I have made this reference before, but looking at euphoric markets I am again reminded of comedian Caroline Aherne as fake TV chat-show host Mrs Merton asking glamorous blonde Debbie McGee of her very short, plain, hair-piece wearing husband: “So what attracted you to the millionaire Paul Daniels?”
Indeed, “So what attracted you to central-bank-liquidity-driven markets?” Because where would very short, plain, wig-wearing assets be without the Fed throwing in hundreds of billions in repo operations and NOT-QE, and China going down the same old unsustainable debt path to juice GDP for 2-3 quarters? Feeling pretty unloved, one would guess – and probably very shorted. Yet having studiously failed to learn that this extra-liquidity doesn’t drive sustainable recoveries, or prevent socio-economic unrest–in fact it drives it–we are set for a whole lot more from central banks, no doubt.
Of course, the phase one trade deal, which virtually nobody sees as realistic or sustainable, also continues to drive market sentiment. Yet CNY is still only around the 7 level, underlining what I have said about the risk/reward being mostly to the downside from here. Presumably, however, when the trade deal does break down, which could be even sooner than many expect, more central-bank liquidity will be required. So let’s celebrate that in advance too, why not?
The afterglow of the UK election also seems to be encouraging markets. And on that front we see that fiscal stimulus is going to pick up, the right kind of liquidity for once, and in the north and midlands for once too, which is set to become BoJo’s mojo dojo as he hopes to release animal spirits in left-behind locations. However, Johnson is also going to amend the UK Brexit legislation such that December 2020 is a hard exit date with no extension of the looming post-Brexit transition period possible. In other words, the UK and EU will have 11 months from February to December next year to agree everything on a new relationship or Hard Brexit still looms. Clearly this is both a play to the new set of working-class voters who just backed Boris, and a continuation of his rip-the-steering-wheel-out negotiating tactics. Again, however, presumably this also means more central-bank liquidity as an airbag, so why worry?
Meanwhile European manufacturing data yesterday, which point to factory jobs being shed at the fastest pace since 2012 and to an even deeper slump in Q4 than expected, can also be seen as a reason for the ECB to try to save the planet even faster than it was already planning to. In which case…you guessed it! More central-bank liquidity.
So here’s a new reference for you all. In the long-running UK sci-fi comedy Red Dwarf there is a minor reoccurring character in the form of a highly-intelligent, AI-enabled talking toaster. Yet for all its technological wizardry, all it can ever conceive of doing is…offering to make toast.
Or crumpets. Or bagels, etc., etc. The ship may be crashing; aliens may be attacking; the universe may be about to end; but that’s all it can understand how to do, and one has to accept it as such. Here is an example, as it talks to the ship’s genius super-computer, Holly.
Toaster: “I have a question. A sensible question. A question that will test the limits of your new IQ and stretch the sinews of your knowledge to bursting point.”
Holly: “This is going be about waffles, isn’t it?”
Toaster: “Certainly not! And I resent the implication that I’m a one-dimensional bread-obsessed electrical appliance!”
Holly: “I apologise, Toaster. What’s the question?”
Toaster: “The question is this: given that God is infinite, and that the universe is also infinite…would you like a toasted teacake?”
Folks, in the current market environment we have to accept that we are all toast. And we will remain so right up until central banks themselves are toast – which is also inevitable, but which is a story for another day.
“You Have Found NOTHING!”: Trump Warns Dems They’re Playing ‘Dangerous Game’
In a six-page letter to Speaker Pelosi, President Trump rages against The Democrats’ “attempted coup,” blasting that “there was more due process at The Salem Witch Trials.”
“This is nothing more than an illegal, partisan attempted coup that will, based on recent sentiment, badly fail at the voting both. You are not just after me, as President, you are after the entire Republican Party,” Trump wrote.
“History will judge you harshly as you proceed with this impeachment charade.”
“I have no doubt the American people will hold you and the Democrats fully responsible in the upcoming 2020 election. They will not soon forgive your perversion of justice and abuse of power,” he added.
The letter comes on the eve of the House vote on two articles of impeachment against Trump for alleged abuse of power and obstruction of Congress, which is widely expected to approve the articles along party lines.
Full letter below (emphasis ours):
Dear Madam Speaker:
I write to express my strongest and most powerful protest against the partisan impeachment crusade being pursued by the Democrats in the House of Representatives. This impeachment represents an unprecedented and unconstitutional abuse of power by Democrat Lawmakers, unequaled in nearly two and a half centuries of American legislative history.
The Articles of Impeachment introduced by the House Judiciary Committee are not recognizable under any standard of Constitutional theory, interpretation, or jurisprudence. They include no crimes, no misdemeanors, and no offenses whatsoever. You have cheapened the importance of the very ugly word, impeachment!
By proceeding with your invalid impeachment, you are violating your oaths of office, you are breaking your allegiance to the Constitution, and you are declaring open war on American Democracy. You dare to invoke the Founding Fathers in pursuit of this election-nullification scheme—yet your spiteful actions display unfettered contempt for America’s founding and your egregious conduct threatens to destroy that which our Founders pledged their very lives to build. Even worse than offending the Founding Fathers, you are offending Americans of faith by continually saying “I pray for the President,” when you know this statement is not true, unless it is meant in a negative sense. It is a terrible thing you are doing, but you will have to live with it, not I!
Your first claim, “Abuse of Power,” is a completely disingenuous, meritless, and baseless invention of your imagination. You know that I had a totally innocent conversation with the President of Ukraine. I then had a second conversation that has been misquoted, mischaracterized, and fraudulently misrepresented. Fortunately, there was a transcript of the conversation taken, and you know from the transcript (which was immediately made available) that the paragraph in question was perfect. I said to President Zelensky: “I would like you to do us a favor, though, because our country has been through a lot and Ukraine knows a lot about it.” I said do us a favor, not me, and our country, not a campaign. I then mentioned the Attorney General of the United States. Every time I talk with a foreign leader, I put America’s interests first, just as I did with President Zelensky.
You are turning a policy disagreement between two branches of government into an impeachable offense—it is no more legitimate than the Executive Branch charging members of Congress with crimes for the lawful exercise of legislative power.
You know full well that Vice President Biden used his office and $1 billion dollars of U.S. aid money to coerce Ukraine into firing the prosecutor who was digging into the company paying his son millions of dollars. You know this because Biden bragged about it on video. Biden openly stated: “I said, ‘I’m telling you, you’re not getting the billion dollars’ …I looked at them and said: ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money.’ Well, son of a bitch. He got fired.”
Even Joe Biden admitted just days ago in an interview with NPR that it “looked bad.” Now you are trying to impeach me by falsely accusing me of doing what Joe Biden has admitted he actually did.
President Zelensky has repeatedly declared that I did nothing wrong, and that there was No Pressure. He further emphasized that it was a “good phone call,” that “I don’t feel pressure,” and explicitly stressed that “nobody pushed me.” The Ukrainian Foreign Minister stated very clearly: “I have never seen a direct link between investigations and security assistance.” He also said there was “No Pressure.” Senator Ron Johnson of Wisconsin, a supporter of Ukraine who met privately with President Zelensky, has said: -At no time during this meeting…was there any mention by Zelensky or any Ukrainian that they were feeling pressure to do anything in return for the military aid.” Many meetings have been held between representatives of Ukraine and our country. Never once did Ukraine complain about pressure being applied—not once!
Ambassador Sondland testified that I told him: “No quid pro quo. I want nothing. I want nothing. I want President Zelensky to do the right thing, do what he ran on.”
The second claim, so-called “Obstruction of Congress,” is preposterous and dangerous. House Democrats are trying to impeach the duly elected President of the United States for asserting Constitutionally based privileges that have been asserted on a bipartisan basis by administrations of both political parties throughout our Nation’s history. Under that standard, every American president would have been impeached many times over. As liberal law professor Jonathan Turley warned when addressing Congressional Democrats: “I can’t emphasize this enough… if you impeach a president, if you make a high crime and misdemeanor out of going to the courts, it is an abuse of power. It’s your abuse of power. You’re doing precisely what you’re criticizing the President for doing.”
