Tucker Carlson Might Want To End Qualified Immunity If He Actually Knew What It Was

Screen Shot 2020-06-26 at 3.07.45 PM

Last night Fox News host Tucker Carlson vigorously defended qualified immunity, the doctrine that allows public officials to avoid federal civil rights lawsuits if the way they violated your rights has not been outlined with exacting detail in previous case law.

Carlson offered an alternative definition for his viewers. “Qualified immunity means that cops can’t be personally sued when they accidentally violate people’s rights while conducting their duties,” he said. “They can be sued personally when they do it intentionally, and they often are.”

There are a few problems with the statement, the largest being that it is not true.

Qualified immunity provides no distinction between accidental and intentional rights violations. A quick review of previous qualified immunity rulings proves as much. Consider the cops in Fresno, California, who were granted qualified immunity after allegedly stealing $225,000 while carrying out a search warrant.

It was not an accidental robbery, and the U.S. Court of Appeals for the 9th Circuit acknowledged as much in their ruling last September. Though “the City Officers ought to have recognized that the alleged theft was morally wrong,” the unanimous panel wrote, it concluded that they “did not have clear notice that it violated the Fourth Amendment.” They both received qualified immunity.

Translation: The officers should’ve known that stealing from someone is morally and legally indefensible. But without a court precedent spelling that out for them, the two were off the hook, leaving the plaintiffs no recourse. That is how qualified immunity works in practice.

“Civil immunity has precisely nothing to do with anything that happened in the George Floyd case,” Carlson continued. “Just in case you were wondering, that cop is in jail.”

Again, that represents a fundamental misunderstanding around where and when qualified immunity applies. The doctrine solely pertains to civil liability—a public official who breaks the law and is awarded qualified immunity is not protected from criminal prosecution. The two are entirely unrelated, although it’s worth noting that state prosecutors often decline to bring such charges in the first place.

Put more plainly, former police officer Derek Chauvin may indeed receive qualified immunity from any civil suit brought by the family of George Floyd—the unarmed man who died after Chauvin dug his knee into Floyd’s neck for almost 9 minutes—even if Chauvin’s trial yields a murder conviction.

Carlson continued:

Qualified immunity has worked so well because police officers, maybe more than anyone else in society, must make difficult split-second decisions on the job, and a lot. They do it constantly. Whether to arrest someone, whether to conduct a search, whether to use force against a suspect. Sometimes, actions they sincerely and reasonably believe are legal are found later by courts to be unconstitutional. Sometimes the very laws they enforce are struck down. That’s not their fault, obviously, but without qualified immunity, police could be sued for that personally. They could be bankrupted they could lose their homes. That’s unfair. It would also end law enforcement. No one would serve as a police officer.

There’s quite a bit to unpack there. First, as Institute for Justice attorney Patrick Jaicomo notes, qualified immunity has nothing to do with reaction times but “is about whether the right that was violated was ‘clearly established.'” That standard was established by the Supreme Court in Harlow v. Fitzgerald (1982) in spite of Section 1983 of Title 42 of the U.S. Code, the statute that previously allowed the American public to sue for violations of their constitutional rights. It’s the epitome of the high court legislating from the bench, something conservatives typically oppose.

But perhaps Carlson’s most significant misinterpretation is his claim that cops are only caught in compromising situations when they “sincerely and reasonably” believed their misconduct was both legal and constitutional. Such a claim can only be explained by a lack of familiarity with qualified immunity case law. Take the cop who received qualified immunity after shooting a 10-year-old while in pursuit of a suspect that had no relationship to the child. The officer, sheriff’s deputy Matthew Vickers, was aiming at the boy’s nonthreatening dog.

There were also the cops who were granted qualified immunity after assaulting and arresting a man for standing outside of his own house. And the prison guards who locked a naked inmate in a cell filled with raw sewage and “massive amounts” of human feces. And the cop who, without warning, shot a 15-year-old who was on his way to school. And the cops who received qualified immunity after siccing a police dog on a person who’d surrendered. It doesn’t take much thought to conclude that such courses of action were morally bankrupt.

Then there’s the notion that police officers would lose their homes and leave the force in droves should qualified immunity meet its demise. Puzzlingly, that claim hinges on the assumption that a slew of officers would lose their cases—a tacit acknowledgement that police culture needs to change.

But even so, cops themselves are almost never on the hook for the bill. Cities are. It’s certainly still not an ideal solution for taxpayers, but until police departments can grapple with reform, it’s an option that should be available for those who have their rights flagrantly violated by those that swear to protect and serve.

Incidentally, qualified immunity does not apply only to those who take that oath. It applies to all public officials. That includes, for instance, university administrators who have infringed on students’ due process rights. Carlson has been beating the campus culture war drum for a while. I assume he would not support qualified immunity in those cases, though one wonders if he knows it applies.

from Latest – Reason.com https://ift.tt/3eDNiCj
via IFTTT

Radley Balko and Rafael Mangual Debate Systemic Racism

thumbnail-pod

There is overwhelming evidence that the criminal justice system is racist.

That was the resolution of an online Soho Forum debate held on Wednesday, June 24, 2020. It featured The Washington Post‘s Radley Balko and the Manhattan Institute’s Rafael Mangual. The debate was moderated by Soho Forum Director Gene Epstein.

Arguing that America’s criminal justice system is, in fact, racist was Radley Balko, an opinion writer for The Washington Post. A former editor at Reason, Balko is also the author of Rise of the Warrior Cop and co-author of The Cadaver King and the Country Dentist.

