French protesters, many donning yellow vests, took a bus across the English Channel to protest outside of Julian Assange’s Thursday extradition hearing in London, according to Bloomberg.
Arriving just one day after chaotic May Day clashes with Paris police, the protesters highlighted the growing movement of activists who voicing concern as UK courts gear up to consider a US extradition request for the WikiLeaks founder.
“We came here to show support because Assange represents
part of the information revolution,” said 39-year-old French protester Alice Eff, who said she arrived on an 80-seat bus with other Assange supporters.
WikiLeaks’ release of hundreds of thousands of classified
cables, and war logs from Afghanistan and Iraq had struck a
chord with the movement, she said outside Westminster
Magistrates Court, though there was no formal connection with
the WikiLeaks organization.
American authorities are pursuing extradition so Assange
can face trial on accusations that he conspired with ex-Army
analyst Chelsea Manning to illegally download classified
government material. Eff said she was concerned that the
existing U.S. charge against Assange could be further broadened. –Bloomberg
“We are protesting in France in order to have more democracy and to have more transparency from the government. And that’s what Julian Assange has been fighting for,” one yellow vest protester named Vincent told Sputnik News. “So for us it was obvious to come here and to support him to, just tell him that he is not alone, that there are like hundred thousands of people in France at least and I guess all [over] the world, probably millions, that consider him as a hero for doing what he has done, to sacrifice his own life and his own freedom in order to put out in the public confidential information that… yeah, release critical information that is important for the public to know.”
Assange was arrested by UK authorities on April 11th after Ecuador revoked his political asylum of nearly seven years. He now faces charges in the United States of conspiring with whistleblower Chelsea Manning to break into a Pentagon computer in order to leak classified information. He faces up to 5.5 years in prison if convicted.
The WikiLeaks founder faces another extradition hearing on May 30, and has told the London court that he does not want to be sent to the United States as we reported earlier on Thursday.
Assange, speaking from Belmarsh prison, was wearing a sports jacket and was not handcuffed.
Asked by Judge Michael Snow if he wished to consent to surrender himself for extradition, Assange said: “I do not wish to surrender myself for extradition for doing journalism that’s won many, many awards and affected many people.” -CNN
His appearance came a day after another judge slapped him with a 50-week sentence for skipping bail back in 2012.
As we previewed last night, Wikileaks editor-in-chief Kristinn Hrafnsson said Wednesday that the extradition process is where ‘the real battle begins’ for Assange.
Speaking to CNN after Assange’s bail violation sentencing on Wednesday, WikiLeaks’ Editor-in-Chief Kristinn Hrafnsson said he was “shocked and appalled by this decision to sentence Julian to two weeks short of the maximum sentence for not showing up in court.”
He added that the US extradition claim is “where the real battle begins.”
Assange’s legal team has yet to publicize its defense strategy, but most expect them to argue that the request is politically motivated. Meanwhile, Hrafnsson declared that it’s Wikileaks’ view that the charges cited by the US in the extradition request are merely a ruse, and that Assange will be charged with violating the 1970 Espionage Act once he’s safely on American soil – a charge that could carry the death penalty.
via ZeroHedge News http://bit.ly/2J82RFi Tyler Durden
Just a few short hours after Stephen Moore assured Bloomberg reporters during an interview that “I’m all in” despite the Senate pushback to his Federal Reserve nomination (and notably disagreeing with Trump that a 1% rate-cut was needed), President Trump has just confirmed that Moore has withdrawn his nomination:
Steve Moore, a great pro-growth economist and a truly fine person, has decided to withdraw from the Fed process. Steve won the battle of ideas including Tax Cuts….
….and deregulation which have produced non-inflationary prosperity for all Americans. I’ve asked Steve to work with me toward future economic growth in our Country.
As Jim Rickards previously noted, that if Moore withdraws next or if his nomination is defeated, no worries. There’s some indication that Trump’s next nominee will be Judy Shelton.
She does have a Ph.D. and is a well-known advocate of a new gold standard. Just this Sunday she wrote an article in The Wall Street Journal, “The Case for Monetary Regime Change,” that challenged the current system and defended the classical gold standard.
She has also defended Trump’s trade policies, arguing that those who embrace unfettered free trade dogma “disregard the fact that the ‘rules’ are not working for many American workers and companies.”
For those who wanted Moore to step aside next, the best advice may be “Be careful what you wish for.”
via ZeroHedge News http://bit.ly/2Y0l8Zj Tyler Durden
With stocks headed for their worst daily drop in weeks, leaving all three major indexes on track to finish in the red, the latest widely-hyped unicorn IPO is keeping the trend alive by nearly doubling its IPO price just minutes after its trading debut.
