Tag: news

Fannie, Freddie Will Need $240BN In Capital As Private Companies: Regulator

Fannie, Freddie Will Need $240BN In Capital As Private Companies: Regulator

Tyler Durden

Wed, 05/20/2020 – 16:25

The 12 year exile of the formerly-insolvent GSEs, Fannie and Freddie, from private markets following their nationalization by the government in 2008 is almost over. There is only the small question of some $240 billion in capital they will need, in order to regain control of their own fate.

According to Bloomberg, Fannie Mae and Freddie Mac’s regulator is proposing that the mortgage giants be required to hold a quarter trillion in dollars in capital to guard against losses, “a step that could have an impact on mortgage interest rates and on the Trump administration’s efforts to free the companies from U.S. control.” A rule proposal by the Federal Housing Finance Agency released Wednesday outlines how much capital the GSEs would have to retain against their total assets as fully private companies. Based on their September 2019 asset totals, the companies would have to have a combined total of about $240 billion.

How was this number reached? According to a senior FHFA official, the ultimate goal of the rule is to ensure that the companies are never leveraged more than 25 to 1, or 4%. As of September 2019, that would have meant they needed about $243 billion in capital backing some $6.1 trillion in mostly mortgage assets, according to the FHFA, and as with other financial firms, “Fannie and Freddie would face different requirements depending on market conditions and their books of business, the agency said.”

Curiously, if Fannie and Freddie had been subject to the proposed requirement before the 2008 financial crisis, neither company would have been at risk of going under, the senior official told Bloomberg, and that makes sense: the current plan only accounts for a max 4% drop in values of mortgages held by the GSEs (a number which will likely prove overly optimistic); back during the financial crisis, however, the impairments on the US housing sector were far greater since most Americans were using real estate as the bubble assets. This time around, the real estate euphoria is far less (although it is unclear if that means the loss potential is also lower) as most Americans have lost their passion for levered home flipping, and instead appear to be giving the Fed-backstopped stock market a go instead.

“We must chart a course for the Enterprises toward a sound capital footing so they can help all Americans in times of stress,” FHFA Director Mark Calabriasaid in a statement. “More capital means a stronger foundation on which to weather crises. The time to act is now.”

The proposal is the latest sign of progress toward Calabria’s goal of freeing Fannie and Freddie from nearly 12 years in federal conservatorship. Private shareholders, including hedge funds and other investment firms, could make billions of dollars when the companies are released, and the public stock offerings would likely be among the largest ever.

During the 2008 financial crisis, Fannie and Freddie received more than $187 billion in taxpayer money after they were seized by regulators. They have since returned more than that in dividends to the U.S. Treasury in fulfilling the terms of their bailout agreements, a return that was only made possible by the Fed’s injection of trillions in liquidity in the broader market and the issuance of a record amount of debt which nobody seems to be concerned about.

Understandably, the companies maintained thin levels of capital while under U.S. control. In 2012, the government amended the bailout terms in a way that effectively eliminated their capital buffers. The terms were changed again last year to let the companies keep as much as $45 billion in earnings combined. As of March, Fannie’s net worth was about $13.9 billion while Freddie’s was $9.5 billion.

So what does the current proposal mean for the GSEs return to the private sector?

Well, according to FHFA officials, it could take years and more than one public offering for Fannie and Freddie to reach the capital levels they’d need to function outside of conservatorship. The capital levels and investors’ return expectations would affect the fees Fannie and Freddie charge to back mortgages and, by extension, the rates charged to borrowers. Spoiler alert: mortgage rates are not going to go down if a government backstop is removed.

The public will have 60 days to comment on the proposed rule after it’s published in the Federal Register, which itself could take a month. A senior FHFA official said the agency hopes to finalize the rule by the end of the year.

In any case, hopes for a quick return to normal have likely been dashed: Calabria said at an online Mortgage Bankers Association event on Tuesday that the coronavirus pandemic had delayed the FHFA’s timeline to capitalize Fannie and Freddie by three to four months, but that it could take even longer if the economy worsens.