Defending America’s criminal justice against the charge of racism was Rafael Mangual, the deputy director of legal policy at the Manhattan Insitute, who is also a contributing editor for City Journal. Mangual’s writing has appeared in The Wall Street JournalThe Atlantic, the New York Post, the Boston Herald, and The Philadelphia Inquirer.

The Soho Forum, sponsored by the Reason Foundation, is a monthly debate series at the SubCulture Theater in Manhattan’s East Village.

Voting on this debate is open until Tuesday, June 30, 2020, at noon EST.

Produced by John Osterhoudt.

from Latest – Reason.com https://ift.tt/3eDhLjJ
via IFTTT

How To Reboot the Government with Common Sense

capitol

“The virus teaches us something. It’s a wakeup call,” says Philip K. Howard, the founder of the nonprofit Common Good and author of such bestsellers as The Death of Common Sense: How Law Is Suffocating America and The Rule of Nobody: Saving America from Dead Laws and Broken Government. “The reason it spread through the country is because public health officials were delayed by over a month while they waded through the red tape of Washington to get approvals to start testing.”

Howard is not a libertarian, but he believes strongly in a limited, effective government that comes close to the libertarian vision. In the video below and through an effort called the Campaign for Common Sense, Howard pulls together an interesting set of Reason-adjacent policy wonks and pols—including former Indiana Gov. Mitch Daniels, former Indianapolis Mayor Stephen Goldsmith, and Free-Range Kids author Lenore Skenazy—to push for reducing the sheer number of rules governing virtually every aspect of our personal and commercial lives. (Howard often cites “the 5,000 rules for a family-owned orchard” as an example.)

It’s an appealing vision, and one sketched out in detail in Howard’s 2019 book, Try Common Sense. (Go here for a podcast interview I did with Howard). In a recent interview with The Washington Examiner, Howard calls for a “spring cleaning” of old and outdated regulations:

I’ll give you an example of a program in Australia a couple of decades ago. They replaced their thick rulebook on nursing homes with 31 general principles. Have a home-like setting, respect the dignity of the residents, and such. Experts scoffed. But before, the nursing-home operators were getting away with murder; within the year, the nursing homes were twice as good. They ran a study, and what they found was when people came to work and they didn’t have their noses in the rulebooks, they could internalize these principles, and they could focus on what the residents needed. And they could run their nursing homes in different ways. Most states have something like a thousand rules for their nursing homes. It’s just absurd. You’ve got to have two pictures on the wall, the window has to be this big, so many peas on the plate. It’s unbelievably granular.

The policy specifics will be rolled out over the course of the summer, but some are already public. For instance, when it comes to liability issues related to COVID-19 and the welfare of workers, the group calls for a “a special administrative court [that] will achieve the reliability needed to avoid chilling recovery. It will also avoid clogging regular courts with COVID claims.” Another plank takes aim at ending unjust protections for public employees such as cops and teachers (“in a typical year, only two of California’s 300,000 teachers are dismissed for poor performance”).

If the protests in the wake of George Floyd’s killing show anything, it’s that public opinion can coalesce rapidly around longstanding grievances. It’s unlikely that the changes the Campaign for Common Sense is calling for will explode into the public consciousness the way that calls for police reform have. But in a long summer featuring two generally unpopular candidates for president, voters might be more interested than usual in hearing about sensible pragmatic reforms.

from Latest – Reason.com https://ift.tt/3dyBGzb
via IFTTT

Tucker Carlson Might Want To End Qualified Immunity If He Actually Knew What It Was

Screen Shot 2020-06-26 at 3.07.45 PM

Last night Fox News host Tucker Carlson vigorously defended qualified immunity, the doctrine that allows public officials to avoid federal civil rights lawsuits if the way they violated your rights has not been outlined with exacting detail in previous case law.

Carlson offered an alternative definition for his viewers. “Qualified immunity means that cops can’t be personally sued when they accidentally violate people’s rights while conducting their duties,” he said. “They can be sued personally when they do it intentionally, and they often are.”

There are a few problems with the statement, the largest being that it is not true.

Qualified immunity provides no distinction between accidental and intentional rights violations. A quick review of previous qualified immunity rulings proves as much. Consider the cops in Fresno, California, who were granted qualified immunity after allegedly stealing $225,000 while carrying out a search warrant.

It was not an accidental robbery, and the U.S. Court of Appeals for the 9th Circuit acknowledged as much in their ruling last September. Though “the City Officers ought to have recognized that the alleged theft was morally wrong,” the unanimous panel wrote, it concluded that they “did not have clear notice that it violated the Fourth Amendment.” They both received qualified immunity.

Translation: The officers should’ve known that stealing from someone is morally and legally indefensible. But without a court precedent spelling that out for them, the two were off the hook, leaving the plaintiffs no recourse. That is how qualified immunity works in practice.

“Civil immunity has precisely nothing to do with anything that happened in the George Floyd case,” Carlson continued. “Just in case you were wondering, that cop is in jail.”

Again, that represents a fundamental misunderstanding around where and when qualified immunity applies. The doctrine solely pertains to civil liability—a public official who breaks the law and is awarded qualified immunity is not protected from criminal prosecution. The two are entirely unrelated, although it’s worth noting that state prosecutors often decline to bring such charges in the first place.

Put more plainly, former police officer Derek Chauvin may indeed receive qualified immunity from any civil suit brought by the family of George Floyd—the unarmed man who died after Chauvin dug his knee into Floyd’s neck for almost 9 minutes—even if Chauvin’s trial yields a murder conviction.

