Pennsylvania Lockdown Lawsuit Victory May Cure a Plague of Pandemic Restrictions

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A federal judge’s ruling that Pennsylvania Gov. Tom Wolf’s pandemic lockdown orders are unconstitutional offers hope not just to the beleaguered residents of that state, but to all Americans suffering under similar impositions. With public health-inspired restrictions weighing on civil liberties and the ability to make a living, pending lawsuits in many states may offer the best chance for restoring personal freedom and dragging the country out of its economic doldrums.

“The Constitution cannot accept the concept of a ‘new normal’ where the basic liberties of the people can be subordinated to open-ended emergency-mitigation measures,” wrote U.S. District Judge William S. Stickman IV in his September 14 decision, in a case brought by a coalition of cities, counties and businesses. “Rather, the Constitution sets certain lines that may not be crossed, even in an emergency. Actions taken by Defendants crossed those lines. It is the duty of the Court to declare those actions unconstitutional.”

In particular, Stickman found that limits on gatherings run afoul of First Amendment protections for assembly rights, stay-at-home orders violate the substantive due process guarantees of the Fourteenth Amendment, and arbitrary business closures violate the Due Process and Equal Protection clauses of the Fourteenth Amendment.

“The fact is that the lockdowns imposed across the United States in early 2020 in response to the COVID-19 pandemic are unprecedented in the history of our Commonwealth and our Country,” the judge added. “They have never been used in response to any other disease in our history.”

“There’s no sense debating a ruling that will be appealed,” Pennsylvania Governor Tom responded in a statement that pleads necessity while entirely side-stepping constitutional issues. “But what’s not up for debate is that our early and decisive action saved lives.”

Except that not just the constitutionality but the effectiveness of lockdowns is up for debate.

“Lockdowns, despite the huge costs they entailed, have not had any obvious payoff in terms of fewer COVID-19 deaths,” Reason‘s Jacob Sullum noted this week after reviewing international examples and recent research. “It would not be the first time that people have exaggerated the potency of government action while ignoring everything else.”

Like the cost to our freedom, the economic toll of the lockdowns is beyond dispute.

“In the wake of COVID-19 cases increasing and local restrictions continuing to change in many states we’re seeing both permanent and temporary closures rise across the nation, with 60% of those closed businesses not reopening (97,966 permanently closed),” the review site Yelp revealed in its latest Local Economic Impact Report. Restaurants, bars, and nightlife venues considered “non-essential” and widely subject to the toughest restrictions are especially hard-hit.

“The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Federal Reserve noted September 16.

The next day, the Department of Labor reported 860,000 initial unemployment claims for the week ending September 12. While that’s much improved from the record numbers reached during the early days of pandemic fears and lockdowns, it’s still brutal. “There were 173,134 initial claims in the comparable week in 2019,” the department revealed.

Undoubtedly, some businesses would have folded and jobs would have been lost anyway in the absence of mandatory closures, as people chose to stay at home and minimize their risk of exposure. But it’s unlikely that the economic damage of voluntary actions would have been as wide-reaching or as lingering as it has been from government orders enforced by administrative penalties, fines, and arrests. And, while the specifics of lockdown orders have varied from place to place, many U.S. states have imposed such penalties to enforce restrictions that Judge Stickman points out are “unprecedented.”

“The actions taken by the administration were mirrored by governors across the country and saved, and continue to save lives in the absence of federal action,” insists Wolf’s spokesperson, Lyndsay Kensinger.

Also mirrored across the country are lawsuits against those lockdowns.

Last week, Michigan’s Supreme Court heard oral arguments in a lawsuit over the constitutionality of Gov. Gretchen Whitmer’s notoriously intrusive and arbitrary lockdown orders. The Mackinac Center Legal Foundation argues that Whitmer “unconstitutionally gave herself unprecedented unilateral power to extend her own state of emergency, a move that was harmful to Michiganders across the state.”

Other state officials face similar lawsuits of their own. And while some of the worst restrictions have since been lifted, that was the case in Pennsylvania, too. Judge Stickman moved forward with his decision anyway because relief was at the whim of the governor and “citizens remain subject to the re-imposition of the most severe provisions at any time.”

Still, some lockdown orders have survived challenges in federal and state courts. It remains to be seen whether the courts will continue down the path of deference to boundless claims of government authority in times of crisis, or will adopt Judge Stickman’s argument that “the Constitution sets certain lines that may not be crossed, even in an emergency.”

The stakes are high with COVID-19 threatening to become a long-term addition to human life and some public health types insisting that pandemic restrictions should also be a semi-permanent fixture.

“It is completely understandable that many are tiring of restrictions due to Covid-19. Unfortunately, their resolve is weakening right when we need it to harden,” Aaron E. Carroll, a professor of pediatrics at Indiana University School of Medicine, wrote September 15 in The New York Times. “It is much more likely that life in 2021, especially in the first half of the year, will need to look much like life does now,” he added.

So, keep your eyes on the courts. Depending on which way they jump, we’ll either find ourselves living in a world of liberties protected by constitutional lines that government can’t cross, or one of open-ended emergency powers extended at the pleasure of political officials.

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First CMBS Mega-Casualty On Deck: $700MM Starwood Portfolio On Verge Of Default

First CMBS Mega-Casualty On Deck: $700MM Starwood Portfolio On Verge Of Default

Tyler Durden

Fri, 09/18/2020 – 16:47

Over the past 6 months we have repeatedly discussed the plight of commercial real estate which unlike most other financial assets, failed to benefit from a Fed bailout or backstop (but that may soon change). It culminated in June when we wrote that the “Unprecedented Surge In New CMBS Delinquencies Heralds Commercial Real Estate Disaster.” The ongoing crisis in structured debt backed by commercial real estate in general and hotel properties in particular, prompted Wall Street to launch the Big Short 3.0 trade: betting against hotel-backed loans, which had the broadest representation in the CMBX 9 index, whose fulcrum BBB- series has continued to slide even as the broader market rebounded.

