Chelsea Manning Faces $1,000-a-Day Fines, Was Imprisoned Again Yesterday After Refusing to Testify for Grand Jury

“I will not cooperate with this or any other grand jury,” Chelsea Manning told reporters Thursday from outside a federal courthouse in Virginia. She is now back behind bars for this refusal, after being released just last week from 68 days’ confinement (much of it in solitary).

U.S. District Court Judge Anthony Trenga hasn’t merely ordered Manning back into federal custody. He ruled that Manning must pay for the privilege of having her freedom taken away: $500 per day after 30 days and $1,000 per day after 60 days.

“While coercive financial penalties are commonly assessed against corporate witnesses, which cannot be jailed for contempt, it is less usual to see them used against a human witness,” the Sparrow Project points out.

Manning has already served seven years in prison for her 2010 whistleblowing efforts, in which she leaked damning information about U.S. military operations in Afghanistan and Iraq to WikiLeaks. This year, the feds have attempted to haul Manning before two separate grand juries to provide testimony related to these acts.

Both times, Manning has refused, objecting to the secretive nature of the grand jury proceedings. She was forced back into federal detention yesterday, “exactly one week after her release…for refusal to testify before a separate Grand Jury that sought answers to identical questions that were asked of her today,” Sparrow Project notes.

Manning’s lawyer, Moira Meltzer-Cohen, says in a statement:

In 2010 Chelsea made a principled decision to let the world see the true nature [of] modern asymmetric warfare. It is telling that the United states has always been more concerned with the disclosure of those documents than with the damning substance of the disclosures.

The American government relies on the informed consent of the governed, and the free press is the vigorous mechanism to keep us informed. It is a point of pride for this administration to be publicly hostile to the press. Grand Juries and prosecutions like this one broadcast an expanding threat to the press and function to undermine the integrity of the system according to the government’s own laws.

Meltzer-Cohen urged members of the press “to stand up for Chelsea in the same manner she has consistently stood up for the press.”


FREE MINDS

“Nobody should be in jail for smoking marijuana,” said 2020 presidential candidate Joe Biden this week.

His campaign spokesperson told CNN that if elected president, Biden would “allow states to continue to make their own choices regarding legalization and would seek to make it easier to conduct research on marijuana’s positive and negative health impacts by rescheduling it as a schedule 2 drug.”


FREE MARKETS

About that Apple antitrust opinion authored by Justice Brett Kavanaugh… It’s had a lot of conservatives in tizzy fits. But “Kavanaugh’s decision in Apple is not some harbinger of incipient leftism,” writes Will Chamberlain at Human Events:

The antitrust question in Apple required the Justices to parse, and apply, a poorly written, unclear, and bizarre Supreme Court decision: Illinois Brick Co. v. Illinois, decided in 1977….

This is not some grand dispute about the virtues or defects of antitrust law; it’s about the meaning of one specific Supreme Court case, and just who should be allowed to sue for an antitrust violation.


QUICK HITS

  • “Section 230 is not about neutrality. Period. Full stop,” Sen. Ron Wyden (D–Ore.), the original author of the statute, tells Vox. Many on the right and left have been trying to argue otherwise.
  • Is Kamala Harris the Jan Brady of 2020?
  • Oakland could follow Denver in decriminalizing psychedelic mushrooms.
  • Taiwan will recognize same-sex marriages:

from Latest – Reason.com http://bit.ly/2w69vnW
via IFTTT

Former NHTSA Head: Tesla’s “Defective” Autopilot Uses Drivers As “Guinea Pigs”, Should Be Recalled

Perhaps the most notable take on the recent fatal Autopilot related accident in Delray Beach, Florida has come from a former acting head of the NHTSA.

For months, we have been asking why the NHTSA has been dragging its feet in taking action regarding Tesla’s obviously mislabeled and misinterpreted driver assistance software, “Autopilot”, which continues to be at the center of numerous Tesla accidents reported on by the mainstream media.

Though the NHTSA has yet to take any meaningful action regarding Autopilot, they may be compelled to pay closer attention after comments made yesterday by a former agency official.

Speaking to the LA Times, David Friedman, who was acting head of the NHTSA in 2014 and is now vice president of advocacy for Consumer Reports, said he was “surprised the agency didn’t declare Autopilot defective after the [2016] Gainesville crash and seek a recall.”

“Their system cannot literally see the broad side of an 18-wheeler on the highway,” Friedman said.

