Most Americans probably haven’t heard of the Posse Comitatus Act. But the federal law, passed in 1878, bars active duty troops from being used as police within the borders of the US. And some Democrats believe that the 5,000+ troops station along the southern border are in violation of the law, despite the Trump Administration’s claims that they’re only there to “support” the CBP personnel.
But in recent weeks, troops have been stationed inside a migrant detention facility in Donna, Texas. They were initially deployed there to perform welfare checks – the troops are allowed to perform emergency medical care – but their duties have ‘evolved’ to include acting as de facto prison guards, something that would be a clear violation of Posse Comitatus, NBC reports.
Rep. John Garamendi, D-Calif., who chairs the House Armed Services Committee Subcommittee on Readiness, says having active duty troops monitor migrants is “teetering on the edge of the posse comitatus law.”
“It’s not the role of the U.S. military to be a prison guard,” he said. “This is certainly mission creep” and could put U.S. military service members “in a precarious legal situation.”
One former defense official told NBC that monitoring migrants is probably “a bridge too far.” If soldiers tried to break up a fight, they’d be in clear violation of the law.
Right now, interactions between the troops and migrants are limited “as much as possible,” said John Cornelio, particularly at the detention facility where troops are now stationed.
“At the Donna Facility specifically,” said Cornelio, “unarmed military personnel monitor the migrants for signs of medical distress, possibility for unrest, unusual behavior and unresponsiveness. In the event of a medical emergency or other reportable event, our military personnel immediately notify CBP personnel on-site who respond to the incident or event in question.”
“Monitoring the wellness of migrants is not a law enforcement function, and this activity has been reviewed by our legal staff to ensure compliance with the Posse Comitatus Act and applicable law. CBP personnel are always present to provide force protection, physical security and perform their law enforcement duties.”
One defense official told NBC that the troops weren’t “guarding” the migrants, saying they were just monitoring them for signs of health issues and performing welfare checks. If the troops spot a problem, they’re supposed to alert a CBP official and have them handle the situation, unless there’s a medical emergency or something else that would require an emergency response. Furthermore, the troops aren’t armed, which cuts against claims that they’re performing a ‘police’ function.
Expect pro-migrant groups to try and challenge the troop deployments to the border: we’re surprised they haven’t already.
via ZeroHedge News https://ift.tt/32UuRUg Tyler Durden
The longer the signals in capital markets go haywire under the influence of “monetary stimulus,” the bigger is the cumulative economic cost. That is one big reason why this fourth Fed stimulus — in the present already-longest (but lowest-growth) of super-long business cycles — is so dangerous.
True, there is nothing new about the Fed imparting stimulus well into a business cycle expansion with the intention of combating a threat of recession. Think of 1927, 1962, 1967, 1985, 1988, 1995, and 1998.
This time, though, we’ve seen it four times (2010/11, 2012/13, 2016/17, 2019) in a single cycle. That is a record. Normally, a jump in recorded goods and services inflation, or concerns about rampant speculation, have trumped the inclination to stimulate after one — or at most two — episodes of stimulus.
Also we should recognize that the length of time during which capital-market signaling remains haywire, is only one of several variables determining the overall economic cost of monetary “stimulus.” But it is a very important one.
Haywire signaling is not just a matter of interest rates being artificially low. Alongside this there is extensive mis-pricing of risk capital. Some of this is related to the flourishing of speculative hypotheses freed from the normal constraints (operative under sound money) of rational cynicism. Enterprises at the center of such stories enjoy super-favorable conditions for raising capital.
There are also the giant carry trades into high-yielding debt, long-maturity bonds, high-interest currencies, and illiquid assets, driven by some combination of hunger for yield and super-confidence in trend extrapolation. In consequence, premiums for credit risk, currency risk, illiquidity, and term risk, are artificially low. Meanwhile a boom in financial engineering — the camouflaging of leverage to produce high momentum gains — adds to the overall distortion of market signals.
