Dallas Marijuana ‘Cite & Release’ a Half-Assed Measure

Dallas’ new “cite and release” program for marijuana possession illustrates just how ridiculous marijuana prohibition laws are to begin with.

The program for offenders caught with up to 4 ounces of marijuana is limited to a very certain kind of offender. Only offenders who have not been caught in a drug-free school zone, who have not previously been convicted of a crime, who have no outstanding warrants, have a valid state ID, and are residents of Dallas County will be eligible.

And despite its name, the penalty for marijuana possession is still not actually a citation. Possession of up to two ounces of marijuana can be punished by up to six months in jail and a fine of $2,000, while possession of up to four ounces of marijuana can be punished by up to a year in jail and a fine of $4,000. First time offenders will continue to have the opportunity to enter a diversionary program.

Police, of course, will continue to confiscate your marijuana if they catch you with it.

According to the Dallas Police Department, more than 400 people who were taken to jail last year would have been eligible for “cite and release.” Between January and May of last year alone, police arrested more than 1,300 people for marijuana possession.

Police officials insist the new program will cause less disruption in people’s lives but that relief is temporary; eventually they will have to go to court and succesfully fight the charge to avoid a jail sentence. It’s also not a one-way street—police benefit because they won’t have to spend limited resources hauling non-violent drug offenders into jail.

As marijuana is decriminalized and legalized around the country, the attempts to hold on to the principles of prohibition appear increasingly antiquated and outdated.

Half-measures like this one, especially, bring the motivations behind prohibition into stark relief. Who are anti-marijuana laws are supposed to benefit, anyway? The fewer the penalties against marijuana possession the clearer the answer to that question is.

Moves like keeping marijuana offenders out of jail prior to trial, converting marijuana possession from a misdemeanor to a merely citable offense, or even legalizing and regulating marijuana, reveal revenue generation to be the primary driver of anti-marijuana laws.

No matter how liberal currently existing marijuana laws have gotten, government revenue is still at the center. To lawmakers and bureaucrats, the taxes and fees associated with legal marijuana appear to be the most important component.

So it likely is with virtually all government ventures.

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Cops Steal $91,800 From a Musician, Claiming He Gave It to Them

According to the story the Wyoming Attorney General’s Office is telling, Phil Parhamovich was moved during a traffic stop last March to donate $91,800, his life savings, to the state’s Division of Criminal Investigation to help it wage the war on drugs. Parhamovich’s version is rather more plausible: He says state police took his money after pressuring him to sign a “waiver” that circumvented even the limited protections offered by Wyoming’s civil asset forfeiture law. Today Parhamovich is in state court, trying to get his money back with help from the Institute for Justice, which argues that Wyoming’s roadside waivers are a thin disguise for highway robbery.

Parhamovich, a Wisconsin musician, was on his way to a gig in Salt Lake City on March 13 when a state trooper, Jeramy Pittsley, pulled him over on Interstate 80 in Laramie County for failing to buckle his seat belt. The stop turned into an interrogation, during which Pittsley asked, “Is there anything in your vehicle I should know about, such as guns, drugs, large amounts of cash, methamphetamines, heroin, cocaine, marijuana, PCP, LSD, etc.?” Parhamovich, startled that Pittsley suddenly suspected him of criminal activity, said no.

Pittsley walked a drug-sniffing dog around Parhamovich’s minivan. “At first,” the Institute for Justice says, “the dog seemed to find nothing interesting about the vehicle. Then, the trooper gestured with what appeared to be a hidden tennis ball, and the dog responded.” The cops used that “alert” as an excuse to search the minivan, and eventually they found $91,800 inside a speaker cabinet. The cops were so excited by their discovery that they high-fived each other. The windfall also apparently made them forget that there was no trace of the drugs that Pittsley’s dog supposedly had detected.

Parhamovich had earned the money legally, largely by fixing guitars and selling old farmhouses after renovating them. He brought the cash with him when he went on tour because he worried that it wouldn’t be safe at his apartment in Madison. He planned to used $80,000 of it for a down payment on a Madison recording studio he was in the process of buying.