The stock debuted at $25, but was trading at $53 just minutes later.
via ZeroHedge News http://bit.ly/2GORkbc Tyler Durden
Presidential candidate Elizabeth Warren says she wants to make public colleges and universities tuition-free. That is, she wants free college for anyone willing to attend a public higher education institution.
Presumably, an important goal of this policy change — other than getting Elizabeth Warren elected, of course — would be to increase the total number of students that graduate from college.
But is there any reason to believe that “free” college would actually increase graduation rates? Not really. In fact, there are several reasons why the opposite may be true.
Indeed, in many countries with tuition-free college (or ultra-low tuition rates), there are fewer college graduates (proportionally speaking) than in countries with significantly more expensive college costs. This correlation doesn’t prove causation, of course, but when we examine how “free” colleges must control costs, we can see why tuition-free higher education ends up limiting access to higher education.
Where College Is Cheapest — and Most Costly
For a sense of where the net costs of college are the highest, we can consult a 2010 report by Alex Usher and Jon Medow which takes into account all college fees (not just tuition) while also including the availability of government grants which don’t directly subsidize tuition rates. Usher and Medow find, of course, that college is not truly “free” anywhere, although prices are certainly lower some places than others:
Although many Americans are under the impression that higher education is “free” most everywhere outside the US, the fact is only a handful of countries offer tuition-free college. Among large countries with more than ten million people, only France and Germany qualify as “tuition-free.”1 Meanwhile, Japan, Australia, Britain, and Canada all require significant out-of-pocket payments from students. (Moreover, once we get into medium-income countries, it’s important to consider the costs shown above with the local median income. In Mexico, for example, the $8,020 price tag shown here is more than 175% of the median income in Mexico.)
But do lower college fees translate into higher graduation rates, and more education?
Well, we find that the countries with higher proportions of college graduates tend to be countries with higher college costs for students. Japan, Canada, the US, and Britain are all among the most expensive countries in terms of net cost. Yet, these countries all have higher incidence of college completion among residents.
Meanwhile, in France and Germany, the countries with “free” education, the incidence of college completion is much lower:
But how can this be? After all, pundits and politicians often tell us that higher education is open to all in most of the “industrialized world,” and at a very low price.
The problem with this reasoning — and a clue as to why college-completion is lower in the “no-tuition” countries — can be found in the inherent conflict between the two phrases “open to all” and “at a very low price.”
In the real world, no scarce resource can be both open to all, and also very inexpensive.
So, when it comes to higher education in places where institutions are mostly government-controlled, and ultra-low-tuition is mandated, the government must also intervene to restrict access to higher education, and to keep costs low through other means.
These methods include:
Restrict access to higher education through testing and other gate-keeping strategies.
Lower “customer service” quality with larger class sizes and fewer amenities.
The first and easiest thing to do is limit the number of students with admissions standards. This can be done by raising requirements for test scores and mandated course work completed prior to enrollment at a higher education institution. How this is done varies considerably from place to place. Germany, for example, employs a number of fairly robust admissions requirements. France, meanwhile, employs the baccalauréat exam system, designed to reduce the number of people eligible for a college education. As Claire Lundberg at Slatehas described it:
The problem here [from the student’s perspective] isn’t with the cost of the education, but with the huge amount of tracking, testing, and winnowing that is used to help keep the system free. In America, virtually anyone can get a college education so long as they have the money to pay for it. In France, you can get an excellent, free or nearly-free education but often only if you follow a prescribed set of rules and pass a series of grueling tests that often start early in high school.
French teenagers go through their first major career sorting at around age 15, when they decide on an academic or vocational course of study. This choice determines what kind of high-school graduation exam, or baccalauréat, the student will sit for, and to some extent what kind of higher education is open to them. The choice of track is also not entirely up to the students; the head of their lycée, or high school, has the final say. There’s some ability to change tracks, but it’s not particularly easy.
Naturally, if testing can be used to keep potential students out of college, this helps to control costs.
This model of restricted access, however, grows out of both administrative reality and European attitudes toward higher education. Europeans are decades behind the Americans in terms of adopting the idea of “mass education” in which more or less anyone ought to be allowed to enroll at some sort of higher education institution.
Yes, Europeans have adopted the idea of providing an education to all applicants who are “qualified,” but as sociologist Martin Trow puts it, “Universal access to postsecondary education … is not the same as open access to university for those who earn an Abitur or baccalaureate.”
