Tag: finance

Tesla Is Being Sued Yet Again, For Allegedly Not Paying Contract Workers

It wouldn’t be another day in April 2018 if there wasn’t yet another negative Tesla headline hitting the wire.

That’s right – Tesla has once again been sued, this time as it relates to contract workers at its Fremont factory. Tesla is party to a lawsuit that was also aimed at Balance Staffing, a company responsible for staffing workers at Tesla’s Fremont factory. These workers have alleged not only that they are due additional overtime pay, but also that the service that placed them at Tesla encouraged them to accept debit cards instead of paychecks when it came time to get paid.

The story was first reported at Jalopnik:

Tesla contract workers aren’t receiving legally required overtime pay or mandated work breaks, according to a new lawsuit filed in California state court. The employees faced “pressure” from a temp agency that hires workers at Tesla’s California factory to take a debit card to accept their compensation, rather than a traditional pay check, the suit claims.

Could this just be the temp agency cutting corners, or is it possible that the cash crunch at Tesla is still very real? Accepting debit cards instead of cash usually results in a small percentage kickback from the debit card originator to the payor (which would save either Tesla, Balance Staffing, or both a nominal amount of money) and they also could extend the amount of time that Balance Staffing could have to pay its workers. The fees are then passed back to the person who is being paid:

“Defendants willfully required Plaintiff and class members to work during rest periods and failed to compensate Plaintiff and class members for work performed during rest periods,” the suit claims.

Nezbeth-Altimore specifically alleges that Balance Staffing “pressured” its employees at Fremont to accept a debit card as pay instead of a physical check. While possibly more convenient, but the feds have said workers can’t be forced to use so-called payroll cards. And workers who use debit cards could also be hit with fees and surcharges for withdrawing their payment at an ATM.

The article continues, citing the temp agency’s standards for overtime pay:

Nezbeth-Altimore points to Balance Staffing’s policy to illustrate her claims over failure to pay necessary overtime wages and provide proper rest periods. California law requires employees to be paid one-and-a-half times their regular rate of pay if they work more than eight hours a day or 40 hours total in a week. After 12 hours in a day, workers are entitled to double their pay.

In its handbook, Balance Staffing only mentions overtime pay for workers who put in more than 8 hours in a work day or 40 hours in a week, the suit says. It makes no mention of working 12 hours a day, according to the suit, something known to happen at Fremont in the past. (CEO Elon Musk said this week that Tesla will be hiring several hundred workers as part of an effort to run Fremont 24/7 to build more Model 3 sedans.) 

“During the relevant time period, Defendants willfully failed to pay all overtime wages owed to Plaintiffs and class members,” the suit says.

Finally, the article notes additional litigation that is outstanding dealing with Tesla’s working conditions, and the obligatory statement from the company, denying it has anything to do with this lawsuit, despite being named a defendant:

Tesla is facing several lawsuits from contract workers over alleged racial bias and abuse at Fremont. One of those cases is moving toward trial, Bloomberg reported last week, as the contract workers aren’t required to settle disputes through binding arbitration, customary for full-time Tesla workers.

In a statement, a Tesla spokesperson said the automaker “goes above and beyond the requirements of California and federal law in providing workers meal and rest breaks and appropriate overtime pay.”

“This is a dispute between a temporary worker and her employer staffing agency, which is responsible for payment of her wages,” the statement said. “There is no specific wrongdoing alleged against Tesla. Regardless, whether Tesla or a staffing agency, we expect employers to act ethically, lawfully and do what is right.”

Is it even possible that both the cash crunch – and the legal issues – at Tesla are getting worse instead of getting better? Regardless, as it relates the company’s finances, those on the short side are starting to smell blood. 

Late last week we did a report on Vilas Capital Management – which has a majority of its short book dedicated to Tesla – and its recent reasoning for making its Tesla short such a large percentage of its capital:

We added meaningfully to our Tesla position in the first quarter at prices in the $340 range. We continue to believe that Tesla is extremely overvalued and that it will experience significant financial difficulties over time.

All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers.

Tesla bulls will argue that their production will rise to 5000 Model 3’s per week soon and, therefore, the stock will trade meaningfully higher. Given that the company lost $20,000 per Model S and X sold for roughly $100,000 each last year, due to the fact that it cost more to build, sell, service, charge and maintain these cars than they collected in revenue, as it is important to include all costs when evaluating a business, we predict it will impossible for Tesla to make a profit on a $35,000 to $50,000 car.

As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.

Vilas continued:

Roughly five institutions make up nearly 50% of Tesla’s freely floating shares. All it will take is for one of them to realize the likely fact that the company won’t ever earn an annual profit, has been overly optimistic, at best, or quite dishonest, at worst, with their projections of cash flow and profit and Tesla’s shares should fall precipitously. We believe that the CEO’s recent tweet that the company will be profitable and will generate positive cash flow in the second half of the year are likely attempts to artificially inflate the stock and keep creditors at bay.

Given that our calculations show that Tesla needs to raise at least $5 billion of equity, if not closer to $8 billion, to stay solvent in the next 14 months, the company needs to find at least another dozen Ron Baron sized investors.

