Summary: OECD’s newest data on global leading indicators suggest October was the turning point taking the global economy from the contraction to the recovery phase. Since 1973 this phase has been the best one for equities in terms of relative performance to bonds. In today’s equity update we show which countries and industries have typically done best in this phase.
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For almost two years the South Korea economy has been declining as China slowed down and the US-China trade war hit investments and global trade. Today, OECD released its global leading indicators hinting that the global economy turned a corner in October moving from the contraction phase and into the recovery phase. The uncertainty is still high and adjustments over the coming months could wash away this on the surface turning point in the global economy.
The quote below is the official press release text.
“Stable growth momentum is anticipated in the euro area as a whole, including France and Italy, as well as in Japan and Canada. Signs of stabilising growth momentum are now also emerging in the United States, Germany and the United Kingdom, where large margins of error remain due to continuing Brexit uncertainty. Among major emerging economies, stable growth momentum remains the assessment for Brazil, Russia and China (for the industrial sector). On the other hand, the CLI for India continues to point to easing growth momentum.” (OECD – Paris, 9 December 2019)
Regardless of October being a turning all the numbers are suggesting that growth momentum is stabilising in all key economies including Germany. For now it looks like the policy action from central banks have stopped the bleeding. Add to this announced fiscal stimulus by Japan last week and South Korea last month. In addition Europe is planning large green investments next year. The fiscal impulse could lift growth momentum into 2020. If this is the case then on the margin that is net positive for Donald Trump’s aspirations for being re-elected.
Our business cycle map on country level going back to 1973 suggests that if the turning point came in October then we are entering the most rewarding period for investors in equities relative to bonds. The average outperformance for equities vs. bonds in USD terms has been 9.4% for every recovery phase. Historically the best performing equity markets have been Hong Kong, China, Singapore, Sweden, Brazil, South Africa and Australia. This should not be a big surprise given the pro-cyclicality of these markets. Another positive aspect of these markets is that their valuations are below the global average.
The same analysis carried out on industries shows that the best industries in the recovery phase are semiconductors, household products, real estate, diversified financials, consumer durables & apparel, and healthcare equipment & services.
China’s Pork Hyperinflation Hits A Record 110%, Keeping Credit Growth In Check
At a time when Beijing is bracing to reveal to the world that China’s economic growth has dipped below 6% for the first time in modern history (and in reality is about half that), and the PBOC is desperate to find ways to stimulate the economy without causing another mini debt bubble, the world’s most populous nation continues to face a major hurdle: pork hyperinflation.
As was revealed in the latest inflation data, China’s CPI accelerated further to 4.5% Y/Y in November, well above the 4.2% consensus expectation, and the highest annual increase since 2011, driven by higher inflation in fresh vegetable and hyperinflation pork prices. The silver lining: the surge in China’s price basket may be easing as on month-over-month terms headline CPI inflation moderated to +8.2% (seasonally adjusted annual rate) in November from +9.1% in October.
As has been the case for the past year, the culprit behind the headline CPI surge was food inflation, which accelerated further to a record +19.1% in November from +15.5% in October, primarily on higher inflation in fresh vegetable and pork prices.
And as iw well-known by now, the driver for surging food inflation remains China’s history pork shortage which in November sent prices surging further, rising to a mindblowing 110.2% yoy in November from 101.3% yoy in October, pushing up headline CPI inflation by around 0.2pp relative to October (although the sequential increase slowed).
A new development in November, this time it wasn’t just pork prices as inflation in fresh vegetable rebounded to +3.9% yoy from -10.2% yoy in October, driving headline CPI inflation up by another 0.4%.
The silver lining: non-food CPI inflation remained relatively low at 1.0% yoy.
Looking at the other side of the ledger, the just as important for China’s companies PPI print printed negative again although the deflation narrowed slightly to -1.4% in November, from -1.5% in October. Deflation in the petroleum industry lessened the most, though partially offset by lower inflation in coal mining.
The reason why PPI is so important is because there is a direct correlation between Chinese industrial profits and factory gate prices, or in this case PPI deflation. And absent a rebound in PPI, China’s corporate sector – already loaded to the gills with debt – will face growing bankruptcy pressures as declining cash flows will increasingly be unable to meet debt service payments.
The problem: as long as CPI is soaring, the PBOC’s hands are generally tired in how much monetary stimulus it can inject. And as Goldman notes this morning, “headline CPI inflation is likely to remain elevated in the coming months” as high frequency data suggest year-on-year inflation in pork prices has remained high in early December, though moderating somewhat. Prices in fresh vegetables have picked up further in early December in year-on-year terms. Elevated inflation could be one factor that may limit the room for front-end rates to decline in coming months.
And as China’s “stimulative” hands remain tied, the latest Chinese credit growth data confirmed that Beijing can only do so much to spur much needed inflation. And while credit data surprised modestly to the upside in November after the record low October print, likely helped by administrative push to lend in November, the Total Social Financing was still a relatively modest, by historical standards, 1.750 trillion, even as shadow banking shrank for the 8th consecutive month.
