing down its off-price retail chain hr2 in the coming months, according to a report. http://bit.ly/2lP5KPn

** Google wants to turn its mobile Android operating system into a major gaming centre, introducing new features that it says will push developers to innovate and make more money, while also helping consumers find more games they will enjoy. http://bit.ly/2lRfNBV

 

Britain

The Times

– Mitie Group Plc, the cleaning and caretaker outsourcing group, is understood to be considering plans to appoint a worker director in reforms being implemented by Phil Bentley, its new chief executive. http://bit.ly/2mxS4X5

– Philip Hammond will have an extra 29 billion pounds ($36.07 billion) to play with in next week’s budget, a think tank says, as better growth and stronger tax receipts hand the government its first windfall since 2014. http://bit.ly/2mxRngJ

The Guardian

– A controversial 24 billion pounds ($29.85 billion) tie-up between the London Stock Exchange Group Plc and its German counterpart Deutsche Boerse is on the brink of failure after a last-minute demand from Brussels appeared to scupper the year-long merger effort. http://bit.ly/2mxLGiQ

– BMW’s new electric Mini could be made in Germany rather than the UK because of the uncertainty caused by Brexit. http://bit.ly/2mxOBYy

The Telegraph

– Netflix Inc is in talks to introduce a ‘pay as you go’ option for smartphones in collaboration with mobile operators. http://bit.ly/2mxQC74

– Ukip was in a state of open civil war last night after Nigel Farage publicly warned that the party will collapse unless its sole MP Douglas Carswell is thrown out. http://bit.ly/2mxMHY2

Sky News

– The House of Lords is set to give the Government its first defeat on the Article 50 Brexit bill as early as Wednesday on the issue of protecting the rights of EU nationals. http://bit.ly/2mxMJ2e

– Former prime minister John Major has said it was a “historic mistake” that a majority of voters opted to leave the European Union. http://bit.ly/2mxUNQE

The Independent

– UK business leaders are demanding that the timing of Brexit be pushed back if the government proves unable to strike a comprehensive trade deal within the two-year negotiating period leading up to the split. http://ind.pn/2mxGEmi

– Labour MPs have expressed anger after Jeremy Corbyn decided not to attend a weekly meeting used to dissect the party’s historic loss in Copeland last week, with one accusing the party leader of a “total dereliction of duty”. http://ind.pn/2mxOI6r

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SCOTUS Seems Likely to Overturn Law Banning Sex Offenders From Social Media

Judging from yesterday’s oral arguments in Packingham v. North Carolina, the Supreme Court seems inclined to overturn that state’s law banning sex offenders from Facebook, Twitter, and other “commercial social networking Web sites.” Robert Montgomery, a lawyer from the North Carolina Attorney General’s Office, had a hard time persuading the justices that the law—which covers a wide range of sites accessible to minors and applies to all registered sex offenders, whether or not their crimes involved children or the internet—passes muster under the First Amendment.

The case was brought by Lester Packingham, who in 2002, at the age of 21, pleaded guilty to taking indecent liberties with a minor. A first-time offender, he received a sentence of 10 to 12 months, after which he served two years of probation and was required to register as a sex offender for 10 years. Six years after Packingham’s conviction, the North Carolina legislature passed a law that made it a Class I felony, punishable by up to a year in jail, for a registered sex offender to “access” any commercial website open to minors that facilitates social introductions, allows users to create web pages or profiles that include personal information, and enables users to communicate with each other. Packingham was caught violating the law in 2010, when he beat a traffic ticket and celebrated the event with an exultant Facebook post:

Man God is Good! How about I got so much favor they dismiss the ticket before court even started. No fine, No court costs, no nothing spent….Praise be to GOD, WOW! Thanks JESUS!

Trying to explain how punishing such innocent (and religious!) speech can be consistent with the First Amendment, Montgomery likened North Carolina’s law to state bans on politicking within 100 feet of a polling place, which the Court upheld in the 1992 case Burson v. Freeman. “I think that does not help you at all,” Justice Anthony Kennedy said, provoking laughter from the audience. “If you cite Burson, I think you lose.”

Justice Elena Kagan briefly seemed to be helping Montgomery, only to drive Kennedy’s point home. “I agree with you,” she told Montgomery. “That’s your closest case….It’s the only case that I know of where we’ve permitted a prophylactic rule where we’ve said not all conduct will have these dangerous effects, but we don’t exactly know how to separate out the dangerous speech from the not-dangerous speech….That is like one out of a zillion First Amendment cases that we’ve decided in our history. And as Justice Kennedy says, there are many reasons to think it’s distinguishable from this one.”

Justice Stephen Breyer was equally discouraging. “The State has a reason?” he said. “Yeah, it does. Does it limit free speech? Dramatically. Are there other, less restrictive ways of doing it? We’re not sure, but we think probably, as you’ve mentioned some. OK. End of case, right?”

Kagan emphasized the extent of the law’s interference with political speech, noting that it prevents sex offenders from following the president, members of Congress, and other elected officials on Twitter or Facebook. “This has become a crucially important channel of political communication,” she said. “And a person couldn’t go onto those sites and find out what these members of our government are thinking or saying or doing….These sites have become embedded in our culture as ways to communicate and ways to exercise our constitutional rights.”

The law clearly covers social media platforms such as Facebook and Twitter, and it arguably applies even to ubiquitous services such as Google and Amazon, which are not primarily social networking sites but seem to meet the statutory definition. Although Montgomery claimed news sources such as nytimes.com are not covered, they might be if they let readers register and create profiles for commenting. “Even if The New York Times is not included,” Justice Ruth Bader Ginsburg said, “the point is that these people are being cut off from a very large part of the marketplace of ideas. And the First Amendment includes not only the right to speak, but the right to receive information.”

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How My Father, Jerome Tuccille, ‘Failed’ His Way to Success: New at Reason

Libertarian author and thinker Jerome Tuccille died on February 16, aged 80.

His son, J.D., writes:

In a real way, it was failure that drove my father’s success—failure to achieve his original goals was the prod that drove continued effort and accomplishment throughout his life.

Just weeks before he died on February 16, my father finished writing his last book. It’s a history of the Bonus Army, military veterans who demanded cash payment of benefits promised to them for their service in The World War (the only one at the time, since politicians had yet to air the sequel). They were brutally dispersed by troops and tanks commanded by General Douglas MacArthur, who was honing the skills he’d apply to more deserving targets in the Pacific a little later in his career. I doubt my old man would have been motivated to labor on that book through the complications of the multiple myeloma eating away at him if he’d achieved his life-long goal of a major bestseller and felt comfortable resting on his laurels.

His writing career started with politics; magazine articles, newspaper op-eds, and the books Radical Libertarianism (1970) and It Usually Begins With Ayn Rand (1971) made his name. But politics damn near broke him. He never expected his 1974 run for governor of New York as the Libertarian candidate to end in electoral victory, but he hoped that his candidacy would win enough votes to gain permanent ballot status for the party. He failed in that goal—and in efforts to continue to earn a living amidst the demands of the election. Breaking with the political preoccupations that had driven him for the previous half-decade, he put on a suit and bluffed his way into a meeting with a Merrill Lynch branch manager by implying that he was a potential big-money client. That he had, instead, a big need for money and had bullshitted his way in the door impressed the guy and landed him a job.

View this article.

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