Carlson continued:

Qualified immunity has worked so well because police officers, maybe more than anyone else in society, must make difficult split-second decisions on the job, and a lot. They do it constantly. Whether to arrest someone, whether to conduct a search, whether to use force against a suspect. Sometimes, actions they sincerely and reasonably believe are legal are found later by courts to be unconstitutional. Sometimes the very laws they enforce are struck down. That’s not their fault, obviously, but without qualified immunity, police could be sued for that personally. They could be bankrupted they could lose their homes. That’s unfair. It would also end law enforcement. No one would serve as a police officer.

There’s quite a bit to unpack there. First, as Institute for Justice attorney Patrick Jaicomo notes, qualified immunity has nothing to do with reaction times but “is about whether the right that was violated was ‘clearly established.'” That standard was established by the Supreme Court in Harlow v. Fitzgerald (1982) in spite of Section 1983 of Title 42 of the U.S. Code, the statute that previously allowed the American public to sue for violations of their constitutional rights. It’s the epitome of the high court legislating from the bench, something conservatives typically oppose.

But perhaps Carlson’s most significant misinterpretation is his claim that cops are only caught in compromising situations when they “sincerely and reasonably” believed their misconduct was both legal and constitutional. Such a claim can only be explained by a lack of familiarity with qualified immunity case law. Take the cop who received qualified immunity after shooting a 10-year-old while in pursuit of a suspect that had no relationship to the child. The officer, sheriff’s deputy Matthew Vickers, was aiming at the boy’s nonthreatening dog.

There were also the cops who were granted qualified immunity after assaulting and arresting a man for standing outside of his own house. And the prison guards who locked a naked inmate in a cell filled with raw sewage and “massive amounts” of human feces. And the cop who, without warning, shot a 15-year-old who was on his way to school. And the cops who received qualified immunity after siccing a police dog on a person who’d surrendered. It doesn’t take much thought to conclude that such courses of action were morally bankrupt.

Then there’s the notion that police officers would lose their homes and leave the force in droves should qualified immunity meet its demise. Puzzlingly, that claim hinges on the assumption that a slew of officers would lose their cases—a tacit acknowledgement that police culture needs to change.

But even so, cops themselves are almost never on the hook for the bill. Cities are. It’s certainly still not an ideal solution for taxpayers, but until police departments can grapple with reform, it’s an option that should be available for those who have their rights flagrantly violated by those that swear to protect and serve.

Incidentally, qualified immunity does not apply only to those who take that oath. It applies to all public officials. That includes, for instance, university administrators who have infringed on students’ due process rights. Carlson has been beating the campus culture war drum for a while. I assume he would not support qualified immunity in those cases, though one wonders if he knows it applies.

from Latest – Reason.com https://ift.tt/3eDNiCj
via IFTTT

Radley Balko and Rafael Mangual Debate Systemic Racism

thumbnail-pod

There is overwhelming evidence that the criminal justice system is racist.

That was the resolution of an online Soho Forum debate held on Wednesday, June 24, 2020. It featured The Washington Post‘s Radley Balko and the Manhattan Institute’s Rafael Mangual. The debate was moderated by Soho Forum Director Gene Epstein.

Arguing that America’s criminal justice system is, in fact, racist was Radley Balko, an opinion writer for The Washington Post. A former editor at Reason, Balko is also the author of Rise of the Warrior Cop and co-author of The Cadaver King and the Country Dentist.

Defending America’s criminal justice against the charge of racism was Rafael Mangual, the deputy director of legal policy at the Manhattan Insitute, who is also a contributing editor for City Journal. Mangual’s writing has appeared in The Wall Street JournalThe Atlantic, the New York Post, the Boston Herald, and The Philadelphia Inquirer.

The Soho Forum, sponsored by the Reason Foundation, is a monthly debate series at the SubCulture Theater in Manhattan’s East Village.

Voting on this debate is open until Tuesday, June 30, 2020, at noon EST.

Produced by John Osterhoudt.

from Latest – Reason.com https://ift.tt/3eDhLjJ
via IFTTT

RIP Lester Grinspoon, Who Encouraged Americans To Reconsider Demonized Drugs

Lester-Grinspoon-NORML

Lester Grinspoon, a leading drug policy reformer who died yesterday at the age of 92, was an optimist. “Whatever the cultural conditions that have made it possible, there is no doubt that the discussion about marihuana has become much more sensible,” Grinspoon wrote in 1977. “If the trend continues, it is likely that within a decade marihuana will be sold in the United States as a legal intoxicant.”

It turned out that Grinspoon was off by a few decades. He did not anticipate the reaction against adolescent pot smoking that would lead to an intensified war on weed during the Reagan administration, when public support for legalization dropped after rising during the 1970s. But Grinspoon lived to see marijuana become a legal intoxicant in 11 states, nine of which have government-licensed shops serving recreational consumers. Marijuana retailers not only are legitimate businesses in those nine states; they were deemed “essential” during COVID-19 lockdowns in all but one, meaning they were allowed to stay open as other merchants were forced to close.

That is a remarkable development after a century of pot prohibition, which began at the state level in 1911 and culminated in the federal Marihuana Tax Act of 1937. The ongoing collapse of that regime is due in no small part to Grinspoon’s tenacious advocacy of a more rational and tolerant approach to America’s most popular illegal drug.