Here are the details from Goldman:
New CNY loans: 1390BN yuan in November, higher than consensus 1200 BN, representing outstanding CNY loan growth of 12.4% in November, the same as October.
Total social financing: 1750BN yuan in November, also well above consensus 1485BN yuan, and more than double October’s paltry 662BN yuan.
According to the PBOC, TSF stock growth was 11.1% yoy in November, the same as October. If we add all local government bond net issuance to TSF flow data, Goldman estimates adjusted TSF stock growth edged up to 10.9% yoy in November from 10.8% in October. The implied month-on-month growth of adjusted TSF accelerated to 10.3% (seasonally adjusted annual rate) from 9.5% in October.
Finally, even though TSF posted a much needed rebound, one can’t say the same for the all important M2, which rose just 8.2% Y/Y in November, missing Bloomberg consensus of 8.4%, and down from October’s 8.4% Y/Y.
So while credit data surprised modestly to the upside in November as RMB loan growth momentum picked up and Banker’s acceptance bill issuance reversed the contraction in October and corporate bond issuance accelerated, the decline in trust and entrusted loans -i.e., shadow debt – continued to be a drag, and has been down for 19 of the past 21 months.
Commenting on the rebound in November credit growth, Goldman writes that “it potentially reflects the loosening intention of the government” and is driven by four factors:
October activity data showed broad-based weakness,
Policy makers were concerned (justifiably in retrospect) about further downward pressures from exports as there was widespread evidence of frontloading of exports until October
a very weak October TSF data. This, amid the two factors above, likely put the central bank under more pressure to keep TSF growth at least stable. Given the weakness in October data, this likely meant a rebound was needed in November
High frequency pork prices have been on a downward trend very recently. This potentially eased the concerns policymakers had about consumer inflation. Although CPI accelerated further in November on a year-over-year basis, it is the high frequency pork price data that matters more on a forward-looking basis, as it has been the single biggest driver of CPI.
As a result the central bank provided ample liquidity in the interbank market in November – but not too much lest food prices spike even more – and pushed commercial banks to lend out more. Other policymakers likely took actions to boost activity growth, especially administrative push to accelerate infrastructure construction. Warmer than usual weather conditions made this easier to do than otherwise since November is around the time of the year when large parts of northern China become too cold to construct some of these projects. These factors increased credit demand, although it is unclear if this relative credit “goldilocks” will persist. It all depends on whether China will find an alternative source of pork to restock its inventory as China’s population is becoming increasingly displeased with the soaring price of its favorite protein.
“This Was An Attempted Overthrow”: Trump Slams FBI After FISA Report Release
President Trump says Monday’s Inspector General report on FISA abuse proves that the FBI “fabricated evidence” and “lied to the courts.”
“It’s a disgrace what’s happened with the things that were done to our country,” Trump said in comments to Republican Senators and state officials who were meeting at the White House.
“It’s incredible, far worse than what I ever thought possible.”
Trump: “The IG report just came out and I was just briefed on it and it’s a disgrace what’s happened with respect to the things that were done to our country. It should never again happen to another president. It is incredible, far worse than I would’ve ever thought possible.” pic.twitter.com/uuRl6bzdsa
Trump added that “It’s a very sad day that I see that,” while claiming the probe was “concocted” and that the intelligence abuses were “probably something that’s never happened in the history of our country.”
“They fabricated evidence and they lied to the courts,” Trump continued. “This was an attempted overthrow and a lot of people were in on it, and they got caught.”
Speaking at the behest of Trump, former Florida Attorney General Pam Bondi said, citing her experience in law enforcement, that “the American people should be terrified that this could happen to you.”
Most of the FBI agents and officials who were part of the major errors have left the agency or been removed from their positions, FBI Director Christopher Wray told Horowitz in a letter also released on Monday. The same is true with the Department of Justice. –Epoch Times
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Justice Department Inspector General Michael Horowitz has released his report into the FBI’s investigation of the Trump campaign during the 2016 US election. The report concludes that despite nearly everybody investigating President Trump hating him – and that evidence was fabricated by at least one FBI attorney, and that they misrepresented Christopher Steele’s credentials, none of their bias ‘tainted’ the investigation, and the underlying process was sound.
That said, Horowitz faults the FBI for “significant inaccuracies and omissions” in their applications to secretly monitor Trump campaign adviser Carter Page, and agents “failed to meet the basic obligation” to ensure the applications were “scrupulously accurate.”
RTRS – INSPECTOR GENERAL FINDS POLITICAL BIAS ON THE PART OF FBI EMPLOYEES DID NOT INFLUENCE DECISION TO OPEN FBI INVESTIGATION -SOURCE
Attorney General William Barr, meanwhile, says that the report “now makes clear that the FBI launched an intrusive investigation of a U.S. presidential campaign on the thinnest of suspicions that, in my view, were insufficient to justify the steps taken.”
AG BARR: “The evidence produced by the investigation was consistently exculpatory. Nevertheless, the investigation and surveillance was pushed forward for the duration of the campaign and deep into President Trump’s admin.”