This system of controlled access has endured longer in Europe which has long looked askanse at American populism in higher education. Consequently, higher education in Europe “constitutes a significant entitlement for the mostly middle and upper middle class families whose children go to university, and it is fiercely defended by them and their children.”
In recent decades, political pressure from working-class voters have forced many European gatekeepers of this higher-education system to move more in the direction of true “universal access.” But, it has proven difficult for European states to fund the expansion in higher education resources necessary to accommodate a model like this. In America, where there is more flexibility to raise tuition — and thus to expand buildings, services, and infrastructure in higher education — growth has been substantial, even if tuition rates have also increased considerably. In European no-tuition regimes, on the other hand, the political opposition to raising tuition rates — opposition provided largely by those middle and upper-middle class families who view it as an entitlement — means the problem of “underfunding” has grown “most dramatically in Europe.”3
This means higher education in countries with few-to-no tuition fees are hemmed in financially, and must either continue to limit access to institutions, or they must find ways to reduce costs while admitting more students.
This leads us to a second means of limiting enrollment: lowering quality by limiting access to faculty and staff, and providing lower quality facilities. This in itself often indirectly encourages students to leave after they’ve already been accepted.
In the United States, tuition-dependent schools have an incentive to retain students through better student-teacher ratios, and through what Trow calls “armies of para-educators, professional counselors, deans of student life, remedial specialists, and the like.”
European colleges do not employ such staff in nearly the same numbers, in part because they are less economically dependent on student retention.
In France, for example, making life difficult for students has been a time-honored method of controlling enrollments. Observers speak of “overfilled auditoria, high dropout rates, and fierce competition among students.” Class sizes of 1,500 people are not uncommon.
As one group of researchers noted: “The accessibility of French universities — both from an admissions and financial perspective — paradoxically has had negative consequences on students. In 1968, French Minister of Education Alain Peyrefitte compared undergraduate life in France to ‘organizing a shipwreck to see who can swim.'”
It appears that little has changed since then.
Nor is this experience specific to France. Many European universities — especially in jurisdictions where education is “free,” appear uninterested in catering to the students:
European universities do not feel compelled to spend millions on amenities that have nothing to do with education, such as athletics, climbing walls, and the like. European students see campuses as places to go to study, not to find a spa-like infrastructure.
But, this is all part of a strategy to control costs. Marketplace quotes German professor Frieder Wolf who notes :
“This is not to complain. I love my job and I have a lot of freedom but this is how we keep costs down — larger classrooms,” Wolf says. “We’ve got courses with 40 participants, 50 participants in the social sciences, where [American universities] might have tutorials of four or five students.”
This isn’t to say, of course, that an education can’t be had at any of these institutions. The German model, by the Germans’ own admission is “reliable quality” and they often achieve this goal — even if that means a stripped-down version of what many people (i.e., British and American students) think of as “the college experience.”
We can contrast these systems with American higher education which is far more open, fluid, and customer-oriented.
After all, virtually anyone can go to college in the US at a junior college or community college where tuition is a mere fraction of what it is at the posh liberal arts schools where many students receive grants and take out loans to attend all four years. Class sizes also tend to be quite small at these 2-year colleges where course credit can also later be transferred to 4-year institutions.
Say Goodbye to Open-Access for Everyone
The mistake many proponents of free tuition make is they assume the current American system of highly flexible open-access colleges can be sustained in a system that also offers classes tuition free. They assume class sizes will continue to be relatively small, that current accessibility to faculty can be kept where it is, and that there will be no need to close off opportunities to students who fail to excel in high school.
The reality in “free-tuition” countries often suggests this is unlikely.
Moreover, this sort of rationed higher education means it will be even more difficult for late bloomers and “second chancers” to access higher education. Economic realities will dictate those potential students will be prevented from attending higher education institutions. But they’ll still be taxed for them.
To all of this, some might object and point out that there’s surely a happy medium here somewhere. Perhaps the prudent goal is not “no tuition,” but merely “low tuition.” After all, some countries, like Canada, have quite high degree-completion rates, and also highly subsidize higher education.
But, in most respects, American higher education systems already have the same in most states. The difference in cost, it seems comes not from too little government funding — which is on par with European welfare states— but from high levels of both government and private spending lavished on higher education institutions in the United States. This “extra” cost that must be absorbed by students then goes to athletics, diversity officers, and dorm life. Part of this, as noted above, stems from efforts to increase student retention. But much of it is enabled by America’s odd system of subsidizing colleges through student loans, which means colleges compete more in terms of amenities than through prices.
