“Expectations Are Too High” – Morgan Stanley Downgrades Penn And DraftKings

“Expectations Are Too High” – Morgan Stanley Downgrades Penn And DraftKings

Tyler Durden

Fri, 08/28/2020 – 15:00

Shares of sports betting companies, DraftKings and Penn National Gaming, slumped Friday after Morgan Stanley published a new note downgrading both to equal weight from overweight amid extreme valuation concerns. 

“DKNG and PENN have both more than doubled since the start of the year. While we think a lot of the increased value is valid, we are concerned investors’ expectations are too high and see six potential negative catalysts through” the end of the year, Morgan Stanley analyst Thomas Allen wrote. 

Allen outlined six potential, near-term risks for DraftKings and Penn that suggest it’s time for Robinhood traders to cash in those chips before the recent loss of momentum in both stocks turns into a correction. 

  • A reversal of “stay-at-home tailwinds;” 

  • Lower consumer gambling trends thanks to the fiscal cliff, or lack of stimulus round two;

  • Increased competition in the sports betting industry;

  • Lack of progress in additional legalization of sports gambling;

  • Increasing prospectus of NFL season being canceled; 

  • Insiders selling stock (read: “DraftKings Insiders Dump $596 Million Of Stock On Unsuspecting Robinhood Daytraders”

Despite the downgrades, Allen increased DraftKings’ price target to $37 from $26, along with Penn’s target to $55 from $49 per share.

The downgrade is mainly due to valuation concerns; DraftKings is up 267% and Penn +1,339% since lockdowns began in early March. Readers may recall we’ve noted the insane moves in both stocks, even pointed out the moves happened in a period when all sporting events were canceled. As some major league games return, such as MLB, NBA, and NHL ones, both companies remain price for perfection. 

Allen believes sports betting and online gaming could be a $12 business by 2025, as both DraftKings and Penn are “arguably the purest plays” on legal sports and online betting.

Draftkings

Penn

The recent loss of momentum in both stocks suggests a correction nears. 

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“They Would Have Killed Us” – Rand Paul Describes Attack By “Unhinged” Mob

“They Would Have Killed Us” – Rand Paul Describes Attack By “Unhinged” Mob

Tyler Durden

Fri, 08/28/2020 – 14:46

During his first live interview since being confronted and assaulted outside the White House last night, Rand Paul, the senator who back in June introduced a bill that would end the kind of “no-knock” warrants that contributed to the murder of Breonna Taylor, described the “horrific” experience of being attacked alongside his wife.

Paul is no stranger to confrontation (remember the incident with his neighbor?) but he said he regretted his decision to try to walk back to his hotel. As Paul and his wife and friends walked, the crowd around them started getting bigger and bigger. They were shouting threats, but they were also shouting “say her name” in reference to Breonna Taylor.

“You couldn’t reason with this mob, but I’m actually the author of a law to try and get rid of no knock raids. These people were unhinged. I’m not sure we would have made it.”

At one point, the mob knocked down one of the officers guarding Paul and his wife. Asked about the types of threats, Paul said he heard members of the crowd bray about trying to kill him and his wife. If the police hadn’t been there “we would not be here today, or we would be in a hospital today.”

“I truly believe this with every fiber of my being, had they gotten at us they would have gotten us to the ground, we might not have been killed, might just have been injured by being kicked in the head, or kicked in the stomach until we were senseless,” he explained.

Later in the interview, he said he feared the mob would have “killed us” if the police hadn’t been there to stop them.

“They were inciting a riot and they would have killed us had the police not been there,” he said, before profusely thanking the police who stepped up to protect him.

Toward the end of the interview, Paul said he believes the mob that attacked him was partly comprised of paid protesters who arrived in Washington DC from out of state, and were given money for their accommodations so they could come and protest.

“I believe there are going to be people who are involved with the attack on us that actually were paid to come here, are not from Washington, DC, and are sort of paid to be anarchists.”

While Americans have a right to peaceably assemble, inciting a riot is a crime, and paid agitators deserve to be arrested, along with whoever is financing them.

“This is disturbing because really, if you’re inciting a riot that’s a crime, but if you’re paying someone to incite a riot that person needs to go to jail as well.”

“If you’re paying someone to incite a riot, that person needs to go to jail as well. I like being free to be able to take a walk in the park…I don’t hear Joe Biden saying anything about it…these are their voters.”

Mobs like this are why politicians who are playing footsie with the crypto-communists calling for “de-funding” the police shouldn’t be given the opportunity to lead.

“It’s become so dangerous for us and I don’t hear Joe Biden or Kamala Harris saying one thing about the violence. This mob is their voters. This is the new Democrat party, and if we don’t resist this, the United States is going to become Portland. We’re going to become Chicago. All of these failed cities Democrats have run, the president said in his speech,” he said. “If we allow them to take over the White House, we are going to become Portland, the country will be on fire, we have to have law and order and we have to support the police. I can’t say that strong enough.”

