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A Very Blessing Through All One’s Days

When I was a high school senior looking at schools, I visited Yale for a student weekend. I didn’t end up at Yale, but a plaque I saw in the Jonathan Edwards College dining hall made a deep impression on me. I don’t know who Robert Chapman Bates was, but his words influenced the course of my life. As I’m about to start my 28th year as a professor (and my 15th at St. John’s), his quote still rings true for me. Here it is, for all the other professors who follow this blog. Happy new semester, everyone:

But if you can’t help it, do go into teaching

For it is the only profession I know of

In which even discouragement and defeat are sweet;

In which the unattained goal is a reward;

In which the not-complete failure is a triumph

And a very blessing through all one’s days.

— Robert Chapman Bates, Fellow of this College 1933-1942

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Some clear thinking on gold at its all-time high

For as long as I can remember, I’ve been a fan of Bruce Lee.

I was probably about four years old when I first watched one of his movies. And I was instantly hooked. The guy was legendary.

As a teenager, I learned more about how he lived, and I began to admire his tenacity, discipline, and relentless pursuit of self-improvement… qualities that I endeavored to attain.

I remain a fan to this day. In fact there’s even a Bruce Lee mural on the wall at our office in Chile.

So when I had the opportunity to purchase some of Bruce Lee’s artwork a few years ago– sketches that he drew with his own hand– I jumped at the chance.

It cost me around $8,000… but it was the best money I ever spent. I had it professionally framed and hung in my home, and it’s probably my most prized possession.

I doubt I’ll ever sell it. But it’s the only asset that I allow myself to be sentimental about.

In everything else related to money, I force myself to be unemotional. I don’t fall in love with prospective investments, nor do I have an emotional attachment to businesses that I own.

You hear this a lot with entrepreneurs, who often refer to their companies as ‘their baby’.

I don’t have that view. Bruce Lee aside, I’m willing to sell any asset for the right price… especially if someone is willing to pay far more than what I think it’s worth, or what it could be worth in the future.

And this brings me to gold.

The price of gold is now at an all-time high in nearly every major currency, including US dollars. On Friday, in fact, gold briefly passed $2,000 per ounce, and it’s still hovering near that figure now.

A lot of people have an emotional attachment to gold… a borderline fanaticism.

I don’t. I write about gold quite frequently. But I’m not a ‘gold bug’.

My views on gold are unemotional, grounded in a rational understanding of gold’s advantages, and the disadvantages of the financial system. I’ve written about this extensively.

But one important thing to understand about gold is that it can be very difficult to value.

I can much more easily value a business like Apple, or private company that I own. The analysis is never perfect, but I can project future cash flows and market-based asset prices, and derive an appropriate value for what an asset is worth.

But gold does not intrinsically generate cash flow like a business or rental property, so that analysis doesn’t work.

People often try to predict the price of gold by examining certain financial benchmarks.

For instance, in theory there are some loose relationships between the gold price and the money supply. But these relationships are far from perfect.

The previous peak for gold was in 2011 when it reached around $1900. The gold price then fell for more than four years, reaching a low of around $1,000 in December 2015.

Yet during that 4+ year period, the Federal Reserve’s balance sheet increased 70% from $2.6 trillion to $4.4 trillion, and M2 money supply in the US increased 30% from $9.5 trillion to 12.3 trillion.

Gold should have performed well from 2011 to 2015 given all the money the Fed was printing. Yet instead the gold price fell.

There’s another theory that gold prices increases because the dollar is weak. But this relationship is also far from perfect.

In the summer of 2018, I wrote note to our readers suggesting that it was a good time to buy gold, and that the price could double over the next few years.

At the time, the gold price was around $1200. But the ‘Dollar Index,’ i.e. the standard financial benchmark for the US dollar’s relative strength, was around 94.

Today gold is at a record high– up more than 60% since I wrote that article. Yet the dollar index is almost exactly the same– 93.8.

But if the theory is true, the gold price should be the same as it was in summer of 2016.

Finally, there’s a theory that the gold price is correlated with ‘real interest rates’, i.e. the rate of interest after adjusting for inflation.

This relationship is also far from perfect; real interest rates in 2011 and 2012, for example, were negative. Yet the gold price was falling.

Real rates in 2017 were rising. But the gold price was also rising. So this theory is also flawed.

The bottom line is that there’s no magic formula to tell us what the gold price should be. Dollar weakness, real rates, and money supply are all useful indicators. But they’re not predictors.