Yet while prominent failures within the CMBS universe had so far been rare due to overcollateralization of even highly distressed portfolios, as the economic slump drags on, as various stimulus measures expire and as landlords fail to make rent payment, the various embedded liquidity buffers have been rapidly draining and as a result we are now approaching the moment where one or more prominent names are about to suffer a spectacular blow up.

The first among them will almost certainly be the Starwood Retail Property Trust 2014-STAR, a portfolio which is backed by an almost $700 million defaulted loan which is collateralized by several malls – including The Mall at Wellington Green in Florida – owned by Barry Sternlich’s Starwood Capital, and whose investors are starting to take losses according to Bloomberg, after the Covid-19 pandemic shuttered stores, crippled rental payments and wiped out emergency cash reserves that had been keeping interest payments flowing.

A big reason for the devastation is that The Mall at Wellington Green, the core property of the portfolio and Wellington’s biggest taxpayer, saw its taxable value drop 32% in 2019 to $150 million as a result of the Nordstrom departure, according to the Palm Beach County Property Appraiser’s Office. Starwood Retail Partners bought the property in 2014 for $341.1 million, marking the largest real estate deal ever recorded in the county at the time. It is now worth less than half, and that’s before most of its other anchor clients also fled or filed for bankruptcy.

The CMBS portfolio also includes the MacArthur Center in Norfolk, Virginia, the Northlake Mall in Charlotte, North Carolina, and The Mall at Partridge Creek in Clinton Township, Michigan.

Meanwhile, total debt on the properties has declined fractionally from $725MM at launch to $682MM currently.

Which is why it won’t come as a surprise that the CMBS portfolio has cut interest payouts to investors for a second time, after a reserve account dried up in June and a sharply lower property valuation led to the servicer holding back some funds.

As Bloomberg notes, the bond’s performance shows how rapidly the pandemic is deepening losses in a sector that was already getting crushed by online shopping. Even the part of the bond deal that was once rated AAA – i.e., where rating agencies saw virtually no risk of taking losses just two months ago – have now been cut deep into junk territory.

As Christopher Sullivan, CIO of United Nations Federal Credit Union said, “The experience of the mall CMBS from Starwood is certainly symptomatic of the larger narrative,” adding that weakening mall asset fundamentals and fewer willing investors “will present ongoing financing problems.”

Having rated more than half of the CMBS portfolio as AAA at inception in 2014…

… S&P in July sharply downgraded the entire stack to speculative grade after a reappraisal of the four regional malls backing the debt valued them 66% lower than when the bond was issued. As Bloomberg adds while loan servicer and borrower Wells Fargo hoped to restructure or modify the loan, the pandemic has put those plans on ice for now, according to a commentary by Wells.

Mall At Wellington Green

Ahead of the ratings bloodbath, Wells began slashing interest payments in June because the sharply lower appraisal triggered a CMBS protection mechanism known as an appraisal reduction amount. With the valuation so much lower, the ARA limits the amount of interest servicers have to advance on loans where the underlying collateral has declined in value. The idea is that the servicer will hold onto funds longer to safeguard senior bondholders, although with no end in sight to the apocalypse in the mall sector it is unclear just what recoveries senior bondholders hope to get.

“Because of the appraisal reduction amount in place, the servicer is only advancing on a portion of the mortgage loan,” said S&P CMBS analyst Dennis Sim.

What is remarkable is that the Starwood loan defaulted last November – before the coronavirus pandemic crippled the retail sector – when the borrower was unable to refinance, but the servicer paid investors out of a dwindling reserve account until June. Wells Fargo is now advancing smaller stopgap payments out of its own pocket.

As a result, the slice of the CMBS originally rated AAA was last quoted around 69 cents on the dollar. This is the tranche that was supposed to be “money good” no matter what.

The Starwood CMBS is just one of many that is about to undergo a dramatic default. According to the latest Trepp data, the percentage of overall CMBS loans assumed by special workout servicers continues to surge, rising from 9.49% in July to 10.04% in August. In total, about 17.3% of retail loans were in special servicing in August, up from 16% in July.

Meanwhile, on the other side of the table, things are getting from bad to worse, as a vast majority of small businesses can no longer afford to pay rent. The situation has been under the radar for the general public for since day one of the pandemic but remains an “enormous problem” for local business owners, says Mary Alice Scott, executive director of the Portland Independent Business and Community Alliance in Maine, quoted by Bloomberg.

How enormous? According to a recent survey by advocacy group Small Business Majority of more than 900 businesses in its network indicated 62% are struggling to make commercial rent or mortgage payments—up 6% from a previous poll released earlier in the month. The group warned a wave of commercial evictions and foreclosures could be on the horizon. A similar survey released in September of more than 5,500 business owners by Alignable, a business referral network, showed 32% will be unable to pay full rent on time in September.

Unfortunately, this means that the carnage in the real economy – not the fake one represented by the Fed manipulated stock market – is only just starting.

via ZeroHedge News https://ift.tt/3kuex4D Tyler Durden

“We House-Arrested Some Folks!”

“We House-Arrested Some Folks!”

Tyler Durden

Fri, 09/18/2020 – 16:20

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Being a vandal and a politician, but I repeat myself, means having zero shame.

