Trump’s Impeachment Trial Will Only Make Us Hate Washington Even More

Today is the day that the impeachment trial of President Donald Trump gets underway. Proceedings start around 1 p.m. in Washington (go here for places to watch) and are expected to last anywhere from a week to a month (Bill Clinton’s trial in 1999 lasted five weeks). In a vote that proceeded along party lines, President Trump has been charged with abuse of power and obstruction of Congress. He is widely expected to be found not guilty by the Senate, in a vote that will also proceed largely, if not completely, along party lines.

Come February, or whenever the pompously self-declared “world’s greatest deliberative body” votes on the matter, we will be right back to where we started, only a little bit more in debt, a little angrier, and a little more behind schedule on nuts-and-bolts things like passing a real budget for the current fiscal year, figuring out how to pay for entitlements, and discerning whether we’re technically at war with various countries.

The impeachment process thus perfectly encapsulates everything that is wrong with the federal government. From start to finish, the impeachment is almost purely partisan and political rather than substantive, and it accomplishes nothing other than driving down even further any form of trust or confidence in the presidency, Congress, or even the Supreme Court (Chief Justice John Roberts will preside over the Senate trial). To be fair, impeachment is designed to be a political, rather than legal, process. It’s not about discovering the truth of what happened, or even fully explaining what happened, as you’d expect in a real trial. As Gerald Ford noted just a few years before becoming president himself after the resignation of Richard Nixon (who was faced with his own impeachment trial), an impeachable offense “is whatever a majority of the House of Representatives considers it to be at a given moment in history.”

It’s only fitting, then, that being found innocent will be an equally partisan exercise. Indeed, that seems especially fitting in an election year in which the incumbent shows some of the worst approval numbers in history and still seems to have an excellent shot at winning a second term.

I’ve documented over the years how far and fast trust and confidence in various parts of the federal government has fallen. In 1964, for instance, 77 percent of Americans agreed that they trusted “the government in Washington always or most of the time.” As of last year, that figure stood at 17 percent. When it comes to the presidency, trust has toppled from 73 percent in 1972 to 45 percent.  For Congress, the drop is even worse, plummeting from 71 percent in 1972 to 38 percent in 2019. Trust in the Supreme Court has followed the same general trend, even if its numbers are better. In 1988, 56 percent had a high degree of trust in the Supreme Court but thirty years later, that figure clocked in at 37 percent.

It’s unlikely that the purely partisan impeachment process will do anything but accelerate those trends. For libertarians, this might on its face seem a blessing, as evacuating trust and confidence in the federal government is surely a precondition for radically reducing its growth and power.

But that’s not how things work. Again and again—and in countries all over the world—declines in trust of government correlate strongly with calls for more government regulation in more parts of our lives. “Individuals in low-trust countries want more government intervention even though they know the government is corrupt,” explain the authors of a 2010 Quarterly Journal of Economics paper. That’s certainly the case in the United States, where the size, scope, and spending of government has vastly increased over exactly the same period in which trust and confidence in the government has cratered. In 2018, I talked with one of the paper’s authors, Andrei Shleifer, a Harvard economist who grew up in the Soviet Union before coming to America. Why do citizens ask a government they don’t believe in to bring order? “They want regulation,” he said. “They want a dictator who will bring back order.”

Counterintuitively, the relative size and spending of government in the United States actually flattened or dipped during periods when trust and confidence in government picked up:

From 1994 to 2001, Pew data show upticks in the number of people who trust the government to mostly do the right thing…. Using inflation-adjusted dollars, the feds spent about $250 billion more in [Bill] Clinton’s last year than in his first, a small increase compared to the spending surges seen under Ronald Reagan and George W. Bush. Viewed as a percentage of GDP, federal spending fell significantly during that period. In 1991, it equaled 21 percent. By 2001, it equaled just 17.5 percent.

There were many reasons for minor increases in trust and confidence in government during the 1990s. The end of the Cold War, the rise of the internet, and continual economic expansion all played important roles (especially the latter). While Washington got shriller—virtually all modern forms of hyper-polarization were present or birthed in the ’90s—it also became less important to more people. Clinton famously acknowledged that “the era of big government is over” even as Congress worked in a bipartisan fashion to change welfare, cut capital gains taxes, and slash defense spending. That sort of rapprochement is unimaginable in the current moment.

You can argue that Trump richly deserves to be the third president to face an impeachment trial, that we should be impeaching all the presidents all the time, or that Trump is actually the victim of a coup. You might even win those arguments. But none of that matters if you really care about restraining the size of government. Come the end of the Senate trial that starts today, Trump will almost certainly still be in office, Democrats and Republicans will hate each other even more, and trust and confidence in Washington will be even lower than it already is.

And the spending of the federal government, what Milton Friedman said was the purest measure of its power, will continue to set new records. All impeachment will have done is add more fuel to the perpetual dumpster fire that is Washington and pushed the calendar back a month or so when it comes to the fiscal reckoning that awaits us in the new decade.

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Vladimir Putin Is Not Reforming the State. He’s Taking Power for Himself.

Russian Prime Minister Dmitry Medvedev and his entire cabinet resigned last week in the wake of what The New York Times‘ Andrew Higgins calls “sweeping constitutional changes.” This is the first major alteration of Russia’s constitution since the 1990s, and it would effectively secure President Vladimir Putin’s control of the state.

At a glance, it’s clear that Putin’s intention is to stay in power after 2024, the year he’s constitutionally required to step down after two consecutive terms. But his changes also indicate a methodical plan to conserve power in the executive branch, which sets a dangerous international precedent.