Everyone, you included, knows what is really happening. Your chosen candidate lost the election in 2016, in an Electoral College landslide (306-227), and you and your party have never recovered from this defeat. You have developed a full-fledged case of what many in the media call Trump Derangement Syndrome and sadly, you will never get over it! You are unwilling and unable to accept the verdict issued at the ballot box during the great Election of 2016. So you have spent three straight years attempting to overturn the will of the American people and nullify their votes. You view democracy as your enemy!
Speaker Pelosi, you admitted just last week at a public forum that your party’s impeachment effort has been going on for “two and a half years,” long before you ever heard about a phone call with Ukraine. Nineteen minutes after I took the oath of office, the Washington Post published a story headlined, “The Campaign to Impeach President Trump Has Begun.” Less than three months after my inauguration, Representative Maxine Waters stated, “I’m going to fight every day until he’s impeached.” House Democrats introduced the first impeachment resolution against me within months of my inauguration, for what will be regarded as one of our country’s best decisions, the firing of James Comey (see Inspector General Reports)—who the world now knows is one of the dirtiest cops our Nation has ever seen. A ranting and raving Congresswoman, Rashida Tlaib, declared just hours after she was sworn into office, “We’re gonna go in there and we’re gonna impeach the motherf’***r.” Representative Al Green said in May, -I’m concerned that if we don’t impeach this president, he will get re-elected.” Again, you and your allies said, and did, all of these things long before you ever heard of President Zelensky or anything related to Ukraine. As you know very well, this impeachment drive has nothing to do with Ukraine, or the totally appropriate conversation I had with its new president. It only has to do with your attempt to undo the election of 2016 and steal the election of 2020!
Congressman Adam Schiff cheated and lied all the way up to the present day, even going so far as to fraudulently make up, out of thin air, my conversation with President Zelensky of Ukraine and read this fantasy language to Congress as though it were said by me. His shameless lies and deceptions, dating all the way back to the Russia Hoax, is one of the main reasons we are here today.
You and your party are desperate to distract from America’s extraordinary economy, incredible jobs boom, record stock market, soaring confidence, and flourishing citizens. Your party simply cannot compete with our record: 7 million new jobs; the lowest-ever unemployment for African Americans, Hispanic Americans, and Asian Americans; a rebuilt military; a completely reformed VA with Choice and Accountability for our great veterans; more than 170 new federal judges and two Supreme Court Justices; historic tax and regulation cuts; the elimination of the individual mandate; the first decline in prescription drug prices in half a century; the first new branch of the United States Military since 1947, the Space Force; strong protection of the Second Amendment; criminal justice reform; a defeated ISIS caliphate and the killing of the world’s number one terrorist leader, al-Baghdadi; the replacement of the disastrous NAFTA trade deal with the wonderful USMCA (Mexico and Canada); a breakthrough Phase One trade deal with China; massive new trade deals with Japan and South Korea; withdrawal from the terrible Iran Nuclear Deal; cancellation of the unfair and costly Paris Climate Accord; becoming the world’s top energy producer; recognition of Israel’s capital, opening the American Embassy in Jerusalem, and recognizing Israeli sovereignty over the Golan Heights; a colossal reduction in illegal border crossings, the ending of Catch-and-Release, and the building of the Southern Border Wall—and that is just the beginning, there is so much more. You cannot defend your extreme policies—open borders, mass migration, high crime, crippling taxes, socialized healthcare, destruction of American energy, late-term taxpayer-funded abortion, elimination of the Second Amendment, radical far-left theories of law and justice, and constant partisan obstruction of both common sense and common good.
There is nothing I would rather do than stop referring to your party as the Do-Nothing Democrats. Unfortunately, I don’t know that you will ever give me a chance to do so.
After three years of unfair and unwarranted investigations, 45 million dollars spent, 18 angry Democrat prosecutors, the entire force of the FBI, headed by leadership now proven to be totally incompetent and corrupt, you have found NOTHING! Few people in high position could have endured or passed this test. You do not know, nor do you care, the great damage and hurt you have inflicted upon wonderful and loving members of my family. You conducted a fake investigation upon the democratically elected President of the United States, and you are doing it yet again.
There are not many people who could have taken the punishment inflicted during this period of time, and yet done so much for the success of America and its citizens. But instead of putting our country first, you have decided to disgrace our country still further. You completely failed with the Mueller report because there was nothing to find, so you decided to take the next hoax that came along, the phone call with Ukraine—even though it was a perfect call. And by the way, when I speak to foreign countries, there are many people, with permission, listening to the call on both sides of the conversation.
You are the ones interfering in America’s elections. You are the ones subverting America’s Democracy. You are the ones Obstructing Justice. You are the ones bringing pain and suffering to our Republic for your own selfish personal, political, and partisan gain.
Before the Impeachment Hoax, it was the Russian Witch Hunt. Against all evidence, and regardless of the truth, you and your deputies claimed that my campaign colluded with the Russians—a grave, malicious, and slanderous lie, a falsehood like no other. You forced our Nation through turmoil and torment over a wholly fabricated story, illegally purchased from a foreign spy by Hillary Clinton and the DNC in order to assault our democracy. Yet, when the monstrous lie was debunked and this Democrat conspiracy dissolved into dust, you did not apologize. You did not recant. You did not ask to be forgiven. You showed no remorse, no capacity for self-reflection. Instead, you pursued your next libelous and vicious crusade—you engineered an attempt to frame and defame an innocent person. All of this was motivated by personal political calculation. Your Speakership and your party are held hostage by your most deranged and radical representatives of the far left. Each one of your members lives in fear of a socialist primary challenger – this is what is driving impeachment. Look at Congressman Nadler’s challenger. Look at yourself and others. Do not take our country down with your party.
If you truly cared about freedom and liberty for our Nation, then you would be devoting your vast investigative resources to exposing the full truth concerning the FBI’s horrifying abuses of power before, during, and after the 2016 election—including the use of spies against my campaign, the submission of false evidence to a FISA court, and the concealment of exculpatory evidence in order to frame the innocent. The FBI has great and honorable people, but the leadership was inept and corrupt. I would think that you would personally be appalled by these revelations, because in your press conference the day you announced impeachment, you tied the impeachment effort directly to the completely discredited Russia Hoax, declaring twice that “all roads lead to Putin,” when you know that is an abject lie. I have been far tougher on Russia than President Obama ever even thought to be.
Any member of Congress who votes in support of impeachment – against every shred of truth, fact, evidence, and legal principle – is showing how deeply they revile the voters and how truly they detest America’s Constitutional order. Our Founders feared the tribalization of partisan politics, and you are bringing their worst fears to life.
Worse still, I have been deprived of basic Constitutional Due Process from the beginning of this impeachment scam right up until the present. I have been denied the most fundamental rights afforded by the Constitution, including the right to present evidence, to have my own counsel present, to confront accusers, and to call and cross-examine witnesses, like the so-called whistleblower who started this entire hoax with a false report of the phone call that bears no relationship to the actual phone call that was made. Once I presented the transcribed call, which surprised and shocked the fraudsters (they never thought that such evidence would be presented), the so-called whistleblower, and the second whistleblower, disappeared because they got caught, their report was a fraud, and they were no longer going to be made available to us. In other words, once the phone call was made public, your whole plot blew up, but that didn’t stop you from continuing.
More due process was afforded to those accused in the Salem Witch Trials.
You and others on your committees have long said impeachment must be bipartisan—it is not. You said it was very divisive—it certainly is, even far more than you ever thought possible—and it will only get worse!
This is nothing more than an illegal, partisan attempted coup that will, based on recent sentiment, badly fail at the voting booth. You are not just after me, as President, you are after the entire Republican Party. But because of this colossal injustice, our party is more united than it has ever been before. History will judge you harshly as you proceed with this impeachment charade. Your legacy will be that of turning the House of Representatives from a revered legislative body into a Star Chamber of partisan persecution.
