The Only Fix Is Taking Matters Into Your Own Hands

The Only Fix Is Taking Matters Into Your Own Hands

Authored by Simon Black via SovereignMan.com,

On Friday evening, the government here in Puerto Rico made an announcement to local retirees that many of them would have their pensions cut.

Poof. Just like that.

The pension cut is part of a debt restructuring plan to help Puerto Rico emerge from bankruptcy, which they declared in May 2017.

Bankruptcy is complicated, so I’ll explain a bit here.

When individuals, corporations, and even local government take on so much debt that they can no longer make payments, they go through a specific legal process called bankruptcy.

During the bankruptcy process, a judge temporarily relieves the bankrupt from making any principal or interest payments on their debt while all sides work out a solution.

The bankrupt puts all of their assets and liabilities on the table, and then works with the bondholders to figure out a plan that everyone can live with.

Sometimes they’re successful. Occasionally you’ll hear about a big company (often an airline) ‘emerging from bankruptcy’.

This means the company was able to work out a deal with its bondholders, i.e. the company agrees to sell some assets and cut costs in order to pay the bondholders, but the bondholders agree to take a loss and only recover, say, 50 cents on the dollar.

Once the deal is settled, the debt is struck off the company’s balance sheet and they begin operating normally again.

Sometimes, though, a deal cannot be reached. And the Bankruptcy Court appoints a special representative to liquidate the company’s assets and split up the proceeds among the bondholders.

But governments can’t exactly do that. Bankruptcy courts don’t have the latitude to sell off police cars, fire trucks, and elementary schools in order to repay government bondholders.

And that’s why Puerto Rico’s debt negotiations have taken so long.

Puerto Rico has more than $70 billion in debt, worth nearly 70% of GDP. And making payments on that debt was consuming nearly 30% of government tax revenue every year.

That’s totally unsustainable, and declaring bankruptcy was inevitable.

When they declared bankruptcy in 2017, it was the biggest bankruptcy case in US history. And definitely one of the most complicated.

Again, the court couldn’t exactly ‘liquidate’ Puerto Rico and pay out the funds to bondholders.

So there’s been more than two years of negotiation between bondholders and all the various officials, pensions, unions, etc.

And on Friday they announced the deal.

Bondholders will take a huge cut of more than 60%. But, as part of the deal, many local retirees in Puerto Rico will see their pensions cut.

Pension payments are an enormous part of the Puerto Rico budget. And since the government here doesn’t have the option of conjuring more money out of thin air, they had no choice but to cut pensions in order to free up cash to pay bondholders.

This is absolutely a sign of things to come in the United States.

Just like Puerto Rico, the US government is heavily in debt. It’s actually much worse.

Puerto Rico’s debt-to-GDP was ‘only’ 70%. The federal government’s debt exceeds 100% of GDP.

And, just like Puerto Rico, the #1 most expensive item in the federal budget is retiree benefits (Social Security and Medicare).

The difference is that Uncle Sam is able to kick the can a lot farther down the road. They have the ‘benefit’ of going deeper into debt because the Federal Reserve will just print more money to buy US government bonds.

But even that has limits.

Social Security is already cashflow negative, and the program’s giant trust funds are starting to deplete their cash reserves.

There are simply too many retirees receiving benefits and not enough people paying into the system. It’s simple arithmetic.

Even the United States Treasury Secretary admits this; he, along with the Secretary of Labor, Secretary of Health and Human Services, etc. publish an annual report forecasting that Social Security’s trust funds will run out of money in about 15 years.

They’re practically giving you a date to circle on the calendar.

This isn’t just a US problem either. A recent report from Citibank estimated that, among the world’s 20 wealthiest nations, the total pension gap is an eye-popping $78 TRILLION.

That makes Puerto Rico’s problem tiny by comparison. And realistically there’s just no way for  governments to solve a problem that large.

Their only hope is to do what Puerto Rico did: default on their promises and cut pensions.

Few people pay attention, though. It’s too far out in the future.

But just because something is far off doesn’t mean we should put it off.

One of the most effective solutions is setting up a more robust retirement structure, something like a Solo 401(k) or SEP IRA.

And if you haven’t started yet and feel like you’re getting a late start, you can move up to $56,000 in qualifying income per year into these types of retirement structures.

So even if you’re already 60, you could put away a ton of money for your retirement over the course of 5-10 years with something as simple as driving around for Uber on the weekend, or selling cupcakes on the side, or just about anything else out there in the Gig Economy.

If you’re young, this is even more important.

An 18-year old who puts $5,000 into an IRA this year could see that money grow to more than $250,000 over the next 50 years.