It’s fair to say, for example, that gold is still undervalued right now relative to recent growth in the Feds balance sheet.

Or that, over very long periods of time as central bankers print money and create inflation, gold tends to keep up.

After all, gold has a 5,000 year track record of holding its value against inflation.

In the short-term, however, the biggest driver of gold prices ironically seems to be emotion… specifically negative emotions like fear and mistrust.

Few people buy gold because they’re happy. Some forward-thinking central banks and investors may buy gold when it’s cheap because they understand its value and potential.

But for the most part, the price rises when people lose confidence in the financial system, in their government, in their central bankers, or in each other.

And that’s what we’re seeing now.

Nearly every government around the world looks incompetent and heavy-handed against the Coronavirus.

Central bankers seem desperate.

Banks are sitting on trillions of dollars of losses, while regulators have actually asked the public ‘please do not withdraw your money.’

And social cohesion has practically collapsed. People are ripping each other apart over masks, social justice, political views, and just about everything else.

It’s hard to have trust and confidence at a time like this. And that’s been a key driver of the gold price.

If you own gold, congratulations. You’ve done well. But don’t be emotional about it.

A record high milestone like this is a good time to check your outlook; be rational and determine whether you want to buy, sell, or hold at this level.

Being rational means being able to see all sides of an issue.

You could easily make a strong case that the fear, uncertainty, and desperation could continue for quite some time. And that, long-term, gold continues to make sense.

You could also make a case that, given how quickly gold has risen in price, a short-term correction may be in order. Or that some of the fear subsides if a Covid vaccine is produced.

Remember that great quote from F. Scott Fitzgerald– “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

Source

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Face Masks Confuse Facial Recognition Technology

Americans can’t agree on whether face masks are a good way to reduce the threat of transmitting COVID-19. We’ve even turned mask-donning into a symbol of partisan affiliation; those who would make them compulsory everywhere face off against those who refuse them under all circumstances. But we should at least be able to agree that face coverings are a great way to defeat the surveillance state—especially now that the U.S. government has conceded that masks confuse the hell out of facial recognition technology.

“Using unmasked images, the most accurate algorithms fail to authenticate a person about 0.3% of the time,” the U.S. National Institute of Standards and Technology (NIST), a federal agency, reported last week. “Masked images raised even these top algorithms’ failure rate to about 5%, while many otherwise competent algorithms failed between 20% to 50% of the time.”

Notably, the NIST test focused on one-to-one matching of a face against a single photo, as you might do to unlock a cellphone or at a passport checkpoint. One-to-one systems are carried out under conditions of near-ideal lighting and camera placement, and so are more reliable than one-to-many matches of faces against databases that are conducted during surveillance of public places. Masks should be expected to be even more effective at increasing failure rates of one-to-many facial recognition systems.

“The more of the nose a mask covers, the lower the algorithm’s accuracy,” the NIST report adds of the digitally simulated coverings used in the study. “The study explored three levels of nose coverage—low, medium and high—finding that accuracy degrades with greater nose coverage.”

Perhaps more surprisingly, black masks turned out to defeat matching algorithms more thoroughly than did light-blue masks. The researchers speculate that very dark and very light masks might confuse cameras’ automatic light-exposure controls. So, the ninja look isn’t just aesthetically pleasing, it’s also practical from a privacy perspective.

The NIST report confirms fears voiced in a May 22 Department of Homeland Security (DHS) notice that people could take advantage of mask-wearing to defeat surveillance efforts. Part of the recent BlueLeaks hack of law enforcement documents published by Distributed Denial of Secrets, the notice warned:

We assess the widespread use of masks for public safety could likely continue to impact the effectiveness of face recognition systems even after federal or state mandates for their use are withdrawn as portions of the general population will likely continue to voluntarily wear face coverings in public even after restrictions on social gatherings are lifted or until an effective COVID-19 vaccine is publicly available.

The notice also talked of other means of defeating facial recognition technology, including blue and green lasers to blind cameras, “clothing or accessories with images of faces, license plates, or pixelated images” to confuse algorithms, and specialized hats and other accessories that emit infrared light that can wash-out camera images.

I’ll add here that I performed a casual experiment with an infrared flashlight clipped to the visor of a baseball cap, and my face was mostly obscured by a white blob on the image transmitted by a home-security camera.