He also said that Tesla’s system was “too slow” to warn the driver to pay attention, unlike other systems that Consumer Reports has tested from GM. Recall, just days ago we wrote about the family of a killed Model X driver suing Tesla, claiming his “state-of-the-art” Tesla lacked safety features, such as an automatic emergency braking system, which the family pointed out was available on less expensive vehicles from other carmakers.

Friedman continued:

“Tesla needs a better system to more quickly detect whether drivers are paying attention and warn them if they are not. Tesla has for too long been using human drivers as guinea pigs. This is tragically what happens.”

“There are multiple systems out on the roads right now that take over some level of steering and speed control, but there’s only one of them that we keep hearing about where people are dying or getting into crashes. That kind of stands out,” Friedman concluded.

We reported yesterday that the NTSB had released its preliminary report  regarding a fatal Tesla crash in Delray Beach, Florida that took place on March 1. The report found that Tesla’s Autopilot “was active at the time of the crash”.

The report describes the events leading up to the incident:

As the Tesla approached the private driveway, the combination vehicle pulled from the driveway and traveled east across the southbound lanes of US 441. The truck driver was trying to cross the highway’s southbound lanes and turn left into the northbound lanes.

According to surveillance video in the area and forward-facing video from the Tesla, the combination vehicle slowed as it crossed the southbound lanes, blocking the Tesla’s path. The Tesla struck the left side of the semitrailer. The roof of the Tesla was sheared off as the vehicle underrode the semitrailer and continued south. The Tesla came to a rest on the median, about 1,600 feet from where it struck the semitrailer. The 50-year-old male Tesla driver died as a result of the crash. 

The report then goes on to note that Autopilot had been engaged 10 seconds before the collision and that the vehicle, traveling about 68 mph, didn’t execute evasive maneuvers: 

The driver engaged the Autopilot about 10 seconds before the collision. From less than 8 seconds before the crash to the time of impact, the vehicle did not detect the driver’s hands on the steering wheel. Preliminary vehicle data show that the Tesla was traveling about 68 mph when it struck the semitrailer. Neither the preliminary data nor the videos indicate that the driver or the ADAS executed evasive maneuvers.

NHTSA, it’s your move. 

via ZeroHedge News http://bit.ly/2Jqnm14 Tyler Durden

Chelsea Manning Faces $1,000-a-Day Fines, Was Imprisoned Again Yesterday After Refusing to Testify for Grand Jury

“I will not cooperate with this or any other grand jury,” Chelsea Manning told reporters Thursday from outside a federal courthouse in Virginia. She is now back behind bars for this refusal, after being released just last week from 68 days’ confinement (much of it in solitary).

U.S. District Court Judge Anthony Trenga hasn’t merely ordered Manning back into federal custody. He ruled that Manning must pay for the privilege of having her freedom taken away: $500 per day after 30 days and $1,000 per day after 60 days.

“While coercive financial penalties are commonly assessed against corporate witnesses, which cannot be jailed for contempt, it is less usual to see them used against a human witness,” the Sparrow Project points out.

Manning has already served seven years in prison for her 2010 whistleblowing efforts, in which she leaked damning information about U.S. military operations in Afghanistan and Iraq to WikiLeaks. This year, the feds have attempted to haul Manning before two separate grand juries to provide testimony related to these acts.

Both times, Manning has refused, objecting to the secretive nature of the grand jury proceedings. She was forced back into federal detention yesterday, “exactly one week after her release…for refusal to testify before a separate Grand Jury that sought answers to identical questions that were asked of her today,” Sparrow Project notes.

Manning’s lawyer, Moira Meltzer-Cohen, says in a statement:

In 2010 Chelsea made a principled decision to let the world see the true nature [of] modern asymmetric warfare. It is telling that the United states has always been more concerned with the disclosure of those documents than with the damning substance of the disclosures.

The American government relies on the informed consent of the governed, and the free press is the vigorous mechanism to keep us informed. It is a point of pride for this administration to be publicly hostile to the press. Grand Juries and prosecutions like this one broadcast an expanding threat to the press and function to undermine the integrity of the system according to the government’s own laws.

Meltzer-Cohen urged members of the press “to stand up for Chelsea in the same manner she has consistently stood up for the press.”


FREE MINDS

“Nobody should be in jail for smoking marijuana,” said 2020 presidential candidate Joe Biden this week.