Grinspoon’s career as a reformer spanned half a century, beginning with his 1971 book Marihuana Reconsidered. When he published that book, Grinspoon was a professor of psychiatry at Harvard Medical School. That respectable perch gave him credibility as he made a case that was still highly controversial at a time when nearly nine out of 10 Americans thought marijuana should remain illegal.

Grinspoon, whose old-fashioned spelling of the drug’s name harked back to the era of Reefer Madness, originally set out to present credible evidence of marijuana’s harms to pot-smoking kids who were ignoring the government’s warnings. “I was concerned about all these young people who were using marijuana and destroying themselves,” he told me in 1993. But after examining the research on marijuana’s effects, he said, “I realized that I had been brainwashed, like everybody else in the country.” In his book, he methodically debunked many scary claims about pot, including fears that it caused crime, sexual excess, psychosis, brain damage, physical dependence, and addiction to other drugs.

The following year, the Nixon-appointed National Commission on Marihuana and Drug Abuse reached broadly similar conclusions: that the dangers of pot had been greatly exaggerated and could not justify punitive treatment of its users. The commission introduced the concept of decriminalization, which the newly formed National Organization for the Repeal of Marijuana Laws (NORML)—which early on replaced repeal with reform in its name—soon adopted as a goal. At a time when some 600,000 people were being arrested each year on marijuana charges, most for simple possession, the strategy had broad appeal. Liberals were concerned about the injustice of sending college students to jail for carrying a joint or two. Conservatives worried about the mass alienation and disrespect for the law that the policy was breeding.

In 1973 Oregon became the first state to “decriminalize” marijuana, making possession of less than an ounce a civil offense punishable by a maximum fine of $100. By the end of the decade, 11 states had decriminalized possession, a policy endorsed by President Jimmy Carter, the American Bar Association, the American Medical Association, and the National Council of Churches. Every other state had reduced the penalty for simple possession, nearly all of them changing the offense from a felony to a misdemeanor. Most allowed conditional discharge, without a criminal record.

That was the context of Grinspoon’s optimism in 1977, when he published an updated edition of Marihuana Reconsidered. But as he noted at the time, decriminalization, while a clear improvement, was not an adequate solution, and it was inherently unstable. “As long as marihuana use and especially marihuana traffic remain in this peculiar position neither within nor outside the law, demands for a consistent policy would remain strong,” he wrote. “We would have to ask ourselves why, if using marihuana is relatively harmless, selling it is a felony; then we would have to decide whether to return to honest prohibition or move on to legalization.”

Although it took longer than Grinspoon expected, Americans eventually grappled with that conundrum and resolved it in favor of legalization, which two-thirds of respondents supported in the most recent Gallup poll. Given the current climate of opinion, it is easy to overlook the courage and perseverance it took to calmly, graciously, and persistently advocate a cause that remained broadly unpopular until the last decade or so.

But Grinspoon, who served for many years on NORML’s board of directors, did more than that. In his 1993 book Marihuana: The Forbidden Medicine, co-authored by James B. Bakalar, he made the case that cannabis—which was a common ingredient in patent medicines during the 19th century, when it was extravagantly promoted as a cure for a wide range of maladies, including coughs, colds, corns, cholera, and consumption—actually had scientifically verifiable medical potential. That was three years before California became the first state to allow medical use of marijuana, a policy that was eventually adopted by 32 other states.

The significance of that development is hard to overstate, because it not only highlighted the potential benefits of a long-demonized plant but focused attention on its side effects, an obvious concern when medically frail people use it for symptom relief. The hazards of marijuana, in turned out, compared quite favorably to those of many widely prescribed pharmaceuticals. And in states like California, where loose rules allowed pretty much anyone to legally obtain marijuana as long as they had a doctor’s note, permitting medical use became a test for broader legalization. The sky did not fall—a point recognized by the voters who eventually approved tolerance of recreational use in California and elsewhere.

Grinspoon’s position on marijuana’s therapeutic potential was ultimately endorsed, to at least some extent, by such scientific authorities as the Food and Drug Administration (FDA) and the National Academies of Sciences, Engineering, and Medicine. Two years ago, the FDA, which had approved a synthetic version of THC as a treatment for AIDS wasting syndrome and the side effects of cancer chemotherapy in the 1980s, authorized the sale of Epidiolex, the first cannabis-derived medication to be approved by the U.S. government, as a treatment for two rare kinds of epilepsy.

Grinspoon’s advocacy was not limited to marijuana. In their 1979 book Psychedelic Drugs Reconsidered, he and Bakalar gave that class of psychoactive substances, which had long terrified politicians and the general public, the same sort of demystifying treatment that Grinspoon had applied to marijuana eight years earlier. As with marijuana, government officials have acknowledged at least some of the truth Grinspoon was telling. In 2018, the same year it approved Epidiolex, the FDA recognized psilocybin as a “breakthrough therapy” for depression, signaling that it might be approved as a prescription drug sometime in the next few years. Meanwhile, state and local activists are pushing for legal tolerance of nonmedical psilocybin use. They scored their first victory in Denver last year.

It is safe to say that Americans, most of whom favor the legalization of psychedelics as psychotherapeutic catalysts, are much calmer about those drugs than they were in the 1960s and ’70s. That sort of reevaluation does not come out of thin air. It is a function of the arguments and evidence marshaled by pioneering public intellectuals like Grinspoon.

Grinspoon did not simply argue that the government should allow the use of drugs that prove to be “relatively harmless,” as he described marijuana in the 1970s. In the 1984 book Drug Control in a Free Society, he and Bakalar delved into the deeper issues raised by politicians’ attempts to enforce their pharmacological prejudices.