Case in point the leadership of the City of Nashville. They were caught red-handed suppressing the data of COVID-19 transmissions to support their draconian business closure edicts.

And yet they still persist in demanding citizens commit economic hari kiri and cover their faces to keep them from losing theirs.

Having first implemented contact tracing measures of dubious legality and then finding out that bars and restaurants were not major vectors of virus transmission the Mayor’s Office chose to keep this information from the public, according to a report from local FOX 17 news.

This is yet another example of a Democrat Mayor in a major U.S. city acting suspiciously during a public health situation which has turned our entire society upside down.

And it is not hard to believe that it was done for purely political purposes.

Mayor Bill DeBlasio in New York City still doesn’t want the city to return to any semblance of normalcy because he’s still hoping that the second wave of COVID-19 will sweep through, like the Angel of Death during Passover, and smite all the non-believers into oblivion, or at least scare them enough not to vote for Donald Trump.

It is truly sickening to watch this pathetic psycho-drama play out and it means there should be criminal charges filed against cities and states which caused material harm to millions of Americans during this sad period of U.S. history.

Trump the Second doesn’t go far enough in his condemnation of this behavior. It isn’t just jobs and/or businesses. Those jobs and businesses represent significant portions of people’s lives.

Property isn’t just some artificial construct of the patriarchy it is truly a physical manifestation of a person’s past decisions with his most precious natural resource… time.

And the Mayor’s office of Nashville decided to value that time and effort of countless people as worth nothing in the face of his political needs to oust Donald Trump from power.

Criminal charges for the Mayor and his staff is a bare minimum for this. Then the civil suits to bankrupt him and his staff to make the barest minimum of restitution.

This story broke at the same time that Attorney General, William Barr put these lock downs in their proper legal and historical context. Barr understands just what was done here and is willing to say what needs to be said.

Barr’s point isn’t just valid it is the only reasonable way to look at the willful destruction of millions of lives by government edict. Like it or not slavery was a feature of the time it was practiced in the U.S.

It’s still practiced today in parts of the world, FYI. But all we can do here in the U.S. is screech incoherently about rectifying a past through some adolescent purity test.

But, slavery is also fundamentally alive in the misbegotten ideas behind the social contract which states that the society has a claim against another man’s labor that isn’t accounted for in his previously-engaged economic transactions.

It is patent nonsense promulgated through neo-Keynesian economists and neo-Marxists who argue government’s role is to account for unpaid externalities of the free market.

What they fail to mention is that it is government itself which creates those unpaid externalities by writing rules which allow actors — be they corporations, city governments or individuals — to be exempt from the harm they cause and socializing the costs.

It is this fundamental tautology that under-girds the entire edifice of the Progressive’s obsession with taxes. Moreover, by creating these centralized systems of regulation they remove the free market’s ability to accurately price any of these so-called unpaid externalities in the first place.

This is why, in the end, every government intervention into the free market eventually necessitates a even greater one in the future to fix the mess created by the previous one.

No other institution of modern society is more indicative of this than the government’s police forces. And it is for this reason that I’m happy to have the conversation about reforming and re-imagining our policing practices here in the U.S.

Not the least of which reason is that it gives shameless vandals like Bill DeBlasio untold power to inflict mindless tyranny on a citizenry he openly despises.

Slavery is an abhorrent institution. No man should have to live under the boot heel of another. It doesn’t all of a sudden become the height of morality because 50.001% of a population showed up at a particular time to pick a person to decide on who holds society’s shackles.

Now, Bill Barr is no raging libertarian or anything but he is fundamentally right when he says that locking down entire populations, putting them effectively under house arrest is wrong. It’s not for the government to decide how much risk you can or should take in any situation like this.

And Barr holding up this end of the argument is frankly refreshing, because while there may have been truly terrifying consequences had COVID-19 turned out to be close to as deadly as advertised, the long-term costs for those who survive it are immeasurable and, frankly, unacceptable in any way if we are to still consider ourselves a free and liberal society.

And it’s clear from the hysterics over his comments that his political opponents are more than happy to throw that freedom under the bus to achieve their political goals, i.e. ousting him and President Trump from power.

Having destroyed a lot of the connective tissue of the U.S. economy and society the vandals in charge of this operation continue their shameless pursuit of leveraging their unpriced externalities to the limit to exercise their power.

It is everywhere we look today and it’s why I continue to tell people that the only way out of this is through it, to continue looking for inflection points in the Culture War that are resonant and keep stocking up on those things you can control and which only you are responsible for.

And you wonder why this blog is called Gold Goats ‘n Guns?

*  *  *

Join my Patreon if you know what it truly is to be a slave and want to free your mind. Install the Brave Browser to throw off the shackles of Google’s evil.

via ZeroHedge News https://ift.tt/3mB55OD Tyler Durden

Stocks Suffer Longest-Losing Streak In Over A Year As Dollar Dump Continues

Stocks Suffer Longest-Losing Streak In Over A Year As Dollar Dump Continues

Tyler Durden

Fri, 09/18/2020 – 16:00

Stocks are down for the 3rd week in a row – yeah we know!!! – leaving levered-call-buying RH’ers facing something they likely haven’t seen in their trading careers (this is the longest losing streak since August 2019)…

The Dow ended the week almost perfectly unchanged.