His campaign spokesperson told CNN that if elected president, Biden would “allow states to continue to make their own choices regarding legalization and would seek to make it easier to conduct research on marijuana’s positive and negative health impacts by rescheduling it as a schedule 2 drug.”


FREE MARKETS

About that Apple antitrust opinion authored by Justice Brett Kavanaugh… It’s had a lot of conservatives in tizzy fits. But “Kavanaugh’s decision in Apple is not some harbinger of incipient leftism,” writes Will Chamberlain at Human Events:

The antitrust question in Apple required the Justices to parse, and apply, a poorly written, unclear, and bizarre Supreme Court decision: Illinois Brick Co. v. Illinois, decided in 1977….

This is not some grand dispute about the virtues or defects of antitrust law; it’s about the meaning of one specific Supreme Court case, and just who should be allowed to sue for an antitrust violation.


QUICK HITS

  • “Section 230 is not about neutrality. Period. Full stop,” Sen. Ron Wyden (D–Ore.), the original author of the statute, tells Vox. Many on the right and left have been trying to argue otherwise.
  • Is Kamala Harris the Jan Brady of 2020?
  • Oakland could follow Denver in decriminalizing psychedelic mushrooms.
  • Taiwan will recognize same-sex marriages:

from Latest – Reason.com http://bit.ly/2w69vnW
via IFTTT

JPM Warns About “Perfect Storm” American Farm Crisis, Slashes Deere To Sell

An escalating Sino-American trade war is creating turmoil in rural America.

JPMorgan told clients Tuesday, the American agriculture complex is on the verge of disaster, with farmers caught in the crossfire of an escalating trade war, reported the Financial Times.

“Overall, this is a perfect storm for US farmers,” JPMorgan analyst Ann Duignan warned investors.

With a farm crisis currently underway, Duignan downgraded John Deere’s stock to underweight, citing fundamentals in the Midwest are “rapidly deteriorating.”

And his downgrade was well-timed after Deere’s earnings overnight, as Bloomberg reports that Deere & Co. is no longer “cautiously optimistic” as it has been for so long.

The machinery giant reported lower-than-expected earnings and cut its annual guidance as its farmer customers shun major purchases amid uncertainty about demand for their products.

“Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases,” Chief Executive Officer Sam Allen said in a statement Friday.

And shares are tumbling…

Farmers are facing tremendous headwinds, including worsening trade war, collapsing soybean exports, global oversupply conditions, and crop yield losses in the Midwest due to flooding.

“As a result of tariffs and excess global supply, US soybean export inspections are down 27%” YoY, Duignan wrote. She added that the Chinese are shunning US farmers and are purchasing crops from South America.

Refinitiv trade flows indicate the trade war has cut over 80% of US soybean exports to China so far this market year (September-August).

Domestically, “the Midwest is off to a very slow start in 2019/20,” Duignan wrote. The growing season is “off to a bad start,” and soybeans are far behind in “planting progress” compared with 2018, she said.

After promising over the weekend to “never surrender to external pressure,” Beijing defied President Trump’s demands that it not resort to retaliatory tariffs and announced plans to slap new levies on $60 billion in US goods.

China’s retaliatory tariff rate increase comes after the White House raised tariffs on some $200 billion in Chinese goods to 25% from 10% on Friday.

In more bad news, China might completely stop purchasing agricultural products from the US. There are currently 7.4 million metric tons of beans that have not yet been shipped to China, according to the US Department of Agriculture data. China could easily cancel the orders, or if the beans are en route, Chinese ports could refuse to take the cargo, a Bloomberg headline said.

This all comes at a time when farmers are defaulting and missing payments at alarming rates, forcing regional banks to restructure and refinance existing loans.

Several months ago, we showed the number of farmers filing for bankruptcy climbed to its highest level in a decade.

Because of the unfriendly environment, the level of farm debt is approaching highs not seen since the farm crisis of the early 1980s.

The deepening trade war has led Trump to pledge $15 billion worth of agricultural product purchases from American farmers through the Commodity Credit Corp., a federal agency given authority during the Great Depression to stabilize prices.

Farmers are some of Trump’s key supporters, they’ve been big advocates of getting a better trade deal with Beijing, but now many are running out of patience as the Midwest goes bankrupt – triggering JPM to write a gloomy note to investors of the next farm crisis.

via ZeroHedge News http://bit.ly/2EgXsZc Tyler Durden

Auto-Loan Delinquencies Spike To Q3 2009 Level, Despite Strongest Labor Market In Years

Authored by Wolf Richter via WolfStreet.com,

But what will happen to banks and automakers when the cycle turns?

