Israel Deploys Defenses, Puts Troops On “High Alert For An Attack”

The Israeli Defense Force says it has identified “unusual movements of Iranian forces in Syria” and has responded by ordering the opening of shelters along the Golan Heights – its border area with Syria – and ordering its troops to be on “heightened alert” for an attack.

The news comes as President Trump is announcing his decision on whether to pull out of the Joint Comprehensive Plan of Action – otherwise known as the Iran deal.

Map

Since the beginning of the Syrian Civil War seven years ago, Israeli forces have launched more than 100 attacks on Iranian forces working with the Syrian regime to fight off rebels and ISIS.

Last month, a senior Israeli military official admitted to the New York Times that an Israeli drone had killed 14 people, half of whom were Iranian, during an attack on Syria’s T4 air base, which is located about halfway between Palmyra and Homs.

Defense stocks are rallying as investors assume – correctly – that the risk of an all-out military conflict between longtime enemies Israel and Iran – a conflict that could push the world into World War III – has never been higher.

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Watch Live: President Trump Announces His Decision On The Iran Nuclear Deal

While President Trump is expected to announce that he will not continue sanctions relief for Iran, a major step toward ending the 2015 nuclear pact he calls the “worst deal ever,” this morning’s barrage of fake news has left markets and onlookers confused and looking for clarification.

As The Hill reports, the announcement follows weeks of furious lobbying by European allies who sought to convince Trump to remain in the deal.

That should not be surprising since The EU has the most to lose if the deal is scuppered..

Infographic: Iran Deal: The EU Has The Most To Lose  | Statista

You will find more infographics at Statista

But each one left the U.S. pessimistic about the deal’s future.

As we detailed earlier, while expectations are for Trump to withdraw from the deal, his speech will be all about the nuance: how will the president frame the US exit, and whether Iran will be allowed to continue its oil exports after the US is no longer a participant in the JCPOA.

One preview of what Trump’s speech may look like comes from Citi’s head of commodity research, Ed Morse, who in a Bloomberg interview this morning said that President Trump will likely give European governments “a chance to step up what they’ve already offered in terms of tightening sanctions” on Iran.

The tighter sanctions would relate to issues left out of the 2015 nuclear accord, such as Iran’s development of ballistic missiles, terrorist financing, Hezbollah, Islamic Revolutionary Guard Corp.

“The president’s going to say something that he’s going to move in a certain direction, that he’s ready to re-impose sanctions” predicted Morse, who added that Trump will “come out strong, and say the Europeans are stepping up to the table and we’ve got to do more.”

Morse also said that it’s possible OPEC will meet and decide to increase output to fill gap left by Iran, although with the price of Brent surging to the revised Saudi target of $80, it is unlikely that OPEC will interfere with the recent favorable equilibrium.

Finally, with everyone throwing their 2 cents on what the price impact of today’s deal collapse could be, Morse said that the Iranian political risk in oil price is about $5/bbl, however the recently bearish analysts said that any sell-off would be “a lot more” than that.

So, will he? Or won’t he? (Trump is due to speak at 1400ET)

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Mueller Rejects Trump Request To Answer Questions In Writing: CBS

Contrary to reports that President Trump is considering benching his newest attorney, former New York City Mayor Rudy Giuliani, following a series of disastrous and revealing interviews last week, Giuliani just confirmed to CBS News during an interview with correspondent Paula Reid that Special Counsel Robert Mueller has rejected the Trump legal team’s request to answer investigators’ questions in a written format.

That contradicts claims (also made by Giuliani last week) that it would be at least a few weeks before Trump’s legal team would have any insight into Mueller’s decision.

Giuliani

Trump’s team had been pushing for Mueller to accept written questions to help the president – whose tendency toward embellishment has been well-documented – avoid a perjury trap.

If Trump does assent to being interviewed, the questioning likely wouldn’t take place until after his historic summit with North Korean leader Kim Jong Un.

Giuliani told Reid that he and the president’s legal team continue to be in communication with the special counsel, but that he wants to have a better sense of the facts before engaging in formal negotiations about a possible interview.

Giuliani said Mr. Trump’s team also wants some issues to be off-limits, although he wouldn’t elaborate on which ones, and they want a time limit for the interview.