While Paul acknowledged that he and his wife got out unscathed, he noted that the mob was still out on the street on Friday morning.

“We can’t live this way. It’s getting worse and worse.”

Watch the entire interview below:

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The U.S. Prison System Has Reached 1,000 COVID-19 Deaths

sanquentinii_1161x653

America crossed a grim threshold this week. The Marshall Project and the Associated Press calculate that there have now been 1,000 COVID-19 deaths across the state and federal prison systems. Of the people who died, 928 were inmates and 72 were prison staff.

There have been at least 108,000 reported COVID-19 infections among inmates, and the rates can vary wildly from state to state: Less than 10 percent of California’s prison population has reported infections, while 30 percent of Arkansas’ population has. You probably shouldn’t use those numbers alone to determine how effectively prisons have responded to the outbreak: There are other variables, like how long it took for prisons to start widespread testing and how they’ve managed the infections. There has been a big spike in newly reported infections in prisons in July and August, but reported deaths are stable and about half what they were in April and May.

Research published in early July found that COVID-19 infection rates among prisoners were 5.5 times that of the general population. The death rate (39 per 10,000) among inmates was also higher than the death rate (29 per 10,000) among the general population. Again, this can vary wildly from state to state. Some states, such as Pennsylvania, report lower infection and death rates among its inmates than in the general population.

In California, the consequences of poor prison COVID policies are still playing out in San Quentin State Prison. California’s oldest prison had been doing very well at keeping the coronavirus at bay, reporting no infections at all until May. But that month, several prisoners were transferred to San Quentin from the Correctional Institute for Men in Chino. The Chino prison had seen a massive outbreak and several deaths, and this was supposed to relieve overcrowding. But the transferred prisoners were not properly tested and quarantined, and so San Quentin had an outbreak too.

When Reason first noted this new infection cluster at the end of June, there had not yet been any COVID-19 deaths at San Quentin. Now, less than 90 days later, there have been 26 deaths, and San Quention has bypassed Chino to have most deaths among inmates in the state. This month a San Quentin prison guard also died of COVID-19.

When we critique politicians who try to shower themselves with undeserved glory for their COVID-19 responses, like New York Gov. Andrew Cuomo, we tend to focus on their poor grasp of risks at both ends of the spectrum—in Cuomo’s case, pushing the infected elderly into nursing homes while shutting down parks and other outdoor spaces. The problems in the prisons deserve more attention, but it often takes a back seat because of people’s attitudes toward prisoners.

But prisoners are in a position where they depend almost completely on government competence in a pandemic for their survival. And this should matter to you even if you don’t particularly care about criminal justice reform (though it’s certainly worth thinking about the facts that almost all of our biggest infection clusters are in prisons and that America has the world’s highest incarceration rate). The people who are most dependent on government competence are getting infected at a higher rate and dying at a higher rate than those who are not. What does that tell you?

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Can the Republican Party Survive Trump?

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Donald Trump, who four short years ago was viewed by many GOP operatives as an erratic outsider, has just been re-nominated as the Republican Party’s standard-bearer. But whether he wins or loses, can a party without any guiding principles survive?

How do old political parties die, and how are new ones born?

Imagine a political party that has lost its ideological coherence and is torn apart by various warring factions. Then an outsider and celebrity candidate emerges with no fealty to the party’s policy agenda and with no previous political experience. He goes on to connect with voters and retake the White House.

That’s exactly what happened in 1848, when the Whigs backed Zachary Taylor.

Political scientist Philip Wallach, a resident senior fellow at the R Street Institute, published a 2017 paper on the parallels between Taylor and Trump.

“Taylor was a very disruptive force for the Whig Party,” says Wallach. “His victory was, of course, something they were very excited about, but he didn’t govern in exactly the ways they would have preferred.”

While Trump raised his profile by projecting a bellicose demeanor on primetime television, Taylor was a celebrated general who won a key battle in the Mexican-American War. And like Trump, he tried to redefine his party in his own image and refused to pledge fealty to party principles.

Taylor “even thought about rebranding [Whiggism] as ‘Taylor Republicanism,'” says Wallach.

But Taylor’s efforts at redefining Whig principles were doomed by a preexisting divide over whether slavery would be allowed in new territories. Both the Whigs and their primary competitors, the Democrats, waffled, which created an opening for single-issue third-parties such as the anti-slavery Liberty Party and Free Soil Party, as well as the nativist Know-Nothing Party.

After Taylor’s untimely death in office, the fractured Whig Party “bled to death,” as historian Michael Holt put it, losing too many voters to the Free Soil and Know-Nothing parties. And out of that carnage rose the Republican Party, united by the conviction that slavery should have no part in America’s future.

What does the death of the Whigs tell us about the prospect of breaking up our modern two-party duopoly?

“In 2020, we have two parties that have delivered us candidates, both of which are more destructive than they are constructive,” says evolutionary biologist and podcast host Bret Weinstein, who is trying to engineer the candidacy of an independent to go up against Biden and Trump.

Weinstein sees a parallel with the mid-19th century in that voters are again open to alternatives.