FBI used confidential human sources on Carter Page and George Papadopoulos *before* and after they joined the Trump campaign! pic.twitter.com/WPru3jBSYV
Also in disagreement is US Attorney John Durham, who is running a concurrent investigation into the 2016 election for AG Barr.
“I have the utmost respect for the mission of the Office of Inspector General and the comprehensive work that went into the report prepared by Mr. Horowitz and his staff. However, our investigation is not limited to developing information from within component parts of the Justice Department. Our investigation has included developing information from other persons and entities, both in the U.S. and outside of the U.S. Based on the evidence collected to date, and while our investigation is ongoing last month we advised the Inspector General that we do not agree with some of the report’s conclusions as to predication and how the FBI case was opened.” -US Attorney John Durham
Horowitz also found that the Steele dossier provided “probably cause” to spy on Carter Page, and that the FISA application “drew heavily…upon the Steele reporting to support the government’s position that Page” was a Russian agent.
The DOJ IG determined that the Steele dossier is what provided “probable cause” for the government to spy on Carter Page, and that the FISA application “drew heavily…upon the Steele reporting to support the government’s position that Page” was a Russian agent. pic.twitter.com/lelsAFD9Oq
The following seven ‘significant inaccuracies and omissions’ were found in the first FISA application:
1. Omitted information the FBI had obtained from another U.S. government agency detailing its prior relationship with Page, including that Page had been approved as an “operational contact” for the other agency from 2008 to 2013, and that Page had provided information to the other agency concerning his prior contacts with certain Russian intelligence officers, one of which overlapped with facts asserted in the FISA application;
2. Included a source characterization statement asserting that Steele’s prior reporting had been “corroborated and used in criminal proceedings,” which overstated the significance of Steele’s past reporting and was not approved by Steele’s handling agent, as required by the Woods Procedures;
3. Omitted information relevant to the reliability of Person 1, a key Steele sub-source (who was attributed with providing the information in Report 95 and some of the information in Reports 80 and 102 relied upon in the application), namely that (1) Steele himself told members of the Crossfire Hurricane team that Person 1 was a “boaster” and an “egoist” and “may engage in some embellishment”
4. Asserted that the FBI had assessed that Steele did not directly provide to the press information in the September 23 Yahoo News article based on the premise that Steele had told the FBI that he only shared his election-related research with the FBI and Fusion GPS, his client; this premise was incorrect and contradicted by documentation in the Woods File- Steele had told the FBI that he also gave his information to the State Department;
5. Omitted Papadopoulos’s consensually monitored statements to an FBI CHS in September 2016 denying that anyone associated with the Trump campaign was collaborating with Russia or with outside groups like Wikileaks in the release of emails;
6. Omitted Page’s consensually monitored statements to an FBI CHS in August 2016 that Page had “literally never met” or “said one word to” Paul Manafort and that Manafort had not responded to any of Page’s emails; if true, those statements were in tension with claims in Report 95 that Page was participating in a conspiracy with Russia by acting as an intermediary for Manafort on behalf of the Trump campaign; and
7. Included Page’s consensually monitored statements to an FBI CHS in October 2016 that the FBI believed supported its theory that Page was an agent of Russia but omitted other statements Page made that were inconsistent with its theory, including denying having met with Sechin and Divyekin, or even knowing who Divyekin was; if true, those statements contradicted the claims in Report 94 that Page had met secretly with Sechin and Divyekin about future cooperation with Russia and shared derogatory information about candidate Clinton. None of these inaccuracies and omissions were brought to the attention of OI before the last FISA application was filed in June 2017. Consequently, these failures were repeated in all three renewal applications.
Further, as we discuss later, we identified 10 additional significant errors in the renewal applications.
The failure to provide accurate and complete information to the OI Attorney concerning Page’s prior relationship with another U.S. government agency (item 1 above) was particularly concerning because the OI Attorney had specifically asked the case agent in late September 2016 whether Carter Page had a current or prior relationship with the other agency. I n response to that inquiry, the case agent advised t he OI Attorney that Page’s relationship was “dated” ( claiming it was when Page lived in Moscow in 2004-2007) and “outside scope.” This representation, however, was contrary to information that the other agency had provided to the FBI in August 2016, which stated that Page was approved as an “operational contact” of the other agency from 2008 to 2013 (after Page had left Moscow).
Thus, the FBI relied upon Page’s contacts with Intelligence Officer 1, among others, in support of its probable cause statement in t he FISA application, while failing to disclose to OI or the FISC that ( 1) Page had been approved as an operational contact by the other agency during a five-year period that overlapped with allegations in the FISA application, (2) Page had disclosed to the other agency contacts that he had with Intelligence Officer 1 and certain other individuals, and (3) the other agency’s employee had given a positive assessment of Page’s candor
The FBI also used Steele to gather information on former National Security Adviser Michael Flynn.