Now the troopers were insinuating that there was something illegal about carrying that much cash. There isn’t, but Parhamovich was so intimidated that he initially denied the money was his, saying the speakers and the cash belonged to a friend. Despite that denial, the troopers presented him with a waiver saying, “I…the owner of the property or currency described below, desire to give this property or currency, along with any and all interests and ownership that I may have in it, to the State of Wyoming, Division of Criminal Investigation, to be used for narcotics law enforcement purposes.” Because he had the impression that he would not be free to go otherwise, Parhamovich signed the form without understanding the legal consequences.

The waiver Parhamovich signed is aimed at getting around Wyoming’s civil forfeiture rules, which the state legislature had tightened just a year before. The 2016 reforms included a requirement that law enforcement agencies prove seized property is connected to a crime by “clear and convincing evidence,” a tougher test than the “preponderance of the evidence” standard it replaced. The legislation also mandated a probable cause hearing within 30 days of a seizure, required that property owners receive 15 days’ notice of forfeiture hearings, and allowed judges to award them damages and attorney’s fees when they successfully challenge forfeitures. But because Parhamovich “voluntarily” signed away his property, the cops did not have to worry about any of that.

Four days after the traffic stop, Parhamovich sent a letter to the Wyoming Highway Patrol and the Attorney General’s Office, seeking to rescind his waiver and asking to be informed of any relevant legal proceedings. The Attorney General’s Office received three pieces of mail from Parhamovich in March and April, including documents verifying the sources of his money and his planned purchase of the recording studio. Parhamovich also submitted an electronic public records request. Each time he included his contact information, and he got two letters back from the Attorney General’s Office, which nevertheless failed to notify him of its May 4 petition seeking to keep his money or the July 5 hearing at which the petition was granted. Instead the office placed a notice in a Wyoming newspaper, where Parhamovich, who lives in Wisconsin, would be sure not to see it.

Parhamovich is now seeking a new hearing, one that he will actually have an opportunity to attend. He also argues that his traffic stop was illegally extended, since Trooper Pittsley had no reasonable grounds to suspect he was involved in criminal activity; that he was entrapped by “misleading and compound questions that wrongly suggested it was illegal for him to be traveling with cash”; and that Pittsley and his colleagues did not have probable cause to search his minivan or seize his money.

Like other cases of highway robbery by police officers, Parhamovich’s experience illustrates not only the perversity of civil forfeiture and the immorality of the war on drugs but the peril of giving cops license to harass motorists at will. If Wyoming did not have a paternalistic law authorizing it, Pittsley would not have been allowed to pull Parhamovich over for failing to buckle his seat belt, a quintessentially self-regarding decision. If the Supreme Court had not ruled that a canine’s olfactory inspection does not count as a search under the Fourth Amendment, Pittsley would not have been allowed to walk his drug-sniffing dog around Parhamovich’s minivan. If the Court had not ruled (unanimously!) that an “alert” by such a dog provides probable cause for a search, Pittsley and his buddies would not have found Parhamovich’s money. The sort of conscious cuing alleged by Parhamovich is just one reason the Court’s faith in police dogs is misplaced.

These are the decisions that have created a society where armed agents of the state detain and search people on the slightest pretext, stealing whatever money they happen to find.

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Is This The Reason For EONIA’s “Mystery” Surge?

'Mystery' solved… maybe.

 

Bloomberg is reporting that excess liquidity within Greek banks – who leant it to their credit-risky peers at notably high rates – are responsible for the sudden, scary spike in EONIA over the last two days, according to two bankers with knowledge of the matter.

Salaries that were deposited by Greek civil servants and higher receipts from repurchase agreements provided National Bank of Greece with more liquidity, the person said, asking not to be named because the matter is not public.

 

National Bank of Greece SA had excess liquidity of around 450 million euros ($536 million) this week, which it loaned to its peers in the country, the people said.

 

Other Greek banks found the rate offered by National Bank of Greece appealing, thus drawing on the cash, the people said.

 

While the flood of funds and the increase in interbank lending in Greece is good news, the rates at which borrowers from the country can access funds are still higher than for the rest of the continent, thus pushing up the weighted average of the overnight rates in Europe, one of the people said.

Today's fix at 1245ET printed at -29.1bps, 5bps lower than Thursday as 'pressure' seems to be relieving.