Crucially, the length of time over which capital-market signaling has been haywire does not neatly coincide with the business cycle. Rather, it may extend into the previous cycle — and beyond — if it is a long time since there has been any sustained period of non-stimulus. This consideration is a rationale for the hypothesis of the long financial cycle — stretching well beyond one business cycle — as hypothesized in research at the Bank for International Settlements.
Accordingly, in the course of a long financial cycle upswing, there could be a recession which briefly shrinks the speculative froth across a range of asset markets. But there would be no extended period of monetary normality (absence of stimulus) during which signaling again became efficient.
For example, think of the business cycle expansion of 2003–2007. In fact, monetary stimulus was already over by late 2005. How could such a short monetary inflation have had such devastating results in terms of Crash and Great Recession? At least part of the answer is the long period during the previous cycle in which prices had also been haywire. This period includes most of the years from 1993–2000. The 2001–2002 economic downturn was mild and the subsequent stimulus (2003–2005) was radical.
The same point about the duration of haywire stretching into the previous business cycle can be made for the asset inflation (coupled with goods inflation) of 1971–1973. Only an exceptionally mild recession and short effective monetary tightening in 1969 (and earlier a brief “credit squeeze” in 1965) interrupted the Fed stimuli during the long cyclical upswing to that date. Earlier in the twentieth century, the shortness of the 1920 recession (though severe) and the power of the subsequent Fed stimulus meant there was no substantial respite from capital market mis-signaling. This dated back to the start of the Great Asset Inflation in 1915–2016 (ignited by vast Fed purchases of gold from Britain and France during the period of neutrality).
Length of time during which capital-market signaling remains haywire is crucial to the amount of overall mal-investment which occurs and the ultimate cumulative economic cost. We also should consider the severity of the mis-signaling. This depends in part on a range of idiosyncratic factors which determine the power and growth of speculative storytelling.
Of course, mis-signaling in capital markets, as measured by duration and extent, is not the only source of economic cost from prolonged asset inflation. There are also the incidental mistakes, sometimes very big, which the Fed makes during the periods of economic slowdown or recession, which interrupt or succeed the asset inflation.
Relevant history here includes the over-tight monetary policy of late 1928 and first three quarters of 1929 as the Fed fought excess speculation on Wall Street. The Fed was blithely unaware of the gathering recession from the autumn of ’28 in Germany, then the world’s number two economy, and the chief destination of vast speculative waves of loan capital. In modern times, we can take the Bernanke Fed’s tight money policies through 2006–2007 driven by concern about CPI inflation above target when asset and credit inflation was already cooling.
In measuring the cumulative economic cost of price-signal malfunctioning in capital markets and coincidental Fed mistakes, it is not just a matter of assessing the severity of the Crash and Recession which marks the end stage of the cycle under review. Costs accrue over a long period of time and might be huge even when these events seem mild. Mal-investment means that the growth of economic prosperity can suffer over decades, especially if, subsequently, capital-market pricing remains haywire and the invisible hands suffer from paralysis.
This has likely been the case with cumulative mal-investment in the first two decades of the present century — helping to explain why growth in overall prosperity has been so meager. Looking into the future there could well be growing evidence of bloated investment (relative to what would happen under sound money) in often negative-sum-game digital technology. This is driven in part by speculative narratives of present or future monopoly power.
In this context, the fourth Fed stimulus is especially dangerous. It is still possible this will be a failed stimulus. Asset inflations tend to burn themselves out. Growing mal-investment, and speculative narratives which become tired, become reflected in slower business earnings growth. Pessimism then becomes apparent in weakness in some particular asset markets, downgrades of credits (as collateral values fall) and at some stage a panic for the exit from crowded carry and other trades. These endogenous forces may be gathering strength and capable of over-powering the “Powell put.”
Take, however, the alternative scenario: where the Powell Fed’s stimulus is indeed effective in producing another growth-cycle upturn which starts well ahead of Election Day. A new momentum of mal-investment around the globe is to fear — along with related fantastic boom time for the financial engineers. There would be chat in the media that the business cycle is dead due to the skill of the data-dependent Fed in administering ever-ready stimulus.