The senior FHFA official said the agency still expects Fannie and Freddie to begin raising capital from the public markets sometime next year. He said it could take years for them to reach the capital goal.

Meanwhile, as Bloomberg notes, with the Trump administration moving forward on releasing Fannie and Freddie, it might be running low on time. While Calabria’s term runs for about four more years, he might run into difficulty if Trump fails to win re-election and a Democratic administration doesn’t want to release the companies.

A different senior FHFA official said the agency is operating with the expectation that Calabria will have the remainder of his term to either release the companies from conservatorship or at least cement his plans. He said that Fannie and Freddie could be released before reaching the capital minimums under some sort of consent order, but that no decisions surrounding that had been made.

Of course, if the coronavirus pandemic leads to a longer adverse impact on the economy, and the recession is here to stay, investor hopes that Fannie and Freddie will return to capital markets at some point in the foreseeable future will be promptly squashed.

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“It’s Junk!” – Illinois’ Borrowing Costs 5 Times Higher Than AAA-Rated States

“It’s Junk!” – Illinois’ Borrowing Costs 5 Times Higher Than AAA-Rated States

Tyler Durden

Wed, 05/20/2020 – 16:25

Authored by Ted Dabrowski and John Klingner via Wirepoints.org,

A new borrowing by Illinois shows lenders are already treating the state like it’s junk-rated.

Last week, Illinois raised $800 million from the bond market with repayment dates through 2045. The borrowed money, meant for summer construction projects and a pension buyout program, costs Illinois as much as 5.85 percent yearly. No other state in the country pays such high interest rates.

To see how punitive borrowing has become for Illinois, look at the interest rates the state is paying on its 10-year bonds. At 5.65 percent, Illinois’ rate is now five times higher than the 1.13 percent rate it costs AAA-rated states to borrow.

In other words, Illinois is paying 4.52 percentage points more compared to AAA-rated states like Indiana, Iowa and Missouri.

Greg Saulnier, MMD’s managing analyst says:

“(Illinois is) pretty much trading like it’s in junk category…I think anybody who’s going to buy this stuff is demanding the bigger coupon payments just for some sort of peace of mind.”

Over the life of the $800 million bond issue, Illinois will end up paying $450 million more in interest costs than if it were a AAA-rated state. 

The massive difference in costs is a reflection of Illinois’ collapsing finances. No one will lend to Illinois at favorable rates because of the state’s fiscal situation.

The state was rated one notch above junk even before the coronavirus crisis hit. And Illinois’ pension debts, its high taxes and its loss of residents already made it the extreme outlier among states.

Illinois’ precarious position was made all the more obvious when State Senate President Don Harmon and the Democratic caucus asked the federal government for a direct bailout in April. The caucus used the negative impact of the coronavirus to ask for $42 billion in funds, including $20 billion for pensions. That in turn prompted U.S. Senate President Mitch McConnell to suggest bankruptcy as an alternate solution for states like Illinois.

Illinois is paying the price for its fiscal irresponsibility. Data from Bloomberg on states’ 10-year bond yields shows Illinois pays interest rates that are multiple times higher than other states.

The fact that Illinois is willing to pay such a high cost for cash shows the state has no apparent alternatives to raise money more cheaply.

The situation for Illinois recently proved difficult when it was forced to postpone a $1.2 billion bond issue two weeks ago. Concerns about pricing and demand led the state to put the bond issuance on day-to-day status. Reports now say the state may try to tap the Federal Reserve’s new Municipal Liquidity Facility (MLF) if it can’t access the funds from the market directly. If the state does use the Federal Reserve, it will send even more bad messages to the market.

With bad finances, a bailout request, bankruptcy comments and the impact of the coronavirus hanging over it all, it’s no wonder Illinois is paying payday rates to borrow.