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James Comey Gloats About Flynn Guilty Plea On Twitter

Former FBI Director James Comey just couldn't help himself.

Shortly after his longtime friend and former colleague Robert Mueller procured a guilty plea from former National Security Adviser Michael Flynn, who will reportedly testify against President Trump and members of his family, Comey tweeted a Bible passage in what seemed like gloating: "But justice roll down like waters and righteousness like an ever-flowing stream".

 

 

Two days earlier, Comey published another cryptic tweet that seems to suggest he might've had advance knowledge of the Flynn plea – something that would've been improper given his status as a witness in the Mueller probe.

 

 

Moments after news broke about Flynn "flipping" on Trump, Flynn released a statement saying he acknowledged his actions were wrong.

After over 33 years of military service to our country, including nearly five years in combat away from my family, and then my decision to continue to serve the United States, it has been extraordinarily painful to endure these many months of false accusations of "treason' and other outrageous acts. Such false accusations are contrary to everything I have ever done and stood for. But I recognize that the actions I acknowledged in court today were wrong, and, through my faith in God, I am working to set things right. My guilty plea and agreement to cooperate with the Special Counsel's Office reflect a decision I made in the best interests of my family and of our country. I accept full responsibility for my actions.

At the same time, Trump attorney Ty Cobb issued a statement about Flynn:

"Today, Michael Flynn, a former National Security Advisor at the White House for 25 days during the Trump Administration, and a former Obama administration official, entered a guilty plea to a single count of making a false statement to the FBI.
 
"The false statements involved mirror the false statements to White House officials which resulted in his resignation in February of this year. Nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn. The conclusion of this phase of the Special Counsel's work demonstrates again that the Special Counsel is moving with all deliberate speed and clears the way for a prompt and reasonable conclusion."

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Chuck Schumer Freaks Out Over Direct-to-Consumer Genetic Testing Privacy

GeneticTestingSerguntDreamstimeLots of folks will give themselves and their relatives direct-to-consumer genetic testing kits as holiday gifts this year. Millions of customers have already used such kits to learn about their genetic ancestry. For example, 23andMe reports that 99.6 percent of my genes derive from Europe, with 43.2 percent being British and Irish. Also, I bear more Neanderthal variants than 85 percent of 23andMe customers, although Neanderthal ancestry accounts for less than 4 percent of my overall DNA.

Sen. Chuck Schumer (D–N.Y.) thinks the testing companies don’t provide enough privacy protection for their customers’ genetic data. “Many don’t realize that their sensitive information may end up in the hands of many other third party companies,” he said at a press conference Sunday. Schumer wants the Federal Trade Commission to investigate the situation, with an eye toward establishing rules that forbid testing companies from sharing your genetic information with other companies or researchers.

The senator did not cite any evidence that genetic testing customers are actually much worried about their privacy. I reached out to various testing companies asking if they had received many (or any) complaints from customers about their privacy policies. Only 23andMe got back to me: Spokesperson Andy Kill claimed there is “nothing substantial to report as far as customer concerns on this front.”

That sounds about right to me.

First, my bona fides. Seven years ago, I wrote an article arguing that worries about genetic privacy are way overblown. I have gone so far as to post publically my 23andMe genotype scanning results. My results are constantly updated as new information about the genetic variants tested for become available. My point is that genetic information is not special, toxic, or occult.

In any case, the direct-to-consumer genetic testing companies all post their privacy policies so that consumers can review them. All of them promise not to disclose your information without your permission. If the companies change their privacy policies, they notify users of the changes and give them an opportunity to withdraw from their services.

For example, 23andMe states, “We will not sell, lease, or rent your individual-level information (i.e., information about a single individual’s genotypes, diseases or other traits/characteristics) to any third-party or to a third-party for research purposes without your explicit consent.” MyHeritage similarly declares: “In no case is the personal information provided by our users sold, licensed or otherwise shared by us with advertisers, sponsors, partners or other third parties. We will never sell or license DNA samples, DNA Results, DNA Reports or any other DNA information, to any third parties without your explicit informed consent, and we will never sell or license such information to insurance companies under any circumstances.” Ancestry.com won’t disclose personal information to third parties without your knowledge and consent, except “as reasonably necessary to comply with a law, regulation, valid legal process (e.g. subpoenas or warrants served on us) or governmental or regulatory request.”