We do not believe that this will be possible given their expected future losses, working capital and capital expenditure needs, lousy execution with the Model 3, falling demand for their somewhat stale Model S and Model X, tax rebates of $7,500 per car that will start going away shortly, impending competition from Jaguar, Mercedes, Porsche, BMW, Audi, etc., the credit rating downgrade by Moody’s to Caa+ while leaving the credit on watch for further downgrades (Caa+ is basically defined as impending default), the NTSB investigation into the accident caused by the “Full Self Driving” option that they collected $3000 for (which may create a class action lawsuit, fines and the disabling of the feature), the fact that they have had 85 letters and investigations back and forth with the SEC (a very unusual pattern), the fact that their three top finance executives (CFO, Chief Accounting Officer, and Director of Finance) have left the company over the last 18 months leaving huge amounts of awarded by unvested shares on the table, a highly suspicious pattern, and the fact that the company owes suppliers roughly $3 billion of unsecured payments, which could be “called” at any time, similar to a run on a bank.

If Tesla’s suppliers simply asked for their past invoices to be paid and to be paid in cash at the time of their next parts delivery, a likely outcome the worse Tesla’s balance sheet gets, it is clear that Tesla would need to file for protection from creditors. Further, the banks lending Tesla money cannot ignore the balance sheet. They have strict rules that regulators enforce about lending to companies with increasingly negative working capital.

The company’s story about further drawing down lines of credit to finance operating losses and capital expenditure needs may seem plausible to novice investors but, in our opinion, not to suppliers and regulated lenders. In a game of financial musical chairs, it is important to sit down quickly.

Who in their right mind would continue to finance this money losing operation? Up to this point, it has been from growth investors who have likely never owned an auto stock before. Once they figure out the industry and the truth about Tesla’s future, we doubt it will continue.

This second lawsuit and continued scrutiny comes at a time when Tesla is publicly under some of the worst pressure its been under since its founding. The media narrative on the company has certainly has certainly become slightly more skeptical and this has, in turn, triggered Elon Musk to set bigger goals and larger milestones for the future.

The tally of bad press, lawsuits and investigations of recent relating to Tesla is starting to pile up.

  1. NTSB investigation that put the company at a public feud with the NTSB
  2. An initial workplace safety investigation by the state of California
  3. A second reported workplace safety investigation, reported on Friday
  4. A securities fraud class action lawsuit against Musk claiming he knew he was going to miss Model 3 targets for 2017
  5. This contract worker lawsuit
  6. CNBC article detailing poor vetting of suppliers, leading to a pile up of malfunctioned parts
  7. Reports of the company cutting corners as it relates to their pre-owned vehicles
  8. Reveal article alleging the company is underreporting its safety incidents at its Fremont factory
  9. Recent massive recall of 125k Model S sedans

Despite this, we’ve been promised by Elon himself that Tesla:

  1. Will be cash flow positive in Q3 and Q4 of this year
  2. Will not need to do another capital raise in 2018
  3. Will produce 6,000 Model 3’s per week, starting this summer

Critics of the company believe that Elon Musk should be a target by the SEC if these goals – once again, easy to promise, not as easy to deliver – aren’t met. They have been the only thing that has kept Tesla’s stock price from falling well below the $300 mark over the last couple of weeks, despite all of the negative press. This new lawsuit is just another negative to add to that pile. 

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Nassim Taleb Warns Americans Should “Fear The 2% – The Intellectuals & Politicians”

Via Esquire.com,

People ask me my forecast for the economy when they should be asking me what I have in my portfolio. Don’t make pronouncements on what could happen in the future if you’re immune from the consequences. In French, they use the same word for wallet and portfolio.

I have never, ever borrowed a penny. So I have zero credit record. No loans, no mortgage, nothing. Ever. When I had no money, I rented. I have an allergy to borrowing and a scorn for people who are in debt, and I don’t hide it. I follow the Romans’ attitude that debtors are not free people.

I carry euros, dollars, and British pounds. What I do with my money is personal. People who say they give it to charity, that’s a no-no in my book. Nobody should ever talk about a charitable act in public.

Better to miss a zillion opportunities than blow up once. I learned this at my first job, from the veteran traders at a New York bank that no longer exists. Most people don’t understand how to handle uncertainty. They shy away from small risks, and without realizing it, they embrace the big, big risk. Businessmen who are consistently successful have the exact opposite attitude: Make all the mistakes you want, just make sure you’re going to be there tomorrow.

Don’t invest any energy in bargaining except when the zeros become large. Lose the small games and save your efforts for the big ones.

There’s nothing wrong with being wrong, so long as you pay the price. A used-car salesman speaks well, they’re convincing, but ultimately, they are benefiting even if someone else is harmed by their advice. A bullshitter is not someone who’s wrong, it’s someone who’s insulated from their mistakes.

What is in his wallet? Euros, dollars, and British pounds.

There is less “skin in the game” today than there was fifty years ago, or even twenty years ago. More people determine the fates of others without having to pay the consequences. Skin in the game means you own your own risk. It means people who make decisions in any walk of life should never be insulated from the consequences of those decisions, period. If you’re a helicopter repairman, you should be a helicopter rider. If you decide to invade Iraq, the people who vote for it should have children in the military. And if you’re making economic decisions, you should bear the cost if you’re wrong.

Ninety-eight percent of Americans – plumbers, dentists, bus drivers – have skin in the game. We have to worry about the 2 percent – the intellectuals and politicians making the big decisions who don’t have skin in the game and are messing the whole thing up for everybody else. Thirty years ago, the French National Assembly was composed of shop owners, farmers, doctors, veterinarians, and small-town lawyers—people involved in daily activities. Today, it’s entirely composed of professional politicians—people who are just divorced from real life. America is a little better, but we’re heading that way.