“This is, in some sense, the natural outgrowth of the fact that the parties long ago stopped serving the interests of the American public,” says Weinstein.

Weinstein, who’s best known for his viral confrontation with student protesters at The Evergreen State College after he objected to a call for all white people to leave campus for a day, believes that the two major parties are in thrall to far-left and far-right fringes and elite donors, causing them to neglect a majority of Americans.

“For many reasons, the natural thing is for Americans to unify under some banner in order to regain power over the policymaking structure,” says Weinstein.

Weinstein launched an initiative called Unity 2020, which intends to use online crowdsourcing to nominate a center-left and center-right candidate to run and govern as a team. He says by circumventing the usual political process, candidates will avoid being so easily corrupted.

“We have all been told that power tends to corrupt and absolute power corrupts absolutely,” says Weinstein. “I have long thought this is nonsense. What we do have is a system in which power tends to be awarded to people on the basis that they are corruptible.”

But in the 19th century, there were fewer obstacles to challenging the major parties.

“For a third party to be able to get some votes was much easier,” says Wallach. “It just had to be able to print ballots and distribute them to a network of supporters….Nineteenth-century politics were just much more open and fluid than our politics today.”

With the election less than two and a half months away, whoever’s nominated by the Unity 2020 ticket is unlikely to make it on many ballots, and Weinstein declined to articulate a plausible path to victory.

“We are certainly too late with respect to the standard process of collecting signatures to get on the ballots of all 50 states, but that’s not the only way this can be accomplished,” says Weinstein.

The Libertarian Party’s presidential nominee, Jo Jorgensen, is on track to getting on the ballot in all 50 states, and she says she offers a better path forward than either Trump or Biden.

“People are realizing that they don’t have the choices that they used to have. And I think they’re getting fed up with government telling them at every turn what they can do,” says Jorgensen.

But Wallach is skeptical that a third party can disrupt our modern duopoly.

In the 19th century, minor parties like the Free Soilers won local and state elections and congressional seats, which the Libertarian Party has mostly failed to achieve. In 2016, after getting more attention than any Libertarian candidate in history, former New Mexico Governor Gary Johnson won just over 3 percent of the popular vote when going up against Trump and Clinton, two historically unpopular candidates.

A third party or independent candidate has never triumphed in a modern presidential election, with the strongest contender being former President Teddy Roosevelt’s 1912 campaign under the Progressive Party banner. The self-funded billionaire Ross Perot’s run in 1992 eventually spun off the Reform Party, which never won a national election but did become the site of Donald Trump’s first foray into presidential politics.

“That leaves us wondering, where would [a successful] a third party come from?” says Wallach.

He believes that, based on the death of the Whigs, to be successful the Libertarian Party would need to win in statewide races and then merge with defectors from a collapsed Democratic or Republican Party.

But Weinstein is betting that digital media have opened new channels for a Unity ticket to bypass traditional gatekeepers, as outsider candidate Andrew Yang did in the Democratic primary.

“Andrew Yang would potentially not have gained our attention had it not been for this alternative media network,” says Weinstein. “He certainly rose spectacularly in the public imagination at the point he showed up on Joe Rogan’s ….There is something of similar or greater magnitude to the major networks that are operating under a different set of rules.”

And while there’s no single issue dividing the nation that’s on par with slavery in the time of the Whigs, Weinstein does see historical parallels.

“We are dealing with the very same issue in a different form in 2020. The thing that caused the civil war is simply not fully resolved,” says Weinstein.

While Weinstein is supportive of some aims of the Black Lives Matter movement, he believes its emphasis on racial identity foments dangerous divisions—for different reasons, but in similar ways, as racist movements on the far right.

“We are now seeing a movement that wishes to place race back at the forefront of our political thinking and, frighteningly, that viewpoint seems to be shared by those on the far left and the far right,” says Weinstein. “We cannot remain cohesive as a nation if we are attacking each other on the basis. That the only thing we need to understand to know what team we are on is the color of our skin or our gender.”

Jorgensen believes it’s government intervention that exacerbates many of our divisions, including racial ones, pointing to the Rosa Parks story as a historical example.

“A rural black woman stood up and refused to sit in the back of the bus,” says Jorgensen. “That was a government-run, government-owned bus. And so it was the government who was putting us in this ‘us versus them’ situation.”

While their strategies and analyses differ, Weinstein and Jorgensen both agree that the status quo cannot hold.

“I’d say everything is at stake in this particular election. And what we’ve been delivered is two different failure modes,” says Weinstein. “I think the problem is either case is unacceptable. And when one finds that situation, we have to look for a third way. And in this case, if it’s considered radical, so be it. It’s simply time.”

Jorgensen says that Americans feel fundamentally disempowered by the infringements on their liberties that a poor federal response to the COVID-19 pandemic has caused.

“Americans are frustrated because they don’t have any control over their own lives,” says Jorgensen. “And all they know is that it’s the two old parties that are making them feel this way.”

