Sen. Josh Hawley Is the Ultimate Karen

By now you’ve probably met Karen, sister to Becky, mother to Chad, and wife to a moderately successful businessman—probably a consultant—whose name is not important. She lives, she laughs, and she loves, and she has the wall art to match! Her “facts” don’t care about your feelings, and neither do her passive aggressive Facebook posts. She wants to speak to the manager.

But what happens when Karen is the manager?

Sen. Josh Hawley (R–Mo.) may just be that Karen. Trade in those Facebook posts for a Twitter feed, and I think we have a match. 

The junior senator from Missouri landed in Congress in 2019 after running what some would call a conventional libertarian-conservative campaign. But his brief tenure on Capitol Hill has been much more in keeping with the current political moment, meaning that it has been almost exclusively defined by his tech-averse brand of populism. 

Hawley has used his perch in Senate hearings to speak to many a manager, employing a familiar take-no-prisoners approach that is more suited to political promo materials than to getting answers to questions. That’s because the answers to those questions aren’t as important as the performative, public interrogation. Does Karen usually care about what the manager has to say? Not really.

So it has gone with Hawley, who has continuously scuffled with managers from Facebook, Twitter, Amazon, and Google. The senator has leveled a slew of accusations against the tech giants, ranging from charges of antitrust infractions to allegations of anti-conservative bias to claims that social media companies peddle dangerously addictive products.

But Hawley is in a unique position. It’s not every day that Karen has the heavy hand of the federal government at her disposal. “Do you know who I am?” lands a bit differently when the sentiment comes not from the president of the PTA but from a sitting U.S. senator.

In that vein, Hawley has repeatedly threatened to use government force when select private companies operate in ways that he finds personally distasteful. Karen might call the cops when the house next door is a little too loud. Hawley calls the Department of Justice.

Consider his crusade against Amazon. Hawley recently requested that Attorney General William Barr open up a criminal investigation into the online colossus for using third-party data to develop its own brand of products. Hawley deems that a violation of antitrust law. He’d be hard-pressed to find a retail magnet that doesn’t engage in the practice, though, because it is a legal one.

Hawley has also zeroed in on some of social media’s more minute facets. The SMART Act, which he proposed last summer, would have outlawed YouTube’s autoplay feature and Snapchat’s streak function, which he says too often encourage kids to stick to their phones. The appropriate venue to fix that, he maintains, is the federal government; his legislation further stipulated that the Federal Trade Commission and the Department of Health and Human Services should have powers to regulate additional aspects of those companies’ products. 

Perhaps most recognizable is Hawley’s ongoing fight with Facebook and Twitter, which have drawn a special ire from the senator—not only for their sheer largeness, but for their alleged anti-conservative bias. Though there might be legitimate reasons to be miffed with the companies’ imperfect content moderation practices, Hawley’s proposed solution is to take away their rights to moderate any content whatsoever. That might make Hawley feel good in the short-term, but it’s a fix the socially conservative senator would certainly regret once such companies are no longer allowed to remove pornography.

There’s a rich irony to that dispute. Hawley seemingly wants to regulate online companies as if they are public utilities—a notion currently shared by others in the GOP. But core to the conservative ideology is, or was, the idea that private companies are explicitly not held to the same rules as state actors. Hawley’s brand of populism separates itself from that notion when it is politically inconvenient. 

It’s also difficult to digest the senator’s fury toward social media behemoths when you remember that he leverages them freely for his own political purposes. In a broad sense, big tech was instrumental in his successful senatorial campaign, and the successful campaigns of other Republicans, who masterfully use social media to their advantage. In a narrower sense, he often usurps Twitter to speak with the manager, calling out United Airlines last week for predictably cutting employee hours after receiving billions in government aid.

Of course, Hawley doesn’t see it that way. “What is it now that in the last 15, 20 years that [big tech has] given this country?” he asked last summer. “What are their great innovations?”

Okay, Karen.

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Cops Arrest Brooklyn Rabbi for Letting Kids—Ages 11, 8, and 2—Walk to the Store

A Brooklyn dad who let his kids walk a few blocks to the local store was arrested on Sunday morning and charged with endangering the life of a child.

The charges against Noah Chakoff, a rabbi, were dropped about 12 hours later. But the ordeal began when New York City police stopped the kids—ages 11, 8, and a 2-year-old in a stroller—as they were simply heading to their local bodega (a small candy-and-everything-else store).

