Only in Illinois does a surprise increase in tax revenues and more pension debt equal “stability” for a state’s finances.
Fitch Ratings just improved Illinois’ rating outlook from negative to stable, partly basing its decision on an unanticipated $1.5 billion state revenue surge and an on-time fiscal 2020 budget. It said “the potential for a downgrade in the near term has receded.”
Here’s what Fitch said:
The Outlook revision to Stable from Negative reflects key developments over the last three months for the state including an unanticipated revenue surge in April 2019 that positioned the state to resolve a sizable fiscal 2019 mid-year budget gap and enact an on-time fiscal 2020 budget. The positive April revenue surprise seen in Illinois, and other states, supported a significant increase in fiscal 2020 estimated revenues, easing the path to budget adoption and allowing the state to reduce (but not eliminate) reliance on non-recurring measures. The state now has a plausible and achievable 2020 budget plan, leaving it better positioned from a fiscal perspective, and the potential for a rating downgrade in the near-term has receded. The recent gains, however, are somewhat tenuous and their sustainability hinges on the state’s actions over the next several years, particularly around the November 2020 ballot initiative on the graduated individual income tax.
But if anything, Fitch’s points in favor of stability are just the opposite – they actually made Illinois weaker.
Windfall revenues allowed politicians to push off spending and structural reforms once again. And a “balanced” budget based on phony accounting means lawmakers will let the state’s retirement debts grow by billions in 2020. (Illinois’ “balanced” budgets don’t require the state to make its full, actuarial pension payments. See the details here.)
Even more, politicians did nothing to address Illinois’ absolute lack of preparedness for the next inevitable recession. Illinois has no resources to weather a downturn and, along with New Jersey, is the nation’s least prepared state.
Fitch’s “stable” outlook is for the benefit of bondholders, who may breathe a sigh of relief after years of downgrades. Since bondholders are the first in line to get repaid, they benefit from any short-term games politicians might play.
But for ordinary Illinoisans, the situation has only gotten worse. The 2020 budget puts Illinois into an even deeper hole.
via ZeroHedge News https://ift.tt/2OKCHg8 Tyler Durden
Reuters reports intense clashes broke out Wednesday along the Line of Control in contested Kashmir between Indian and Pakistani troops.
Citing local media, Reuters described that “troops on the border had exchanged heavy fire and that Pakistani troops have fired mortars in the clashes.” The exchange of fire took place according to local media at the Sunderbani Sector along the Line of Control (LOC) after 10pm local time, with each side blaming the other for breaching a ceasefire.
Kashmir fighting illustrative file image.
Though few details were given, especially with a near total communications blackout on the Indian-administered side in Jammu and Kashmir (J&K), military observers have been expecting intensifying shelling and clashes between the nuclear armed rivals after earlier this week the Hindu nationalist Bharatiya Janata leadership in New Delhi revoked Article 370 of the constitution which protected Muslim-majority J&K’s special autonomous status.
Unverified social media reports from regional observers say the death toll is mounting amid a broad Indian crackdown on its side of the LOC.
I have received confirmed reports of over 250 casualties of civilians clashing with Indian security forces in Kashmir. Just one hospital in Srinagar has recieved 50 bodies so far….
I have also seen around 14 dead bodies of Indian troops killed in the violent clashes.
Pakistan’s Prime Minister Imran Khan placed his armed forces on alert and on Wednesday recalled its ambassador while expelling its Indian envoy, and crucially took the drastic step of suspending bilateral trade with India.
PM Khan further directed the military to “continue vigilance” after previously saying Pakistan would take “all possible options” in support of Kashmir’s Muslim-majority population – this after regional media reported “tens of thousands” of Indian troops have surged into Kashmir, while a phone and internet blackout is in place.
A day prior to the fresh clashes, which are likely to escalate without external mediation, Khan had suggested a “genocide” could be unfolding as Indian reinforcements continued pouring into the restive border region.
This is Srinagar, Kashmir – some of the first images we’ve seen since the lockdown. At least one protestor has been killed and over 100 people have been arrested by Indian military forces. pic.twitter.com/EFpTsr0Ac7
India and Pakistan have fought two wars specifically over Kashmir, resulting in the deaths of tens of thousands amid a nearly three decade armed revolt.
via ZeroHedge News https://ift.tt/2Yv0JQV Tyler Durden
Most people assume that, if they have money on deposit in a bank, they own that money. That’s not necessarily the case. Decades ago, some of the world’s most powerful countries began to pass legislation that, if you deposit money in the bank, it becomes the property of the bank. In those countries, if you open a bank account and make a deposit, you sign off legal title to that cash. It becomes an asset of the bank.