Some clever entrepreneurs have deliberately targeted the market for surveillance-defeating fashion, producing dazzling eyeglasses and distracting clothing intended to drive facial recognition technology to distraction. The tactic is apparently effective, although perhaps at the price of making people look a bit like Elton John impersonators.

Now you can add to the list of effective anti-surveillance tools the fabric masks that some jurisdictions require us to wear in the name of public health.

That government officials are going to end up awfully conflicted over whether to mandate or forbid masks in the years to come is obvious from the case of Hong Kong. Last October, the Hong Kong government banned the wearing of facial coverings in public places because pro-democracy demonstrators had adopted them to deter surveillance efforts by Chinese authorities. Now, the same officials require the wearing of masks in public places as part of efforts against the pandemic.

It’s hard to be a control freak.

Similar concerns prevail in the U.S. as federal and state law enforcement agencies convert databases from sources including the U.S. State Department and state motor vehicle departments into a treasure trove of images against which to match surveillance of public places. As of last summer, the FBI had compiled a collection of 640 million faces to peruse.

Government officials may promote mask-wearing now but, as the DHS notice demonstrates, they’re already worried about the effect that normalizing facial coverings has on high-tech surveillance programs. It could be frustrating to spend years developing sophisticated algorithms, and networks of cameras connected to vast databases, only to see the expensive effort thwarted by the popularization of the bandit look.

That’s not to say that face masks are necessarily an absolute check on surveillance. As the NIST report points out, concealing the face to one extent or another reduces the reliability of facial recognition technology, but it doesn’t completely eliminate matches.

Some security companies—particularly those serving China’s police state—claim that their facial recognition technology can work around masks by matching images of people’s eyes. “But the system struggles to identify people with both a mask and sunglasses,” Reuters reports.

NIST plans to assess such mask-accommodating technology in the near future.

“We have begun by focusing on how an algorithm developed before the pandemic might be affected by subjects wearing face masks,” says Mei Ngan, an author of the report. “Later this summer, we plan to test the accuracy of algorithms that were intentionally developed with masked faces in mind.”

NIST also plans to test one-to-many searches to assess the impact of face masks on surveillance of public places.

For privacy-minded people who are skeptical of public health arguments in favor of face masks, the pandemic may prove to be less of a reason to wear face coverings than an excuse to do just that. And we may as well throw in sunglasses and a hat, just to be sure.

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A Very Blessing Through All One’s Days

But if you can’t help it, do go into teaching

For it is the only profession I know of

In which even discouragement and defeat are sweet;

In which the unattained goal is a reward;

In which the not-complete failure is a triumph

And a very blessing through all one’s days.

— Robert Chapman Bates, Fellow of this College 1933-1942

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Roubino: Why So Many Cities Are Paralyzed

Roubino: Why So Many Cities Are Paralyzed

Tyler Durden

Mon, 08/03/2020 – 12:30

Authored by John Rubino via DollarCollapse.com,

Sympathy for America’s big-city mayors and their allies is evaporating – generally for good reason. Portland and Seattle, for instance, seemed willing to give rioters a free hand before belatedly stepping in. And of course there’s the amazing quote from Chris Cuomo, the brother of New York’s Governor :

“Please, show me where it says protesters are supposed to be polite and peaceful.”

The worst-run cities will pay a huge price for this indecision when rioters finally leave but shoppers and merchants don’t come back.

But like most things in this increasingly messy world, the big-city mayor story is way more complicated (and maybe more sympathetic) than it seems at first glance.

Let’s take it in stages.

Many US cities were already headed for bankruptcy

It’s easy to forget that less than a year ago – when the national economy seemed pretty strong and people were borrowing and spending with abandon – the unfunded liabilities of Chicago, Los Angeles, New York and a long list of other venerable cities were already out of control and threatening those governments’ solvency.

In the next recession and/or equities bear market, big pension plans like California’s CalPers and Chicago’s Teachers Pension Fund, were going to topple into some form of default, taking local bond ratings into junk territory and forcing draconian cuts in public services. On DollarCollapse.com there’s a 30-part series called Welcome To The Third World that chronicles the deterioration of public finance and how it will leave many US cities looking more like Caracas than Zurich.

Today’s big-city mayors are just the latest in a long line of leaders who bought labor peace and public sector votes by paying teachers, police, and firefighters way more than was mathematically possible in the long run. But the way can-kicking works is that the people who start the game get out with their reps and fortunes intact while the people in charge at the end get all the blame. In other words, today’s mayors were in deep trouble even in a normal business cycle.

