Category: zerohedge

Authored by Kerry McDonald via The Foundation for Economic Education,

It’s like something out of The Onion: city manager shuts down preschool farm stand out of fear that, if allowed, “we could end up with one on every corner.”

Farm Stand Shut Down

Alas, this is not satire. It’s the current predicament facing the Little Ones Learning Center in Forest Park, Georgia, just outside of Atlanta. In an area where access to fresh fruits and vegetables can be limited, this preschool has stepped up to prioritize growing and selling fresh produce from its school gardens. According to recent reporting in the Atlanta Journal-Constitution, Little Ones has often sold its produce with generous discounts to local food stamp recipients and other neighbors and has been acknowledged as a leader in the farm-to-school healthy food movement.

That is, until the city shut down the bi-monthly farm stand program last month for zoning violations.

Despite protests from community members, city officials are holding firm to their stance that allowing one farm stand could lead to an unruly proliferation of fresh produce.

“Anywhere you live, you’ve got to have rules and regulations,” Forest Park City Manager Angela Redding said.

“Otherwise, you would just have whatever,” the Atlanta Journal-Constitution reported.

That “whatever” is exactly the hope and promise that irks central planners. Whatever symbolizes what is possible when individuals and organizations spontaneously create new streams of value for their neighbors. Whatever are opportunities for mutual gain through voluntary exchange. Whatever are new inventions, new services, and new ways of living and being that augment our existence and improve our future. Whatever is freedom.

Central Planners Are Threatened by Freedom

Freedom is the threat. Central planners are uneasy with spontaneous order, or the decentralized, peaceful process of human action that occurs when individuals follow their diverse interests in an open marketplace of trade. A preschool finds it beneficial for their students, parents, employees, and neighbors when they emphasize immersive gardening, sustainably-grown produce, and farm stand commerce. Students enjoy it, parents value the experience for their children, teachers choose to work in this farm-focused environment, and neighbors are willing to pay for the garden bounty from a twice-per-month farm stand. It is a beautiful example of the beneficial gains achieved through free markets.

That is, until the city’s central planners intervened out of fears that allowing one neighborhood farm stand to operate could lead to many, un-zoned farm stands. This is particularly poignant given that this preschool is located in one of the most disadvantaged counties in Atlanta. Little Ones preschool director Wande Okunoren-Meadows told Mother Nature Network: “According to the United Way, Clayton County has the lowest child well-being index out of all the metro Atlanta counties…So if we’re trying to move the needle and figure out ways to improve well-being, I’m not saying the farm stand is the only way to do it, but Little Ones is trying to be part of the solution.”

Zoning is often considered to be a protection mechanism, ensuring that neighborhoods remain orderly and livable. Yet, zoning laws in this country have a long history of racist tendencies. Granting power to government officials to control housing, commerce, and neighborhood development has previously led to unfair practices and unfavorable results. Decentralizing that power by eliminating questionable zoning practices can ensure that power is more justly distributed among the individual citizens of a particular community.

In the case of the Little Ones preschool, power would shift from city planners to local neighbors and businesses.

The city has offered Little Ones an opportunity to hold their farm stand in another part of town, but it is far away from the preschool and its neighborhood. City officials also said that Little Ones could pay $50 for a “special event” permit for each day it hosts its farm stand—a fee that is prohibitively expensive for the school and its small produce stand. For now, the school is selling its fruits and vegetables inside the building, but the indoor location is leading to far fewer sales as passersby don’t realize it’s there. The Little Ones parent and educator community is hoping that the city rules can be changed to allow for occasional outdoor farm stands.

Cases like Little Ones preschool expose the deleterious effects of zoning regulations.

“It’s like shutting down a kid’s lemonade stand,” Okunoren-Meadows says. “Nobody does this. It just shouldn’t happen,” the preschool director told Mother Nature Network.

Sadly, children’s lemonade stands are also routinely shut down for similar reasons, often with the same outrage.