The reason they got away with this obvious “theft through legislation” was that the banks were required to henceforth regard your deposit as a debt in your favour. So, technically, you were still owed the money as a bank liability, even though it was no longer truly yours.
On the surface, the change of ownership may seem to be a moot point, as, surely any bank would allow you to withdraw whatever you have deposited, or there would be a run on the bank and the bank would fail.
Well, that’s a definite “maybe.”
What if there were a financial crisis, such as in Greece, where an anticipated run on the banks was circumvented by freezing all accounts, then partially reopening them? If that were the case, the bank in question could allow small amounts of cash to be withdrawn by its depositors each week or each month until the crisis had been safely averted.
Surely, that would be a good thing to do, yes?
Well, there might be a problem there. It’s just possible that the bank would decide that it was enjoying the revised relationship, that it would like to continue to take in deposits the normal way but only pay out “allowances” to depositors as it saw fit.
And that’s just what’s happened. The end of the Greek banking crisis has never been acknowledged, and depositors have to accept whatever the banks choose to allow them to withdraw, long after the crisis ended.
If other banks, throughout the world, were to do the same as Greece, depositors would, in effect, be on an “allowance” from the bank.
But if that were the only concern, depositors could feel assured that, as their deposits were a liability on the bank’s books, the debt to them would remain, albeit without the depositor having free access to the deposit.
Well, unfortunately, the US came up with an idea that further lessened the chances of bank deposits being redeemed at some point.
A law was passed in 2010 that allowed any bank, if it declared a bank emergency, to confiscate deposits in such a way that the liability could be diminished or eliminated by the bank unilaterally. In effect: a license to steal.
This law was then tested.
A trial balloon went up in Cyprus, where deposits were confiscated as a result of a declared but unannounced bank emergency. Since Cyprus is merely a small island nation, most people outside the country paid the event little heed, but it established the principle that it was all right to confiscate deposits if the bank felt an emergency condition existed. (And remember, the bank wasn’t required to announce the emergency prior to confiscation.)
Since the trial balloon was so successful, Canada also passed confiscation legislation (in 2013), as did the EU (in 2014).
Then, in 2017, Greece began seizing bank accounts due to alleged unpaid taxes. It’s important to bear in mind that, since these confiscations were taken directly from bank accounts, the seizures were not a part of any agreement of level of debt between the taxpayer and the government, but were determined by the government, unilaterally, then taken.
In reviewing all the above, it would be reasonable if the reader were to conclude that, if he does his banking in the EU, US, or Canada, his government and his bank have him in a financial straightjacket that he cannot escape. He is, in effect, a turkey that’s trussed up and ready for slaughter, and in terms of a pending economic crisis, “Thanksgiving” is rapidly approaching.
It would seem clear, then, that any deposits that are in any bank within these jurisdictions should be regarded as sacrificial. It may be convenient to have some expense money in one of these banks, but any “wealth” should be removed to a safer place as soon as possible.
But where would it be moved to? Are there safer jurisdictions? Well, yes. What you’d want to do would be to seek out jurisdictions whose government revenue is based on foreign depositors using their systems, more than locals.
This would indicate the many small countries that depend primarily on foreign deposits – whose political class would lose their careers if they were to alienate foreign investors.
There are quite a few to consider using: Singapore, the Channel Islands, the British Virgin Islands, Hong Kong, the Cayman Islands, Switzerland, etc.
Next you may want to do some research on what form of legal system is used in each of those countries. In the Western Hemisphere, there are two predominant systems: Civil Law, as is employed in most Spanish countries, and English Common Law, which is found in most all non-Spanish countries.
Under Civil Law, not everyone has the same rights within the country. Those who are not citizens tend to take a lesser position than citizens, under the law. This provides a layer of opportunity for fraud by local banks with regard to deposits of non-nationals.
In Mexico, such fraud has become a lucrative business. In 2018 alone, there were an astonishing 7.3 million complaints of fraud, amounting to about $1 billion. And under Civil Law, such fraud can be difficult for the foreigner to address.
So, does this mean that you’re toast, no matter where you move your wealth for safekeeping?
No, quite the contrary. What it means is that you select those countries that do not come under the wings of the US, EU, or Canada. Then focus on those remaining jurisdictions that operate under English Common Law (or a similar-based system).
Then, narrow your study to those smaller jurisdictions whose economy depends upon serving foreign investors well.
Most countries have no confiscation laws, and for the US, EU, or Canada to confiscate your deposits in other countries, they’d need to adhere to the laws of those countries. In your home country, you could suffer confiscation without warning. But in a country without confiscatory laws, any attempt would need to pass through that country’s court system, which would be, at a minimum, ponderous and time consuming for your home country to pursue. And if the economic future of the country you’d chosen depended on keeping overseas investors happy, the political will would exist to make any confiscation by your home country difficult, if not impossible.