Of course, no company can promise absolutely that it can prevent disclosure through hacking.

For what it’s worth, I have basically consented to let 23andMe do whatever it wants with my genetic test results. I think that doing so advances biomedical research that will end up helping lots of people and figuring out what makes us humans tick. For example, my 23andMe genetic data was used in a study published in Nature Communications that found genetic associations with the susceptibility with some common infectious diseases and another in Molecular Psychiatry that identified genetic correlations associated with empathy. You’re welcome.

At any rate, if any people do have concerns about their genetic privacy, they have a simple way to avoid the issue: Don’t take the tests.

Disclosoure: I am a longtime happy customer of 23andMe.

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“Statement Of The Offense”: Here Is The Full Michael Flynn Plea Agreement

As the public scrambles to uncover more information on just what Flynn knows, or doesn’t know, and how exactly he is cooperating with Mueller, moments ago the Special Counsel has released the following “statement of the offense“, i.e., Michael Flynn’s plea agreement, summarizing the government’s case against Flynn, and the basis for the cooperation plea which seeks to impeach Trump.

* * *

STATEMENT OF THE OFFENSE (link)

Pursuant to Federal Rule of Criminal Procedure 11, the United States of America and the defendant, MICHAEL T. FLYNN, stipulate and agree that the following facts are true and accurate. These facts do not constitute all of the facts known to the parties concerning the charged offense; they are being submitted to demonstrate that sufficient facts exist that the defendant committed the offense to which he is pleading guilty.

1.    The defendant, MICHAEL T. FLYNN, who served as a surrogate and national security advisor for the presidential campaign of Donald J. Trump (“Campaign”), as a senior member of President-Elect Trump’s Transition Team (“Presidential Transition Team”), and as the National Security Advisor to President Trump, made materially false statements and omissions during an interview with the Federal Bureau of Investigation (“FBI”) on January 24, 2017, in Washington, D.C. At the time of the interview, the FBI had an open investigation into the Government of Russia’s (“Russia”) efforts to interfere in the 2016 presidential election, including the nature of any links between individuals associated with the Campaign and Russia, and whether there was any coordination between the Campaign and Russia’s efforts.

2.    FLYNN’s false statements and omissions impeded and otherwise had a material impact on the FBI’s ongoing investigation into the existence of any links or coordination between individuals associated with the Campaign and Russia’s efforts to interfere with the 2016 presidential election.

False Statements Regarding FLYNN’s Request to the Russian Ambassador that Russia Refrain from Escalating the Situation in Response to U.S. Sanctions against Russia

3.    On or about January 24, 2017, FLYNN agreed to be interviewed by agents from the FBI (“January 24 voluntary interview”). During the interview, FLYNN falsely stated that he did not ask Russia’s  Ambassador to the United States (“Russian Ambassador”) to refrain from escalating the situation in response to sanctions that the United States had imposed against Russia. FLYNN also falsely  stated that he did not remember a follow-up conversation in which the Russian Ambassador stated that Russia had chosen to moderate its response to those sanctions as a result of FLYNN’s  request. In truth and in fact, however, FLYNN then and there knew that the following had occurred:

a.    On or about December 28, 2016, then-President Barack Obama signed Executive Order 13757, which was to take effect the following day. The executive order announced sanctions against Russia in response to that government’s actions intended to interfere with the 2016 presidential election (“U.S. Sanctions”).

b.    On or about December 28, 2016, the Russian Ambassador contacted FLYNN,

c.    On or about December 29, 2016, FLYNN called a senior official of the Presidential Transition Team (“PTT official”), who was with other senior members of the Presidential Transition Team at the Mar-a-Lago resort in Palm Beach, Florida, to discuss what, if anything, to communicate to the Russian Ambassador about the U.S. Sanctions. On that call, FLYNN and the PTT official discussed the U.S. Sanctions, including the potential impact of those sanctions on the incoming administration’s foreign policy goals. The PTT official and FLYNN also discussed that the members of the Presidential Transition Team at Mar-a-Lago did not want Russia to escalate the situation.

d.    Immediately after his phone call with the PTT official, FLYNN called the Russian Ambassador and requested that Russia not escalate the situation and only respond to the U.S. Sanctions in a reciprocal manner.

e.    Shortly after his phone call with the Russian Ambassador, FLYNN spoke with the PTT official to report on the substance of his call with the Russian Ambassador, including their discussion of the U.S. Sanctions.