These latter issues certainly deserve our attention. But the European experience suggests the problems of high prices students now face will hardly be solved by embracing a “free college” model that will serve to only make colleges less responsive to student needs while, ultimately restricting access.
via ZeroHedge News http://bit.ly/2DIn2Gi Tyler Durden
Finally, the New York Times opinion section has acknowledged it has a political conflict of interest. All it took was the brother of its top editor to run for president.
That’s right. New York Times Editorial Page Editor James Bennet, formerly a top editor at the Atlantic who was credited with turning around the magazine, has, according to a statement, recused himself from coverage of the 2020 presidential election now that his brother, Colorado Senator Michael Bennet, has entered the race.
Bennet said Thursday he’s running for the Democratic presidential nomination, offering himself as a centrist alternative to the increasingly leftward tilt of the Democrats vyng to challenge Trump in 2020.
The senator’s announcement made him the 21st Democrat – and seventh sitting senator – to announce his candidacy for the 2020 nomination. Put another way, a full 15% of sitting Democrats in the Senate are now running for president – an unprecedented total, which could create problems for the party’s efforts to, you know, actually legislate during the campaign, with so many members expected to be out on the trail.
We’re at 21 Democrats running with Senator Michael Bennet’s announcement. Will have 22 after Bullock gets in. Maybe we’ll get a late entrance over the summer if the field is still unsettled, but 22 could be the highest number we see pic.twitter.com/AKraHadpTL
— Iowa Starting Line (@IAStartingLine) May 2, 2019
According to the NYT’s statement, Bennet “will not discuss, assign or edit any editorials, Op-Eds, columns or other opinion pieces focused on candidates or major issues in the campaign.”
.@nytimes editorial page editor James Bennet has recused himself from 2020 election coverage following the announcement that his brother Senator Michael Bennet intends to run for president. Full statement follows. pic.twitter.com/w7UiX85gDQ
Of course, the fact that the brother of the NYT’s Opinion pages was a powerful sitting Democratic senator wasn’t a conflict for him, right?
However difficult it might be to believe that, the paper said James, who has been in charge of the NYT’s opinion coverage since 2016, hasn’t been involved with any decisions relating to his brother in the past, either. Deputy editors Kathleen Kingsbury and James Dao will take handle political coverage so long as Michael’s campaign is active (so probably through the Iowa Caucuses, but not much longer).
For those who are unfamiliar with Michael (as most readers probably are), here’s a rundown of his policy platform, courtesy of – who else? – the New York Times.
Immigration
Mr. Bennet may be best known for being part of the so-called Gang of Eight: four Democratic and four Republican senators who negotiated a comprehensive immigration proposal in 2013. The bill, which passed the Senate but not the House, included:
A path to citizenship for undocumented immigrants who passed a background check, paid a fine and back taxes, and learned English.
An expanded visa program for agricultural workers and an expedited path to permanent residency for student visa holders who earned advanced STEM degrees.
A 700-mile border fence, new border-monitoring technologies and about 20,000 more Border Patrol agents.
A stronger system for companies to verify employees’ immigration status.
More recently, Mr. Bennet was co-author of a proposal that would have prevented the government shutdown in December by giving President Trump $25 billion for a border wall in exchange for protections for immigrants who were brought to the United States illegally as children.
Education
Mr. Bennet, a former superintendent of the Denver school system, has focused heavily on education policy in the Senate. “I think we need an education president,” he told The Des Moines Register this year. “There’s no public good that’s more important than education.”
In 2015, he helped write legislation that overhauled the No Child Left Behind Act, transferring some authority from the federal government to the states and reducing the use of standardized tests to evaluate students and teachers.
He has supported expanding Pell Grants and is a co-sponsor of the Finish Act, which would provide funding for colleges and universities to “increase access to higher education for high-need students, increase degree attainment and improve efficiency in our higher education systems.”
In materials provided to The New York Times, his campaign did not make any concrete education proposals but said Mr. Bennet would work to ensure that “college students can pursue their studies without incurring the crushing burden of debt; more people seeking an alternative to college can pursue high-quality apprenticeships and job training; and Americans throughout their lives can advance their careers by improving their existing job skills or learning new ones.”
Climate change
Mr. Bennet is in line with the rest of the Democratic field in calling for recommitting to the Paris Agreement and preserving Obama-era climate regulations that Mr. Trump is reversing. He has also supported regulating methane emissions and creating a standardized metric for the federal government to measure the cost of greenhouse gas emissions.
In March, he helped create the Senate Special Committee on the Climate Crisis, and last month, he was co-sponsor of a bipartisan billthat would provide tax incentives for energy storage.