Yes, that’s a long way off. But time is on your side. And the earlier you get started, the better off you’ll be.

The government has no hope of fixing this. Young people will spend their entire lives paying into a broken system that won’t be there when it comes time for them to collect.

The only fix for this pension problem is taking matters into your own hands. And saving a little bit of money now will literally pay enormous dividends in the future.


Tyler Durden

Mon, 09/30/2019 – 19:45

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Iraqi PM For First Time Confirms Israel Responsible For Multiple Strikes On Iraq

Iraqi PM For First Time Confirms Israel Responsible For Multiple Strikes On Iraq

For the first time Iraq’s government has issued formal charges blaming Israel for a spate of attacks on Iraqi soil over the past months. Iraqi Prime Minister Adel Abdul Mahdi said on Monday the result of weeks-long investigations into multiple airstrikes and violations of Iraq’s airspace show Israel’s military to be the culprit. 

“Investigations into the targeting of some Popular Mobilization Forces positions indicate that Israel carried it out,” Abdul Mahdi told Al Jazeera. Though Tel Aviv was long suspected of prior ‘mystery’ airstrikes on Iran-backed paramilitary bases in July and August, with even Netanyahu strongly hinting responsibility in an Aug. 30 campaign speech, Mahdi’s condemnation marks the first high level allegation from a top Iraqi official. 



Adil Abdul-Mahdi, Prime Minister of Iraq, via Middle East Monitor

The ‘mystery’ explosions that have rocked ammunition depots and bases in and around Baghdad have been stepped up through September, including incidents on Sept. 9, 19, and 22, resulting in dozens of killed and wounded; and more recently last Friday on Imam Ali base near the border with Syria.

In total international reports count nine strikes on Iraq’s Popular Mobilization Forces (PMF) — in some cases while they were allegedly operating just across the country’s western border with Syria. 

Iraq’s prime minister also raised the spectre of war amid a broader standoff between Tel Aviv’s and Tehran, saying “many indicators show that no one wants war in the region except for Israel,” according to a translation by Reuters.



Alleged Israeli airstrike on a military base southwest of Baghdad, Iraq in August. Image source: AP

Israel has long accused Iran of hosting IRGC officers and missiles, with Israeli and Saudi media also claiming Lebanese Hezbollah maintains a presence in the Boukamal region, which was bombed reportedly by either Israeli drones or jets last week. 

There’s currently speculation that the Trump administration may have greenlighted stepped up Israeli attacks on Iranian proxies in the region as an alternative to direct war with Iran. 

This after defense officials have voiced concern Iran is utilizing Iraq’s PMF units to aid Syrian forces in establishing a security corridor stretching along the Syrian-Iraq border, or so-called Iranian “land bridge”.


Tyler Durden

Mon, 09/30/2019 – 19:25

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China’s Renewable Boom Hits The Wall

China’s Renewable Boom Hits The Wall

Authored by Irina Slav via OilPrice.com,

When earlier this year China announced subsidies for 22.79 GW of new solar power capacity, those following the country’s renewable energy story must have started to worry. The capacity subsidized is half the amount approved in 2017, at 53 GW. And chances are that solar and wind additions will continue to fall.

Subsidies are one reason. In January, Beijing said it will only approve solar power projects if they are cost-competitive with coal. Judging by the size of subsidies announced in July, more than 22 GW in projects can boast cost-competitiveness with coal.

Yet there is another reason: curtailment. China-based journalist Michael Standaert wrote in a recent story for Yale Environment 360 that China’s solar and wind farms continue to produce electricity that is wasted because there is not enough transmission capacity.

Renewable energy is a top priority for China as it fights one of the worst air pollution levels in the world while subject to an uncomfortably high degree of reliance on energy imports, namely oil and gas. At the same time, it is one of the biggest—if not the single biggest—driver of global energy demand as its middle class grows fast and with it, energy demand. Now, it seems, energy demand is taking the upper hand.

China has substantially increased subsidies for shale gas exploration and methane separation from coal, Standaert writes. He also quotes a former IEA official as saying, “Though China is the largest clean energy market in the world, wind and solar only accounted for 5.2 percent and 2.5 percent of China’s national power generation in 2018.”

What’s more, Kevin Tu, now a fellow at the Center on Global Energy Policy at Columbia University, tells Standaert that “Against the backdrop of an ongoing U.S.-China trade war and a slowing Chinese economy, political priority of climate change in China is unlikely to become very high in the near future, indicating great difficulties for Beijing to further upgrade its climate ambitions.”

In short, renewables won’t cut it when you need cheap power to feed growing energy demand. By the way, China is not alone in this situation. Energy demand is rising on a global scale and this means emissions are rising, too.