This leaves The Dow down over 3% YTD and the S&P 500 up just over 2% YTD…

Source: Bloomberg

Is it time for The Fed to start “getting back to work” on their balance sheet now that rates are impotent…

Source: Bloomberg

All that ‘work’ and “you get nothing”…

The Nasdaq 100 is down over 12% from record highs (so much for BTFD)…

The S&P 500 and Nasdaq closed below their 40DMAs. Small Caps managed to bounce off the 50DMA (after breaking below) and The Dow bounced perfectly off it…

FANG Stocks plunged to their lowest since late July (down 17% from the highs)…

Source: Bloomberg

Very choppy week in quant-factor land with Value and momentum swapping places day after day…

Source: Bloomberg

Notably, Quad Witch sparked some shenanigans in the vol-stock complex today…

Source: Bloomberg

And the Gamma pivoted around 270 Strike for Nasdaq QQQ…

Despite equity weakness, Treasury yields rose very modestly on the week…

Source: Bloomberg

The Dollar Index fell this week, after two weeks of gains…

Source: Bloomberg

Cryptos were largely higher on the week (Litecoin lower), led by Bitcoin

Source: Bloomberg

Bitcoin was, however, unable to hold on to $11k…

Source: Bloomberg

Oil dominated commodity-land with copper also higher and PMs marginally so…

Source: Bloomberg

Gold remains increasingly range bound…

And a big reversal in WTI (back above $41)…

Ags had a huge week as Corn, Soybeans soared on China chatter…

Source: Bloomberg

Finally, 1930 called again…

Source: Bloomberg

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

“Absolutely Terrified” Democrats Demand Emergency Investigation Into Durham Probe

“Absolutely Terrified” Democrats Demand Emergency Investigation Into Durham Probe

Tyler Durden

Fri, 09/18/2020 – 15:50

In August, Attorney General William Barr refused to commit to withholding any report by DOJ watchdog John Durham before the November election – causing Congressional Democrats to froth at the mouth over an “October surprise” meant to hurt Joe Biden.

Durham was appointed by Barr to investigate the Russia investigators – including members of the Obama-Biden administration, the FBI and the DOJ.

Now, days after a top prosecutor on the Durham team resigned – reportedly over what she thought was “pressure from Barr to produce results before the November election,” the Democratic chairs of four House committees have demanded an “emergency investigation” into Durham’s probe, according to the Daily Caller.

“We write to ask that you open an emergency investigation into whether U.S. Attorney General William Barr, U.S. Attorney John Durham, and other Department of Justice political appointees are following DOJ’s longstanding policy to avoid taking official actions or other steps that could improperly influence the upcoming presidential election,” wrote Democrats Adam Schiff (D-CA), Jerry Nadler (D-NY), Zoe Lofgren (D-CA) and Carolyn Maloney (D-NY) in a letter to DOJ inspector general Michael Horowitz.

“Absolutely Terrified” Democrats Demand Emergency Investigation Into Durham Probe

The letter follows a similar demand on Thursday from 10 Democratic members of the Senate Judiciary Committee.

Democrats are questioning the legal authority of the investigation, and whether Durham is allowed to release a public report of the probe before the election.

“Attorney General Barr has signaled repeatedly that he is likely to allow DOJ to take prosecutorial actions, make public disclosures, and even issue reports before the presidential election in November. Such actions clearly appear intended to benefit President Trump politically,” the Democrats wrote. –Daily Caller

House Judiciary Republicans suggested that the Democrats are “absolutely terrified” of the Durham probe, as “They know Barr and Durham are cleaning up the what the Obama/Biden DOJ left behind,” adding “And the results won’t be pretty for them.”

As part of his investigation, Durham has interviewed former CIA Director John Brennan and others, allegedly regarding the CIA’s assessment that Russian President Vladimir Putin was behind interference in the 2016 US election in order to help President Trump.

In an August 13th interview, Barr said he expects “significant” developments to come out of the investigation before the election. Days later, former FBI lawyer Kevin Clinesmith pleaded guilty to fabricating evidence used to obtain surveillance warrants on former Trump adviser Carter Page. Clinesmith -who worked on both the Hillary Clinton email investigation and the Russia probe, was part of Special Counsel Robert Mueller’s team, and interviewed Trump campaign advisor George Papadopoulos.

Meanwhile, earlier this month White House Chief of Staff Mark Meadows suggested that former FBI agent Peter Strzok and other officials involved in the operation against Trump could be in trouble.

“And I use the word unlawful at best, it broke all kinds of protocols and at worst people should go to jail as I mentioned previously,” Meadows said during a virtual appearance on Fox Business’ “Mornings With Maria” on Monday. -via The Epoch Times

If the Obama-Biden DOJ did nothing wrong, what do Democrats have to worry about?

via ZeroHedge News https://ift.tt/2H7hg5C Tyler Durden

Bitcoin & The Tragedy Of Monopolized Fiat Money

Bitcoin & The Tragedy Of Monopolized Fiat Money

Tyler Durden

Fri, 09/18/2020 – 15:35

Authored by Jeffrey Wernick, op-ed via CoinTelegraph.com,

Why the government should make a monetary transition to Bitcoin, and the problems that cryptocurrency would help solve, such as preemptive war and national debt.

image courtesy of CoinTelegraph

As an anarcho-capitalist, I hold that property rights are sacred and that violence is acceptable only when our natural rights, as embedded and enshrined in the Constitution and Bill of Rights, are under a direct and imminent threat, and only in self-defense. I might be the first anarchist, anarcho-capitalist, or minarchist you’ve ever met. Those labels may sound scary to some — that’s fine.

Democrats and Republicans call each other scary names all the time, too. But all my labels mean is that I believe in a monetary system that presumes freedom more consistently than that which is advocated by a typical Libertarian. I identify as such due to a moral judgment I made, one that I arrived at after observing the results of our country’s fiat paper money, odious debt and central banking system. After analyzing these with reference to foundational concepts and principles of economics, I think others will see the generally accepted alternative of Democrat socialism vs. Republican capitalism as I do.