“I can understand them stopping the children, just to ask a few questions,” Chakoff’s attorney, Jason Goldman, tells Reason. “But obviously I don’t agree with them charging the rabbi and keeping him for hours and hours while everything was going on with the pandemic.”

Reporter Noah Goldberg writes in The New York Daily News that the police even sent an ambulance to the scene. Is there nothing more pressing a New York City EMT might need to attend to? Are kids to be considered so neglected, endangered, or rabid, that they might require emergency medical care by merely being outside?

The rabbi was taken to the precinct and then on to central booking. His wife, eight months pregnant with their ninth child, tried to bring her husband the holy items used for prayer, but these were not given to him.

Eventually the cops presented their arrest to the prosecutor.

“The prosecutor ultimately decides if they are going to prosecute the case and nine times out of 10—even more than nine times out of 10—they do,” says Goldman. “But on occasion, the prosecutor will make the smart decision not to prosecute the case.” And that is what happened here.

The reason, Goldman added, is because letting your kids go to the store is not actually against the law. On the contrary—it’s perfectly normal behavior.

If only cops harassing innocent families was a little less normal.

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Cops Arrest Brooklyn Rabbi for Letting Kids—Ages 11, 8, and 2—Walk to the Store

A Brooklyn dad who let his kids walk a few blocks to the local store was arrested on Sunday morning and charged with endangering the life of a child.

The charges against Noah Chakoff, a rabbi, were dropped about 12 hours later. But the ordeal began when New York City police stopped the kids—ages 11, 8, and a 2-year-old in a stroller—as they were simply heading to their local bodega (a small candy-and-everything-else store).

“I can understand them stopping the children, just to ask a few questions,” Chakoff’s attorney, Jason Goldman, tells Reason. “But obviously I don’t agree with them charging the rabbi and keeping him for hours and hours while everything was going on with the pandemic.”

Reporter Noah Goldberg writes in The New York Daily News that the police even sent an ambulance to the scene. Is there nothing more pressing a New York City EMT might need to attend to? Are kids to be considered so neglected, endangered, or rabid, that they might require emergency medical care by merely being outside?

The rabbi was taken to the precinct and then on to central booking. His wife, eight months pregnant with their ninth child, tried to bring her husband the holy items used for prayer, but these were not given to him.

Eventually the cops presented their arrest to the prosecutor.

“The prosecutor ultimately decides if they are going to prosecute the case and nine times out of 10—even more than nine times out of 10—they do,” says Goldman. “But on occasion, the prosecutor will make the smart decision not to prosecute the case.” And that is what happened here.

The reason, Goldman added, is because letting your kids go to the store is not actually against the law. On the contrary—it’s perfectly normal behavior.

If only cops harassing innocent families was a little less normal.

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The Stock Market Isn’t The Economy, But…

The Stock Market Isn’t The Economy, But…

Authored by Lance Roberts via RealInvestmentAdvice.com,

“The stock market is not the economy.”

Such is the latest rationalization to support the “bull market” narrative. The question, however, is the validity of the statement. As I noted in this past weekend’s newsletter:

“There is currently a ‘Great Divide’ happening between the near ‘depressionary’ economy versus a surging bull market in equities. Given the relationship between the two, they both can’t be right.”

There is a close relationship between the economy, earnings, and asset prices over time. The chart below compares the three going back to 1947 with an estimate for 2020 using the latest data points.

Since 1947, earnings per share have grown at 6.21% annually, while the economy expanded by 6.47% annually. That close relationship in growth rates should be logical, particularly given the significant role that consumer spending has in the GDP equation.

The Consumption Function

While stock prices can deviate from immediate activity, ultimately, reversions to actual economic growth eventually occur. Such is because corporate earnings are a function of consumptive spending, corporate investments, imports, and exports. 

I subsequently received an email discussing the point.

“PCE depends on jobs and wages as well as intact supply chains, neither of which are in good condition. Regarding unemployment, the U6 rate, which is a more reliable indicator of job market health, is at 22.8% currently and rising while the labor market participation rate has dropped to about 60%.  These factors do not bode well for growth and earnings for most companies.” – A Brinkley, Jr.

His statement is correct. There is a precise correlation between PCE and GDP. Not surprisingly, if consumption contracts due to high levels of unemployment, then economic growth declines. 