Perhaps most insulting of all is your false display of solemnity. You apparently have so little respect for the American People that you expect them to believe that you are approaching this impeachment somberly, reservedly, and reluctantly. No intelligent person believes what you are saying. Since the moment I won the election, the Democrat Party has been possessed by Impeachment Fever. There is no reticence. This is not a somber affair. You are making a mockery of impeachment and you are scarcely concealing your hatred of me, of the Republican Party, and tens of millions of patriotic Americans. The voters are wise, and they are seeing straight through this empty, hollow, and dangerous game you are playing.
I have no doubt the American people will hold you and the Democrats fully responsible in the upcoming 2020 election. They will not soon forgive your perversion of justice and abuse of power.
There is far too much that needs to be done to improve the lives of our citizens. It is time for you and the highly partisan Democrats in Congress to immediately cease this impeachment fantasy and get back to work for the American People. While I have no expectation that you will do so, I write this letter to you for the purpose of history and to put my thoughts on a permanent and indelible record.
One hundred years from now, when people look back at this affair, I want them to understand it, and learn from it, so that it can never happen to another President again.
George Conway Helps Launch Never-Trump Super PAC To Get Rid Of ‘Cancer On The Presidency’
The husband of President Trump’s top adviser has formed a ‘never-Trump’ Super PAC aimed at defeating “President Trump and Trumpism at the ballot box” in 2020.
Conservative lawyer George Conway has teamed up with the bitter all-stars of the Never Trump right to found the Lincoln Project,” has a reported $1 million in fundraising commitments.
The PAC’s principals include GOP operative Rick Wilson, former McCain adviser Steve Schmidt, former Ohio Gov. John Kasich adviser John Weaver and former New Hampshire GOP chair Jennifer Horn. Curiously absent is neocon royalty, Bill Kristol.
The group will focus on blocking Trump’s reelection, as well as his Congressional supporters in a handful of key 2020 battlegrounds, by targeting disaffected Republicans and right-leaning independents. They will focus efforts on Michigan, Pennsylvania and Wisconsin, along with Arizona, Colorado, North Carolina, Maine, and possibly Kentucky and Kansas, according to the Associated Press.
The Lincoln Project is very much a work in progress, despite Tuesday’s official launch. While the core players don’t yet have titles, day-to-day operations will be led by Horn and Reed Galen, a veteran Republican operative who worked for McCain but left the GOP after Trump’s nomination in 2016.
The group begins as a super PAC, which means it can raise and spend unlimited sums of money and must disclose its donors. –AP
Conway, husband of senior White House aide Kellyanne Conway, told AP that he hopes the anonymous Trump administration official who authored a recent anti-Trump book would join the group – however the rest of the PAC’s founders ultimately decided against Conway’s suggestion.
“I think the more the merrier,” said Conway. “And I hope maybe he — he or she, I don’t know who Anonymous is — will come out someday and join the effort. Because everyone who believes as we do that Donald Trump is a cancer on the presidency and on the Constitution needs to help and join this effort.”
When asked about the PAC, Kellyanne acknowledged George’s involvement, saying “It’s kind of disappointing to see some of the people who are involved, but not surprising,” characterizing the group as a collection of failed campaign managers.
“They never got a president elected into the White House. I’m sure that hurts, very much. But they never really accommodated the growing Republican Party and understood how to beat Democrats and we did.”
Conway, who left the GOP last year, said he would probably be the group’s “cheerleader” because of his limited political experience.
“I’m not a fundraiser or political consultant, but if I could help in that way and learn how to do that — even to raise a nickel or two — I’ll do it because it’s important,” he said, adding “For this, I think I can make an exception.”
“If he’s not removed by the Senate, he needs to be removed at the ballot box,” he said of Trump. “The people in Congress who are enabling him, either actively or passively, they, too, are violating their oaths of office. … Andthey need to be removed, too.” –AP
Will Conway and the Nevertrumpers throw their support behind the Democratic nominee?
The stunning decline of men in the student headcount.
With college costs blowing through the roof, with “luxury student housing” and not so luxury “student housing” having become asset classes – including, of course, CMBS, now in rough waters – for global investors, with textbook publishers gouging students to the nth degree, and with the monetary value of higher education questioned in more and more corners, the inevitable happened once again: College enrollment dropped for the eighth year in a row.
The post-secondary student headcount – undergraduate and graduate students combined – in the fall semester of 2019 fell 1.3% from the fall semester last year, or by over 231,000 students to 17.97 million students, according to the Student Clearing House today. In the fall of 2011, the peak year, 20.14 million students had been enrolled. Since then, enrollment has dropped by 10.8%, or by 2.17 million students:
This is based on enrollment data submitted to the Student Clearing House by the schools. It does not include international students, which account for just under 5% of total student enrollment in the US. Duplicate headcounts – one student enrolled in two institutions – are removed from the data to eliminate double-counting.
The 10.8% decline in enrollment since 2011 comes even as student loan balances have surged 74% over the same period, from $940 billion to $1.64 trillion:
Enrollment in for-profit colleges collapses.
The overall decline in enrollment hasn’t been spread evenly across the board. After myriad scandals, lawsuits, government action, and government inaction, enrollment in for-profit four-year colleges has plunged by 54%, from 1.64 million student in the fall of 2010, as far back as the data series is available, to 750,000 now.
The current year-over-year decline of 2.1% pales compared to the plunges of 15% in 2018, of 7% in 2017, of 15% in 2016, and of 14% in 2015. Despite the relatively small share of total enrollment – by 2019, the share has withered to just 4% – these for-profit colleges account for 41% to the total decline in enrollment since 2001:
Enrollment at public two-year schools, such as junior colleges, has plunged by 22% since 2011, to 5.37 million (green line in the chart below).
But enrollment at private nonprofit four-year colleges has ticked up 3.9% since 2011. Yet, even these schools saw enrollment decline by 0.6% over the past year, to 3.84 million (brown line in the chart below).
And public four-year schools too had been hanging in there and the student headcount remains up 2.2% from 2011 though it too declined 1.2% over the past 12 months, to 7.82 million. At public schools, the peak was in 2016 with 8.1 million students (blue line):
Where the heck are the men?
Women by far outnumbered men in total enrollment in the fall semester of 2019 with 10.63 million women enrolled and just 7.61 million men, meaning that overall there are now 40% more women in college than men:
At public four-year schools, there were 30% more women (4.51 million) than men (3.48 million)
At private non-profit four-year schools, there were 50% more women (2.32 million) than men (1.54 million)
At private for-profit four-year schools, there were more than twice as many woman (508,000) than men (241,000).
At public two-year schools, there were 38% more women (3.11 million) than men (2.26 million).
Over the past three years, enrollment has declined for both men and women, but faster for men (-5.2%) than for women (-1.4%). Since 2011, enrollment has declined by 13% for men and by 9.4% for women.
Enrollment by state.
Of the big four states, California had by far the most students, at 2.45 million. Over the 12-month period, enrollment ticked down by 0.8%, and over the three-year period by 2.7%.
In Texas, with 1.49 million students, enrollment inched up by 0.3% this year, and by 0.7% from three years ago.
In New York, at 1.04 million students, enrollment declined 1.8% year-over-year and fell 4.4% over the three-year period.
In Florida, with 933,000 students, enrollment fell by 5.3% year-over-year, or by 52,328 students, the largest headcount decline among the states. And it fell 7.0% over the three-year period.
Enrollment in 35 states declined. Here are the states with largest enrollment declines by percentage change this year:
Alaska: -10.6% year-over-year to 22,300 students; -14.3% from 2017
Florida: -5.3% year-over-year to 933,000 students, -7.0% from 2017
Arkansas: -4.9% year-over-year to 144,000 students; -7.2% from 2017
Missouri: -4.4% year-over-year to 323,400 students; -6.9% from 2017
Vermont: -4.4% year-over-year to 38,200 students; -4.5% from 2017
Wyoming: -4.4% year-over-year to 27,600 students; -5.8% from 2017.
