San Jose Unified School District Discriminated Against Fellowship of Christian Athletes, Based on …

From Fellowship of Christian Athletes v. San Jose Unified School Dist., decided yesterday by the Ninth Circuit, in an opinion by Judge Kenneth Lee joined by Judge Danielle Forrest:

The Fellowship of Christian Athletes (FCA) requires students serving in leadership roles to abide by a Statement of Faith, which includes the belief that sexual relations should be limited within the context of a marriage between a man and a woman. The San Jose Unified School District … revoked FCA’s status as an official student club at its high schools, claiming that FCA’s religious pledge requirement violates the School District’s non-discrimination policy….

The School District engaged in selective enforcement of its own non-discrimination policy, penalizing FCA while looking the other way with other student groups. For example, the School District blessed student clubs whose constitutions limited membership based on gender identity or ethnicity, despite the school’s policies barring such restricted membership. The government cannot set double standards to the detriment of religious groups only….

We apply strict scrutiny to government regulations that burden religious exercise unless those laws are neutral and generally applicable. A law is not neutral and generally applicable if it is selectively enforced against religious entities but not comparable secular entities. “[W]hether two activities are comparable for purposes of the Free Exercise Clause must be judged against the asserted government interest that justifies the regulation at issue.” … Finally, the “Government fails to act neutrally when it proceeds in a manner intolerant of religious beliefs or restricts practices because of their religious nature.”

Under strict scrutiny, the government can prevail only if it shows that its restrictions on religion “are justified by a compelling interest and [are] narrowly tailored to advance that interest.” Given that high bar, the defendants do not argue that their policies can pass muster under strict scrutiny; rather, they contend that strict scrutiny does not apply at all because their policies are neutral and generally applicable.

But the record before us shows that the School District’s non-discrimination policies have been, and continue to be, selectively enforced against FCA. Other secular student groups maintain facially discriminatory membership criteria but enjoy ASB recognition. In short, the School District targeted FCA because of its religious-based views about marriage and sexuality, and not merely because of its alleged violation of non-discrimination policies….

The ASB-recognized Senior Women of Leland High School maintains a discriminatory membership criterion that violates the All-Comers Policy. The Senior Women Club’s mission is to “connect the school’s women with local events.” The club’s constitution limits membership based on gender identity. Even though the Senior Women Club explicitly stated its intention to exclude males from membership—i.e., that they intend to discriminate based on gender identity in violation of the All-Comers Policy—the School District still granted it ASB recognition. This alone shows selective enforcement by the School District.

To be clear, there may be very good reasons for the Senior Women Club to have restricted membership. A female-only group may enhance mentorship, camaraderie, and networking for its members. But the School District’s All-Comers policy does not carve out exceptions for “benign” discriminatory membership rules. Simply put, the Senior Women Club’s constitution violates the School District’s All-Comers policy, yet the School District recognizes it as an ASB student club.

Still, the defendants argue that the Senior Women Club’s discriminatory membership rule should be excused because the club agreed to comply with the All-Comers Policy when it signed the school’s standardized club application form. The district court charitably said that there was “arguably some tension” between the Senior Women club’s membership criteria and its affirmation of the All-Comers Policy. The district court then resolved this “tension” in the School District’s favor because the plaintiffs had not proven that the Senior Women Club actually discriminates based on gender identity.

The district court clearly erred. First, the Senior Women Club’s discriminatory membership criterion and the All-Comers Policy are not merely in “some tension.” Rather, they are diametrically opposed to each other—only one can be true. Either membership is open only to female students or it is open to all students. And the club specified on the application form required by the School District for the 2021–22 school year that its membership was open only to “seniors who identify as female.” We fail to see how this club can maintain its restrictive membership criteria while complying with the All-Comers Policy.

The district court relied on the boilerplate nondiscrimination statement in the club application form that the Senior Women Club’s student leader signed as proof that the club does not discriminate based on gender identity. True, the boilerplate statement in this form does have the School District’s required non-discrimination language in it. But the Senior Women club modified that form twice by handwriting in discriminatory membership conditions based on gender identity. First, as noted above, the Senior Women Club’s leader handwrote that only “seniors who identify as female” can become members. To accentuate this point, she then handwrote that a student will no longer be considered a member if the student “is not a senior who does not identify as female.” In other words, the Senior Women Club modified the terms of ASB participation when it inserted its gender-based membership conditions into its club application form submitted for ASB approval. And when the School District approved the Senior Women Club’s application, it assented to the club’s discriminatory condition.