In addition, Giuliani also told Reid he’d want to know whether the interview would become public, and whether they would have the chance to issue a rebuttal to anything alleged by the special counsel.

If they can come to an agreement on the terms of an interview, Giuliani says he would like to wait until after the North Korea summit to prepare Mr. Trump. He believes that it would take several days to prepare the president for this kind of interview and he would not want to take him away from preparing for talks with North Korea.

If negotiations are not successful and Mr. Trump is subpoenaed, he will fight it, Giuliani said. The case would likely end up at the Supreme Court. 

Giuliani, who is apparently Trump’s point man during negotiations with the Mueller team (the two man have a decades-long working relationship), last week said that if Trump does sit for an interview, it would last only a few hours – and certainly wouldn’t resemble the marathon 12-hour long questioning sessions to which some Trump associates (Steve Bannon, for example) have been subjected.

This is just the latest sign that Trump and his legal team are leaning toward rejecting Mueller’s interview request. It’s widely expected that the special counsel will then seek to subpoena the president, which could trigger a constitutional crisis that would need to be resolved by the Supreme Court.

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Google to Purge Ads for Bail Bond Services

Bail bondsmanGoogle has thrown its support behind the growing movement to eliminate cash bail by purging bail bond advertisements from its platform.

Beginning in July, Google will no longer accept advertisements from private bail bond services. David Graff, Google’s director of global product policy, explained the decision Monday:

We made this decision based on our commitment to protect our users from deceptive or harmful products, but the issue of bail bond reform has drawn support from a wide range of groups and organizations who have shared their work and perspectives with us, including the Essie Justice Group, Koch Industries, Color of Change and many civil and human rights organizations who have worked on the reform of our criminal justice system for many years.

Vanita Gupta, president and CEO of the Leadership Conference on Civil and Human Rights, put out a statement Monday afternoon supporting Google’s decision:

No one should be incarcerated—before they’ve even been tried or convicted of a crime—simply because they can’t afford not to be. With this ban, Google is doing its part to protect people from unscrupulous advertisers who are taking advantage of the fact that most people will do whatever they can to avoid having to spend time, or having their family member spend time, in jail.

This morning, Google hosted these organizations at a bail reform panel in D.C. to discuss the push for court systems across the country to move away from using cash bail systems. The Charles Koch Institute was represented at the panel and provided a brief statement to Reason show support for bail reform:

The Charles Koch Institute (CKI) is interested in driving solutions to the many barriers to opportunity caused by monetary bail. We believe that decisions to detain an individual accused of a crime should be based on public safety and flight risk. These decisions should be consistent with the Bill of Rights and the Eight Amendment, and not be based solely on an individual’s ability to pay. CKI is excited to lend our voice to this issue alongside leaders like the Pretrial Justice Institute.

New Jersey courts have largely eliminated cash bail. Alaska this year changed its system to rely less on cash bail and to use pretrial risk assessments and monitoring tools to try to keep more people out of jail if they have not been convicted. Other states, such as California, are considering changes—and if they don’t, civil rights groups plan to force the matter with lawsuits.

But refusing to run ads for bail bond companies isn’t changing the law. It limits publicity for a service that many people need to get out of jail right now. The American Bail Coalition, which represents the industry, is not happy with Google’s decision and disagrees with the Koch Institute’s interpretation of the Bill of Rights. In a prepared statement, American Bail Coalition President Jeff Clayton responded:

It is shameful that Google would deny people access to bail services, which are heavily regulated by state insurance commissioners around the country. For years, Google has taken money from bail companies, like all other legal businesses, to let the marketplace help consumers of services find and research the providers of such services that they need. However, it would appear that Google and Koch Industries have decided to pander to special interests in an attempt to re-engineer society according to their own dictates. Unfortunately, their alarming move to re-write state and federal statutes on their own is inconsistent with the rule of law and the U.S. Bill of Rights.

People who are actually in need of bail bondsmen are still going to be able to track down services. But it’s not like Google is purging those companies from its search results. Well, at least not yet. It’s worth considering that possibility given that the company says it believes these bail services are a “deceptive and harmful product.”

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Trump Decides to Tear Up Iran Nuclear Deal, Reimpose Sanctions

President Donald Trump has decided to withdraw the United States from the Iran nuclear deal.