In its latest International Energy Outlook, the U.S. Energy Information Administration poured cold water on the hopes of many climate change fighters by estimating global energy demand will increase by as much as 50 percent between 2018 and 2050. That’s under the EIA’s reference case scenario, that is, the middle ground between the scenario of high economic growth, under which energy demand growth will be even greater and the scenario of low economic growth, which could give the planet a breather.

Unsurprisingly, Asia will be the biggest driver of this growing demand and China specifically as its economy continues to expand at rates higher than the mature economies of the OECD. As it expands, Beijing—as other governments around the world—would need to juggle between satisfying this growing energy demand and cutting emissions.

It seems like an impossible task. To do it, China would need to solve the curtailment problem and make solar and wind even cheaper, and not just for households but for the industrial sector: it is this sector that will account for most of energy demand growth to 2050.


Tyler Durden

Mon, 09/30/2019 – 19:05

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Schiff Targets Trump-Putin Transcripts; Kremlin Says Nyet So Fast

Schiff Targets Trump-Putin Transcripts; Kremlin Says Nyet So Fast

House Intelligence Committee Chairman Rep. Adam Schiff (D-CA) is gunning for transcripts of President Trump’s phone conversations with Russian President Vladimir Putin, citing concerns that Trump may have jeopardized national security, according to Reuters

“I think the paramount need here is to protect the national security of the United States and see whether in the conversations with other world leaders – and in particular with Putin – that the president was also undermining our security in a way that he thought would personally benefit his campaign,” Schiff said on NBC‘s “Meet the Press.” 

The Democratic-led House last week launched an official impeachment inquiry into Trump in the aftermath of a whistleblower complaint from an individual within the U.S. intelligence community that Trump solicited interference by Ukraine in the 2020 election for his own political benefit.

The whistleblower’s complaint cited a telephone call in which Trump asked Ukrainian President Volodymyr Zelenskiy to open an investigation of former Vice President Joe Biden, a leader among Democratic candidates seeking to challenge Trump in 2020, and his son Hunter. Hunter Biden sat on the board of a Ukrainian gas company. –Reuters

In response to Schiff’s comments, the Kremlin insisted that US lawmakers would require Russia’s consent to publish transcripts of any conversations between Trump and Putin

“Of course their publication is to some extent only possible by mutual agreement of the parties. This is a certain diplomatic practice,” said Kremlin spokesman Dmitry Peskov

“To be more specific, perhaps, diplomatic practice in general does not envisage their publication. If there are some signals from the Americans, then we will discuss (them).”

Interestingly, Schiff hasn’t requested transcripts of any calls between former Vice President Joe Biden and former Ukrainian government officials. 


Tyler Durden

Mon, 09/30/2019 – 18:50

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Here Are The Billions Of Loans Exposed To A Potential WeWork Bankruptcy

Here Are The Billions Of Loans Exposed To A Potential WeWork Bankruptcy

With the WeWork IPO now dead and buried, and as attention shifts to the company which for years was world consciousness elevating Adam Neumann’s personal piggybank (he cashed out to the tune of $740 million, while stranding his thousands of employees with worthless stock) many are noticing what we highlighted last week, namely that WeWork now has just a few months of cash left.

As we noted recently, the most immediate task facing WeWork is that once the IPO was called off, it unraveled a $6 billion financing package. It is also the gargantuan challenge facing the company’s two new co-CEOs brought in to replace Neumann – Sebastian Gunningham and Artie Minson – who have to find a way forward for a company that was until just a few weeks ago one of the world’s most valuable private startups with a valuation of $47 billion… but has not only never made a penny in profit but saw its losses grow the more its revenue increased.

Meanwhile, as we also reported, in an attempt to shore up its rapidly shrinking cash balance, WeWork has been in talks with Goldman and JPMorgan about a new $3 billion loan, but that’s as good as dead: any new deal requires the company to successfully IPO, which we now know is not happening. 

There is one final option: going to Masayoshi Son’s, SoftBank, the Japanese company that has already pumped in more than $10 billion, hat in hand and begging for a bailout. But is Son willing to jeopardize the future of his VisionFund, and perhaps his entire organization, to throw even more money after what is clearly a terrible investment?

For now, the answer is unknown. What is known is that the company lost $690 million in the first six months and is expected to generate a loss from operations approaching $3 billion as it burns through tens of millions in cash daily. Which means that according to analyst estimates, with its existing $2.5 billion in cash as of June 30, the company could run out of money by mid-2020.