Whether the plaintiffs can set forth specific instances when the Senior Women Club has discriminated against males is irrelevant under the School District’s reasoning. The School District has repeatedly emphasized that the mere existence of FCA’s religious beliefs was enough to deny ASB recognition, regardless of any affirmation to the contrary. And according to the School District, FCA will be denied recognition so long as it maintains its student leadership requirements, even though there is no evidence that FCA has ever denied a student leadership application because the student disagreed with FCA’s statements of belief. So, whether the Senior Women Club actually discriminates is beside the point. The mere existence of the Senior Women Club’s discriminatory criteria should likewise require denying it ASB recognition. But instead, the School District welcomed this club.

{We also question whether a club’s mere affirmation that it will follow the All-Comers Policy is in fact meaningful. For example, Big Sisters/Little Sisters is obviously intended for female students only; it is unclear that a male student would or should try to serve as a mentor or seek guidance through this group. Big Sisters/Little Sisters may have affirmed the All-Comers Policy on the School District’s form, but the club’s name and mission is obviously gender-specific. At oral argument, the defendants’ counsel highlighted how little the affirmation means: she conceded that a White nationalist group would not run afoul of the School District’s All-Comers Policy or its Non-Discrimination Policy so long as the group signed the affirmation statement and club application form stating that anyone could join the group. Not only does such a formalistic litmus test fall short of serving the School District’s goal of inclusiveness, but it appears to penalize student groups that are truthful about their mission and membership.}

The dissent criticizes us for crediting the plaintiffs’ evidence of Senior Women Club’s discriminatory membership policy because “it is not our role to find facts.” We agree that such fact finding would be inappropriate if there was any real dispute that the Senior Women maintain discriminatory membership criteria. But the School District admits that the discriminatory criteria exists and “under the District’s policy the … activities director should have required the Senior Women Club to clarify or modify their handwritten characterization of their members or else disapproved the application.” We are not required to shut our eyes to “uncontested facts” found within the record….

[The School District has also] repeatedly looked the other way when secular ASB organizations maintained discriminatory membership and leadership criteria that violated the School District’s policies before the All-Comers Policy went into effect during the 2021–22 school year [and while a previous Non-Discrimination Policy was in effect].

For example, Girl Talk and Big Sisters/Little Sisters limited membership to female-identifying students, which violated the Non-Discrimination Policy’s prohibition against gender identity discrimination. The South Asian Club also “prioritize[d]” members who were South Asian. Yet these clubs retained ASB recognition because, as Pioneer’s Activities Director admits, the school never received any complaints from students or teachers about these gender-or ethnicity-limited clubs.

The defendants argue that we cannot consider these past instances of selective enforcement of the then-controlling Non-Discrimination Policy when evaluating prospective relief because the School District has since implemented the “new” All-Comers Policy. We disagree. Past examples of selective enforcement inform whether the School District is still selectively enforcing the “new” All-Comers Policy because these two policies are effectively one and the same. Indeed, the School District’s counsel at oral argument walked away from the assertion that the All-Comers Policy is “new”: She represented that “[the All-Comers Policy] is not a change in practice … and what [the School District] was implementing in 2021 was a formalization of a long-standing practice of the School District.”

In other words, the “new” policy is just a rebranding. The Non-Discrimination Policy and the All-Comers Policy are substantively identical. Based on their language, both policies purport to bar discrimination. Both policies also have the effect of excluding FCA from ASB while allowing secular groups that discriminate based on protected characteristics to maintain ASB status. And both policies were enacted and implemented by the same School District and Pioneer officials that expressed hostility towards FCA’s religious views (more on that later)….

{The plaintiffs also argue that the School District’s policies facially violate the EAA, and their First Amendment rights of free speech, association, and free exercise of religion. The School District responds that this position conflicts with binding precedent. In Christian Legal Society v. Martinez (2010), the Supreme Court held that an All-Comers Policy identical to the School District’s here did not run aground of the EAA or the First Amendment. [This might be a mistake as to the EAA, which I don’t think CLS v. Martinez mentioned. -EV] We also held that similar non-discrimination policies do not violate the EAA or First Amendment. See Alpha Delta Chi-Delta Chapter v. Reed (9th Cir. 2011); Truth v. Kent School Dist. (9th Cir. 2008). The plaintiffs reply that our decision in Truth only approved of non-discrimination policies as applied to student members but not its leadership and rely on Hsu v. Roslyn Union Free Sch. Dist. No. 3 (2d Cir. 1996), which held that impeding a group’s ability to exclude non-Christians from leadership positions violated the EAA. We need not decide these issues or address the plaintiffs’ and certain amici’s argument that intervening Supreme Court decisions have undercut Martinez and Truth because we hold that the plaintiffs will likely prevail on their as-applied challenges.}

Judge Lee also wrote a separate concurrence, just for himself, focusing on what he saw as evidence of religion-based hostility on the part of School District decisionmakers:

Under the First Amendment, the government must “proceed in a manner neutral toward and tolerant” of people’s “religious beliefs.” The School District contends that there is not a “whiff of antireligious animus” motivating its actions. The record, however, belies that assertion.