And in 15 states, enrollment increased. Here are the biggest gainers:
Utah: +4.9% year-over-year to 362,000 students; +13.8% from 2017
New Hampshire: +3.4% year-over-year to 157,200; +6.4% since 2017
Arizona: +1.8% year-over-year to 456,543 students; +1.1% from 2017, having dipped in 2018
Georgia: +1.5% year-over-year to 518,800 students; +5.5% from 2017
Kentucky: +1.5% year-over-year to 243,300 students; +1.8% from 2017
The overarching theme is the horrible expense of getting a higher education, as each layer element in the University-Corporate-Financial Complex extracts its pound of flesh, largely funded by parental sacrifices and by student loans, which are a mix of taxpayers funds when the loans default and students’ future sacrifices when the loans don’t default. The vision of a pile of student loans for years to come act as a discouragement to students who spend more than two minutes thinking about it.
But clearly, there are more factors at work. The collapse of enrollment in for-profit colleges is a result of numerous scandals and scams that left students with huge student loans and either no degree or with a degree that’s utterly worthless. It is likely that these for-profit schools marketed to people that would otherwise not have gone to university and enticed them with government-funded student loans.
The declining proportion of men among students has long been observed. That women flock to higher education is a great thing, but why did men bail on the system in such large numbers? This is subject to endless and wide-ranging discussions. One explanation that has been offered, and only a partial one, and only covering the past few years, is the relatively good job market where young men decided for forgo a higher education and instead enter the workforce after high school – and that makes sense in many cases, especially if it involves learning a trade.
Whatever the explanations may be, for most parents and students it has become a daunting task to pay for higher education and feed the University-Corporate-Financial Complex.
Watch: Climate Activists Are “Nearly Run Over” Trying To Halt Coal-Laden Freight Train
The “end of the world” apocalyptic hyper-gloom-and-doom rhetoric of Greta Thunberg and other self-anointed climate prophets are leading followers to take greater and greater risks in attempts at “staving off climate disaster” — increasingly endangering themselves and public safety.
As a case in point, climate activists in the northeast United States have for the past month been physically trying to halt coal-filled freight trains, in some cases by literally jumping on the tracks. As Fox News reports of the latest dangerous incident caught on video:
An environmental reporter in Massachusetts posted a video on Twitter late Monday that she said showed a freight train hauling coal being met with a group of climate change activists on a dark track.
The train was seen moving slowly through Worchester, Mass., and about a dozen activists with small lights could be seen surrounding the tracks. The train’s horn was blaring, but the activists appeared to continue to give it chase. The train was headed to New Hampshire, the reporter wrote.
#BREAKING A train carrying coal to NH nearly ran over a dozen climate activists who tried to block it in Worcester. This happened after someone farther south on the tracks called the emergency hotline twice to report there were people on the tracks. pic.twitter.com/uaUa12mauQ
The clip was posted by Boston NPR-WBUR reporter Miriam Wasser, who also noted railway authorities had been alerted that people were on the tracks by a call to an emergency hotline, just prior to the chaotic scene.
Wasser wrote that the train bound for New Hampshire “nearly ran over a dozen climate activists” who had been attempting to block its passage. The video shows the slow-moving train blaring its horn constantly as flashlight bearing activists attempt to halt its movement by appearing to dart in front of it as well as run close alongside it. There were no reports of injuries in the aftermath, and the incident is apparently still being investigated.
The large freight train’s movement doesn’t appear to be stalled; however, it’s well-known that at full speed multi-car trains can take up to a mile to mile-and-a-half to stop once emergency brakes are applied.
Protesters in Massachusetts in a prior Dec.8 incident attempting to flag down a coal train to stop it. Image source: 350 New Hampshire Action via WBUR.
The ultra risky tactic of attempting to block trains in motion also presents the potentially deadly scenario of derailment or danger to the engineers conducting the train. A statement from one activist group alleged to be involved in the latest incident confirmed the train didn’t stop:
An after-hours email from Fox News to the group was not immediately returned. 350 New Hampshire, an activist group in the state, wrote that no one was hurt, but the train “refused to stop.”
It’s not the first such incident and appears part of a greater trend, as earlier this month the Boston Globe identified that a group called the Climate Disobedience Center is engaged in a broader campaign to halt coal transfer based on the claim that coal power plants “pollutes the river and causes asthma and contributed to climate change.”
🚨 HAPPENING NOW:
New England activists are blocking a coal train heading to Bow, NH.
This is a #ClimateEmergency, and people are dying. We refuse to let them add fuel to the fire.
A group called 350 New Hampshire Action also admitted to being engaged in a campaign to disrupt trains in the region: “It is crucial that the actions that we take not be one-off actions,” a spokesperson for the activist group said. They vowed to “continue until the power plant is taken offline once and for all” — specifically in reference to Merrimack Station power plant in Bow, New Hampshire.
“We are in the beginning of a mass extinction. … If you choose to fail us, I say we will never forgive you.” Image source: AP.
An earlier report from a local NPR station said multiple arrests were made in the New England region earlier this month as the activists’ tactics get more dangerously interventionist:
She and about 100 others joined the protest Sunday, delaying the train at three different points along its route – in Worcester and Ayer, Massachusetts, and in Hooksett.
About two dozen people were arrested on misdemeanor trespassing charges.
Fox News also noted freight tracks had been temporarily blocked at “various points” across New Hampshire, including Worcester, Ayer and Hooksett.
As such protest tactics inevitably get more and more radical and risky, we should also note the mainstream media’s role in all of this. Consider some of the opening lines to a recent New Yorker piece: “The climate apocalypse is coming… If you’re under thirty, you’re all but guaranteed to witness it… you can accept that disaster is coming, and begin to rethink what it means…”.
Now with the issue cast in such cult-like “good vs. evil” moral dualism, disaster is indeed on the horizon, but not in the way these ‘activists’ and media pundits think.
In my days before I worked for the Mises Institute, I had a colleague who knew I associated with Austrian-School economists. In the wake of the bailouts and quantitative easing that followed the 2008 financial crisis, he’d sometimes crack “where’s all that inflation you Austrians keep talking about?”
But then, in the very same conversation, he’d remark with dismay on how much housing-price increases had outpaced household income in the region.
He didn’t need an answer from me. He’d found some of “that inflation” all on his own.
Price Changes Are Not Homogeneous
These exchanges illustrated some of the blind spots we repeatedly find among economists and pundits who insist there is no inflation, or that there’s even deflation. (In this article, I’m talking only about price inflation, and not money-supply inflation.) But whether or not one is experiencing an inflationary economy can vary widely on socio-economic status, location, life stage, and age. For those who need higher education services, housing, health care, and savings for retirement, the current inflationary economy could be problematic indeed.
This isn’t to say that price inflation is increasing everywhere. Oil prices are down by nearly half since 2014, for instance, which means lower transportation costs for most of us. Apparel prices have been declining for decades.
Nevertheless, the official measure of inflation — the CPI — does show an increase over the past decade. Over the ten years from 2009 to 2018, the CPI value rose 15 percent. It has risen fifty percent in the twenty years since 1999.
No Deflation Here: Housing, Healthcare, Stocks, and Education
Yet, the CPI increase has been significantly outpaced by prices in a number of sectors.
Even bigger increases are found in asset prices.According to Case-Shiller, for example, the 20-city housing index rose 50 percent from 2009 to 2018. During the same period, the Dow Jones rose 108 percent.
Just because price inflation is showing up more in some assets and services than in others doesn’t mean it’s not there.
Supporters of the status quo tend to defend housing-price increases on the grounds that rising housing prices are good for people who own those assets.This is true. Unfortunately, not everyone is a homeowner.