Like the townsfolk in Gogol’s Government Inspector, markets would fete the mysterious disappearance of the recession danger which visited in 2019, even attributing the escape from a new hard regime as due to their representatives’ skill. Later it would turn out that the visitor was an artful impostor and the real inspector (recession and crash) arrives with no notice.
via ZeroHedge News https://ift.tt/2Olilda Tyler Durden
We can imagine Mark Zuckerberg, sitting ensconced in his bunker inside Facebook HQ, reading every new story about his one-time friend and Facebook co-founder Chris Hughes’ campaign to force the breakup of Facebook, the company Zuckerberg worked so hard to build. ‘How ungrateful,’ Zuckerberg probably thinks to himself.
That’s because Hughes has emerged as what the Washington Post characterized as “one of [Facebook’s] biggest problems.” It started with a sweeping New York Times op-ed, where Hughes declared that Facebook ‘should be broken up’ and that while he still thinks Mark Zuckerberg is “a good, moral person”, as Chairman and CEO of Facebook, Zuckerberg has too much power.
While Facebook gladly paid $5 billion to settle allegations of privacy violations with the FTC, the company is firmly opposed to any kind of anti-monopoly actions. Its argument is simple: Since consumers use social media apps that aren’t controlled by Facebook (think Twitter and LinkedIn), it’s clear that Facebook doesn’t have a monopoly. And when asked about the status of his friendship with Zuckerberg after going public with his allegations, Hughes joked that Zuckerberg probably no longer considers him a friend.
The decision to publicly oppose Facebook in the op-ed was a difficult one, he said.
“I knew I would lose some friends over it. And that’s okay because some things are that important,” he said. “But it’s been nice on the other side of it, too, to have the argument out there, to speak my mind about what I think and believe.”
In a story about Hughes’ campaign to undermine the company he helped create, a company that netted him a fortune ($500 million at the time he cashed out his stake). Hughes left Facebook in 2007 to volunteer for the campaign of then-Senator Barack Obama.
But now, according to WaPo, Hughes has been making the rounds on Capitol Hill, visiting dozens of lawmakers and regulators at the DOJ and FTC, and presenting a 39-slide PowerPoint deck that he purportedly made himself outlining his argument about Facebook being a monopoly.
Hughes’ argument depends on the vast user base of Facebook and Instagram, and the company’s acquisitiveness, which helps to stifle competition by discouraging challengers.
Facebook’s wealth and power and massive user base have pushed it into monopoly territory, and its acquisitions of rivals have squashed competition. More than 2.7 billion people use Facebook or its other platforms, which include Instagram and messaging service WhatsApp, at least once a month, Facebook said Wednesday.
“I hope that my speaking out provides cover to a lot of other folks, whether former employees or current ones, to express ambivalence or concern about what’s going on,” Hughes said in an interview Thursday. “And I think there’s a lot to be concerned about.”
The former Facebook spokesman is also trying to convince other ex-employees with reservations about the company’s largess to speak out.
But the fact that a former executive are making these criticisms is a huge boon for trust-busters. It threatens not just Facebook, but the other tech giants of Silicon Valley. Hughes has effectively become the most effective lobbyist for the ‘break up Facebook’ crowd, and he’s doing all of this work for free.
And that’s bad news for Facebook, because breaking up big tech has become a bipartisan issue, embraced by President Trump and Dems like Elizabeth Warren.
To be sure, Hughes isn’t the only former Facebook executive or early investor to criticize the company: Sean Parker and Robert McNamee and other former senior executives have also criticized Facebook over its business practices, but they haven’t been lobbying for breaking up Facebook.
Hughes has reportedly been a useful resource for anti-trust lawyers who have been working on a new argument for breaking up Facebook.
Soon after, Hughes was contacted by two prominent antitrust scholars, Scott Hemphill of New York University School of Law and Tim Wu of Columbia Law School. The two academics and longtime collaborators had been developing an argument for breaking up Facebook in the form of the slide presentation. To them, the purchase of Instagram and WhatsApp represented a “plain-vanilla violation of antitrust law, just low-hanging fruit,” Wu said in an interview. They began to pitch lawmakers and regulators together.