In his address to the Federal Assembly, Russia’s national legislature, Putin proposed to move some key powers from the executive branch to the Duma, Russia’s parliament, and the State Council, an advisory body that handles issues deemed of the highest importance to the state. The most significant constitutional changes would allow the Duma to appoint members to the prime minister’s cabinet and allow the State Council to oversee the appointment of the heads of Russia’s security agencies.

In addition to giving the State Council constitutional status, Putin also intends to limit the supremacy of international law.  The amendments would ban foreign citizenship and foreign residency permits for judicial and legislative officials and require presidential candidates to have had permanent residence in Russia for at least 25 years.

“Is this a coup? Absolutely,” says Elena Lukyanova, law professor at Russia’s Higher School of Economics. She adds that the amendments would allow the Russian government to refuse to fulfill its obligations under international treaties.

But why has Putin taken a more subtle approach to maintaining his autocracy as opposed to simply removing term limits from Russia’s constitution? Maria Snegovaya, post-doctoral fellow at John Hopkins University School of Advanced International Studies, compares Putin’s transfer of power to that of Nursultan Nazarbayev, Kazakhstan’s president, in 2019. Nazarbayev had distributed some elements of presidential authority to the Kazakh Senate and Security Council. Nazarbayev then put his daughter in charge of one body and himself in charge of the other.

“Putin’s goal is to avoid concentrating too much power under a singular institution outside of his control, lest it diminish his authority or even threaten his rule,” Snegovaya writes.

Peter Dickinson, editor of Atlantic Council’s Ukraine Alert, notes that Putin’s constitutional proposals clearly indicate his intentions to retain control while also creating an illusion of change:

Putin’s last constitutional conjuring trick, which saw him return to the presidency in 2012 after a farcical four-year handover to Dmitry Medvedev, sparked mass protests in Moscow that left the regime rattled. With his approval rating currently in the doldrums, Putin knows he must tread carefully as he seeks to extend his reign beyond 2024. Much will now depend on the public reaction to Putin’s plans. Large-scale protests are unlikely but cannot be ruled out as Russians face up to the reality of a stagnating economy and the prospect of Putin in power for another generation.

Putin’s actions should alarm the international community. They pose a grave threat to the rule of law.

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North Korea Ends Moratorium On Missile Tests, Nuclear Enrichment

North Korea Ends Moratorium On Missile Tests, Nuclear Enrichment

After warning the US about the possibility of a return to the frosty relations of previous administrations, North Korean leader Kim Jong Un is once again wheedling the Trump Administration by threatening to re-start the country’s ICBM tests.

On Tuesday, a senior NK government official warned that the US had ignored his year-end deadline for nuclear talks. And because of this lack of progress, Kim no longer feels bound by his commitments, including his promise to halt nuclear testing and suspend its ICBM program.

Talks with North Korea stalled after last February’s failed summit, and have apparently made little progress during the intervening months. Late last year, NK fired off several short-range missiles, unnerving its neighbors in South Korea and Japan, though President Trump quickly declared that the missile launches didn’t violate North Korea’s truce with the US.

“We found no reason to be unilaterally bound any longer by the commitment that the other party fails to honor,” said Ju Yong Chol, a counselor at North Korea’s mission to the United Nations in Geneva. Ju made these remarks during a UN-backed conference on disarmament.

To be sure, the talks with NK were likely doomed to fail from the beginning. Washington has insisted that no economic sanctions would be lifted until NK completes the disposal of its nuclear arsenal, while NK has demanded that the two sides agree to a schedule whereby sanctions would be gradually lifted in exchange for NK taking steps toward disarmament.

Speaking as the envoy from the DPRK, Ju accused the US of imposing “the most brutal and inhuman sanctions,” before warning that “If the US persists in such hostile policy toward the DPRK there will never be the denuclearization of the Korean peninsula.”

From Reuters:

“If the United States tries to enforce unilateral demands and persists in imposing sanctions, North Korea may be compelled to seek a new path,” Ju added.

To be sure, this isn’t the first time NK has threatened to walk away from the table.

It’s worth noting that the renewal of North Korea’s belligerent stance comes just one day after Kim appointed a new foreign minister to succeed Ri Yong Ho, a North Korean official who became one of the country’s most recognizable figures by representing NK in talks with the US, and at the UN. In his place, Kim has installed a former defense commander with little diplomatic experience, once again spotlighting the regime’s reliance on a small group of loyalists, while also potentially signalling a return to the country’s belligerent attitude when it comes to its defense and nuclear programs, Reuters reports.

Fortunately, the US military has been keeping close tabs on North Korea. On Friday, the Pentagon’s No. 2 general warned that NK was scrambling to build new missiles now that diplomatic efforts with the US have effectively collapsed.

So now both Iran and North Korea are rejecting prior promises to limit or end their enrichment of uranium.

Expect missiles to fly in the not-too-distant future. Fortunately, with so much else going on, we imagine markets will ignore the threat of nuclear war, just like they did last time around.


Tyler Durden

Tue, 01/21/2020 – 10:35

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Hillary Clinton: “Nobody Likes Bernie”

Hillary Clinton: “Nobody Likes Bernie”

Authored by Jonathan Turley,

One of the most curious things to watch after the 2016 election was the unrelenting reclamation project called Hillary Clinton.

It seems the unending work of powerful figures in the Washington and Hollywood establishment. The project now has a name: “Hillary.” It is the latest documentary on Hulu that seeks to show how Hillary was a victim of sexism but remains the oracle of our age. The work was the brainchild of producer Howard T. Owens and Washington power broker Robert Barnett who represents Clinton. Barnett offered undisclosed footage as an enticement for another effort to repackage Clinton’s historic loss to Trump.

