The Corporate Debt Bubble Is A Train Wreck In Slow Motion

The Corporate Debt Bubble Is A Train Wreck In Slow Motion

Authored by Brandon Smith via Alt-Market.com,

There are two subjects that the mainstream media seems specifically determined to avoid discussing these days when it comes to the economy:

  • the first is the problem of falling global demand for goods and services; they absolutely refuse to acknowledge the fact that demand is going stagnant and will conjure all kinds of rationalizations to distract from the issue.

  • The other subject is the debt bubble, the corporate debt bubble in particular.

These two factors alone guarantee a massive shock to the global economy and the US economy are built into the system, but I believe corporate debt is the key pillar of the false economy.  It has been utilized time and time again to keep the Everything Bubble from completely deflating, however, the fundamentals are starting to catch up to the fantasy.

For example, in terms of stock markets, which are now meaningless as an indicator of the health of the real economy, corporate stock buybacks have been the single most vital mechanism for inflation. Corporations buy their own stocks, often using cash borrowed from each other and from the Federal Reserve, in order to reduce the number of shares on the market and artificially boost the value of the remaining shares. This process is essentially legal manipulation of equities, and to be sure, it has been effective so far at keeping markets elevated.

The problem is that these same corporations are taking on more and more debt through interest payments in order to maintain the facade. Over the period of a decade, corporate debt has skyrocketed back to levels not seen since 2007, just before the credit crisis. The official corporate debt load now stands at over $10 trillion, and that’s not even counting derivatives exposure.  According to the Bank for International Settlements, the amount of derivatives still held by corporations stands at around $544 trillion in notional value (theoretical value), while the current market value is only around $10 trillion.  This is a massive discrepancy that can only lead to disaster.

In terms of debt-to-GDP, the credit cycle peak has spiked beyond any other peak in the past 40 years. This amount of borrowing always has consequences. Even if central banks were to intervene on a level similar to TARP, which saturated markets with $16 trillion in liquidity, the amount of cash needed is so immense and the economic returns so muted that such measures are ultimately a waste of time. The Federal Reserve fueled this bubble, and now there is no stopping it’s demise. Though, they’re behavior and minimal response to the problem suggests that they have no intention of stopping it anyway.

Currently, stock buybacks are set to decline this year, and I don’t think this is because corporations have decided they want to quit the tactic. They have to quit, because the amount of debt they are accumulating is is now outpacing their falling profits. Corporate profits peaked in the 3rd Quarter of 2018 and have been in decline ever since.  The Price-to-Earnings ratio as well as the Price-to-Sales ratio are now well above their historic peak during the dot-com bubble, meaning, stocks have never been more overvalued compared to the profits that corporations are actually bringing in.

As I warned back in 2018, Trump’s tax cuts were a gift to corporations, not average people, and that gift was designed to be squandered as there was no doubt that companies would pour all extra cash into stock buybacks instead of innovation and new jobs. This is exactly what happened.

While corporations, the Fed and Trump have been putting some effort into keeping stock markets from imploding, the real economy has been evaporating. Global import/exports are crashing, US manufacturing is in recession territory, US GDP is in decline (even according to rigged official numbers), US retail outlets are closing by the thousands, the poverty rate jumped in 30% of US counties in the past year, and high paying jobs are disappearing and being replaced with minimum wage service sector jobs.

To be sure, this process did not start under Trump, it’s been a slow motion train wreck for over a decade. But, it’s important to point out that Trump has done nothing to mitigate the crash and his obsession with the fraudulent stock market shows that he has no plans to try. The amount of time the tax cuts and debt increase bought was a couple of years. That’s it. With buybacks in decline, the question is what will keep the bubble afloat now? The Fed? That’s doubtful…

Global corporations with the most VISIBLE debt include:

  • AT&T with $180 billion

  • SoftBank with $154 billion

  • Apple with $136 billion

  • Verizon with $114 billion

  • Comcast with $112 billion

  • AbInbev with $110 billion

  • General Electric with $115 billion

  • Shell with $77 billion

  • Microsoft with $67 billion

Some companies, like Apple and Warren Buffet’s Berkshire Hathaway are holding extensive cash reserves, but most do not. Also, the level of cash reserves held by certain top corporations suggests they know something is on the horizon. Why hold piles of cash when the stock market is a “sure thing”? Unless, the debt bubble is about to collapse and cash will be needed to absorb the damage?

Stock buybacks, I believe, are the litmus test for how long the corporate world can hold out against the weight of the debt bubble. 2020 appears to be the year in which buybacks are set to crumble. Corporate profits degraded over 2019 and the slide is set to continue this year. This means profits are not going to come to the rescue and stave off the explosion of the debt structure (once again, the problems of demand and debt intertwine). All that is left is the Fed, as the “buyer of last resort” becomes the buyer of only import.

The list above, of course, does not include financial companies like JP Morgan and other banks that are suspected of harboring an extensive debt load and borrowing cash frantically through the Fed’s overnight repo markets.

These loans are now coming due, and the Fed has indicated it plans to tighten liquidity once again next month while returning to balance sheet cuts. Interest rates remain well above zero, which means the more companies borrow through repo markets, the more interest they will accrue. The Fed will have to institute a full QE program on the level of the TARP bailouts and cut interest rates to zero in order to end the constant repo liquidity threat and kick the can for a couple more years, and they’ve given no indication that they plan to do this in time to stop the current crash.