One schoolteacher called the Fellowship of Christian Athletes’ (FCA) beliefs “bullshit” and sought to ban it from campus. Another described evangelical Christians as “charlatans” who perpetuate “darkness” and “ignorance.” And yet another teacher denigrated his own student as an “idiot” for empathizing with FCA members who faced backlash from teachers and students.

This is not, to put it mildly, neutral treatment of religion. More than a whiff, a stench of animus against the students’ religious beliefs pervades the Pioneer High School campus….

Pioneer’s Climate Committee—the body that led the district-wide push for FCA derecognition—had members that expressed remarkably similar hostile statements. Peter Glasser was the most forthcoming about his contempt for FCA’s religious beliefs. The day after learning about FCA’s religious-based views on marriage and sexuality, Glasser channeled his inner Martin Luther, pinning the Statement of Faith and Sexual Purity Statement to his classroom whiteboard along with his grievances. But instead of a reformation, Glasser demanded an inquisition. As he explained in emails sent to Principal Espiritu, FCA’s “bullshit” views “have no validity” and amount to heresy because they violated “my truth.” Glasser believed “attacking these views is the only way to make a better campus” and proclaimed that he would not be an “enabler for this kind of ‘religious freedom’ anymore.”

Glasser’s desire to attack FCA’s views makes plain that FCA, putting it charitably, was “less than fully welcome” on Pioneer’s campus. Glasser’s comments also improperly imputed insincerity to FCA’s religious views by referring to their beliefs as an exercise in (air quotes) “religious freedom.”

Glasser was not the only skeptic. Michelle Bowman also serves on the Climate Committee and as faculty advisor to the Satanic Temple Club. In discussing this lawsuit with a former student, she opined that “evangelicals, like FCA, are charlatans and not in the least bit Christian,” and “choose darkness over knowledge and they perpetuate ignorance.” But it is not for Bowman to dictate what beliefs are genuinely Christian. Id. at 1731 (The government cannot “pass[ ] judgment upon or presuppose[ ] the illegitimacy of religious beliefs.”). Nor should the government disfavor religious-based beliefs, even if many may view them as not “acceptable, logical, consistent, or comprehensible.”

With these two individuals in the room, the Climate Committee concluded that FCA’s Statement of Faith and Sexual Purity Statement go against Pioneer High School’s core values and that the Committee “need[s] to take a united stance” against FCA. The Committee’s unity suggests there was little to no push back against Glasser and Bowman’s views. So does the speed of the derecognition decision—two days later, Principal Espiritu informed FCA that they had lost recognition without giving FCA’s students any opportunity to defend themselves or their organization. At least the baker in Masterpiece Cakeshop had a chance to be heard.

Equally telling was the continued hostility towards FCA even after it lost ASB recognition and thus could not possibly violate the School District’s non-discrimination policies. In an effort “to ban FCA completely from campus,” Glasser ginned up another potential “avenue” of attack during Summer 2019. He posited that FCA could be accused of violating the School District’s sexual harassment policy by creating “a hostile work environment for students and faculty.” In other words, teenagers—meeting privately to discuss the Bible—were creating a hostile work environment for adult faculty, according to Glasser. There is no indication in the record that Glasser’s inimical view of FCA was rebuffed.

The defendants contend that any past animus is legally irrelevant for two reasons. First, they argue that the School District, and not the Climate Committee, made the decision to derecognize FCA, and this “decision was based solely on the club’s violation of the [non-discrimination] policy.” Second, they contend that past animus has no bearing on whether the plaintiffs are likely to suffer future harm—denial of ASB recognition—during the 2022–23 school year, when the School District’s new All-Comers Policy is in force. The defendants are wrong on both points.

The School District is incorrect that our animus inquiry must be strictly limited to the actions or words of the “decisionmakers.” As the Supreme Court held, we may assess “the historical background” and “specific series of events leading” to the decision in question. And the “historical background” and “series of events” leading to FCA’s derecognition included animus against FCA’s religious beliefs by multiple Pioneer officials….

The events preceding FCA’s derecognition are of special importance here because the School District relied on receiving complaints in enforcing its Non-Discrimination Policy. Absent Glasser’s call for action and pressure, the Climate Committee may have never broached FCA’s Statement of Faith and Sexual Purity Statement and its ASB status. And but for the Climate Committee’s “united stance” against FCA, the controversy would not have been escalated to the School District. So even if it was the School District that determined FCA was violating the Non-Discrimination Policy, the issue came to its attention as a result of Glasser’s open hostility towards FCA’s religious beliefs expressed to Principal Espiritu and the Climate Committee. The Climate Committee’s “united stance” then catalyzed the School District’s derecognition of FCA.