Starting with John Stuart Mill’s On Liberty and with nods toward libertarians such as Thomas Szasz and Robert Nozick, Grinspoon and Bakalar thoughtfully challenged the case for paternalistic drug policies; questioned the conventional understanding of addiction; noted how a sweeping conception of public health becomes a license for all manner of meddling in personal choices; highlighted the arbitrary legal distinction between alcohol and other drugs; and insisted that the pleasure people get from drugs should count for something in any calculus of prohibition’s cost and benefits. It is a slim, wisdom-packed volume that is still relevant 36 years later.

Americans have mostly accepted Grinspoon’s position on marijuana, and they may be coming around on psychedelics as well. I am less hopeful that they will ever think logically, consistently, and systematically about drug policy in general. But if they do, it will thanks to dogged dissidents like Grinspoon.

from Latest – Reason.com https://ift.tt/3eDO6qy
via IFTTT

The Fourth Bubble – Instability & The Problem Of Debt

The Fourth Bubble – Instability & The Problem Of Debt

Tyler Durden

Fri, 06/26/2020 – 15:25

Authored by Lance Roberts via RealInvestmentAdvice.com,

It didn’t take long. Over the last several years, we have discussed the risk of excessive monetary policy inflating a bubble in a variety of assets from debt, to real estate, to stocks. In March, it appeared as if the bubble had finally popped. However, the Fed’s quick response and massive monetary interventions ceased the asset bubble’s deflation and reinflated it.

Another Bubble

The idea of another bubble was put forth recently by Jeremy Grantham of GMO fame:

“At GMO, we dealt with three major events before this crisis, and rightly or wrongly, we felt ‘nearly certain’ that we would be right sooner or later. We exited Japan 100% in 1987 at 45x and watched it go to 65x (for a second, more significant than the U.S.) before a downward readjustment of 30 years and counting. In early 1998 we fought the Tech bubble from 21x (equal to the previous record high in 1929) to 35x before a 50% decline. Through 2007 we led our clients relatively painlessly through the housing bust. 

In all three, we felt we were nearly sure to be right. Japan, the Tech bubbles, and 1929, which sadly I missed, were not new types of events. They were merely extreme cases akin to South Sea Bubble investor euphoria and madness. The 2008 event was also easier if you focused on the U.S. housing euphoria, a 3-sigma, 100-year event, or, simply, unique. We calculated that a return trip to the old price trend and a typical overrun in those extreme house prices would remove $10 trillion of perceived wealth from U.S. consumers and guarantee the worst recession for decades. All these events echoed historical precedents. And from these precedents, we drew confidence.

But this event is unlike all those. It is new, and there can be no near certainties, merely strong possibilities. Such is why Ben Inker, our Head of Asset Allocation, is nervous. and this is why you are worried or should be.”

Don’t Blame The Pandemic

While much of the media points to the pandemic as the “cause” of the economic problems,  it isn’t.

COVID-19 was merely the “pin the pricked the bubble.” If the pre-pandemic economy were as strong as previously reported, it would have weathered the blow better. However, the 5-year average growth of wages, productivity, and real economic growth tells the story.

Consequently, the surge in the stock market over the last decade gave an “illusion” of prosperity, that “prosperity” was relegated to a relatively small portion of the broader economy. As noted recentlythe Fed’s policies are responsible for the “wealth gap.” 

“This isn’t surprising. A recent research report by BCA confirms one of the causes of the rising wealth gap in the U.S. The top-10% of income earners own 88% of the stock market, while the bottom-90% owns just 12%.”

Reliance On Debt To Solve A Debt Problem

The reliance on debt, or what the Austrians refer to as a “credit induced boom,” has reached its inevitable conclusion. The unsustainable credit-sourced boom, which led to artificially stimulated borrowing, created diminished investment opportunities. Those diminished investment opportunities lead to widespread malinvestments, which we saw play out “real-time” in subprime mortgages in 2008 and excessive “share buybacks” over the last few years.

Now companies are struggling to take on more debt just to survive the economic downturn. Even as balance sheets are levering up, stock buybacks, a main support of the stock market over the last decade, are dropping sharply.

The Problem Of Debt

Unfortunately, given the Fed stopped the “debt reversion process” with the latest rounds of monetary interventions, nearly $4.00 of debt are required to create $1 of economic growth. This all but guarantees that future economic growth will be further retarded.

Such is a point made previously:

“Before the “Financial Crisis,” the economy had a linear growth trend of real GDP of 3.2%. Following the 2008 recession, the growth rate dropped to the exponential growth trend of roughly 2.2%. Instead of reducing the debt problems, unproductive debt, and leverage increased.”

“The ‘COVID-19’ crisis led to a debt surge to new highs. Such will result in a retardation of economic growth to 1.5% or less. While the stock market may rise due to the Fed, only the 10% of the population owning 88% of the market will benefit. Going forward, the economic bifurcation will deepen to the point where 5% of the population owns virtually all of it.

That is not economic prosperity. It is a distortion of economics.

Bubbles, Bubbles, Bubbles

Jerome Powell clearly understands this risk. After a decade of monetary infusions and low interest rates, the Fed has created the largest asset bubble in history. However, trapped by their own policies, any reversal leads to almost immediate catastrophe as seen in 2018, and again in 2020.

As previously stated:

“In the U.S., the Federal Reserve has been the catalyst behind every preceding financial event since they became ‘active,’ monetarily policy-wise, in the late 70’s.”