Above all, if your wealth is no longer yours in your home jurisdiction, you can benefit by expatriating it to one or more carefully chosen non-confiscatory jurisdictions.
* * *
The US, Canada and the EU have already passed laws that open the door to future theft by banks. In an economic crisis, deposits in these jurisdictions could get the Cyprus treatment—in which a bank emergency is used as justification for confiscation.
The good news is there are far more favorable banking options. That’s why The New York Times best-selling author Doug Casey and his team have created a comprehensive offshore banking guide outlining our favorite banks and offshore banking jurisdictions. It includes crucial information on the limited jurisdictions that still accept American clients and allow them to open accounts remotely with small minimums. Click here to download the free PDF now.
via ZeroHedge News https://ift.tt/2GVx2xx Tyler Durden
Historian Stephen Davies has an insightful article describing the growing influence of the “cultic milieu”—trends that make it easier for what were initially extremist fringe ideas to gain new adherents and begin to enter the mainstream:
The concept of the cultic milieu (hereafter CM) was formulated by a British sociologist called Colin Campbell, in an article published in 1972….
This is a kind of subterranean world or counterculture with a whole range of ideas that are strongly opposed to conventional beliefs and knowledge. These included highly heterodox and unusual religious systems (such as neo-paganism or Theosophy or Satanism), marginalised political ideologies… and theories that rejected central elements of orthodox science, such as rejection of vaccination….
Campbell’s insight was that these fringe beliefs did not exist in isolation from each other. They rather all mingled in a social space in which accepted and dominant ways of thinking about the world were rejected. Frequently people who started holding just one of these countercultural beliefs would come into contact with and pick up other ones with no apparent connection to the original belief….
One reason why it matters is that the boundaries of the CM are permeable—it is not clearly distinct from the orthodox mainstream in a fixed or permanent way. Ideas, symbols, and even ways of life can move in both directions between the orthodox mainstream and the counterculture of the CM. One of Campbell’s main arguments was that although there was little formal connection, mainstream organisations such as established churches could draw upon the ideas that were being produced in the cultic milieu and make use of them or incorporate them.
Sometimes a whole body or wider system of ideas will move from fringe and countercultural status to being part of the mainstream conversation….
Right now the size and influence of the CM is growing. Ever more people subscribe to fringe beliefs and the availability of the kinds of ideas that circulate in the cultic counterculture has increased dramatically. This has happened before, notably in the period between roughly 1890 and 1930….
Colin Campbell’s original model has been used to explain contemporary phenomena, above all the persistence and growth of radical right collectivist ideas, as well as radical left ones and other movements such as Islamism….
Economics can help explain why the size and influence of the cultic milieu is increasing now and grew in the earlier period….
For economists a clear factor is technological and economic developments that make it less costly to both spread ideas and information and to discover them, even when people holding those ideas do not have access to the dominant modes of communication. In the late nineteenth century cheap printing did this, along with the telegraph and telephone. By contrast the dominant communications technologies of the twentieth century (radio and television) did not because it was more difficult for proponents of non-mainstream ideas to use them.
Today social media and the internet are playing the same role as cheap printing but on an even larger scale (because the cost reductions are greater). Economic history also suggests that a growth of the cultic counterculture is a response not to secularization but to the social disruption brought about by episodes of rapid innovation…
Such episodes lead to a feeling for many people of social disconnection and displacement and bring what are seen as serious social costs. Ideas that reject received opinion then become attractive to many people as well as more accessible.
As Davies explains, this is a problematic trend, because many CM ideas are dangerous and likely to cause great harm if they come to be widely accepted, especially if they thereby public policy. Davies notes that the previous era of growing CM influence—1890-1930—was also the period when harmful ideologies communism, fascism, and eugenics, entered the mainstream, leading to large-scale atrocities and oppression.
I would add that the dynamic Davies identifies is particularly dangerous in the case of political ideas, for reasons I highlighted in an earlier post on misinformation online (see also here):
There is no shortage of nonpolitical con artists and hucksters online. But most internet consumers have learned to avoid them, or at least minimize the risk.
By contrast, we do a much worse job of minimizing the risk posed by political deception and disinformation. If you get an e-mail from a wealthy heiress who offers to pay you a million dollars, or see a website that promises to increase your sexual potency at a bargain-basement price, you are likely to be highly skeptical… [M]any people don’t apply anything like the same degree of common-sense scrutiny to political snake oil – especially when it conforms to their preexisting views. Politicians and activists who peddle dubious conspiracy theories, promise to give you something for nothing, and otherwise spread disinformation, often gain a wide following….