Since it is no longer backed by a valuable commodity such as gold, our currency is subject to manipulation and valuation based on the level of “trust” in its value. That, in large part, means trust in government. But upon what record of honesty and integrity do you trust the government? Most people who have witnessed government mismanagement and corruption of all matters — big and small — are rightfully skeptical. But they do not often view the money in their wallet with the same degree of skepticism. And that’s a mistake.

A lack of skepticism about fiat money

Two recently published studies produced by Brown University estimate the cost of the War on Terror since Sept. 11, 2001 at $6.4 trillion and more than 800,000 lives, half of which were civilians. Adding indirect deaths as a consequence of the war, the number of lives lost climbs to 3.1 million. If they knew these numbers at the time of deciding to go to war, would Congress and the American people still have believed our actions would produce the most cost-effective results, worthy of that human sacrifice? Surely not. We were all manipulated, during a time when our emotions were prepotent and information was scarce, we were pressured by patriotism, and we believed our fiat paper currency could help us afford it. We were wrong.

Hard money regimes are abandoned in wartime, because the debasement of money is a prerequisite of most wars. An honest currency system backed by Bitcoin (BTC) or gold would require Americans to explicitly consent and confirm their willingness to pay for military aggression, as well as all other routine functions of government and the private sector.

An honest currency demands that, when we go to war, we have skin in the game. It’s a small sacrifice to write an IOU for other people’s money, but people more carefully reflect upon the cost and benefits of a purchase when they see their budget shrink in real time.

Bitcoin functions as a reserve currency, denationalized and therefore detached from government manipulation. When it first emerged during the 2008 global financial crisis, banks did not trust each other’s balance sheets and would not lend to each other, which exposed the fragility of markets for traditional fiat currency. If our markets were not manipulated by the central bank, the time preference of money would not be perverted, and our preferences for consumption today vs. saving for tomorrow would be reflected in interest rates.

Prior to the creation of the Federal Reserve, the government did not spend much as a portion of gross domestic product, and private savings rates were high. People invested, bought real estate and deposited money in the bank, accumulating wealth through the power of compound interest. Inflation and interest were under control. However, since 1971, we have abandoned all sense of market discipline and substituted central bank discretion in its place. And fiscal policy, no longer encumbered by its tie to a supply of physical gold, became more interventionist: Governments borrowed more, companies borrowed more. As a result, we all owed more, because all debt eventually flows down to the individual. We may not feel it, but we pay it.

What economists say about money

John Exter, ex-vice-president of the New York Federal Reserve, wrote in 1971:

“Today no money in the world fully performs all three services. National currencies are being used as means-of-payment and standard-of-value money, but none in this inflationary age is an assured store-of-value money. […] Commodities like gold and silver, which are being used as store-of-value money, are not being used as either means-of-payment or standard-of-value money.”

Other economists agree. Adam Smith, the father of the modern political economy, said:

“All money is a matter of belief.”

When he was a congressman of Nebraska, Howard Buffett, father of Warren Buffet, argued that “paper money systems have always wound up with collapse and economic chaos.” Further, a recent Bank for International Settlements report concluded that the unprecedented growth in central banks’ balance sheets has had an adverse impact on the functioning of capital markets.

In other words: Financial markets are dysfunctional, they no longer price risk appropriately, and they pervert the allocation of capital. They exacerbate inequality and, at the same time, make us all poorer.

Why use Bitcoin?

If all Americans had used Bitcoin in 2001, we would have had to consent to taxation in order to fund the war-on-terror, therefore immediately feeling the impact of that decision. On the flipside, the value of savings would also be realized, allowing us to better appreciate the effect of adopting a sensible energy policy along with a more efficient allocation of other resources. Prices would again function as a representation of our individual preferences rather than government promises.

Most importantly, using Bitcoin forces us to weigh the options of war and welfare. Using the figures stated above, for example, we would have had to decide if it was worth spending $800,000 per person killed.

With respect to debt manipulation, note that not all debts are the same. Some debt lays the foundation for future returns that will exceed the cost of infrastructure. Other debts will never be repaid, referred to as odious debt.

All debt issued by the U.S. government is odious debt. According to Alexander Nahum Sack in 1927, odious debt is issued by the state to strengthen its power and repress the population. The central bank is aware, as are Wall Street banks, that the spending is profligate, especially hostile debt incurred to prosecute wars. Few believe we can grow ourselves out of this hole, and some want to roll it over into perpetuity. Many advocates of Free Lunch economics believe the State can continually issue debt without limit, because there is no limit to future cash flows collected through increased taxes.

While the debate rages on, so does the debt. And, for many people, the size of the debt no longer has any meaning. The numbers are too large to grasp. They’ve never been asked to sacrifice anything as a result of it, and they cannot imagine what their quality of life would be, living in a country without it.

How can so many Democrats and Republicans believe that there is no limit to indebtedness? No limit to the growth of central banks’ balance sheets? That, somehow, increased market concentration and further concentration of economic and political power combined with very little investment and low productivity growth, will make us wealthy?

Fiat paper money exists only through the monopolistic force of the state. Paper money is dishonest, corrupt, deceitful, and is managed by a cartel. Distrust and power are its currency. The use of fiat money requires permission. It is always subject to confiscation and surrender.

Bitcoin does not allow odious debt and debt that is not explicitly agreed to. It has other attractive features as well: immutability, decentralization, privacy and scarcity; easy to divide and easy to transfer; there’s no need for an intermediary, no need for permission; no one can debase it and no authority controls it; and lastly, the ledger does not lie.