1    On or about December 30, 2016, Russian President Vladimir Putin released a statement indicating that Russia would not take retaliatory measures in response to the U.S. Sanctions at that time.

g.    On or about December 31, 2016, the Russian Ambassador called FLYNN  and informed him that Russia had chosen not to retaliate in response to FLYNN’s request.

h.    After his phone call with the Russian Ambassador, FLYNN spoke with
senior members of the Presidential Transition Team about FLYNN’s conversations with the Russian Ambassador regarding the U.S. Sanctions and Russia’s decision not to escalate the situation.

False Statements Regarding FLYNN’s Request that Foreign Officials Vote Against or Delay a United Nations Security Council Resolution

4.    During the January 24 voluntary interview, FLYNN made additional false

statements about calls he made to Russia and several other countries regarding a resolution submitted by Egypt to the United Nations Security Council on December 21, 2016. Specifically FLYNN falsely stated that he only asked the countries’ positions on the vote, and that he did not request that any of the countries take any particular action on the resolution. FLYNN also falsely stated that the Russian Ambassador never described to him Russia’s response to FLYNN’s request regarding the resolution. In truth and in fact, however, FLYNN then and there knew that the following had occurred:

a.    On or about December 21, 2016, Egypt submitted a resolution to the United Nations Security Council on the issue of Israeli settlements (“resolution”). The United Nations Security Council was scheduled to vote on the resolution the following day.

b.    On or about December 22, 2016, a very senior member of the Presidential Transition Team directed FLYNN to contact officials from foreign governments, including Russia, to learn where each government stood on the resolution and to influence those governments to delay the vote or defeat the resolution.

c.    On or about December 22, 2016, FLYNN contacted the Russian Ambassador about the pending vote. FLYNN informed the Russian Ambassador about the incoming administration’s opposition to the resolution, and requested that Russia vote against or delay the resolution

d.    On or about December 23, 2016, FLYNN again spoke with the Russian Ambassador, who informed FLYNN that if it came to a vote Russia would not vote against the resolution.

Other False Statements Regarding FLYNN’s Contacts with Foreign Governments

5.    On March 7, 2017, FLYNN filed multiple documents with the Department of  Justice pursuant to the Foreign Agents Registration Act (“FARA”) pertaining to a project performed by him and his company, the Flynn Intel Group, Inc. (“FIG”), for the principal benefit of the Republic of Turkey (“Turkey project”). In the FARA filings, FLYNN made materially false statements and omissions, including by falsely staling that (a) FIG did not know whether or the extent to which the Republic of Turkey was involved in the Turkey project, (b) the Turkey project was focused on improving U.S. business organizations’ confidence regarding doing business in Turkey, and (c) an op-ed by FLYNN published in The Hill on November 8, 2016, was written at his own initiative; and by omitting that officials from the Republic of Turkey provided supervision and direction over the Turkey project.

Robert S. Mueller III
Special Counsel

* * *

The above in pdf format (link)

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The U.S. Government Wants to Seize ‘Pharma Bro’ Martin Shkreli’s Wu-Tang Clan Album

Lawyers for the U.S. government are asking a judge to order the forfeiture of millions of dollars’ worth of noted “pharma bro” Martin Shkreli’s assets, including an unreleased, one-of-a-kind Wu-Tang Clan album.

Shkreli, who is facing up to 20 years in prison after being convicted of securities fraud in August, gained infamy in 2015 for jacking up the price of a life-saving AIDS drug. In a court filing today, the U.S. government is seeking $7.4 million of Shkreli’s assets in total, including a Picasso painting and a World War II Enigma machine.

But perhaps the most intriguing of Shkreli’s assets is the never-heard Wu-Tang Clan album, “Once Upon a Time in Shaolin,” which he bought from the Staten Island rap group for $2 million. Shkreli released a series of videos of himself smugly listening to the album, but it has yet to be released to the public.