Serious auto-loan delinquencies – 90 days or more past due – jumped to 4.69% of outstanding auto loans and leases in the first quarter of 2019, according to New York Fed data. This put the auto-loan delinquency rate at the highest level since Q4 2010 and merely 58 basis points below the peak during the Great Recession in Q4 2010 (5.27%):

These souring auto loans are going to impact banks and specialized lenders along with the real economy – the automakers and auto dealers and the industries that support them.

This is what the banks are looking at.

The dollars are big. In Q1, total outstanding balances of auto loans and leases rose by 4% from a year ago to $1.28 trillion (this amount by the New York Fed is slightly higher than the amount reported by the Federal Reserve Board of Governors as part of its consumer credit data). Over the past decades, since in Q1 2009, total auto loans and leases outstanding have risen by 65%.

But the number of auto-loan accounts has risen only 34% over the decade, to 113.9 million accounts in Q1 2019. In other words, what caused much of the increase in the auto-loan balances is the ballooning amount financed with each new loan and longer loan terms that causes those loans to stay on the books longer.

The chart below shows the dollar amounts of auto loan balances (blue columns, right scale) in trillion dollars and the number of auto-loan accounts (red line, left scale) in millions:

Of this ballooning amount of auto loans, 4.67% is seriously delinquent (90+ days). This amounts to $60 billion. This chart shows the trajectory of what the banks and specialized lenders are facing, in billion dollars:

For lenders, these delinquent loans don’t represent total losses. This debt is collateralized by vehicles, which can be repossessed without much of a delay – unlike foreclosing on a house. But generally, the loan amount is far higher than what a repossessed vehicle will bring at the auction. Perhaps the banks can recover 50% on average of the loan amount. So, if all of the current vintage of 90+ day delinquencies turn into repossessions, and the banks lose 50% on them, it would amount to $30 billion in loan losses.

But there are more loans going delinquent even as we speak, and they will become seriously delinquent in Q2, and the next batch in Q3, and so on, and this is working itself forward wave after wave. So the cumulative losses over the next two years will be higher.

These losses are spread over thousands of banks, credit unions, and specialized non-bank lenders, and over asset-backed securities holders, such as pensions funds, other institutional investors, and bonds funds, and most will get through this by just licking their wounds. But some smaller subprime-focused non-bank lenders will collapse, and a few have already collapsed. So these defaulted auto loans are going to hurt, and they’re going to take down some smaller lenders, but they’re not going to take down the US banking system. They’re just not big enough.

This is what automakers are facing.

Lenders have already figured out that subprime auto loans have soured. They’ve been seeing this since 2015 or 2016. And ever so gradually, lenders have tightened their subprime underwriting standards. And subprime customers that don’t get approved for a new-vehicle loans may get approved for a much smaller loan for a cheaper used vehicle. This process has already been shifting potential new-vehicle customers to used vehicles.

For automakers, this has already shown up in their sales. New-vehicle sales, in terms of vehicles delivered to end-users, peaked in 2016 and have been declining ever since. Through Q1 this year, new-vehicles sales, fleet and retail, were down 3.2% from Q1 2018, and so 2019 looks to be another down-year for the industry – the third in a row.

But this isn’t happening in a recession with millions of people losing their jobs and defaulting on their auto loans because they lost their jobs. This is happening during one of the strongest labor markets in many years. It’s happening when the economy is growing at around 3% a year. It’s happening in good times. And people with jobs are defaulting.

This is not a sign of a worsening economy, but a result of years of aggressive and reckless auto lending, aided and abetted by yield-chasing investors piling into subprime auto-loan backed securities because they offer a little more yield in an era of central-bank engineered financial repression. It’s a sign like so many others in this economy, that the whole credit spectrum has gone haywire over the years. Thank you Fed, for having engineered this whole thing with your ingenious policies. So now there’s a price to pay – even during good times.

And we already know what a scenario looks like when the cycle turns, when unemployment surges and millions of people lose their jobs and cannot make their car payments, even people with a prime credit rating – that will then turn into subprime. We know what happens to the auto industry when the economy dives into a recession. We know what this will look like because we’ve seen it before. The auto industry is very cyclical.