Academics and lawmakers who have worked with Hughes say he has helped explain the motivations and viewpoints of key players at Facebook, including Zuckerberg – although Hughes says he has no specific insider knowledge. They say Hughes can frame the business practices of present-day Silicon Valley in ways that jibe with largely untested antitrust laws that were written for major oil and rail companies decades ago.
[…]
Hughes’s feedback shaped the scholars’ case, as he helped them understand how executives in Silicon Valley think about competition — it tends to be measured by viral growth rather than by size, said Hemphill, the New York University professor. At the time, the two professors were working on a roadshow, which they asked Hughes to join.
Rhode Island Congressman David Cicilline say Hughes has helped inform his views about whether Facebook might be a monopoly.
“The thing that stuck with me…was he focused on Facebook’s revenue as a true measure of its role in the marketplace,” Cicilline recalled. “Facebook captures over 80 percent of all global social media revenue and controls 58 percent of the U.S. social media market. That’s significant.”
So, how will Zuckerberg counter Hughes? The company has hired an army of lobbyists in the wake of its twin scandals, data privacy violations and its failure to stamp out fake accounts. But given his resources, Hughes is going to be a difficult critic to discredit and stamp out.
via ZeroHedge News https://ift.tt/2OleMDO Tyler Durden
OPEC and its Russia-led non-OPEC allies are in their third year of managing supply to the market, hoping to draw down high inventories and push up oil prices.
Early this month, the so-called OPEC+ coalition of partners rolled over their production cuts of a combined 1.8 million bpd into March 2020, as the resurging oil glut threatened to derail their continued efforts to manage the market.
OPEC is now considering using several metrics to assess where global oil (over)supply stands, including taking the five-year average of oil stocks in 2010-2014 instead of the most recent five-year average 2014-2018, which it currently reports in its monthly oil market reports and which the International Energy Agency (IEA) also takes as a benchmark to measure oil inventories.
Analysts warn that the 2010-2014 average metric will not give a correct comprehensive assessment of the oil market.
Fatih Birol, the IEA’s executive director, warns that moving the goalposts doesn’t change the situation in the oil market. The glut is there, regardless of how OPEC wants to measure inventories.
“The important thing is that you can change the methodology but you cannot change the realities of the market,” Birol told Reuters, noting that the 2010-2014 average is a new perspective OPEC proposes to use, while the IEA has its own perspective.
On the sidelines of the OPEC+ meeting in Vienna earlier this month, Khalid al-Falih, the Energy Minister of OPEC’s largest producer and de facto leader Saudi Arabia, told Al Arabiya:
“With demand rising over the next nine months and the commitments from all the countries, including the Kingdom of Saudi Arabia, we are approaching the normal levels of supplies of 2010-2014. It is one of the options in front of us as a goal.”
“The rate of the last five years is another option, which we think is unsuitable. We will study the middle options between these two choices. In any case, we will make sure that the market is balanced with proportionate indicators,” al-Falih told the Arab broadcaster.
OPEC is set to use the 2010-2014 average as the main measure of oil market inventories, two sources told Reuters.
Analysts, however, are not convinced that this is the most sensible goalpost.
First, the 2010-2014 doesn’t include the enormous glut from the end of 2015 through most of 2016, as estimated by the IEA and analysts at Bernstein, and compiled by Reuters.
Second, measuring against 2010-2014 could further distort the current market supply assessment because oil demand back then was around 7 million bpd lower than it is now, Energy Aspects co-founder Richard Mallinson told Reuters.
Giving too much weight to a single metric “could result in actions that have unintended consequences,” Mallinson said.
Third, the IEA and OPEC tend to measure oil inventories in the developed economies of the OECD countries, while stockpiles in countries like China and India, for example, are difficult to assess to the point of being nearly impossible.
Whatever the goalposts may be, OPEC continues to struggle with an oil glut, and the cartel itself and the IEA both warn that non-OPEC supply growth could add to the glut next year.