Money can’t buy happiness, but the absence of money can cause unhappiness. Money buys freedom: intellectual freedom, freedom to choose who you vote for, to choose what you want to do professionally. But having what I call “fuck you” money requires a huge amount of discipline. The minute you go a penny over, then you lose your freedom again. If money is the cause of your worry, then you have to restructure your life.

The best money I’ve ever spent has been spent on books. The stupidest thing I’ve ever spent money on? Books. Also, I cannot understand why anyone would spend any amount to enhance their social status.

If nobody’s paying my salary, I don’t have to define myself. I find it arrogant to call yourself a philosopher or an intellectual, so I call myself a flaneur and I refuse all honors. As Cato once said, it’s better to be asked why there is no statue in your name than why there is one.

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Broward Sheriff Israel To Face No-Confidence Vote For “Suspected Malfeasance”

The Broward County Sheriff’s Office Deputies Association has scheduled a no-confidence vote for Sheriff Scott Israel for “many instances of suspected malfeasance” among several claims that his conduct leading up to, and following, the Feb 14th Parkland school shooting.

Union president Deputy Jeff Bell announced the upcoming vote on Friday. Of note, Florida governor Rick Scott can fire Israel for “malfeasance, misfeasance, neglect of duty (or) incompetence.”

To that end, Israel is accused by the Association of “many instances of suspected malfeasance, misfeasance, failure to maintain fiduciary responsibility by the sheriff, failure to properly investigate possible criminal conduct by members of his senior command staff and the lack of leadership that has crushed morale throughout the agency.”

Seems like the Deputies Association is about to give Governor Scott exactly what he needs to get rid of Israel, right down to the official language.

While multiple agencies failed in the lead-up to the Parkland shooting, the Broward County Sheriff’s Department – led by Sheriff Israel, had directly interfaced with self-confessed killer Nikolas Cruz – having received nearly 50 calls about him.

Perhaps  resource officer Scot Peterson (the Broward Deputy who ran from the shooting) failed to commit Cruz for mental evaluation under Florida’s Baker Act. 

Israel has refused to take responsibility for his behavior before or after the shooting. Under calls to resign, the Sheriff said: 

“I gave him a gun. I gave him a badge. I gave him the training. If he didn’t have the heart to go in, that’s not my responsibility,” said Israel of Peterson’s failure to face Cruz during the shooting. 

As Ben Domenech of The Federalist noted in February, when Israel was accused of corruption in the past, he responded with a paraphrased quote from Game of Thrones: “Lions don’t care about the opinions of sheep.” 

The manner of corruption, though, is illuminating: essentially, it amounts to Israel’s use of the Broward County office as a patronage program, hiring unqualified political allies for cushy county public relations jobs. –The Federalist

From the Sun Sentinel:

The outreach workers, who mainly attend community events, are in addition to political activists and others Israel hired into community affairs roles, writing and designing printed pieces about the agency, and sharing it on social media. The employee log shows six hired into community affairs roles, their salaries totaling 388,729. Israel’s opponents say he’s built a publicly funded political machine, paying back supporters with jobs and using them to keep him in office. They say the money could be better spent, particularly after the sheriff complained about not having enough funding to secure the county courthouse, where a murder suspect recently escaped.

Israel was also accused of taking donations from a convicted felon in the “Cuban Mafia”…

Israel was criticized in 2014 after a political action committee supporting his re-election campaign for sheriff accepted thousands of dollars in donations from a convicted felon.

The donor, Yoram Izhak, was indicted for allegedly being part of an organized crime ring known as the “Cuban Mafia” that “was allegedly involved in cocaine trafficking, arson, gambling and murder,” according to Local10.

Meanwhile, Israel has morphed into a mouthpiece for the gun control movement. 

Between Israel’s checkered past and his conduct surrounding the Parkland massacre, it appears that the Deputies Association is paving the way for a new sheriff to take the helm in Broward County.

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The Economy Is Cooked

Authored by Adam Taggart via Peak Prosperity.com,

Hours ago, European Central Bank chief Mario Dragho conceded: “The growth cycle may have peaked”

Of course, those paying attention to the data already knew this. Our politicians and central planers have been peddling to us the fantasy that the global economy is strengthening, finally ready to fire on all cylinders after nearly ten years of dependence on monetary stimulus.

That just ain’t so.

The Federal Reserve of Atlanta’s GDPNow measure, which gives a forecast of Q1 2018’s expected GDP, is currently coming in at 2.0%, down from the much more vigorous 5.4% growth predicted as recently as early February:

Generating this growth, meager as it is, has required a tremendous amount of new debt. So much more so that the US will soon have a worse debt-to-GDP ratio than perennial fiscal basket-case Italy:

U.S. Debt Load Seen Worse Than Italy’s by 2023, IMF Predicts (Bloomberg)

In five years, the U.S. government is forecast to have a bleaker debt profile than Italy, the perennial poor man of the Group of Seven industrial nations.

The U.S. debt-to-GDP ratio is projected widen to 116.9 percent by 2023 while Italy’s is seen narrowing to 116.6 percent, according to the latest data from the International Monetary Fund. The U.S. will also place ahead of both Mozambique and Burundi in terms of the weight of its fiscal burden.