What we haven’t seen before is this kind of credit stress among car buyers during good times – with the bad times still ahead. So when credit stress gets this bad during good times, we don’t even want to imagine what it might look like during bad times. Whatever that scenario will be, it won’t be fun for automakers.

The surprise was in the SEC 10-Q filing when no one was supposed to pay attention. Read...  Tesla Discloses Record Pollution Credits for Q1: Without Them, it Would Have Lost $918 Million and Bled $1.14 Billion in Cash

via ZeroHedge News http://bit.ly/2WPxweC Tyler Durden

White House Confirms Auto Tariffs Delayed By 6 Months

Beijing’s announcement overnight that there are no plans for more trade talks with Washington has rattled global markets, and seeing as there’s no positive trade news on the China front, the White House is giving a bullish headline about auto tariffs, perhaps the second-most-important trade-related issue.

Confirming earlier reports, Trump said plans to impose auto tariffs on EU auto imports by six months.

  • TRUMP SAYS EU, JAPAN AUTO TARIFFS DELAYED FOR AT LEAST 180 DAYS
  • WHITE HOUSE SET TO ANNOUNCE UP TO SIX MONTH DELAY IN DECIDING WHETHER TO IMPOSE TARIFFS ON IMPORTED CARS AND PARTS FRIDAY

Cars

One analyst told BBG that the delay is a sign that the administration is shelving its plans for a broader trade battle, but still, everything else pales in comparison to China.

“So one part of the trade fight is being put off. And hopefully we’ll soon know if the metals tariffs the U.S. imposed on Mexico and Canada will be torn down after this week’s proposal. But all that pales in comparison to the China situation.”

Unfortunately, the jawboning has met with limited success. US stock futures have moved off their lows for the session on the news.

via ZeroHedge News http://bit.ly/2LRlRel Tyler Durden

What Caused Last Night’s Bitcoin Flash Crash

Shortly before 11pm EDT on Thursday night, we reported that cryptos suddenly jerked lower with Bitcoin flash-crashing over 15%, sliding as low as $6,395 on Bitmex XBTUSD perpetual swap – the most liquid bitcoin contract globally – before bouncing back.

The insta-crash, which took place in a news vacuum and without an immediate catalyst, looked technical and positioning-led on the derivatives side. Courtesy of our cryptocurrency derivative expert friends at Skew, below is a breakdown of what happen in those minutes that send Bitcoin over $1000 lower.

To start with, 5,000 bitcoin went through on European physical exchange Bitstamp between 3.45 a.m and 4.15 a.m (London time, UTC +1) crashing the price down to $6,178 on the exchange.

This $35 million volume shouldn’t have been too much of a deal in itself – Kraken had a similar event a few weeks back on the 25th of April – but Bitstamp accounts for 50% of the bitcoin index at Bitmex – the largest bitcoin derivatives exchange. This index is being used to trigger liquidations of the bitcoin XBTUSD perpetual swap contract – the most liquid derivatives instrument where trading occurs on margin and which traded $5bln+ daily over the last week.

As a result, more than $200mln of sell liquidations occurred which took the market down with it

As the crash accelerated, overleveraged positions got cleared, resulting in open interest down by a third from $630mln to $400mln

The Basis (Bitmex XBTUSD – Coinbase BTCUSD) instantly plunged to – 5% – very unusual to see the bitmex perp decoupling to such an extent.

Liquidity – measured by bid offer spread of $10mln in the XBTUSD order book – evaporated for a moment.

Overall, Sk3w concludes that “this was the first serious alert since bull market restarted on the 2nd of April. It’s also another serious session for bitcoin with > $12bln going through on the futures side in last 24h.

d

via ZeroHedge News http://bit.ly/2VvJdFC Tyler Durden

Trump De-escalating? Satellite Intel Based On Tehran “Misreading” US Intentions

Soaring tensions of the past nearly two weeks paving the way for a potential direct military clash in the Persian Gulf between the US and Iran could be de-escalating as rapidly as they began as the president attempts to reign in hawks in his own administration, per a new report in FT:

President Donald Trump said he hoped the US would not go to war with Iran, cooling tensions at the end of a week in which worries spiked over the risk of conflict between the US and the Islamic republic. As he stood outside the West Wing waiting to meet Swiss president Ueli Maurer on Thursday, Mr Trump was asked by a reporter whether the US was going to war with Iran. He replied: “I hope not.”