Those who wish to dismiss the possibility to significant price inflation might also claim the CPI is reflective of the real-world situation because not everyone buys a college education, and not everyone needs sizable medical services. That’s true, and averages could be used in these cases to portray increases in spending in these areas are more muted than the experience of many individuals suggests.
But this ultimately just shows the problem with using broad aggregate numbers and averages to represent the cost of living.
In practice, increases in asset prices hurt first-time homebuyers, and low income households who have so far been unable to afford a downpayment and the elevated asset prices we’re now seeing. Nor is everyone in the market to buy real estate soon. Or ever. Real estate price increases drive up rents as well, and this is a problem for both young consumers and low-income ones. Over the past decade in the metro Denver area the average rent increased 60 percent in contrast to the CPI increase of 16 percent. In Phoenix, the average rent increased seven percent from 2018 to 2019.
The CPI might tell us that inflation is “subdued,” or “muted,” there are plenty of people whose budgets are taking big hits anyway. Moreover, home prices are a big part of most households’ monthly expenses. Combined with healthcare spending and higher education, the increases in the cost of living — reflected in price increases — we’ve seen over the past decade are hardly something we could describe as “deflationary.”
Defenders of the there’s-no-inflation position might claim “but these price increases are moderated by price declines in other places!” That may be true, but housing, healthcare, and education make up a pretty sizable portion of a family’s expenses. We can’t simply assume the CPI’s basket of goods necessarily reflect the day-to-day economic realities that ordinary people face. For many people who don’t fit the profile of the “average”, generic, or aggregated American, the official numbers may not reflect reality at all. Indeed, it appears lower-income, younger, and more elderly consumers are the ones who suffer the most. For example, elderly retirees on fixed incomes can’t just increase their incomes by working more to keep up with price increases. And young people with no assets will have a much harder time acquiring assets if prices are relentlessly speeding upward. Mid-career people with flexible incomes and with assets are one thing. Everyone else is more likely to encounter trouble.
Low Inflation Is Not “No” Inflation
Finally, it’s important to keep in mind that what’s routinely touted as “low inflation” isn’t all that low.
For example, even though we’re told we live in an age of exceptionally low inflation, the CPI measure shows the that a dollar’s worth of goods and services twenty years ago requires about $1.50 today. Even over just the past decade, what one dollar once bought then requires $1.17 today.
The much-vaunted two-percent-inflation standard shows similar results. If central banks are able to nail the “low” two-percent-inflation level, we’d still end up with a dollar that loses nearly half its value in 20 years. In this scenario, a dollar would lose nearly one-fifth of its value in just a decade.
For regular people who can’t count on a a four-percent return on their investments, and who rely on banks which pay around one percent, this means a lot of lost wealth in spite of these households’ best efforts at saving.
Although central bankers insist a two-percent inflation rate offers “price stability” the reality is one of significant depreciation in wealth for those who are struggling to acquire assets and who may be facing medical problems, high rent, and and college bills.
This may account for some of the growing divide between higher-income investors and middle- to low-income Americans. They often can’t take advantage of the higher-yield options enjoyed by those who already have high incomes and portfolios packed with assets.
As shown by Karen Petrou in recent research, many regular people have placed more of their wealth in real estate, but often real estate in less inflationary markets in middle America. The result has been a class of wealthier investors in expensive coastal cities who own a lot of stocks and own real estate in stylish markets. But there are also many Americans who have smaller portfolios and own real estate in markets that have seen far less appreciation. Inflation is by no means uniform nationwide and its more benign in some places — and in some socio-economic groups — than in others.
None of this shows up in the official aggregate data, but that results are real. Some benefit greatly from the asset price inflation. Others aren’t benefittng nearly as much.
Rosenblatt Goes Full Bear On Apple With $150 Target As China iPhone Sales Slump
Rosenblatt Securities analyst Jun Zhang maintained a sell rating on Apple with a price target of $150 per share, citing a decline in iPhone sales in China is leading to a wave of production cuts by the company.
“Based on our recent channel checks, we believe Apple’s total iPhone sales in China were down ~-30% y/y in November,” said Zhang in a note to clients on Tuesday.
Zhang stated that consumers are opting for cheaper models than the iPhone 11 Pro, which retails for around $1,100.
Rosenblatt’s sell rating on Apple has a price target of $150 per share, about -46% difference from the current price on Tuesday morning.
It was only last week when Credit Suisse warned about declining iPhone shipments in China:
CS said iPhone shipments in China dropped a shocking 35.4% YoY in November (following a 10.3% YoY drop in October). This compares to a 0.2% increase in the broader regional smartphone market. Additionally, CS reports that total shipments in China are now down 7.4% since the launch of the iPhone 11 line.
Besides Rosenblatt and CS offering their gloomy outlooks on Apple, Maximum Group has a recent selling rating with $190 price target, -32% from current prices; Elazar Advisors’ neutral rating with a $204 price target, -27% from current prices, and Wells Fargo Securities’ equal weight with a $245 price target, a 12% difference from current prices.
A whistleblower complaint filed at the Internal Revenue Service in November by a knowledgeable church member alleges that a non-profit supporting organization controlled by the Church of Jesus Christ of Latter-day Saints used member tithes to amass more than $100 billion in a set of investment funds and the Church misled members about uses of the money.
The complaint may be the most important look at LDS finances in decades, a window into one of the wealthiest religious organizations in the United States and the world. Details of the IRS filing reveal financial assets largely hidden from the church’s membership (often known as “Mormons”) and the public view.
The 74-page document filed with the IRS and obtained by Religion Unplugged shows that Ensign Peak Advisors, Inc. (EPA) owned assets under management grew to more than $100 billion from $10 billion in the past 22 years, fueled by a mix of investment strategy and tithe money from church members.
Religion Unplugged reached EPA’s managing director Roger Clark by phone on Monday, offering to explain key parts of this story and to ask questions for EPA to give a response. “We don’t really answer questions with the public press. So thanks,” he said, before hanging up the phone.
Ensign Peak Advisors’ articles of incorporation confirm Ensign Peak is an arm of the Church of Jesus Christ of Latter-day Saints. As registered under section 509(a)3 of the Internal Revenue Code, Ensign Peak Advisors, Inc. EPA is a “supporting organization” of the Church under article 3 in its registration document. Upon dissolution, all Ensign Peak assets go the Church or affiliated organizations according to article 5 and that article cannot be changed without “the written consent of The First Presidency” of the Church. Because Ensign Peak Advisers is a support organization to a church it is not subject to disclosure requirements that other non-profit organizations are required to make.
A former Church member in Minnesota named Lars Nielsen published a 74-page document filed with the IRS that makes several allegations. The filing also included several internal EPA documents including an EPA Policy book, an EPA master plan, an EPA New Staff Orientation Guide, statements of financial condition and data downloads and analysis of the firm’s investment portfolio. One presentation slide in the document from March of 2013 is labeled “New Staff Orientation Deck” and shows a Church investment governance structure including a “Council on Disposition of Tithes” that allocates funds from tithes to holding organizations in the church such as EPA.
Nielsen learned of the allegations from an LDS church member, who prefers to be unnamed. The whistleblower worked with Nielsen on a two-month research project to research and explain the inner workings of EPA. The complaint (Form 211) was filed with the IRS whistleblower office on Nov. 15, 2019 and received by the IRS on Nov. 22, 2019. Nielsen has chosen to go public with the allegations by releasing the report online and explaining the allegations in videos.
“I started to suspect that EPA was not compliant with its 501c3 or acting in accordance with its Articles of Incorporation around 2013,” the whistleblower writes on a notarized cover letter to the IRS obtained by Religion Unplugged. “I raised several flags and concerns over the years.”
A Secret $100 Billion Stockpile
The document tallies assets in EPA using downloaded spreadsheets of assets from across its portfolio from March 22, 2018. The document indicates that the firm receives billions each year from tithe revenue – the donations church members make to the church – and estimates EPA assets from tithes and investment growth is more than $100 billion at present.