The defendants also cannot dismiss their past animus by relying on the newly-adopted All-Comers Policy. When Pioneer officials pushed to have FCA derecognized after the Climate Committee meeting, the plaintiffs were deprived of ASB recognition in violation of their Free Exercise rights. FCA had enjoyed ASB recognition for nearly two decades without controversy, and the School District’s laissez-faire attitude to enforcing its Non-Discrimination Policy meant that FCA would likely retain recognition but for the Climate Committee’s actions. As Pioneer’s Activities Director admitted, renewal of ASB recognition for already-established clubs like FCA was a formality.

The defendants say their concerted effort to derecognize FCA should be excused because ASB approval is decided annually, and during the upcoming 2022–23 school year, the only relevant inquiry is whether the School District may properly deny FCA recognition for violating its All-Comers Policy. But as explained in the majority opinion, the defendants concede that FCA will not be approved while it maintains its faith requirements for student leaders, and the All-Comers Policy is inextricably linked to the Non-Discrimination Policy in force in Spring 2019.

Judge Morgan Christen dissented, arguing that there wasn’t sufficient evidence that the FCA had standing to seek the injunction; if you’re interested in the standing question, please do read the opinion. Here are a few passages, though, that go more to the substantive question:

The majority accepts plaintiffs’ argument that the District selectively enforced its Policy because the District approved the Senior Women Club’s ambiguous ASB application, which simultaneously affirmed compliance with the Policy and included a notation that “[m]embers are considered students who are seniors who identify as female.” The majority brushes off the district court’s factual finding that “there is no clear proof that the district allows the club to violate the Policy,” or that the club actually discriminates. The district court did not ignore the ambiguity presented by the handwritten notation but recognized the District’s approval may have been an oversight. The court’s analysis demonstrates that it correctly limited its focus to how the Policy would operate prospectively. The majority’s scattershot references to other clubs are also unavailing because the court found no club besides FCA has refused to sign the ASB Affirmation Form and there is no evidence that any other club discriminates….

Congratulations to Daniel Blomberg of the Becket Fund for Religious Liberty, who argued the case, and also Eric S. Baxter, Nicholas R. Reaves, Abigail E. Smith, and James J. Kim of Becket, Kim Colby of the Center for Law & Religious Freedom, Springfield, Virginia, and  Christopher J. Schweickert of Seto Wood & Schweickert LLP.

The post San Jose Unified School District Discriminated Against Fellowship of Christian Athletes, Based on … appeared first on Reason.com.

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Twitter Drops After Musk Sends Another Termination Letter Citing Whistleblower As New Reason To Exit Deal

Twitter Drops After Musk Sends Another Termination Letter Citing Whistleblower As New Reason To Exit Deal

Twitter shares slumped to $38 before erasing almost all losses, after Elon Musk’s increasingly desperate lawyers sent a termination letter to the social media company, citing the recent accusations from a Twitter whistle-blower as a new reason to end the $44 billion takeover of the social media platform.

In a filing early Tuesday, Musk’s law firm said the allegations by Zatko, including “egregious deficiencies” in the platform’s defenses against hackers and privacy issues, meant that Twitter had breached the conditions in the merger agreement.

Peiter Zatko, Twitter’s ex-head of security, claimed he raised questions about severe shortcomings in the social media company’s handling of users’ personal data, including running out-of-date software and that executives had withheld information about breaches and lack of protections for user data. Lawyers for both Musk and Twitter have subpoenaed Zatko, who said the social-media platform’s officials didn’t know or care to find out how many accounts were spam or robot accounts.

Musk has been scrambling for months to try and extract himself from the takeover of Twitter, initially leading with the claim that Twitter’s user figures are inflated by millions of robot accounts. The billionaire’s legal team has recently switched its attention to Zatko, who was fired from Twitter earlier this year.

Twitter shares fell as much as 5% in premarket trading on Tuesday before New York exchanges opened, to $38.00, far below Musk’s offer price of $54.20, before recovering most losses as traders realized that Musk’s latest gambit has little chance of overturning the deal.

Twitter, which has maintained that spam and bots make up fewer than 5% of accounts, sued Musk in July to force him to complete his proposed acquisition. Since then, more than 100 people, banks, funds and other firms have been subpoenaed in the Delaware suit, with a trial scheduled to begin Oct. 17.

As Bloomberg notes, the new findings add to Musk’s prior claims, showing that Twitter is in “material noncompliance” with obligations around data privacy and consumer protection laws and that the company is vulnerable to data center failures and malicious actors.

Tyler Durden
Tue, 08/30/2022 – 07:22

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What Do Rolex Daytonas, US Airfares And Food Prices Have In Common?