The numbers put renewed focus on the U.S. deteriorating budget after the enactment in December of $1.5 trillion in tax cuts, and the passage more recently of $300 billion in new spending. President Donald Trump’s administration argues that the tax overhaul combined with deregulation will help the economy accelerate, which in turn will generate enough extra revenue to avoid any fiscal fallout.

Officials with the Federal Reserve and Congressional Budget Office are skeptical about those expectations, as they forecast long-term economic growth will fall short of expansion rates needed to fund tax cuts. The central bank’s most recent forecasts show a median estimate of 2.7 percent for this year’s expansion slowing to 2 percent in 2020, while the CBO sees GDP growth slowing from 3.3 percent this year to 1.8 percent in 2020.

Looking back across the past 50 years, we can clearly see that the 2008 Great Financial Crisis was a turning point. That was the moment where our addiction to exponentially increasing our debts began to have real consequences.

The chart below clearly shows that, since then, we’ve been in an era of diminishing returns in exchanging debt for growth:

What can ride to the rescue at this point? Not much.

Our ‘recovery’ since 2008 is now one of the longest on record; another recession will occur sooner or later (Fannie Mae head economist Doug Duncan thinks one will likely arrive by next year).

Rising interest rates will only accelerate the advance of a recession. And interest rates are indeed on the rise, with 10-year Treasury yields having nearly doubled since July 2016:

10-YEAR TREASURY YIELD (%)

And with the arrival of recession, what will our leadership do? The only thing it knows how: print, borrow and deficit spend in attempt to boost ‘growth’. Except the debt will be even more expensive this time, and it’s ability to generate incremental growth per unit of new debt even weaker.

The Bigger Predicament

But sadly, as prodigious as it will be, our growing pile of debt isn’t going to be the primary limiter of growth in the coming decades.

Instead, it will be Energy.

Oil prices are on the rise again, as the world is waking up to the fact that annual demand will exceed supply for decades to come and that the US shale ‘miracle’ will be a short-lived mirage. All while new oil field discoveries are the worst since World War 2.

With increasingly expensive energy — and increasing global competition for it — the economy will find itself increasingly constrained. We will be faced with a future of doing less.

This is not fear-mongering; it’s science. Specifically, our destiny is in the hands of the Laws of Thermodynamics. Without a surfeit of new, plentiful, BTU-dense and affordable energy sources (which we simply don’t see on the horizon), economic growth cannot be sustained.

One of the best explanations I’ve read on this is the report my fellow Peak Prosperity co-founder, Chris Martenson, wrote upon finishing the book version of The Crash Course. It remains to this day one of his most seminal warnings of the global predicament we a species face on this finite planet.

In Part 2: Energy Is The Non-Negotiable Element Defining Our Future, we re-publish this report in full, which is even more relevant and important to heed today then when Chris wrote it eight years ago — as our economy specifically, and humanity in general, are totally unprepared for a future of even slightly less energy.

Everything is tuned to grow exponentially. There is no “plan B”.

We have no models yet for how to manage in a world of de-growth, so we will blindly slam into this crisis head-on. But as painful as they will be, the economic woes at that time will be the least of our worries.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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Russia Claims It Captured Trump’s “Nice And New And Smart” Missiles After Syrian Strike

Two of President Trump’s “nice and new and smart” cruise missiles were recovered non-detonated by the Syrian Armed Forces on April 14, one day after the US, the UK and France fired more than 100 rockets into Syria according to the Russian TASS new agency. The U.S.-led missile strike targeted what they assumed were Syrian chemical weapon facilities in response to the April 07 gas attack in the Syrian city of Douma.

And now the reverse engineering of America’s “new and smart” technology can begin: an unnamed source within the Syrian military confirmed to TASS that the cruise missiles were sent to Russia on April 18.

“Two cruise missiles that were not exploded during the US missile strike in Syria on the night of April 14 were discovered by the Syrian military, both missiles in good enough condition the day before yesterday [April 17] were transferred to the Russian military,” the source said.

As the source adds “these missiles were sent yesterday [April 18] by plane to Russia” for further examination.

Alleged images of American and French cruise missiles shot down by Syria forces have recently surfaced on Twitter:

“Syrian soldier stands beside downed US Tomahawk missile,” said Partisangirl.

“Some are saying the missile with the red tip on the right is a Russian R-40 band I’ve come to agree. But Pentagon trolls are trying to use this to claim Syria didn’t shoot down any missiles, how do they explain the French, English & American dates on these missiles?” she said.

However, Pentagon officials have denied all claims that their “nice and new and smart” cruise missiles were shot down. Officials said that missiles successfully hit all targets, while the Ministry of Defense of the Russian Federation, Syrian air defense claimed they shot down 71.

The missile “performed exactly as advertised, striking its programmed targets with devastating precision,” said Lt. Col. Damien Pickart, an Air Force spokesman.

While it can be difficult to sift through the propaganda on both sides, here is SouthFront’s breakdown of the events on April 14:

As discussed previously, while not enough to prompt a retaliatory escalation, the airstrikes on Syria angered Russia, who warned that there would be consequences. As Bloomberg wrote, one of them was spelled out: The Kremlin said it might supply its Syrian ally with state-of-the-art air defenses.