According to a Tuesday New York Times story, Trump told French President Emmanuel Macron that he intended to withdraw from the Obama-negotiated deal—formally known as the Joint Comprehensive Plan of Action or JCPOA—which saw the Iranian government agree to limits on its nuclear program in exchange for sanctions relief.

Trump has been uniformly critical of the deal both on the campaign trail and in office, threatening to withdraw from the arrangement numerous times.

The president had planned an announcement about his administration’s continued participation in the nuclear pact for this afternoon. Trump’s reported comments to Macron apparently confirms many analysts’ assumption that the president would use the announcement to scuttle the deal.

According to the Times, the deal-breaker for Trump had been his demand that limitations on Iran’s nuclear fuel production continue past 2030, when current restrictions are scheduled to be lifted. The United States’ withdrawal means the re-imposition of sanctions that had prevented the sale of Iranian oil and froze billions of the country’s assets.

Trump’s decision is sure to upset America’s European allies, who were also party to the agreement, and who have been urging the president to remain in the deal. Britain’s Foreign Secretary Boris Johnson met with Vice President Mike Pence this week to try and persuade the administration to keep the JCPOA in place. France’s Defense Minister has referred to the deal as “a factor of peace and stabilization in a very eruptive region.”

Voices inside the administration had likewise worked to keep Trump from tearing up the deal, most prominently former Secretary of State Rex Tillerson and former National Security Advisor H.R. McMaster. Their ouster in favor of Iran uber-hawks Mike Pompeo and John Bolton effectively removed any internal opposition to today’s decision.

Reason contributor Steve Chapman has objected to the conflicted reasoning of Trump and other critics for ending the Iran deal, who’ve taken the JCPOA to task for both imposing ineffective restrictions on Iran’s nuclear program and for putting an expiration date on those restrictions.

“The weird logic of the opponents is that because parts of the accord will end too soon, we should end the whole thing even sooner—right now,” wrote Chapman. “Their implication is that all the flaws would be acceptable if only they would remain in effect until the end of time.”

Tearing up a deal now “would be diplomatic malpractice” argued Reason contributor and Defense Priorities Fellow Daniel DePetris, who argued that whatever its imperfections, the JCPOA has lowered the possibility of a military confrontation with Iran.

“Jettisoning a nuclear deal that is working, despite the problems buried in the text, would run counter to the realism embedded in the Trump administration’s national security doctrine,” wrote DePetris. “And it may very well put the United States in the position of fighting a fourth war in the Middle East, a possibility the American people are neither prepared for nor willing to support.”

Trump is scheduled to officially announce his withdrawal from the deal at 2 p.m. Eastern today.

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Human Trafficking Court in Delaware Shuts Down for Lack of Human-Trafficking Victims

After just a few years in operation, Delaware’s Human Trafficking Court is shutting down. The court’s rise and fall offers valuable lessons for similar systems across the country and shines a light on how trending problems lead to stupid policy—something those in the throes of the “opioid epidemic” panic would do well to remember.

The court was killed by Judge Alex Smalls, chief of Delaware’s Court of Common Pleas, citing a plan to consolidate several community court programs into one multipurpose court. The shift will save money and streamline responses to cases with a social-service component, said Smalls.

But the trafficking court’s closure goes beyond simple bureaucratic shuffling. It comes following a 2016 report from the Delaware Criminal Justice Council, which found less than a third of people who started the alternative-to-jail program actually completed it and that there was “little evidence to suggest the defendants of this court are the subjects” of sex-trafficking enterprises.

Delaware’s News Journal describes the Human Trafficking Court as “a special treatment court for adult prostitutes” and said Smalls’ decision to close it has “riled trafficking victims advocates.” These advocates argue that “free will is an illusion,” writes Margie Fishman, and they insist the definition of sex-trafficking victim should be expanded to include anyone who exchanges sexual services for money, even those who work entirely independently.

Sadly, this position has become a popular one in recent years, as law-enforcement agencies around the nation get federally funded (and sometimes mandated) “human trafficking awareness” training to shift their thinking about sex workers. The approach has gained oodles of good PR for allegedly being more compassionate, enlightened, and feminist than previous police views of prostitution—treated as a community nuisance—and sex workers, previously seen as morally depraved, deliberately lawless, and lying in the beds they made for themselves. The new national message on prostitution is that the vast majority of women involved were forced or coerced, if not by a literal “pimp” or “trafficker” than by the circumstances of their lives.