What Do Rolex Daytonas, US Airfares And Food Prices Have In Common?

By Nick Colas of DataTrek Research

What do Rolex Daytonas, US airfares and food prices have in common? They all give us unique and useful ways to understand inflation. Because of that, they are also the focus of this week’s Story Time. Bottom line: to reduce inflation, monetary policy must curtail BOTH consumers’ ability to spend (lower wage growth and employment levels) AND their desire to spend (diminished wealth effect, lower confidence). Achieving those goals without a sharp recession is difficult. Markets still believe the Fed can accomplish that goal.

This week we have 3 vignettes about inflation:

#1: Rolex Daytona inflation. If you go to the Rolex corporate website, you will see that a no-frills Daytona costs $14,550. It is a nice steel watch with a built-in chronograph (stopwatch) and an all-mechanical (not quartz) movement.

Rolex Daytonas have been in high demand for many years, as much because of the brand and watch’s appeal to A-list celebrities as its own technical merits. Rolex is the best-known luxury brand in the world. The Daytona has been in continuous production since 1963 and was most famously worn by actor and amateur race car driver Paul Newman. More-recent celebrity fans of the Daytona include Jay Z, Victoria Beckham, John Legend and Michael Jordan.

The chart below shows “gray market” (used and new watches sold outside official dealer channels) prices for Daytonas over the last 5 years. Just before the Pandemic Crisis (December 2019), they were going for about $21,000 (44 percent over retail). A year later (December 2020), the price was slightly higher ($22,000). In 2021, Daytona prices increased quickly and reached $40,000 (170 pct above retail) in March 2022. Now, prices are starting to drop. A Daytona can be yours for about $36,000.

Takeaway: the root cause of post-Pandemic Crisis Daytona inflation is high financial asset prices and confidence among the world’s wealthy that these would remain elevated. No one “needs” a Daytona and supply is relatively inelastic. Marginal demand therefore moves prices very quickly. Daytona inflation is therefore one way to understand how the wealth effect impacts prices more generally. By this admittedly offbeat measure, we still have a way to go before aggregate demand has returned to levels consistent with central banks’ target inflation rate of 2 percent.

* * *

#2: US airfare inflation. The chart below shows the airfare component of the US Consumer Price Index from 2005 – present, indexed to 100 for the December 2019 reading. This approach allows us to see nominal changes in airline ticket prices over time. Why that is important will become clear in the next paragraph.

As highlighted by the arrow under the red text, US airfares as of July’s CPI report are the same in nominal terms as those in 2011 – 2014. In other words, US airlines have had no net pricing gains for almost a decade. If you find that hard to believe, go look at a long run stock price chart for Delta or Southwest. Both trade lower today than in 2015. Zero industry-level pricing power explains why.

The other annotations on the chart highlight the periods when the airline industry does see some pricing power: only when oil prices are high. Jet fuel is a volatile fixed cost for all airlines. When fuel prices rise, every airline puts through price increases and sticks to them. When they drop, airlines immediately lower prices to fill marginal seats. Yes, US airline industry fundamentals are brutal and have been since deregulation in the 1970s.

Takeaway: the direction of energy prices drives marginal inflation pressures. This has been true since the 1973 Saudi oil embargo. While the Federal Reserve cannot increase the supply of oil, they can reduce demand by raising interest rates to cool economic growth. As much as Chair Powell focuses on financial markets as the primary conduit between monetary policy and the real economy, oil prices are an important transmission mechanism for systematic inflation.

* * *

#3: Global food inflation. While Rolexes and air travel are luxuries, food is a necessity. Annualized US food inflation was 10.9 percent last month. The latest report from the United Nations shows global food inflation running 13.1 percent over the same period. Even though higher food prices are a worldwide problem, they affect national economies and consumers differently. These are the weightings for food in various country-level consumer price inflation indices:

  • US: 13.4 percent of CPI
  • Eurozone: 20.9 pct
  • China: 30.0 pct
  • India: 36 pct (urban), 54 pct (rural), 46 pct (total)

Takeaway: rising food prices are a global phenomenon, but their effects on overall inflation differ dramatically depending on the country/region in question.

* * *

Pulling these 3 mini-stories into 1 overarching narrative:

  • After a 40-year absence, inflation is once again a real problem for consumers and policymakers around the world. Global food inflation is especially problematic because it weighs heaviest on less affluent countries and individuals.
  • Inflation works in 2 ways. It makes some products more expensive than they ever were before (Rolexes and food, for example). It also increases industrial pricing power in sectors that otherwise have little structural inflation (airline tickets). The combination of those drivers is why inflation is very high right now.
  • In order to reduce aggregate demand and tame inflation, consumers must (by definition) purchase fewer goods and services. This means policymakers must dampen not just their ability to spend (lower wage growth and employment levels) but also their desire to spend (lower confidence in financial asset prices/job security).