Furthermore, given that consumption drives imports, the correlation also stands.

Exports, which comprise roughly 40% of corporate profits, also have a high correlation to consumption and related economic activity. 

It should be evident that corporate earnings and profits are highly correlated to economic activity. While Business Investment and Government Spending do have an input into the economy, it is consumption which ultimately drives profits.

Stock Prices & The Economy

As stated, over short-term periods, the stock market often detaches from underlying economic activity as investor psychology latches onto the belief “this time is different.” 

Unfortunately, it never is. 

While not as precise, a correlation between economic activity and the rise and fall of equity prices does remain. In 2000, and again in 2008, as economic growth declined, corporate earnings contracted by 54% and 88%, respectively. Such was despite calls of never-ending earnings growth before both previous contractions. 

As earnings disappointed, stock prices adjusted by nearly 50% to realign valuations with both weaker than expected current earnings and slower future earnings growth. While the stock market is once again detached from reality, looking at past earnings contractions, suggests it won’t be the case for long.

The relationship becomes more evident when looking at the annual change in stock prices relative to the yearly change in GDP.

Again, since stock prices are driven in part by the “psychology” of market participants, there can be periods where markets become detached from fundamentals. However, there is no point in the previous history, where the fundamentals catch up with stock prices.

The Stock Market Isn’t The Economy

When it comes to the state of the market, corporate profits are the best indicator of economic strength.

The detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, the markets can certainly seem to “remain irrational longer than logic would predict.”

However, such detachments never last indefinitely.

Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.” – Jeremy Grantham

As shown, when we look at inflation-adjusted profit margins as a percentage of inflation-adjusted GDP, we see a process of mean-reverting activity over time. Of course, those mean reverting events always coincide with recessions, crises, or bear markets.

As shown below, peaks, and subsequent reversions, in the ratio have been a leading indicator of more severe corrections in the stock market over time. Such should not be surprising as asset prices should eventually reflect the underlying reality of corporate profitability.

More importantly, corporate profit margins have physical constraints. Out of each dollar of revenue created, there are costs such as infrastructure, R&D, wages, etc. Currently, one of the biggest beneficiaries to expanding profit margins has been the suppression of employment, wage growth, and artificially low borrowing costs. The recession will cause a rather marked collapse in corporate profitability as consumption declines.

Recessions Reverse Excesses

The chart below measures the cumulative change in the S&P 500 index as compared to corporate profits. Again, we find when investors pay more than $1 for a $1 worth of profits, there is a reversal of those excesses.

The correlation is more evident when looking at the market versus the ratio of corporate profits to GDP. Again, since corporate profits are ultimately a function of economic growth, the correlation is not unexpected.  Hence, neither should the impending reversion in both series.

To this point, it has seemed to be a simple formula that as long as the Fed remains active in supporting asset prices, the deviation between fundamentals and fantasy doesn’t matter. It has been a hard point to argue.

However, what has started, and has yet to complete, is the historical “mean reversion” process which has always followed bull markets. This should not be a surprise to anyone, as asset prices eventually reflect the underlying reality of corporate profitability.

Recessions reverse excesses.

Rallying Into Uncertainty

While it may seem for the moment that stock prices can remain detached from the economic devastation, it is likely not the case indefinitely. Such is especially the case given stocks are rising into a increasing list of uncertainties. (Adapted from Doug Kass.)

  • The “value proposition” no longer exists.

  • A summer swoon? Seasonality is coming into play. 

  • Corporate profits have been flat since 2014 and are likely to deteriorate markedly.

  • My S&P EPS estimates are well below consensus at $80-90/share.

  • Economic challenges going forward will absorb a vast majority of the Fed’s liquidity. 

  • The Federal Reserve is already rapidly slowing the rate of QE

  • 5-stocks dominate the market and are responsible for the rally.

  • Small- and Mid-caps stocks are sorely lagging.

  • Market participants have rapidly returned to exuberance during the rally.

  • No one wants to buy a “bear market” bottom.

  • Surging debts and deficits are economic retardants, which will eventually reflect in earnings, profits, and weaker economic growth.

  • A Democratic Presidential Win Could Be “Market Unfriendly”

  • Buyback activity, which has comprised almost the entirety of the markets advance over the last several years, is slowing markedly. 