This as the WSJ also reports Trump is fast reigning in his two Iran hawk horsemen of the apocalypse Bolton and Pompeo: “There are sharply differing views within the Trump administration over the meaning of intelligence showing Iran and its proxies making military preparations, people familiar with the matter said,” according to the report.

Image source: AFP/Getty

So Trump doesn’t want war, and now with the Senate demanding it be given a comprehensive briefing on just what the increased Iran threat constitutes and the intelligence consensus behind it (or lack thereof), it looks like the war train could be grinding to a halt. 

Bloomberg also agrees, per its latest report:

President Donald Trump is wary of drawing the U.S. into a war with Iran, in part out of concern that an armed conflict with the Islamic Republic would imperil his chances at winning a second term, according to people familiar with the matter. U.S.’s evidence of Iran threat readied for release by Pentagon. 

But the Pentagon war machine’s next move could hinge on what’s been revealed as the initial key piece of intelligence “evidence” of Iran’s “attack preparations” that got us here in the first place, starting with Bolton’s May 5th announcement of a major Iranian threat escalation. The “smoking gun” that started it all apparently hinges on satellite photos showing Iranian paramilitary forces moving missiles on boats in the Persian Gulf (perhaps even in their own territorial waters!?).

The New York Times cited three defense officials who confirmed that, “The intelligence that caused the White House to escalate its warnings about a threat from Iran came from photographs of missiles on small boats in the Persian Gulf that were put on board by Iranian paramilitary forces.”

But crucially, according to US intelligence officials cited by the WSJ, the “missile movement” satellite photographs may have just been picking up on Iranian defensive measures that came in reaction to Tehran’s belief that a US military attack was on the horizon.  

Intelligence collected by the U.S. government shows Iran’s leaders believe the U.S. planned to attack them, prompting preparation by Tehran for possible counterstrikes, according to one interpretation of the information,” reports The Wall Street Journal’s Warren Strobel, Nancy Youssef, and Vivian Salama.

However, what was originally set in motion itself has momentum enough to spark confrontation, given on Thursday two Navy destroyers have entered the Persian Gulf as the American military continues to add to its assets in the region to head off any planned Iranian ‘aggression’, USNI reported.

The USS McFaul and USS Gonzalez traveled through the Strait of Hormuz Thursday afternoon without being challenged by IRGC forces. They joined the USS Abraham Lincoln, which is stationed in the Gulf of Oman, as well as a strike force that includes several B-52 bombers out of Qatar. 

So there it is: formula for de-escalation; however, the chances of some “accident” happening which leads to clashes remains high and unpredictable, at which point the intelligence debate Congress is demanding could turn into a moot afterthought, as is the pattern with many US wars. 

via ZeroHedge News http://bit.ly/2EdPxfq Tyler Durden

Elizabeth Warren’s Plan for Free College Tuition Would Punish Hard Work, Increase National Debt

Americans need a car in our road-dependent society, but the cost of the average vehicle has soared into the mid-30s. Payments are pushing $600 a month, leaving many people strapped to afford housing, food and other necessities. The simple answer is for the feds to pay off their car loans and provide free vehicles to everyone who wants one.

Before you hit send on your angry email, realize that I’m making this modest proposal with my tongue planted in my cheek and just for illustrative purposes. Sometimes it takes an absurd idea to illustrate the stupidity of a serious one. These days, Democratic presidential candidates are touting their plans to forgive most student debt and to provide wannabe college students with “free” tuition. They appear to be completely serious about it.

Former students crushed by loan debt might find the idea appealing. It also sounds great to families with teenagers who are approaching their college years. Recent surveys show broad public support for the plan floated by Sen. Elizabeth Warren (D–Mass.), who has vowed to cancel student loan debt up to $50,000 for lower-income students and tax billionaires to fund the $1.25 trillion cost for making tuition at public universities complimentary.

But this column isn’t about debt spending, which is a huge problem but one that makes the public’s eyes glaze over. In March, the federal government racked up the largest monthly budget deficit in history ($234 billion) and federal debt levels have soared to $22 trillion. Most of us can’t fathom a trillion, which might explain our society’s collective shrug even as we are busy spending our grandchildren’s inheritance.

Instead, this column is about the unforeseen consequences of doing morally hazardous things. If the government wiped away Americans’ car-loan debt, it would reward people who spent 70-large on one of those leather-clad monster trucks with a pickup bed used mainly for trips to Ikea. It would punish people who had more impulse control, squirreled away savings, and chose to get around in a 12-year old Civic or the Metro bus.