We should be outraged when young entrepreneurs are prohibited from producing and selling something of value to their neighbors due to restrictive regulations that centralize power and weaken neighborhood dynamism. Some states, like Utah, are passing laws to protect young entrepreneurs from these zoning and licensing challenges. The key is to look beyond preschool farm stands and advocate for more freedom for all.

Several rockets were fired at Baghdad’s fortified Green Zone overnight, and landed near the sprawling US embassy in Iraq, according to defense officials cited in international reports, in the second such attack since May.

At least two Katyusha rockets landed near the embassy shortly before midnight, according to the AFP, which further cited a security source which described, “One hit about three metres [10 feet] inside a gate on the embassy compound.”

During the attack “several rockets” had been reported, which appeared clearly intent on hitting the American compound, though there were no casualties or significant damage as a result. 

Over the past months occasional rocket attacks on or near the embassy compound have underscored soaring tensions between US coalition forces and pro-Iran Iraqi Shia paramilitary groups (Popular Mobilization Forces, or PMF). This after US forces have been accused of turning a blind eye following a series of alleged Israeli airstrikes on ‘Iran-backed’ bases in Iraq. 

There was no immediate claim of responsibility for the rocket attack, but US officials have pointed the finger at militants backed by Iran after previous similar events, especially given broader regional tensions wherein Iran has claimed itself capable of striking any regional US base or aircraft carrier. The IRGC has lately vowed that any US military action against Iran, even if “limited” retaliation for the Aramco attacks, would result in “all-out war” — with American troops and assets in the region the first in the cross hairs. 

The US coalition in Iraq issued a statement Tuesday saying it “would not tolerate” any attacks on the fortified Green Zone – an area which houses western diplomatic buildings and international institutions. 

The overnight Monday attack also comes as the UK, France and Germany joined the United States in condemning Iran for the Sept. 14 twin aerial strikes on Saudi Aramco facilities.

Currently there’s also a movement gaining ground in Iraq’s parliament to expel the American ‘anti-ISIL’ coalition from the country, given the Islamic State’s recent demise as well as controversial attacks on weapons depots widely blamed on Israel. 

Authored by Sven Henrich via NorthmanTrader.com,

Risk happens fast, especially when markets run on hopium with extended valuations.

Whether today’s news headlines that Democrats will be opening an impeachment inquiry into President Trump will be a trigger with a lasting market impact is too early to tell. After all markets have been quick to ignore all surprises as of late, the attack on the Saudi oil platform, the sudden and hectic repo operations by the Fed, negative economic data here and abroad.

But as I said in Playing with Fire: At 144% market cap to GDP US markets remains priced to perfection in an increasingly imperfect world making markets accident prone to unexpected events. Markets need sustained new highs or face technical consequences.

Fact is markets didn’t make new highs despite popular calls for an imminent market break out:

Incidentally the bear case is by far the most contrarian view out there. That doesn’t mean it’s the right case, but fwiw here’s a sentiment check: pic.twitter.com/JHrfwV9WsA

— Sven Henrich (@NorthmanTrader) September 21, 2019

And that may bring about technical consequences. Recall last year markets peaked during September OPEX week and may have done so again with a slightly lower high versus July:

And by doing so markets have opened up the prospect of a double top and a failed back test as outlined in the Bear Case.

The volatility structure has remained in clean form throughout the summer.

Now as far as political triggers are concerned there is very little visibility on how they can turn out. While the political attention on impeachment is focused on the US it may also have international consequences. Perhaps the pertinent question to ask is: How will the Chinese react?

A president under a formal impeachment process is something the Chinese may want to wait out until the dust settles. The US election is barely 14 months away, an impeachment process can drag out for months.

No situation is alike, but here’s the timeline during the Nixon hearings:

Obviously this impeachment process may lead nowhere and conventional wisdom currently presumes that any impeachment process will end in the House and it faces instant death in the Senate. That is probably the default position, but then again one can’t know what facts come to light during an actual impeachment hearing. Nixon hung on for months and only when the facts revealed themselves did the public mood change and his congressional support abandoned him.