In most private-sector contexts, we have strong incentives to guard against deception and keep wishful thinking under control. If you believe the promises of the self-proclaimed Saudi prince who e-mails to say he will send you a million dollars tomorrow if only you will forward him a much smaller sum today, you will probably lose your money…
By contrast, if you find a website or Twitter feed that promises we can promote social justice or make America great again by supporting some dubious candidate or public policy, incentives for skepticism are much weaker. If you get taken in and end up with false political beliefs that lead you to vote for the “wrong” candidate on election day, the chance that your vote will make a difference to the outcome is infinitesimally small. And even if your mistaken vote does somehow end up being decisive, most of the cost of the error will fall on the rest of society, not you or your family.
This suggests that the cultic milieu is more of a menace when it comes to political issues than beliefs on matters where individuals have more incentive to be wary of misinformation. If political CM ideas provide you with psychic gratification, you often have little incentive to carefully scrutinize their validity.
Unfortunately, it is easier to describe the problem than to solve it. It may be tempting to respond to this analysis by concluding that we should just abjure all non-mainstream ideas, especially political ones. But that would be a mistake. History shows that what start out as radical non-mainstream ideas often turn out to be right: abolitionism and gender equality are famous examples. Of course, you might expect me to say that, since I am, after all, a libertarian and hold some pretty radical views myself! But it’s true nonetheless. The correlation between the truth of an idea and its degree of acceptance by mainstream public opinion is often weak, at best.
Another possibility is to try use the power of government to prevent, or at least impede, the spread of harmful fringe ideas online. Examples include various efforts to use government regulation to prevent the spread of “fake news.” However, such ideas have all the same flaws as more traditional forms of government regulation of speech. Rarely can governments be trusted to sift bad ideas from good ones, and they have strong incentives to use such power to suppress opposition speech, regardless of the true merits of the opposition’s ideas.
In assessing non-mainstream ideas, we ideally want a reliable way to separate out the wheat from the chaff—preferably one that is easy enough to use that it can be employed by nonexperts. Sadly, we are far from fully achieving that. And the dynamics of political bias and ignorance I described above ensure that at least when it comes to political ideas, many people won’t bother to use reliable sorting methods even when they are available.
While there is no easy way to neutralize the dangers of the cultic milieu without simultaneously suppressing many potentially valuable ideas, there are some modest steps people can take to reduce the likelihood of being taken in by quackery.
One is to give serious consideration to expert opinion, while taking due account of experts’ various limitations. Other things equal, a non-mainstream idea that has significant support among experts in the relevant fields is more likely to have some real value than one that lacks it. It also pays to take some of the precautions I summarized here, such as being aware of one’s own possible biases, distrusting “gut feelings” on complex issues, avoiding heavy reliance on social media, attempting to consider a variety of different views, and refraining from forming strong views on issues you know little about. But none of these precautions is foolproof, especially when it comes to issues we know little about and do not have time to study carefully.
On December 7 of last year, Julius Ervin Tate Jr. attempted to rob an undercover police officer who had responded to a social media ad posted by Tate in which he purported to be selling a cell phone. After a SWAT agent shot and killed him, police charged his 16-year-old girlfriend, Masonique Saunders, with felony murder.
What?
Under Ohio’s felony murder rule, the state can charge individuals with murder if he or she participated in a tangential crime that led to the death in question. Saunders allegedly helped plan the botched robbery, giving authorities a way to prosecute her for his death.
The teen eventually took a plea deal and was sentenced last week to three years in juvenile prison for involuntary manslaughter as well as aggravated robbery. But although Saunders evaded a life sentence for murder, some people say the deal was still unjust, as she played no part in her then-boyfriend’s actual demise.
They would be correct. Felony murder rules exist in several states across the country, locking up people who did not participate in the murder—or sometimes even the original crime.
For instance, consider the case of Ryan Holle, who in 2003 let his housemate borrow his car, which was then used to commit murder during a burglary gone wrong. Holle was 1.5 miles away from the scene of the crime but was convicted of felony murder the next year and sentenced to life in prison. His sentence was commuted to 25 years in 2015.
Or perhaps more similar to Saunders’ is the case of Cedric Chatman, who was 17 years old when a police officer shot and killed him as he exited a car he had stolen. His two friends who participated in that robbery were charged with first-degree murder, although they were not present when the shooting occurred. Those charges were eventually dropped.
Then there’s Bobby Garcia, who, while in ninth grade, robbed a man for gas money while en route to North Hollywood, California. While he was waiting in the car, his accomplice stabbed someone, which Garcia spent 21 years in prison for, despite the fact that he did not know the killing had taken place until later. Garcia lobbied to change that law, and last year, the state passed serious restrictions on its enforcement.