The film by Nanette Burstein apparently will be largely devoid of critical voices, except Hillary’s of course. Lashing out at her critics, she takes particular aim at Bernie Sanders who she seems to blame for ruining her coronation but making the 2016 Democratic primary competitive. In an ironic projection, she declares that “no one likes Bernie” — a curious view since it took the help of the DNC to rig the primary against his surging support in 2016.

The interview is classic Clinton. She feigns reluctance to criticize Sanders during the primary. She insists “I am not going to go there yet” and then goes there. Her attack on Sanders is read to her and then she strongly eludes to his sexism and his cabal of supporters.

After the election, Clinton alternatively blamed sexismracismself-hating womendomineering boyfriendsRussian hackersBernie Sanders, and of course, James Comey.  The most obvious reason is that Clinton remains a highly unpopular figure and was viewed as inauthentic on the campaign by many.  Many of us were critical when the Democratic establishment (and virtually every Democratic member of Congress) all but guaranteed the nomination of Clinton despite every poll showing her to be unpopular and the voters seeking an anti-establishment choice.

Now her ire appears directed at Sanders. In an embarrassingly one sided interview on documentary, Lacey Rose quotes Clinton in saying:

“He was in Congress for years. He had one senator support him. Nobody likes him, nobody wants to work with him, he got nothing done. He was a career politician. It’s all just baloney and I feel so bad that people got sucked into it.”

She goes to say that “people got sucked into” his campaign and strongly suggests that he is himself sexist.

“I’m not going to go there yet. We’re still in a very vigorous primary season. I will say, however, that it’s not only him, it’s the culture around him. It’s his leadership team. It’s his prominent supporters. It’s his online Bernie Bros and their relentless attacks on lots of his competitors, particularly the women.”

It seems like powerful figures will not stop in this reclamation project until people relent and agree that Hillary lost because of sexism, Comey, Sanders, self-loathing women, a conservative cabal, and other late additions to the Clinton black list. It simply cannot be that she was universally viewed as inauthentic due to her refusal to answer questions directly or her changing her positions on core issues from gay marriage to war powers to suit the polls. It cannot be that she remained one of the biggest war hawks in Washington or that she and her husband cashed in on speeches and deals worth hundreds of millions of dollars.

The problem is that it has not worked. She remains highly unpopular with voters so the public is being called to yet another reeducation on the life and continuing times of Hillary Clinton. The question is whether a general statement of concession will end this never ending reclamation project.  Even Sanders might be willing to sign on to such a collective capitulation in the interest of just moving on.


Tyler Durden

Tue, 01/21/2020 – 10:15

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You’ll be surprised to see what investment has destroyed the S&P 500

The year was 1990, and the Soviet Union was on the verge of collapse.  The Berlin Wall was still in the process of being destroyed, and East and West Germany were set to reunify later in the year.

Nelson Mandela was released from prison in February, and the South African government began talks to end Apartheid soon after.

Iraqi dictator Saddam Hussein invaded Kuwait in August.

Ghost, Home Alone, and Pretty Woman were the top movies of the year. Janet Jackson’s Rhythm Nation was the top-selling album.

And the S&P 500 reached an all-time high of 360.65 in May.

It’s hard to even imagine that number anymore; the S&P 500 just closed last week at an all-time high of 3316, more than nine times higher than its peak in 1990.

And that’s impressive growth, no doubt. Investors who have had the discipline to buy and hold over the past three decades have been rewarded.

This is, of course, the most common investment advice doled out by money experts and best-selling financial authors. They tell people to invest in an S&P 500 index fund, and to basically keep it there for decades.

The experts insist there will always be strong years and weak years, but the overall long-term track record is pretty good.

And this is true to a degree. But let’s go back 20 years to early 2000, when the S&P 500 was at roughly 1500.

If you had bought then and held until now, that works out to be an average annual return of just 4%.

4% is better than zero… but it’s hardly anything to write home about.

[This return doesn’t factor in dividends, taxes, fund management fees, or inflation… but those effects all largely offset one another.]

Going farther back, if you had bought the S&P 500 in 1990 and held for 30 years, you would have earned a more respectable annualized return of 7.7%.

And that sounds a lot better.

But it may surprise you to find out that you could have bought a 30-year US government bond back in 1990 yielding 9.2%!

Think about that– you could have avoided all the stock market swoons… all the crazy gyrations due to war, financial crises, recessions, panics, euphoria, etc. AND earned an extra 1.5% each year over the past three decades.

The point is– conventional wisdom isn’t always right.

I’m not trying to say that investing in an index fund is a terrible idea; it’s a reasonable approach for people who aren’t willing to educate themselves about finance or do any work to find great investments.

But it’s important to at least know what you’re getting yourself into.

Buying an S&P 500 index fund essentially means that you have 500 different investments. It’s really hard to keep track of 5 investments. I can’t imagine keeping track of 500.

And even experienced, sophisticated investors would have a hard time even naming more than 50 to 100 companies in the S&P.

My guess is there are a few hundred companies in the index that most people have never even heard of, let alone know anything about– the business operations, financial performance, quality and integrity of management, etc.

Index investing is a conscious decision to know absolutely nothing about your investments– and to buy everything regardless of price or quality.

Again, this is a very easy and simple approach to investing that might be appropriate for some people. But it’s silly to think that this is the correct (and ONLY) way that everyone should invest.

There are always other options… and that’s the fundamental ethos that underpins our worldview at Sovereign Man.

Our goal is to help people expand their options beyond convention, and to help folks understand the risks and rewards of each one.

I showed you one simple example earlier– the S&P 500 returned 7.7% since 1990, while a 30-year government bond paid 9.2%.

And since 2000, the S&P 500 has returned just 4%, while a 20-year government bond would have paid you 6.9% over the same period. That’s a HUGE difference of nearly 3%.