And then there is the real liquidity crisis staring everyone in the face: as part of its tremendous growth, by the end of 2019 WeWork will have not only burned $6 billion since 2016, but will have accrued $47 billion of future rent payments due in the form of lease liabilities. On average it leases its buildings for 15 years. Yet as Bloomberg reported previously, its tenants are committed to paying only $4 billion, and on average have leases for 15 months.

in short, a WeWork solvency crisis (read: bankruptcy) would send a shockwave across the US Commercial Real Estate market. Correction, it would send a shockwave across the global commercial real estate market. The reason is that with over $47 billion in lease liabilities, WeWork is already one of the world’s largest lessees, trailing only oil exploration giants Petrobras and Sinpec, an astonishing feat for the flexible office space provider “which was founded less than a decade ago, bleeds cash, and doesn’t plan to become profitable any time soon.”

And then there is the not so subtle fact that WeWork is already the single biggest tenant in New York City, as well as Chicago, Denver and central London.

Said otherwise, a WeWork insolvency would send the Commercial Real Estate market in New York, London, and most major metropolises into a tailspin.

Which brings up the next logical question: who is exposed?

Luckily, commercial real estate expert TREPP has already done work when it comes to WeWork’s US-facing exposure in the CRE realm and has found that co-working giant is flagged as a top five tenant behind $3.3 billion in CMBS debt across 36 properties. Courtesy of Trepp, here is a summary of WeWork’s exposure by state, which as expected, shows New York and California as the top CMBS markets with WeWork exposure.

Drilling down on some of the key properties, we find the following Top 10 locations that will find themselves scrambling to undo their billions in contractual exposures to a potentially insolvent WeWork:

Here is a different way of representing the exposure, this time from the Deal side perspective:

Readers seeking the full list of WeWork exposure are urged to contact Trepp  directly.

For those asking why is any of the above information relevant, the answer is simple: in a year when a record 11,000 stores are expected to shutter…

… as a result of the ongoing “retail apocalypse” which today claimed its latest victim, fast-fashion pioneer Forever 21, which is set to close as many of 350 of its 800 stores around the world…

… commercial real estate is looking at an unprecedented rental payment “hole” as countless tenants file for bankruptcy and put their lease payments on indefinite halt.

Throw WeWork – and its $47 billion in lease obligations in the mix – and CRE is facing a CREsh of epic proportions, because in a bankruptcy, all those obligations would be frozen and squeezed among all the other pre-petition claims, which of course means that the commercial real estate market of cities where WeWork is especially active – like New York and London – would suddenly find itself paralyzed, as a deflationary tsunami is unleashed among one of the strongest performing markets since the financial crisis.

Whether that will in fact happen remains to be seen: after all, with so much hanging on whether the cashflow burning WeWork lunacy can continue, one could argue that when it comes to the commercial real estate market, the company has become too big to fail.

That’s precisely what Boston Fed president Eric Rosengren said on September 20, when he warned just how serious WeWork’s leveraged debacle has become. In a speech delivered to New York University, the Boston Fed head seems to have seen the light, fearing financial instability from WeWork and its ilk:

Mr. Rosengren noted the risks posed by commercial real estate, which have long been a concern of his, as a possible vector to amplify trouble.

Without naming any firms, Mr. Rosengren noted the particular concerns posed by co-working companies. He made this comment as the parent of office-sharing firm WeWork postponed its initial public offering amid investor doubts about its valuation and concerns about its corporate governance. Office-sharing firms are particularly exposed to risks should the economy run into trouble, and could wound landlords in the process, Mr. Rosengren said.

“In a downturn the co-working company would be exposed to the loss of tenant income, which puts both them and the property owner at risk if they cannot make lease payments to the owner of the building,” he said.

“I am concerned that commercial real estate losses will be larger in the next downturn because of this growing feature of the real estate market, which could ultimately make runs and vacancies more likely due to this new leasing model,” Mr. Rosengren said.

“The fact that the shared office model relies on small-company tenants with short-term leases, combined with the potential lack of recourse for the property owner, is potentially problematic in a recession. This also raises the issue of whether bank loans to property owners in cities with major penetration by co-working models could experience a higher incidence of default and greater loss-given-defaults than we have seen historically.”

Ironically, unless some last ditch source of emergency WeWork funding emerges – and there is about 6 months for that to happen – Rosengren’s warning about a crash in the commercial real estate market will come true. Why ironic? Because it will be none other than the Fed which will be “forced” to provide said emergency funding, making the global moral hazard hole even deeper in a world in which not even one too big to fail zombie company is allowed to fail ever again.