Not surprisingly, after the market correction in March, the immediate response stopped the correction from becoming a full-fledged bear market. However, this only forestalled the inevitable as we have seen a sharp rise in “speculative fervor” ever since. Investors, and the financial media, continue to assume there is investment risk due to the Fed. To quote Dr. Irving Fisher:

“Stocks have reached a permanently high plateau.”

Instability

It is imperative for the Fed that market participants, and consumers, “believe” in their actions. With the entirety of the financial ecosystem more heavily levered than ever, the “instability of stability” remains the most significant risk.

“The ‘stability/instability paradox’ assumes that all players are rational, and such rationality implies avoidance of complete destruction. In other words, all players will act rationally, and no one will push ‘the big red button.’”

The Fed had hoped they would have time, after a decade of the most unprecedented monetary policy program in U.S. history, to navigate the risks built up in the system. Unfortunately, they ran out of time, and the markets stopped “acting rationally.”

By not letting the system correct, letting weak fail, and allowing valuations to revert, the Fed has trapped itself into an even bigger bubble. One way to view this problem is by looking at the Nasdaq 100 versus the S&P 500 index. That ratio is now at the highest level ever.

Furthermore, that rise was not a function of a broad number of companies participating due to stronger economic growth and profits, but rather just 5-companies driving the surge.

If you don’t think this is important, I suggest you re-read Bob Farrell’s Rule #7:

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.”

Bubbles Aren’t About Price

“Market bubbles have NOTHING to do with valuations or fundamentals.”

As we discussed last week, the market is now trading nearly 90% above multiple long-term valuation measures.

“One thing I had hoped for in 2018-2019 is a correction large enough to revert some of the excessive valuation levels which existed. Such would provide higher future returns over the next decade. Such would allow investors to reach their investment goals.

Instead, the Fed’s actions halted the correction. Subsequently, the ‘clearing process’ was not allowed to occur. The outcome has been increased levels of corporate leverage, and valuations remain grossly elevated on many different levels.”

Since stock market “bubbles” are a reflection of speculation, greed, emotional biases, valuations are only a reflection of those emotions.

It’s Elementary

Bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let’s look at an elementary example. The chart below is the long-term valuation of the S&P 500 going back to 1871.

Notice that except for 1929, 2000, and 2007, every other major market crash occurred with valuations at levels LOWER than they are currently. 

Secondly, market crashes have been the result of things unrelated to valuation levels. Such as liquidity issues, government actions, monetary policy mistakes, recessions, and inflationary spike, or even a “pandemic.” Those events were the catalyst, or trigger, which started the “reversion in sentiment” by investors.

Market crashes are an “emotionally” driven imbalance in supply and demand. Such has nothing to do with fundamentals. It is strictly an emotional panic, which is ultimately reflected by a sharp devaluation in market fundamentals.

That is what started in March.

The Fed’s actions have only temporarily halted its inevitable completion.

The 4th-Bubble

Our previous prediction:

“The current belief is the Fed will implement QE at the first hint of a more protracted downturn in the market. However, as suggested by the Fed, QE will likely only be employed when rate reductions aren’t enough.”

Credit markets’ implosion made rate reductions completely ineffective and has pushed the Fed into the most extreme monetary policy bailout in the history of the world.

So far, the Fed was able to inflate another asset bubble to restore consumer confidence and stabilize the credit market’s functioning. The problem is that since the Fed never unwound their previous policies, current policies are likely to have a more muted long-term effect.

However, with 50+ million unemployed, wage growth declining, bankruptcies on the rise, and banks tightening lending standards, the Fed’s attempt to inflate another bubble to offset the damage from the deflation of the last bubble, will work.

It has taken a massive amount of interventions by Central Banks to keep economies afloat globally over the last decade. There is little evidence that growth will recover following this crisis to the degree many anticipate.

Problems QE Can’t Fix

There are numerous problems which the Fed’s current policies can not fix:

  • A decline in savings rates

  • Aging demographics

  • Heavily indebted economy

  • Decline in exports

  • Slowing domestic economic growth rates.

  • Underemployed younger demographic.

  • Inelastic supply-demand curve

  • Weak industrial production

  • Dependence on productivity increases

The lynchpin in the U.S., remains demographics, and interest rates. As the aging population grows, they are becoming a net drag on “savings,” the dependency on the “social welfare net” will explode as employment and economic stability plummets, and the “pension problem” has yet to be realized.

While the current surge in QE has been successful in inflating another bubble, there is a limit to the ability to continue pulling forward future consumption to stimulate economic activity. There are only so many autos, houses, etc., that consumers can purchase within a given cycle. 

Unfortunately, extremely high levels of unemployment, lack of incomes, and a slow economic recovery will likely undermine those hopes.

One thing is for certain. The Federal Reserve will never be able to raise rates or reduce monetary policy ever again.

The only question is, what will the Fed do if “all the king’s men can’t put Humpty Dumpty back together again?”

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

House Democrats Approve Bill To Make Washington DC 51st State

House Democrats Approve Bill To Make Washington DC 51st State

Tyler Durden

Fri, 06/26/2020 – 15:05

The Democrat-controlled House voted on Friday to make Washington D.C. the country’s 51st state and rename it “Washington, Douglass Commonwealth,” replacing Italian explorer Christopher Columbus with Maryland-born abolitionist Frederick Douglas.