Finally, we give the final word to Mike Shedlock who sums up the situation harshly and perfectly: “Illinois does not deserve a bailout. Its pension woes are of it own making and have nothing to do with the coronavirus. Illinois debt trades like junk, because it is junk.”

via ZeroHedge News https://ift.tt/3e7cYX0 Tyler Durden

Another State Supreme Court Stands Up for Economic Liberty

On Monday the Georgia Supreme Court ruled in favor of Mary Jackson, a veteran lactation consultant with decades of experience, who is fighting a 2018 state law that requires lactation consultants to obtain a government-issued occupational license before they are allowed to give professional advice about breastfeeding. “We have long interpreted the Georgia Constitution,” the court said in Jackson v. Raffensperger, “as protecting a right to work in one’s chosen profession free from unreasonable government interference.”

It was a welcome win for economic liberty. It was also, as I noted, the latest example of a state supreme court doing something that the U.S. Supreme Court now mostly refuses to do: namely, carefully scrutinize a purported health or safety regulation to make sure that it actually serves a legitimate health or safety purpose.

Here is another case in point. On Tuesday the Pennsylvania Supreme Court ruled in favor of Sara Ladd, a property owner who offers short-term rentals via websites like Airbnb. In 2017 the Pennsylvania Real Estate Commission ordered her to close up shop because she was guilty of the “unlicensed practice of real estate.” Ladd responded by filing suit in state court, arguing that the Real Estate Licensing and Registration Act (RELRA) was unconstitutional (under the Pennsylvania Constitution) as applied to her work as a short-term rental manager.

The Pennsylvania Commonwealth Court dismissed her case. But the Pennsylvania Supreme Court took a different view.

“The right to choose a particular occupation…is not absolute and its exercise remains subject to the General Assembly’s police powers, which it may exercise to preserve the public health, safety, and welfare,” the state high court acknowledged in Ladd v. Real Estate Commission of the Commonwealth of Pennsylvania. “But, the General Assembly’s police powers are also limited and subject to judicial review.”

And what “our review reveals,” the Pennsylvania Supreme Court continued, is that “Ladd’s complaint raises a colorable claim that RELRA’s requirements are unconstitutional as applied to her because they are, in that context, unreasonable, unduly oppressive and patently beyond the necessities of the case, thus outweighing the government’s legitimate policy objective.” Ladd’s constitutional case against the licensing law was thereby revived and will now move forward.

In addition to being welcome examples of judicial action on behalf of economic liberty, these two cases share another characteristic. They were both argued and won by lawyers from the Institute for Justice, a public interest law firm that specializes in such matters. Two wins in two days is impressive work.

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Trump’s Threat to Withhold Federal Funds from States that Expand Voting By Mail Highlights Growing Menace to Federalism and Separation of Powers

Earlier today, President Trump threatened to withhold federal grants from the states of Michigan and Nevada if they proceed with plans to expand vote-by-mail options in order to make it safer to vote in the midst of the ongoing coronavirus pandemic. It’s not clear what specific funds Trump has in mind, or even whether he has any meaningful plan to make good on the threat. Still, the danger that the White House can use the threat of withholding grants to bully the states should be taken seriously. If the president is able to impose his own new conditions on federal grants to states and localities, it would be a serious threat to both federalism and separation of powers. The vast expansion of federal spending and state dependence thereon during the coronavirus crisis has made this is an even more serious danger than before.

To my knowledge, there are no federal grants to Michigan, Nevada, or other states that Congress has conditioned on forbidding or severely restricting voting by mail. The extent of mail voting is one of of many aspects of election administration that the Constitution largely leaves to state governments.

In my view, expanding vote by mail makes excellent sense at a time when in-person voting could risk spreading a deadly disease, particularly among elderly voters and poll workers, who are especially vulnerable to the coronavirus. Empirical evidence undercuts claims that postal voting is particularly prone to fraud, or that it necessarily advantages one party over the other. In this 2014 post, I criticized claims that allowing early voting by mail exacerbates the problem of political ignorance.

But whether expanding mail voting is a good idea or not, the president has no authority to use federal grants to pressure states on the issue. The Constitution gives Congress, not the president, the power to allocate federal spending, including imposing conditions on state and local government grant recipients. Supreme Court precedent also imposes constraints on those conditions to protect state autonomy, most notably that any onditions  “unambiguously” stated in the text of the law “so that the States can knowingly decide whether or not to accept those funds,”  not added later by the president or by creative judicial interpretation of vague statutes.