For now, Fed repo intervention has achieved little except keeping stocks at all-time highs. The rest of the economy is in disarray.

The real economy will start to drag down the establishment’s favorite distraction – The Dow, as this process continues. The big question is always one of timing. How long can the delusional euphoria keep the system levitated?

The situation is one of complacency and condition. If people are suddenly confronted with an enormous forest fire surrounding their city, they will ask “What can we do to save ourselves?” But what if people are surrounded by a forest fire for ten years and it hasn’t quite reached them yet? You warn them that the winds have finally changed and it is about to expand and take their homes and they will say “What forest fire?”

It’s hard to imagine a scenario in which there are no major shocks to the financial structure for the rest of the year. With the corporate system tapped out and no longer able to act as a support for the bubble, the fundamentals will start to take over again. Geopolitical events will also have a more visible effect. A whole year without escalation with Iran?  Without escalation with North Korea? Without a pandemic threat like the coronavirus going global? Without threats of a liquidity crisis as banks starve for more and more repo loans? I think not…

It’s important not to let complacency interfere with vigilance.  A slow motion train wreck is still ultimately a train wreck.  The damage can only be mitigated by removing one’s self from the train, and preparing for the fallout.  Do not think that simply because the system has been able to drag it’s nearly lifeless body along for ten years that this means all is well.  All bubbles collapse, and corporate debt has already sealed the fate of the Everything Bubble.

*  *  *

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Tyler Durden

Thu, 01/23/2020 – 16:25

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

Stocks Surge Intraday ‘Despite’ Global Virus-nado & Plunging US Data

Stocks Surge Intraday ‘Despite’ Global Virus-nado & Plunging US Data

Judging by the intraday surge in US equity prices, you’d think that the Coronavirus was cured and everything was awesome…

But, it’s not!

Virus deaths increase. Virus cases soar in China (23 million quarantined), and Virus cases spread globally (from Singapore to Scotland).

And then there’s Leading Economic Indicators at their weakest since 2009

So what did the machines in the US do? Well, that’s obvious – you buy the f**king global pandemic dip of course!!

Yes, that is Trannies soaring 2% from the opening lows (not the lows were perfectly at the EU close and then the ramp exploded). Dow ended red…

Nasdaq is back in the green for the week – so an economy-crushing pandemic is a buying opportunity for tech? WTF!!

 

This comes after some serious ugliness in Chinese markets…

Source: Bloomberg

And Europe tumbling…

Source: Bloomberg

Dow broke back below 29k early on but the machines were having none of that…

As another short-squeeze engineered at the open saved the day…

Source: Bloomberg

There was a 90-minute period in the middle of the day with no negative TICK…

Source: Bloomberg

In the US Defensives continue to lead the week, though cyclicals were bid aggressively today…

Source: Bloomberg

Credit markets were not buying this dip…

Source: Bloomberg

And while stocks pushed back towards record highs, bond yields plunged to 3 month lows….

Source: Bloomberg

Treasury yields fell for the 3rd day in a row…

Source: Bloomberg

With 30Y Yield back at their lowest since early October… This is the biggest 30Y Yield drop to start a year since 2015

Source: Bloomberg

2y Yields closed at the lowest since Oct 9th…

Source: Bloomberg

The yield curve tumbled to its flattest in 6 weeks…

Source: Bloomberg

The Dollar spiked to its highest in a month early on before fading back…

Source: Bloomberg

Yuan tumbled even further overnight but rebounded modestly intraday…

Source: Bloomberg

Cryptos legged down today, with Bitcoin testing its 100DMA, but remain notably higher on the year…

Source: Bloomberg

Commodities were mixed despite the dollar gains with crude and copper falling further – unable to ignore China as easily as stocks – as PMs rose modestly…

Source: Bloomberg

WTI tested a $54 handle intraday today…

Source: Bloomberg

Finally, Americans are the least pessimistic about the economy since March 2002…

Source: Bloomberg

But its starting to look a lot like 2018…

Source: @thehawktrader


Tyler Durden

Thu, 01/23/2020 – 16:02

via ZeroHedge News https://ift.tt/2Gjc9vu Tyler Durden

The Future Of What’s Called “Capitalism”

The Future Of What’s Called “Capitalism”

Authored by Charles Hugh Smith via OfTwoMinds blog,

The psychotic instability will resolve itself when the illusory officially sanctioned “capitalism” implodes.

Whatever definition of capitalism you use, the current system isn’t it so let’s call it “capitalism” in quotes to indicate it’s called “capitalism” but isn’t actually classical capitalism.

Try a few conventional definitions on for size:

  • Capitalism allocates capital to its most productive uses. Does the current system actually do this? You must be joking.

  • Capitalism is based on private labor and capital freely choosing where to invest time/assets. Does the current system actually do this? You must be joking.

  • Capitalism enables comparative advantages which enrich everyone. Does the current system actually do this? You must be joking.

The core dynamics of “capitalism” around the globe are:

1) Central banks create unprecedented sums of currency and credit and distribute them to the top of the wealth-power pyramid: banks, financiers, corporations, the super-wealthy.