This is insane, obviously. But it informed (and still informs) a rash of recent bad policies, starting under George W. Bush but really picking up steam in the later years of the Obama era. Without the Bush-tinted veneer of being a socially conservative or Christian enterprise, anti-sex-trafficking crusades were quickly seized upon by Democrats and other mainstream liberal types, and “human trafficking” legislation became a frantic and bipartisan affair at the federal and state levels. But even though Bush-era language specifically condemning consensual prostitution was gone, the policies had the same in effect.

States—including Delaware, New York, and Michigan—and cities created special courts during this time to deal with the purported human trafficking “epidemic” sweeping America. Delaware’s court was created in 2012 (“one of 14 nationwide when it was first established,” according to the Journal). Like other so-called human trafficking courts, it handled criminal cases related to adult prostitution, regardless of whether anyone was alleging force, fraud, or coercion.

These courts garnered a lot of good headlines as well as praise from high-powered people—plus the public funds that came with that—by promising to treat all arrested sex workers as potential sex-trafficking victims and offer them a way to dodge jail time with counseling and social services. But it turned out that many arrested on prostitution charges didn’t want to declare themselves victims, name names of “traffickers,” enter a months-long state-run “treatment” program, or even leave prostitution in the first place. And those that were open to state aid with starting a new life could find themselves presented not with practical assistance but things like yoga classes and group counseling—if not worse: There have been multiple reports of U.S. Immigration and Customs Enforcement using human-trafficking courts to find immigrants who have been working in prostitution, which is grounds for deportation even if they are in the country legally.

In some areas, those who complete human-trafficking court programs can be cleared of prostitution charges. Delaware’s program only provided a way to avoid jail time, not a criminal conviction altogether. In order to be eligible for the program, an arrested person had to plead guilty to misdemeanor prostitution and would be put on (usually) one year probation. Those who couldn’t keep up with program requirements—regular class attendance, drug testing, no new arrests or probation violations—were sent swiftly back to the typical criminal-justice route.

Once in the program, women “pursued their GEDs” and were trained for jobs at local ShopRite stores, reports the Journal. The court helped people like “Clorissa,” now 29, who “left behind an abusive, controlling boyfriend, a heroin addiction and thousands of dollars that she earned” via street-based sex work, according to the paper.

Of course, not everyone arrested on prostitution charges (and certainly not everyone engaging in prostitution) needs to exit an abusive relationship, shake a drug problem, finish a high-school diploma, or get trained to work at a minimum-wage job. Yet instead of saving the Clorissas while letting non-victims get on with their lives, these programs only offer alternatives for people willing to be “saved.”

Of the 110 people who entered Delaware’s human trafficking program, the Journal reports, only 30 have completed it.

The Criminal Justice Council report concluded that it “finds it difficult to continue to justify the resources that have been expend on so few probations who have demonstrated a low rate of success.” It recommended at least moving to a program where those who completed it could avoid a criminal conviction (known as the diversionary model), but it does not seem that authorities have accepted this recommendation.

Ultimately, it looks like the prostitution arrest model in Delaware may return to its previous status quo, where the state still punishes adults for paid sex but at least doesn’t pretend like that’s part of some humanitarian mission. We’ll see. For now, the shift in (media- and politics-created) social priorities in the state is interesting.

The feds gave at least $1.5 million over five years to Delaware’s Brandywine Counseling and Community Services, which worked with the Human Trafficking Court in addition to doing street-based sex worker outreach. CEO told Lynn Fahey that funding has dried up recently, however, as “the attention shifted to the opioid epidemic.” Sometimes there’s only room for one trending panic in town.

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What Is Causing The Recent Spate Of US Military Crashes?

