Rich Driver = Poor Driver, Beggarman = Cop

From our hideous neighbors to the north, an amusing/horrifying
example of some mighty trifling police work,
the “hobocop” campaign
, as explained in the Toronto
Sun:

Const. Brian Kellar, a one time officer of the month, was
dressed as a homeless person — complete with hat, hood and
cardboard sign — who appeared to be begging for money.

But what he and another officer were really doing this week was
approaching motorists to determine if they were on, or touching,
their smart phones.

Slick manoeuvre. Innovative.

On one side of the sign, it read: “I’ve got High Hopes — Frank
Sinatra.”

On the other was written the more ominous “Hello I am a Police
Officer: If you are reading this you are about to get a cellphone
ticket.”…

It’s also quite a ding to the offenders and a windfall for
government. Thanks to one stroke of the pen of a judge, the fine as
of March 18 went from $155 to $280.

We should remember that what starts as simple tickets can turn
into some serious problems in people’s lives, especially those
lacking a fair amount of disposable cash or those who just don’t
have their shit together about getting things in the mail on time.
See my earlier Reason article, “Petty
Law Enforcement vs. The Poor
.”

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Economist Tyler Cowen Pepper Sprayed While Teaching Class at George Mason University

Economist, author, and George Mason University
professor Tyler
Cowen
 was pepper sprayed in his classroom today by a
man trying to place him under citizen’s arrest.
ArlNow.com reported
on the incident, which took place at GMU’s
Arlington, Virginia, campus this afternoon.

Police say the man entered the classroom and attempted to place
the professor under a citizen’s arrest. The professor tried to get
the man—described as a white male in his 20s or 30s—to leave, at
which time the man pepper sprayed him and a scuffle ensued,
according to Arlington County Police spokesman Dustin
Sternbeck.

The professor did not know the man, Sternbeck said.

The ArlNow.com account didn’t identify the professor, but
several commenters said it was Cowen.

Tom Roussey, a
reporter with D.C.’s ABC7 news, then confirmed with GMU that it was
Cowen who was pepper sprayed. According to Roussey, the man entered
Cowen’s classroom this afternoon, said he was placing Cowen under
citizen’s arrest, and sprayed the pepper spray in Cowen’s face.
Cowen ran, the intruder chased him, and students in the hallway
caught the suspect and held him until the Arlington Police arrived
and arrested him. The man wasn’t a student, Arlington County police
officers say, and charges are pending. 

A few hours after the incident, at 6:35 p.m., Cowen
tweeted

Cowen and the dozen or so students in his classroom were
affected by the pepper spray but not taken to the hospital. No word
yet on what motivated the intruder. 

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Russia: Capital Controls?

The markets are speculating that Vladimir Putin will have to set up some form of capital control in order to stem the flight of capital from his country. It was already happening before the crisis in Ukraine and the annexation of Crimea. But, now it is set to get worse and an estimated $70 billion is the figure that is being mentioned. That is far higher than had previously been expected.

The G7 suspended Russia from the G8 and is considering complete expulsion (on the say-so of the UK’s David Cameron) from the group of nations (Canada, France, Germany, Italy, Japan, UK, USA), during aMarch 24th 2014 special summit in The Hague. That’s all despite the fact that Russian media is now reporting that the G7 suspended themselves and Russia is left in the G8 on its own. It’s a little like the British that had headlines running that shock, horror, the ‘Continent was cut off from the British Isles by thick fog’. All depends where you believe you are. The Russians are at the center of their universe, obviously. Russia was part of the G8 between 1998 and 2014.

Russian Foreign Minister Sergei Lavrov stated: “If our Western partners believe the format has exhausted itself, we don’t cling to this format.”

So, what does Putin have to lose now? The ground has been prepared for a war in which Putin has nothing less to lose than his own power or ego being jolted a little. If he sits back and does nothing now that the G8 has become the G7 and Russia has been excluded (from one of the very few moments that the West actually communicates with Russia), then he will suffer the public consequences and humiliation of the Western world.