2) The recipients of the central banks’ free money and credit dominate production, finance and the political sphere, controlling these forces to serve their own interests to the detriment of the biosphere and 99.9% of humanity.

3) The system depends on ever-increasing debt and leverage in every sector, household, commercial and government. If debt and leverage stop expanding, the system crashes.

4) Energy must be abundant and affordable to the average worker or the system crashes.

5) Despite the supposed benefits of “comparative advantage” globalization, costs of essential goods and services are rising relentlessly everywhere while wages stagnate everywhere.

6) The abject failure of “green solutions” such as recycling to the horrendously wasteful landfill economy.

7) The unholy alliance of surveillance capitalism and increasingly repressive states.

8) The unprecedented dominance of stock and financial markets, to the detriment of the real economy.

The current issue of Foreign Affairs magazine is emblematic of the status quo’s calculated avoidance of these dynamics: the issue’s focus is “The Future of Capitalism,” but there is literally not one mention of central banks, the dominance of financial elites, the dependence of the system on ever-expanding debt and leverage, soaring costs of essentials while wages stagnate or the inconvenient reality that there is no substitute for hydrocarbon fuels.

Instead, the “future of capitalism” is presented as a choice between statist (i.e. Chinese) and private-sector (i.e. American) versions, ignoring the reality that both versions depend on central banks issuing unprecedented, gargantuan sums of freshly issued currency and credit, enormous expansions of public and private debt, ever-higher speculative leverage and ever-greater consumption of hydrocarbon fuels.

Rather than “efficient allocation of capital,” we have monopolies and cartels profiting from a staggeringly wasteful landfill economy based on extracting ever greater quantities or energy to squander on traffic congestion, destructive addictions and planned obsolescence.

Rather than an “invisible hand” benefiting everyone, we have a self-serving state-cartel system that squashes competition, exploits the politically powerless and stripmines resources, workforces and a financial system designed to benefit the few at the expense of the many.

We inhabit an unsustainably destabilizing psychotic dualist reality, an officially sanctioned “capitalism” in which everyone is getting better every day in every way as central banks, financiers and the super-wealthy go about their self-serving business, and the lived real-world economic reality described by the eight dynamics listed above.

The psychotic instability will resolve itself when the illusory officially sanctioned “capitalism” implodes.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


Tyler Durden

Thu, 01/23/2020 – 15:50

via ZeroHedge News https://ift.tt/37mVnHJ Tyler Durden

Utah Judge Rules Against Topless Stepmom’s Equal Protection Challenge

A Utah judge denied a motion this week from a woman challenging Utah’s lewdness statute. That means Tilli Buchanan could still be placed on the sex offender registry for 10 years after appearing topless in front of her underage stepchildren.

According to Buchanan, she and her husband stripped their shirts off after installing insulation in their garage and getting the itchy substance onto their clothes. When Buchanan’s stepchildren saw the couple partially naked, she says, she attempted to explain that she and her husband were at the same level of undress and that her bare chest was not inherently sexual.

Word of the incident made its way back to the biological mother of Buchanan’s stepchildren. The mother then reported the incident to Utah’s Division of Child and Family Services. Prosecutors say Buchanan stripped in front of her stepchildren under the influence of alcohol and threatened to remain naked unless she saw her husband’s penis.

Buchanan is now charged with three misdemeanors for lewdness involving a child. Her husband, on the other hand, will not face any legal repercussions because Utah statute 76-9-702.5 defines lewdness involving a child as exposing “genitals, the female breast below the top of the areola, the buttocks, the anus, or the pubic area” in both public or private spaces “under circumstances the person should know will likely cause affront or alarm or with the intent to arouse or gratify the sexual desire of the actor or the child.”

The Utah branch of the American Civil Liberties Union (ACLU) challenged this statute, arguing that it violates the Equal Protection Clause of the 14th Amendment, which clearly prohibits discrimination on the basis of race, but can also be read to prohibit discrimination on the basis of sexuality and gender. In this case, the ACLU argued that the law’s inclusion of “the female breast below the top of the areola,” but not its male counterpart, is gender-based discrimination.

On Sunday, Utah Third District Judge Kara Pettit rejected the argument. In her decision, Pettit argued that the law criminalized similar levels of nudity and merely itemized specific body parts “rooted in physical differences between the sexes.” Because the itemization reflects the “contemporary community standards regarding nudity” and because the government has an interest in protecting children from lewd acts, Pettit dismissed Buchanan’s Equal Protection argument.

“We’re obviously disappointed that the motion was denied,” ACLU attorney Leah Farrell says. “We’ll likely appeal the decision.”

Constitutionality aside, prosecutors could stand to exercise some discretion in Buchanan’s case. They have not been able to verify even a detail as simple as the date of the incident. There is significant disagreement over the timeline of events, with separate recollections placing the incident in the fall of 2016, in late 2017, and in early 2018.

Meanwhile, the possibility that Buchanan will be added to the sex offender registry for what may be an honest misunderstanding highlights the problems with such a registry. The rules that designate sex offenders can be inconsistent or overzealously applied to people who clearly are not a threat to children. And those placed on these lists are often subjected to abuses from state and local governments

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via IFTTT

Does an Impeachment Overturn an Election?