Produced by Zach Weissmueller. Opening graphic by Lex Villena.

Music by Stanley Gurvich licensed by Artlist.

Photo credits: CNP/AdMedia/Newscom; DNC via Sipa USA/Newscom; Tetra Images Tetra Images/Newscom; Tom Williams/CQ Roll Call/Newscom ; Bill Clark/CQ Roll Call/Newscom; Leah Millis/Reuters/Newscom; Leslie Spurlock/ZUMA Press/Newscom; Jeremy Hogan/ZUMA Press/Newscom; Antonio Perez/TNS/Newscom; Nuri Vallbona/Reuters/Newscom; Leah Millis/Reuters/Newscom; Stanton Sharpe/SOPA Images/Sip/Newscom; Gary I. Rothstein/UPI/Newscom;  David R. Frazier/DanitaDelimont.com “Danita Delimont Photography”/Newscom

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Maximum Security Comes Up Short

Horse races should be decided on the track, not in court. That’s one way to read the opinion of the U.S. Court of Appeals for the Sixth Circuit in West v. Kentucky Horse Racing Commission, a challenge to the decision to effectively disqualify Maximum Security from the Kentucky Derby, despite the fact that that horse was the first to cross the finish line.

Judge Bush’s opinion for the court begins:

“Whether true or perceived to be true, a referee’s calls can ‘change the outcome of [a] game.'” Higgins v. Ky. Sports Radio, LLC, 951 F.3d 728, 735 (6th Cir. 2020) (citation omitted). As is true for Kentucky basketball, the same is true for Kentucky horse racing. At issue here is a call made by racing stewards that changed the outcome in the most storied race of them all—the Kentucky Derby.

In 144 uninterrupted years of Runs for the Roses, only one horse to cross the finish line first had been disqualified, and no winning horse had ever been disqualified for misconduct during the race itself. But, on the first Saturday in May 2019, fans were told to hold onto their tickets at the conclusion of the 145th Derby. “Maximum Security,” the horse that had finished first, would not be declared the winner. Instead, he would come in last, thanks to the stewards’ call that Maximum Security committed fouls by impeding the progress of other horses in the race.

As a result of this ruling, Maximum Security’s owners, Gary and Mary West, were not awarded the Derby Trophy, an approximate $1.5 million purse, and potentially even far greater financial benefits from owning a stallion that won the Derby. So, the Wests filed this civil rights lawsuit under 42 U.S.C. § 1983 against the individual stewards who made the controversial call, the individual members of the Kentucky Horse Racing Commission, and the Commission itself. The complaint alleged that the stewards’ decision was arbitrary and capricious, was not supported by substantial evidence, and violated the Wests’ right to procedural due process. The Wests also claimed that the regulation that gave the stewards authority to disqualify Maximum Security is unconstitutionally vague. They sought, among other things, a declaration from the district court that Maximum Security was the official winner of the 145th Kentucky Derby.

The district court dismissed the suit for failure to state a claim. It determined that the stewards’ decision was not reviewable under Kentucky law, that the Wests had no property interest in the prize winnings, and that the challenged regulation is not unconstitutionally vague. For the reasons discussed below, we agree and AFFIRM the judgment of the district court.

Judges Batchelder and Larsen joined Judge Bush’s opinion.

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The U.S. Prison System Has Reached 1,000 COVID-19 Deaths

sanquentinii_1161x653

America crossed a grim threshold this week. The Marshall Project and the Associated Press calculate that there have now been 1,000 COVID-19 deaths across the state and federal prison systems. Of the people who died, 928 were inmates and 72 were prison staff.

There have been at least 108,000 reported COVID-19 infections among inmates, and the rates can vary wildly from state to state: Less than 10 percent of California’s prison population has reported infections, while 30 percent of Arkansas’ population has. You probably shouldn’t use those numbers alone to determine how effectively prisons have responded to the outbreak: There are other variables, like how long it took for prisons to start widespread testing and how they’ve managed the infections. There has been a big spike in newly reported infections in prisons in July and August, but reported deaths are stable and about half what they were in April and May.

Research published in early July found that COVID-19 infection rates among prisoners were 5.5 times that of the general population. The death rate (39 per 10,000) among inmates was also higher than the death rate (29 per 10,000) among the general population. Again, this can vary wildly from state to state. Some states, such as Pennsylvania, report lower infection and death rates among its inmates than in the general population.

In California, the consequences of poor prison COVID policies are still playing out in San Quentin State Prison. California’s oldest prison had been doing very well at keeping the coronavirus at bay, reporting no infections at all until May. But that month, several prisoners were transferred to San Quentin from the Correctional Institute for Men in Chino. The Chino prison had seen a massive outbreak and several deaths, and this was supposed to relieve overcrowding. But the transferred prisoners were not properly tested and quarantined, and so San Quentin had an outbreak too.

When Reason first noted this new infection cluster at the end of June, there had not yet been any COVID-19 deaths at San Quentin. Now, less than 90 days later, there have been 26 deaths, and San Quention has bypassed Chino to have most deaths among inmates in the state. This month a San Quentin prison guard also died of COVID-19.