August 2016:
SSA1 (Pientka?) ran an op against Flynn under the guise of providing a defensive briefing. pic.twitter.com/8YYm8npeQK
Rep. Devin Nunes suggested that the DOJ IG report makes clear that “Republican FISA abuse memo from February 2018 was accurate and actually understated the FISA abuse the dirty cops engaged in.“
Looks like DOJ IG Report is clear that Republican FISA abuse memo from February 2018 was accurate and actually understated the FISA abuse the dirty cops engaged in. Time for FISA court to take action!
And after reading this, it’s no wonder we’ve been seeing defensive leaks in the New York Times and CNN. And that the Democrats rushed to hold an impeachment hearing the same day.
It’s every bit as bad as advertised. And certainly worse than the media has been suggesting. https://t.co/0U5dzQGDMY
We now know that within one week of the investigation opening, the FBI was surveilling the campaign and four specific individuals associated with it. (2/4)
Read the massive report here. This article will be updated as analysis pours in.
Something to keep in mind from Rolling Stone‘s Matt Taibbi: “conservative media will find it damning, while MSNBC/CNN types, if they cover it at all, will call it a nothingburger.”
Have heard conflicting things about the report by Inspector General Horowitz that’s supposed to drop imminently. No matter what, a classic Hate Inc. situation: conservative media will find it damning, while MSNBC/CNN types, if they cover it at all, will call it a nothingburger
2) Horowitz was instead asked to investigate whether FBI abused its powers as part of its probe–namely if it abused the FISA process. Was it honest to court about its sources; did it include exculpatory evidence; did it doctor anything?
It began, unlike most epic love stories featuring two cosmically intertwined souls rediscovering their connection from some past life, in the printer room of the University of New Mexico’s Anderson School of Management.
It ended with a graduate student attempting to blackmail a professor into continuing their flirtatious banter, a sexual harassment investigation that treated the blackmailer as a victim, and, ultimately, a one-year unpaid suspension for the professor.
The professor made serious mistakes. He shouldn’t have let the conversation become romantic and sexual—an exchange he actively participated in. He shouldn’t have floated the possibility of hiring the student for a low-paid research position—an opportunity she initially expressed interest in taking, then turned down, and then used against him when he rebuffed her, according to documents obtained by Reason.
But the professor and the student never slept together. She never worked for him, and she never took one of his classes. They never even met in person, except for their initial five-minute introduction.
The Foundation for Individual Rights in Education (FIRE) has taken the professor’s case, and it is urging the university to reverse course.
“The university reached conclusions that defied reason and were completely at odds with all of the established facts of the case,” attorney Samantha Harris, a vice president of FIRE, tells Reason.
His name was Nick Flor. A tenured professor at the university, he had taught information systems and digital marketing for the past 17 years. He was in his 50s, married with kids.
Her name, for the purposes of this article, was Julia. (I have changed it to protect her anonymity.) She was a graduate student in her 30s. She was fond of hummingbirds, flowers, and astrology.
Julia knew someone who had taken one of Flor’s classes some years back, and when she saw him in the School of Management, she took the opportunity to introduce herself. It was a fleeting encounter that lasted all of five minutes, but Julia followed it up with an email to Flor the next day—May 10, 2018. She asked whether he was teaching any classes in the fall.
“I am glad we crossed paths the other day….” she wrote, ending the thought with ellipses, as was her habit. “It was likely meant to happen, as are most if not all things in the Universe…..”
Flor wrote back that he would not be teaching in the fall, but would be happy to chat with her about her academic interests.
Over the next two months, Julia sent Flor 3,258 emails and 174 text messages. Flor sent 2,218 emails in response—though his replies were usually shorter—and 11 text messages. Reason obtained and reviewed all of these messages.
The content of Julia and Flor’s correspondence became romantic, and then sexual. Julia sent Flor romantic songs, love horoscopes for their signs, and called him “babe.” She suggested cuddling, he suggested kissing, she expressed a desire for it to lead to something more, and so on.
Flor says he eventually realized what he was doing was wrong—among other issues, he was married—and tried to de-escalate matters. When he stopped responding to her messages as often as she would have liked, she threatened him. When he appealed to his department for help, he became the subject of an investigation. And after a procedure that he says violated his due process rights, he was found guilty of quid pro quo harassment.
Flor says he knows he shouldn’t have let the relationship develop the way it did. “I can’t excuse my behavior,” Flor tells Reason. “I exercised poor judgment.”
But he’s apoplectic at the idea that his conduct could be deemed sexual harassment, when the harassment—as evidenced by the full investigative file, which was obtained by Reason—went in the other direction.
“They’re treating me like I’m Harvey Weinstein,” he says.
Julia told the university’s investigators that she did not harass Flor, that it was he who pushed their conversation into sexually explicit territory, and that she felt compelled to keep it up because she worried not doing so would negatively impact her educational opportunities.
“I believe that Professor Flor should be fired,” Julia wrote in her victim impact statement. “Going through this process, and in particular, being the subject of retaliatory action and conduct by an instructor for exercising my civil rights has been nothing short of excruciating, daunting, and overwhelming. I have had to witness and endure, first-hand, the reality and influence of the power dynamic a faculty member inevitably and undeniably has over a student.”