When the White House released its formal response to the House impeachment, it repeated a frequent claim of the president’s defenders: “This is a brazen and unlawful attempt to overturn the results of the 2016 election.” The president himself had set the tone some time ago by tweeting, “what is taking place is not an impeachment, it is a COUP.”

This is not an unusual move for defenders of an embattled president. Nancy Pelosi was among a group of Democratic politicians who once claimed that the impeachment of President Bill Clinton was “tantamount to overturning the will of the American people.” Back then, it was Jerrold Nadler who declared that the House majority was “participating in a thinly veiled coup d’etat.”

I have a forthcoming article that tries to take these sorts of arguments seriously and determine how much credence we should give them. There is obviously a lot of meaningless bluster in this kind of rhetoric, but presidential defenders are pointing to a real issue. In a political culture that emphasizes the importance of partisan political elections, removing a president by congressional action is not the same as removing a district court judge. Advocates of presidential impeachment and removal bear a very high argumentative burden to justify such an extraordinary act, not just because the presidency is an important office but because the president was elected by the people and will eventually be held accountable by the people for his actions.

Nonetheless, all the talk of overturning elections and coups is over the top.

The impeachment power exists within the constitutional scheme, and it exists for a reason. Like any other constitutional power, it can be mishandled and abused, and the people will eventually have their say about that as well. But rhetoric of overturning elections suggests that the impeachment power can never be legitimately used against a president, which would surely be a dangerous mistake. And if impeaching a president is tantamount to overturning the will of the people who elected him, then what other actions that a Congress might take to impede a president’s plans should fall under the same shadow? Can the Senate refuse to confirm his judicial appointees? Can Congress refuse to fund his border walls? Can the Supreme Court strike down the president’s signature policy initiative? Elections have consequences, but the American constitutional system is not reducible to presidential plebiscites.

There are unique circumstances in which a presidential impeachment might be understood to have such dramatic consequences for the workings of a democracy. If the vice president were the partisan rival of the president, as he might have been under the original 1787 Constitution, then it is not hard to imagine a corrupt bargain between the vice president and his supporters in Congress to remove the president. The Twelfth Amendment saved us from that problem. If the office of the vice president were vacant such that a member of the congressional majority might succeed to the White House upon a presidential removal, as was the case when Andrew Johnson was impeached in 1868, then defenders of a president might have grounds for complaint.

In normal circumstances, of course, presidential removal would simply result in the ascension of the president’s handpicked partisan running mate. If Bill Clinton had been replaced by Al Gore in early 1999, the Democratic Party and its voters might well have been better off. The prospect of Newt Gingrich plotting to install Al Gore in the White House would have been a strange sort of coup indeed.

Perhaps there are situations in which passing the baton to the vice president does more closely resemble an effort to undo the results of an election. If the vice president represented a radically different political faction than the president, then supporters of the president might well call shenanigans if the vice president conspired with allies in Congress to depose him. If Democrats had controlled Congress in 1865 and attempted to unseat Abraham Lincoln in order to turn the presidency over to Andrew Johnson, then Republicans would have had something to complain about.

Closer to home, we might imagine a uniquely charismatic and populist president who is loathed by the political establishment. If establishment politicians sought to remove that president so one of their own might be elevated to the head of the executive branch, then the voters who rallied to the populist might well have a gripe.

It is not implausible to think that Donald Trump and Mike Pence were not interchangeable for the average GOP voter in 2016. The spectacle of Nancy Pelosi and Mitt Romney joining hands to unceremoniously toss the tribune of the people out of the nation’s capital could well be disconcerting in ways that might have made less sense in the context of almost any other president. If the salient divide is not primarily partisan but rather populist or even Trumpist, then an impeachment might face unique legitimacy challenges.

Similarly, it would not be hard for supporters of President Barack Obama or of a President Hillary Clinton to spin a narrative in which those individuals have unique representative mantles that could not simply be passed on to Joe Biden or Tim Kaine if congressional leaders disfavored the people’s choice of president.

Through their own missteps, critics of a president can give greater credence to such accusations that an impeachment is an effort to overturn an election. If presidential critics reach for every possible vehicle or excuse to attempt to remove a president from the day of his election, one should not be surprised if supporters of the president greet an impeachment with greater than average skepticism. If presidential critics make little or no effort to reach across the aisle to build broad-based support for an impeachment, then it becomes harder to credit the impeachment as driven by anything other than partisan motives to cripple a presidency. If presidential critics cannot supply a credible constitutional rationale for an impeachment, then it becomes easier to dismiss an impeachment effort as partisan dirty tricks.

When those who chant “not my president” eventually succeed in impeaching that president, their arguments are likely to be discounted. Impeachments occur in a political context, and that context will necessarily affect how the impeachment is perceived. If Obama had committed grave offenses while in office that would have merited his impeachment and removal by a Republican-controlled Congress, birtherism conspiracy theories promoted by Donald Trump among others would have poisoned the well such that many Democrats would have doubted whether any impeachment inquiry was being made in good faith and was anything other than an attempt to effectively nullify the results of an election by rendering the president politically impotent if nothing else. Suggestions that the Senate should no longer be allowed to confirm an impeached President Trump’s judicial nominations, as if a President Pence would not have made the same nominations or that an impeached president no longer wields the power of his constitutional office, give the impression that nullifying the effects of a presidential election is precisely the point. Elections have consequences, and so does political rhetoric.