When we critique politicians who try to shower themselves with undeserved glory for their COVID-19 responses, like New York Gov. Andrew Cuomo, we tend to focus on their poor grasp of risks at both ends of the spectrum—in Cuomo’s case, pushing the infected elderly into nursing homes while shutting down parks and other outdoor spaces. The problems in the prisons deserve more attention, but it often takes a back seat because of people’s attitudes toward prisoners.

But prisoners are in a position where they depend almost completely on government competence in a pandemic for their survival. And this should matter to you even if you don’t particularly care about criminal justice reform (though it’s certainly worth thinking about the facts that almost all of our biggest infection clusters are in prisons and that America has the world’s highest incarceration rate). The people who are most dependent on government competence are getting infected at a higher rate and dying at a higher rate than those who are not. What does that tell you?

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Can the Republican Party Survive Trump?

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Donald Trump, who four short years ago was viewed by many GOP operatives as an erratic outsider, has just been re-nominated as the Republican Party’s standard-bearer. But whether he wins or loses, can a party without any guiding principles survive?

How do old political parties die, and how are new ones born?

Imagine a political party that has lost its ideological coherence and is torn apart by various warring factions. Then an outsider and celebrity candidate emerges with no fealty to the party’s policy agenda and with no previous political experience. He goes on to connect with voters and retake the White House.

That’s exactly what happened in 1848, when the Whigs backed Zachary Taylor.

Political scientist Philip Wallach, a resident senior fellow at the R Street Institute, published a 2017 paper on the parallels between Taylor and Trump.

“Taylor was a very disruptive force for the Whig Party,” says Wallach. “His victory was, of course, something they were very excited about, but he didn’t govern in exactly the ways they would have preferred.”

While Trump raised his profile by projecting a bellicose demeanor on primetime television, Taylor was a celebrated general who won a key battle in the Mexican-American War. And like Trump, he tried to redefine his party in his own image and refused to pledge fealty to party principles.

Taylor “even thought about rebranding [Whiggism] as ‘Taylor Republicanism,'” says Wallach.

But Taylor’s efforts at redefining Whig principles were doomed by a preexisting divide over whether slavery would be allowed in new territories. Both the Whigs and their primary competitors, the Democrats, waffled, which created an opening for single-issue third-parties such as the anti-slavery Liberty Party and Free Soil Party, as well as the nativist Know-Nothing Party.

After Taylor’s untimely death in office, the fractured Whig Party “bled to death,” as historian Michael Holt put it, losing too many voters to the Free Soil and Know-Nothing parties. And out of that carnage rose the Republican Party, united by the conviction that slavery should have no part in America’s future.

What does the death of the Whigs tell us about the prospect of breaking up our modern two-party duopoly?

“In 2020, we have two parties that have delivered us candidates, both of which are more destructive than they are constructive,” says evolutionary biologist and podcast host Bret Weinstein, who is trying to engineer the candidacy of an independent to go up against Biden and Trump.

Weinstein sees a parallel with the mid-19th century in that voters are again open to alternatives.

“This is, in some sense, the natural outgrowth of the fact that the parties long ago stopped serving the interests of the American public,” says Weinstein.

Weinstein, who’s best known for his viral confrontation with student protesters at The Evergreen State College after he objected to a call for all white people to leave campus for a day, believes that the two major parties are in thrall to far-left and far-right fringes and elite donors, causing them to neglect a majority of Americans.

“For many reasons, the natural thing is for Americans to unify under some banner in order to regain power over the policymaking structure,” says Weinstein.

Weinstein launched an initiative called Unity 2020, which intends to use online crowdsourcing to nominate a center-left and center-right candidate to run and govern as a team. He says by circumventing the usual political process, candidates will avoid being so easily corrupted.

“We have all been told that power tends to corrupt and absolute power corrupts absolutely,” says Weinstein. “I have long thought this is nonsense. What we do have is a system in which power tends to be awarded to people on the basis that they are corruptible.”

But in the 19th century, there were fewer obstacles to challenging the major parties.

“For a third party to be able to get some votes was much easier,” says Wallach. “It just had to be able to print ballots and distribute them to a network of supporters….Nineteenth-century politics were just much more open and fluid than our politics today.”

With the election less than two and a half months away, whoever’s nominated by the Unity 2020 ticket is unlikely to make it on many ballots, and Weinstein declined to articulate a plausible path to victory.

“We are certainly too late with respect to the standard process of collecting signatures to get on the ballots of all 50 states, but that’s not the only way this can be accomplished,” says Weinstein.

The Libertarian Party’s presidential nominee, Jo Jorgensen, is on track to getting on the ballot in all 50 states, and she says she offers a better path forward than either Trump or Biden.

“People are realizing that they don’t have the choices that they used to have. And I think they’re getting fed up with government telling them at every turn what they can do,” says Jorgensen.

But Wallach is skeptical that a third party can disrupt our modern duopoly.