So just looking at these numbers, you can see that the conventional wisdom of ‘invest in an S&P 500 index fund’ didn’t necessarily result in the highest annualized return.

This might not work today, of course.

30-year bond yields are pitiful, just 2.3%. That barely keeps up with taxes and inflation… so you’d have to be insane to lock in such a dismal rate for the next three decades.

Fortunately, those are not the only two options in the investing universe.

Conventional thinking would have us believe that we can only invest in stocks, or we invest in bonds. And if you’re a bank or hedge fund with tens of billions of dollars to manage, those are pretty much your only options.

But this is where small investors have a unique advantage; with limited size, we are nimble enough to participate in niche opportunities that are far too small for large investors.

Small investors can invest in thriving foreign markets. Or in alternatives like cash-producing royalties, peer-to-peer real estate financing, or distressed private assets.

But the best investment you can make, of course, is the investment you make in yourself. Taking the time to learn about business and finance pays enormous dividends in the future.

You could learn, for example, how to start an online business in your free time that can generate life-changing supplemental income. And that’s a return that would far outpace any index fund.

Again, I’m not here to tell you where you should or should not invest. The key idea is that you tend to increase your chances of success when you think a bit unconventionally and expand your universe of options.

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A Year Ago, the Media Mangled the Covington Catholic Story. What Happened Next Was Even Worse.

On the weekend of January 18, 2019, a short video appeared on Twitter that purported to show a group of Catholic high school boys—one young man, Nicholas Sandmann, in particular—harassing a Native American elder named Nathan Phillips on the steps of the Lincoln Memorial.

One year later, the media’s reckless mishandling of the story stands as an important warning against the kind of agenda-driven, outrage-mongering clickbait that unfortunately thrives in the world of online journalism.

But no less noteworthy was the news cycle that followed the initial flawed coverage, which featured a host of ideologically-motivated partisans doubling down on their initial assumption, digging for new information to justify it, and reassuring themselves that they were right all along. Sandmann and his MAGA hat-wearing friends had identified themselves as members of Team Trump, and thus the national shaming they endured was deserved, this thinking went. Indeed, those who had defended the boys by disputing some aspects of the encounter—including me, in an article for Reason that changed many people’s minds about what had happened—were engaged in “gaslighting“: trying to make people think that something they saw hadn’t really happened.

Sandmann’s subsequent lawsuits have kept the Covington-sympathetic public focused on several of the outlets that misreported the initial story: CNN, The Washington Post, and others. Indeed, these publications certainly deserve criticism, independent of the merits of the individual lawsuits. But these outlets’ Covington-related sins pale in comparison to those who continued to malign the teens long after the additional video footage was available.

It’s important to recall that the mainstream media’s textbook rush-to-judgment about the Covington teens relied on two key pieces of faulty evidence. The first was the misleading video clip, which did not contain important context about what had happened immediately before the encounter between Sandmann and Phillips.

The second was Phillips’ brazenly inaccurate statements to the press: He claimed that he had intervened to protect the third group, the Black Hebrew Israelites, from the “predatory” boys, even though the boys were not threatening anyone. He also claimed he had heard a “build the wall” chant, even though no evidence of this has emerged in any of the additional footage. Phillips, it turned out, was a false witness: an on-the-ground source whose information seemed credible, but wasn’t. (In fact, Phillips is a charlatan with a long history of allowing the media to misrepresent him as a Vietnam War veteran, even though he never served abroad or saw combat.)

Since journalism in the modern era moves at a rapid pace, irrespective of the need to double- and triple-check facts, these two pieces of evidence were sufficient to launch dozens of stories in mainstream press that essentially indicted Covington’s students as racists. These stories employed some cautious language—allegedly, seemingly, etc.—and attributed the stronger statements to Phillips, which provided a veneer of objectivity, even though readers were given little reason to think there might be more to the story.

A truly discerning reader would have wondered why a trivial encounter that involved no one of significance and resulted in zero injuries or property damage was worthy of so much coverage at all. But no matter: The actions of Sandmann and his friends, as described by the media, generated apoplectic denunciation by conservatives, liberals, Catholics, celebrities, politicians, and virtually everyone else. Even ideological allies of the boys, who had come to Washington, D.C. to attend the anti-abortion March for Life rally, were quick to condemn them.

In hindsight, the slanted nature of the coverage is almost comical. The Detroit Free Press described the video as depicting “Phillips peacefully drumming and singing, while surrounded by a hostile crowd” and suggested that this “illustrates the nation’s political and racial tensions.” The Daily Beast‘s story was filed under “AWFUL” and described the video as “disturbing.” Its first several paragraphs quote directly from Phillips. NPR asserted that the boys had mocked the Native American man. In story after story, news outlets claimed the Covington kids had shouted “build the wall.” Again, the sole source of this claim was Phillips.

The news stories, at least, were edited; Twitter is not. Thus the reaction on social media was even more unhinged. Reza Aslan, a scholar and television pundit on CNN, tweeted that Sandmann had a “punchable” face. His CNN colleague Bakari Sellers agreed. BuzzFeed‘s Anne Petersen tweeted that Sandmann’s face reminded her of Brett Kavanaugh’s—and this wasn’t intended as a compliment.Vulture writer Erik Abriss tweeted that he wanted the kids and their parents to die. Kathy Griffin said the high schoolers ought to be doxxed. As a USA Today retrospective noted, “comedian Patton Oswalt called the students in the video ‘bland, frightened, forgettable kids who’ll grow up to be bland, frightened, forgotten adult wastes.’…Writer Michael Green, referring to Sandmann’s apparent smirking at the Native American man, wrote: ‘A face like that never changes. This image will define his life. No one need ever forgive him.’…Huffington Post reporter Christopher Mathias explicitly compared the students to violent segregationists.”