Then came the pandemic

Depending on who’s pontificating, covid-19 is either a deadly health threat or a catastrophic overreaction by ignorant and panicked governments.

Either way, it produced much higher-than-expected health care costs and vastly lower tax revenues, ripping city budgets to shreds. So the inevitable end-of-cycle recession has been replaced by its bigger, meaner, butt-ugly brother, and cities that were teetering on the edge of insolvency are now demonstrably, undeniably broke.

Public workers, in short, were going to be fired in droves and services curtailed on a scale that even the biggest critics of municipal finances didn’t see coming this soon.

Then came the riots

The past few weeks’ civil unrest exploded seemingly out of nowhere — but was actually the inevitable result of an aristocracy systemically impoverishing regular people, combined with a multi-month lockdown that prevented millions from paying for health care or housing, and in many cases food.

Overwhelming burden

Add it all up and the result is an overwhelming financial and political burden for a typical mayor. But the nature of this civil unrest presents a completely different kind of challenge – which takes us to the part that you may not like because it calls for a bit of empathy.

Consider:

Most big-city mayors are liberals, which isn’t surprising given the voting patterns of urban populations. And not just any old liberals, but hard-core, all-in civil-rights-obsessed liberals who remember (or grew up on tales of) the civil rights movement of the 1960s and have modeled their political lives accordingly.

Most of them fantasize about being this generation’s Marin Luther King, leading a massive march on Washington that forces historic changes in how the least among us are treated.

They thought they’d finally gotten their chance when the current protests erupted, and gleefully tried to get in front of the crowd, no doubt hoping to not just encourage it but lead it.

That’s an admirable goal. But this is not Martin Luther King’s movement.

When, for instance, the mayor of Portland showed up expecting to be welcomed with open arms – he was one of them after all – the reaction was just slightly different.

Now Portland and Seattle look like the set of a Mad Max film, and their mayors, along with many others across the country, are confronting not just riots, but a repudiation of their life’s work. If they’re not civil rights leaders, what are they?

That – not their supposed hard-core Marxism — explains the mayors’ indecision: They know they’re required to protect their small businesses and peaceful citizens. But to do that they have to cross their people, who, until just a couple of weeks ago, defined the mayors’ political careers. They’d sooner arrest their own children.

Put another way, big-city Democrat mayors have gone from being – in their own minds – exactly the right people for this historical moment to being exactly the wrong people. They have no idea how to reconcile their self-image and life’s work with this baffling new world, and they’re paralyzed.

And their cities – already headed for catastrophe – might never be the same.

via ZeroHedge News https://ift.tt/3kalBE7 Tyler Durden

Men’s Wearhouse Files For Bankruptcy

Men’s Wearhouse Files For Bankruptcy

Tyler Durden

Mon, 08/03/2020 – 12:15

As we previewed on month ago in ‘Work-From-Home’-Epidemic Set To Bankrupt Suit-Sellers, “I Guarantee It“, on Monday the retail wreck continued on Sunday when Tailored Brands, the owner of Men’s Wearhouse filed for bankruptcy, adding to a list of brick-and-mortar retailers that have succumbed to the economic fallout from the COVID-19 crisis.

The retailer filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas. Tailored Brands said in a statement that it has entered into a restructuring agreement with more than 75% of its senior lenders, and that could reduce the company’s debt by at least $630 million. The company also said it has received commitments for $500 million in debtor-in-possession financing from its existing lenders. In the court filing, the company listed both its assets and liabilities in the range of $1 billion to $10 billion.

The Houston, Texas-based retailer, which was already struggling with competition from fast-fashion brands and a shift to online shopping before the pandemic, said it will continue to build on its previously announced plans to reduce its corporate workforce by 20% and shut as many as 500 stores.

The company’s four retail brands, including Moores Clothing for Men and K&G Fashion Superstore, will continue to operate through the process. It employs 18,000 workers and operates 1,274 retail and apparel rental stores in the U.S. and 125 in Canada, according to court documents.

Tailored Brands was in a tough spot before the outbreak: sales had fallen every year since 2016 as Men’s Wearhouse and Jos. A. Bank contended with changing consumer tastes and e-commerce rivals. “The unprecedented impact of Covid-19 requires us to further adapt and evolve,” Chief Executive Officer Dinesh Lathi said in a statement.