Takeaway: inflation is a complex problem with a simple solution. That does not, however, make it easy to address. Monetary policy makers could fix the inflation problem in a few months if they were willing to crash the global economy with suddenly higher interest rates. That is clearly not their gameplan. They will go relatively slowly, feeling their way along and expecting inflation to moderate over time. Capital markets have no choice but to go along for that ride. US equity valuations and bond yields say the Fed will be successful in reducing inflation without creating a deep recession. To be bullish here, one must entirely agree with that conclusion.

Sources: Chrono 24: https://www.chrono24.com

Tyler Durden
Tue, 08/30/2022 – 07:20

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Norway Displaces Russia As Europe’s Biggest NatGas Supplier

Norway Displaces Russia As Europe’s Biggest NatGas Supplier

The European Union is reducing its dependence on Russian natural gas and has made some progress. Norway has displaced Russia as the top supplier of NatGas to the EU as energy supply chains are rejiggered, reported Reuters, as Moscow reduces flows to EU countries via the Nord Stream 1 pipeline. 

According to government data in May, Norway ramped up NatGas production by at least 8% versus last year. This means the Scandinavian country could produce upwards of 122 billion cubic meters (bcm) of NatGas this year. 

Refinitiv Eikon data show Norway is now the largest supplier of NatGas to Europe, surpassing Russia, which has slashed Nord Stream capacity to just 20%. By Wednesday, the pipeline will undergo a surprise three-day shutdown for ‘maintenance’ work. 

Norwegian petroleum & energy minister Terje Aasland expects production levels can be sustained through the decade as new projects are coming online. This is undoubtedly a relief for the energy-stricken continent. 

“I expect that we can maintain the production levels we are at now until 2030. 

“We see that there are projects and also plans for development and operation coming now that can help maintain the high gas volumes going forward,” Terje Aasland told Reuters in an interview.

The energy minister said diversification of EU’s Natgas supplies away from Russia is critical. He said, “this is an important message to get from the EU.” 

Increasing flows from Norway also come as European Natas prices have tripled and repeatedly hit new records this summer. Though prices plunged on Monday from all-time highs reached last week following news Germany was ahead of schedule in filling up storage facilities ahead of winter. 

“In principle, the market is predictable. When there is scarcity, prices are high. That also contributes to increasing production and steers the gas to the markets that need it most,” Aasland said.

Despite Norway’s largest oil and gas producer, the majority state-owned Equinor, boosting renewable energy and low-carbon technologies investments, it will also increase hydrocarbon exploration projects to meet EU demand. 

Europe’s ability to unlock partial energy independence could be through Norway, as the oil-rich nation is now the largest supplier of NatGas to the continent and could be on track to sustain high production levels through at least 2030. 

Tyler Durden
Tue, 08/30/2022 – 06:55

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“Don’t Be Fooled By Recent Strength… A Post-Dollar World Is Coming”

“Don’t Be Fooled By Recent Strength… A Post-Dollar World Is Coming”

Authored by Ruchir Sharma, op-ed via The Financial Times,

The currency may look strong but its weaknesses are mounting…

This month, as the dollar surged to levels last seen nearly 20 years ago, analysts invoked the old Tina (there is no alternative) argument to predict more gains ahead for the mighty greenback.

What happened two decades ago suggests the dollar is closer to peaking than rallying further. Even as US stocks fell in the dotcom bust, the dollar continued rising, before entering a decline that started in 2002 and lasted six years. A similar turning point may be near. And this time, the US currency’s decline could last even longer.

Adjusted for inflation or not, the value of the dollar against other major currencies is now 20 per cent above its long-term trend, and above the peak reached in 2001. Since the 1970s, the typical upswing in a dollar cycle has lasted about seven years; the current upswing is in its 11th year. Moreover, fundamental imbalances bode ill for the dollar.

When a current account deficit runs persistently above 5 per cent of gross domestic product, it is a reliable signal of financial trouble to come. That is most true in developed countries, where these episodes are rare, and concentrated in crisis-prone nations such as Spain, Portugal and Ireland. The US current account deficit is now close to that 5 per cent threshold, which it has broken only once since 1960. That was during the dollar’s downswing after 2001.

Nations see their currencies weaken when the rest of the world no longer trusts that they can pay their bills. The US currently owes the world a net $18tn, or 73 per cent of US GDP, far beyond the 50 per cent threshold that has often foretold past currency crises.

Finally, investors tend to move away from the dollar when the US economy is slowing relative to the rest of the world. In recent years, the US has been growing significantly faster than the median rate for other developed economies, but it is poised to grow slower than its peers in coming years.