Precisely zero House Republicans voted for the bill, which passed 232 to 180. Democratic Rep. Collin Peterson (MN) – who voted against impeaching President Trump, voted no along with the Republicans, as did independent Rep. Justin Amash.

The bill is expected to die in the Senate, while Trump also opposes the move which would likely grant the new state two Democratic senators.

On Thursday, Joe Biden(‘s handlers) tweeted: “DC should be a state. Pass it on,” adding to a long chain of Democrats ‘passing it on’ which was started by Ilyse Hogue, president of pro-choice organization NARAL.

Keep in mind that House Democrats – who just weeks ago appeared for a choreographed ‘kneeling’ while dressed in African attire – know the DC statehood vote has no chance of passing, and is therefore yet another giant virtue signaling circlejerk.

via ZeroHedge News https://ift.tt/2YzRM7e Tyler Durden

Students Are Demanding A Professor Be Fired For Opposing Slavery

Students Are Demanding A Professor Be Fired For Opposing Slavery

Tyler Durden

Fri, 06/26/2020 – 14:51

Authored by Steve Watson via Summit News,

Students are petitioning to have a professor at Loyola University New Orleans fired over his opinions on slavery, even though he vehemently opposes it.

Economics professor Walter Block says he opposes slavery because he is a libertarian, but that reasoning isn’t good enough for some students, who wish to see the professor removed because he doesn’t have exactly the same opinions as they do.

petition, signed by over 600 students, alleges that Block has ‘racist and sexist beliefs’.

The petition claims that Block “has publicly stated that he believes slavery to be wrong because it goes against Libertarianism, not because it is morally wrong.”

“If Loyola is really wanting to remove racism, they should remove racists from teaching,” it adds.

“While it is important to have professors with different views and opinions and beliefs, racist and sexist beliefs should not be a part of this,” it continues, adding “It is harmful to any non-men and any Black people to be taught that slavery isn’t morally wrong, to be taught that women don’t deserve to be paid and treated equally.”

The students also claim that Block has “ableist” opinions, in that he discriminates against people with disabilities. It claims that Block once told a student that he thinks the “Americans with Disabilities Act was a terrible law”.

The Spectator managed to get a comment from Block, as the professor told the publication “Slavery is wrong, evil and should be outlawed, and slavers be considered criminals and put in jail because it is a rights violation; it is an abomination.”

He further notes, however, that “woke” students are trying to remove him because they are not capable of accepting, co-existing with,  or debating a diversity of discourse.

“The woke people who want me fired do not wish to engage in civil dialogue or debate. Also, thank goodness for academic freedom and what little intellectual diversity remains on campus,” Block urged.

The University appears to be standing by Block for now, with Interim Provost Maria Calzada commenting that academic freedoms need to be upheld.

“We have serious legal constraints on our ability to fire faculty for that which they publish, even if we find it anathema,” Calzada said, adding “We cannot be accredited as a university without policies of academic freedom.”

This case perfectly illustrates how the woke mob don’t really care about freedom of expression or diversity of opinion. You may hold morally sound beliefs but still be targeted for cancellation because you do not have the exact same opinions as they do.

via ZeroHedge News https://ift.tt/3i5Vq0t Tyler Durden

RIP Lester Grinspoon, Who Encouraged Americans To Reconsider Demonized Drugs

Lester-Grinspoon-NORML

Lester Grinspoon, a leading drug policy reformer who died yesterday at the age of 92, was an optimist. “Whatever the cultural conditions that have made it possible, there is no doubt that the discussion about marihuana has become much more sensible,” Grinspoon wrote in 1977. “If the trend continues, it is likely that within a decade marihuana will be sold in the United States as a legal intoxicant.”

It turned out that Grinspoon was off by a few decades. He did not anticipate the reaction against adolescent pot smoking that would lead to an intensified war on weed during the Reagan administration, when public support for legalization dropped after rising during the 1970s. But Grinspoon lived to see marijuana become a legal intoxicant in 11 states, nine of which have government-licensed shops serving recreational consumers. Marijuana retailers not only are legitimate businesses in those nine states; they were deemed “essential” during COVID-19 lockdowns in all but one, meaning they were allowed to stay open as other merchants were forced to close.

That is a remarkable development after a century of pot prohibition, which began at the state level in 1911 and culminated in the federal Marihuana Tax Act of 1937. The ongoing collapse of that regime is due in no small part to Grinspoon’s tenacious advocacy of a more rational and tolerant approach to America’s most popular illegal drug.

Grinspoon’s career as a reformer spanned half a century, beginning with his 1971 book Marihuana Reconsidered. When he published that book, Grinspoon was a professor of psychiatry at Harvard Medical School. That respectable perch gave him credibility as he made a case that was still highly controversial at a time when nearly nine out of 10 Americans thought marijuana should remain illegal.

Grinspoon, whose old-fashioned spelling of the drug’s name harked back to the era of Reefer Madness, originally set out to present credible evidence of marijuana’s harms to pot-smoking kids who were ignoring the government’s warnings. “I was concerned about all these young people who were using marijuana and destroying themselves,” he told me in 1993. But after examining the research on marijuana’s effects, he said, “I realized that I had been brainwashed, like everybody else in the country.” In his book, he methodically debunked many scary claims about pot, including fears that it caused crime, sexual excess, psychosis, brain damage, physical dependence, and addiction to other drugs.