Most property seized by the federal government is auctioned off by the U.S. Marshals Service, so in the near future you might be able place a bid on the Wu on, of all places, a federal law enforcement web site.

The U.S. Marshals Service did not immediately respond to a request for comment on whether it has plans to auction the album, if it is forfeited.

Protect ya neck and your assets, kiddos.

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Why Does Oregon Suck So Much at Spending Medicaid Dollars?

Oregon Healthcare AdvocatesOregon has a well-deserved reputation as a progressive state, so it should come as no surprise that the state spends a lot of money on healthcare for its citizens. The surprise is how increasingly wasteful and incompetent it is at that spending.

The state released an audit that found the Oregon Health Authority spent $88 million on ineligible Medicaid recipients between the months of March and September. That in addition to revelations earlier in November that OHA made $186 million in improper, wasteful, or overgenerous payments to individuals and healthcare providers.

The report released Wednesday adds damning details to the performance of an agency caught up in repeated scandals and leadership shake-ups over its lack of transparency and poor stewardship of taxpayer dollars. The latest audit focuses on the state’s payouts to ineligible Medicaid recipients, a legacy of OHA’s past IT boondoggles.

Wednesday’s audit comes a little more than a month before Oregon voters will decide whether to approve a $673 million tax on healthcare providers to fund OHA’s Medicaid program.

“The amount of wasteful and incompetent spending at OHA has been staggering and has gone on for at least the past four years,” said Oregon Secretary of State Dennis Richardson, whose office conducted the audit.

Medicaid—the mostly federally-funded, state-managed healthcare program for the poor—comes with specific eligibility requirements (for income, residency, etc.). Following passage of the Affordable Care Act (Obamacare), Oregon had planned to verify Medicaid recipients’ eligibility through something called Cover Oregon, the state’s Obamacare exchange.

However, after spending roughly $300 million the state abandoned Cover Oregon in favor of the federal Healthcare.gov exchange. In addition to the wasted tax dollars, the state was without a systematic method of verifying Medicaid eligibility. Over the next three years, annual eligibility determinations were only conducted sporadically, leaving a long backlog of verifications.

Oregon spent another $116 million on Oregon Eligible (ONE) system—four times what it initially estimated—to fix the problem. ONE was supposed to eliminate the backlog by February, but did not complete the task until the end of August.

Wednesday’s audit determined the delay caused the state to pay out the additional $88 million to ineligible recipients. The audit also uncovered glaring inadequacies in OHA’s ability or even willingness to identify and prevent improper payments.

Declining to audit Coordinated Care Organizations (CCO)—which pass payments between the state and Medicaid providers—resulted in $74 million in overpayments to individuals who were eligible for both Medicaid and Medicare.

OHA reportedly took months to respond to audit requests that should have taken minutes, and often provided incomplete or erroneous information. Lower-level OHA staff were told not to communicate with auditors’ requests directly, but instead pass information through managers.

Auditors also report OHA managers sitting in on their interviews with lower-level staff, something they said might have led staff to be less forthcoming.

During the course of the audit, Lynne Saxton, OHA’s Director, was forced to resign over an unrelated scandal. Her replacement, Patrick Allen, has so far proven more forthcoming about the agency’s shortcomings, revealing in a letter to Gov. Kate Brown that OHA had dispensed at least a further $112 million in improper payments on a grab- bag of programs, including $1.5 million in federal funds for abortions.

The audit comes at a time when an increasing number of national and state-level Democratic lawmakers are endorsing a single-payer healthcare system, in part because they will believe it will save money and reduce inefficiencies in our current healthcare system.

If progressive Oregon is any guide, government bureaucrats are about as good at managing a healthcare system as they are at pretty much everything else.

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Newspapers Shouldn’t Act Like Super PACs: New at Reason

Should The New York Times be lobbying followers of its Opinion Twitter account to call a senator about the tax bill?

David Harsanyi writes:

Journalists will often complain that readers don’t properly understand the distinction between editorialists and reporters. To be fair, it’s often quite difficult to tell. That’s not only because of some biased coverage or because the internet has largely wiped away the compartmentalization of the traditional newspaper; it’s because reporters now regularly give their opinions on TV, write “analysis” pieces and make their ideological preferences clear on social media. Many news outlets—The Daily Beast, BuzzFeed, etc.—unapologetically report from a left-wing perspective.