But what an impeachment process at this stage will introduce is a new element of uncertainty into an already fragile global economic backdrop. What will the Chinese do? Markets, having run toward all time highs again on trade optimism headlines may be ill prepared for trade negotiations to again produce no results in October.

Bulls now have failed twice to break through $SPX 3,000 and above. Identified as a sell zone in the summer this area has now confirmed as a sell twice. Bulls have a lot to prove now in an environment that has just become a lot more uncertain. Two rate cuts and nothing to show for.

But bears have little to celebrate either as no major breakdown is confirmed yet. But bulls are on notice. Watch this space. Market just got interesting.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

Democratic Leader Nancy Pelosi is expected to rally Democratic members of the House for a press conference late Tuesday afternoon to launch an investigation into whether Trump should be impeached.

The House leader will also address other issues facing Democrats and Republicans, including climate control and their electoral strategy for the 2020 vote.

Pelosi said earlier that: “Later today I will make an announcement after I meet with my chairmen, my leadership and my caucus.”

Pelosi has resisted Trump’s impeachment for the duration of his first term, but with the rise of more left-leaning Democrats in the House, it’s looking like an issue that Pelosi can no longer afford to ignore, according to CNBC News.

She is also expected to make a statement at 5 pm ET, following meetings with congressional leadership and her caucus.

More than a dozen Democrats have come out in favor of impeachment within the past week, following bombshell reports that Trump had reportedly asked Ukraine President Volodymyr Zelensky to investigate political rival Joe Biden’s son, Hunter Biden, during a phone call back in July.

Meanwhile, House Intelligence Chairman Adam Schiff  tweeted: “We have been informed by the whistleblower’s counsel that their client would like to speak to our committee and has requested guidance from the Acting DNI as to how to do so. We‘re in touch with counsel and look forward to the whistleblower’s testimony as soon as this week,” according to Axios.

We have been informed by the whistleblower’s counsel that their client would like to speak to our committee and has requested guidance from the Acting DNI as to how to do so.

We‘re in touch with counsel and look forward to the whistleblower’s testimony as soon as this week.

— Adam Schiff (@RepAdamSchiff) September 24, 2019

Watch her speech live below:

Surprisingly, the odds of Trump surviving his first term fell by more than 20 percentage points in recent days as more Democrats turned to supporting the issue, unconcerned about its impact on the election. 

But the investigation launch isn’t the only thing happening in Congress: The House will on Wednesday vote on a resolution making clear Congress’s disapproval of the Trump administration’s effort to block the release of a whistleblower complaint, House Democratic leaders said in a statement, according to Reuters.

Pelosi/Hoyer announce a Weds floor vote on a resolution relating to the Ukraine whistleblower complaint.

Nonbinding. Just makes a statement. But it puts Republicans on the spot re: voting to demand the release of the whistleblower complaint. pic.twitter.com/zYoTzQiJbH

— Jennifer Bendery (@jbendery) September 24, 2019

Republicans killed another Democratic attempt to impeach Trump early this year, but it didn’t make it out of the House.

Authored by Michael Snyder via The Economic Collapse blog,

Economists are already predicting “the world’s lowest growth in a decade”, but it is beginning to look like what we will be facing will be much worse than that. 

In recent days, numbers have been coming in from all over the planet that are absolutely abysmal.  The “global economic slowdown” is rapidly transitioning into a new global economic crisis, and central banks seem powerless to stop what is happening.  They have already pushed interest rates to the floor (actually below the floor in many cases), and over the past decade they have absolutely flooded the global economy with new money.  But despite all of this unprecedented intervention, economic conditions are deteriorating at a pace that is breathtaking.

Let’s start by taking a look at what is happening in India.  According to CNN, vehicle sales in India fell a whopping 31 percent in July…

Just two years ago, India’s huge car market was booming and global players were rushing to invest. Now it’s been slammed into reverse.

Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It’s the ninth straight month of declines and the sharpest one-month drop in more than 18 years, SIAM Director General Vishnu Mathur told CNN Business.