The West believes that is can draw a line under the annexation of Crimea, that it should tell Putin to stop there and all will be accepted as it is. But, Putin’s point is that Russia has been humiliated for decades by the West. The West has constantly treated the Russian Federation as a backward, Soviet-era country in which the people drank vodka all day and ate pelminis (that’s when the state was able to hand them out after queuing for three hours to get a slice of bread at a state shop). There might be many drawbacks to Russia where the people don’t quite do things the way of the Western world. Yes, they have lack of freedom of the press and yes there is an omnipresent state and a dictatorial leader. Although, the sole difference is the fact that Russia doesn’t pretend to be magnanimous and caring for anything but international power. The difference is that Western leaders do pretend (sometimes).

By taking away the privilege (if we can call it that) of sitting around a table with the other members of the G8, this will only exacerbate Putin’s feeling of humiliation. He will not stand for it. He will not accept it and he is so far in now that he cannot back down. The West is willing to wound Russia, but fears striking them since they are wary of the volatility of Putin as leader of a country with a damaged ego. Why at the present time, in the present predicament of the financial crisis with Greece in debt for generations, the French failing to do anything of any economic worth and the British threatening to leave the EU, would you wish for one moment to expand it by adding Ukraine into the already-failing union? Doing so, could have only had one result: causing the ire of Moscow. By going to Kiev in the beginning to defend the rights of anti-Russian and pro-European crowds, the US and the EU could only bring about egg being splattered on their faces. That, from the start was a case of nigh-on interference in the domestic affairs of another nation. What happened to the notions of state-sovereignty and self-determination? The US and the EU should never have publically got involved and should have stayed with using diplomatic channels.

Capital controls will only hinder economic progress in Russia, but what are the other alternatives to putting an end to the flight of capital from the country? Using legislation or volume restrictions will only send the message to the world that the Russian economy is still developing and is not worthy of investment. Capital controls won’t be used just yet and capital outflows will have to get to a worse point before that happens. Russia’s current account is preparing to get into a deficit and imports will outweigh exports. The amount of outflows from Russia is nothing today for the moment compared with the financial crisis and the $150 million that left the country every single quarter.

It would be a brave investor or one with fortuitous insight to take the step to invest in Russia today. Russian stock was already running on the cheap side before the sanctions imposed by the West. Markets have no possibility of dealing with the geopolitical risk involved in Russia. Earnings per share (EPS) have already been cut by analysts who predict a drop of 8.5%. That could increase to at least 62% which was being experienced in 2008-2009.

For the moment, Russia is playing it icily cold and decidedly Siberian. But, that is probably proof that something is going to happen. Putin will not be able to sit back and watch his suspension from the herd of the rich boys in The Hague yesterday, not without showing them he’s the boss (at least where he comes from).

Originally posted: Russia: Capital Controls?

 


    



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Look Who Has the Highest Labor Force Participation Rate, Eh?

Submitted by Ralph Dillon via Global Financial Data,

Lately, much has been made about Unemployment and Labor Participation Rates here domestically in the United States. With unemployment steadily ticking down from 10% at it peak to just 6.5% today, many point to the improving economy as a reason that the Unemployment Rate has been steadily improving. While it makes for good political theater, the reality is that we are suffering from an employment crisis in this country not seen in nearly 3 decades.

The problem we face, is that while unemployment has been creeping down, the number of those currently in the labor force has also come down. Frankly put, people who would like to work can’t. They are having a very difficult time finding work and keeping it. With the total duration of unemployment now at 101 weeks, that’s nearly 2 years of unemployment, one can hardly find a reason to celebrate 6.5% unemployment.
 
Now imagine if you will you are in a country like Italy. Italy has certainly had its struggles during the global recession like everyone else, but if you think we have it bad here, look what they are dealing with. With just about a 50% Labor Participation Rate, Italy’s  unemployment has soared to almost 13% and appears headed much higher. In looking at the chart below, it appears that that trend is going nowhere but higher. Especially when you factor in the rest of the economic and social issues that the country is facing.