If the president can get around such restrictions and impose his own new conditions on federal grants to state government, he could use that power to bully states and localities on a wide range of issues. Conservatives who might be happy to see Trump wield that authority should ask how they would feel when Joe Biden (or some other future Democratic president) does the same thing. The same tools Trump uses to pressure blue and purple states can easily be turned against red states. Either way, centrally enforced homogeneity will undermine the variation in state policy that is crucial to coexistence in a diverse and deeply divided nation.

Those tempted to dismiss Trump’s threat as mere bluster should recall this is far from the first time the administration has tried to bully states and localities by usurping the spending power. In a long series of “sanctuary city” cases, Trump has repeatedly tried to use that tactic to force state and local governments to cooperate with his immigration agenda. Nearly all court decisions on the issue (with one notable exception) have so far rejected the administration’s tactics on the ground that Trump cannot impose spending conditions that were not authorized by Congress.

Many of the sanctuary city cases involved administration efforts to withhold relatively modest-size federal law enforcement grants. But the threat to federalism and separation of powers goes far beyond that specific case. The same tactics used by the administration in sanctuary cities cases, can also be used to coerce states and localities by threatening to withhold far more significant federal grants.

Congress, of course, also sometimes adopts ill-advised grant conditions. But the need to build up majorities in two houses representing a range of diverse interests makes it harder to enact sweeping new conditions, and provides some protection for the autonomy of politically diverse states. The president can act more aggressively and faces fewer such constraints.

The vast expansion of federal spending during the ongoing coronavirus crisis exacerbates the danger posed by executive usurpation in this sphere. Thanks to that expansion and the catastrophic decline in states’ own tax revenue,  state and local governments are now more dependent on federal aid than at any time in living memory. In that state of affairs, a president empowered to attach his own new conditions to federal grants will have more opportunity to abuse that authority than ever.

Ideally, we should limit the danger by taking steps to ensure a quick recovery, while also carefully limiting proposed bailouts of states to those that are genuinely needed to deal with the emergency. But we must reckon with the possibility that the crisis will continue for a long time, and that massive expansions of federal spending will continue along with it.

If that happens, growing state dependency on federal grants will almost unavoidably have serious negative effects. For example, it will diminish state incentives to compete for residents who “vote with their feet,” since one of the main incentives for such competition is the desire for new tax revenue—which will be less pressing the more states can instead get money from Washington.

As long as the crisis continues, we cannot prevent all such problems, or even come close to it. But vigilant enforcement constitutional constraints on presidential attempts to usurp the spending power can forestall at least one threat to federalism and separation of powers.

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Trump’s Threat to Withhold Federal Funds from States that Expand Voting By Mail Highlights Growing Menace to Federalism and Separation of Powers

Earlier today, President Trump threatened to withhold federal grants from the states of Michigan and Nevada if they proceed with plans to expand vote-by-mail options in order to make it safer to vote in the midst of the ongoing coronavirus pandemic. It’s not clear what specific funds Trump has in mind, or even whether he has any meaningful plan to make good on the threat. Still, the danger that the White House can use the threat of withholding grants to bully the states should be taken seriously. If the president is able to impose his own new conditions on federal grants to states and localities, it would be a serious threat to both federalism and separation of powers. The vast expansion of federal spending and state dependence thereon during the coronavirus crisis has made this is an even more serious danger than before.

To my knowledge, there are no federal grants to Michigan, Nevada, or other states that Congress has conditioned on forbidding or severely restricting voting by mail. The extent of mail voting is one of of many aspects of election administration that the Constitution largely leaves to state governments.

In my view, expanding vote by mail makes excellent sense at a time when in-person voting could risk spreading a deadly disease, particularly among elderly voters and poll workers, who are especially vulnerable to the coronavirus. Empirical evidence undercuts claims that postal voting is particularly prone to fraud, or that it necessarily advantages one party over the other. In this 2014 post, I criticized claims that allowing early voting by mail exacerbates the problem of political ignorance.