Tyler Durden

Mon, 09/30/2019 – 18:35

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Alexander Butterfield

In July, 1973, Alexander Butterfield, a virtually unknown White House staffer, revealed, in testimony before the Senate Special Watergate Committee, that President Nixon had installed a secret taping system in the White House, and that all of Nixon’s conversations were recorded, automatically, on tape.

The White House had released a document to the Committee staff that was intended to defend the President by impugning and rebutting public testimony that Presidential Counsel John Dean had given the month before. The document contained extensive quotations from conversations between Nixon and Dean, and Committee staffers started to wonder how, exactly, these lengthy quotations were obtained. They began routinely asking interviewees whether they knew of a taping system.  When they asked Butterfield, he replied with one of the great sentences in US legal and political history: “I was wondering when you would ask that.”  “Yes,” he continued; “there is tape in the White House.”

It is difficult to convey, to those of you too young to remember the Watergate episode, how electrifying Butterfield’s revelations were.  It’s one of the very few “people remember where they were when they heard …” moments that did not involve loss of life (Pearl Harbor, the Kennedy Assassination, 9-11).  At the time of his testimony, the Watergate hearings had been going on for months, and there had been charges and counter-charges and counter-counter charges involving what the President had been told, and what the President had said, in connection with the Watergate break-in.  And then suddenly, seemingly out of the blue, it turned out that there was a record of everything that people had told Nixon, and everything Nixon had told them.

It was a true bombshell.  If there is a single moment that represents the beginning of the end of Nixon’s presidency, this was it. The tapes were at the center of the Saturday Night Massacre; Special Prosecutor Archibald Cox demanded their production as part of his investigation, and Nixon ordered Attorney General Elliot Richardson to fire Cox; when Richardson refused, Nixon fired him, and ordered Deputy AG (and, at least for the moment, Acting AG) William Ruckleshaus to fire Cox; when Ruckelshaus refused, Nixon fired him, until he finally found someone in the chain of command—Robert Bork, in his first starring role—willing to do as ordered.  The Saturday Night Massacre then led directly to the House Impeachment hearings and passage of the Articles of Impeachment.

And it was Nixon’s subsequent refusal, the following year, to turn over the tapes to Judge Sirica (DDC) to be used as evidence in criminal cases brought by the new Special Prosecutor, Leon Jaworski, that led to an epic confrontation between the Executive and Judicial Branches.  On July 24, 1974 a unanimous Supreme Court ordered Nixon to turn over the tapes in (the aptly-named) US v. Nixon, and, fortunately for the country, he did so. Two weeks later, transcripts were released by Judge Sirica, including the famous “smoking gun”: the conversation between Nixon and his top aides on June 23, 1972—six days after the Watergate break-in—in which Nixon approves the plan to try to get CIA Director Richard Helms to tell FBI Director L. Patrick Gray to halt the Bureau’s investigation into the Watergate break-in on the grounds that it was a “national security matter,” when it was, in fact, purely a matter of protecting Nixon’s rear end.

Once the “smoking gun” transcript was made public, Nixon’s political support vanished more-or-less overnight. The Republicans jumped ship en masse; the 10 Republicans on the House Judiciary Committee who had voted against the Articles of Impeachment (compared to the seven who had voted for impeachment) all stated publicly that they would change their vote when the Articles came up on the House Floor, and, famously, a delegation of prominent Republican senators—including Sens. Goldwater, Baker, Scott men of real character and patriotism and dignity, who understood the need to put the needs of the country before the needs of their party—visited the Oval Office and gave Nixon the bad news: they wouldn’t support him anymore, and he would lose an impeachment vote in the Senate.

Is it just me, or are others starting to have that “deja vu all over again” feeling?  I’m not the only one who thinks that there just might be—might be—a more detailed account of exactly what President Trump said in that July 25th phone call, am I? I am aware that Nixon himself ordered the White House taping system dismantled, and that subsequent presidents, Democrats and Republicans alike, have been loath to re-install it precisely because of the hot soup in which it had landed Nixon and could land them.  At the same time, in 2019 it is difficult to imagine—for me, at least—that the highest levels of our government rely entirely on mid-20th century stenographic technology to make a record of who said what to whom.

When the Wall Street Journal first reported on Trump’s July 25th phone call, the reporters, quoting “people familiar with the matter,” observed that Trump “repeatedly pressured the president of Ukraine to investigate Joe Biden’s son, … urging Volodymyr Zelensky about eight times to work with Rudy Giuliani on a probe that could hamper Mr. Trump’s potential 2020 opponent.”  But the “memorandum” released by the White House with a “summary” of the conversation doesn’t have eight references to Biden or to Giuliani.  Makes you wonder, no?