Republican politicians and conservative media figures have gone to great lengths to excuse or condone President Trump’s genuine misconduct, and the Trump White House—not unlike the Clinton White House—has attempted to delegitimate investigators and accusers in a scorched earth strategy to maintain power. They have attempted to portray Trump’s impeachment as not merely misguided or unjustified but as beyond the pale. In doing so, they attempt to provide the foundation for characterizing the impeachment as a kind of coup. The attempt is analytically flawed, but politically effective.

We find ourselves at a difficult juncture. Both critics and defenders of the president have too often undermined their own credibility and have done too much to foster a partisan antipathy that cannot be easily set aside or overcome. Both fear that the other side will not abide by election results and will seek to manipulate the electoral process and constitutional mechanisms to their own advantage. Both believe that their opponents do not respect the will of their voters. When Doug Collins complains that “liberal elites” are telling “millions of voters” that their preferences do not matter, he is both pointing to and reinforcing a divide that insists that an elected president represents only part of the country.

The legitimacy of a presidential impeachment depends on our ability to come together as Americans to investigate and deliberate over charges of presidential misconduct. If impeachments are instead seen as just another form of partisan constitutional hardball, then they will be seen as illegitimate and simply a continuation of the partisan electoral struggle itself. Political leaders can help create a political environment in which presidential impeachments can fulfill their constitutional function, but they can also create an environment in which impeachments are just another manifestation of constitutional dysfunction.

A presidential impeachment is not much like a coup and would rarely overturn the will of the people, but in a deeply partisan environment it is likely to feel that way.

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Utah Judge Rules Against Topless Stepmom’s Equal Protection Challenge

A Utah judge denied a motion this week from a woman challenging Utah’s lewdness statute. That means Tilli Buchanan could still be placed on the sex offender registry for 10 years after appearing topless in front of her underage stepchildren.

According to Buchanan, she and her husband stripped their shirts off after installing insulation in their garage and getting the itchy substance onto their clothes. When Buchanan’s stepchildren saw the couple partially naked, she says, she attempted to explain that she and her husband were at the same level of undress and that her bare chest was not inherently sexual.

Word of the incident made its way back to the biological mother of Buchanan’s stepchildren. The mother then reported the incident to Utah’s Division of Child and Family Services. Prosecutors say Buchanan stripped in front of her stepchildren under the influence of alcohol and threatened to remain naked unless she saw her husband’s penis.

Buchanan is now charged with three misdemeanors for lewdness involving a child. Her husband, on the other hand, will not face any legal repercussions because Utah statute 76-9-702.5 defines lewdness involving a child as exposing “genitals, the female breast below the top of the areola, the buttocks, the anus, or the pubic area” in both public or private spaces “under circumstances the person should know will likely cause affront or alarm or with the intent to arouse or gratify the sexual desire of the actor or the child.”

The Utah branch of the American Civil Liberties Union (ACLU) challenged this statute, arguing that it violates the Equal Protection Clause of the 14th Amendment, which clearly prohibits discrimination on the basis of race, but can also be read to prohibit discrimination on the basis of sexuality and gender. In this case, the ACLU argued that the law’s inclusion of “the female breast below the top of the areola,” but not its male counterpart, is gender-based discrimination.

On Sunday, Utah Third District Judge Kara Pettit rejected the argument. In her decision, Pettit argued that the law criminalized similar levels of nudity and merely itemized specific body parts “rooted in physical differences between the sexes.” Because the itemization reflects the “contemporary community standards regarding nudity” and because the government has an interest in protecting children from lewd acts, Pettit dismissed Buchanan’s Equal Protection argument.

“We’re obviously disappointed that the motion was denied,” ACLU attorney Leah Farrell says. “We’ll likely appeal the decision.”

Constitutionality aside, prosecutors could stand to exercise some discretion in Buchanan’s case. They have not been able to verify even a detail as simple as the date of the incident. There is significant disagreement over the timeline of events, with separate recollections placing the incident in the fall of 2016, in late 2017, and in early 2018.

Meanwhile, the possibility that Buchanan will be added to the sex offender registry for what may be an honest misunderstanding highlights the problems with such a registry. The rules that designate sex offenders can be inconsistent or overzealously applied to people who clearly are not a threat to children. And those placed on these lists are often subjected to abuses from state and local governments

from Latest – Reason.com https://ift.tt/2RLasMB
via IFTTT

Does an Impeachment Overturn an Election?

When the White House released its formal response to the House impeachment, it repeated a frequent claim of the president’s defenders: “This is a brazen and unlawful attempt to overturn the results of the 2016 election.” The president himself had set the tone some time ago by tweeting, “what is taking place is not an impeachment, it is a COUP.”

This is not an unusual move for defenders of an embattled president. Nancy Pelosi was among a group of Democratic politicians who once claimed that the impeachment of President Bill Clinton was “tantamount to overturning the will of the American people.” Back then, it was Jerrold Nadler who declared that the House majority was “participating in a thinly veiled coup d’etat.”