Authored by Duane Norman via Free Market Shooter blog,

Recently it was revealed that the US Department of Defense issued a Notice to Airmen (NOTAM) regarding air transit near a Chinese airbase in the East African country of Djibouti.  The notice was issued after pilots were allegedly targeted with lasers originating from the Chinese airbase:

On May 3, 2018, Dana White, the Pentagon’s chief spokesperson, said lasers from China’s base in the East African country had harassed American aviators on between two and 10 occasions, resulting in two, unspecified minor injuries to the C-130 crew. She also indicated that there had been an increase in these activities recently, prompting American officials to make a formal complaint. The issue had prompted the U.S. military to issue a formal warning to its own aircrews in April 2018, which did not specifically name who was responsible.

“I’d have to ask you [to] ask the Chinese about the motivation,” White said. “But it’s serious, we take it seriously, and that’s why we demarched them.”

It has been previously hypothesized that Chinese “hacking” played a role in a number of US Navy crashes last year.  As a result, some has speculated that “hacking” could be to blame for a recent increase in US aviation crashes.

However, it doesn’t take much examination to come up with a far more plausible theory – lack of proper maintenance for older airframes, some of which can be attributed to the 2013 budget sequester.

For starters, let’s take a look at the list of US military aviation crashes in 2018, as per Wikipedia:

  • January 21: A U.S. Army AH-64 Apache crashed during training at the base in the Mojave Desert, California. Both pilots onboard were killed.

  • March 14: A US Navy F/A-18E/F Super Hornet crashed roughly a mile off the end of the runway at Naval Air Station Key West in Florida. Both crew members died after they ejected.

  • March 15: A US military HH-60 Pave Hawk helicopter crashed in Western Iraq, killing all seven aboard.

  • April 3: A U.S. Marine Corps AV-8B Harrier crashed in Djibouti shortly after take-off.

  • April 4: A USMC CH-53E Super Stallion crashed near Naval Air Field El Centro, killing all 4 crewmen.

  • April 5: A US Air Force Flight Demonstration Team F-16 crashed in Nevada, killing the pilot.

  • April 13: A United States Air Force F-22 Raptor fighter jet was damaged when it experienced an engine malfunction during takeoff. Apparently the left engine basically stopped working on takeoff, suddenly depriving the pilot of enough thrust to continue ascent after he had already raised the landing gear, forcing for a hard, belly landing that lasted for more than a mile.

  • April 24: A United States Air Force F-16 crashed during an emergency landing. The pilot ejected safely.

  • May 2: United States Air Force Lockheed WC-130H Hercules 65-0968, of the 156th Airlift Wing of the Puerto Rico Air National Guard, crashed on Georgia State Route 21 in Port Wentworth, Georgia while on climbout from Hilton Head International Airport and caught fire, killing all nine on board. This was to be the aircraft’s last flight before retirement at the 309th Aerospace Maintenance and Regeneration Group (AMARG) base in Arizona.

Of all of these crashes, the one that arouses the most suspicion is that of the AV-8B “Harrier” jump-jet, due to be replaced by the (troubled) F-35B in the near future…

The Harrier’s design is over 50 years old, with 172 aircraft losses listed on Wikipedia, and likely with other losses not listed on the page resulting from damaged aircraft being removed from service and/or cannibalized for parts.  While combat losses (particularly in Desert Storm) are among the Harrier losses, the majority of the jet’s losses have been due to crashes, owing to the aircraft’s design requiring a great deal of maintenance to keep it airworthy.  Additionally, the Harrier is known for having a greater degree of difficulty to operate, some of which is in part to its unique (and dated) design, as well as the aircraft’s many flight control surfaces.

Thus, even though a US aircraft crashed in close proximity to a Chinese airbase known for shooting lasers at US pilots, it is difficult at best to attribute yet another Harrier crash to hacking or external interference.

Aging airframes often require more extensive maintenance.  Unfortunately a combination of both Congressional inability to act and poor Pentagon decisions have resulted in major neglect for the airframes that need it the most, as The War Zone points out:

The continuing inability of Congress to pass a formal annual budget has only made the situation worse, making it difficult for the U.S. military to conduct serious long-term planning and properly arrange its spending priorities. U.S. government officials and lawmakers repeatedly pointed out the devastating impact this would and was having on readiness, including the safety and availability of military aircraft fleets.

To be certain, poor decision making on the part of many of the services further exacerbated these issues. New weapon systems repeatedly took precedence over readiness issues, including routine training, preventive maintenance, and supporting the logistics chain for existing equipment. By 2016, for example, this deliberate neglect prevented the Marines from flying more than 30 percent of their CH-53 heavy lift helicopters – one of which crashed earlier in April 2018, killing four Marines – at any one time.