I believe we are in the early stages of forming a new social consensus — a trust revolution. It will be a global one, independent of geography, religion, nationality, culture, ethnicity or gender.

Denationalized money like Bitcoin is an investment in social consciousness. It fosters voluntary trade, it forces the market to celebrate wins and acknowledge losses, and brings more individual control over how we assign prices to the things we value — including our very lives.

via ZeroHedge News https://ift.tt/3kzi7KZ Tyler Durden

Investors Flood Into Tech Stocks Just As Wall Street Agrees Long Tech Is “Most Crowded Trade” Of All Time

Investors Flood Into Tech Stocks Just As Wall Street Agrees Long Tech Is “Most Crowded Trade” Of All Time

Tyler Durden

Fri, 09/18/2020 – 15:21

After weeks of tentative fund flows throughout the market’s rally from the post-March lows, and certainly the August meltup, investors finally flooded into stocks, and especially tech names following the tech selloff at the start of the month.

According to EPFR data compiled by Bank of America, the week ended Sept 16 saw $26.3BN of new capital deployed into equities, the largest inflow since March 18…

… with another $9.1BN going into bonds, funded by a massive $58.9 billion outflow from cash – the 9th largest outflow ever –  in what BofA’s Michael Hartnett dubbed “massive weekly rotation to stocks from cash.”

And he is right: the $184bn in cash outflows from money markets – which now hold $4.4 trillion compared to #3.6 trillion before March…

… over the past 6 weeks were the biggest since Apr’10.

Other notable flows included an “inflection” from gold & credit with gold funds seeing their first outflow in 4 months, while IG & HY bond saw their smallest inflow in 6 months;

But it was the frenzy into US stocks in general, and specifically the 9th largest inflow ever to tech, that stole the show.

What is hilarious about this FOMO move is that it comes just as the latest Fund Manager Survey published earlier this week found that Wall Street is “paranoid tech” because when asked what they think is the most “crowded trade”, 80% – an all time high consensus – said “long tech”…

… with fund managers declaring that the “tech bubble” is now the second biggest tail risk for the market after a “second wave” of COVID-19.

This once again shows just how much credibility these Wall Street “surveys” have, as investors respond as they know they should – after all it not a secret to anyone that tech is now the biggest bubble since the dot com days – even as they rush to put their money into this bubble.

Well, maybe it was a secret to at least one person: Willem Sels, chief market strategist at HSBC Private Bank, told Bloomberg that he doesn’t see signs of overexuberance in the market and says client positioning in equities isn’t at risky levels.

“We remain invested in U.S. tech stocks because in a low-growth environment, investors are interested in companies that can show growth,” he told Bloomberg. We wonder how many percentage points lower in the QQQs William will change his mind.

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Facebook Sued In Federal Court For “Spying” On Instagram Users Through Camera 

Facebook Sued In Federal Court For “Spying” On Instagram Users Through Camera 

Tyler Durden

Fri, 09/18/2020 – 14:50

In August, Facebook was accused of illegally harvesting the biometric data of users from its photo-sharing app Instagram. Now the social media giant is being sued again, this time for spying on Instagram users through their smartphone cameras, reported Bloomberg.

The new lawsuit, filed Thursday (Sept. 17) in federal court in San Francisco by Instagram user Brittany Condi, claims Facebook gained access to Instagram users’ smartphone cameras without their permission. She alleges Facebook spied on users to collect “lucrative and valuable data on its users that it would not otherwise have access to.”

By “obtaining extremely private and intimate personal data on their users, including in the privacy of their own homes,” Instagram and Facebook collected “valuable insights and market research,” the complaint said. 

The suit follows media reports from July when a “bug” in Instagram’s code led users to believe the app was turning on their cameras without permission.  Some users, according to The Independent’s story in July, said they noticed a green indicator (seen below) at the top of their iPhone’s Control Panel that showed the camera was activated. Users believed Instagram had been spying on them. 

Instagram was quick to debunk the spying, indicating it was merely an error: 

“We only access your camera when you tell us to — for example, when you swipe from Feed to Camera. We found and are fixing a bug in iOS 14 Beta that mistakenly indicates that some people are using the camera when they aren’t,” a spokesperson told The Verge in mid-July. 

“We do not access your camera in those instances, and no content is recorded.”

In another suit, in August, Facebook was accused of using facial-recognition technology to collect biometric data of users. Facebook has denied the accusations. 

And what is Facebook really up to? Is Facebook really harvesting biometric data and spying on users? 

We pointed out as early as December 2017 that Facebook could be using users’ phones and microphones to spy on users.

And in 2018, the creep factor with Facebook increased, as they wanted to spy on people by hiding inaudible messages in TV ads.

Stay tuned. The pending lawsuits against Facebook could provide valuable insight into what social media companies are really doing with users’ private data… 

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Short Circuit: A Roundup of Recent Federal Court Decisions

Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.

Over at The Washington Post (paywall), IJ’s first-ever client, African-style hair braider Pamela Ferrell, is profiled at length about a different chapter in her life. “I never want to feel what that officer — whose face was so full of hate — felt. Then [hatred] gets your soul. I won’t give it that.”

New on the Short Circuit podcast: Special guest Molly Brady of Harvard Law tells an untold story of how NIMBYs tried to turn neighbors into nuisances, and when they failed turned to zoning instead.