Those are numbers you would expect to see if we were in the middle of a full-blown economic depression, and it is being projected that this downturn “could result in a million people being laid off”…

The slump has prompted companies to slash over 330,000 jobs through the closing of car dealerships and cutbacks at component manufacturers, Mathur said, citing data from industry associations that govern those two sectors.

The Automotive Component Manufacturers Association of India warned in a statement last month that its “crisis-like situation” could result in a million people being laid off.

A million jobs is very serious.

And we are talking about just one industry in one country.

How many jobs will ultimately be lost all over the world in the months ahead?

Over in China, the auto industry is also deeply struggling…

China’s Geely (GELYF) revealed this week that its net profit probably plunged by 40% in the first half of the year as the world’s second largest economy slowed. In June alone, its car sales fell 29%.

That isn’t supposed to happen in China.

For decades, China has been one of the primary engines of global economic growth, but now things have changed dramatically.

Perhaps you can blame the trade war for what is happening in China, but the auto industry is also in big trouble in Europe.  In fact, some of the biggest automakers in the world are closing European factories and ruthlessly slashing jobs…

Ford is cutting 12,000 jobs and closing six plants in Europe, including an engine factory in the United Kingdom. Jaguar Land Rover, which is owned by India’s Tata Motors (TTM), is slashing 4,500 jobs. Honda is also closing a plant in the United Kingdom.

If those companies expected the European economy to bounce back in the foreseeable future, they would not be making such moves.

But just like you and I, they can see what is happening to Europe’s economy, and on Monday we just received some more deeply troubling news.  The following comes from Zero Hedge…

Weakness in euro-area manufacturing hit a climax this morning as German private sector activity plunged to a seven-year low. The Germany Manufacturing PMI slumped in September, dropping to 41.4, down from 44.7 in August, printing below the lowest sellside estimate (consensus of 44.4); worse, the German manufacturing recession is now spreading to the services sector, where the formerly resilient services PMI also slumped from 54.8 to 52.5, also missing the lowest analyst estimate, and collectively, resulting in the first composite PMI print below 50, or 49.1 to be precise, since April 2013. The rate of decline was one of the sharpest in seven years.

It appears that the German economy has already entered recession territory, and these new numbers are not causing anyone to be optimistic.

In fact, “abysmal” is hardly strong enough to describe these absolutely horrible figures…

• Flash Germany PMI Composite Output Index (1) at 49.1 (Aug: 51.7). 83-month low.

• Flash Germany Services PMI Activity Index(2) at 52.5 (Aug: 54.8). 9-month low.

• Flash Germany Manufacturing PMI(3) at 41.4 (Aug: 43.5). 123-month low.

• Flash Germany Manufacturing Output Index(4) at 42.7 (Aug: 45.8). 86-month low.

Of course the U.S. economy has been slowing down for quite some time now, and if you doubt this, I encourage you to read this list of 28 alarming facts about our economy that I posted earlier this month.

We haven’t seen economic conditions like this in the United States since the depths of the Great Recession, and many believe that what is coming will be far worse than the last time around.

And we may be deep into the coming crisis far sooner than many were expecting.  In fact, David Rosenberg of Gluskin Sheff is adamant that there is “a recession coming in the next 12 months”…

David Rosenberg, the Gluskin Sheff chief economist and strategist, is warning that a recession is coming. Rosenberg says economic growth in the United States will turn negative sooner than most investors anticipate and the Federal Reserve is powerless.

Even if the central bank lowers interest rates to zero, a recession will still grip the U.S. within 12 months, Rosenberg predicts. “There’s a recession coming in the next 12 months,” he stated with fact last Thursday on CNBC’s “Futures Now. The Fed just lowered its benchmark interest rate last Wednesday by a quarter-point and Fed Chairman Jerome Powell signaled rates would only be cut again if there’s new evidence the economy is softening.

If things really start to deteriorate in the months ahead, we could be in the midst of a horrible economic downturn by the time the U.S. presidential election rolls around.