I’m not sure whether this kind of transparency is necessarily a bad thing, but whatever the case, an editorial board is still run separately from a newspaper. It offers arguments regarding public policy and culture. Ideally, it publishes op-ed columns by an array of voices with varying points of view, and it even occasionally challenges the preconceived notions of readers. When I was a member of an editorial board, our mission, at least as I saw it, was to offer rigorous good-faith arguments for whatever point of view we were taking. I never once consulted anyone in the newsroom.

In his botched sting on the Washington Post this week, conservative provocateur James O’Keefe demonstrated just how easy it is to either confuse the editorial board with the newsroom or manipulate readers to confuse them. At some point, though, it can also be the paper’s fault. What happens when an editorial board goes beyond arguing for liberal positions and debating policy to actively politicking? There’s a vital distinction to be made between political discourse and partisan activism.

View this article.

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Yes, Cash Is An Asset Class Again!

Authored by Steven Vannelli via Knowledge Leaders Capital blog,

In a US Dollar bull market with interest rates at zero, cash is rightfully dismissed as a non-asset class. But, when the US Dollar is in a bear cycle, things change, irrespective of what US interest rates are.

There are a handful of indicators we use to identify US Dollar bull and bear cycles.

One indicator – the Laubauch-Williams (LW) Real Neutral Rate – has gained traction with the Fed and is often referred to as r-star. It is a measure of the real (after inflation) neutral interest rate that the US economy can handle without stimulating or restraining the economy. Over time, the LW Real Neutral Rate is one of the better signals for the US Dollar.

Every US Dollar bull market since 1970 has been marked by an increasing LW rate. In the chart below, I plot the LW Real Neutral Rate (blue line, left axis) against the US Dollar Index (red line, right axis). In the early 1980s the US Dollar bull market occurred with the LW rate rising from about 3% to about 4%. Similarly, the US Dollar bull run of the late 1990s occurred with the LW rate rising from just over 2% to just over 3%. The most recent US Dollar bull market has been no exception. While admittedly harder to see because the numbers are so small, the most recent US Dollar bull occurred with the LW rate rising from around -.5% to about +.3%.

This relationship suggests the US Dollar bull run has come to a conclusion as the LW Real Neutral Rate has rolled over again. In the chart below, I focus on the last five years. Notice the US Dollar following the trend in the LW rate. The pop in the LW rate in the first quarter of 2014 led the 25% gain of the US Dollar from mid-2014 through early 2017. Notice also that the LW rate peaked in mid-2016, having fallen back by about 50bps in the last few quarters, leading the peak and decline in the US Dollar.

The fact that the LW rate has declined for three quarters in a row suggests this isn’t a temporary fluke. It is likely driven by the slow turnaround in oil prices. In the chart below, I plot the LW rate against oil prices. Simply, falling oil prices (red line, right scale, inverted) pull the LW rate (blue line, left axis) up. And, the reverse is true also that rising oil prices dampen the LW rate.

So, if we are now in a US Dollar bear market, driven by, among other factors, a falling LW rate and rising commodity prices, the good news is that cash is an asset class again.

Which currencies should investors focus on? An easy place to start are those currencies with the tightest linkages to oil prices.

Let’s start in Asia. Among interesting developed market options for a cash allocation are the Australia Dollar, Singapore Dollar and New Zealand Dollar. In each chart below, I plot the US Dollar FX rate against oil prices, with the correlation shown in the upper right corner.

Among emerging market currencies in Asia, the most interesting are the Indonesian Rupiah and Thai Baht.

Moving to the Americas, the Canadian Dollar, Mexican Peso, Brazilian Real and Chilean Peso all look interesting.

Moving on to Europe, the most interesting currencies are Euro, Norwegian Krone and Swedish Krona.

While there are many asset allocation decisions that hinge on whether the US Dollar is in a bull or bear market cycle, one of the easier is currency allocation. An investor following an Anything but US Dollars policy has the chance to capitalize on the new US Dollar bear market. Cash is now an asset class again, and this creates new possibilities for alpha generation and risk management.

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