But whether expanding mail voting is a good idea or not, the president has no authority to use federal grants to pressure states on the issue. The Constitution gives Congress, not the president, the power to allocate federal spending, including imposing conditions on state and local government grant recipients. Supreme Court precedent also imposes constraints on those conditions to protect state autonomy, most notably that any onditions  “unambiguously” stated in the text of the law “so that the States can knowingly decide whether or not to accept those funds,”  not added later by the president or by creative judicial interpretation of vague statutes.

If the president can get around such restrictions and impose his own new conditions on federal grants to state government, he could use that power to bully states and localities on a wide range of issues. Conservatives who might be happy to see Trump wield that authority should ask how they would feel when Joe Biden (or some other future Democratic president) does the same thing. The same tools Trump uses to pressure blue and purple states can easily be turned against red states. Either way, centrally enforced homogeneity will undermine the variation in state policy that is crucial to coexistence in a diverse and deeply divided nation.

Those tempted to dismiss Trump’s threat as mere bluster should recall this is far from the first time the administration has tried to bully states and localities by usurping the spending power. In a long series of “sanctuary city” cases, Trump has repeatedly tried to use that tactic to force state and local governments to cooperate with his immigration agenda. Nearly all court decisions on the issue (with one notable exception) have so far rejected the administration’s tactics on the ground that Trump cannot impose spending conditions that were not authorized by Congress.

Many of the sanctuary city cases involved administration efforts to withhold relatively modest-size federal law enforcement grants. But the threat to federalism and separation of powers goes far beyond that specific case. The same tactics used by the administration in sanctuary cities cases, can also be used to coerce states and localities by threatening to withhold far more significant federal grants.

Congress, of course, also sometimes adopts ill-advised grant conditions. But the need to build up majorities in two houses representing a range of diverse interests makes it harder to enact sweeping new conditions, and provides some protection for the autonomy of politically diverse states. The president can act more aggressively and faces fewer such constraints.

The vast expansion of federal spending during the ongoing coronavirus crisis exacerbates the danger posed by executive usurpation in this sphere. Thanks to that expansion and the catastrophic decline in states’ own tax revenue,  state and local governments are now more dependent on federal aid than at any time in living memory. In that state of affairs, a president empowered to attach his own new conditions to federal grants will have more opportunity to abuse that authority than ever.

Ideally, we should limit the danger by taking steps to ensure a quick recovery, while also carefully limiting proposed bailouts of states to those that are genuinely needed to deal with the emergency. But we must reckon with the possibility that the crisis will continue for a long time, and that massive expansions of federal spending will continue along with it.

If that happens, growing state dependency on federal grants will almost unavoidably have serious negative effects. For example, it will diminish state incentives to compete for residents who “vote with their feet,” since one of the main incentives for such competition is the desire for new tax revenue—which will be less pressing the more states can instead get money from Washington.

As long as the crisis continues, we cannot prevent all such problems, or even come close to it. But vigilant enforcement constitutional constraints on presidential attempts to usurp the spending power can forestall at least one threat to federalism and separation of powers.

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Ohio Judge Deems the State’s COVID-19 Lockdown ‘Arbitrary, Unreasonable, and Oppressive’

Ohio’s COVID-19 lockdown is illegal, a state judge ruled today, because it exceeds the powers granted by the statute under which it was imposed. Responding to a May 8 lawsuit filed by the 1851 Center for Constitutional Law on behalf of 35 gyms, Lake County Court of Common Pleas Judge Eugene Lucci enjoined Ohio Department of Health Director Amy Acton from penalizing the plaintiffs or similar businesses for violating the lockdown, provided “they operate in compliance with all applicable safety regulations.”

In issuing her business closure and stay-at-home orders, Acton relied on a statute that gives her department “ultimate authority in matters of quarantine and isolation.” Lucci concluded that Ohio’s lockdown does not meet the legal requirements for “isolation,” which is defined as “the separation of an infected individual from others during the period of disease communicability,” or a “quarantine,” which is defined as “the restriction of the movements or activities of a well individual or animal who has been exposed to a communicable disease during the period of communicability of that disease.” A quarantine is supposed to last only as long as “the usual incubation period of the disease”—two to 14 days, in the case of COVID-19.