“If the prospect rings alarm bells among President Bashar al-Assad’s enemies, they’re likely to be loudest in Israel, not the U.S. Israel carries out airstrikes in Assad-controlled Syrian territory much more frequently than the U.S., as it seeks to prevent a military buildup near Israeli borders by Assad’s other key backer, Iran.

Israeli analysts and former defense officials say there’s only one likely response from the Jewish state if the S-300 surface-to-air missile systems are delivered to Syria: An immediate attempt to blow them up.

That would upend the delicate relationship between Israel and Russia, who’ve kept channels open despite supporting opposite sides in Syria. And it could create another dangerous moment with the potential to escalate the seven-year civil war into a wider conflict.”

And while Trump praised his billion-dollar missile strike in Syria as “Mission Accomplished” – famous words have usually been associated with the beginning of a major US military fiasco – the question is whether the US just successfully delivered, on a silver platter, the latest US cruise missile technology to the Syrian government, and thus, to Russia.

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Trump Erupts On “Crooked H Flunkie” Maggie Haberman And “Drugged Up Loser” Sam Nunberg

President Donald Trump isn’t happy about a series of stories published this week speculating that his former personal attorney, Michael Cohen, feels “isolated” and would turn on the president and cooperate with investigators, if charged with a crime.

In his trademark angry Saturday morning tweetstorm, the president lashed out at the New York Times reporter Maggie Haberman for a Friday story which she co-authored, titled “Michael Cohen Has Said He Would Take a Bullet for Trump. Maybe Not Anymore”. It quotes several Trump associates – including Roger Stone and Sam Nunberg – along with a handful of “anonymous” sources to claim that despite Cohen’s many public professions of loyalty, the longtime Trump associate has suffered years of ridicule at the hands of his overbearing boss and is more disgruntled than he’s willing to let on.

Other targets of Trump’s ire included “drunk/drugged up loser” Sam Nunberg, who was heavily quoted in the New York Times story.

But the New York Times isn’t the only major paper that has questioned Cohen’s loyalty. Earlier this week, the Wall Street Journal published an “exclusive” quoting a  Trump confidant expressing his “expert opinion” that Cohen would turn on Trump if pressured and threatened with a lengthy prison sentence.

* * *

This isn’t the first time Trump has singled out Maggie Haberman for ridicule as the relationship between Haberman and Trump deteriorated significantly since the early days of his administration.

In fact, Haberman, as one of the Times’ chief White House reporters, has often been targeted by the president in a way that makes her almost representative for the paper as a whole.

Haberman

Glenn Thrush, Haberman’s former reporting partner on the White House beat, came to her defense:

With his constant attacks, Trump has provided priceless free publicity for the NYT reporter, in the process making her into a household name, a fact she clearly has grasped by providing a link to the NYT story in her response to Trump’s tweet:

Despite Trump’s hash words for Haberman, his initial misspelling of her name (in his original tweet, Trump called her “Habberman”), and claiming he has “nothing to do with,” the pair have a long history: she was the reporter Trump first notified he was entering the 2016 presidential race, and they appear to remain in contact.

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Sessions Threatens To Quit If Trump Fires Rosenstein

Attorney General Jeff Sessions told the White House recently that he might quit if his President Trump fires Deputy AG, Rod Rosenstein.

Jeff Sessions, Rod Rosenstein and Solicitor General Noel Francisco dine together in late February near the Justice Department.

Sessions reportedly warned White House counsel Donald McGahn of his position in a phone call last weekend according to the WaPo, while President Trump’s rage at Rosenstein grew over the Deputy AG’s approval of a raid on Trump attorney Michael Cohen’s home, office and hotel room on April 9 – requested by Special Counsel Robert Mueller. 

Sessions’s message to the White House, which has not previously been reported, underscores the political firestorm that Trump would invite should he attempt to remove the deputy attorney general. While Trump also has railed against Sessions at times, the protest resignation of an attorney general – which would be likely to incite other departures within the administration – would create a moment of profound crisis for the White House.

Rosenstein also signed off one of the FISA spy warrant renewals on a Trump campaign associate targeted in an FBI counterintelligence operation. 

During a joint press conference on Wednesday with Japan’s Prime Minister, Shinzō Abe, President Trump sought to calm fears over whether he would fire Rosenstein or Mueller.

“They’ve been saying I’m going to get rid of them for the last three months, four months, five months, and they’re still here,” said Trump – though he expressed a desire to end the Russia investigation, calling it a “very bad thing for our country.” 

“So we want to get the investigation over with, done with, put it behind us,” Trump added.

The Mercury News reports that Sessions asked McGahn about the details of a White House meeting between Trump and Rosenstein on April 12, according to a “person with knowledge of the call,” who said that Sessions “expressed relief to learn that their meeting was largely cordial.” 

“Sessions said he would have had to consider leaving as the attorney general had Trump ousted Rosenstein, this person said.” –Mercury News

Another person familiar with the exchange insisted that Sessions didn’t intend on threatening the White House – rather, he wanted to convey that Rosenstein’s firing would put him in an untenable position.

Over 800 former Justice Department employees have signed an open letter calling on Congress to “swiftly and forcefully respond to protect the founding principles of our Republic and the rule of law” if Rosenstein, Mueller or other senior DOJ officials are fired. Liberal advocacy group MoveOn.org has plans to organize nationwide protests if the G-men are fired. 

Sessions does not like the way President Trump has been treating Rosenstein, a senior administration official tells the Mercury, noting that Sessions has held this view “for months,” while regularly seeking guidance from the White House on Rosenstein’s standing with the president.