In the 19th century, minor parties like the Free Soilers won local and state elections and congressional seats, which the Libertarian Party has mostly failed to achieve. In 2016, after getting more attention than any Libertarian candidate in history, former New Mexico Governor Gary Johnson won just over 3 percent of the popular vote when going up against Trump and Clinton, two historically unpopular candidates.

A third party or independent candidate has never triumphed in a modern presidential election, with the strongest contender being former President Teddy Roosevelt’s 1912 campaign under the Progressive Party banner. The self-funded billionaire Ross Perot’s run in 1992 eventually spun off the Reform Party, which never won a national election but did become the site of Donald Trump’s first foray into presidential politics.

“That leaves us wondering, where would [a successful] a third party come from?” says Wallach.

He believes that, based on the death of the Whigs, to be successful the Libertarian Party would need to win in statewide races and then merge with defectors from a collapsed Democratic or Republican Party.

But Weinstein is betting that digital media have opened new channels for a Unity ticket to bypass traditional gatekeepers, as outsider candidate Andrew Yang did in the Democratic primary.

“Andrew Yang would potentially not have gained our attention had it not been for this alternative media network,” says Weinstein. “He certainly rose spectacularly in the public imagination at the point he showed up on Joe Rogan’s ….There is something of similar or greater magnitude to the major networks that are operating under a different set of rules.”

And while there’s no single issue dividing the nation that’s on par with slavery in the time of the Whigs, Weinstein does see historical parallels.

“We are dealing with the very same issue in a different form in 2020. The thing that caused the civil war is simply not fully resolved,” says Weinstein.

While Weinstein is supportive of some aims of the Black Lives Matter movement, he believes its emphasis on racial identity foments dangerous divisions—for different reasons, but in similar ways, as racist movements on the far right.

“We are now seeing a movement that wishes to place race back at the forefront of our political thinking and, frighteningly, that viewpoint seems to be shared by those on the far left and the far right,” says Weinstein. “We cannot remain cohesive as a nation if we are attacking each other on the basis. That the only thing we need to understand to know what team we are on is the color of our skin or our gender.”

Jorgensen believes it’s government intervention that exacerbates many of our divisions, including racial ones, pointing to the Rosa Parks story as a historical example.

“A rural black woman stood up and refused to sit in the back of the bus,” says Jorgensen. “That was a government-run, government-owned bus. And so it was the government who was putting us in this ‘us versus them’ situation.”

While their strategies and analyses differ, Weinstein and Jorgensen both agree that the status quo cannot hold.

“I’d say everything is at stake in this particular election. And what we’ve been delivered is two different failure modes,” says Weinstein. “I think the problem is either case is unacceptable. And when one finds that situation, we have to look for a third way. And in this case, if it’s considered radical, so be it. It’s simply time.”

Jorgensen says that Americans feel fundamentally disempowered by the infringements on their liberties that a poor federal response to the COVID-19 pandemic has caused.

“Americans are frustrated because they don’t have any control over their own lives,” says Jorgensen. “And all they know is that it’s the two old parties that are making them feel this way.”

Produced by Zach Weissmueller. Opening graphic by Lex Villena.

Music by Stanley Gurvich licensed by Artlist.

Photo credits: CNP/AdMedia/Newscom; DNC via Sipa USA/Newscom; Tetra Images Tetra Images/Newscom; Tom Williams/CQ Roll Call/Newscom ; Bill Clark/CQ Roll Call/Newscom; Leah Millis/Reuters/Newscom; Leslie Spurlock/ZUMA Press/Newscom; Jeremy Hogan/ZUMA Press/Newscom; Antonio Perez/TNS/Newscom; Nuri Vallbona/Reuters/Newscom; Leah Millis/Reuters/Newscom; Stanton Sharpe/SOPA Images/Sip/Newscom; Gary I. Rothstein/UPI/Newscom;  David R. Frazier/DanitaDelimont.com “Danita Delimont Photography”/Newscom

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Maximum Security Comes Up Short

Horse races should be decided on the track, not in court. That’s one way to read the opinion of the U.S. Court of Appeals for the Sixth Circuit in West v. Kentucky Horse Racing Commission, a challenge to the decision to effectively disqualify Maximum Security from the Kentucky Derby, despite the fact that that horse was the first to cross the finish line.

Judge Bush’s opinion for the court begins:

“Whether true or perceived to be true, a referee’s calls can ‘change the outcome of [a] game.'” Higgins v. Ky. Sports Radio, LLC, 951 F.3d 728, 735 (6th Cir. 2020) (citation omitted). As is true for Kentucky basketball, the same is true for Kentucky horse racing. At issue here is a call made by racing stewards that changed the outcome in the most storied race of them all—the Kentucky Derby.

In 144 uninterrupted years of Runs for the Roses, only one horse to cross the finish line first had been disqualified, and no winning horse had ever been disqualified for misconduct during the race itself. But, on the first Saturday in May 2019, fans were told to hold onto their tickets at the conclusion of the 145th Derby. “Maximum Security,” the horse that had finished first, would not be declared the winner. Instead, he would come in last, thanks to the stewards’ call that Maximum Security committed fouls by impeding the progress of other horses in the race.