We also know from public statements that the overall availability of certain types of aircraft has slipped to atrocious levels. In November 2017, the Marine Corps disclosed to Congress that the availability rate for their CH-53s was still under 40 percent. Earlier in 2017, it became public that more than 60 percent of all Navy and Marine Corps F/A-18 Hornets and Super Hornets were unusable on any given day. 

It is not a coincidence that several of the US aircraft that have crashed in 2018 are mentioned above – older airframes that have been passed over for more expensive “stealth” aircraft, which oddly enough, have higher maintenance costs, in spite of their newer age, owing to high maintenance costs for “low-observable” flight.

And even though a “newer” F-22 airframe was among the crashed aircraft, with one experiencing a hard “belly” landing this year after an engine flameout…

…a similar incident occurred in 2012 due to a mistake made by an F-22 student pilot:

On May 31st, 2012 a student pilot on his second solo flight in the F-22 didn’t apply enough power before retracting the jet’s landing gear during departure. The F-22 sunk down and careened its way across the runway on its belly before coming to a stop. The cost to repair that jet was a whopping $35M and took six years to accomplish the task.

The official details surrounding this year’s crash make the possibility of a cover-up distinctly possible, especially given the F-22’s troubled history:

Considering that the F-22 can fly with just one engine, and a similar incident was blamed on pilot error, this could be the USAF’s attempt to shift the blame for a pilot mistake onto Congress for providing a lack of maintenance funds.  Even if the incident can be attributed to an engine flameout, the F-22 has already been cancelled at 187 copies, being passed over for the poorly-designed F-35, so it is possible that aircraft maintenance dollars are being spent on the F-35, with Lockheed at risk of a reduction or cancellation of the project.

Given all of the domestic problems the US Air Force has keeping its older aircraft airborne, and the location of all of the aviation accidents, it is highly unlikely that any of these incidents can be chalked up to hacking or external interference from a peer state.  Although it is important to point out that this could be the case, and the average citizen will likely never know if aircraft losses are due to Chinese/Russian interference…

…it is far more likely that the recent crashes are due to failures by the Pentagon’s inability to compensate for Congress slightly pricking the balloon of out-of-control defense spending.  Sadly, it seems that the end result of all this will be more big-money contracts doled out to put more inferior weapons systems in the US inventory.  

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3Y Auction Prices At Highest Yield Since May 2007 As Foreign Buyers Slide

While unlike back in March, when the US Treasury had a record amount of Bills, Notes and Bonds for sale, the selling calendar has not been quite as busy, there is still a deluge of paper for sale over the next few days, and following the earlier 4-Week Bill auction, moments ago the US Treasury sold $31BN in 3Y Notes (more than the $30BN sold last month), the largest 3Y auction since August 2013, at a yield of 2.664%, the highest since May 2007 (when 3Y issuance was briefly suspended until Nov. 2008), for the second month in a row just barely tailing the When Issued by 0.1bps.

The internals were medicore, with a 2.76 Bid to Cover, below last month’s 2.85 and the 6 month auction average of 2.97.

Indirect bidders, i.e. foreign central banks, dipped again, down from 47.6% to 45.6%, the lowest since last Dec 2016, with Directs taking down 12.3%, above the 6MMA of 9.8% and the highest since July 2016, leaving Dealers with 42.2%, the highest award since Sept. 2017.

Overall, a mediocre auction to start this week’s issuance, with all eyes now on tomorrow’s 10Y auction as the Treasury ramps up supply to fund its $1+ trillion deficit.

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Human Trafficking Court in Delaware Shuts Down for Lack of Human-Trafficking Victims

After just a few years in operation, Delaware’s Human Trafficking Court is shutting down. The court’s rise and fall offers valuable lessons for similar systems across the country and shines a light on how trending problems lead to stupid policy—something those in the throes of the “opioid epidemic” panic would do well to remember.

The court was killed by Judge Alex Smalls, chief of Delaware’s Court of Common Pleas, citing a plan to consolidate several community court programs into one multipurpose court. The shift will save money and streamline responses to cases with a social-service component, said Smalls.