In other areas, though, he has diverged from the party’s left wing. In a USA Today op-ed essay in 2017, he said some Democrats had played into Republicans’ portrait of them as “job killers fundamentally out of touch with most Americans.”
“It is not enough to call for less coal or oil without having meaningful work to replace lost jobs,” he wrote, and “when Democrats oppose natural gas, we fail to appreciate both its importance to small-town economies and its pivotal role in reducing coal production.”
He also suggested that instead of opposing the Keystone XL pipeline, Democrats should have negotiated a deal that approved the pipeline in exchange for emission reduction measures.
Economics and health care
Mr. Bennet is a co-sponsor of the American Family Act, a Senate proposal that would give every family with children a refundable tax credit of $250 to $300 per month. He also supports expanding the earned-income tax credit.
And his campaign outlined the broad strokes of an economic platform involving infrastructure improvements, high-speed broadband in rural areas, and investments in “advanced manufacturing, artificial intelligence, superconductors and quantum computing.”
via ZeroHedge News http://bit.ly/2GOKcLY Tyler Durden
After waffling between slight gains and losses for most of the morning, stocks have tumbled into the European close, possibly prompted by a story published by Outlook India claiming that trade talks between US and China have hit an impasse.
The drop leaves the Dow on track for its second straight weekly close in the red. And after the late-day tumble on Wednesday prompted by the Fed’s ‘transitory’ hawkishness, stocks are on track to finish lower for the second day in a row.
via ZeroHedge News http://bit.ly/2Vao6h8 Tyler Durden
Oil prices have plunged to one-month lows since President Trump tweeted against OPEC’s “artificially high prices” thanks to soaring inventories and a surprising (high) Russian production print.
The drop was triggered by rising supply concerns (Russia production and US inventories) and demand worries (green shoots in China and US fading fast).
“U.S. inventories have come in quite high and there was already evidence and anticipation that they will be supplying more oil,” said Frances Hudson, a global thematic strategist at Aberdeen Standard Investments in Edinburgh. “I don’t think we’re particularly bullish on prices from here.”
Russia missed a target for production cuts in April, dampening the impact of its agreement with OPEC to prop up prices.
US crude stockpiles are at two-year highs…
“When the U.S. crude-oil warehouses bulge to their highest levels since September 2017, while production continues to set new high-water marks, warning signals should be flashing red,” said Stephen Innes, head of trading at SPI Asset Management.
And don’t forget, speculators are positioned extremely long once again…
via ZeroHedge News http://bit.ly/2LjFQ57 Tyler Durden
It looks like Joe Biden isn’t the chosen one after all.
After getting that whole ‘groping’ thing out of the way and announcing his 2020 bid for the White House, Biden emerged as the Democratic frontrunner this week according to several polls.
Alas for Biden, his past is catching up with him, again.
While Politico and Marketwatch have dinged Biden over free-trade fails and comments on China, perhaps most damning is a late Wednesday article in the New York Times slamming the former vice president’s major Ukraine conflicts. We reported on this nearly four weeks ago following reporting and interviews with key players by The Hill‘s John Solomon, and it looks bad for Joe.
At the heart of the matter is Biden’s role in threatening Ukraine if they didn’t immediately fire their top prosecutor, General Viktor Shokin – who was leading a wide-ranging corruption investigation into a natural gas firm – Burisma Holdings – which Biden’s son, Hunter, sat on the board of directors.
Biden openly bragged about this at a January CFR event.
In his own words, with video cameras rolling, Biden described howhe threatened Ukrainian President Petro Poroshenko in March 2016 that the Obama administration would pull $1 billion in U.S. loan guarantees, sending the former Soviet republic toward insolvency, if it didn’t immediately fire Prosecutor General Viktor Shokin. –The Hill
Biden’s campaign maintains that the former vice president carried out US policy without regard to Hunter’s activities, and that the two never discussed the matter. Biden claims he found out his son was on the board of Burisma “from news reports.” Incredible.
It goes much deeper though…
As the Times notes, “new details about Hunter Biden’s involvement, and a decision this year by the current Ukrainian prosecutor general to reverse himself and reopen an investigation into Burisma, have pushed the issue back into the spotlight.”
Hunter Biden was a Yale-educated lawyer who had served on the boards of Amtrak and a number of nonprofit organizations and think tanks, but lacked any experience in Ukraine and just months earlier had been discharged from the Navy Reserveafter testing positive for cocaine. He would be paid as much as $50,000 per month in some months for his work for the company, Burisma Holdings. –New York Times
HUNTER BIDEN’s partners recruited firms to diffuse Ukrainian investigations into an oligarch whose company was paying Hunter Biden $50k/month.