OPEC’s own estimates in the Monthly Oil Market Report in July show that total OECD commercial oil stocks in May rose by 41.5 million barrels to stand at 2.925 billion barrels, which was 25 million barrels above the latest five-year average, from 2014 to 2018.
So even considering the years of the biggest glut in 2015-2016, there is glut on the market.
Using 2010-2014 as a benchmark could result in much higher oversupply estimates, potentially building the case for OPEC to continue its market management policies after March 2020, when the current deal expires.
As things stand now, OPEC may have to extend the cuts yet again, if by March 2020 it’s still prioritizing ‘whatever it takes’ to cut global oversupply over fighting for market share and trying to sink U.S. shale.
via ZeroHedge News https://ift.tt/2YzMHwN Tyler Durden
Jeffrey Epstein’s longtime personal pilots have been subpoenaed by federal prosecutors in Manhattan, according to the Wall Street Journal. The grand jury subpoenaes were served earlier this month following Epstein’s July 6 arrest at Teterboro Airport in New Jersey on charges of sex-trafficking minors. He has pleaded not guilty to the yearslong scheme in which prosecutors allege the wealthy financier sexually abused dozens of young girls from 2002 to 2005, some of whom recruited other victims.
It is unknown how many of Epstein’s pilots were subpoenaed, or whether they are cooperating witnesses. According to court documents from prior cases, Epstein employed David Rodgers, Larry Visoski, Larry Morrison and Bill Hammond as pilots and flight engineers. Rogers, Visoski and Morrison have previously testified in civil depositions.
Testimony from the pilots could be used by federal investigators in their efforts to corroborate accounts from Mr. Epstein’s accusers. They could also provide detail on Mr. Epstein’s travels and his associates. Some of the pilots were responsible for keeping flight logs of passengers who flew on Mr. Epstein’s private jet, according to court filings. –Wall Street Journal
While prosecutors claimed that Epstein owns two private jets, the registered sex offender’s attorneys said in a court filing earlier this month that he owns one private jet, and “sold the other jet in June 2019.” Considering that he was arrested after returning from Paris in his Gulfstream G550, per Bloomberg, it suggests that Epstein sold his infamous and evidence-rich Boeing 272-200 known as the “Lolita Express” weeks before his arrest.
Women in civil lawsuits have accused Mr. Epstein of conspiring with his pilots and other associates from at least 1998 to 2002 to facilitate sex abuse and avoid law-enforcement detection. One woman has said in court filings that when she was a minor in 2000, Mr. Epstein transported her regularly on his private jet to be sexually exploited by his associates and friends. –Wall Street Journal
According to flight logs, former President Bill Clinton flew on the “Lolita Express” a total of 27 times. “Many of those times Clinton had his Secret Service with him and many times he did not,” according to investigative journalist Conchita Sarnoff – who first revealed the former president’s extensive flights on Epstein’s “lolita express” in a 2010 Daily Beast exposé.
Clinton claimed in a statement earlier this month that he only took “a total of four trips on Jeffrey Epstein’s airplane” in 2002 and 2003, and that Secret Service accompanied him at all times – which Sarnoff told Fox News was a total lie.
“I know from the pilot logs and these are pilot logs that you know were written by different pilots and at different times that Clinton went, he was a guest of Epstein’s 27 times,” said Sarnoff.
Other famous guests include actor Kevin Spacey and Chris Tucker, who flew with Clinton to Africa to tour HIV/AIDS project sites, according to New York Magazine in 2002, which notes how much Epstein revered the former president.
Lawyers for some of Epstein’s accusers alleged in a 2015 court filing that flight logs provided by Epstein pilot Rodgers were incomplete, and that they will corroborate their accusations of being trafficked by Epstein and his associates when they were underage.
“It would not be surprising to find that some of these flight logs…were likely designed to hide evidence of criminal activity—or perhaps later cleansed of such evidence,” wrote the lawyers.
Investigators may be interested in asking Mr. Epstein’s pilots whether they witnessed any efforts by Mr. Epstein to interfere with law enforcement, according to legal experts. In recent court filings, prosecutors have accused Mr. Epstein of tampering with witnesses, an allegation that Mr. Epstein’s lawyers denied in court.