But Sessions has had little ability to do anything about it, given his own shaky standing with Trump for recusing himself from the Russia investigation, this official said. Trump has, at times, referred to Sessions as “Mr. Magoo” and Rosenstein as “Mr. Peepers,” a character from a 1950s sitcom, according to people with whom the president has spoken. –Mercury

On Wednesday, Eleven GOP members of Congress led by Rep. Ron DeSantis (R-FL) wrote a criminal referral to Sessions, along with Attorney John Huber and FBI Director Christopher Wray – accusing James Comey, Hillary Clinton and others of a laundry list of malfeasance surrounding the 2016 U.S. presidential election, and insisting that Rosenstein “be recused from any examination of FISA abuse,” and “neither U.S. Attorney John Huber nor a special counsel (if appointed) should report to Rosenstein.”  

Perhaps it’s time to “drain” both Sessions and Rosenstein from the swamp. Of course, then there would be the not-so-small and just slightly controversial matter of confirming whoever Trump picks to replace Sessions before the next election, especially now that Rudy Giuliani, the man who was rumored to be Trump’s original AG, is set to join Trump’s legal team. 

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Russia Exposes British Lies On Skripal, But Trail Leads To US

Authored by M.K. Bhadrakumar via The Strategic Culture Foundation,

Moscow says it has proof that the agent used in the UK attack is a chemical weapon patented in the US. So was this a covert operation aimed at ratcheting up tensions between the West and Russia?

The sensational case of the poisoning of the ex-MI6 agent and former Russian military intelligence colonel Sergei Skripal on March 4 in Salisbury, in the UK, is becoming more and more curious. Under a blinding spotlight from Moscow, the British allegation regarding a Russian hand in the poisoning of Skripal is getting exposed. An engrossing plot in big-power politics is also unfolding. There is stuff here for a Le Carre novel.

Are we witnessing a replay of the false flag Gulf of Tonkin attack of August 1964, the imaginary “incident” concocted by the US military to provide legal and political justification for deploying American forces in South Vietnam and for commencing open warfare against North Vietnam?

To recap, Britain alleged without any empirical evidence that a military grade nerve agent of a type known as Novichok was used in Salisbury, saying it was originally developed in the former Soviet Union, and therefore, Moscow’s hand – possibly, even President Vladimir Putin’s hand – was “highly likely”.

Moscow has maintained, on the other hand, that it had destroyed all its chemical weapons and an Organization for the Prohibition of Chemical Weapons (OPCW) investigation verified and testified to that.

The British allegation quickly morphed into a large-scale expulsion of Russian diplomats (over 100 of them) by western capitals, under heavy pressure from Washington and London. The US alone expelled 60 Russian diplomats, while Britain expelled 23.

Egg on May’s face

Britain is studiously ignoring the Russian requests for samples of the chemical agent used in the Salisbury attack and for consular access to be granted to the former spy’s daughter Yulia. Meanwhile, Britain instead approached the OPCW to investigate.

The OPCW has now responded that it cannot identify the country of origin of the chemical agent used in the Salisbury attack.

There is egg on PM Theresa May’s face.

However, Russians managed to get their hands on the report prepared for the OPCW by its reputed laboratory in Spiez, the Swiss Center for Radiology and Bacteriological Analysis. According to the Swiss lab’s report, the chemical formula used in the Salisbury attack has been in service in the US, the UK and other NATO countries. Furthermore, neither the Soviet Union nor Russia “ever developed or stockpiled similar chemical weapons.”

That’s more egg on May’s face.

Now comes the bombshell. On April 18, Moscow disclosed that it has formally handed over to the OPCW proof to the effect that the Novichok agent purportedly used in the Salisbury attack actually happens to be patented as a chemical weapon in 2015 in the US and produced in that country. (By the way, unlike Russia, the US is yet to destroy its chemical weapon stockpiles, as required under the Chemical Weapons Convention of 1997.)

Now, not only the British government but Washington too has some explaining to do.

Was Skripal attack a covert op by the West?

Simply put, the Salisbury attack might even have been an Anglo-American joint covert operation undertaken with the ulterior motive to ratchet up tensions between the West and Russia. (The Washington Post reported on Monday that the former National Security Advisor HR McMaster might have hoodwinked President Donald Trump into approving the expulsion under the wrong notion that similar numbers of expulsions by European allies was in the pipeline. In the event though, the Europeans made only token expulsions.)

Britain is steadily edging away from the Skripal case, hoping, perhaps, that the matter will die down. But will Moscow let Britain off the hook?

On their part, the Russians seem to be holding back on some explosive information pointing toward the US’s direct complicity in this affair.

Indeed, if this was McMaster’s swan song, the indefatigable Russophobe probably hoped to kill two birds with one shot – push Russia’s relations with the West to a crisis point and second, scotch the prospects of an early US-Russia presidential summit (which Trump wanted.)

McMaster reportedly tried to stop Trump from congratulating Putin on his big victory in the Russian election on March 18 in a phone conversation where they discussed a possible summit meeting in a near future.

How far all this is linked to Trump’s decision on March 22, finally, to sack McMaster as his National Security Advisor is yet another template. By the standards of military people, McMaster probably has the reputation of being an “intellectual” but the man proved to be an unvarnished Cold Warrior fit for a museum.