Within 48 hours, the truth had emerged. A longer video, which showed the Covington boys’ prior harassment at the hands of the Black Hebrew Israelites, made it clear that the kids had not directed racist invectives at Phillips’ crowd—they were cheering in order to drown out the Black Hebrew Israelites. Phillips then entered the teens’ midst, drumming and chanting at them. Some thought he was joining their cheer, a small few made inappropriate tomahawk gestures, while others seemed confused or even wary—correctly wary, since Phillips and his entourage had not come in good faith.

I wrote about the additional footage, and, over time, many commentators backpedaled. The mainstream media did as well. Case in point: The New York Times went from “Viral Video Shows Boys in ‘Make America Great Again’ Hats Surrounding Native Elder,” to “Fuller Picture Emerges of Viral Video of Native American Man and Catholic Students.”

But less well remembered than the mainstream media’s belated mea culpa was the absurd effort to re-legitimize the initial narrative.

On the next day, January 21, the New York Daily News published a contemptible hit piece attributed to its sports staff titled: “SEE IT: Covington Catholic High students in blackface at past basketball game.” The first sentence read: “This won’t help Nick Sandmann’s case,” as if the story was some sort of indictment of him. In fact, it had nothing to do with him, or any of his classmates at the Lincoln Memorial. The “blackface” incident was from a Covington basketball game years before, in which some attendees had painted themselves black to show school spirit. Ill-advised, in today’s rage-charged climate? Sure. An example of racial harassment? Probably not. In either case, it had nothing to do with Sandmann.

Not to be outdone, Ben Kesslen of NBC News published a story the next day with the headline: “Gay valedictorian banned from speaking at Covington graduation ‘not surprised’ by D.C. controversy.” Kesslen’s piece included critical remarks from the gay valedictorian, as well as a local Native American activist group for good measure. The Covington kids “were not blameless,” said the valedictorian. Readers who consumed the article too quickly may have missed that this student hailed from a different Covington school (albeit one in the same diocese), rendering his subjective impression of what may or may not have happened at the Lincoln Memorial fairly useless.

Then there was another video clip—this one just eight seconds long—that was widely cited as evidence that perhaps the Covington boys were up to no good, after all. It allegedly depicted a separate incident near the Lincoln Memorial, involving a group of boys who may or may not be students from Covington. The appear to yell something—perhaps “MAGA”—at a passing girl. It’s not clear what prompted this. It’s not clear if the girl initiated a conversation with the boys. It’s not clear if they meant to harass her. It’s not even clear that these boys are the same ones who encounter Phillips. It’s an eight-second video.

For some reason, Vox‘s Emily Stewart embedded the short clip in her January 24 piece about Covington. This isn’t even the most astonishing failing of the piece: She also uncritically cited Phillips throughout.

“Phillips told the Post that even before the confrontation, he and other Native American activists had issues with the students during the day,” wrote Stewart. “And it wasn’t just him and the Hebrew Israelites—a video surfaced on Twitter purporting to show the Covington boys harassing a group of girls as they walked by.”

Stewart’s piece is shockingly devoid of pushback, failing to note that Phillips’ account was misleading—even though the piece was written four days after his narrative had fallen apart. She made note of my piece, and a few others from those in the Fox News orbit, but her bolded points were “We’re probably never going to know exactly what happened on the Lincoln Memorial steps” and “These kids still don’t look great.”

On the latter point, she linked to a piece by Slate‘s Ruth Graham, who wrote, “There’s no mistaking the core dynamics of the encounter: Sandmann smugly grins in Phillips’s face and declines to step backward, and he’s backed by dozens of boisterous teens who are jeering and mocking the much smaller group of Native marchers.”

In a previous piece, she had referred to Sandmann’s face as “punchable and untouchable.” Her new piece contained no apology—indeed, she hardly changed her mind about him at all.

“The new facts about this small encounter this weekend in Washington are important, and worth clarifying,” wrote Graham. “But they don’t change the larger story, the one that caused so many people to react so viscerally to the narrative’s first, and simpler, draft.”

The most obnoxious entry in this series was penned by Deadspin‘s Laura Wagner, who actually attempted to shame those who had changed their mind about the Covington kids in the face of new evidence. “Nothing about the video showing the offensive language of Black Israelites changes how upsetting it was to see the Covington students, and Sandmann in particular, stare at Phillips with such contempt,” wrote Wagner. “I don’t see how you could watch this and think otherwise unless you’re willing to gaslight yourself, and others, in the service of granting undeserved sympathy to the privileged.”

That’s right—people who were sorry for making a snap judgment and condemning a teenager for not smiling the right way while caught in a confusing moment with a bad-faith interloper were “granting undeserved sympathy to the privileged.” (I responded to Wagner’s piece shortly after it was first published.)

One year after the Covington debacle, it’s actually the gratuitous cruelty of the Laura Wagners and Ruth Grahams that sticks out to me as worthy of ongoing criticism—far more than the significantly flawed but at least summarily retracted news articles by the likes of Washington Post and CNN. Covington is a story about a viral outrage-addicted media succumbing to a bad impulse and make horrible mistakes. But as the better-known news outlets continue to garner the lion’s share of the opprobrium, it’s important to remember that there are plenty of commentary writers who continue to think—wrongfully, and shamefully—that the media had it basically right the first time.

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A Year Ago, the Media Mangled the Covington Catholic Story. What Happened Next Was Even Worse.

On the weekend of January 18, 2019, a short video appeared on Twitter that purported to show a group of Catholic high school boys—one young man, Nicholas Sandmann, in particular—harassing a Native American elder named Nathan Phillips on the steps of the Lincoln Memorial.