Despite its filing which will eliminate most of the company’s debt. Tailored Brands is gradually returning to normal operations after the coronavirus temporarily shut its doors. It re-opened just under half of its stores as of June 5, according to a statement. All of them, as well as e-commerce distribution centers in the U.S. and Canada, were temporarily closed in the first quarter.

The company traces its roots to 1973, when George Zimmer started Men’s Wearhouse in the Houston area. He would go on to become the face of the brand, starring in television commercials spouting his catchphrase “You’re going to like the way you look — I guarantee it,” before he was ousted in 2013. It acquired Jos. A. Bank the following year.

Tailored Brands has hired law firm Kirkland & Ellis LLP as legal advisor, investment bank PJT Partners as financial advisor and AlixPartners as restructuring advisor according to Bloomberg.

* * *

With its filing, Tailored Brands became the latest to collapse as a result of widespread economic lockdowns which have drained revenue, pushing already-struggling companies like J.C. Penney, J. Crew Group, and Neiman Marcus Group into bankruptcy. Lord & Taylor also filed Chapter 11 on Sunday.

The following chart from ReorgFirstDay shows the precipitous surge of retail chain bankruptcies in just the first half of 2020, with many still on deck.

As Reuters notes, apparel retailers have been among the worst hit from the coronavirus crisis as their businesses were considered non-essential and their stores had to be closed. They were forced to limit operations to online, which led to furloughing of staff and unpaid leases and rents.

Separately, Lord & Taylor, a storied department store chain founded in 1826, billed as the oldest in the United States, also filed for Chapter 11 bankruptcy on Sunday.

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Rabobank: Is Judge Dredd A Vision Of What Awaits Our Society

Rabobank: Is Judge Dredd A Vision Of What Awaits Our Society

Tyler Durden

Mon, 08/03/2020 – 11:55

By Michael Every of Rabobank

Elon and Eloi

It was just a few short weeks ago that governments in Australia and the UK were congratulating themselves on how they had performed under Covid-19, and both were enthusiastically looking ahead to getting life back to normal. Today Victoria, Australia is under new lockdown and Melbourne faces six weeks of virus curfews, while in the UK a state of emergency has been declared in Manchester, a trial balloons have been floated to cut-off London from the rest of the country if needs be –which we were recently told would never happen– and for the over 50s to have to stay at home to allow everyone younger to get back to normal – which were again told would never happen. Oh, for a time machine back to when all was well with the world! (Which was a time when the virus was still out of control in the US, and Brazil, and Mexico, and India, and South Africa, but never mind.)

On which note, the dwindling band of US-China optimists who can remember how recently “Chimerica” was the future should note that the US has placed new Magnitsky sanctions on China over the treatment of Uighurs in Xinjiang. This time it is not just individuals but the Xinjiang Production and Construction Corps (XPCC), a paramilitary organization that employs almost 12% of Xinjiang’s total population, is involved in the production of one-third of China’s cotton, and which data show back in 2014 comprised 17% of the Xinjiang’s economy. That’s a move with huge implications – and potentially even for Hong Kong, where the September LegCo election has been cancelled, a move dubbed possibly illegal by its bar association.

Meanwhile, the sword of Damocles hangs over the head of Chinese apps in the US. President Trump has made it clear that TikTok is either going to be banned outright or forced to divest to an American owner: and it is also being reported that the ubiquitous WeChat may go the same way. If that were to occur, and given Western alternatives are banned in China, it literally stops much US-China on-line communication. Decoupling it is then; and despite July having seen a surge in Chinese imports of US agricultural goods. Not that China isn’t doing its part on that front, aside from app banning. General Secretary Xi Jinping declared late last month that the economic situation is “complicated and grave”, and spoke of the need for a “dual circulation” approach to growth: this means a focus on the vast domestic market over exports – and importing less too. Because you must contract imports if you are going to see lower exports and still want to maintain a trade surplus.

On a more meta-level, a time machine might also be needed when one sees the “This is so 2020” headline that Elon Musk has been invited by the Egyptian government to come and see that the pyramids were not built by aliens. Presumably Musk is too buy landing astronauts or preparing for his cage-fight with Johnny Depp.