From all accounts, Trump never trusted McMaster and the two had an acrimonious relationship. The one-star general who was overlooked for promotion by the Pentagon was Trump’s default choice following the abrupt departure of Michael Flynn.

Michael Wolff narrates a hilarious episode in his book ‘Fire and Fury’ that during the job interview for the NSA post, McMaster tried to impress Trump when he showed up in military uniform with his silver star and launched into a wide-ranging lecture on global strategy. After, Trump reportedly remarked, “That guy bores the shit out of me.”

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Harvard Teens Raise $1M For Crypto Fund Despite “Not Knowing A Lot”

Teens are now setting up crypto hedge funds despite not having much of a clue as to what they’re doing. And they don’t seem to have trouble finding capital, either.

If you are in the process of trying to gauge whether or not the world of crypto is achieving new highs in bubble status, then look no further than today’s perfunctory Bloomberg article on the crypto world.

Our daily dose of crypto “must have” news comes in the form of an article, published Friday, that details several Harvard undergrad students who woke up one morning and decided they wanted to start a crypto hedge fund. Bloomberg reported,

Bushra Hamid, the 19-year-old daughter of Syrian immigrants, has teamed up with three schoolmates to form Plympton Capital, a hedge fund for investing in digital currencies. Hamid says they aim to launch in six to eight weeks, starting with $1 million. Plympton, named for a street in Cambridge, Massachusetts, has already raised $700,000 from friends and family.

And to give you some indication as to exactly how ready people are to throw money at crypto right now, the article states that they were able to raise $700,000 million from family and friends despite the fact that they may have no clue as to what they are doing:

“We don’t necessarily know a lot, but they have full trust in us,” Hamid said.

Friends – rather, investors – in the fund seem to be a little light on the “due diligence” angle, investing because founder Hamid had one run of success with cryptos:

The quartet began meeting to discuss cryptocurrencies last year, when they each invested in coins independently. Hamid said that last fall she started the Harvard Undergraduate Blockchain Group, in which more than 300 students have shown an interest. Hamid won’t say how much she made on crypto, but a friend was impressed enough with the returns to spur her to action.

“He was instantly, instantly intrigued,” she said. “He said, ‘Start something and I’ll invest.’

The article continues:

While many tech-savvy individual investors have long dabbled in cryptocurrencies, funds became interested in the last few years. About 226 have opened so far, most of them within the last year, managing as much as $5 billion in capital, according to Autonomous Research LLP.

Bitcoin, the bellwether for the entire market, has retreated from last year’s heights, sending the crypto fund returns down 48 percent in the first quarter, according to the Eurekahedge Crypto-Currency Hedge Fund Index.

The article states that they are banking on people their age – and as well as strategies like “technical analysis” to find the right investments:

The Plympton group is banking on the youth movement. A recent online survey of about 2,000 adults conducted by Harris Poll for Blockchain Capital showed that 4 percent of millennials — people 18 to 34 years old — have owned Bitcoin, twice the rate of the general population. And 16 percent of millennials said they plan to buy Bitcoin in the next five years.

“Some people might see our age, and see this is a new growing space that’s largely driven by the millennials,” Junaid Zubair, another Plympton founder, said. “That allows for a high sense of liability but also passion and interest. There we might have an advantage.”

Plympton’s plan is to deploy technical analysis, arbitrage opportunities, portfolio optimization, and machine learning to find the right investments, Zubair said. He declined to provide more specifics.

Good luck with that. The formation of this fund comes at the height of the crypto adoption boom and at a time where countries are the furthest along with they’ve ever been in trying to regulate cryptos and initial coin offerings.

These teenagers have anointed themselves as experts due to one of them simply buying and holding cryptos in ostensibly benefiting from one ride up. However, now that crypto adoption has reached what seems like someone of a slow down, it’s going to take more than just being lucky or buying and holding to make consistent returns in the crypto space.

We wrote yesterday about the only types of funds making money in crypto right now: market makers, volatility experts and those with net neutral exposure. Bloomberg reported on Thursday:

Funds specializing in virtual currency market making and arbitrage strategies delivered first-quarter gains even as their mostly bullish peers lost 40 percent on average. That’s a big reversal from last year, when digital assets soared and market-making funds lagged far behind their long-biased counterparts.

Pivot Digital Trading-2, managed by Hong Kong-based Amber AI Group, generated some of the biggest gains among cryptocurrency funds that avoid directional bets. It rose 4.3 percent in March to bring its first-quarter return to 30 percent, according to the firm. Market Neutral Liquidity SP-Institutional, domiciled in the Cayman Islands, earned 5.6 percent in the first quarter, said Cedric Jeanson of BitSpread Group, investment adviser to the portfolio.

The man behind the curtain continues to get his take. The increased volume that comes with crypto’s plunge may not be great for traditional “buy-and-hold“ crypto funds or retail investors who only have the means to hold long, but that did not stop market makers, net neutral funds and volatility bettors from cashing in. The article continued: 

The results suggest some managers are finding ways to profit from wild swings in cryptocurrencies without having to predict whether they will rise or fall. Such tactics may appeal to investors who want exposure to cryptocurrencies without their extreme volatility.

Here’s a full list of funds that weathered the storm and the methods they used, courtesy of Bloomberg:

We’re not sure how fund managers who don’t necessarily “know a lot” will be able to engage in these types of strategies, especially if their experience is likely just buying and holding in a Coinbase account. 