The organization’s IRS 990-t forms also show an opaque but growing organization. In 2007, the organization listed “investing” as its primary business activity, lists a $1 million book value of all assets at year end. In 2015, it listed a book value “over” $1 million. By 2017, EPA listed “investing in partnerships” as its primary business, did not disclose its book value, reported $17.6 million in capital gain net income and lists $1.25 million as tax overpayment. Meanwhile, a letter on EPA stationery from Jan. 9, 2017, signed by vice president Greg Tarbet offered credit information about the firm saying, “Ensign Peak does not distribute financial statements. Assets, however, are well in excess of $5 billion, and Ensign Peak is essentially without debt.”
An internal EPA slide presentation from 2013 states that during the financial crisis period of 2008 and 2009, the firm “experienced a temporary drawdown” of close to $13 billion, noting that amount was greater than 30 percent of its portfolio at the time.
The whistleblower complaint said EPA had 75 employees in 2019, up from 20 in 2010. They work in a building in Salt Lake City, Utah, (60 East South Temple, Suite 400) that does not have a sign on the building or in the downstairs lobby according to the complaint. The company does not have a public web site. A LinkedIn search of Ensign Peak Advisors lists 64 people who work there including people in typical finance roles such as compliance officer, investment manager, investment analyst, portfolio manager, equity trader, private equity associate and accountant.
“Supporting organizations raise funds. They invest funds. Depending on how the investment fund was set up, it could well be proper,” says Arthur Rieman, an attorney at The Law Firm for Non-Profits in Studio City, Calif. “If it’s set up as an investment fund and increased 1,000 percent in 20 years, that’s a pretty good return.”
The whistleblower document alleges that EPA has given away $0 to religious, educational or charitable purposes. Non-profit experts such as Rieman note that EPAs registration as a 509(a)3 supporting organization to the LDS Church could protect it from having to make charitable distributions because churches are not required to disclose finances to the public.
“The Church of Jesus Christ of Latter-day Saints pays all taxes that are required by law,” says an LDS Church statement about its tax status.
Nielsen says the Mormon “giga-church” needs “a place to park its cash” and has used EPA to do so. Nielsen alleges EPA grew from regular tithes by members of the LDS Church, most of whom had no idea of how their money was being spent or invested given the lack of public financial disclosure by the church since 1959.
Certainly, other religions and denominations – Islam, Hinduism, Judaism, Catholicism, Episcopalians, Orthodox Christians and protestants – have property and wealth. Calculating that wealth is often difficult because of varied organization structures. For example, Catholic News Service reported in June that the Institute for the Works of Religion – often referred to the Vatican bank – held assets worth $5.6 billion at the end of 2018. But that does not capture the vast real estate and financial profile of the Roman Catholic Church and its thousands of dioceses around the world according to experts who spoke with TheStreet.com in 2015.
Historic Significance
If true as the whistleblower alleges, the size of the LDS Church holdings at EPA would represent a massive pool of capital of interest to the financial world, which pays close attention to the investment moves of large pension funds and major university endowments.
Religion Unplugged called the media relations office of the LDS Church on Monday and sent several questions by email. Church spokesman Eric D. Hawkins responded by email saying, “the Church does not provide information about specific transactions or financial decisions.” He sent language from the church’s web site such as its “Principles of Church Finances” section that includes, “Following sound financial principles over an extended period of time, the Church has grown from meager beginnings into a worldwide organization able to support its divine mission.”
Exhibits in the whistleblower complaint include internal documents, a masterplan and presentation slides from EPA where it describes the purposes of its reserves to support prophetic initiatives, church operating budgets, backstops to pension plans and collateral for church purposes.
“The corporation’s property is irrevocably dedicated to religious, educational and charitable purposes meeting the requirements for exemption provided by Section 501(c)3 of the Internal Revenue Code, and no part of the net income or assets of this corporation shall ever inure to the benefit of any trustee, officer or member thereof or to the benefit of any private person,” says one provision of the Articles of Incorporation.
The filing to the IRS alleges that EPA has made zero religious, educational or charitable distributions in 22 years. According to tax experts, that may not be a problem for a 509(a)3 organization, depending on more nuanced details of its registration which are not publicly available on the IRS web site or the organizations 990-t annual filings.
“EPA is the reserve of the reserves,” a whistleblower is quoted as saying in the document. It suggests tithing surplus flows to EPA where it is “merged, sliced and diced into portfolios and limited liability companies designed to fly under radars and reporting limits.” The document obtained by Religion Unplugged makes several additional allegations about EPA.
City Creek Center Mall
The complaint alleges a series of payments from EPA totaling $1.4 billion to help construct the City Creek Center mall in Temple Square in downtown Salt Lake City, Utah, which features a retractable roof, luxury storefronts and simulated creek with live trout. The LDS Church and its developers aimed to create a new urbanism in downtown Salt Lake City.
The mall was developed by Property Reserve, Inc., which is a commercial real estate division of the Corporation of the President of the Church of Jesus Christ of Latter-day Saints and retail manager Taubman Centers Inc. according to a press release from the LDS Church on Oct. 3, 2006. These entities developed the mall during the financial crisis, which caused funding difficulties. The church and developers have not disclosed the entire cost of the mall according to an article in The New York Times on July 9, 2013.
The whistleblower complaint pointed to the LDS church-owned Ensign Magazine in 2006 that said “no tithing funds will be used in the redevelopment” of the area downtown. A year later, in 2007, the church-owned newspaper, The Deseret News, reported that “Money for the project is not coming from the LDS Church members’ tithing donations. City Creek Center is being developed by Property Reserve Inc., the church’s real-estate development arm, and its money comes from other real-estate ventures.” And local TV station KUTV on Oct. 3, 2006, also reported Presiding Bishop of the church H. David Burton saying no tax dollars or tithes will be used in construction.
The whistleblower complaint alleges that $1.4 billion of funding from EPA did go toward the mall project and came from a funding pool that included tithing dollars. A slide from an EPA internal presentation dated March 2013 and titled “Framework and Exposures” indicates $1.4 million was paid to the City Creek project over five years.
The mall opened in 2012 with 100 stores in more than 700,000 square feet of retail space and is part of downtown Salt Lake City revitalization plans that includes office space and residential towers. “No one will mistake it for the East Village, but downtown is starting to become a place people actually seek out to eat and play,” said Jason Mathis of the Downtown Alliance to the Times article in 2013.
The City Creek Mall rose as a competitor to another similar-sized downtown retailer called Gateway mall, which opened in 2001 by The Boyer Co. ahead of the 2002 Winter Olympics in Salt Lake City and was later sold to Illinois-based Retail Properties of America Inc. The Salt Lake Tribune reported on Jan. 16, 2015, that Gateway saw its credit status, retailer occupancy and retail sales decline after City Creek opened.
New York-based Moody’s Investors Service noted that Gateway’s occupancy rate dropped from 96 percent in 2010 to 78 percent in 2015 as an Apple Store and others decamped from Gateway to City Creek. Moody’s noted the mall’s reported value dropped from $163 million in 2010 to $75 million in 2014. The Tribune reported Gateway’s annual sales fell from $210 million in 2011 $100 million in 2013, citing data from the Utah Tax Commission. At the same time, City Creek’s revenues grew from zero to $250 million. Local news outlets reported that Gateway Mall became a “ghost town” and saw an “uptick in crime, drug and homeless activity.” It was sold to a new owner, Vestar, in 2016 which reportedly invested $100 million into the property.
One member of the Corporation of the Presiding Bishopric and an executive in the LDS for-profit businesses, Keith McMullin, told Bloomberg BusinessWeek in 2012 that tithes do not go to the church’s for-profit endeavors and did not go to City Creek Center.
The whistleblower complaint to the IRS raises the question of whether church leaders such as McMullin made honest or false public statements about financing sources for the mall project both before and after construction of the mall.