But the trafficking court’s closure goes beyond simple bureaucratic shuffling. It comes following a 2016 report from the Delaware Criminal Justice Council, which found less than a third of people who started the alternative-to-jail program actually completed it and that there was “little evidence to suggest the defendants of this court are the subjects” of sex-trafficking enterprises.

Delaware’s News Journal describes the Human Trafficking Court as “a special treatment court for adult prostitutes” and said Smalls’ decision to close it has “riled trafficking victims advocates.” These advocates argue that “free will is an illusion,” writes Margie Fishman, and they insist the definition of sex-trafficking victim should be expanded to include anyone who exchanges sexual services for money, even those who work entirely independently.

Sadly, this position has become a popular one in recent years, as law-enforcement agencies around the nation get federally funded (and sometimes mandated) “human trafficking awareness” training to shift their thinking about sex workers. The approach has gained oodles of good PR for allegedly being more compassionate, enlightened, and feminist than previous police views of prostitution—treated as a community nuisance—and sex workers, previously seen as morally depraved, deliberately lawless, and lying in the beds they made for themselves. The new national message on prostitution is that the vast majority of women involved were forced or coerced, if not by a literal “pimp” or “trafficker” than by the circumstances of their lives.

This is insane, obviously. But it informed (and still informs) a rash of recent bad policies, starting under George W. Bush but really picking up steam in the later years of the Obama era. Without the Bush-tinted veneer of being a socially conservative or Christian enterprise, anti-sex-trafficking crusades were quickly seized upon by Democrats and other mainstream liberal types, and “human trafficking” legislation became a frantic and bipartisan affair at the federal and state levels. But even though Bush-era language specifically condemning consensual prostitution was gone, the policies had the same in effect.

States—including Delaware, New York, and Michigan—and cities created special courts during this time to deal with the purported human trafficking “epidemic” sweeping America. Delaware’s court was created as part of omnibus “human trafficking” legislation the state passed in 2014 (“one of 14 nationwide when it was first established,” according to the Journal). Like other so-called human trafficking courts, it handled criminal cases related to adult prostitution, regardless of whether anyone was alleging force, fraud, or coercion.

These courts garnered a lot of good headlines as well as praise from high-powered people—plus the public funds that came with that—by promising to treat all arrested sex workers as potential sex-trafficking victims and offer them a way to dodge jail time with counseling and social services. But it turned out that many arrested on prostitution charges didn’t want to declare themselves victims, name names of “traffickers,” enter a months-long state-run “treatment” program, or even leave prostitution in the first place. And those that were open to state aid with starting a new life could find themselves presented not with practical assistance but things like yoga classes and group counseling—if not worse: There have been multiple reports of U.S. Immigration and Customs Enforcement using human-trafficking courts to find immigrants who have been working in prostitution, which is grounds for deportation even if they are in the country legally.

In some areas, those who complete human-trafficking court programs can be cleared of prostitution charges. Delaware’s program only provided a way to avoid jail time, not a criminal conviction altogether. In order to be eligible for the program, an arrested person had to plead guilty to misdemeanor prostitution and would be put on (usually) one year probation. Those who couldn’t keep up with program requirements—regular class attendance, drug testing, no new arrests or probation violations—were sent swiftly back to the typical criminal-justice route.

Once in the program, women “pursued their GEDs” and were trained for jobs at local ShopRite stores, reports the Journal. The court helped people like “Clorissa,” now 29, who “left behind an abusive, controlling boyfriend, a heroin addiction and thousands of dollars that she earned” via street-based sex work, according to the paper.

Of course, not everyone arrested on prostitution charges (and certainly not everyone engaging in prostitution) needs to exit an abusive relationship, shake a drug problem, finish a high-school diploma, or get trained to work at a minimum-wage job. Yet instead of saving the Clorissas while letting non-victims get on with their lives, these programs only offer alternatives for people willing to be “saved.”

Of the 110 people who entered Delaware’s human trafficking program, only 30 completed it.

The Criminal Justice Council report concluded that it “finds it difficult to continue to justify the resources that have been expend on so few probations who have demonstrated a low rate of success.” It recommended at least moving to a program where those who completed it could avoid a criminal conviction (known as the diversionary model), but it does not seem that authorities have accepted this recommendation.