One year later, the media’s reckless mishandling of the story stands as an important warning against the kind of agenda-driven, outrage-mongering clickbait that unfortunately thrives in the world of online journalism.

But no less noteworthy was the news cycle that followed the initial flawed coverage, which featured a host of ideologically-motivated partisans doubling down on their initial assumption, digging for new information to justify it, and reassuring themselves that they were right all along. Sandmann and his MAGA hat-wearing friends had identified themselves as members of Team Trump, and thus the national shaming they endured was deserved, this thinking went. Indeed, those who had defended the boys by disputing some aspects of the encounter—including me, in an article for Reason that changed many people’s minds about what had happened—were engaged in “gaslighting“: trying to make people think that something they saw hadn’t really happened.

Sandmann’s subsequent lawsuits have kept the Covington-sympathetic public focused on several of the outlets that misreported the initial story: CNN, The Washington Post, and others. Indeed, these publications certainly deserve criticism, independent of the merits of the individual lawsuits. But these outlets’ Covington-related sins pale in comparison to those who continued to malign the teens long after the additional video footage was available.

It’s important to recall that the mainstream media’s textbook rush-to-judgment about the Covington teens relied on two key pieces of faulty evidence. The first was the misleading video clip, which did not contain important context about what had happened immediately before the encounter between Sandmann and Phillips.

The second was Phillips’ brazenly inaccurate statements to the press: He claimed that he had intervened to protect the third group, the Black Hebrew Israelites, from the “predatory” boys, even though the boys were not threatening anyone. He also claimed he had heard a “build the wall” chant, even though no evidence of this has emerged in any of the additional footage. Phillips, it turned out, was a false witness: an on-the-ground source whose information seemed credible, but wasn’t. (In fact, Phillips is a charlatan with a long history of allowing the media to misrepresent him as a Vietnam War veteran, even though he never served abroad or saw combat.)

Since journalism in the modern era moves at a rapid pace, irrespective of the need to double- and triple-check facts, these two pieces of evidence were sufficient to launch dozens of stories in mainstream press that essentially indicted Covington’s students as racists. These stories employed some cautious language—allegedly, seemingly, etc.—and attributed the stronger statements to Phillips, which provided a veneer of objectivity, even though readers were given little reason to think there might be more to the story.

A truly discerning reader would have wondered why a trivial encounter that involved no one of significance and resulted in zero injuries or property damage was worthy of so much coverage at all. But no matter: The actions of Sandmann and his friends, as described by the media, generated apoplectic denunciation by conservatives, liberals, Catholics, celebrities, politicians, and virtually everyone else. Even ideological allies of the boys, who had come to Washington, D.C. to attend the anti-abortion March for Life rally, were quick to condemn them.

In hindsight, the slanted nature of the coverage is almost comical. The Detroit Free Press described the video as depicting “Phillips peacefully drumming and singing, while surrounded by a hostile crowd” and suggested that this “illustrates the nation’s political and racial tensions.” The Daily Beast‘s story was filed under “AWFUL” and described the video as “disturbing.” Its first several paragraphs quote directly from Phillips. NPR asserted that the boys had mocked the Native American man. In story after story, news outlets claimed the Covington kids had shouted “build the wall.” Again, the sole source of this claim was Phillips.

The news stories, at least, were edited; Twitter is not. Thus the reaction on social media was even more unhinged. Reza Aslan, a scholar and television pundit on CNN, tweeted that Sandmann had a “punchable” face. His CNN colleague Bakari Sellers agreed. BuzzFeed‘s Anne Petersen tweeted that Sandmann’s face reminded her of Brett Kavanaugh’s—and this wasn’t intended as a compliment.Vulture writer Erik Abriss tweeted that he wanted the kids and their parents to die. Kathy Griffin said the high schoolers ought to be doxxed. As a USA Today retrospective noted, “comedian Patton Oswalt called the students in the video ‘bland, frightened, forgettable kids who’ll grow up to be bland, frightened, forgotten adult wastes.’…Writer Michael Green, referring to Sandmann’s apparent smirking at the Native American man, wrote: ‘A face like that never changes. This image will define his life. No one need ever forgive him.’…Huffington Post reporter Christopher Mathias explicitly compared the students to violent segregationists.”

Within 48 hours, the truth had emerged. A longer video, which showed the Covington boys’ prior harassment at the hands of the Black Hebrew Israelites, made it clear that the kids had not directed racist invectives at Phillips’ crowd—they were cheering in order to drown out the Black Hebrew Israelites. Phillips then entered the teens’ midst, drumming and chanting at them. Some thought he was joining their cheer, a small few made inappropriate tomahawk gestures, while others seemed confused or even wary—correctly wary, since Phillips and his entourage had not come in good faith.

I wrote about the additional footage, and, over time, many commentators backpedaled. The mainstream media did as well. Case in point: The New York Times went from “Viral Video Shows Boys in ‘Make America Great Again’ Hats Surrounding Native Elder,” to “Fuller Picture Emerges of Viral Video of Native American Man and Catholic Students.”

But less well remembered than the mainstream media’s belated mea culpa was the absurd effort to re-legitimize the initial narrative.

On the next day, January 21, the New York Daily News published a contemptible hit piece attributed to its sports staff titled: “SEE IT: Covington Catholic High students in blackface at past basketball game.” The first sentence read: “This won’t help Nick Sandmann’s case,” as if the story was some sort of indictment of him. In fact, it had nothing to do with him, or any of his classmates at the Lincoln Memorial. The “blackface” incident was from a Covington basketball game years before, in which some attendees had painted themselves black to show school spirit. Ill-advised, in today’s rage-charged climate? Sure. An example of racial harassment? Probably not. In either case, it had nothing to do with Sandmann.