The Warren plan would hike demand for vehicles, which would first lead to shortages and then to rising prices. If other people are paying, why save up or shop on Craigslist for a beater? Inflation is a problem mainly in industries where there are third-party payers (insurers or government), such as health care. We don’t comparison shop for that colonoscopy.

As usual, political leaders are great at pinpointing a serious problem, and then coming up with solutions that will make it even worse. Student debt levels have hit $1.5 trillion. Analysts have warned of a student debt bubble. I agree with writer Robert Farrington, who noted in Forbes that it’s unlikely to pop: “In the housing crisis, if a borrower struggles to pay their mortgage, the bank can foreclose on their house.” But banks can’t repossess a college education, so it becomes a years-long drag on household spending and the economy.

Easy student loans and vast amounts of state and federal subsidies have turned into a funding spigot for public and private universities, which—and this should be no surprise—have not always spent the money wisely. The free-flowing cash caused universities to create Byzantine administrative bureaucracies. Check out the size of the University of California’s Office of the President.

It enabled them to construct new departments specializing in potentially interesting but questionable pursuits revolving around race, gender and sexuality. I’m skeptical that many people would pop for a $200,000 degree on the sociology of surfing or oppression studies if they were paying from their own bank account. Fortunately, Walmart always seems to be hiring.

In the 1990s, universities went on a spending binge just as government started expanding its student-aid programs. They built luxury dormitories and fancy student centers. Texas Tech built an enormous leisure pool with a centerpiece 645-foot-long “lazy river,” as The Atlantic reported last year. Money is fungible, and such unfathomable binges are the result of flowing government cash and students who pay their tuition on the installment plan.

Free college only will exacerbate these problems. It will crowd out serious students—and seriousness is best measured by people willing to invest in their own future plans—and discourage people from choosing cost-effective strategies such as community college or pursuing a skilled trade or vocational field. As a parent, I understand the predicament that students face. They need to find a way to pay for tuition, but the best public-policy solution is to put a damper on the subsidies that fuel the inflation, not dump more cash on the fire.

Americans can’t see the absurdity of giving away free stuff when we’re talking about education, which is why I decided to discuss the price of cars. So what kind of SUV will you and your neighbors buy if taxpayers are paying the freight?

This column was first published in the Orange County Register.

Steven Greenhut is Western region director for the R Street Institute. He was a Register editorial writer from 1998-2009. Write to him at sgreenhut@rstreet.org.

from Latest – Reason.com http://bit.ly/2Hxeymu
via IFTTT

Pound Hits 4-Month Low As Talks With Labour Collapse

The pound weakened again on Friday, touching fresh four-month lows, as a No. 10 spokesman revealed that talks with Labour had ended without reaching a Brexit deal.

Sterling slips 0.4% to $1.2752, the lowest since Jan. 15.

Pound

Bloomberg reported that divisions in the Labour Party over support for a second referendum, as well as the government’s unwillingness to offer any meaningful concessions, contributed to the collapse of talks, which many had expected.

During a campaign event in Bristol, Theresa May blamed the pro-second referendum faction within Labour for crashing the talks.

“As Jeremy Corbyn says, actually these talks have been constructive and we’ve made progress. There have been areas where we have been able to find common ground. But other issues have proved to be more difficult. And, in particular, we haven’t been able to overcome the fact that there isn’t a common position in Labour about whether they want to deliver Brexit or hold a second referendum which could reverse it.”

“So when we come to bring the legislation forward, we will think carefully about what we’ve had with these talks, the outcome of these talks. We will also consider whether we have some votes to see if the ideas that have come through command a majority in the House of Commons. But when MPs come to vote on the bill, they will be faced with a stark choice; that is, to vote to deliver on the referendum, to vote to deliver Brexit, or to shy away again from delivering Brexit with all the uncertainty that that would leave.”

Either way, investors are avoiding the pound until more becomes certain. No. 10 said it wasn’t clear whether there would be enough support to hold another round of indicative votes.

“It looks like investors are avoiding the pound until there is more clarity,” said ABN Amro strategist Georgette Boele.

The pound has been declining all week as talks with Labour appeared increasingly fraught, and as Tories pushed May to set forth a timetable for her resignation. The prime minister has reportedly agreed to leave shortly after holding a fourth vote on her withdrawal agreement.

via ZeroHedge News http://bit.ly/2VKtuI2 Tyler Durden