Such changes have not yet made headway in Ohio, meaning Saunders stood little chance of evading blame for Tate’s death. To make matters worse, the circumstances surrounding the robbery are murky: Police say that Tate pulled a gun on the officer, prompting the killing, but an eyewitness account disputes that. The family’s lawyer alleges that police found the weapon after searching one of the homes.
In any case, the felony murder rule fails to curtail crime rates, according to a 2002 study by Anup Malani. If reducing crime is the goal, then states are falling flat—all while locking up people for crimes they did not commit.
from Latest – Reason.com https://ift.tt/2yQhSFf
via IFTTT
Millionaire pedophile Jeffrey Epstein remained in the good graces of Wall Street titans both during and after his 13-month work-release jail stint in 2008 – 2009, who only severed ties with the registered sex offender when the heat was back on, according to Bloomberg.
Barclays CEO Jes Staley
For example, Barclays CEO and longtime associate Jes Staley “visited Epstein on the private island, accompanied by his wife Debora,” in 2015 – seven years after everyone knew Epstein was a pedophile. They would sever ties months later as new accusations of sexual abuse were levied against the financier, while weeks later the now-defunct Webstie Gawker published his “little black book” containing over 1,000 names of prominent individuals and their contacts.
Within months of the Bequia sailing from Little St. James, Staley cut ties to Epstein, according to a person with knowledge of the situation. The banker was in the running for the top job at Barclays, a position that required interviews and approvals by U.K. regulators. The wisdom of breaking from Epstein became apparent when the British press reported on their relationship. –Bloomberg
While not accused of participating in any of Epstein’s illegal activities, Staley – who visited Epstein at his Palm Beach office while the Epstein was on prison work-release, has come under fire by those who want to know exactly how close the two were. By all accounts, Epstein played a pivotal role in Staley’s rise while running JP Morgan’s private bank – referring wealthy clients to the banker and helping to arrange the bank’s 2004 acquisition of Highbridge Capital Management.
Staley left JPMorgan in 2013 before joining hedge fund BlueMountain Capital Management. In December 2015 joined Barclays as CEO.
Going back about two decades, Epstein regularly brought Staley business when he ran JPMorgan’s private bank and the two were close professionally, according to a person familiar with the matter. One of those introductions Epstein made was to hedge fund billionaire Glenn Dubin, the New York Times reported. –Bloomberg
Staley aside, Epstein somehow managed to maintain his relationships on Wall Street despite his sex-offender pedophile lifestyle,including billionaire Leon Black, former Israeli Prime Minister (and current candidate for the job) Ehud Barak – and was able to secure preferable stock allocations in dozens of IPOs. Via Bloomberg:
Apollo Global Management’s Black met with Epstein at the company’s New York offices. Black dispatched Apollo co-founder Marc Rowan to attend a meeting at Epstein’s Manhattan mansion with representatives of Edmond de Rothschild Group to discuss how the two firms could work together more closely, people with knowledge of the meeting said. Florence Gaubert, a spokeswoman for Edmond de Rothschild, said she wasn’t aware of any meeting and that the bank has no business links with Apollo or Epstein.
BV70 LLC, a charity controlled by Black, donated $10 million to Epstein’s foundation Gratitude America, even as the New York Attorney General’s Office questioned whether another of Epstein’s foundations was complying with state registration requirements.
Epstein invested in a partnership started in 2015 by Barak, prime minister from 1999 to 2001, according to the Israeli newspaper Haaretz.
Meanwhile, Epstein’s travel became far more frequent in 2015 – as he flew between New York, the US Virgin Islands, New Mexico (where he owns a compound), and Paris.
In 2017, filings for Epstein’s Gratitude America charity reveal investment income of $899,417 from 52 trades – most of which involved IPOs. Clearly nobody had a problem associating with the pedophile or his money.
“The IPO trading is evidence of Mr. Epstein’s level of access to the offerings,” said Jacob Frenkel, chair of government investigations and securities enforcement at Dickinson Wright.
Enter the Miami Herald
In 2018, Epstein became truly radioactive after the Miami Herald published a series of reports beginning in November – titled Perversion of Justice. Not only did the Herald catalogue Epstein’s many accusers – the series focused on the sweetheart deal he was given by former Trump Labor Secretary Alexander Acosta despite dozens of accusers levying claims. Acosta resigned last month amid the controversy.
Meanwhile, Deutsche Bank fired Epstein as a client earlier this year, and has been actively assisting the case against him, according to court filings.
via ZeroHedge News https://ift.tt/2Ku0tYA Tyler Durden
Historian Stephen Davies has an insightful article describing the growing influence of the “cultic milieu”—trends that make it easier for what were initially extremist fringe ideas to gain new adherents and begin to enter the mainstream:
The concept of the cultic milieu (hereafter CM) was formulated by a British sociologist called Colin Campbell, in an article published in 1972….