The cases were closed in 2017, but now they’ve been reopened.@JoeBiden‘s campaign says it’s a political attack. https://t.co/tblUPYPJMG
In fact, the Obama State Department at the time were concerned that Hunter Biden’s work for Burisma would pose a conflict for his father’s diplomatic efforts, according to the report which cites former officials.
“I have had no role whatsoever in relation to any investigation of Burisma, or any of its officers,” said Hunter Biden in a Wednesday statement. “I explicitly limited my role to focus on corporate governance best practices to facilitate Burisma’s desire to expand globally.”
Republicans, meanwhile, have seized – pounced if you will – on the Bidens’ Ukraine conflicts. Leading the charge has been Trump’s personal attorney, Rudy Giuliani, who last week told Fox News “I ask you to keep your eye on Ukraine.”
Mr. Giuliani declined to comment on any such phone call with Mr. Trump, but acknowledged that he has discussed the matter with the president on multiple occasions. Mr. Trump, in turn, recently suggested he would like Attorney General William P. Barr to look into the material gathered by the Ukrainian prosecutors — echoing repeated calls from Mr. Giuliani for the Justice Department to investigate the Bidens’ Ukrainian work and other connections between Ukraine and the United States.
“I can assure you this all started with an allegation about possible Ukrainian involvement in the investigation of Russian meddling, and not Biden,” said Giuliani. “The Biden piece is collateral to the bigger story, but must still be investigated, but without the prejudgments that infected the collusion story.”
For 5 years, HUNTER BIDEN was on the board of a gas company owned by a Ukrainian oligarch accused of enriching himself using his position in the Russia-aligned YANUKOVYCH gov’t.
BIDEN stepped down last month, as his dad was preparing to run for president. https://t.co/tblUPYPJMG
The decision to reopen the Burisma investigation was made in March by Ukraine’s current prosecutor general – who had previously cleared Hunter Biden’s employer over two years ago. The announcement was made following a contentious presidential election, and was seen in some quarters as a bid by the prosecutor general, Yuriy Lutsenko, to curry favor from the Trump administration on behalf of his boss – incumbent president Petro O. Poroshenko.
Poroshenko lost his re-election bid last month to a comedian who played a president on TV, Volodymyr Zelensky – who says he will replace Lutsenko as prosecutor general. Zelensdky has not indicated whether Lutsenko’s replacement will be asked to continue the investigation.
Volodymyr Zelensky, the newly elected president of Ukraine, has not said whether the prosecutors he appoints will be asked to continue to pursue the Zlochevsky investigation.CreditBrendan Hoffman/Getty Images
Kostiantyn H. Kulyk, a deputy for Mr. Lutsenko who was handling the cases before being reassigned last month, told The New York Times that he was scrutinizing millions of dollars of payments from Burisma to the firm that paid Hunter Biden.
…
Hunter Biden’s work in Ukraine appears to have been well compensated. Burisma paid $3.4 million to a company called Rosemont Seneca Bohai LLC from mid-April 2014, when Hunter Biden and Mr. Archer joined the board, to late 2015, according to the financial data provided by the Ukrainian deputy prosecutor. The payments continued after that, according to people familiar with the arrangement.
Rosemont Seneca Bohai was controlled by Mr. Archer, who left Burisma’s board after he was charged in connection with a scheme to defraud pension funds and an Indian tribe of tens of millions of dollars. Bank records submitted in that case — which resulted in a conviction for Mr. Archer that was overturned in November — show that Rosemont Seneca Bohai made regular payments to Mr. Biden that totaled as much as $50,000 in some months. –New York Times
Now to see if Ukraine’s new president, Zelensky, keeps the investigation alive.
via ZeroHedge News http://bit.ly/2Wjf91x Tyler Durden
The fundamental problem for the U.S. consumption dynamic remains the extreme unequal distribution of income in America which means, to a far greater extent than is the case in western Europe or indeed Japan, that America’s middle class has been hollowed out. U.S. real median household income in 2017, the latest data available, was still 0.1% below the previous high reached in 2007 and 1.0% below the all-time high reached in 1999 (see following chart).
As an example of rising stresses, it was interesting to read recently that the Federal Housing Administration (FHA) tightened in March, underwriting standards because of rising delinquencies. Thus the FHA, which insures mortgages for first-time home buyers, told lenders that it would begin flagging more loans as high risk. The FHA reportedly said that those mortgages, many of which are extended to borrowers with low credit scores and high debt payments relative to their income, will now go through a more rigorous manual underwriting process (see The Wall Street Journal article: “FHA clamps down on risky government-backed mortgages” [paywall], March 25, 2019).