Whether or not these Harvard students understand that the only people making money in cryptos right now are those with net neutral exposure where those making a market remains to be seen. But, the fact that there are four partners here, combined with the timing with which they decided to start this fund, has us believing this might be not only the first, but also the last time, we hear about them. 

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Crimes Of A Monster: Your Tax Dollars At Work

Authored by John Whitehead via The Rutherford Institute,

Let us not mince words.

We are living in an age of war profiteers.

We are living in an age of scoundrels, liars, brutes and thugs. Many of them work for the U.S. government.

We are living in an age of monsters.

Ask Donald Trump. He knows all about monsters. 

Any government that leaves “mothers and fathers, infants and children, thrashing in pain and gasping for air” is evil and despicable, said President Trump, justifying his blatantly unconstitutional decision(in the absence of congressional approval or a declaration of war) to launch airstrikes against Syria based on dubious allegationsthat it had carried out chemical weapons attacks on its own people. “They are crimes of a monster.”

If the Syrian government is a monster for killing innocent civilians, including women and children, the U.S. government must be a monster, too.

In Afghanistan, ten civilians were killed—including three children, one an infant in his mother’s arms—when U.S. warplanes targeted a truck in broad daylight on an open road with women and children riding in the exposed truck bed.

In Syria, at least 80 civilians, including 30 children, were killed when U.S.-led air strikes bombed a school and a packed marketplace.

Then there was a Doctors without Borders hospital in Kunduz that had 12 of its medical staff and 10 of its patients, including three children, killed when a U.S. AC-130 gunship fired on it repeatedly. Some of the patients were burned alivein their hospital beds.

Yes, on this point, President Trump is exactly right: these are, indeed, the crimes of a monster.

Unfortunately, this monster—this hundred-headed gorgon that is the U.S. government and its long line of political puppets (Donald Trump and before him Obama, Bush, Clinton, etc.), who dance to the tune of the military industrial complex—is being funded by you and me.

It is our tax dollars at work here, after all.

Unfortunately, we have no real say in how the government runs, or how our taxpayer funds are used.

We have no real say, but we’re being forced to pay through the nose, anyhow, for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

Consider: we get taxed on how much we earn, taxed on what we eat, taxed on what we buy, taxed on where we go, taxed on what we drive, and taxed on how much is left of our assets when we die. 

Indeed, if there is an absolute maxim by which the federal government seems to operate, it is that the American taxpayer always gets ripped off. 

This is true whether you’re talking about taxpayers being forced to fund high-priced weaponrythat will be used against us, endless warsthat do little for our safety or our freedoms, or bloated government agencies such as the National Security Agencywith its secret budgets, covert agendas and clandestine activities. Rubbing salt in the wound, even monetary awards in lawsuits against government officials who are found guilty of wrongdoing are paid by the taxpayer.

Not only are American taxpayers forced to “spend more on state, municipal, and federal taxes than the annual financial burdens of food, clothing, and housing combined,” but we’re also being played as easy marks by hustlers bearing the imprimatur of the government. 

With every new tax, fine, fee and law adopted by our so-called representatives, the yoke around the neck of the average American seems to tighten just a little bit more. 

Everywhere you go, everything you do, and every which way you look, we’re getting swindled, cheated, conned, robbed, raided, pickpocketed, mugged, deceived, defrauded, double-crossed and fleeced by governmental and corporate shareholders of the American police state out to make a profit at taxpayer expense.

Yet as Ron Paul observed, “The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”

We are now ruled by a government consumed with squeezing every last penny out of the population and seemingly unconcerned if essential freedoms are trampled in the process. 

If you have no choice, no voice, and no real options when it comes to the government’s claims on your property and your money, you’re not free.

You’re not free if the government can seize your home and your car (which you’ve bought and paid for) over nonpayment of taxes. 

You’re not free if government agents can freeze and seize your bank accounts and other valuables if they merely “suspect” wrongdoing. 

And you’re certainly not free if the IRS gets the first cut of your salary to pay for government programs over which you have no say. 

Somewhere over the course of the past 240-plus years, democracy has given way to kleptocracy  (a government ruled by thieves), and representative government has been rejected in favor of a kakistocracy  (a government run by the most unprincipled citizens that panders to the worst vices in our nature: greed, violence, hatred, prejudice and war) ruled by career politicians, corporations and thieves—individuals and entities with little regard for the rights of American citizens.

As I make clear in my book Battlefield America: The War on the American People, the American kleptocracy continues to suck the American people down a rabbit hole into a parallel universe in which the Constitution is meaningless, the government is all-powerful, and the citizenry is powerless to defend itself against government agents who steal, spy, lie, plunder, kill, abuse and generally inflict mayhem and sow madness on everyone and everything in their sphere.

But what if we didn’t just pull out our pocketbooks and pony up to the federal government’s outrageous demands for more money? 

What if we didn’t just dutifully line up to drop our hard-earned dollars into the collection bucket, no questions asked about how it will be spent? 

What if, instead of quietly sending in our checks, hoping vainly for some meager return, we did a little calculating of our own and started deducting from our taxes those programs that we refuse to support?

If we don’t have the right to decide what happens to our hard-earned cash, then we don’t have very many rights at all. 

If the government can just take from you what they want, when they want, and then use it however they want, you can’t claim to be anything more than a serf in a land they think of as theirs. 

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