Not to be outdone, Ben Kesslen of NBC News published a story the next day with the headline: “Gay valedictorian banned from speaking at Covington graduation ‘not surprised’ by D.C. controversy.” Kesslen’s piece included critical remarks from the gay valedictorian, as well as a local Native American activist group for good measure. The Covington kids “were not blameless,” said the valedictorian. Readers who consumed the article too quickly may have missed that this student hailed from a different Covington school (albeit one in the same diocese), rendering his subjective impression of what may or may not have happened at the Lincoln Memorial fairly useless.

Then there was another video clip—this one just eight seconds long—that was widely cited as evidence that perhaps the Covington boys were up to no good, after all. It allegedly depicted a separate incident near the Lincoln Memorial, involving a group of boys who may or may not be students from Covington. The appear to yell something—perhaps “MAGA”—at a passing girl. It’s not clear what prompted this. It’s not clear if the girl initiated a conversation with the boys. It’s not clear if they meant to harass her. It’s not even clear that these boys are the same ones who encounter Phillips. It’s an eight-second video.

For some reason, Vox‘s Emily Stewart embedded the short clip in her January 24 piece about Covington. This isn’t even the most astonishing failing of the piece: She also uncritically cited Phillips throughout.

“Phillips told the Post that even before the confrontation, he and other Native American activists had issues with the students during the day,” wrote Stewart. “And it wasn’t just him and the Hebrew Israelites—a video surfaced on Twitter purporting to show the Covington boys harassing a group of girls as they walked by.”

Stewart’s piece is shockingly devoid of pushback, failing to note that Phillips’ account was misleading—even though the piece was written four days after his narrative had fallen apart. She made note of my piece, and a few others from those in the Fox News orbit, but her bolded points were “We’re probably never going to know exactly what happened on the Lincoln Memorial steps” and “These kids still don’t look great.”

On the latter point, she linked to a piece by Slate‘s Ruth Graham, who wrote, “There’s no mistaking the core dynamics of the encounter: Sandmann smugly grins in Phillips’s face and declines to step backward, and he’s backed by dozens of boisterous teens who are jeering and mocking the much smaller group of Native marchers.”

In a previous piece, she had referred to Sandmann’s face as “punchable and untouchable.” Her new piece contained no apology—indeed, she hardly changed her mind about him at all.

“The new facts about this small encounter this weekend in Washington are important, and worth clarifying,” wrote Graham. “But they don’t change the larger story, the one that caused so many people to react so viscerally to the narrative’s first, and simpler, draft.”

The most obnoxious entry in this series was penned by Deadspin‘s Laura Wagner, who actually attempted to shame those who had changed their mind about the Covington kids in the face of new evidence. “Nothing about the video showing the offensive language of Black Israelites changes how upsetting it was to see the Covington students, and Sandmann in particular, stare at Phillips with such contempt,” wrote Wagner. “I don’t see how you could watch this and think otherwise unless you’re willing to gaslight yourself, and others, in the service of granting undeserved sympathy to the privileged.”

That’s right—people who were sorry for making a snap judgment and condemning a teenager for not smiling the right way while caught in a confusing moment with a bad-faith interloper were “granting undeserved sympathy to the privileged.” (I responded to Wagner’s piece shortly after it was first published.)

One year after the Covington debacle, it’s actually the gratuitous cruelty of the Laura Wagners and Ruth Grahams that sticks out to me as worthy of ongoing criticism—far more than the significantly flawed but at least summarily retracted news articles by the likes of Washington Post and CNN. Covington is a story about a viral outrage-addicted media succumbing to a bad impulse and make horrible mistakes. But as the better-known news outlets continue to garner the lion’s share of the opprobrium, it’s important to remember that there are plenty of commentary writers who continue to think—wrongfully, and shamefully—that the media had it basically right the first time.

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‘Climate Puppet’ Greta Thunberg Shames Davos Attendees For ‘Doing Nothing’

‘Climate Puppet’ Greta Thunberg Shames Davos Attendees For ‘Doing Nothing’

Greta Thunberg did exactly as expected at Davos – delivering her trademark public shaming to the world’s most rich and powerful (non-Chinese) leaders gathered on the icy slopes of the Swiss Alps.

Our house is still on fire,” the 17-year-old told the World Economic Forum. “Your inaction is fueling the flames by the hour.”

I wonder, what will you tell your children was the reason to fail and leave them facing the climate chaos you knowingly brought upon them?” she added, delivering a verbal flagellation to elite climate sinners that want to repent – as long as they can brand themselves as ‘green’ and make hand-over-fist in the process.

Thunberg is pushing immediate, radical change in order to achieve ‘net zero’ carbon emissions by 2050, along with the planting of 1 trillion trees to offset pollution, in order to keep temperatures from rising beyond 1.5 degrees from preindustrial levels.

She and a group of young climate activists have called on private investors and governments to immediately halt exploration for fossil fuels, to stop funding their production, to end taxpayer subsidies for the industry and to fully divest their existing stakes in the sector. –NYT

“Let’s be clear. We don’t need a ‘low carbon economy.’ We don’t need to ‘lower emissions,’” Thunberg told the audience. “Our emissions have to stop.

And while the private jet, virtue-signaling billionaires and their entourages might be embracing their shaming, it appears the general public isn’t exactly buying Greta’s shtick.

As Raúl Ilargi Meijer of The Automatic Earth notes:

“You see, Greta, the message the rich get is not that they must listen to you, it’s that others do listen who control a lot of money, individuals, governments, and so there will be money to be made if they just promote your ideas enough. You’ve been co-opted and pre-empted, so to speak. And what are you going to do now? You’re in cahoots, whether you like it or not, with the likes of Exxon, Shell, and Mercedes.