  • Pension plans problems are likely to become even larger problems, as discussed previously.

  • Bonds do not agree with the stock market. Bonds, more often than not, are right.

  • Trump is on the verge of restarting the “Trade War” with China.

Conclusion

There are a tremendous number of things that can go wrong in the months ahead. Such is particularly the case of a surging stock market against weakening fundamentals. 

While investors cling to the “hope” that the Fed has everything under control, there is more than a reasonable chance they don’t. 

Regardless, there is one simplistic truth. 

“The stock market is NOT the economy. But the economy is a reflection of the very thing that supports higher asset prices – corporate profits.”


Tyler Durden

Tue, 05/12/2020 – 14:50

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NY Reports 93 Children Sick With ‘Mysterious COVID-19-Linked Respiratory Syndrome’

NY Reports 93 Children Sick With ‘Mysterious COVID-19-Linked Respiratory Syndrome’

NYC Mayor Bill de Blasio and NY Gov Andrew Cuomo have repeatedly warned about the growing number of children affected by a mysterious, possibly COVID-19-linked respiratory syndrome this week, and Newsday reported Tuesday afternoon that the number of children infected statewide has climbed to 93.

The harrowing report claimed 2 to 3 children have arrived at one Long Island hospital ‘daily’ in recent weeks, all of them suffering from severe inflammatory symptoms that required immediate admission to the ICU.

Two to three children are coming into one Long Island hospital daily with an inflammatory disease thought to be tied to COVID-19, health care officials said Monday.

Most of these young patients are so ill, they are immediately put into the intensive care unit at Cohen Children’s Medical Center, said Dr. James Schneider, chief of pediatric critical care medicine at the center in New Hyde Park. He said more than 30 patients have been admitted with what is being called “pediatric multi-system inflammatory syndrome associated with COVID-19.”

Hospitals across the state by Monday had reported 93 cases of the illness, which can cause inflamed muscles and breathing problems, state officials said.

Experts who spoke with Newsday said the most popular theory is that the syndrome is likely an “overreaction” to the virus that causes COVID-19, a not-uncommon reaction to viral infection in some susceptible children.

Health experts believe the illness could be the body’s overreaction to COVID-19, the disease caused by the novel coronavirus.

Parents should be on the lookout for symptoms that include a persistent high fever, rash, belly pain and vomiting. In general, most of the patients are healthy kids who didn’t know they had COVID-19 and later tested positive for antibodies, Schneider said.

Schneider said he isn’t surprised these cases have been popping up in recent weeks based on early information about the syndrome.

“This phenomenon starts weeks after infection,” he said. “It all makes sense that now they are showing up – at least from what we think we understand about this illness.”

Last week, the NY State Department of Health issued an advisory about the syndrome and required health care providers to report all cases in people under the age of 21. State Health Commissioner Howard Zucker said a team of experts is evaluating each reported case.

Some have claimed the syndrome has symptoms similar to Kawasaki disease.

NYU Winthrop in Mineola has treated two patients with the syndrome, said Dr. Leonard Krilov, the hospital’s chairman of pediatrics. The most recent, a 4-year-old girl, has been at the hospital since late last week after showing symptoms of the illness, including a fever and rash, Krilov said.

Krilov said the patient is in stable condition and her vital organs are “doing well.”

The hospital’s first patient, a 4-year-old boy who since has been released, had a high fever, rash, abdominal pain and inflammation in his kidneys, Krilov said.

Stony Brook Children’s Hospital treated a 10-year-old boy about a week ago who had symptoms linked to Kawasaki disease, along with vomiting, diarrhea and low blood pressure, said Dr. Christy Beneri, fellowship program director of pediatric infectious diseases at the hospital.

Kawasaki disease has symptoms that are similar to the new syndrome, such as inflammation of the lips, tongue and eyes, and rashes.

NYC Mayor de Blasio said Monday that he didn’t think the syndrome would impact the city’s reopening plans since schools will be shuttered until at least next fall. But both he and Cuomo voiced new concerns on Tuesday, and Dr. Fauci even admonished Sen. Rand Paul over the issue of children returning to school which drew more attention to the issue.