The following year, the Nixon-appointed National Commission on Marihuana and Drug Abuse reached broadly similar conclusions: that the dangers of pot had been greatly exaggerated and could not justify punitive treatment of its users. The commission introduced the concept of decriminalization, which the newly formed National Organization for the Repeal of Marijuana Laws (NORML)—which early on replaced repeal with reform in its name—soon adopted as a goal. At a time when some 600,000 people were being arrested each year on marijuana charges, most for simple possession, the strategy had broad appeal. Liberals were concerned about the injustice of sending college students to jail for carrying a joint or two. Conservatives worried about the mass alienation and disrespect for the law that the policy was breeding.

In 1973 Oregon became the first state to “decriminalize” marijuana, making possession of less than an ounce a civil offense punishable by a maximum fine of $100. By the end of the decade, 11 states had decriminalized possession, a policy endorsed by President Jimmy Carter, the American Bar Association, the American Medical Association, and the National Council of Churches. Every other state had reduced the penalty for simple possession, nearly all of them changing the offense from a felony to a misdemeanor. Most allowed conditional discharge, without a criminal record.

That was the context of Grinspoon’s optimism in 1977, when he published an updated edition of Marihuana Reconsidered. But as he noted at the time, decriminalization, while a clear improvement, was not an adequate solution, and it was inherently unstable. “As long as marihuana use and especially marihuana traffic remain in this peculiar position neither within nor outside the law, demands for a consistent policy would remain strong,” he wrote. “We would have to ask ourselves why, if using marihuana is relatively harmless, selling it is a felony; then we would have to decide whether to return to honest prohibition or move on to legalization.”

Although it took longer than Grinspoon expected, Americans eventually grappled with that conundrum and resolved it in favor of legalization, which two-thirds of respondents supported in the most recent Gallup poll. Given the current climate of opinion, it is easy to overlook the courage and perseverance it took to calmly, graciously, and persistently advocate a cause that remained broadly unpopular until the last decade or so.

But Grinspoon, who served for many years on NORML’s board of directors, did more than that. In his 1993 book Marihuana: The Forbidden Medicine, co-authored by James B. Bakalar, he made the case that cannabis—which was a common ingredient in patent medicines during the 19th century, when it was extravagantly promoted as a cure for a wide range of maladies, including coughs, colds, corns, cholera, and consumption—actually had scientifically verifiable medical potential. That was three years before California became the first state to allow medical use of marijuana, a policy that was eventually adopted by 32 other states.

The significance of that development is hard to overstate, because it not only highlighted the potential benefits of a long-demonized plant but focused attention on its side effects, an obvious concern when medically frail people use it for symptom relief. The hazards of marijuana, in turned out, compared quite favorably to those of many widely prescribed pharmaceuticals. And in states like California, where loose rules allowed pretty much anyone to legally obtain marijuana as long as they had a doctor’s note, permitting medical use became a test for broader legalization. The sky did not fall—a point recognized by the voters who eventually approved tolerance of recreational use in California and elsewhere.

Grinspoon’s position on marijuana’s therapeutic potential was eventually endorsed, to at least some extent, by such scientific authorities as the Food and Drug Administration (FDA) and the National Academies of Sciences, Engineering, and Medicine. Two years ago, the FDA, which had approved a synthetic version of THC as a treatment for AIDS wasting syndrome and the side effects of cancer chemotherapy in the 1980s, authorized the sale of Epidiolex, the first cannabis-derived medication to be approved by the U.S. government, as a treatment for two rare kinds of epilepsy.

Grinspoon’s advocacy was not limited to marijuana. In their 1979 book Psychedelic Drugs Reconsidered, he and Bakalar gave that class of psychoactive substances, which had long terrified politicians and the general public, the same sort of demystifying treatment that Grinspoon had applied to marijuana eight years earlier. As with marijuana, government officials have acknowledged at least some of the truth Grinspoon was telling. In 2018, the same year it approved Epidiolex, the FDA recognized psilocybin as a “breakthrough therapy” for depression, signaling that it might be approved as a prescription drug sometime in the next few years. Meanwhile, state and local activists are pushing for legal tolerance of nonmedical psilocybin use. They scored their first victory in Denver last year.

It is safe to say that Americans, most of whom favor the legalization of psychedelics as psychotherapeutic catalysts, are much calmer about those drugs than they were in the 1960s and ’70s. That sort of reevaluation does not come out of thin air. It is a function of the arguments and evidence marshaled by pioneering public intellectuals like Grinspoon.

Grinspoon did not simply argue that the government should allow the use of drugs that prove to be “relatively harmless,” as he described marijuana in the 1970s. In the 1984 book Drug Control in a Free Society, he and Bakalar delved into the deeper issues raised by politicians’ attempts to enforce their pharmacological prejudices.

Starting with John Stuart Mill’s On Liberty and with nods toward libertarians such as Thomas Szasz and Robert Nozick, Grinspoon and Bakalar thoughtfully challenged the case for paternalistic drug policies; questioned the conventional understanding of addiction; noted how a sweeping conception of public health becomes a license for all manner of meddling in personal choices; highlighted the arbitrary legal distinction between alcohol and other drugs; and insisted that the pleasure people get from drugs should count for something in any calculus of prohibition’s cost and benefits. It is a slim, wisdom-packed volume that is still relevant 36 years later.

Americans have mostly accepted Grinspoon’s position on marijuana, and they may be coming around on psychedelics as well. I am less hopeful that they will ever think logically, consistently, and systematically about drug policy in general. But if they do, it will thanks to dogged dissidents like Grinspoon.

from Latest – Reason.com https://ift.tt/3eDO6qy
via IFTTT