U.S. REAL MEDIAN HOUSEHOLD INCOME
Note: Adjusted the levels prior to 2013 based on the 2013 gap between the old data and the new data based on the redesign income questions. Source: U.S. Census Bureau
Similarly, there are growing stresses on auto loan repayments. Thus, the flow into serious delinquency (the share of auto loan balances that newly became 90+ day delinquent) rose to 2.4% in 4Q18, up from a recent low of 1.5% in 4Q12, according to the latest New York Fed’s household debt survey. More interestingly, auto loan borrowers with credit scores less than 620 saw their transitions into serious delinquency rise from 5.5% in 4Q12 to 8.2% in 4Q18 (see following chart).
TRANSITION OF AUTO LOANS INTO SERIOUS DELINQUENCY (90+ DAYS) BY ORIGINATION CREDIT SCORE
Source: Federal Reserve Bank of New York
Meanwhile, the trend in retail sales and U.S. consumer spending on services remains relatively lacklustre. U.S. retail sales rose by 3.6% YoY in nominal terms in March, down from 6.6% YoY in July 2018 (see following chart). While real household consumption expenditure for services rose by 2.4% YoY in 1Q19, down from 4.1% YoY in 2Q15 (see following chart).
As for consumer loan demand, the Fed’s latest quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices shows a net 17.4% and 18.2% of banks reporting weaker demands for credit card loans and auto loans, respectively, in January, up from 4.3% and 1.8% in October (see following chart).
U.S. NOMINAL RETAIL SALES GROWTH
Source: U.S. Census Bureau
U.S. REAL HOUSEHOLD CONSUMPTION EXPENDITURE FOR SERVICES
Fed senior loan officer survey – Net Pct of domestic banks reporting stronger demand for consumer loans
FED SENIOR LOAN OFFICER SURVEY: NET % OF DOMESTIC BANKS REPORTING STRONGER DEMAND FOR CONSUMER LOANS
Source: Federal Reserve – Senior Loan Officer Opinion Survey on Bank Lending Practices
True, the bull story on the American consumer story, which has been acknowledged here previously, is that millennials are now a bigger cohort of the U.S. population than the baby boomers and they have much less debt. “Millennials”, defined as people aged between 19 and 37 (or born from 1982 to 2000), now total 85 million, compared with 74 million baby boomers, defined as those born between 1946 and 1964, according to the Census Bureau’s population estimates (see following chart).
While this is broadly true, save perhaps for student debt, which now totals an enormous US$1.5 trillion, the problem is that the boomers are entering “retirement” with a much greater debt burden than previous generations.
U.S. POPULATION BY AGE AND GENERATION
Source: U.S. Census Bureau
THE BURDEN OF DEBT FOR AGING AMERICANS
Americans who are 60 or older owed about US$615 billion in credit cards, auto loans, personal loans and student debt as of 2017, up 84% since 2010, the biggest increase of any age group, according to the TransUnion data compiled for The Wall Street Journal (see The Wall Street Journal article: “Over 60, and crushed by student loan debt” [paywall], Feb. 2, 2019).
Student loan borrowers in their 60s, for example, owed an average US$33,800 in 2017, up 44% from 2010. So, student debt is spread across age groups. Thus, the New York Fed data shows that 6.5% of the student loans were owed by Americans aged 60 or above at the end of 2018, up from 1.8% in 2004 (see following chart). Indeed such data is why many baby boomers cannot afford to retire, assuming they want to.
SHARE OF STUDENT LOANS BY AGE GROUP
Source: Federal Reserve Bank of New York Consumer Credit Panel / Equifax
CAN STRONG WAGE GROWTH BALANCE OUT DEBT?
The conclusion from all of the above is that the resilience of U.S. consumption should not be taken for granted despite the seeming improving trend in wage growth. U.S. average hourly earnings growth for private employees rose from 2.3%YoY in October 2017 to 3.4%YoY in February 2019 and was 3.2%YoY in March (see following chart).
Meanwhile, the capex trend remains far from robust while share buybacks have continued to surge. Indeed surging share buybacks have been the chief beneficiary of Donald Trump’s tax reform. In terms of capital spending, real non-residential private fixed investment, excluding mining investment, rose by 4.6%YoY in 1Q19, down from 6.6%YoY in 4Q18 (see following chart).