Children have a long history of being little-impacted by viruses unless they have specific immune issues. Research so far has suggested that children aren’t major carriers of the virus, which brings the decision to close schools into question. Others noted that among children affected by this new syndrome, the prevalence in underlying conditions isn’t an accident. While Dr. Fauci is probably technically correct that we can’t be certain children aren’t a major risk of spreading the virus, that’s only true in the context of it being too early in the game to say anything for certain, beyond a few basic undisputed truths, as Dr. Fauci has repeatedly explained to the public. However, the decision to be so cautious about children returning to the classroom as to suggest that it shouldn’t happen for more than a year would appear to contradict the prevailing “science” suggesting children aren’t major spreaders.

Stories about the virus in the UK have largely petered out as it hasn’t appeared to spread widely so far. We suspect a similar pattern will emerge in the US.


Tyler Durden

Tue, 05/12/2020 – 14:36

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Fiscal Disaster: US April Deficit Hits Record $738BN As Government Spends $1 Trillion In One Month

Fiscal Disaster: US April Deficit Hits Record $738BN As Government Spends $1 Trillion In One Month

While it will hardly come as a surprise to anyone that the US fiscal situation is now an absolute catastrophe – following previously projections that the US is expected to issue over $5 trillion in debt this year alone and the Fed is expected to monetize all of it, if not more – moments ago we got the actual details of just how bad it will get when the Treasury published its April Monthly Treasury Statement.

The numbers were terrifying: with the US economy shut down in April, the US government collected just $242BN in receipts, down a record 54.8% from a year ago “as certain taxes from individuals and corporations were deferred until July,” the Treasury said, a deferral which may now be extended all the way to December. On a rolling 12-month basis, receipts were just $3.265 trillion, the lowest since March 2017, and down 3% Y/Y, assuring the US economy is in recession (just in case the 34 million recently unemployed Americans didn’t make that clear)

But the real horror was in government spending, which exploded by 161% to a record $1 trillion (technically $980 billion but at this point one can just roundt up) in April, “largely due to the release of assistance related to the COVID-19 outbreak.” The chart below says it all.

Looking at the details, as receipts plunged to just $139BN in social insurance and retirement, and a paltry – for April $75BN in income taxes, spending soared as follows: Income Security ($307BN), medicare ($152BN), Health ($100BN), social security ($92BN), national defense ($58BN), Net Interest ($36BN)and so forth.

This means that in April, the total US deficit hit a record $738 billion, and the cumulative deficit for the seven months of the year has surged to $1.5 trillion, some 180% greater than the $531BN for the comparable period a year ago.

And this is just the beginning. As a reminder, with the US expected to issue $3 trillion in debt this quarter alone, the US deficit will not be smaller than $1 trillion for many months, and – thanks to helicopter money issued by the recent Fed/Treasury LLC joint venture – may never drop back to a “billion” handle.


Tyler Durden

Tue, 05/12/2020 – 14:22

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House Dems Introduce $3 Trillion COVID-19 Relief Bill; McConnell Slams As “Another Big Laundry List”

House Dems Introduce $3 Trillion COVID-19 Relief Bill; McConnell Slams As “Another Big Laundry List”

House Speaker Nancy Pelosi (D-CA) will unveil the Democrats’ latest attempt to ‘never let a good crisis go to waste’ on Tuesday.

According to CNBC, party leaders are set to vote on the more than 1,800 page package on Friday, as well as a plan to allow for proxy voting during the pandemic.

A summary via CNBC:

  • Nearly $1 trillion in relief or state and local governments 
  • A second round of direct payments of $1,200 per person, and up to $6,000 for a household
  • About $200 billion for hazard pay for essential workers who face heightened health risks during the crisis
  • $75 billion for coronavirus testing and contact tracing — a key effort to restart businesses
  • An extension of the $600 per week federal unemployment insurance benefit through January (the provision approved in March is set to expire after July)
  • $175 billion in rent, mortgage and utility assistance 
  • Subsidies and a special Affordable Care Act enrollment period to people who lose their employer-sponsored health coverage
  • More money for the Supplemental Nutrition Assistance Program, including a 15% increase in the maximum benefit
  • Measures designed to buoy small businesses and help them keep employees on payroll, such as $10 billion in emergency disaster assistance grants and a strengthened employee retention tax credit
  • Money for election safety during the pandemic and provisions to make voting by mail easier
  • Relief for the U.S. Postal Service

The new stimulus package will eclipse the $2.2 trillion legislation passed in late March – which was the largest emergency spending measure in US history. It comes amid an unemployment rate not seen since the Great Depression.