  • The Smoot-Hawley Tariff Act of 1930 requires all “vessel[s] arriving in the United States” to maintain (and publicly disclose) a manifest recording information about the just-completed voyage and the cargo. Data-aggregating companies file FOIA suit against the federal government, contending that the Act gives them a right to access airplane manifests too. Second Circuit: The statute is a mess (“an amalgamation of language from incompatible statutes”), but it applies to waterborne vessels only, not aircraft. No word on whether it applies to seaplanes. Or airships.
  • Two Pittsburgh brothers are stopped on the street by a police lieutenant who suspects (incorrectly) that they are carrying synthetic marijuana. Five other police officers soon join the lieutenant. Finger-pointing altercation ensues, and the police slam one brother into a wall and tase the other. Third Circuit (over dissent): No qualified immunity for the body-slamming officer, though the lieutenant is off the hook for failing to prevent the body slam.
  • United States Park Police officer stops truck driver on the George Washington Memorial Parkway, where commercial vehicles require permits. He smells marijuana, finds marijuana, and arrests the driver. Fourth Circuit: Yet he had no lawful reason to stop the driver. Merely suspecting that he might not have had a permit is not grounds for a traffic stop. Suppress the evidence.
  • After federal agents seize a man’s truck, he waits over two years for a hearing before a judge. Does due process require a more prompt post-seizure hearing? Fifth Circuit: The Constitution requires no such hearing; and the Second Circuit’s contrary holding (in an opinion written by then-Judge Sotomayor) should be limited to the specific statute at issue in that case. (This is an IJ case. We will be filing a cert petition.)
  • After unruly, possibly armed man declines to raise his hands with sufficient alacrity, Fort Worth, Tex. officer employs a “distractionary strike” to gain compliance, allegedly breaking the man’s nose. Fifth Circuit: A reasonable jury might review the bodycam footage and think that was excessive force.
  • Dearborn, Mich. officer: I shot the man because he was standing over me, trying to get my gun, and I realized the gun was loose in its holster.  The man’s estate: That makes no sense. There was nothing wrong with the safety mechanisms on the officer’s double-lock holster, and the bullet trajectories indicate the victim was lying on the ground when he was shot. Sixth Circuit: All of which presents a fact question for the jury. No qualified immunity.
  • In May, the Sixth Circuit stayed a district court order directing Ohio to (among other things) dispense with the ink signature and witness requirements for ballot initiative petitions. Sixth Circuit (September 2020): We still think the district court was wrong, so its preliminary injunction is reversed (and marijuana decrim is rather less likely to appear on some local ballots). Also, a soft circuit-split: the Sixth Circuit breaks with the Eleventh in electing to spell Anderson v. Celebrezze correctly. Which is unsurprising since respondent Anthony J. Celebrezze Jr. was the son of Anthony J. Celebrezze Sr., a Sixth Circuit judge from 1965 to 1998.
  • District Court: “I disagree with the Sixth Circuit. . . . Maybe the Sixth Circuit will reverse me again, but I can’t impose a sentence on [the defendant] that . . . does not make sense to me.” Sixth Circuit: Vacated and remanded for reassignment to a different judge.
  • It is clearly established that a government employee cannot grope an inmate. It is clearly established that a government employee cannot grope a fellow government employee. But what about just groping ordinary folks? That calls for qualified immunity, says two-thirds of this Ninth Circuit panel. (It’s clearly established now, though.)
  • It is clearly established that if an inmate’s health significantly deteriorates after the inmate is seen by jail medical staff, guards must summon medical staff anew. So, says the Sixth Circuit, Macomb County, Mich. guards who allegedly watched a man (who was in jail for being unable to pay a $772 court fine) lie naked and convulsing on the floor of his cell for two days before his death are not entitled to qualified immunity.
  • District Court: The database systems ICE uses to determine whether individuals who have recently been arrested by local authorities are subject to deportation are not reliable enough to create probably cause. Ninth Circuit (over a dissent): Reversed. The district court needs to reconsider whether reliability issues with some of the databases necessarily mean the whole system is unreliable. Separately, it was error to hold that detainees are not entitled to a post-detainer review by a neutral magistrate on whether there is probable cause to deport them.
  • In 1990, Congress created a program to temporarily allow foreigners to live here if they couldn’t safely return to their home countries because of natural disasters, armed conflicts, or other calamities. In 2017 and 2018, the Dep’t of Homeland Security closed the program to citizens of Sudan, Nicaragua, El Salvador, and Haiti. Ninth Circuit (over a dissent): Which is something Congress gave DHS broad discretion to do. Moreover, there is no evidence the policy change was driven by the president’s alleged racial animus. The district court’s nationwide preliminary injunction is vacated.
  • Woman alleges that Pontotoc County, Okla. jailer demanded she go to the control tower where he had sex with her while she cried, fearing she would face additional charges if she resisted. Jailer: It was consensual. Regardless, it’s not clearly established that sex with an inmate is inherently coercive. Tenth Circuit: No qualified immunity. (He was also convicted of rape, though the Tenth Circuit did not rely on that in reaching its decision here.)
  • It is clearly established that police can’t plant evidence on people, says the Eleventh Circuit. So a Meriwether County, Ga. officer who says she did not plant pot at the plaintiff’s home can tell it to the jury. No qualified immunity.
  • Allegation: Albany, Ga. officer invokes nonexistent eyewitness, gets innocent man charged with felony murder. The man spends several months in jail, but the charges are dismissed when he agrees to testify against the remaining co-defendants. District court: Which doesn’t count as the charges being resolved in his favor, so he can’t sue the officer for malicious prosecution. Eleventh Circuit: Not necessarily. The case can go on.
  • And in en banc news, the Ninth Circuit will not reconsider its earlier holding that the First Amendment does not protect the right of a labor union to encourage neutral employees to strike for the purpose of furthering the union’s labor negotiations. Six judges dissent, pointing out that this would seem to conflict with everything the modern Supreme Court has said about the First Amendment. And by an 8–7 vote, the Sixth Circuit will not rehear an earlier panel decision about the appropriate application of harmless-error review in a federal habeas case brought by a prisoner who was partially shackled during trial.