S&P500 share buybacks rose by 63% YoY to US$223 billion in 4Q18, the fourth consecutive record high. For the whole year, S&P500 share buybacks increased by 55% to a record US$806 billion in 2018, 37% above the previous record of US$589 billion reached in 2007 (see following chart).
U.S. AVERAGE HOURLY EARNINGS GROWTH FOR PRIVATE EMPLOYEES
Source: US Bureau of Labour Statistics
U.S. REAL PRIVATE NON-RESIDENTIAL FIXED INVESTMENT EXCLUDING MINING INVESTMENT
Source: CLSA, Bureau of Economic Analysis
S&P500 SHARE BUYBACKS
Source: S&P Dow Jones Indices
CONTINUING DECLINE IN SMALL BUSINESS OPTIMISM
The other point to be aware of is the renewed decline in America’s NFIB Small Business Optimism Index after the spike to an all-time high which occurred last year followed Trump’s tax reform, higher than under Ronald Reagan in 1980s.
The index peaked at 108.8 in August 2018 and has since declined to a two-year low of 101.2 in January and was 101.8 in March. It is interesting to note that within the aggregate index, the components measuring capital spending plans and hiring plans are trending down again. Thus, the capex plans and hiring plans components declined from 33% and 26% in August 2018 to 27% and 18% in March. This needs to be watched closely in coming months.
U.S. NFIB SMALL BUSINESS OPTIMISM INDEX
Source: CEIC Data, National Federation of Independent Business (NFIB)
All of the above suggests there is a lot of potential for U.S. data to weaken in the coming quarters regardless of what happens on the U.S.-China trade dispute. If this is yet another reason for the Donald not only to agree to a deal, but also to drop the existing tariffs, it is also the case that the American president will be quick to blame the Fed if the U.S. data does indeed start to disappoint. That will, in turn, create political pressure on the Powell Fed to do what it is going to do anyway sooner or later, which is to cut interest rates.
What about the risk that the Donald’s continuing pressure on the Fed, with his comments in early April that the Fed should “drop rates”, will stop Powell from acting for fear that he no longer looks “independent”? I would not be concerned. The Fed has never in reality been “independent” of the executive, even allowing for the vaunted separation of powers under the American constitution. The reality is that G7 central banks are no more “independent” than central banks in the emerging world but their policies are a lot less orthodox than their emerging market counterparts!
via ZeroHedge News http://bit.ly/2Y28gln Tyler Durden
Refusing to allow the fact that AG Barr chose not to attend today’s Mueller Report hearing, angry Democrats took full advantage of the photo-op to conjure images of a terrified attorney general cowering from the truth and protecting a clearly guilty-of-something president.
Despite Barr’s decision last night not to attend, because he objected to Democratic demands that their staff counsel be able to question him, Democrats went forward with the theater of the hearing anyway, setting up an empty chair for the absent attorney general.
As The Hill reports, Rep. Steve Cohen (D-Tenn.) brought a bucket of Kentucky Fried Chicken to the morning event, and accused Barr of being a coward after it ended.
Rep. Steve Cohen brought a bucket of Kentucky Fried Chicken to today’s hearing, apparently to suggest that Barr is afraid to testify.
Via CSPAN pic.twitter.com/g3XOIedYqR
House Judiciary Chairman Jerrold Nadler (D-N.Y.) tore into Barr, accusing him of failing to check President Trump’s “worst instincts” and misrepresenting Mueller’s findings.
“He has failed the men and women of the Department by placing the needs of the President over the fair administration of justice,” Nadler said. “He has even failed to show up today.”
Republicans did not take it lying down with Rep. Matt Gaetz (R-Fla.) noted vociferously that “Judiciary Democrats say AG Barr is “terrified.” Yesterday he testified for over five hours in an open hearing. Today, they cut off my microphone.”
Judiciary Democrats say AG Barr is “terrified.” Yesterday he testified for over five hours in an open hearing.
And, Rep. Doug Collins (R-Ga.) accused Nadler of staging a “circus political stunt” and said the Democratic chairman wanted the hearing to look like an impeachment hearing.
“That is the reason. The reason Bill Barr is not here today is because the Democrats decided they didn’t want him here today. That’s the reason he’s not here,” Collins said. “Not hearing from him is a travesty to this committee today.”
Nadler concluded the hearing after a half an hour by demanding the Justice Department provide the committee access to Mueller’s unredacted report and underlying evidence. Nadler has threatened a contempt citation against Barr if he doesn’t meet Democrats’ demands.
“We need the information without delay,” Nadler said in closing. “The hearing is adjourned.”
Or what?
via ZeroHedge News http://bit.ly/2GXBg88 Tyler Durden