Of course, it was H.G Wells who first wrote of ‘The Time Machine’ back in the late 1800s, a novel which bears a quick summary here for those unfamiliar with it. A British Time Traveller travels from Wells’ time to London in 802,701AD, where he meets the Eloi, a society of small, elegant, childlike adults. They live in small communities within large and futuristic yet slowly deteriorating buildings, and adhere to a fruit-based diet. His efforts to communicate with them are hampered by their lack of curiosity or discipline. He concludes the entire planet has become a garden, with little trace of human society or engineering from the hundreds of thousands of years prior. The Time Traveller theorizes that intelligence is the result of and response to danger; with no real challenges facing the Eloi, they have lost the spirit, intelligence, and physical fitness of humanity at its peak.

Later in the dark, he is approached menacingly by the Morlocks, ape-like troglodytes who live in darkness underground and surface only at night. Exploring the Morlocks’ dwellings, he discovers the machinery and industry that makes the above-ground paradise of the Eloi possible. He alters his theory, speculating that the human race has evolved into two species: the leisured classes have become the ineffectual Eloi, and the downtrodden working classes have become the brutal light-fearing Morlocks. Who says that old-school science fiction isn’t about society (or prophetic)?

We should all consider The Time Machine’s lessons as we drift through ‘Eloi’ markets rife with a lack of curiosity and discipline, and where spirit and intelligence appear absent. Especially as danger is still all-too real, albeit due to efforts –quite understandably– being made to prevent the emergence of future Morlocks in the first place.

Meanwhile, as millions get ready to stay at home again because of the virus we had beaten just weeks ago, and some speculate that an Eloi-esque policy of a universal basic income might be a solution to that problem, let’s consider another work of science fiction from 80 years after Wells, 2000AD’s Judge Dredd. In that dystopian future there is no working class anymore because there is no work, just mass unemployment in post-apocalypse megacities, and a struggle to maintain any kind of social control over a bored-and-frustrated-to-madness population forced to live on a utilitarian universal income. Police, judge, jury, and executioner are now combined in one role to keep control: a bit like social media, eh?

Note that while this might seem a silly season summer Daily, the underlying points it makes are deadly serious. What will our society look like ahead? The odd couple or decoupled? Elois lie Elon, and more Morlocks, or not? And if not, how and what instead? Those are questions markets should ask a lot more frequently than “Is the USD going up or down?” if they want to understand whether the USD will be going up or down.

And for those Eloi who can’t be bothered to do the reading, the recent news-flow pointing to imminent changes both within and between our societies suggests the Greenback might be close to finding a floor, and it being EM FX’s turn to start to swoon again.

via ZeroHedge News https://ift.tt/3gnQbb6 Tyler Durden

Kodak Granted Chairman 1.75 Million Options The Day Before Trump’s $765 Million Loan To Company

Kodak Granted Chairman 1.75 Million Options The Day Before Trump’s $765 Million Loan To Company

Tyler Durden

Mon, 08/03/2020 – 11:35

The day before a $765 million loan from the government was announced, Kodak granted its executive chairman Jim Continenza 1.75 million options as the result of what is being called an “understanding” with the Board of Directors. The options had not been listed in his employment contract, nor were they made public, according to Reuters.

The announcement of the loan the next day took shares of Kodak from about $2.50 on Monday to, at one point, $60. Shares now trade at $22. Kodak’s executive chairman’s options are now worth tens of millions of dollars, as a result.

The decision to grant executive chairman Continenza the options was “never formalized or made into a binding agreement, which is why it was not disclosed previously,” the report says. They were reportedly granted to “shield Continenza’s overall stake in the company from being diluted by a $100 million convertible bond deal clinched in May 2019”.

The idea of granting options simply for this reason is unusual, as raising capital and the resulting dilution is a run-of-the-mill part of business and because options are usually for long-term incentives. For example, off the top of our heads, we cannot recall ever seeing an options issuance for this reason in the past.

Most companies have “wide latitude” in assigning these options but three corporate governance experts told Reuters that Kodak’s move was “unusual”.

Jim Continenza has $83 million reasons to smile

Sanjai Bhagat, a finance professor at the University of Colorado said: “The compensation committee’s job is not to protect the CEO from every adverse effect on the stock price. It’s to get the CEO to think about long-term value.”

Regardless, the approach is “permissible”, according to the report. Kodak disclosed the award in an SEC filing, but one source says the options grant happened because of an “understanding with the board”.

The company also granted options to three other executives on Monday, worth about $712,000 each.

The chairman’s paper gains amounted to about $83 million at the end of this week, compared to $53 million in gains he would have made if it wasn’t for his additional options. About 29% of the options he received on Monday vested immediately.