By contrast, Lucci writes, “The director has quarantined the entire people of the state of Ohio, for much more than 14 days. The director has no statutory authority to close all businesses, including the plaintiffs’ gyms, which she deems non-essential for a period of two months. She has acted in an impermissibly arbitrary, unreasonable, and oppressive manner and without any procedural safeguards.”

Gov. Mike DeWine already planned to let gyms and fitness centers reopen next Tuesday, subject to social distancing and other COVID-19 precautions. But Lucci’s injunction adds to the smattering of court decisions recognizing that state officials must comply with the law even when they are responding to a public health emergency.

In this case, Acton purported to criminalize a wide range of previously legal conduct, threatening violators with a $750 fine and up to 90 days in jail. But those misdemeanor penalties are legally authorized only for people who violate orders that fit within the health department’s statutory powers. Lucci concluded that Acton’s orders did not, although Case Western Reserve law professor Jonathan Adler notes in a Volokh Conspiracy post that another, more general provision of the statute, authorizing “special or standing orders…for preventing the spread of contagious or infectious diseases,” arguably authorizes the lockdown.

“The general public would be harmed if an injunction was not granted,” Lucci writes. “There would be a diminishment of public morale, and a feeling that one unelected individual could exercise such unfettered power to force everyone to obey impermissibly oppressive, vague, arbitrary, and unreasonable rules that the director devised and revised, and modified and reversed, whenever and as she pleases, without any legislative guidance. The public would be left with feelings that their government is not accountable to them.”

In addition to the injunction, the plaintiffs are seeking compensation for lost income and legal costs.

“Constitutions are written to prevent governments from arbitrarily interfering in citizens’ lives and businesses,” 1851 Center Executive Director Maurice Thompson said in response to the ruling. “On that front, the call to action is clear: The governor and health director may no longer impose their own closures and regulations and write their own criminal penalties to enforce those regulations and closures. We remain available to serve those who are caught in the state’s tangled web of unlawful orders.”

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Stocks, Bonds, Gold, & Oil Pop As Dollar & Crypto Drop

Stocks, Bonds, Gold, & Oil Pop As Dollar & Crypto Drop

Tyler Durden

Wed, 05/20/2020 – 16:01

The mania continues…

Stocks all rallied hard today after yesterday’s brief breather, but still, just look at Small Caps and Trannies today…

Oh and because it was a Fed Minutes day, stocks had to rally!

Another test of the 2950/Fib retrace level with no solid breakout…

S&P could not break its 100DMA…

 

“Most Shorted” Stocks surge out of the gate again amid yet another squeeze…

Source: Bloomberg

FANG Stocks rallied to new highs… again…

Source: Bloomberg

Bonds were bid…

Source: Bloomberg

Gold was bid…

Silver was bid…

Silver outperformed gold once again…

Source: Bloomberg

Oil soared again…

As The dollar tumbled once again, falling to the low-end of its recent range once again…

Source: Bloomberg

Cryptos were clubbed today…

Source: Bloomberg

And finally, P/Es for tech and the broad market are back at cycle highs…

Source: Bloomberg

If the entire world economy is locked down and 325,700 die from a previously unknown virus but stocks didn’t really budge much… did it ever happen?

Source: Bloomberg

Probably nothing…

Source: Bloomberg

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“The Data Is Disturbing” – Extreme Options Sentiment Flash Red Light For Stocks

“The Data Is Disturbing” – Extreme Options Sentiment Flash Red Light For Stocks

Tyler Durden

Wed, 05/20/2020 – 15:45

Stocks know something… they must do right? Remember, they’re a discounting mechanism… or some other such trite bullshit. They are nothing of the sort, as bond and commodity markets and fundamental earnings expectations signal quite clearly…

But “Fear not…” echo the halls of mirror and smoke vendors appearing on your education channels… Tomorrow, some other drug trial will announce the person its testing its virus on looks slightly happier, or a Central Banker will say something really market supportive like: “We’ve got lots of money and we want to give it to you so that markets don’t fall…” 

There’s just one thing (well a few, but let’s focus on this one). As Bloomberg reports, small options traders are bullish to a point that signals trouble for U.S. equities, according to Sundial Capital Research.