As a result of this ruling, Maximum Security’s owners, Gary and Mary West, were not awarded the Derby Trophy, an approximate $1.5 million purse, and potentially even far greater financial benefits from owning a stallion that won the Derby. So, the Wests filed this civil rights lawsuit under 42 U.S.C. § 1983 against the individual stewards who made the controversial call, the individual members of the Kentucky Horse Racing Commission, and the Commission itself. The complaint alleged that the stewards’ decision was arbitrary and capricious, was not supported by substantial evidence, and violated the Wests’ right to procedural due process. The Wests also claimed that the regulation that gave the stewards authority to disqualify Maximum Security is unconstitutionally vague. They sought, among other things, a declaration from the district court that Maximum Security was the official winner of the 145th Kentucky Derby.

The district court dismissed the suit for failure to state a claim. It determined that the stewards’ decision was not reviewable under Kentucky law, that the Wests had no property interest in the prize winnings, and that the challenged regulation is not unconstitutionally vague. For the reasons discussed below, we agree and AFFIRM the judgment of the district court.

Judges Batchelder and Larsen joined Judge Bush’s opinion.

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The Fed’s Circular Firing-Squad… Got Gold?

The Fed’s Circular Firing-Squad… Got Gold?

Tyler Durden

Fri, 08/28/2020 – 14:31

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

The Fed Redefines Inflation… Again

The original definition of inflation was an expansion of the supply of money. If you create more money while keeping everything the same, ceteris paribus, then prices should rise accordingly.

This is a simplistic understanding of the role of the money supply as it leaves out the manner in which the new money makes its way into the economy.

If we digitally airdrop 10% more money into everyone’s accounts, as the latest proposals from economists attached to the Federal Reserve suggest, then the general price level will, in fact, rise 10% if that money is spent on necessities.

This is the scenario we are in now, as I talked about in a recent article.

In an environment where most people’s time preference is short because they are literally fighting for their economic lives, this new stimulus money will go right into the things people needs right now — food, clothing, shelter.

Things are so bad for so many Americans now that they saved their first stimulus checks and only spent them on the bare necessities, forgoing any thought of paying down debt.

They used what’s left of their credit rating to feed themselves now on someone else’s dime and let the bank choke on their mortgage when the credit card is maxed.

This next round of stimulus money will circulate. The Fed will finally do what Bernanke tried desperately to avoid, print helicopter money.

This showed up in consumer spending numbers outpacing expectations while debt delinquencies rise.

That definition of inflation, while simplistic, is still instructive under certain market conditions. It ignores the Cantillion effect of who gets the new money and how it travels. That was the old monetary policy mechanism, through credit expansion via the banks.

Jay Powell’s speech yesterday all but told us that that mechanism is broken and that we’ll be embarking on a new monetary experiment into the future.

That said, at a minimum, the simplistic view of inflation defines for us that moment when all the other considerations about the value of the money have been stripped away — the debt issued in that currency, the confidence in it, etc. — and just focuses on what happens when you pump money in.

Bids for goods rise. Not all goods, equally, but goods.

All About Prices…

To obfuscate this underlying truth, inflation was later redefined to reflect the change in the general price level, since this was one of the pillars of the Keynsian economic worldview which elevated concepts such as aggregate supply and demand to having near religious significance.

These concepts, steeped in the religion of social engineering and technocracy, form the basis for all central banking and monetary policy.

… and all of their basic, methodological errors.

It had to be done in order to support the Phillips Curve, the thoroughly-debunked relationship between unemployment and inflation, which has shaped monetary policy for two generations, to everyone’s detriment.

With this definition of inflation it allowed for the unmoored-from-gold financial system to engage in experiments based on flawed theories, like the Quantity Theory of Money (QTM), to justify monetary policy.

And every time the Fed (and every other central bank) was wrong in their forecasts, they redefined both inflation and unemployment to keep satisfying the Phillips Curve as the basis for their commnications.

But never for a second believe that the central banks didn’t know exactly what they were doing with this stuff. That was all for the big show — to project institutional confidence in their ability to manage the economy through monetary policy.

From that confidence flowed our faith in government’s ability to tinker with human nature, alter our incentives and prep humanity for their latest project, The Great Reset, as advocated by the World Economic Forum.

The Davos Crowd.

The operation was simple. Keep things anchored in arcane, economic guildspeak to bamboozle the muppets. Ultimately, it allowed them to print money for domestic political advantage during down periods of the economic cycle and pull back on the money supply to gain international political advantage during the ends of boom periods.

Buy votes at home and bankrupt/colonize people abroad. Lather. Rinse. Repeat.

All the while keep redefining unemployment, inflation and the money supply itself to constantly shape the narrative of their competence.