When asked about tithe funds being used in the City Creek project contradicting what the church leaders said, LDS Church spokesman Eric D. Hawkins sent language from a church statement that said the City Creek development is a way “the Church enhanced the environs of Temple Square and underscored a commitment to Salt Lake City, Utah, where it is headquartered.”
Mormon, Inc.
The Church of Jesus Christ of Latter-day Saints is one of the most economically successful religious organizations in the United States, defying a history of persecution. Mormons settled in Utah after they were attacked by mobs at times during their nearly 200-year history and forced to flee previous locations in upstate New York, Ohio, Missouri and Illinois.
LDS members in the resulting nearly two centuries have founded companies, become elected to federal offices and written best-selling books. And, in the early days, LDS Church leaders set up hundreds of businesses in Utah to help build a functioning economy. Early efforts to force church members to patronize LDS-owned businesses led to the U.S. Congress passing the Edmunds-Tucker Act in 1887 to limit vertical integration and monopolies by the LDS Church.
The President of the LDS Church, currently Russell M. Nelson, presides over 18,000 churches, 217 temples, four universities, three media companies and dozens of other properties along with EPA.
Pew Research Center data shows 97 percent of LDS members consider themselves Christian but only 51 percent of U.S. adults consider Mormonism as a Christian religion. Pew data also shows that LDS members are more highly involved in their congregations than any sector of Christianity, surpassing Protestants, Catholics and Orthodox Christians alike. In the book “Passing the Plate,” Christian Smith writes that most Christians give away 2 percent or less of their income while Mormons averaged 5.2%.
TIME Magazine published a cover story (“Mormons Inc.”) expose by David Van Biema in 1997 titled “Kingdom Come” that showed the growing financial power of the LDS church. It said “Salt Lake City was just for starters – The Mormons’ true great trek has been to social acceptance and a $30 billion church empire.” The story examined the extensive agricultural holdings, radio station chains, life insurance companies and other assets. “There is no major church in the U.S. as active as the Latter-day Saints in economic life, nor, per capita, as successful at it.” The piece argued that Roman Catholics have more wealth than Mormons but the Catholic Church had 45 times as many members in 1997.
“The Mormon Church is by far the most numerically successful creed born on American soil and one of the fastest growing anywhere,” Van Biema and colleagues wrote. “Its U.S. membership of 4.8 million is the seventh largest in the country, while its hefty 4.7% annual American growth rate is nearly doubled abroad, where there are already 4.9 million adherents.”
Newsweek published a story on June 5, 2011, by novelist Walter Kirn titled “The Mormon Moment” noting that the LDS Church, “resembles a sanctified multinational corporation – the General Electric of American religion, with global ambitions and an estimated net worth of $30 billion.” It noted that then presidential candidate Mitt Romney was a wealthy and powerful member of the Mormon church as was fellow presidential candidate Jon Huntsman Jr. Senate majority leader Harry Reid was Mormon at the time as well.
Bloomberg News estimated the net worth of LDS church assets at around $40 billion in 2012. The whistleblower estimates a closer net-worth figure of the church could be $200 billion or more when you include EPA along with vast agricultural and property holdings.
A church-managed investment portfolio represents a newer area for the church. When asked to confirm or deny the whistleblower allegation that the Church has amassed more than $100 billion in owned assets under management, the LDS Church spokesman pointed again to online statements from the church such as:
“The Church’s reserves are overseen by Church leaders and managed by professional advisers, consistent with wise and prudent stewardship and modern investment management principles. Ultimately, all funds earned by the Church’s investments go back to supporting its mission to invite souls to come unto Christ.”
Tithing Culture
The Church’s auditing department publishes a short statement every year without giving more financial disclosure. “Church Auditing is of the opinion that, in all material respects, contributions received, expenditures made, and assets of the Church for the year 2017 have been recorded and administered in accordance with approved Church budgets, policies, and accounting practices. The Church follows the practices taught to its members of living within a budget, avoiding debt, and saving against a time of need,” said the statement for 2017, read aloud every April in the Saturday afternoon session of its General Conference.
Author Jana Riess wrote a piece at Religion News Service in December of 2019 titled, “I just paid my Mormon tithing. Why don’t I feel better about it?” She notes that December is a time when Mormons are supposed to sit down with their bishops to “declare” themselves. That means “Are you a full tithe-payer (10%), a partial tithe-payer (something less than 10%) or a non-tithe payer?”
Riess noted that the LDS church stopped making disclosures to its members about its use of money in 1959 because the church “was on the brink of financial disaster” that year. She suspects the non-disclosure policy continues “not because the church is poor or indebted, but because it has grown wealthy enough that exposing the extent of its holdings could cause embarrassment and prompt unwanted questions.”
Samuel D. Brunson, the Georgia Reithal Professor of Law at Loyola University in Chicago, writes that this practice dates back to at least 1906 and, today, “provides the sole window into the global finances of the LDS Church.” In the Spring 2015 issue of Dialogue: A Journal of Mormon Thought, Brunson wrote an article on “LDS Financial Transparency” that shows finances were once “open for the inspection of the Saints” according to church records from 1905 and 1906. Brunson writes the Church was more financially accountable to its members between 1915 and 1959. He writes that the LDS Church lost $1 million on municipal bonds in 1956 and spent $8 million more than its income during 1959.
“As a result of its silence about the details of its finances, members, critics, and the interested public have been left to guess at the Church’s wealth and the scope of its charitable spending, among other things,” Brunson writes. “The Church’s lack of public financial disclosure bothers some—apologists and critics alike—who have requested, in various ways, that the Church return to its former practice of publicly disclosing detailed financial information.”
Brunson told TheStreet.com that England and Canada have disclosure requirements for religious non-profits but that churches in the U.S. can “disclose whatever they want” and “whatever they want can vary.”
Experts on the LDS Church note that in Mormonism, the church hierarchy uses tithing as a principal metric to judge the faithfulness of its members. Only tithing members can witness temple marriages of other members, including one’s children and participate in other central rites of the faith. Only “tithing faithful” males can move up in rank of church leadership according to Richard Ostling, a ReligionUnplugged columnist who co-authored the 2007 book “Mormon America: The Power and the Promise.”
Aaron L. West wrote in Ensign Magazine in 2012 quoting a Mormon bishop in El Salvador who said, “If paying tithing means that you can’t pay for water or electricity, pay tithing. If paying tithing means that you can’t pay your rent, pay tithing. Even if paying tithing means that you don’t have enough money to feed your family, pay tithing.” (The church’s Ensign Magazine and the EPA fund take their name from Isaiah 5:26 that says, “He will lift up an ensign to the nations.”)
TIME reported in 1997 that $5.2 billion flowed into the LDS Church in 1996, dwarfing the pace of contributions received by other denominations. It noted that the LDS Church sees tithes not just as tools for paying church staff and expenses but, rather, as venture capital to build new temples (normal activity for religious organizations) and also to invest in stocks and bonds as well as for-profit companies in agriculture, travel and real estate. TIME estimated LDS Church investments to be $6 billion in 1997, a figure that may have been under-reported.
By comparison, the Southern Baptist Convention, the largest protestant denomination in the U.S., discloses on its web site that it received $9.6 billion in giving from the estimated 14.8 million members in its 47,456 cooperating churches in 2017-2018.
Brunson notes that some other churches are trying to improve financial disclosure. The Evangelical Council for Financial Accountability (ECFA) accredits churches that prepare accurate financial statements to be reviewed by an independent certified public accountant and which make their financial statements available upon written request.
“The LDS Church similarly has the option to make financial disclosure, whether or not the law demands it. Even without a secular obligation to disclose, the Church might view itself as subject to a divine disclosure mandate,” Brunson writes. “But such a mandate does not explicitly exist in canonized Mormon scripture, and the evidence is strong that Church leaders have never believed they were under such a divine mandate, even at the beginning of the Church.”
A Cloak of Secrecy
The whistleblower complaint alleges that the EPA universe of assets grew by $90 billion between 2009 and 2019 and a large part of that growth came as run-off from tithing income to the church.