One person close to the company said: “The issue is the board wanted to make sure the CEO had the same economic alignment as was contemplated when he took the job.”

Kodak’s spokeswoman said Continenza “is a strong believer in the future of the company, and has never sold a single share of stock.”

We bet he’s an even stronger believer after Monday.

via ZeroHedge News https://ift.tt/33kAXjp Tyler Durden

New in Newsweek: “A Supreme Court divided cannot stand. John Roberts must step up or step off.”

Last week the Roberts Court reached its nadir. I summarized Joan Biskupic’s four-part leak series here. Today, Newsweek has published my editorial. The title is stark, but warranted: A Supreme Court divided cannot stand. John Roberts must step up or step off.

Here is the introduction.

The Supreme Court has turned into a sieve. Last week, CNN reporter Joan Biskupic published a four–part series that revealed the high court’s private deliberations. Even worse, the leaks were designed to advance specific narratives about which justices are strong and which are weak. Chief Justice John G. Roberts is all-powerful. Justice Neil Gorsuch appears decisive. Justice Brett Kavanaugh looks weak and ineffective. And Justice Elena Kagan lurks in the background, eager to lend a helping hand to form a moderate coalition. We do not know who leaked the information to the press. It could have been the justices, their law clerks or even allies outside the Court. Frankly, it doesn’t matter. These leaks have no doubt destroyed trust and camaraderie on the Court. Relationships will become distant, and the workplace will become even more toxic. There is only one person who can restore order to the Court: Chief Justice Roberts.

Alas, I doubt the George W. Bush appointee is up to the task. Roberts fancies himself the second coming of the great Chief Justice John Marshall. Not even close. Instead, now he more closely resembles one of his lesser-known predecessors, Chief Justice Warren Burger. In 1979, Bob Woodward and Scott Armstrong published the groundbreaking book, The Brethren. The reporters interviewed several of the justices and hundreds of Court staff to peel back the curtain. They revealed internal Court squabbles, painted some of the justices as partisans and highlighted Burger’s inept leadership. This book tore the justices apart and created distrust for decades. Burger, an ill-suited chief justice, could do nothing to heal those wounds. Roberts now faces an even greater crisis of confidence. Unless he can rise to the occasion, and plug these leaks, the Roberts Court will tear itself apart. A Supreme Court divided cannot stand. If Roberts cannot unite the Court, he must leave it.

I offer five specific steps Chief Justice Roberts can take to bring the Court back in order. Here are the highlights:

“First, the chief justice must immediately issue a public statement, on his own behalf, about the leaks. “
“Second, after the chief justice publicly denounces the leaks, he must bring his colleagues on board.
“Third, after all of the justices agree to condemn the leaks, Roberts must meet with his colleagues, one at a time. He should personally ask them whether they spoke to Biskupic or authorized someone to speak on their behalf—expressly or impliedly.”
“Fourth, Roberts should talk to every law clerk, staff member and employee of the Court, one at a time. Unlike the justices, they can be fired.”
“Fifth, and finally, all of the justices should then pledge that for the next term, in the midst of a presidential election, there will be no disclosures.”

And here is the conclusion:

If by next July, Roberts cannot step up to this challenge—either through his own ineptitude or his own malfeasance—then he should step down from the Court. I don’t reach this conclusion lightly. But leadership matters even more than jurisprudence. Roberts continually frustrates me with his calculating approach to deciding cases. Indeed, this never-ending balancing act may have contributed to the toxic climate among the justices. Yet, I can live with Roberts’ frustrating legal reasoning—it will have a short shelf-life. Most justices are forgotten as soon as they retire, and their precedents fade just as quickly. Roberts will suffer that fate, sooner or later.

However, I cannot abide by a crumbling Supreme Court. I would much rather have a competent chief justice who I constantly disagree with, but who can manage the Court, than a failed chief justice who sometimes writes decisions I partially approve of while the Court tears itself apart. An occasional five to four victory, which throws crumbs to the Right, is not enough to sit by idly as a whirlwind demolishes the marble palace from the inside. And I lay down this marker knowing full well that President Joe Biden will likely nominate Roberts’ replacement. Chief Justice Merrick Garland, anyone?

This op-ed will be controversial. But I hope it begins a process for the Court to bring itself back into order. I cannot abide by the status quo, which will rip the Court apart.

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