 

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Alexander Butterfield

In July, 1973, Alexander Butterfield, a virtually unknown White House staffer, revealed, in testimony before the Senate Special Watergate Committee, that President Nixon had installed a secret taping system in the White House, and that all of Nixon’s conversations were recorded, automatically, on tape.

The White House had released a document to the Committee staff that was intended to defend the President by impugning and rebutting public testimony that Presidential Counsel John Dean had given the month before. The document contained extensive quotations from conversations between Nixon and Dean, and Committee staffers started to wonder how, exactly, these lengthy quotations were obtained. They began routinely asking interviewees whether they knew of a taping system.  When they asked Butterfield, he replied with one of the great sentences in US legal and political history: “I was wondering when you would ask that.”  “Yes,” he continued; “there is tape in the White House.”

It is difficult to convey, to those of you too young to remember the Watergate episode, how electrifying Butterfield’s revelations were.  It’s one of the very few “people remember where they were when they heard …” moments that did not involve loss of life (Pearl Harbor, the Kennedy Assassination, 9-11).  At the time of his testimony, the Watergate hearings had been going on for months, and there had been charges and counter-charges and counter-counter charges involving what the President had been told, and what the President had said, in connection with the Watergate break-in.  And then suddenly, seemingly out of the blue, it turned out that there was a record of everything that people had told Nixon, and everything Nixon had told them.

It was a true bombshell.  If there is a single moment that represents the beginning of the end of Nixon’s presidency, this was it. The tapes were at the center of the Saturday Night Massacre; Special Prosecutor Archibald Cox demanded their production as part of his investigation, and Nixon ordered Attorney General Elliot Richardson to fire Cox; when Richardson refused, Nixon fired him, and ordered Deputy AG (and, at least for the moment, Acting AG) William Ruckleshaus to fire Cox; when Ruckelshaus refused, Nixon fired him, until he finally found someone in the chain of command—Robert Bork, in his first starring role—willing to do as ordered.  The Saturday Night Massacre then led directly to the House Impeachment hearings and passage of the Articles of Impeachment.

And it was Nixon’s subsequent refusal, the following year, to turn over the tapes to Judge Sirica (DDC) to be used as evidence in criminal cases brought by the new Special Prosecutor, Leon Jaworski, that led to an epic confrontation between the Executive and Judicial Branches.  On July 24, 1974 a unanimous Supreme Court ordered Nixon to turn over the tapes in (the aptly-named) US v. Nixon, and, fortunately for the country, he did so. Two weeks later, transcripts were released by Judge Sirica, including the famous “smoking gun”: the conversation between Nixon and his top aides on June 23, 1972—six days after the Watergate break-in—in which Nixon approves the plan to try to get CIA Director Richard Helms to tell FBI Director L. Patrick Gray to halt the Bureau’s investigation into the Watergate break-in on the grounds that it was a “national security matter,” when it was, in fact, purely a matter of protecting Nixon’s rear end.

Once the “smoking gun” transcript was made public, Nixon’s political support vanished more-or-less overnight. The Republicans jumped ship en masse; the 10 Republicans on the House Judiciary Committee who had voted against the Articles of Impeachment (compared to the seven who had voted for impeachment) all stated publicly that they would change their vote when the Articles came up on the House Floor, and, famously, a delegation of prominent Republican senators—including Sens. Goldwater, Baker, Scott men of real character and patriotism and dignity, who understood the need to put the needs of the country before the needs of their party—visited the Oval Office and gave Nixon the bad news: they wouldn’t support him anymore, and he would lose an impeachment vote in the Senate.

Is it just me, or are others starting to have that “deja vu all over again” feeling?  I’m not the only one who thinks that there just might be—might be—a more detailed account of exactly what President Trump said in that July 25th phone call, am I? I am aware that Nixon himself ordered the White House taping system dismantled, and that subsequent presidents, Democrats and Republicans alike, have been loath to re-install it precisely because of the hot soup in which it had landed Nixon and could land them.  At the same time, in 2019 it is difficult to imagine—for me, at least—that the highest levels of our government rely entirely on mid-20th century stenographic technology to make a record of who said what to whom.

When the Wall Street Journal first reported on Trump’s July 25th phone call, the reporters, quoting “people familiar with the matter,” observed that Trump “repeatedly pressured the president of Ukraine to investigate Joe Biden’s son, … urging Volodymyr Zelensky about eight times to work with Rudy Giuliani on a probe that could hamper Mr. Trump’s potential 2020 opponent.”  But the “memorandum” released by the White House with a “summary” of the conversation doesn’t have eight references to Biden or to Giuliani.  Makes you wonder, no?