If the dollar is close to entering a downswing, the question is whether that period lasts long enough, and goes deep enough, to threaten its status as the world’s most trusted currency.

Since the 15th century, the last five global empires have issued the world’s reserve currency — the one most often used by other countries — for 94 years on average. The dollar has held reserve status for more than 100 years, so its reign is already older than most.

The dollar has been bolstered by the weaknesses of its rivals. The euro has been repeatedly undermined by financial crises, while the renminbi is heavily managed by an authoritarian regime. Nonetheless, alternatives are gaining ground.

Beyond the Big Four currencies — of the US, Europe, Japan and the UK — lies the category of “other currencies” that includes the Canadian and Australian dollar, the Swiss franc and the renminbi. They now account for 10 per cent of global reserves, up from 2 per cent in 2001.

Their gains, which accelerated during the pandemic, have come mainly at the expense of the US dollar.

The dollar share of foreign exchange reserves is currently at 59 per cent – the lowest since 1995.

Digital currencies may look battered now, but they remain a long-run alternative as well.

Meanwhile, the impact of US sanctions on Russia is demonstrating how much influence the US wields over a dollar-driven world, inspiring many countries to speed up their search for options. It’s possible that the next step is not towards a single reserve currency, but to currency blocs.

South-east Asia’s largest economies are increasingly settling payments to one another directly, avoiding the dollar. Malaysia and Singapore are among the countries making similar arrangements with China, which is also extending offers of renminbi support to nations in financial distress. Central banks from Asia to the Middle East are setting up bilateral currency swap lines, also with the intention of reducing dependence on the dollar.

Today, as in the dotcom era, the dollar appears to be benefiting from its safe-haven status, with most of the world’s markets selling off. But investors are not rushing to buy US assets. They are reducing their risk everywhere and holding the resulting cash in dollars.

This is not a vote of confidence in the US economy, and it is worth recalling that bullish analysts offered the same reason for buying tech stocks at their recent peak valuations: there is no alternative. That ended badly. Tina is never a viable investment strategy, especially not when the fundamentals are deteriorating.

So don’t be fooled by the strong dollar. The post-dollar world is coming.

*  *  *

The writer is chair of Rockefeller International

Tyler Durden
Tue, 08/30/2022 – 06:30

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French Tax Authorities Deploy AI Software To Find 20,000 Undeclared Swimming Pools

French Tax Authorities Deploy AI Software To Find 20,000 Undeclared Swimming Pools

Artificial intelligence software paired with the latest satellite imagery has opened new frontiers for the French government to find thousands of undeclared residential pools that can be taxed, reported The Guardian

Developed by Google and Capgemini, the AI software uses aerial images to identify residential pools and cross-checks land registry databases in real-time to see if the pools were registered with the government. If pools weren’t registered, the AI tool flags the property for further investigation by tax authorities.

So far, the AI tool has uncovered 20,356 undeclared pools. 

The tax office expects to collect at least 10 million euros in taxes from the homeowners who failed to declare the pools with the government. This means about a +200 euro tax per property. 

The software is in limited use and is now only being rolled out nationally, which could generate even more taxes for the government. 

Antoine Magnant, the deputy director general of public finances, told Le Parisien newspaper that the AI tool would also be used to find undeclared home extensions, patios, or gazebos: 

“We are particularly targeting house extensions like verandas, but we have to be sure that the software can find buildings with a large footprint and not the dog kennel or the children’s playhouse,” Magnant said. 

The Google-Capgemini software had a 30% margin of error in April and often confused solar panels for swimming pools. When finding extensions, the software had trouble analyzing a home with trees or in the shadows. 

The boom in pools and extensions of homes during the virus pandemic had some homeowners skip out on registration paperwork. Tax authorities understand this problem and have adopted ‘big brother’ surveillance tools to watch over homeowners’ every move. 

Tyler Durden
Tue, 08/30/2022 – 05:45

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Turkey Says Greek Missiles Locked On Its F-16s Over Mediterranean

Turkey Says Greek Missiles Locked On Its F-16s Over Mediterranean

Authored by Connor Freeman & Will Porter via The Libertarian Institute, 

Greece’s Russian-made S-300 air defense systems stationed on the island of Crete locked onto Turkish fighter jets as they crossed international airspace over the Mediterranean, Turkey’s Defense Ministry claimed, amid mounting tensions between the two NATO states.

The incident occurred on August 23, according to the Turkish statement, which came just days after Ankara leveled a similar accusation against Greek forces. Athens has disputed both alleged close-calls, with a Greek defense official calling the claims “fake news.”