“Last week, the smallest of options traders, those with trades for 10 contracts or fewer at a time, opened a new record of net bullish positions,” Sundial President Jason Goepfert wrote in a note Tuesday.

In comparison, very large traders, those with trades of 50 or more contracts at a time, haven’t been betting so much on a rally, he said.

That has widened the spread between small- and large-trader net bullish positions to a record, with the gap jumping “like it did in 2008” in the past couple of weeks, he added.

All of which reflects on the buying panic by small millennial retail buyers…

Extremes in the data have consistently led to poor market returns, Goepfert wrote.

“The data from last week is disturbing,” Goepfert wrote.

“It clearly shows that the smallest of traders, who tend to be the most consistently ill-positioned at extremes, have gone aggressively long, in a leveraged fashion.

This has a strong tendency to lead to lower prices over the short to medium term.”

But, as Bill Blain summed up succinctly earlier:

“The big risk is that people are going to tire of this B/S.

Bank analysts and big investors trying to look past the vaccine/treatment noise, past the Central Bank puts, and focusing on fundamentals all say the same thing: Stocks are massively overvalued ahead of a looming recession. Corporate bond yields need to reflect rising default risk. Simple as. “

Trade accordingly.

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Ohio Judge Deems the State’s COVID-19 Lockdown ‘Arbitrary, Unreasonable, and Oppressive’

Ohio’s COVID-19 lockdown is illegal, a state judge ruled today, because it exceeds the powers granted by the statute under which it was imposed. Responding to a May 8 lawsuit filed by the 1851 Center for Constitutional Law on behalf of 35 gyms, Lake County Court of Common Pleas Judge Eugene Lucci enjoined Ohio Department of Health Director Amy Acton from penalizing the plaintiffs or similar businesses for violating the lockdown, provided “they operate in compliance with all applicable safety regulations.”

In issuing her business closure and stay-at-home orders, Acton relied on a statute that gives her department “ultimate authority in matters of quarantine and isolation.” Lucci concluded that Ohio’s lockdown does not qualify as “isolation,” which is defined as “the separation of an infected individual from others during the period of disease communicability,” or a “quarantine,” which is defined as “the restriction of the movements or activities of a well individual or animal who has been exposed to a communicable disease during the period of communicability of that disease.” A quarantine is supposed to last only as long as “the usual incubation period of the disease”—two to 14 days, in the case of COVID-19.

By contrast, Lucci writes, “The director has quarantined the entire people of the state of Ohio, for much more than 14 days. The director has no statutory authority to close all businesses, including the plaintiffs’ gyms, which she deems non-essential for a period of two months. She has acted in an impermissibly arbitrary, unreasonable, and oppressive manner and without any procedural safeguards.”

Gov. Mike DeWine already planned to let gyms and fitness centers reopen next Tuesday, subject to social distancing and other COVID-19 precautions. But Lucci’s injunction adds to the smattering of court decisions recognizing that state officials must comply with the law even when they are responding to a public health emergency.

In this case, Acton purported to criminalize a wide range of previously legal conduct, threatening violators with a $750 fine and up to 90 days in jail. But those misdemeanor penalties are legally authorized only for people who violate orders that fit within the health department’s statutory powers. Lucci concluded that Acton’s orders did not.

“The general public would be harmed if an injunction was not granted,” the judge writes. “There would be a diminishment of public morale, and a feeling that one unelected individual could exercise such unfettered power to force everyone to obey impermissibly oppressive, vague, arbitrary, and unreasonable rules that the director devised and revised, and modified and reversed, whenever and as she pleases, without any legislative guidance. The public would be left with feelings that their government is not accountable to them.”

In addition to the injunction, the plaintiffs are seeking compensation for lost income and legal costs.