Let us hope that is not the case, but right now things certainly do not look good for the U.S. economy or for the global economy as a whole.

Oil prices tumbled today on the heels of Saudi production headlines (supply) and Trump’s negative tone towards China (demand), however, not everyone was buying what the Saudis were selling.

“The current timetable is overly optimistic,” said Joe McMonigle, an analyst at Hedgeye Risk Management and former vice chairman of the International Energy Agency. The kingdom probably won’t achieve full capacity “until the end of the year at the earliest.”

So once again all eyes (and algos) will be on the inventory data…

API

• Crude +1.38mm (-600k exp)

• Cushing +2.3mm

• Gasoline +1.9mm

• Distillates -2.2mm

After last week’s surprise crude and gasoline inventory build, analysts have shrunk their estimates for the latest week but were wrong again as API reported a surprise 1.38mm barrel rise in crude inventories. Cushing saw a major rise in stocks…

Source: Bloomberg

WTI hovered around $57 ahead of the data, and extended losses after the second surprise build in a row…

Meanwhile, as Bloomberg details, cash-market San Francisco gasoline traded at near a seven-year high Tuesday and $4/gal retail gasoline “may be on the table” due to refinery issues, Patrick DeHaan, GasBuddy petroleum analysis director, says.

Source: Bloomberg

 

 

 

It’s not just corporate insiders of publicly traded companies who are dumping stocks at a feverish pace: private equity also would be… if of course the equity wasn’t “private.” Stephen Schwarzman, the CEO of Blackstone – the world’s largest private equity firm – warned Monday that the inflating bubble in asset values “could lead to a painful reckoning, particularly for late-stage investors in private technology companies like WeWork parent We Co.”

Speaking to the WSJ, Schwarzman said that orivate valuations are getting “very high”, adding that later-stage funding rounds in companies planning initial public offerings were helping to escalate those values, even for companies that often have little prospect of profitability. Case in point: WeWork, whose disastrous IPO, and whose valuation collapse from $47 billion to less than $10 billion, coupled with mass layoffs, demonstrates what happens when there are no more greater fool.

For those confused, a company went from a $47bn valuation to mass layoffs and CEO termination because it ran out of greater fools

— zerohedge (@zerohedge) September 24, 2019

“That’s the greatest risk,” Schwarzman said in response to a question about patterns he sees developing in the market.  “These valuations of private tech companies are most probably too high,” he said, adding some people will lose money as a result.

Schwarzman listed SoftBank’s catastrophic investments We and Uber Technologies as examples of overly high valuations, and likened the situation to the dot-com bubble around the turn of the century.

Then again, the bad blood between VCs cashing out from overvalued investments, and PE firms trying to buy (or sell) companies at a time of record high EBITDA multiples is hardly new.

Alternatively, VCs will be happy to counter that whereas their investment create jobs, PE portfolio names merely saddle firms with massive debt loads, forcing them to fire millions of workers as they cut into both the fat and muscle, and strip their investments to the bone. Blackstone however, would have none of it: asked about the battering the private-equity industry has been taking this year by politicians in Washington, D.C., and on the presidential campaign trail, Schwarzman said much of the criticism doesn’t reflect facts.

Arguing that buyout firms “typically invest to grow portfolio companies and improve profitability”, which results in increased payrolls rather than job cuts, Schwarzman pointed out that Blackstone portfolio companies created about 100,000 jobs over the past decade. Of course, here one can point out there some of the biggest defaults in the past two decade have been the mega LBOs which, due to record debt loads, ended up in Chapter 11 or Chapter 7, firing most of their workers, but not before the PE sponsors made out like bandits on their investment.

He added that Blackstone buys an asset to “make it better so it can make more money and grow faster,” he said. “To make a company grow quickly, you don’t cut your way forward. You have to invest.”

Ironically, in a time of collapsing CapEx and massive buybacks and dividends debt deals, nobody is actually investing and everyone is “cutting” their way forward.