 

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Girl Admits To Hate Crime Hoax At School Where Karen Pence Teaches

Girl Admits To Hate Crime Hoax At School Where Karen Pence Teaches

Isn’t it time the resistance learned from its (multiple mistakes)?

Last week, twelve-year-old black student Amari Allen said three boys from her school, who she said are white, cut off her hair on Monday.

Amari – who NBC Washington takes the time to note is a straight-A student and violin player – said the boys started bullying her at the beginning of the school year. She has attended the school since kindergarten and has always liked it. 

But on Monday, she was at recess and about to go down a slide when one of the boys grabbed her and put a hand over her mouth. Another boy grabbed her arms. A third boy cut off some of her hair.

Amari’s grandmother, Cynthia Allen, was stricken as she spoke about the ambush.

“It was like she just died. That’s how painful it was for me,” she said.

Amari’s grandfather also said it hurt him.

“My heart just broke,” he said. “I was just paralyzed. I couldn’t get myself together.”

Sounds awful!

BUT… the key to why this is more interesting is that the incident occurred at the evangelical Christian school where Vice President Mike Pence’s wife, Karen Pence, teaches part-time.

While race-based hate-attacks play well to the narratives the liberal media would like to paint about the racist deplorables who need to know their place in the world and leave it to “they” to run the world, one would think at least a second though would be given to the farce that was (and is) Jussie Smollett’s fake attack in Chicago.

But no… The media ran with it… with no questioning of its reality

NBC News’ wrote wrote…

Three sixth-grade white boys at a Christian school in Virginia where Vice President Mike Pence’s wife works cut a black girl’s hair, calling it ‘nappy’ and her ‘ugly,’ the girl says.”

And then the truth came out

Stephen Danis, the principal at Immanuel, said in a note to parents, according to The Washington Post:

We can now confirm that the student who accused three of her classmates of assault has acknowledged that the allegations were false. We’re grateful to the Fairfax County Police Department for their diligent work to investigate these allegations,”

But somehow managed to shift the attention in the statement back to the “victim” of this fake non-crime…

While we are relieved to hear the truth and bring the events of the past few days to a close, we also feel tremendous pain for the victims and the hurt on both sides of this conflict. We recognize that we now enter what will be a long season of healing.”

The girl’s family has apologized in a statement…

“To those young boys and their parents, we sincerely apologize for the pain and anxiety these allegations have caused,” Allen’s grandparents wrote in a statement, according to WaPo.

“To the administrators and families of Immanuel Christian School, we are sorry for the damage this incident has done to trust within the school family and the undue scorn it has brought to the school. To the broader community, who rallied in such passionate support for our daughter, we apologize for betraying your trust.

…so that takes care of everything?

Just a reminder of what Amari’s grandmother said before it was exposed as a hoax:

“Some consequences should be implemented so that the school will send a strong message: We will not tolerate this, under any circumstances. No matter who you are,”

Indeed Cynthia!

Let’s hope someone learned something from this!

Because everyone knows, by now, you never go full Smollett!


Tyler Durden

Mon, 09/30/2019 – 18:10

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Challenging Edward Snowden  

In this episode I cross swords with John Samples of the Cato Institute; we debate whether Silicon Valley’ is trying to disadvantage conservative speech and what to do about it. I accuse him of Panglossian libertarianism; he challenges me to identify any way in which bringing government into the dispute will make things better. I say government is already in it, citing TikTok’s PRC-friendly “community standards” and Silicon Valley’s obeisance to European norms on hate speech and terror incitement.

Disagreeing on how deep the Valley’s bias runs, we agree to put our money where our mouths are: For $50, I take the under and he takes the over on whether Donald J. Trump will last a year after leaving office without being suspended or banned from Twitter.

There’s a lot of news in the roundup, too.

David Kris explains the background of the first CLOUD Act agreement that may be signed this year with the UK.

Nate Jones and I ask, “What is the president’s beef with CrowdStrike, anyway?” We find a certain amount of common ground on the answer.

This Week in Counterattacks in the War on Terror: David and I recount the origins and ironies of Congress’s willingness to end the NSA 215 phone surveillance program. We also take time to critique the New York Times’s wide-eyed hook-line-and-sinker ingestion of an EFF attack on the FBI’s use of National Security Letters.

Edward Snowden’s got a new book out, and the Justice Department wants to make sure he never collects his royalties. Nate explains. I’m just relieved that I will be able to read it without having to shoplift it. And as this seems to be the episode for challenges, I offer Snowden a chance to be interviewed on the podcast:  Anytime, anywhere, Ed!