The oil companies have long rebranded themselves as energy companies (this started when BP’s logo turned green years ago) and invested billions in solar and wind turbines. The carmakers are betting big on electric vehicles. And this is supposed to achieve your goal of carbon neutrality? Let’s get real, shall we?

You’re way out of your league. You’re up against people who represent decades if not centuries-old interests, as well as -aspiring- politicians in every Parliament and even city counsel who know full well their careers will be nipped in the bud if they don’t go along with those interests. And then there’s 10,000 Middle East sheiks.

Davos is not your stage, Greta, and it’s not the stage for the people who believe in you. You’re betraying them by going there, because you have no control over the stage. Still, the other side really want you to think it is, the oil companies do, US and EU governments do, Mercedes and Toyota and Ford, do. Because you are their meal ticket.

They want you to believe that the problem that keeps you up at night can be solved with electric cars and solar panels and wind turbines. Because they have invested heavily in companies that produce all of those.

And now there’s a trillion here and a trillion there, because people listen to you. No government, no chosen official or appointed civil servant at any level, can anymore be forgiven for not budgeting heavily for climate change effects, even if they are ignorant about what those are.


Tyler Durden

Tue, 01/21/2020 – 09:55

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Guggenheim’s Minerd Warns Global Central Banks Are Fueling A Ponzi Market

Guggenheim’s Minerd Warns Global Central Banks Are Fueling A Ponzi Market

Authored by Scott Minerd, Global CIO Guggenheim Investments,

One of the topics that I am focused on in Davos is the deterioration in the quality of the corporate bond markets. 

The disturbing trend is that despite the rally in risk assets in the prior year, the number of defaults rose by approximately 50 percent, according to data compiled by J.P. Morgan. Additionally, the number of distressed exchanges increased by 400 percent.

This correlates well with our observation that the number of idiosyncratic defaults has been increasing. Ultimately, markets will need to reprice for this rising risk with increased bond spreads relative to Treasury securities. However, that day of reckoning when spreads rise is being held off by the flood of central bank liquidity and international investors fleeing negative yields overseas. 

And let’s not forget downgrade risk of BBBs: today 50 percent of the investment-grade market is rated BBB, and in 2007 it was 35 percent. More specifically, about 8 percent of the investment-grade market was BBB- in 2007 and today it is 15 percent. It has more than quintupled in size outstanding, from $800 billion to $3.3 trillion. We expect 15–20 percent of BBBs to get downgraded to high yield in the next downgrade wave: This would equate to $500–660 billion and be the largest fallen angel volume on record—and would also swamp the high yield market.

Ultimately, we will reach a tipping point when investors will awaken to the rising tide of defaults and downgrades. The timing is hard to predict but this reminds me a lot of the lead-up to the 2001 and 2002 recession. 

The prolonged period of tight credit spreads experienced in the late 1990s lulled investors into unwittingly increasing risk at a time they should have been upgrading their portfolios.

This brings to mind the famous observation by economist Hyman Minsky, who stated that stability is inherently destabilizing. That is to say that long periods of relative stability in risk assets causes investors to keep upping the risk during a long period of calm.

Ultimately, this leads to what he called a Ponzi Market where the only reason investors keep adding to risk is the fear that prices will be higher tomorrow (or in the case of bonds, yields will be lower tomorrow).

Daniel Kahneman observed this behavior in his own work, when he identified that investors’ fear of missing an opportunity induces them to buy when they should be selling. 

Even though the recession clearly has been put off until 2021 and perhaps 2022, in the lead-up to the 2001 recession, credit deterioration started to be evidenced three years earlier in 1998 as defaults and credit spreads were rising. 

This would sound like good news for yield starved investors and I would agree.

But patience will lead to bigger opportunities for disciplined investors who don’t wander off into exotic asset classes or chase current returns.


Tyler Durden

Tue, 01/21/2020 – 09:35

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Former Interpol Chief Sentenced To 13.5 Years In A Chinese Prison

Former Interpol Chief Sentenced To 13.5 Years In A Chinese Prison

Roughly 16 months ago, Meng Hongwei, the Chinese President of international crime-fighting agency Interpol, disappeared after returning to China and being detained by authorities.

Now, Meng, who also served as a senior justice official in China, has been sentenced to more than 13 years in a Chinese prison for graft, in a case that the Financial Times said raises “concerns about Beijing’s influence on global organizations.”

Meng, the first Chinese official to lead Interpol, held his position for two years from November 2016 until he disappeared in October 2018.  Days after his disappearance, his family in Lyon reported him missing. But after Chinese officials confirmed that Meng had been arrested on corruption charges, he was apparently coerced to hand in his resignation to Interpol.

At the time of Meng’s disappearance, Human Rights Watch said his case “raised concerns at global institutions where high-level Chinese officials already have been installed in powerful positions” because “any government official is vulnerable” to a graft probe in China.

During his trial at a court in Tianjin city, not far from Beijing, prosecutors said Meng had abused his power for personal gain while helping to run China’s public security agency. Meng was accused of accepting more than 14 million yuan ( about $2 million) in bribes and kickbacks.

Although the verdict didn’t mention Meng’s involvement with Interpol, it did claim that he also used his standing abroad to “seek improper profits.”

According to the Chinese court, Meng accepted his judgment and would not appeal the case. Though we doubt any appeal would get very far in a legal system which is under total control of Communist Party judges.

Meanwhile, back in Lyon, Meng’s wife, Grace Meng, has been granted political asylum. She’s launched a lawsuit against Interpol, accusing the organization of leaving her husband twisting in the wind by not standing up to Beijing and demanding his return. Beijing insists that the case was an “internal matter” and was handled according to Chinese law.


Tyler Durden

Tue, 01/21/2020 – 09:15

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