I have a forthcoming article that tries to take these sorts of arguments seriously and determine how much credence we should give them. There is obviously a lot of meaningless bluster in this kind of rhetoric, but presidential defenders are pointing to a real issue. In a political culture that emphasizes the importance of partisan political elections, removing a president by congressional action is not the same as removing a district court judge. Advocates of presidential impeachment and removal bear a very high argumentative burden to justify such an extraordinary act, not just because the presidency is an important office but because the president was elected by the people and will eventually be held accountable by the people for his actions.

Nonetheless, all the talk of overturning elections and coups is over the top.

The impeachment power exists within the constitutional scheme, and it exists for a reason. Like any other constitutional power, it can be mishandled and abused, and the people will eventually have their say about that as well. But rhetoric of overturning elections suggests that the impeachment power can never be legitimately used against a president, which would surely be a dangerous mistake. And if impeaching a president is tantamount to overturning the will of the people who elected him, then what other actions that a Congress might take to impede a president’s plans should fall under the same shadow? Can the Senate refuse to confirm his judicial appointees? Can Congress refuse to fund his border walls? Can the Supreme Court strike down the president’s signature policy initiative? Elections have consequences, but the American constitutional system is not reducible to presidential plebiscites.

There are unique circumstances in which a presidential impeachment might be understood to have such dramatic consequences for the workings of a democracy. If the vice president were the partisan rival of the president, as he might have been under the original 1787 Constitution, then it is not hard to imagine a corrupt bargain between the vice president and his supporters in Congress to remove the president. The Twelfth Amendment saved us from that problem. If the office of the vice president were vacant such that a member of the congressional majority might succeed to the White House upon a presidential removal, as was the case when Andrew Johnson was impeached in 1868, then defenders of a president might have grounds for complaint.

In normal circumstances, of course, presidential removal would simply result in the ascension of the president’s handpicked partisan running mate. If Bill Clinton had been replaced by Al Gore in early 1999, the Democratic Party and its voters might well have been better off. The prospect of Newt Gingrich plotting to install Al Gore in the White House would have been a strange sort of coup indeed.

Perhaps there are situations in which passing the baton to the vice president does more closely resemble an effort to undo the results of an election. If the vice president represented a radically different political faction than the president, then supporters of the president might well call shenanigans if the vice president conspired with allies in Congress to depose him. If Democrats had controlled Congress in 1865 and attempted to unseat Abraham Lincoln in order to turn the presidency over to Andrew Johnson, then Republicans would have had something to complain about.

Closer to home, we might imagine a uniquely charismatic and populist president who is loathed by the political establishment. If establishment politicians sought to remove that president so one of their own might be elevated to the head of the executive branch, then the voters who rallied to the populist might well have a gripe.

It is not implausible to think that Donald Trump and Mike Pence were not interchangeable for the average GOP voter in 2016. The spectacle of Nancy Pelosi and Mitt Romney joining hands to unceremoniously toss the tribune of the people out of the nation’s capital could well be disconcerting in ways that might have made less sense in the context of almost any other president. If the salient divide is not primarily partisan but rather populist or even Trumpist, then an impeachment might face unique legitimacy challenges.

Similarly, it would not be hard for supporters of President Barack Obama or of a President Hillary Clinton to spin a narrative in which those individuals have unique representative mantles that could not simply be passed on to Joe Biden or Tim Kaine if congressional leaders disfavored the people’s choice of president.

Through their own missteps, critics of a president can give greater credence to such accusations that an impeachment is an effort to overturn an election. If presidential critics reach for every possible vehicle or excuse to attempt to remove a president from the day of his election, one should not be surprised if supporters of the president greet an impeachment with greater than average skepticism. If presidential critics make little or no effort to reach across the aisle to build broad-based support for an impeachment, then it becomes harder to credit the impeachment as driven by anything other than partisan motives to cripple a presidency. If presidential critics cannot supply a credible constitutional rationale for an impeachment, then it becomes easier to dismiss an impeachment effort as partisan dirty tricks.

When those who chant “not my president” eventually succeed in impeaching that president, their arguments are likely to be discounted. Impeachments occur in a political context, and that context will necessarily affect how the impeachment is perceived. If Obama had committed grave offenses while in office that would have merited his impeachment and removal by a Republican-controlled Congress, birtherism conspiracy theories promoted by Donald Trump among others would have poisoned the well such that many Democrats would have doubted whether any impeachment inquiry was being made in good faith and was anything other than an attempt to effectively nullify the results of an election by rendering the president politically impotent if nothing else. Suggestions that the Senate should no longer be allowed to confirm an impeached President Trump’s judicial nominations, as if a President Pence would not have made the same nominations or that an impeached president no longer wields the power of his constitutional office, give the impression that nullifying the effects of a presidential election is precisely the point. Elections have consequences, and so does political rhetoric.

Republican politicians and conservative media figures have gone to great lengths to excuse or condone President Trump’s genuine misconduct, and the Trump White House—not unlike the Clinton White House—has attempted to delegitimate investigators and accusers in a scorched earth strategy to maintain power. They have attempted to portray Trump’s impeachment as not merely misguided or unjustified but as beyond the pale. In doing so, they attempt to provide the foundation for characterizing the impeachment as a kind of coup. The attempt is analytically flawed, but politically effective.