Turkey’s state-run Anadolu Agency reported that Turkish F-16s were performing a reconnaissance mission west of Greece’s Rhodes island – located some 142 miles northeast of Crete – and were flying at an altitude of 10,000 feet when the radar lock occurred. “Despite the hostile environment,” the Turkish planes finished the mission and returned to their bases, the outlet added, citing military sources. 

Under NATO’s rules of engagement, radar locks are deemed a hostile act. But the Greek Defense Ministry insists its “S-300 missile system has never put a lock on Turkish F-16 jets.”

Last week, the Turks summoned Athens’ military attache and filed a complaint with NATO over another disputed incident, in which Greek warplanes reportedly harassed five Turkish F-16s flying over the eastern Mediterranean

While Ankara says its jets were participating in a NATO mission, Greece has rejected that version of events, instead claiming the Turkish craft appeared without notice to escort American B-52s which had been cleared to cross its airspace. According to Anadolu, Turkey gave the “necessary response” and warded off the Greek planes.

Relations between Turkey and Greece have long been strained, nearly going to war on three separate occasions over the last 50 years due to competing claims to territory and resources in the Aegean Sea.

Map: Encyclopedia Britannica

 Ankara has accused the Greeks of militarizing islands in the Aegean and violating limits established in peace treaties signed after World Wars I and II. In 2020, a naval standoff ensued between the NATO allies over exploratory drilling rights in Mediterranean waters, parts of which are also claimed by Cyprus.

Tyler Durden
Tue, 08/30/2022 – 05:00

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Russians’ Luxury Cars Fill Helsinki Airport Garage As Tourists Sidestep Flight Ban

Russians’ Luxury Cars Fill Helsinki Airport Garage As Tourists Sidestep Flight Ban

From Porsche 911s to Mercedes-Benz S-Class sedans, Range Rovers and Bentleys, luxury cars with Russian plates abound in the Helsinki airport parking garage, as wealthy Russians are driving across the border to sidestep Ukraine War-inspired flight restrictions. 

The European Union shut its airspace to Russian planes after the February invasion. However, resourceful Russians aren’t letting that stand between them and vacations in Europe and elsewhere: They’re simply driving to Helsinki and flying on from there. 

High-end vehicles with Russian license plates are everywhere in the Helsinki airport garage (Alessandro Rampazzo/AFP via Moscow Times

For most, the centerpiece of the work-around is a “Schengen visa.” The Schengen Area is a passport-free travel zone that spans most of Europe. Schengen visas can be issued to Russians — or others — by any of the member countries, allowing holders to stay for up to 90 days and travel to any other member country.   

“They come here on Schengen visas issued by various different countries and then continue further via Helsinki airport,” Finnish Foreign Minister Pekka Haavisto told AFP.

The Schengen Area, which allows passport-free travel among member states. Not all members are EU countries, and not all EU states are Schengen members. (via Schengen Visa Info)

An AFP reporter’s casual stroll through the Helsinki airport garage suggests there could be hundreds of Russian vehicles parked there as their owners galavant despite the Western ban on flights to and from their country.

The phenomenon is ruffling some Finnish feathers: Earlier this month, Finland said it would cut its issuance of Russian tourist visas by 90%. However, according to August Finnish border guard observations, about two-thirds of the visas used by Russians were issued by countries other than Finland.

Poland, Latvia, the Czech Republic and Lithuania stopped issuing visas to Russians after the invasion of Ukraine. Historically, countries issuing the most Schengen visas to Russians include Hungary, Spain, Italy, Austria and Greece.

A Russian-tagged Bentley in the Helsinki airport garage (AFP via Euronews

Estonia has threatened to bar Russians altogether, even if they have a visa issued by another member state. German Chancellor Olaf Scholz has urged Estonia to pump the brakes: “This is not the Russian people’s war, it is Putin’s war.” 

Finland is planning to elevate the issue at an Aug 30 meeting of EU foreign ministers. Bending to pleas from Ukrainian President Volodymyr Zelenskey and hardline-EU governments, the ministers are expected to endorse a suspension of the EU’s visa facilitation agreement with Russia, according to the Financial Times.

While that would only be a first step toward a potential ban, it would make the process more complicated, expensive and far lengthier for Russian applicants. Some officials want a ban that would also hits citizens of Belarus, which has backed the Russian invasion.  

Defenders of the status quo note that it’s essential for anyone who wants to flee Russia permanently. Others are leery of punishing individual Russians who have no control over the country’s foreign policy.

On the other hand, there are plenty of officials eager to impose group punishment on innocents. One senior EU official involved in visa talks told the Financial Times, “It is inappropriate for Russian tourists to stroll in our cities, on our marinas. We have to send a signal to the Russian population that this war is not OK, it is not acceptable.”

Tyler Durden
Tue, 08/30/2022 – 04:15

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