Matthew Heiman explains the latest NotPetya travail for FedEx: A shareholder suit alleging that the company failed to disclose how much damage the malware caused to its ongoing business.

Evan Abrams gives a hint about the contents of Treasury’s 300-page opus incorporating Congress’s overhaul of CFIUS into the CFR.

I credit David for inspiring my piece questioning how long end-to-end commercial encryption is going to last, and we note that even the New York Times seems to be raising questions about whether Silicon Valley’s latest enthusiasm is actually good for the world.

Matthew tells us that China may have a new tool to use in the trade war – or at least to keep companies toeing the party line: The government is assigning social credit scores to businesses.

Finally, Matthew outlines France’s OG take on international law and cyber conflict. France has opened up some distance between its views and those of the United States, and everyone will soon get a chance to talk at even greater length on the topic, as the UN gears up two different bodies to engage in yet another round of cyber-norm-building.

Download the 280th Episode (mp3).

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Trump, Not the Whistleblower, Has Acted Illegally

Partisans of this president are looking for every way to undermine and smear the Ukraine whistleblower. They have accused the person of being a Democratic hack. They have questioned the whistleblower’s motives and integrity. And they have speculated that he or she is part of a deep state conspiracy to take down President Donald Trump.

But Trump himself took the cake when he demanded to know the identity of the person while saying that whoever did so was “close to a spy.”

“You know what we used to do in the old days when we were smart with spies and treason, right? We used to handle it a little differently than we do now,” he said, hinting that the person deserved severe punishment—perhaps even execution.

But there is a vast difference between a domestic spy who sells out his country to another for personal gain and a whistleblower who tries to protect his country from corrupt officials abusing the powers granted to them.

If anything, Trump’s actions are more in line with a spy’s given that he is using his public office for private gain. As Frank Bowman, University of Missouri law professor and author of High Crimes and Misdemeanors: A History of Impeachment for the Age of Trump, notes, in authoritarian states like Vladimir Putin’s Russia, it may be seen as normal for a leader to use state power to ensure his continuation in office. In this country, a president’s interest in getting re-elected is considered to be a private, rather than a public, interest. (Dislosure: Bowman is my tenant.)

That’s why, argues The Volokh Conspiracy’s Ilya Somin, to the extent that Trump threatened to withhold congressionally authorized aid to Ukraine until President Volodymyr Zelenskiy promised to dig up dirt on Trump’s political opponent, he basically demanded an in-kind political contribution, a kind of private benefit that 18 USC Section 601 explicitly outlaws. Soliciting foreign contributions for a political campaign is not illegal, per se. But what is potentially criminally illegal—along with being unconstitutional—is that Trump tried to use congressional aid as leverage to do so.

The whistleblower, by contrast, has scrupulously adhered to the law.

University of Texas’ Stephen Vladeck points out that the amended 1978 Foreign Intelligence Surveillance Act (FISA) laid out the channels and procedures that whistleblowers must follow in order to expose wrongdoings by higher-ups in intelligence agencies—both to protect classified information and themselves from retaliation. This means that the whistleblowers dealing with sensitive intelligence cannot leak the information to the press or the public. Rather, they must share their concerns with the Office of the Inspector General (OIG) who, in turn, is required to transmit credible concerns to the director of national intelligence (DNI). The director then has seven days to transmit this information to congressional intelligence committees along with his (or her) own comments.

In this case, the whistleblower did exactly what he was supposed to do. Unlike Daniel Ellsberg of Pentagon Papers fame and Edward Snowden, the National Security Agency contractor who exposed government surveillance of ordinary Americans, both of whom illegally (and heroically for anti-war, anti-surveillance libertarians!) copied classified information and released it publicly, the whistleblower, in this case, did none of those things. He stayed within official channels.

But the folks whom he reported his concerns to didn’t. Vladeck notes that for the first time in the 21-year history of the revised FISA statute, DNI Joseph Maguire did not forward the whistleblower’s complaints to Congress. Why? Because the Department of Justice told him not to, even though the DOJ Office of the Inspector General, a quasi-independent watchdog, deemed it worthy of congressional scrutiny.

Still, the president has the temerity to accuse the whistleblower (and those around him) of being spies who have committed treason while advocating that we deal with them like we used to do in the “old days” when we were apparently smarter. These are the kinds of threats that, if not unambiguously rejected, could prevent future whistleblowers from coming forward to expose executive abuse. They are more worthy of banana republics led by authoritarian rulers who have contempt for any law that holds them accountable.

Trump has gotten himself into big trouble. And he will seemingly stop at nothing to get himself out of it—even if that means personal attacks, threats, and trashing of the institutions and norms painstakingly erected over the course of the last 250 years.

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