We find ourselves at a difficult juncture. Both critics and defenders of the president have too often undermined their own credibility and have done too much to foster a partisan antipathy that cannot be easily set aside or overcome. Both fear that the other side will not abide by election results and will seek to manipulate the electoral process and constitutional mechanisms to their own advantage. Both believe that their opponents do not respect the will of their voters. When Doug Collins complains that “liberal elites” are telling “millions of voters” that their preferences do not matter, he is both pointing to and reinforcing a divide that insists that an elected president represents only part of the country.

The legitimacy of a presidential impeachment depends on our ability to come together as Americans to investigate and deliberate over charges of presidential misconduct. If impeachments are instead seen as just another form of partisan constitutional hardball, then they will be seen as illegitimate and simply a continuation of the partisan electoral struggle itself. Political leaders can help create a political environment in which presidential impeachments can fulfill their constitutional function, but they can also create an environment in which impeachments are just another manifestation of constitutional dysfunction.

A presidential impeachment is not much like a coup and would rarely overturn the will of the people, but in a deeply partisan environment it is likely to feel that way.

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Sanders Targets ‘Black Voter-Betraying’ Biden As CNN Poll Shows Democratic Socialist Leading Pack

Sanders Targets ‘Black Voter-Betraying’ Biden As CNN Poll Shows Democratic Socialist Leading Pack

The brewing battle between Bernie Sanders and Joe Biden is heating up, as The Hill reports that the 78-year-old Vermont Senator is looking for a ‘one-on-one battle’ with the 77-year-old former Vice President.

The beef between Sanders and Biden came to a head this week after Sanders accused Biden of supporting cuts to Social Security, while Biden hit back – claiming Sanders is mischaracterizing his position.

And while most polls still have Biden as the 2020 Democratic frontrunner, a national CNN poll released Wednesday had Sanders at 27% vs. Biden at 24%, while Elizabeth Warren (D-MA) came in a distant third at 14%.

A Biden confidant said the campaign sees Sanders as its biggest rival at the moment, even as polls of Iowa and New Hampshire find a tighter four-candidate race between Biden, Sanders, Warren and former South Bend, Ind., Mayor Pete Buttigieg.

“For now at least it’s trending that way,” said the Biden insider. “It looks like Warren and Pete have peaked.

After struggling to reach people of color in the 2016 Democratic primary, Sanders has markedly improved his standing among nonwhite voters and is now challenging Biden at the top. –The Hill

Sanders supporters include artists such as Killer Mike and ‘The Squad’ (AOC (D-NY), Ilhan Omar (D-MN), Pramila Jaypal (D-WA) and Rashida Tlaib (D-MI).



Nina Turner

Meanwhile, Sanders national campaign co-chairman Nina Turner wrote in an op-ed last week in South Carolina’s “The State” that Biden “has repeatedly betrayed black voters to side with Republican lawmakers and undermine our progress,” according to The Hill.

Apparently the pressure is catching up to Biden – who mocked and berated a CBS journalist who asked about the feud.

 


Tyler Durden

Thu, 01/23/2020 – 15:35

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Ron Paul: The Impeachment Trial Of President Trump Is “Pure Politicking”

Ron Paul: The Impeachment Trial Of President Trump Is “Pure Politicking”

Former United States Hose of Representatives member and presidential candidate Ron Paul is not too impressed with the ongoing impeachment trial of President Donald Trump in the US Senate. The impeachment trial is “pure politicking,“ declares Paul in a new interview at TRT World focused in the impeachment trial.

Paul further comments in the interview:

It’s always been said that impeachment is a political process. Well that’s an understatement when you look at what’s going on now.

With wrongdoing being pursued by politicians both Republican and Democrat in DC, Paul assesses in the interview that the real battle taking place is over “who’s going be the boss of this” and “who’s going to control the largess.”

Watch Paul’s complete interview here:

Source: Adam Dick at The Ron Paul Institute for Peace & Prosperity


Tyler Durden

Thu, 01/23/2020 – 15:20

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Why Do Critics of Harsh Drug Penalties Support Them When the Drug Is Fentanyl?

Even as President Donald Trump brags about his support for sentencing reform, he pushes enhanced fentanyl penalties that threaten to repeat the mistakes he claims to be correcting. As a new report from the Drug Policy Alliance (DPA) shows, that sort of inconsistency is hardly unique to the president.

“Many legislators who support scaling back mass incarceration and the drug war are now supporting extremely harsh measures for fentanyl, undercutting the effectiveness of criminal justice reforms,” write Michael Collins, former director of national affairs at DPA, and Sheila Vakharia, the organization’s deputy director for research and academic engagement. One striking example: The Sentencing Reform and Corrections Act of 2017—a bill that would have gone further in reducing drug penalties than the FIRST STEP Act, which Trump signed in 2018—nevertheless included a “mandatory sentencing enhancement” for heroin containing fentanyl.

At the state level, politicians who favor reducing drug sentences, such as Maryland Gov. Larry Hogan (R), likewise want to increase them when the drug is fentanyl. Since 2011, Collins and Vakharia found, 39 states and the District of Columbia have responded to the upward trend in opioid-related deaths by enacting harsher penalties for fentanyl offenses, a strategy that is both ineffective and unjust.