Friends, in 1873, the Supreme Court ruled that the “right to use the navigable waters of the United States” is possessed by all Americans and protected by the Privileges or Immunities Clause of the 14th Amendment. But that right—and the constitutional clause that protects it—have largely been ignored ever since. This week, IJ asked the Supreme Court to change that. For decades, Jim and Cliff Courtney have tried to provide boat transportation across 55-mile-long Lake Chelan in Washington state, but state officials have stymied them at every turn through a protectionist licensing law. Click here to read the cert petition. And click here for a lovingly crafted podcast episode about the case.

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A Second Round of Airline Bailouts Would be Bad for the Industry and Consumers

reason-airlines5

Not content with one round of sector-specific bailouts, the country’s passenger airlines are lobbying Congress and the White House hard in hopes of receiving yet another infusion of taxpayers’ money.

On Thursday, The Wall Street Journal reports, the top executives of American Airlines, Southwest, and United all met with White House Chief of Staff Mark Meadows to ask for cash assistance, which they say would forestall a looming round of October layoffs.

Meadows appeared amenable to providing an additional $25 billion to the industry, which he deemed a small sum compared to the broader pandemic relief proposal that Congress is currently considering.

“I never thought I’d say $25 billion was a small number, but compared to $1.5 trillion, it’s a rather small amount of additional assistance that could potentially keep 30,000 to 50,000 workers on the payroll,” Meadows told reporters after the meeting. Meadows is the former chair of the House Freedom Caucus, which presents itself as a force for fiscal conservatism.

That sum would likely come as a clean extension of the $32 billion Payroll Support Program, which was originally passed in March as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That program, administered by the Treasury, made $25 billion in grants available to passenger carriers on the condition that they not involuntarily furlough their workers or cut wages through the end of September. They’re also obliged to run a minimum number of flights to areas they serviced prior to the pandemic.

Airlines—who saw travel volumes decline by as much as 95 percent at the beginning of the pandemic—have eagerly accepted those grants. United, American, and Delta all inked grant agreements worth around $5 billion each. Southwest accepted $3.2 billion in taxpayer-funded grants. Companies will have to pay some of this grant money back, either as cash or as stock.

The CARES Act also created a $25 billion line of credit for the industry. So far, no airline has touched that pot of money, despite an announcement in July that several major carriers would. Southwest has cited its success at raising private capital as a reason for walking away from CARES Act loans.

The airlines and their unions are warning that without another round of grants, carriers could be forced to lay off up to 75,000 employees after benefits expire October 1.

The Congressional Research Service has pointed out that because the airlines’ grant agreements were signed in May, June, July, and even later, many of these recipients will likely still have grant money left over to pay workers in October.

Nevertheless, the potential for sudden, mass layoffs of airline workers in an election year has attracted bipartisan concern from members of Congress.

In August, 16 Republican senators wrote a letter to Senate Majority Leader Mitch McConnell (R–Ky.) urging him to support a second airline bailout. In late July, a majority of U.S. House members, including 195 Democrats and 28 Republicans, likewise signed a letter endorsing a six-month extension of the Payroll Support Program. “Without an extension of the (payroll support program) before then, hundreds of thousands of airline workers will be fired or furloughed on October 1,” they wrote.

But job losses in an industry that has seen a massive drop in demand for its services isn’t the worst thing in the world, argues Marc Scribner, a transportation researcher with the Reason Foundation (which publishes this website).

“The outlook isn’t great for the airlines,” says Scribner. The number of people flying is down around 70 percent compared to this time last year, and the industry itself doesn’t expect passenger volumes to return to 2019 levels until 2024.

“Another round of bailouts would just be an expensive way of delaying” an inevitable shedding of jobs, he tells Reason, warning that trying to prevent the shrunken sector from downsizing risks creating a “zombie airline industry.”

As Veronique de Rugy argued in a recent column for Reason, bailouts tend to set the stage for still more bailouts by propping up lots of unprofitable businesses.

Refusing a second round of bailouts would lead to job losses and possibly even bankruptcy for some carriers, but it would also encourage the restructuring necessary for an airline to return to profitability in a world of much-diminished demand for air travel. After all, if you only have 30 percent of the passengers you once had, you probably don’t need to keep paying 100 percent of your flight attendants and baggage handlers.

Whether or not a second airline bailout will end up being included in the fourth relief package remains to be seen.

Neither the $1 trillion relief measure floated by McConnell in July, nor the $500 billion “skinny stimulus” proposed by Republicans this month included money for the airlines. The Democrats’ May-passed $3 trillion relief proposal would have barred airlines from furloughing workers until government assistance ran out, but didn’t give them any more money.

A $1.5 trillion relief package proposed by the bipartisan House Problem Solvers Caucus managed to budget $12 billion for broadband in underserved communities but included no more money for the airlines either.

None of that bodes well for a second bailout. But given that Senate Republicans, House Democrats, and the White House have all endorsed additional support for carriers, there’s a real chance they’ll end up being included in whatever eventually passes.

The best way to help both airlines and consumers, says Scribner, is to tackle the public health crisis that’s scaring people away from flying in the first place.

“The danger of going forward with another round of airline bailouts is that we are going to be locking in the pre-pandemic industry structure when we could stand to see some destruction and competition,” he says.

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