Makes you want to think about all the different ways that the Government keeps statistics on Unemployment and how they use it. Currently, we have the U-1,2,3,4,5,6 classifications depending on which narrative you are looking to exploit. Many would make an argument that if you truly wanted to gauge where unemployment stands today, you would just simply have to count those who are well, unemployed. Pretty simple concept. So why don’t we do it? Probably because our Unemployment would look like Italy’s.
 
Finally, I think one of the most effective ways of measuring employment is by looking at the Labor Participation Rate. Those who are in the work force who want to work and are fortunate enough to be working and can. I think it paints a much more complete picture of the employment landscape that we are facing. In doing so, I thought it would be interesting to look at Developed Nations Labor Participation Rates to see just how bad we have it. I guess it could be worse, at least we are second in terms of participation at around 64% and not Italy near 50%.
 
And who do you think has the highest Labor Force Participation Rate amongst the developed countries? The answer may surprise you eh…


    



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As Russia Controls 51 Ukraine Ships And Moves More Tanks To The Borders, Obama Denounces “Brute Force”

President Obama denounced Russia's "brute force" in Ukraine during a speech in Brussels today, but it seems from the images and clips below that Russia cares little for words and is more about strategic actions for now. Russia now, reportedly, controls 51 Ukraine Navy ships and while Merkel is talking tough, she is careful not to be too aggressive in her call for escalation. Talking of escalation, Russia tanks were being moved en masse across the nation to various borders.

 

Russian Forces Control 51 Ukraine Navy Ships in Crimea: Embassy

Ukraine retains 10 ships in Crimea, Ukrainian Embassy in Russia says in e-mailed newsletter.

But social media is flooded today with fresh pictures, videos, and reports of Russian tanks and troops on the move towards the Ukrainian border.

 

As InterprterMag notes,

After the annexation of Crimea, however, there was a military deescalation. Sources told us that the Russian troops were in position, but were no longer on the move in large numbers, and were not yet massed in large enough numbers that an invasion would be possible. Earlier this week, however, NATO began to once again raise the alarm that Russian forces were gathering to potentially invade Ukraine, or even move on to Moldova. Today, there are reports that Russian troops are indeed on the move near Ukraine’s borders.

 

 

There is another key difference. Much of the equipment spotted on the move today are not just troop transports and APCs. What we are seeing is reports of main battle tanks, support equipment, and other heavy weaponry. If Russia was not ready to invade two weeks ago, could these reinforcements be enough for an invasion?

Russian Tanks near the Ukrainian border

 

And MPCs on the roads

 

Furthermore, on the bypass road near Belgorod, more than 25 Mi-24 Hind attack helicopters have been spotted

Julia Karmo of Sky News Broadcasting has geolocated this video, which was taken yesterday in Novozybkov, in the Bryansk region of Russia. Karmo notes that the trains are on tracks that lead to towards Belarus or towards Ukraine.

and Somova, north-northeast from Voronezh

 

But the good news is that Gazprom…

  • *NAFTOGAZ UKRAINY SAYS GAS DEBT TO GAZPROM IS $1.7B: KOBOLYEV

might finally get paid

  • *UKRAINE-IMF ANNOUNCEMENT 'MOST LIKELY' TOMORROW, LAPPO SAYS

 

And while Merkel is talking tough

  • *MERKEL SAYS RUSSIA RISKS 'TOUGH RESPONSE' IF CRISIS ESCALATES

She is also backing away…

  • *MERKEL SAYS SHE HOPES TO AVOID ESCALATION OF SANCTIONS

Leaving Obama to do the talking…

President Obama offered a sustained and forceful rejoinder against Russia on Wednesday, denouncing the “brute force” he said it has used to intimidate neighbors like Ukraine and vowing that the United States “will never waver” in standing up for its NATO allies against aggression by Moscow.

And after all that, this is happening…



    



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Hawaii Cops Give Up on Sex With Hookers, Settle for Handjobs and Blowjobs

Hawaii cops have reached an

agreement
with state legislators that will limit the exemption
that allows them to have sex with prostitutes. Police originally

insisted
on an open-ended license to fornicate, but now they
are willing to settle for petting, handjobs, blowjobs, and other
activities that fall short of penetration.