Through her attorneys, she declined to comment for this article.
After the encounter in the printer room, Julia began earnestly conversing with Flor electronically. She was quick to stress that she believed their meeting was destiny and that it would be foolish to “take such synchronicity for granted.”
Flor’s initial responses were polite but curt. He provided answers to her questions about which classes she should take, whether she should go to law school, what the university’s Organization, Information and Learning Sciences program was like, and other things.
Within a few days, Julia had shared that she was nearly killed in a car accident years ago and that she possessed lingering pain because of it.
“I’m a licensed therapist, in my own healing journey, but yet still,” she wrote, “cannot find anyone to help me heal or feel better….”
Julia also expressed an interest in gossiping about other faculty members—hidden insights, she claimed, that Flor would find “hilarious, intriguing, and mysterious.” Flor suggested switching to their personal email addresses or Google Hangouts for such conversations. One of her first messages was a picture of a male faculty member and an attractive woman standing next to each other on a golf course. Julia had circled the woman’s breasts, and the man’s crotch area, suggesting there was something going on between them.
Soon Julia was drawing hidden connections everywhere. She found it interesting that Flor had tweeted about hummingbirds right after she had seen—and attempted to photograph—precisely such a creature. Flor replied that this was bewildering. “Wow, maybe it wasn’t chance that we met,” he wrote back, adding a “haha.”
But Julia seemed to think this was no laughing matter. “I really don’t think you know how synchronous this all really is,” she wrote, sending him a picture of a hummingbird landing on a yellow flower. Flor pointed out that his last name meant flower, which pleased her.
email from Julia
Next came love songs—”Past Lives” by the musician Borns was a favorite—and horoscopes. Julia indicated that she expected Flor to actively interpret and respond to them, and she did not appreciate it when he failed to take them seriously enough. She became distraught when he referred to a psychic she admired as crazy, though for the most part Flor passively agreed with Julia that a mounting pile of evidence suggested they were connected in some way. Julia informed him that although he was 20 years her senior, they were actually both ageless—possibly having lived many lives before their current one.
email from Julia
Over the course of May, the conversation became steadily more romantic. Julia frequently referenced her pains, both physical and spiritual. Discussions of coping techniques led to a proposed massage and escalated from there. These were followed by sexually explicit, graphic messages—sent by both Flor and Julia.
“I don’t even know what came over me,” Flor says. By early June, he had realized he was making a terrible mistake, and it was time to wind down their romantic conversations.
email from Nick Florresponse from Julia
Julia was routinely sending lengthy declarations of love and descriptions of the kinds of emotional, physical, and spiritual pain she wanted him to help her heal. But by the beginning of June, she had noticed that he was barely responding to her emails.
“So what do you have against chatting with me?” she wrote, adding “just curious.”
She accused him—in half a dozen separate emails—of killing the romance. He had broken her heart, she said, in this life and in her previous ones. She alternated sending messages contemplating suicide, and pictures of flowers.
During the month and a half of correspondence, Julia and Flor had briefly discussed the possibility of her working a few hours each week as his assistant doing data and analytics. As the messages make clear, he proposed using leftover money from a National Science Foundation grant, which came to a grand total of $703. That meant 35 total hours of work, spread out across 7 weeks.
They couldn’t quite work out the logistics, and Julia declined the offer in a June 9 email. But a few days later, she asked about it again. By this point, Flor had quite sensibly decided to spend the money elsewhere, on new equipment, and told her so.
It was on June 24 that Julia made her first threat. She referenced Flor’s boss, and asked what he would think if she sent the boss screenshots of their romantic correspondence. Flor stopped responding to her emails, so she began texting him.
“I’ll also unfortunately keep on this til it’s addressed,” she said, referencing Flor’s refusal to answer her. “I’m still relentless.”
She also began stalking him on social media, sending him screenshots of a tweet he had liked. This tweet belonged to another female student.
“That’s what made her go ballistic,” Flor recalls.
The texts came at all hours of the day. On June 29, Julia texted him every few minutes, from 5:20 a.m. until 8:30 a.m. Over and over again, she repeated her threat to embarrass him by making public their earlier conversations.
text from Julia
Flor says he realized he could no longer ignore her threats, and felt he had no choice but to inform the university administration. He told his boss that he was experiencing harassing behavior from Julia, and his boss reported the matter to the university’s Title IX office, which deals with gender and sex-based misconduct. Flor met with the university’s compliance specialist on July 2. According to the investigative file, he told the specialist that Julia was harassing him because he would not pursue a relationship with her.
When Julia learned she was the subject of a Title IX investigation, she filed her own complaint, accusing Flor of quid pro quo harassment and retaliation. The university referred the matter to an independent investigator, who interviewed both parties over the next few weeks.
Flor had to come clean to his wife, something he described as “the hardest part of all of this.” They talked about everything, and though his behavior damaged their relationship, Flor says they have stayed together.
“It’s so hard to recover from,” he says. “But I feel like our relationship is stronger now because we talk so much about it.”