This is a kind of subterranean world or counterculture with a whole range of ideas that are strongly opposed to conventional beliefs and knowledge. These included highly heterodox and unusual religious systems (such as neo-paganism or Theosophy or Satanism), marginalised political ideologies… and theories that rejected central elements of orthodox science, such as rejection of vaccination….
Campbell’s insight was that these fringe beliefs did not exist in isolation from each other. They rather all mingled in a social space in which accepted and dominant ways of thinking about the world were rejected. Frequently people who started holding just one of these countercultural beliefs would come into contact with and pick up other ones with no apparent connection to the original belief….
One reason why it matters is that the boundaries of the CM are permeable—it is not clearly distinct from the orthodox mainstream in a fixed or permanent way. Ideas, symbols, and even ways of life can move in both directions between the orthodox mainstream and the counterculture of the CM. One of Campbell’s main arguments was that although there was little formal connection, mainstream organisations such as established churches could draw upon the ideas that were being produced in the cultic milieu and make use of them or incorporate them.
Sometimes a whole body or wider system of ideas will move from fringe and countercultural status to being part of the mainstream conversation….
Right now the size and influence of the CM is growing. Ever more people subscribe to fringe beliefs and the availability of the kinds of ideas that circulate in the cultic counterculture has increased dramatically. This has happened before, notably in the period between roughly 1890 and 1930….
Colin Campbell’s original model has been used to explain contemporary phenomena, above all the persistence and growth of radical right collectivist ideas, as well as radical left ones and other movements such as Islamism….
Economics can help explain why the size and influence of the cultic milieu is increasing now and grew in the earlier period….
For economists a clear factor is technological and economic developments that make it less costly to both spread ideas and information and to discover them, even when people holding those ideas do not have access to the dominant modes of communication. In the late nineteenth century cheap printing did this, along with the telegraph and telephone. By contrast the dominant communications technologies of the twentieth century (radio and television) did not because it was more difficult for proponents of non-mainstream ideas to use them.
Today social media and the internet are playing the same role as cheap printing but on an even larger scale (because the cost reductions are greater). Economic history also suggests that a growth of the cultic counterculture is a response not to secularization but to the social disruption brought about by episodes of rapid innovation…
Such episodes lead to a feeling for many people of social disconnection and displacement and bring what are seen as serious social costs. Ideas that reject received opinion then become attractive to many people as well as more accessible.
As Davies explains, this is a problematic trend, because many CM ideas are dangerous and likely to cause great harm if they come to be widely accepted, especially if they thereby public policy. Davies notes that the previous era of growing CM influence—1890-1930—was also the period when harmful ideologies communism, fascism, and eugenics, entered the mainstream, leading to large-scale atrocities and oppression.
I would add that the dynamic Davies identifies is particularly dangerous in the case of political ideas, for reasons I highlighted in an earlier post on misinformation online (see also here):
There is no shortage of nonpolitical con artists and hucksters online. But most internet consumers have learned to avoid them, or at least minimize the risk.
By contrast, we do a much worse job of minimizing the risk posed by political deception and disinformation. If you get an e-mail from a wealthy heiress who offers to pay you a million dollars, or see a website that promises to increase your sexual potency at a bargain-basement price, you are likely to be highly skeptical… [M]any people don’t apply anything like the same degree of common-sense scrutiny to political snake oil – especially when it conforms to their preexisting views. Politicians and activists who peddle dubious conspiracy theories, promise to give you something for nothing, and otherwise spread disinformation, often gain a wide following….
In most private-sector contexts, we have strong incentives to guard against deception and keep wishful thinking under control. If you believe the promises of the self-proclaimed Saudi prince who e-mails to say he will send you a million dollars tomorrow if only you will forward him a much smaller sum today, you will probably lose your money…
By contrast, if you find a website or Twitter feed that promises we can promote social justice or make America great again by supporting some dubious candidate or public policy, incentives for skepticism are much weaker. If you get taken in and end up with false political beliefs that lead you to vote for the “wrong” candidate on election day, the chance that your vote will make a difference to the outcome is infinitesimally small. And even if your mistaken vote does somehow end up being decisive, most of the cost of the error will fall on the rest of society, not you or your family.
This suggests that the cultic milieu is more of a menace when it comes to political issues than beliefs on matters where individuals have more incentive to be wary of misinformation. If political CM ideas provide you with psychic gratification, you often have little incentive to carefully scrutinize their validity.
Unfortunately, it is easier to describe the problem than to solve it. It may be tempting to respond to this analysis by concluding that we should just abjure all non-mainstream ideas, especially political ones. But that would be a mistake. History shows that what start out as radical non-mainstream ideas often turn out to be right: abolitionism and gender equality are famous examples. Of course, you might expect me to say that, since I am, after all, a libertarian and hold some pretty radical views myself! But it’s true nonetheless. The correlation between the truth of an idea and its degree of acceptance by mainstream public opinion is often weak, at best.