That said, there’s virtually no chance of it gaining traction in the Senate.

It is unclear when both Democrats and Republicans would sign off on a proposal for more relief, as the GOP downplays the need to spend more federal money on a rescue bill now.

“I’m in constant communication with the White House. If we decide to go forward, we will go forward together,” Senate Majority Leader Mitch McConnell told reporters Monday.

The Kentucky Republican added that he does not believe “we have yet felt the urgency of acting immediately.” He said “that time could develop, but I don’t think it has yet.”CNBC

McConnell called the Democrats’ Tuesday package “another big laundry list of priorities.


Tyler Durden

Tue, 05/12/2020 – 14:14

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Federal Judge Calls Plea Bargain Deals That Limit Compassionate Release ‘Appallingly Cruel’

A federal judge in San Francisco criticized federal prosecutors on Monday for including language in a plea bargain that sharply narrowed the defendant’s rights to request compassionate release under recent criminal justice reforms passed by Congress, calling the proposed deal “appallingly cruel,” “unconscionable,” and “inhumane.”

Judge Charles Breyer of the U.S. District Court for the Northern District of California rejected a proposed plea agreement between the U.S. Attorney’s Office for Northern California and defendant Allan Josue Funez Osorto, who is facing federal drug charges. Breyer found that the plea agreement’s language subverted the provisions of the FIRST STEP Act, which was passed by Congress in late 2018.

“Although Congressional intent alone would be sufficient reason to reject the Plea Agreement, there is another reason that the compassionate release waiver renders it unacceptable,” Breyer wrote. “Plainly put, its effects are appallingly cruel.”

Compassionate release is a policy within the Bureau of Prisons (BOP) that allows inmates who are terminally ill, disabled, or who have unforeseen family tragedies to petition for early release. However, the BOP’s petition process was arbitrary, inscrutable, and interminable. Between 2014 and 2018, at least 81 federal inmates died while waiting for the government to review their applications. To fix this problem, Congress expanded compassionate release under the FIRST STEP Act, giving inmates the ability to petition judges for release if the BOP ignored their request for more than 30 days.

This judicial escape hatch has become even more important in recent months. In an effort to alleviate potentially deadly outbreaks of COVID-19, Attorney General William Barr directed the BOP to use compassionate release and other methods to get elderly and at-risk inmates out of federal prisons.

Osorto’s plea agreement would have required him to waive his right to petition a judge for compassionate release after 30 days of BOP inaction. Instead, he would have to exhaust his administrative remedies through the BOP (“no mean task,” Judge Breyer noted) or wait 180 days.

“What’s worse—that this is a disgusting use of prosecutorial power? Or that it’s completely unsurprising?” says Kevin Ring, president of the criminal justice group FAMM, which has advocated for expanded compassionate release for many years. “These types of abuses will not end until more judges do what Judge Breyer did here and call them out.”

U.S. Attorney for the Northern District of California David Anderson told Law.com that his office changed the waiver language last week after hearing from local defense attorneys:

“We are working hard to protect the community one case at a time. Nothing in the record suggests this defendant Funez Osorto is particularly at any unusual health risk,” Anderson said. Anderson said that in older cases, where the office had negotiated a full waiver of compassionate release, the office has allowed prisoners to bring compassionate release motions “where we thought such a waiver would be fair to the defendant.” 

Breyer noted in his order that federal prosecutors had recently used similar waivers to oppose compassionate release petitions filed in his court.

“That result is unacceptable for two reasons,” Breyer wrote. “First, it undermines Congress’s intent in passing the First Step Act. Second, it is inhumane.”

Noting the BOP’s “dismal record” on compassionate release, the judge concluded that “because this waiver provision undermines Congressional intent and is an unconscionable application of a federal prosecutor’s enormous power to set the terms of a plea agreement, the Court cannot approve of the proposed Plea Agreement in this case.”

So far, 49 federal inmates have died of complications from COVID-19. More than 3,300 inmates and 250 BOP staff are infected, according to the latest numbers from the BOP. Those deaths include a woman who was sent to federal prison for a nonviolent drug crime while in her third trimester of pregnancy.

Although Attorney General Barr ordered the BOP to identify and release at-risk inmates, advocacy groups and family members of inmates say confusing rule changes, resistance from prison wardens, and a generally slow process have hamstrung the federal government’s efforts. In many cases, inmates were told they had been approved to go home, put in pre-release quarantine, and then abruptly told they were no longer eligible and sent back.