Religion Unplugged reached out to several former employees of EPA to hear their perspective on the firm and their response to allegations raised in the whistleblower complaint. One former employee, speaking on background, said he greatly respected EPA staff and leadership and didn’t believe the firm needed to practice more transparency. Transparency, he said, is “usually for accountability to those who you have a fiduciary duty to. In this case, they are responsible to themselves. They don’t have investors. I understand if it is a mutual fund where people give their own money to manage. They [EPA] don’t have shareholders.”
The whistleblower complaint noted that a former Head of Fixed Income at EPA, Richard B. Willes, in 2011 advocated for transparency. “The longer we wait to disclose the more difficult it will be to defend,” the document quotes him as saying. It quotes another member of the asset allocation team saying, “We’ve got an optics problem here. The lack of distributions sure doesn’t look good.”
An ex-Mormon thread on the message board Reddit names powerful Utah institutions and calls Ensign Peak Advisors “the big kahuna of them all” and identifies it as “the super secretive investment arm of the church.” The author of the Reddit post describes a meeting he had at EPA in which he was asking for a $100 million investment and said the firm saw that amount as a “drop in the bucket” to them. Religion Unplugged tried to reach the person to learn more.
Other websites online such as Salamander Society has discussion threads asked LDS tithe payers to contact church headquarters and request financial disclosure of church assets and to obtain any response other than “Sorry, that information is not available.”
In response to Religion Unplugged’s questions about financial disclosure, the church media relations department sent links to statements on the Church web site. “While the Church chooses not to publish the details of its finances, the Church does provide public information on the financial principles it follows, the financial controls in place to protect Church funds and the source and use of these funds,” according to a frequently asked question section on the LDS Church web site. “The Church also provides all financial information required by law.”
Suddenly Nobody Is Bearish Anymore: Managers Of $745BN In AUM See Biggest Jump In Optimism On Record
Just a few months after a record number of survey respondents said that the US is late cycle, a recession is imminent, and generally were “the most bearish since the financial crisis”, the latest just released Fund Manager Survey from Bank of America has confirmed that nothing is ever quite as wrong as consensus. The reason: in the past two months optimism across Wall Street professionals has exploded, and FMS investors have now fully reversed the bearish bent, pricing out recession risks as global growth expectations jumped a record 66% – an unprecedented reversal from the -50% in June – and recession fears plummeted 33%, in what BofA said was “a dramatic turnaround from the Most Bearish FMS since the GFC in June 2019.”
And to think all it took was a $350BN expansion in the Fed’s balance sheet – with another $500 billion on deck – to force a dramatic U-turn in “professional” opinions about the future.
There were various other confirmations of just how pervasive newly-found optimism was across the 247 survey respondents managing $745 billion in AUM. Here are some of the key highlights from BofA:
Global growth expectations jump 22% to net 29% of investors polled indicating they expect global growth to improve over the next year, marking the biggest 2-month jump in growth expectations on record, and as noted above, a record 2-month upswing (+66%) as over two-thirds, or net 68%, now say a recession is unlikely in 2020, largest 2-month drop since May’09. Meanwhile, just a few months after everyone was convinced a recession in 2020 was inevitably, recession concerns have plunged by 33% to net 68% of investors saying a recession is unlikely in 2020.
Alongside the surge in growth expectations, there was a parallel spike in inflation expectations, which rose 12% to net 43% of survey participants expecting higher global CPI in the next 12 months. This means that after plunging to near record lows in the summer of 2019, inflation expectations have since risen to a 13-month high and a majority, or net 55% expect steeper yield curve, which also means that calling for a curve flattener is now the contrarian trade.
And another sharp reversal in sentiment: as of December, 20% of fund managers surveyed think the global economy will experience above-trend growth and below-trend inflation, a 7-month high (although 65% continue to expect below-trend growth and inflation).
There has been a regime change not only when it comes to perspectives about the economy: Wall Street’s take on corporations also shifted. And while concerns over the credit cycle remained, with net 39% of those surveyed saying they think corporate balance sheets are overleveraged, down from a record 50%+ a few months ago…
… Global corporate profit expectations surged 23%t from November, with just a net 14% of FMS investors saying they expect profits to deteriorate over the next 12 months, the highest since April 2018.
When asked what they would most like to see companies do with cash flow, 46% of those surveyed say increase capex spending, while just 36% wanted corporates to improve their balance sheets – well below levels hit in late 2018 and early 2019 even though corporate leverage is now higher than ever – and just 15% saying they want corporates to return cash to shareholders, and yet that’s precisely the behavior investors are rewarding. Just look at Apple.
What does all of this mean on capital allocations? Well, acording to the FMS, investor cash levels have dropped to 4.2% in December, the lowest level since March 2013.
At the same time, allocation to cash holds at net 18% overweight, the lowest cash allocation since November 2015
So as they take down cash levels, FMS investors bought equities, commodities, RoW equities, banks & energy; sold bonds, real estate, US equities, utilities & staples.
As a result of this newfound euphoria, allocation to global equities jumps 10ppt month-on-month to net 31% overweight, the highest level in one year. Meanwhile, as they rushed into stocks, the allocation to bonds continues to tick down, this month falling 1ppt to net 48% underweight, the most underweight in over a year.
Finally, what will dent sentiments, or end the rally? According to survey, the 10Y TSY can rise a further 84bp, to 2.71%…
… before causing losses and volatility in risk assets, while consensus now expects the S&P500 to peak at 3,322, up from 3,022 in Dec 2018, and the highest since the question was first asked in Jun’18.
So all in all, an amazing reversal in sentiment. How did we get here? Simple: the answer in one chart, and confirming that what Pozsar expected, namely QE4, has effectively taken place with the Fed’s balance sheet set to surge by almost $1 trillion in just four months, rising to a new all time high as soon as mid-January.
Finally, how long does this go on for? Here is the conclusion from Michael Hartnett:
FMS investors bullish until global PMI peaks at >55, or GT10 >2.7% pops bond bubble.
and
FMS bear risk for 2020 is unexpected outcome of upcoming US presidential election.
In other words, it appears that neither Trump, not Powell, will allow the S&P to dip even modestly before November. After that, however, all hell breaks loose.
Rick Gates Gets 45 Days In Jail After Flipping On Manafort, Stone
Former Trump campaign official Rick Gates has been sentenced to 45 days in jail and 300 hours of community service on counts of conspiracy and lying to federal investigators. He will also be required to pay a $20,000 fine.
BREAKING: Gates sentenced to three years of probation and also 45 days in jail, to be served on weekends. Also a $20,000 fine.
Gates, 46, was Paul Manafort’s right-hand man, helping the former Trump campaign manager conceal millions of dollars in overseas payments. After he was caught lying to federal investigators, he flipped on Manafort, as well as Roger Stone and Greg Craig – becoming the government’s star witness after agreeing to cooperate.
Gates was Manafort’s right-hand man and became his deputy when Manafort was named chairman of the Trump campaign in 2016. After Manafort was forced to step down over revelations about his work in Ukraine, Gates stayed on, becoming a liaison between the campaign and the Republican National Committee. He helped plan President Trump’s inauguration before leaving for a job with a pro-Trump outside group. –CBS News
In August of 2018, Gates testified that he was involved in criminal activity while working for Manafort, and admitted to having siphoned hundreds of thousands of dollars from their Cyprus-based bank accounts without Manafort’s knowledge.
“I added money to expense reports and created expense reports” that were not accurate, Gates said, to pad his salary by “several hundred thousand” dollars.
Gates also provided crucial testimony that Manafort instructed him to forge financial documents and IRS forms.
Jackson notes $75M flowed through offshore accounts controlled by Manafort and Gates. She adds, “Those are facts. Those are not alleged facts. Those are not alternative facts.”
Federal prosecutors had asked US District Judge Amy Berman Jackson to sentence Gates to probation. Either way, the six-week sentence is a far cry from the 10 years in prison he was facing.