Defending his track record, Schwarzman also pointed to the contribution private-equity firms have made to the U.S. retirement system, through managing investments from institutional investors such as pension funds and life insurers. In all, he said, the industry has invested about $3 trillion over the past five years.

It remains to be seen what the IRR on those $3 trillion will be after the coming market crash.

What started off as a positive day thanks to overnight algos liftathon after TSY Secretary Mnuchin spoke on Fox Business and broke old news about China talks, ended up rather ugly as the triple whammy of consumer confidence crumbling, Trump talking down China in his UN speech, and battling impeachment headlines sparked risk-off moves in stocks and a bid for bonds and gold.

What the algos saw…

• 1605ET BUY – Mnuchin on China Vice Premier talks.

• 1000ET SELL – Cons Confidence.

• 1020ET SELL – Trump dissing China at UN

• 1210ET SELL – Pelosi says she will make an announcement, Impeachment fears rise.

• 1410ET BUY – Trump to release transcript of Ukraine call, reducing impeachment odds.

• 1440ET SELL – Pelosi formal impeachment headlines.

• 1544ET BUY – Kashkari pushes 50bps rate cut

However, as @Sentimentrader noted, the outcome of impeachment inquiries is uncertain…

All of which makes you think…

 

Small Caps and Nasdaq were the day’s worst performers…

 

Nasdaq and Small Caps broke below the key 50DMA and tested the 100DMA…

Momentum stocks were manically bid early on…

Source: Bloomberg

“Most Shorted” stocks were hammered from the open and basically never looked back…

Source: Bloomberg

China stocks ramped overnight early on the Mnuchin trade headlines…

Source: Bloomberg

European stocks opened higher also, but faded as confidence data and Trump UN speech hit…

Source: Bloomberg

Treasury yields plunged today (down 8-10bps across the curve) – biggest yield drop in a month…

Source: Bloomberg

30Y Yields are now down 6 of the last 7 days, testing back towards 2.00%…

Source: Bloomberg

The yield curve collapsed today…

Source: Bloomberg

The Dollar plunged today back into the range…

Source: Bloomberg

Yuan tossed and turned on the heels of the China headlines…

Source: Bloomberg

Cryptos were a bloodbath…

Source: Bloomberg

With Bitcoin back to $8500…

Source: Bloomberg

Mixed bag in commodityland today with gold outperforming as silver, crude, and copper dropped…

Source: Bloomberg

WTI tumbled further today on Saudi production headlines…

Gold jumped back up above $1540…

Finally, it looks like we’re gonna need some more liquidity to keep this potemkin stock market alive…

Source: Bloomberg

Because fun-durr-mentals won’t do it…

Source: Bloomberg

 

After spitting venom at millionaires until he became one, Sen. Bernie Sanders (I-VT) has a new target: billionaires. 

On Tuesday, Sanders rolled out an ‘ambitious’ plan to tax the nation’s ultra-rich, going far beyond his Democratic primary rival Elizabeth Warren’s proposed wealth tax with what Sanders says would cut American billionaires’ fortunes in half over 15 years. 

while Ms. Warren came first, Mr. Sanders is going bigger. His wealth tax would apply to a larger number of households, impose a higher top rate and raise more money.

Mr. Sanders’s plan to tax accumulated wealth, not just income, is particularly aggressive in how it would erode the fortunes of billionaires. His tax would cut in half the wealth of the typical billionaire after 15 years, according to two economists who worked with the Sanders campaign on the plan. Mr. Sanders would use the money generated by his wealth tax to fund the housing plan he released last week and a forthcoming plan for universal child care, as well as to help pay for “Medicare for all.” –NY Times

Sanders’ plan would impose a graduated tax of 1% on assets over $32 million, 2% for households worth $50 – $250 million, 3% from $250 million to $500 million, 4% from $500 million – $1 billion and finally 8% on wealth over $10 billion. Over a decade, the tax would raise an estimated $4.35 trillion (less whatever can’t be recovered from all the money quickly funneled into offshore trusts). 

Moreover, the estate tax rate would begin at 45% for assets over $3.5 million, rising to 77% for those with over $1 billion – a proposal which Sanders says would apply to 0.2% of the population. 