Hawaii’s current
prostitution law
includes a blanket exemption for law
enforcement officers “acting in the course and scope of duties.”
That covers both agreeing to pay for sex and actually having sex.
As you may recall, some members of the state House of
Representatives, who apparently were surprised to discover this
exemption existed, wanted to remove “sexual penetration or
sadomasochistic abuse” from the list of things cops are allowed to
do with prostitutes. Police objected, saying that change would put
a damper on their work., and the bill that the House ultimately
passed left the exemption alone. But news of the nixed amendment
generated enough outrage that police are now willing to
compromise.

Yesterday state Sen. Clayton Hee, who chairs the Senate
Judiciary and Labor Committee,
told
KHON, the Fox station in Honolulu, that the Honolulu
Police Department (HPD) “agrees that the sexual penetration
language in the law that they are exempt from should no longer be
an exemption for police officers.” HPD Maj. Jerry Inouye told the
station that the department “has never allowed police officers to
have sex with prostitutes and that HPD only wanted to keep ‘the
part that allows an officer to make a verbal agreement for sex for
money because that’s the crux for most prostitution
investigations.'” But that is not what Jason Kawabata, captain of
the HPD’s Narcotics/Vice Division,
told
 the House Judiciary Committee last month (emphasis
added):

As written, this bill would nullify the exemption if the officer
agrees to pay a fee for sexual penetration or sadomasochistic
abuse. This would limit the type of violations law enforcement
officers are able to enforce. Even if the intent of the
amendment is merely to limit actual conduct by the officer, we must
oppose it. Codifying the limitations on an officer‘s conduct would
greatly assist pimps and prostitutes in their efforts to avoid
prosecution. 
 

Yes, Kawabata wanted to make sure it was legal for officers to
promise money for sex, including penetration. But he also wanted to
preserve the exemption for actually having sex with hookers, even
though Inouye insists that has never been allowed, because
“codifying the limitations on an officer’s conduct would greatly
assist pimps and prostitutes in their efforts to avoid
prosecution.” As I
said
last week, that argument does not make a lot of sense,
since it depends on a scenario in which a prostitute has sex with
her customer before striking a deal. In any case, if
police regulations are as strict as Inouye claims, knowledge of
them would have the same effect on the behavior of pimps and
prostitutes as knowledge of a statutory restriction would.

Apparently that has occurred to the SPD, which decided not to
send any representatives to a Senate hearing on the prostitution
bill last Friday. Inouye explained that the first rule of the
department’s policy regarding sex with hookers is not to talk about
the department’s policy regarding sex with hookers:

Maj. Inouye also addressed the department’s absence at last
Friday’s hearing, saying they have to be very careful about what
they say publicly about policies when it comes to their undercover
investigations. “We felt at that point, if I went to the hearing, I
might be subjected to questions about our undercover polices that I
might not be able to answer,” he said.

Kawabata and Inouye talk about their work as if they are
catching terrorists and dare not tip them off about police methods.
But in reality, cops enforcing prostitution laws are not protecting
the public from dangerous predators; they are trying to stop
consenting adults from exchanging sex for money. There is nothing
noble or worthwhile about that work, and it surely does not deserve
the sort of deference the state House showed when it unanimously
agreed that police need the leeway to have sex with prostitutes so
they can stop people from having sex with prostitutes.

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IRS Slams Bitcoin With Retroactive Tax Rules… Is Gold Next?

Submitted by Simon Black of Sovereign Man blog,

Bitcoin tax rules finally came to the Land of the Free yesterday. And I have to imagine there are some not-too-happy campers this morning, if they even know about it.

Bitcoin taxes were inevitable. I’ve written about this numerous times, and have even gone so far as to predict that the government will probably mandate special Bitcoin reporting on foreign disclosure forms.