Another possibility is to try use the power of government to prevent, or at least impede, the spread of harmful fringe ideas online. Examples include various proposals to get government to prevent the spread of “fake news.” However, such ideas have all the same flaws as more traditional forms of government regulation of speech. Rarely can governments be trusted to sift bad ideas from good ones, and they have strong incentives to use such power to suppress opposition speech, regardless of the quality of the opposition’s ideas.
In assessing non-mainstream ideas, we ideally want a reliable way to separate out the wheat from the chaff—preferably one that is easy enough to use that it can be employed by nonexperts. Sadly, we are far from fully achieving that. And the dynamics of political bias and ignorance I described above ensure that at least when it comes to political ideas, many people won’t bother to use reliable sorting methods even when they are available.
While there is no easy way to neutralize the dangers of the cultic milieu without simultaneously suppressing many potentially valuable ideas, there are some modest steps people can take to reduce the likelihood of being taken in by quackery.
One is to give serious consideration to expert opinion, while taking due account of experts’ various limitations. Other things equal, a non-mainstream idea that has significant support among experts in the relevant fields is more likely to have some real value than one that lacks it. It also pays to take some of the precautions I summarized here, such as being aware of one’s own possible biases, distrusting “gut feelings” on complex issues, avoiding heavy reliance on social media, attempting to consider a variety of different views, and refraining from forming strong views on issues you know little about. But none of these precautions is foolproof, especially when it comes to issues we know little about and do not have time to study carefully.
On December 7 of last year, Julius Ervin Tate Jr. attempted to rob an undercover police officer who had responded to a social media ad posted by Tate in which he purported to be selling a cell phone. After a SWAT agent shot and killed him, police charged his 16-year-old girlfriend, Masonique Saunders, with felony murder.
What?
Under Ohio’s felony murder rule, the state can charge individuals with murder if he or she participated in a tangential crime that led to the death in question. Saunders allegedly helped plan the botched robbery, giving authorities a way to prosecute her for his death.
The teen eventually took a plea deal and was sentenced last week to three years in juvenile prison for involuntary manslaughter as well as aggravated robbery. But although Saunders evaded a life sentence for murder, some people say the deal was still unjust, as she played no part in her then-boyfriend’s actual demise.
They would be correct. Felony murder rules exist in several states across the country, locking up people who did not participate in the murder—or sometimes even the original crime.
For instance, consider the case of Ryan Holle, who in 2003 let his housemate borrow his car, which was then used to commit murder during a burglary gone wrong. Holle was 1.5 miles away from the scene of the crime but was convicted of felony murder the next year and sentenced to life in prison. His sentence was commuted to 25 years in 2015.
Or perhaps more similar to Saunders’ is the case of Cedric Chatman, who was 17 years old when a police officer shot and killed him as he exited a car he had stolen. His two friends who participated in that robbery were charged with first-degree murder, although they were not present when the shooting occurred. Those charges were eventually dropped.
Then there’s Bobby Garcia, who, while in ninth grade, robbed a man for gas money while en route to North Hollywood, California. While he was waiting in the car, his accomplice stabbed someone, which Garcia spent 21 years in prison for, despite the fact that he did not know the killing had taken place until later. Garcia lobbied to change that law, and last year, the state passed serious restrictions on its enforcement.
Such changes have not yet made headway in Ohio, meaning Saunders stood little chance of evading blame for Tate’s death. To make matters worse, the circumstances surrounding the robbery are murky: Police say that Tate pulled a gun on the officer, prompting the killing, but an eyewitness account disputes that. The family’s lawyer alleges that police found the weapon after searching one of the homes.
In any case, the felony murder rule fails to curtail crime rates, according to a 2002 study by Anup Malani. If reducing crime is the goal, then states are falling flat—all while locking up people for crimes they did not commit.
from Latest – Reason.com https://ift.tt/2yQhSFf
via IFTTT
Today Echoes Great Recession, Euro Crisis & 2016 Election
There are moments of inflection in the market when the phrase ‘prices have changed more than the facts’ becomes particularly apropos and today’s Treasury rally ostensibly qualifies. We’ll caution here however that the devolving macro narrative is very consistent with with such a repricing.
The overnight round of Asian central bank cuts combined with the weakest yearly change in German industrial production since 2009 are symptoms of changing expectations rather than the root cause of the move. Nonetheless, 10-year German yields dipped as low as -0.613% to a fresh record low. The selloff in domestic equities offers echoes of Q4 2018, with the primary difference being the Fed just cut rates versus the December hike-too-far.