In a letter to Congress yesterday, a group of federal public defenders warned that the Department of Justice (DOJ) and the BOP “have made little use of these authorities to reduce prison populations and enable social distancing.”

“Despite repeated Congressional directives that DOJ use compassionate release expansively during this crisis,” the federal defenders wrote, “BOP facilities have refused to accept or review compassionate release requests and prosecutors have adopted a nearly default opposition to release.”

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Federal Judge Calls Plea Bargain Deals That Limit Compassionate Release ‘Appallingly Cruel’

A federal judge in San Francisco criticized federal prosecutors on Monday for including language in a plea bargain that sharply narrowed the defendant’s rights to request compassionate release under recent criminal justice reforms passed by Congress, calling the proposed deal “appallingly cruel,” “unconscionable,” and “inhumane.”

Judge Charles Breyer of the U.S. District Court for the Northern District of California rejected a proposed plea agreement between the U.S. Attorney’s Office for Northern California and defendant Allan Josue Funez Osorto, who is facing federal drug charges. Breyer found that the plea agreement’s language subverted the provisions of the FIRST STEP Act, which was passed by Congress in late 2018.

“Although Congressional intent alone would be sufficient reason to reject the Plea Agreement, there is another reason that the compassionate release waiver renders it unacceptable,” Breyer wrote. “Plainly put, its effects are appallingly cruel.”

Compassionate release is a policy within the Bureau of Prisons (BOP) that allows inmates who are terminally ill, disabled, or who have unforeseen family tragedies to petition for early release. However, the BOP’s petition process was arbitrary, inscrutable, and interminable. Between 2014 and 2018, at least 81 federal inmates died while waiting for the government to review their applications. To fix this problem, Congress expanded compassionate release under the FIRST STEP Act, giving inmates the ability to petition judges for release if the BOP ignored their request for more than 30 days.

This judicial escape hatch has become even more important in recent months. In an effort to alleviate potentially deadly outbreaks of COVID-19, Attorney General William Barr directed the BOP to use compassionate release and other methods to get elderly and at-risk inmates out of federal prisons.

Osorto’s plea agreement would have required him to waive his right to petition a judge for compassionate release after 30 days of BOP inaction. Instead, he would have to exhaust his administrative remedies through the BOP (“no mean task,” Judge Breyer noted) or wait 180 days.

“What’s worse—that this is a disgusting use of prosecutorial power? Or that it’s completely unsurprising?” says Kevin Ring, president of the criminal justice group FAMM, which has advocated for expanded compassionate release for many years. “These types of abuses will not end until more judges do what Judge Breyer did here and call them out.”

U.S. Attorney for the Northern District of California David Anderson told Law.com that his office changed the waiver language last week after hearing from local defense attorneys:

“We are working hard to protect the community one case at a time. Nothing in the record suggests this defendant Funez Osorto is particularly at any unusual health risk,” Anderson said. Anderson said that in older cases, where the office had negotiated a full waiver of compassionate release, the office has allowed prisoners to bring compassionate release motions “where we thought such a waiver would be fair to the defendant.” 

Breyer noted in his order that federal prosecutors had recently used similar waivers to oppose compassionate release petitions filed in his court.

“That result is unacceptable for two reasons,” Breyer wrote. “First, it undermines Congress’s intent in passing the First Step Act. Second, it is inhumane.”

Noting the BOP’s “dismal record” on compassionate release, the judge concluded that “because this waiver provision undermines Congressional intent and is an unconscionable application of a federal prosecutor’s enormous power to set the terms of a plea agreement, the Court cannot approve of the proposed Plea Agreement in this case.”

So far, 49 federal inmates have died of complications from COVID-19. More than 3,300 inmates and 250 BOP staff are infected, according to the latest numbers from the BOP. Those deaths include a woman who was sent to federal prison for a nonviolent drug crime while in her third trimester of pregnancy.

Although Attorney General Barr ordered the BOP to identify and release at-risk inmates, advocacy groups and family members of inmates say confusing rule changes, resistance from prison wardens, and a generally slow process have hamstrung the federal government’s efforts. In many cases, inmates were told they had been approved to go home, put in pre-release quarantine, and then abruptly told they were no longer eligible and sent back.