A number of other countries, from Germany to Singapore, have already issued their own tax rules on Bitcoin and related virtual currency transactions. And yesterday the IRS finally issued their own.

Here’s the quick summary:

1) While a number of governments (including the United States to a degree) have officially pronounced Bitcoin to be a ‘currency alternative,’ the IRS disagrees.

 

2) According to the IRS, Bitcoin is -property- and should be taxed as such… similar to, for example, a piece of rental property or collection of fine wine.

 

3) This means that the sale of Bitcoins is taxable based on capital gains. If you bought Bitcoins at $1 and sold them at $501 several years later, you would have to pay long-term capital gains tax on the $500 difference, currently 23.8%.

 

4) If you hold Bitcoins for shorter periods of less than 1-year, you can be taxed at ordinary income tax rates on your gains.

 

5) To the extent that you mine Bitcoins as a trade or business, the Bitcoin income from mining activity is not only subject to income tax, but also self-employment tax.

 

6) If you trade your Bitcoins for some other property that exceeds your cost basis, you are subject to tax. This is a huge ruling that effects all the ‘Bitcoin millionaires’ out there– early adopters who purchased Bitcoins at a dollar or less.

So let’s say you were one of the first Bitcoin adopters and bought 5,000 bitcoins at $0.05. Last year when Bitcoin was valued at roughly $1,000 in paper currency, you traded 250 of them for a brand new Lamborghini.

The IRS would say that you had a cost basis of $12.50 for those 250 coins. But you traded them for other property with a fair market value of $250,000. This means you have a taxable gain of $249,987.50.

Naturally, the US government is happy to go back in time and thrust all sorts of interest and penalties upon you if you didn’t comply with the law.

According to their ruling, “failure to timely or correctly report virtual currency transactions when required to do so may be subject to information reporting penalties under section 6721 and 6722.”

What’s most interesting about this new set of rules is what they might mean for gold.

If you’ve ever read Currency Wars (a fantastic book by my colleague Jim Rickards), you may recall early in the book when Jim suggests a potential outcome for gold.

Imagine– paper currencies go into freefall. Gold soars. Anyone who bought gold early sees sizeable profits (in paper currency)… at which point the government steps in after the fact and sets up new tax rules to confiscate a substantial portion of those gains.

Think it can’t happen? These Bitcoin rules certainly establish a precedent.


    



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Citi On The “Known Unknowns” That Are Not Priced In

Looking ahead at the next couple of weeks, Citi’s Stephen Englander sees multiple sources of risk which he does not think are fully priced in. Most of these risks appear to be asset market negative, involving higher US rates, more geopolitical disruption and downside economic shocks.

Via Citi’s Stephen Englander,

The 5 Known Unknowns…

Payrolls – the early forecast for NFP is 188k. This implies that investors expect the April release to be not much better than the trend prior to the severe winter. The potential for upside surprise is significant in our view, carrying positive implications for the USD and negative implications for other assets.

 

Ukraine – crisis is hardly over. The G7 may be overestimating the impact of financial sanctions and underestimating how tempting it may be for Russia to continue to annex areas that it considers historically linked to Russia.

 

China optimism flies in the face of limited policy options that they have. Investors have become confident in recent days that the Chinese will apply stimulus to the Chinese economy. However easing credit conditions can hardly be attractive to Chinese policymakers and straight out fiscal policy pushes against structural reform efforts.

 

Japan sales tax increase hitting an economy that is already losing momentum. The trade so far is to buy JPY whenever bad news hits, whatever the source, and sell on good news. It looks more likely that economic weakness will force doubling down on policy stimulus and lead to JPY weakness.

 

Australian data have been punching above their weight and may reverse to the downside. Short AUD positions have been cut and there is increasing discussion of a domestic demand driven Australian economy. This flies in the face of Australian integration with China. As a share of GDP, Australia exports more to China than France to Italy and Germany combined. So there is a risk that the strong data are a statistical fluke that will reverse in coming months.

Of course, any of these will merely be met with a plethora of talking heads suggesting that central bankers will re-crank the printing presses… or not this time.


    



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