The Austrian Call

Austrian economists, as gadflies, sharpened their pens, pointed out these failings, advocated for gold and told everyone there is a limit to how far the expansion of credit over the base economy could go in propping up asset prices.

The economy always reaches a point where interest rates are irrelevant to creating confidence to take on new debt. I like to use the term ‘debt saturation’ to describe where we are.

Now with Jay Powell’s speech from virtual Jackson Hole, we have him openly admitting this, validating the Austrian criticism. And so, we have the new definition of inflation, freed from the shackles of the Phillips Curve.

It’s still all about prices today but now the Fed is admitting that the economy runs on the time preference of individuals rather than arbitrary definitions of full employment.

Powell uses the term ‘inflation expectations’ but time preference is still better.

Inflation is now a measure of the confidence of the people in their future, what they expect to happen. In that respect Keynes was right about ‘animal spirits’ affecting markets.

All the Fed can do now is print money, hand it out and try to create rising prices to fill the vortex of debt and stimulate growth. But that still misses the point. It still doesn’t address the real problem.

Actions Before Consequences

Confidence is a consequence of human action. Not all human action is not a consequence of confidence. People have to act first. The actions they take are informed by the confidence they have in their state at the time of that action.

People without confidence still act. They still eat. They still huddle in the corner and despair. Any economic theory that puts confidence in front of action as the primary driver is engaging in a fundamental methodological error.

It’s like saying that velocity determines position. Or that the first derivative of a function determines the function. The two are linked, certainly, but there is an unknown factor which determines the final outcome. You don’t know the starting point.

For example, the first derivative of a function (velocity) is f'(x) = 2x. This is the speed at which your position is changing.

Integrating that yields the function f(x) = x^2 + C, where C is an unknown constant. This function determines where you are at any given value of x. The final value of the function is only determined by knowing where you started, i.e. C, and adding that to the value of x^2.

So if x = 2, x^2=4. Not tough. But, that tells us nothing about where we actually are other than that we’re 4 units from where we started. Is four good? Bad? Hell if I know?

And neither does the Fed.

Now I’m sympathetic, for argument’s sake, to define inflation expectations as the first derivative of action. If you expect things to get better than you may make choices which lead to lower time preference behavior which, in turn, boosts investment in larger projects and an expansion of the division of labor.

Economic growth.

But, not necessarily. It all depends on C. If C is profoundly negative, a small increase in inflation expectations won’t do squat to push your decision tree with your extra money out in time. It will improve your economic thinking slightly but I in this example that means going from buying food to buying slightly more food, not investing in a new roof.

You Were Expecting Confidence?

Powell finally admitted that confidence in the future is what determines the actions people take economically. If they are facing an uncertain future no amount of new credit can stimulate demand.

It represents a sea change in monetary policy thinking. And I won’t argue that it’s slowly getting us closer to reality. But the question now is how will this new definition be used?

We already know the answer. They change the definition of inflation to suit themselves, not the people whose lives they affect. Because they are committed to 2% inflation, as defined by the terminally-flawed, constantly moving definition of the Consumer Price Index, as the policy goal.

And that means money printing to the extreme bringing us right back to what I outlined at the beginning. The Fed will airdrop money into people’s accounts to raise the general price level through the real definition of inflation, an increase in the money supply absent concomitant real capital formation, to support the value of asset prices inflated by previous poor definitions of inflation.

Sound circular? It is. Of the firing squad variety.

Because this sets the next stage in motion for the real collapse in confidence, central banks and the currencies they manage.

Got gold?

*  *  *

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via ZeroHedge News https://ift.tt/2EDxByb Tyler Durden

NBA Commits To Transforming Every Arena Into A 2020 Voting Location

NBA Commits To Transforming Every Arena Into A 2020 Voting Location

Tyler Durden

Fri, 08/28/2020 – 14:14

It looks like grandstanding NBA stars like LeBron James, who have been pushing for the league to do something “social justice-ey” after failing to shut down the postseason, have finally gotten their wish.

Adam Silver has apparently consented to a new arrangement whereby all the leagues arenas will be transformed into 2020 voting locations.

That way, people can feel safe voting in person. Somebody should probably tell them that the last thing Democrats want is a workaround that deflates their argument for mail-in voting.  The league has also announced that it’s taking a “series of further steps” to advance the social justice agenda as well.

Play will resume over the weekend.

Meanwhile, roughly 100 NBA employees based in New York went on “strike” on Friday in solidarity with the NBA and WNBA players pushing for social justice.

They reportedly spent the day calling elected officials.

Considering that the NBA is so far in China’s pocket that even the mighty LeBron James suggested that “free speech has its negatives” when the CCP brought the league to its knees after that disastrous Daryl Morey tweet voicing support for protesters in Hong Kong, we can’t help but wonder: Is this some kind of Beijing-approved electoral tampering? Is President Xi doing everything in his power to get out the vote in the US?

Think for a second. Who is facing a greater threat of state-backed “oppression”? Middle Class American college students? Or the people of Hong Kong?

via ZeroHedge News https://ift.tt/2QxVqtt Tyler Durden