Federal prosecutors in Miami and Mr. Epstein’s lawyers in 2007 negotiated over the possibility of Mr. Epstein pleading guilty to obstruction of justice, including for an incident involving one of his pilots, according to emails that became public in civil lawsuits. –Wall Street Journal
Interestingly, prosecutors confirmed that there are “uncharged individuals” in Epstein’s case. Aside from his close associate and Clinton pal Ghislaine Maxwell – his ‘madam,’ could the pilots be on that list?”
Epstein case update – the Govt confirms the Epstein investigation involves other people not yet charged.
“certain documents and materials that . . . would impede, if prematurely disclosed, the Govt’s ongoing investigation of uncharged individuals.” pic.twitter.com/TOiWqicxUB
In the past month there has been extensive speculation whether the Trump admin, as part of its desire to devalue the dollar against other currencies whose central banks are engaging in aggressive devaluation campaigns of their own, would pursue currency intervention as first Bank of America suggested last month, only to be followed by virtually every other research analyst, and culminating with a take from Standar Chartered’s Steven Englander who said that “The US Can Intervene To Weaken The Dollar… But What Would It Buy?”
To be sure there was ample reason for such speculation, not the least as a result of Trump’s own July 3 tweet in which he said that “China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH...”
China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!
Fast forward to today, when it appears that the Trump administration has had some time to reconsider if it wants to engage in outright currency war against every other developed (and developing) nation, and moments ago speaking on CNBC, Trump’s chief advisor Larry Kudlow said that currency intervention is off the table:
“We have as a matter of policy ruled out currency intervention,” Kudlow said.
Kudlow also said that he does not agree that Trump “wants a weak dollar” and instead is concerned about foreign countries devaluing their own currencies.
In kneejerk reaction, the Bloomberg Dollar index, which had been depressed for the past few weeks amid speculation that the White House may in fact surprise markets with a new Plaza Accord, surged and has now erased all of its power FOMC losses, as the growing army of dollar shorts is once again crushed.
via ZeroHedge News https://ift.tt/30ZwA97 Tyler Durden
As stocks pushed back towards yet more record highs, President Trump just took the shine off the day by tweeting against two mega-tech companies…
First it was Google, following up on Peter Thiel’s recent accusations:
There may or may not be National Security concerns with regard to Google and their relationship with China. If there is a problem, we will find out about it. I sincerely hope there is not!!!
How long before someone explains to Trump that “as goes Apple and Google so goes the US equity market?”
This is one of those days where the S&P 500’s rise comes down to a handful of stocks, well, really just one stock: Alphabet. The parent of Google accounts for ~60% of the index’s point gain.
via ZeroHedge News https://ift.tt/2Y7Nc1u Tyler Durden
As Bloomberg reports, updated government figures show that gross domestic product expanded 2.5% on a fourth-quarter-over-fourth-quarter basis last year.
That compares with a previous estimate of 3% and an upwardly revised 2.8% in 2017, the first year of Trump’s presidency.
Slower growth of business investment and exports, along with a greater output in the fourth quarter of 2017 that made the comparison less favorable.
Growth in the final three months of 2018 is now pegged at an annualized 1.1%, half the previous estimate and the slowest pace in three years, as consumer spending downshifted significantly.
Full-year revisions for other recent years were fairly minor and didn’t shift the economy’s overall trajectory. Year-over-year growth in 2017 was revised slightly higher, to 2.4% from an earlier estimate of 2.2%, largely due to higher government spending, higher consumer spending on goods and the availability of new government finance data.
WSJ also notes that, measured another way – total output for 2018 compared with total output for 2017 – the economy grew 2.9% last year. That figure was unrevised from the government’s earlier estimates, and it marked the strongest yearly pace of growth since 2015.
Finally, WSJ notes thatthe 2.3% average annual economic growth of the current decade-long expansion compares with 2.9% during the previous expansion from late 2001 to 2007, and 3.6% in the 10-year expansion that ended in early 2001.