Ultimately, it looks like the prostitution arrest model in Delaware may return to its previous status quo, where the state still punishes adults for paid sex but at least doesn’t pretend like that’s part of some humanitarian mission. We’ll see. For now, the shift in (media- and politics-created) social priorities in the state is interesting.

The feds gave at least $1.5 million over five years to Delaware’s Brandywine Counseling and Community Services, which worked with the Human Trafficking Court in addition to doing street-based sex worker outreach. CEO told Lynn Fahey that funding has dried up recently, however, as “the attention shifted to the opioid epidemic.” Sometimes there’s only room for one trending panic in town.

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Goldman Warns Hedge Funds Are On The Verge Of Liquidation

Last week, when looking at the index of the 50 most popular hedge fund positions, also known as the Goldman Sachs Hedge Fund VIP index, or as we call it the “hedge fund hotel California” as one can rarely if ever check out painlessly once one arrives, we noted something troubling: despite a market that was largely unchanged for 2018, the 50 top hedge fund names have been sliding, in what appears to be the ominous right should of the head and shoulders formation, suggesting that something troubling was taking place below the surface of the hedge fund community:

… it appears that the latest cycle of outperformance is now over, because as the following sloping head-and-shoulders chart in the GS HF VIP index shows, the bottom is about to fall out for the 50 most popular hedge fund names, as suddenly instead of frontrunning purchases, hedge funds will scramble to liquidate first before everyone else. And not to make a too fine point of it, Bloomberg also adds that “today feels like a liquidation day from popular hedge fund holdings” – because the HF VIP index is tumbling by 1.8%, its biggest drop in months, and set for the lowest close since December, wiping out all 2018 gains. Needless to say, its correlation with the S&P is almost 100%.

As shown in the chart below, this particular index was nothing more than a high beta version of the S&P.

Our conclusion, when looking at the chart above, was that for whatever reason, a liquidation appeared to be spreading within the hedge fund community.

Now, in a report by Goldman Sachs, the bank’s equity strategist Ben Snider also points out that whereas retail sentiment, which tumbled ahead of Q1 earnings season, has rebounded most of the way as we near the end of said earnings season (the best since 2010), hedge fund favorite stocks have underperformed sharply.

Goldman should know: after all it is their index that tracks the favorite stocks; which is why the following warning from Goldman is particularly ominous to the hedge fund community, which by some odd coincidence, has found itself largely invested in the same 50 or so stocks:

Investors should be attentive to the positioning dynamics currently driving stock performance. If the S&P 500 takes another turn lower, popular positions will likely underperform, with mutual fund and retail favorites particularly vulnerable, while hedge fund favorites look poised to outperform if the market continues to rally.

Some more details from the report, which juxtaposes the skittish mindset of retail investors earlier in the year alongside hedge funds’ “rock solid” positioning, and how these two inverted as earnings season progressed, or in other words, how the smart money has been selling to the dumb “retail money”:

Although 1Q earnings results have been strong, during the last few weeks hedge fund favorites have underperformed sharply. Our basket of the most popular hedge fund positions lagged the S&P 500 for seven straight days at the end of April, underperforming the market by more than 200 bp during the period. Of the 37 basket constituents that have reported earnings thus far, 21 have posted results more than a standard deviation of consensus estimates above the mean, and only one has missed. While some notable constituents such as AMZN and FB have outperformed sharply following results, most of the basket’s constituents have fared poorly during the season.

Here, Goldman repeats what we BofA highlighted yesterday, namely that earnings beats across the S&P 500 have been rewarded by less than usual, while misses have been aggressively punished…

… which according to Goldman , supports “the idea that investors had long positions and high expectations coming into the reporting season and have reduced positions as catalysts pass.

Goldman’s conclusion:

If the S&P 500 takes another turn lower, popular positions will likely underperform, with mutual fund and retail favorites particularly vulnerable, while hedge fund favorites look poised to outperform if the market continues to rally.

In other words, one more correction in the S&P – we’ve already had 2 this year – or even a modest drop, and not only do hedge fund gets it, but the “market leadership” stocks, those 50 names that have driven the bulk of S&P upside in the past 2 years, will tumble as hedge fund accumulation turns to sheer, hedge fund panic liquidation.

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