At the end of November, the independent investigator issued his preliminary findings, subject to comment from both Flor and Julia. Flor says at that point his attorney was optimistic.
Two weeks later, Flor learned that the university had taken the independent investigator off the case and replaced him with a woman, the interim Title IX coordinator at the university’s Office of Equal Opportunity (OEO). The documents informing Flor of this development included no explanation for it.
The interim Title IX coordinator then ruled that Julia had not sexually harassed Flor. In fact, her threats to publish their correspondence was “good faith civil rights protected activity,” the coordinator wrote in her report. The coordinator went so far as to dismiss the idea that revenge played any part in Julia’s decision making: Rather, “she presents as a very hurt individual grasping for some sort, any sort, of communication from a former lover.” (Again, Flor and Julia had never had a physical relationship.)
Flor did not get off so easily. The report found him responsible for quid pro quo sexual harassment and retaliation. In the OEO’s view, Julia might have believed that she needed to send him sexual messages in order to get the research position—a classic example of quid pro quo harassment. Flor’s decision to report Julia’s threats constituted retaliation.
“They kept her retaliation complaint but threw away mine,” says Flor. “They found me guilty. I don’t see how.”
The case went on for several more months, as Flor filed a series of fruitless appeals. Finally, in October 2019, it was time for sentencing. I spoke to Flor a few days before the hearing. He told me he was expecting to get off lightly: a 30-day unpaid suspension, perhaps. That had been the punishment, Flor recalled, when the university disciplined a football coach.
“It seems like that’s the worst thing they do to you,” says Flor.
On October 17, I received a frantic email from Flor. “It is worse than I ever imagined,” he wrote. The university had suspended him without pay for a full year.
The university declined to comment about the case, replying instead with a boilerplate statement.”The University of New Mexico abides by [university] policies and state and federal laws relating to disciplinary matters,” a spokesperson wrote in an email to Reason. “It is our practice not to discuss individual personnel matters.”
Julia would have preferred an even stronger sanction, according to her victim impact statement.
“Submission to the sexual advances were the basis of Professor Flor’s offers of employment to me,” she wrote in calling for his dismissal. “I was forced to make a decision: either 1) tolerate the increasing misconduct, sexual advances, and harassment from a professor in order to receive a Graduate Assistant/Project Assistant position and advance in my field and school of study, or 2) report the misconduct and policy violations. When I decided I had to report Professor Flor’s conduct things went from bad to exponentially worse because he chose to use his might to fire numerous false and retaliatory statements and allegations against me.”
Samantha Harris of FIRE believes the university has violated Flor’s due process rights.
“This is one of the most egregious cases of university malfeasance that I have seen in my nearly 15 years with FIRE,” Harris says. “The university found Professor Flor responsible with zero due process—no hearing, no opportunity to question his accuser—in a case where credibility was of critical importance.”
It has become much more common over the last decade for universities to adjudicate misconduct—particularly sexual misconduct—in a manner that disregards due process. In 2011, the Obama administration’s Education Department released a “Dear Colleague” letter that contained new requirements for publicly funded educational institutions. The department’s Office for Civil Rights instructed colleges and universities to take sexual misconduct accusations much more seriously, and to investigate them using a framework that would minimize the possibility of retraumatizing the victim. This meant lowering the burden-of-proof threshold to a preponderance of the evidence, defining misconduct broadly as “any unwelcome conduct of a sexual nature,” and discouraging investigators from allowing cross-examination.
The result was that many schools stopped holding adjudicatory hearings altogether, and instead moved to a single-investigator model, in which one administrator would decide which witnesses to question, produce a report based on these interviews, and then recommend a finding. Such procedures give accused parties very little opportunity to present evidence on their behalf.
Last year, under the guidance of Sec. Betsy DeVos, the Education Department rescinded its previous guidance. But many universities have vowed to continue operating as if nothing has changed.
Flor’s case is emblematic of this widespread abuse of the rights of accused students and professors. In a letter to the university, Harris wrote that the OEO’s findings do not establish that Flor “implicitly or explicitly conditioned employment on submission to sexual conduct.”On the contrary, FIRE points out, Julia declined the position after Flor had ceased his overtures. She was not interested in working with him if they were going to be mere work associates. Flor did not condition Julia’s employment on a romantic relationship—Julia did.
FIRE’s letter notes that Flor never received so much as a hearing, let alone an opportunity to cross-examine his accuser. He was not able to pose questions that a panel might ask of Julia. He was not able to present witnesses on his behalf—even though he knew of another professor who had received similar correspondence from Julia and would have been willing to appear on his behalf.
Indeed, documents forwarded to Reason by Julia’s attorneys make reference to this other professor, Smith. (I have changed his name to protect his anonymity.) Julia had also accused of Smith of sexual misconduct following an email- and text-based relationship that failed to yield an employment offer for her, but OEO cleared Smith of wrongdoing. On October 8, Julia wrote to the university’s board of regents, urging them to reverse this decision and sanction Smith. According to Julia, Smith broke off contact with her after his wife demanded that he do so.