“Constitutions are written to prevent governments from arbitrarily interfering in citizens’ lives and businesses,” 1851 Center Executive Director Maurice Thompson said in response to the ruling. “On that front, the call to action is clear: The governor and health director may no longer impose their own closures and regulations and write their own criminal penalties to enforce those regulations and closures. We remain available to serve those who are caught in the state’s tangled web of unlawful orders.”

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Leaked Pentagon Memo Warns “Real Possibility” Of COVID-19 Resurgence, No Vaccine Before Summer 2021

Leaked Pentagon Memo Warns “Real Possibility” Of COVID-19 Resurgence, No Vaccine Before Summer 2021

Tyler Durden

Wed, 05/20/2020 – 15:30

Authored by Haley Britzky via TaskandPurpose.com,

The Defense Department should prepare to operate in a “globally-persistent” novel coronavirus (COVID-19) environment without an effective vaccine until “at least the summer of 2021,” according to a draft Pentagon memo obtained by Task & Purpose.

“We have a long path ahead, with the real possibility of a resurgence of COVID-19,” reads the memo, authored for Secretary of Defense Mark Esper but not yet bearing his signature. 

“Therefore, we must now re-focus our attention on resuming critical missions, increasing levels of activity, and making necessary preparations should a significant resurgence of COVID-19 occur later this year.”

Despite its grim forecast, the draft document lays out a framework for the U.S. military’s proverbial reopening, which includes the resumption of training exercises, increased operational tempo, and the repositioning of forces and supplies to fight the global pandemic.

A Pentagon spokeswoman said the document was outdated but declined to provide more specifics.

The memo was prepared by Kenneth Rapuano, assistant secretary of defense for homeland defense and global security, and is intended to update previous guidance issued by Esper on April 1, 2020. It’s unclear if Esper has seen the memo. 

The document has not been officially released, and could see changes since being circulated among the military services at the beginning of May for feedback, a defense official said on condition of anonymity.

“All indications suggest we will be operating in a globally-persistent COVID-19 environment in the months ahead,” the memo reads.

“This will likely continue until there is wide-scale immunity, through immunization, and some immunity post-recovery from the virus.”

The Pentagon framework for operations in a “persistent COVID-19 environment” relies on a number of assumptions, including the chance of successive waves of infection, continued shortages of personal protective equipment, and a lack of a viable treatment or vaccine for COVID-19 until at least next summer.

More waves of infection will occur “in clusters” that will coincide with the seasonal flu season, the memo suggests, while testing “will not provide 100% assurance of the absence” of the virus.

The planning framework detailed in the draft memo also calls for an increase in testing and surveillance, expanded contact tracing capabilities, and the use of a registry “to track and closely monitor outcomes of those infected with COVID-19.” 

The memo stands in contrast to more optimistic assessments given by Trump administration officials, including Esper, who said Friday the Pentagon would “deliver by the end of this year a vaccine at scale to treat the American people and our partners abroad.” 

“We’d love to see if we can do it prior to the end of the year,” President Donald Trump said Friday. “We think we’re going to have some very good results coming out very quickly.”

The top Pentagon spokesman later clarified the end of year timeline was merely “a goal.”

Meanwhile, Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, recently stated that it’s “doable” to have a vaccine ready in January “if things fall in the right place.”

“Remember, go back in time, I was saying in January and February that it would be a year to 18 months, so January is a year, so it isn’t that much from what I had originally said,” Fauci said on NBC’s Today Show, adding that the goal is “aspirational.” 

Army researchers also pointed to the 12-18 month timeframe for when a vaccine would be deemed safe to use in early March. But some experts say that even 12-18 months might not be enough time.

Dr. Amesh Adalja, a senior scholar and infectious disease physician at the Johns Hopkins University Center for Health Security, recently told the New York Times that “everything would have to go perfect” in order to have a vaccine by January 2021.

“Vaccine development doesn’t always go as predicted,” Adalja told the Times. “There are a lot of hiccups in the production process. We’re going faster than we ever have with a vaccine, but we have to be prepared for things to slow down once we get further along.”

via ZeroHedge News https://ift.tt/2AH1N9a Tyler Durden