In a letter to Congress yesterday, a group of federal public defenders warned that the Department of Justice (DOJ) and the BOP “have made little use of these authorities to reduce prison populations and enable social distancing.”

“Despite repeated Congressional directives that DOJ use compassionate release expansively during this crisis,” the federal defenders wrote, “BOP facilities have refused to accept or review compassionate release requests and prosecutors have adopted a nearly default opposition to release.”

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Deleted Tweet Drives Allegations That Detained Saudi Rival Quietly Disposed Of By MbS

Deleted Tweet Drives Allegations That Detained Saudi Rival Quietly Disposed Of By MbS

In March we noticed that “conveniently” at a moment the world’s attention was focused on surviving and defeating the spread of coronavirus, it appeared that Crown Prince Mohammed bin Salman (MbS) took the ‘opportunity’ to initiate a Riyadh Ritz-Carlton 2.0 round-up of rivals within the royal family — hearkening back to the first headline-grabbing ‘house arrest’ of scores of princes and top officials in 2017. 

Only this time it barely made a dent in global media coverage, given it’s hard to compete with a world-altering pandemic. The Wall Street Journal did report on a March 6th incident which has received little attention since: black-clad commandos had raided the homes of two prominent royals close to the throne — namelythe ageing King Salman’s brother, Prince Ahmed bin Abdulaziz al Saud, and more importantly the 60-year old Prince Mohammed bin Nayef (often referred to as MBN). The move against him was described at the time (as usual) as conspiracy to mount a coup against the king and de facto ruler MbS

Since then the powerful MBN, who had been briefly named crown prince prior to the role being controversially bestowed on MbS hasn’t been heard from. He had previously spent time as minister of the interior, a very high-level post with direct oversight over troops and Saudi intelligence. He had also long been considered a close ally to the United States and US intelligence. But now a bizarre episode involving a statement posted by Saudi Arabia’s Prison Authority, but quickly deleted, gives clues into bin Nayef’s fate.

Mohammed bin Nayef was one-time successor to the Saudi throne. Image: Saudi Royal Palace/AFP

The now-deleted statement posted on Twitter said the senior prince was transferred to intensive care after suffering a heart attack. Al-Jazeera describes the strange attempt to quickly retract the eye-opening statement via the official account:

The tweet, which was published in the early hours of Sunday morning, denied the death of the senior royal, adding that a specialized medical team was working around the clock to attend to him.

After the tweet was removed, the Prison Authority posted another tweet saying that the security of its account had been breached, suggesting that the first post about the former crown prince has been published by hackers.

Saudi state-funded media further tried to assure the public the Prison Authority’s Twitter account had be hacked. 

Importantly, this all comes amid widespread rumors that Nayef is either dead or so sick as to be nearly so. And now the deleted tweet incident and subsequent PR damage control is driving speculation that MbS actually wanted MBN to expire quietly. Al Jazeera continues:

Sunday’s series of tweets sparked controversy among Saudi activists, some of whom raised questions about the wellbeing the crown prince. Some said the posts may have been aimed to pave the way for the senior royal family member’s death.

Meanwhile, an account called Prince Mohammed bin Nayef’s adviser posted a series of tweets saying that the de-facto Saudi ruler Mohammed bin Salman (MBS) “wanted to see Mohammed bin Nayef dead as a result of medical negligence, but after news leaked to the family that the prince’s health was deteriorating, MBS was forced to allow the medical team to treat him.”

It added that bin Nayef’s health has been deteriorating for more than a week.

Critics of Riyadh’s response have noted that if the Prison Authority’s official Twitter account had really been hacked or compromised, it wouldn’t have been able to regain control of it so fast. 

Saudi activists and observers questioned the response from the Prison Authority, saying that if its account had been hacked, it would have been impossible to recover it so quickly.

Crackdown in the kingdom, image via Middle East Eye

“I wonder if a security breach or a prelude [to announcing the death of the former crown prince],” one activist and critic cited in the report said. Another questioned: “Is this to pave the way for getting rid of bin Nayef while in custody?”

Indeed it would appear all too convenient if Nayef – long considered the most direct threat to MbS’ rule – were to suffer a “heart attack” and quietly perish in an intensive care unit a mere two months after being arrested. 


Tyler Durden

Tue, 05/12/2020 – 14:05

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