“Professors must not dangle promises of job and project opportunities in front of a student with whom they are communicating with in a personal nature and then use their wife as an excuse to retract the offer and all communication,” wrote Julia in her appeal. “This decision was based on sex/gender and directly violates University Policy.”
Smith did not respond to a request for comment.
On November 13, Flor inquired about the outcome of a separate investigation: The university had also sought to determine whether he had violated Policy 2215, which deals with consensual relationships and conflicts of interest. This investigation had determined that Flor “did not exercise authority over a subordinate,” since he had not been teaching, supervising, or evaluating Julia. In this case, he had been cleared.
But according to Flor, the university only belatedly informed him of this important fact after he asked about it. If he had been told in August, when the decision was reached, he could have cited the outcome in his appeals concerning the Title IX matter.
“I look at this as withholding exculpatory evidence,” says Flor.
In the meantime, Flor can’t even look for alternative long-term work. The University of New Mexico has a policy prohibiting employees from working at any other job for more than 39 days per year. Flor asked the administration if he still counted as an employee during the term of his suspension. He was informed that he did.
He’s also worried that he will never again receive any grant money, since the OEO reported his Title IX violation to the National Science Foundation.
Flor is currently waiting for the outcome of another appeal. This “peer review” appeal, permitted under university policy, gives faculty members the power to review the appropriateness of a colleague’s sanction. They could opt to lessen Flor’s punishment, though his suspension—which goes into effect on January 1—is likely to begin before the faculty reach any kind of decision.
“FIRE will not rest until Professor Flor gets some justice in this egregious case,” says Harris.
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Impeachment articles are here. Democratic leaders in the U.S. House of Representatives unveiled the charges today, officially accusing President Donald Trump of abuse of power and obstruction of Congress for his alleged “quid pro quo” with Ukraine and efforts to cover it up.
“President Trump solicited a foreign nation, Ukraine, to publicly announce an investigation into an opponent [Joe Biden] … to help his reelection campaign,” said Rep. Adam Schiff (D–Calif.) at a press conference this morning, calling the evidence of Trump’s guilt in this regard “overwhelming and uncontested.” And “when the President got caught, he committed his second impeachable act,” said Schiff.
House Speaker Nancy Pelosi’s (D–Calif.) schedule sends a bit of a confusing message, however:
Pelosi has literally scheduled back-to-back press conferences to announce articles of impeachment against Trump and then support for his trade deal.
The House Judiciary will vote on the impeachment articles Thursday, and if they get through (as expected), a full House vote will happen the following week.
FREE MINDS
The Inspector General report on the federal investigation into the 2016 Trump campaign speaks to the FBI’s corruption and incompetence, independent of any partisan angle. Democrats and Republicans are both spinning it to their benefit…
But at the heart of the matter lies the same old overreach and incompetence among America’s top law enforcement agency.
Initial reaction: The IG report is indeed incredibly bad for the FBI, though not for the reasons Trump & his defenders assert. Only against the backdrop of their exaggerated claims could anyone call this any sort of “vindication” of the Bureau.
Said Hina Shamsi of the American Civil Liberties Union in a statement yesterday:
While the report found that there wasn’t an improper purpose or initiation of the investigation, it also found significant problems that are alarming from a civil liberties perspective…. The system requires fundamental reforms, and Congress can start by providing defendants subjected to FISA surveillance the opportunity to review the government’s secret submissions. The FBI must also adopt higher standards for investigations involving constitutionally protected sensitive activities, such as political campaigns.
No shortage of news today, but House Ethics Committee report on Duncan Hunter includes this line itemization of campaign funds spent on personal trips, items. Included: "Flights for pet rabbit"- $625 pic.twitter.com/ZnIIjV4Vgq
DOJ has done it again. A handful of people from New Jersey were released last month after serving 19.5 years, thanks to the crack retroactivity provision in the First Step Act. Today, on the 30th day of their freedom, DOJ filed appeals to send them all back. Disgraceful.
It began, unlike most epic love stories featuring two cosmically intertwined souls rediscovering their connection from some past life, in the printer room of the University of New Mexico’s Anderson School of Management.
It ended with a graduate student attempting to blackmail a professor into continuing their flirtatious banter, a sexual harassment investigation that treated the blackmailer as a victim, and, ultimately, a one-year unpaid suspension for the professor.
The professor made serious mistakes. He shouldn’t have let the conversation become romantic and sexual—an exchange he actively participated in. He shouldn’t have floated the possibility of hiring the student for a low-paid research position—an opportunity she initially expressed interest in taking, then turned down, and then used against him when he rebuffed her, according to documents obtained by Reason.
But the professor and the student never slept together. She never worked for him, and she never took one of his classes. They never even met in person, except for their initial five-minute introduction.
The Foundation for Individual Rights in Education (FIRE) has taken the professor’s case, and it is urging the university to reverse course.
“The university reached conclusions that defied reason and were completely at odds with all of the established facts of the case,” attorney Samantha Harris, a vice president of FIRE, tells Reason.