Sanders’ campaign said his wealth tax would slash U.S. billionaires’ wealth in half in 15 years, “which would substantially break up the concentration of wealth and power of this small privileged class.”

“Enough is enough,” Sanders, a Vermont senator, said in a statement. “We are going to take on the billionaire class, substantially reduce wealth inequality in America and stop our democracy from turning into a corrupt oligarchy.” –Bloomberg

“Let me be very clear: As president of the United States, I will reduce the outrageous and grotesque and immoral level of income and wealth inequality,” Sanders told the Times, adding “What we are trying to do is demand and implement a policy which significantly reduces income and wealth inequality in America by telling the wealthiest families in this country they cannot have so much wealth.”

Asked if he thinks billionaires should exist in America, Sanders said “I hope the day comes when they don’t,” adding “It’s not going to be tomorrow.”

2015: MILLIONAIRES ARE EVIL

2016: MILLIONAIRES AND BILLIONAIRES ARE EVIL

2017: MILLIONAIRES AND BILLIONAIRES ARE EVIL

*becomes millionaire*

2019: BILLIONAIRES ARE EVIL pic.twitter.com/qS6dmL8VIN

— Razor (@hale_razor) September 24, 2019

As the Times notes, “As appealing as a wealth tax might sound for the party’s liberal base, enacting it would pose major challenges. Anyone lucky enough to be in its sights has access to top tax lawyers and accountants who can sift through the tax code for a way out, or at least a means of minimizing the hit.”

Warren’s proposal, meanwhile, would impose a 2% tax on wealth over $50 million – or the top 70,000 families in the country. For someone with $100 million in assets, Warren’s plan would cost them $1 million per year. Fortunes over $1 billion would be subject to an additional 1% annual surcharge. Her plan also includes expanding the estate tax – which would begin at 55% and rise to 75%. 

Authored by Celine Ryan via Campus Reform,

The University of California system has announced its intention to completely divest from fossil fuels. 

Officials in charge of investments insist that their decision to move toward more “sustainable” and environmentally conscious investments is simply in the practical interest of beneficiaries, rather than a product of political opinion.

In an opinion piece in the Los Angeles Times, UC chief investment officer and treasurer Jagdeep Singh Bachher and chairman of the UC Board of Regents’ Investments Committee Richard Sherman reasoned that “hanging on to fossil fuel assets is a financial risk.”

“That’s why we will have made our $13.4-billion endowment “fossil-free” as of the end of this month, and why our $70-billion pension will soon be that way as well,” the officials explained in the September 17 op-ed.

Sherman and Bachher deny that their decision was “born of political pressure,” or that it is a result of “green movement idealism.” Instead, they insist that it is based on a “sustainable investing” approach. 

“Today, we are on track to beat our own five-year goal of investing at least $1 billion in climate change solutions and, by incorporating environmental, social and governance factors — ESG factors — into our investment decision-making, we’ve become better stewards of university funds,” the officials explained.

Sherman and Bachher boast that they drove UC to become the first U.S. public university to sign onto the U.N’s Principles for Responsible Investing, a commitment by institutional investors to act in the “long-term interests” of their beneficiaries by incorporating “environmental, social, and corporate governance (ESG) factors” into investment decisions.

The commitment consists of six principles to guide investment decisions including to “incorporate ESG issues into investment analysis” to “seek appropriate disclosure on ESG issues by the entities in which we invest,” and to “promote acceptance and implementation” of the listed principles.

The investors emphasize that they are not driven by political reasonings, but that they are led to the same decision that they might be if that were the case. Regardless of political motivations, they say that they sold $150 million in fossil fuel assets because they “posed a long-term risk.”

“While our rationale may not be the moral imperative that many activists embrace, our investment decision-making process leads us to the same result. We’re in the business of helping to ensure the financial viability of a great university whose stakeholders frequently come at an issue — even one as terrifyingly consequential as climate change — from different perspectives,” the pair wrote.