Our primary concern linked to the sharp selloff in stocks is a spike in equity vol that tightens financial conditions to rapidly price in the Fed’s series of three quarter-point-eases.
An inter-meeting ease isn’t on our radar; although the futures market shows the August contract trading with an implied rate of 2.115% — 1.5 bp of easing (or a 6% chance of a quarter-point emergency move).
What is even more compelling are the odds of a 50 bp cut in September jumped >50% — 54% depending on how one slices it or 38.5 bp net easing. To say the Fed’s fine tuning ambitions just became a lot more complicated would be an understatement.
We’ve included a chart of the absolute 5-day change in 30-year yields dating back to 1990 to illustrate just how dramatic the recent 40 bp rally in the long bond has been. Every time the market moved in a comparable fashion, ‘something has changed’ was invariably the takeaway.
The last three episodes were 1) 2016 US Election, 2) Euro crisis and Twist/QE, and of course 3) the Global Financial Crisis/Great Recession. If there was ever any question whether or not there is a significant shift in investor expectations afoot, the performance of the long bond should make it abundantly clear — particularly in light of the proximity to the August refunding auctions.
Remember when supply events warranted a concession? So pre-crisis.
In keeping with our efforts to demonstrate the relevance of the magnitude of the recent move, we offer a chart of 3-month 30-year swaptions implied volatility — in both percentage and basis point terms.
The significance of the spike is difficult to overstate.
via ZeroHedge News https://ift.tt/2Tg5oAm Tyler Durden
Jon Corzine, the former CEO of Goldman (and New Jersey) and the man who singlehandedly brought down trading powerhouse MF Global with a few Italian bonds is back, baby… with a few conditions.
As Bloomberg first reported, Corzine’s application to register his new hedge fund, JDS-JSC, LP, was approved by the Securities and Exchange Commission, however in a novel spin, “it attached a series of seldom-seen conditions” for the fund of the former executive who many claim should have been barred from working in the industry.
Among the restrictions on Corzine’s firm, are limitations on his ability to handle customer cash and invest in less-liquid assets. Amusingly, the SEC order includes “trading parameters” that bar JDC-JSC from engaging in prop trading – which is bizarre for an investing vehicle whose entire operation is prop trading by definition – and also require it to have a “reasonable basis” to expect that, under normal conditions, each of its funds could be “orderly liquidated” within five trading days. According to David Tawil, co-founder of Maglan Capital, that would restrict Corzine to trading in only the most liquid of markets, such as those for currencies and large-cap stocks.
“There aren’t many assets you can blow out in five days,” Tawil said in a telephone interview. “I really don’t understand what magic Corzine thinks he is going to perform in markets with these shackles on.”
The answer may be simpler than David thinks: inside information, which is one thing the formerly best connected executive on Wall Street will have plenty of. Although in this age when all that matters are central banks, it is unclear if even having inside information will allow one to consistently generate P&L.
Separately, each fund is ordered to have investors give 65 days notice in order to withdraw capital, though the firm may agree to shorten this to no less than 30 days, according to the order, making it a glorified E-Trade account with virtually no lock-ups (and certainly no gates). Each fund also must have an independent administrator to handle client subscriptions, redemptions and cash; Corzine himself “will not be involved” in these activities.
Those limits ironically reflect the events at MF Global Holdings that unfolded under Corzine, when seeking to boost trading revenue, he commingled client funds to make at least $6 billion in proprietary bets on European sovereign debt. Then when the bonds tumbled and the firm faced a margin call, some $1 billion in client funds went “temporarily missing” and MF Global filed for bankruptcy overnight.
Ironically, whereas the CFTC permanently banned Corzine from the futures industry, he somehow was given a pass by the SEC, although one assume his tenure at Goldman had something to do with it.
As Bloomberg notes, earlier this month, a group of execs and traders from the National Futures Association had circulated a petition to send to the SEC to deny Corzine’s application, citing his role in the MF Global bankruptcy. Kyle Bass was among those who signed the petition.
“Corzine levered the firm to make big sovereign bets on euro debt and then they misappropriated their customers’ money to pay for the margin calls,” Bass said in an email. “Why on earth should the SEC allow him to have a license to handle customer money once again?”
Well, Kyle, think of it as natural selection: any idiot who gives money to Corzine to manage, deserves to lose it all. Which means that within a few weeks, we expect Corzine to be managing several billion.
For those curious, we previously reported that the JDC-JSC Opportunity Fund, which bears the initials of Corzine’s late son Jeffrey and his own, will launch this quarter and aims to attract $100 million to $300 million in its first trading year. Corzine and former Taconic Capital Advisors investment director Richard Chappelear will share the chief investment officer role.
via ZeroHedge News https://ift.tt/31rnmCR Tyler Durden
Historian Stephen Davies has 