These politicians are responding to the increasing prevalence of fentanyl as a heroin booster and substitute. That development, driven by the economics of prohibition, has made illegal opioids more deadly.

Since fentanyl is roughly 50 times as potent as heroin, its use has made the potency of illicit opioids more variable and unpredictable, magnifying the risk of accidental overdose. “The lack of knowledge whether an illegal drug may contain fentanyl (or how much) could mean that people may not be taking necessary precautions to reduce their risk of overdose, such as using a smaller amount, not mixing with other classes of drugs or consuming their drugs more slowly,” Collins and Vakharia note. Furthermore, fentanyl is faster-acting than heroin: “Whereas there may be 2-3 hours to respond to a heroin or prescription opioid pill overdose, the effects of a fentanyl-related overdose are virtually immediate (death can occur in a matter of minutes) and someone must reverse the overdose with naloxone [an opioid antagonist used to treat overdoses] immediately to prevent a fatality.”

Fentanyl has become very common in many parts of the country. “Fentanyl is now present in most heroin in the Midwest and Northeast, while rapidly spreading west of the Mississippi,” Collins and Vakharia write. Between 2010 and 2017, according to data collected by the U.S. Centers for Disease Control and Prevention, opioid-related deaths more than doubled, while the share of those deaths involving “synthetic opioids other than methadone”—the category that includes fentanyl and its analogs—more than quadrupled, from 14 percent to 60 percent. In 2017, that category was implicated in more than 28,000 deaths.

Given those trends, it is not surprising that legislators have reacted to fentanyl the way they usually react to the latest drug menace: by ramping up penalties for distribution in the vain hope of shrinking the supply, raising retail prices, and ultimately reducing consumption. But it is striking that this punitive response has coincided with bipartisan recognition that past attempts to reduce drug-related harm by sending more people to prison for longer periods of time—in particular, draconian mandatory minimums for crack cocaine offenses—resulted in excessive punishment for low-level dealers that disproportionately affected racial minorities.

The fentanyl crackdown promises more of the same. Looking at federal fentanyl convictions in 2016, Collins and Vakharia find that half the defendants were black, while a quarter were Hispanic. Although the average sentence was five and a half years, 26 percent of the fentanyl defendants were classified as “couriers/mules,” while 24 percent were described as “street-level” dealers. Even more striking, 53 percent of the defendants “did not seem to know they had fentanyl,” according to the U.S. Sentencing Commission.

Since fentanyl is commonly added to heroin high up in the distribution chain, people convicted of selling it, like their customers, “are often unaware of the composition and potency of their drugs and have little control over the quality of product available,” Collins and Vakharia write. “How can a tough sentence be a deterrent for behavior that people cannot prevent and may not even know they are engaging in?”

Politicians may imagine they are punishing callous kingpins who are “agents of death,” as former Sen. Kelly Ayotte (R–N.H.) put it while promoting a bill that would have increased federal fentanyl penalties. Under her proposal, the weight threshold triggering a 10-year mandatory minimum would have been reduced from 400 to 20 grams for fentanyl and from 100 to five grams for fentanyl analogs; the cutoffs for a five-year mandatory minimum would have dropped from 40 to two grams and from 10 grams to half a gram, respectively. Yet the low-level players who would often be subject to those mandatory minimums not only might not realize they were selling fentanyl; they might be users who sell drugs to finance their own habits or who qualify for distribution charges when they pool their resources with other users to buy drugs.

While Ayotte cited Prince’s fentanyl-related death as an example of the problem she was trying to tackle, Collins pointed out that Prince himself could have qualified for a mandatory minimum sentence under her bill. Collins and Vakharia warn that “differentiating between people who use and sell drugs is not possible,” especially since sentences are based on weight and prosecutors generally assume “intent to distribute.”

Is there any reason to think that enhanced penalties will actually reduce fentanyl-related deaths? “There is no evidence that punishing the use and sale of a drug more harshly due to its potency will reduce its availability,” Collins and Vakharia say. They quote an observation that Marc Mauer, executive director of the Sentencing Project, made in 2018: “Increasing already high penalties for drug offenses is not effective because 1) most people do not expect to be apprehended for a crime, are not familiar with relevant legal penalties, or criminally offend with their judgment compromised by substance abuse or mental health problems, and 2) those who are apprehended and sentenced are often in the lower levels of the drug trade and are readily replaced by other sellers willing to fill their roles.”

The fentanyl crackdown could actually increase drug-related deaths, since it includes a surge in prosecutions for “drug-induced homicide,” a trend documented in a 2017 DPA report. By threatening to imprison people who share drugs that are implicated in fatal overdoses, such prosecutions may deter them from seeking lifesaving help, undermining the goal of “Good Samaritan” laws that are supposed to protect bystanders in such situations.

Instead of more punishment, Collins and Vakharia recommend several harm-reduction measures that are more likely to be effective, such as stronger Good Samaritan laws, increased access to naloxone, distribution of test strips that indicate the presence of fentanyl in black-market drugs, legalization of supervised drug consumption sites, and expansion of treatment using substitute opioids, including research on injectable alternatives. “We cannot have a public health response to some drugs and a criminal justice response to others,” they write. “We cannot talk about ‘treatment, not incarceration’ and then revert to interdiction and enforcement when a new substance that frightens us appears on the scene.”

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