His name was Nick Flor. A tenured professor at the university, he had taught information systems and digital marketing for the past 17 years. He was in his 50s, married with kids.
Her name, for the purposes of this article, was Julia. (I have changed it to protect her anonymity.) She was a graduate student in her 30s. She was fond of hummingbirds, flowers, and astrology.
Julia knew someone who had taken one of Flor’s classes some years back, and when she saw him in the School of Management, she took the opportunity to introduce herself. It was a fleeting encounter that lasted all of five minutes, but Julia followed it up with an email to Flor the next day—May 10, 2018. She asked whether he was teaching any classes in the fall.
“I am glad we crossed paths the other day….” she wrote, ending the thought with ellipses, as was her habit. “It was likely meant to happen, as are most if not all things in the Universe…..”
Flor wrote back that he would not be teaching in the fall, but would be happy to chat with her about her academic interests.
Over the next two months, Julia sent Flor 3,258 emails and 174 text messages. Flor sent 2,218 emails in response—though his replies were usually shorter—and 11 text messages. Reason obtained and reviewed all of these messages.
The content of Julia and Flor’s correspondence became romantic, and then sexual. Julia sent Flor romantic songs, love horoscopes for their signs, and called him “babe.” She suggested cuddling, he suggested kissing, she expressed a desire for it to lead to something more, and so on.
Flor says he eventually realized what he was doing was wrong—among other issues, he was married—and tried to de-escalate matters. When he stopped responding to her messages as often as she would have liked, she threatened him. When he appealed to his department for help, he became the subject of an investigation. And after a procedure that he says violated his due process rights, he was found guilty of quid pro quo harassment.
Flor says he knows he shouldn’t have let the relationship develop the way it did. “I can’t excuse my behavior,” Flor tells Reason. “I exercised poor judgment.”
But he’s apoplectic at the idea that his conduct could be deemed sexual harassment, when the harassment—as evidenced by the full investigative file, which was obtained by Reason—went in the other direction.
“They’re treating me like I’m Harvey Weinstein,” he says.
Julia told the university’s investigators that she did not harass Flor, that it was he who pushed their conversation into sexually explicit territory, and that she felt compelled to keep it up because she worried not doing so would negatively impact her educational opportunities.
“I believe that Professor Flor should be fired,” Julia wrote in her victim impact statement. “Going through this process, and in particular, being the subject of retaliatory action and conduct by an instructor for exercising my civil rights has been nothing short of excruciating, daunting, and overwhelming. I have had to witness and endure, first-hand, the reality and influence of the power dynamic a faculty member inevitably and undeniably has over a student.”
Through her attorneys, she declined to comment for this article.
After the encounter in the printer room, Julia began earnestly conversing with Flor electronically. She was quick to stress that she believed their meeting was destiny and that it would be foolish to “take such synchronicity for granted.”
Flor’s initial responses were polite but curt. He provided answers to her questions about which classes she should take, whether she should go to law school, what the university’s Organization, Information and Learning Sciences program was like, and other things.
Within a few days, Julia had shared that she was nearly killed in a car accident years ago and that she possessed lingering pain because of it.
“I’m a licensed therapist, in my own healing journey, but yet still,” she wrote, “cannot find anyone to help me heal or feel better….”
Julia also expressed an interest in gossiping about other faculty members—hidden insights, she claimed, that Flor would find “hilarious, intriguing, and mysterious.” Flor suggested switching to their personal email addresses or Google Hangouts for such conversations. One of her first messages was a picture of a male faculty member and an attractive woman standing next to each other on a golf course. Julia had circled the woman’s breasts, and the man’s crotch area, suggesting there was something going on between them.
Soon Julia was drawing hidden connections everywhere. She found it interesting that Flor had tweeted about hummingbirds right after she had seen—and attempted to photograph—precisely such a creature. Flor replied that this was bewildering. “Wow, maybe it wasn’t chance that we met,” he wrote back, adding a “haha.”
But Julia seemed to think this was no laughing matter. “I really don’t think you know how synchronous this all really is,” she wrote, sending him a picture of a hummingbird landing on a yellow flower. Flor pointed out that his last name meant flower, which pleased her.
email from Julia
Next came love songs—”Past Lives” by the musician Borns was a favorite—and horoscopes. Julia indicated that she expected Flor to actively interpret and respond to them, and she did not appreciate it when he failed to take them seriously enough. She became distraught when he referred to a psychic she admired as crazy, though for the most part Flor passively agreed with Julia that a mounting pile of evidence suggested they were connected in some way. Julia informed him that although he was 20 years her senior, they were actually both ageless—possibly having lived many lives before their current one.
email from Julia
Over the course of May, the conversation became steadily more romantic. Julia frequently referenced her pains, both physical and spiritual. Discussions of coping techniques led to a proposed massage and escalated from there. These were followed by sexually explicit, graphic messages—sent by both Flor and Julia.
“I don’t even know what came over me,” Flor says. By early June, he had realized he was making a terrible mistake, and it was time to wind down their romantic conversations.
email from Nick Florresponse from Julia
Julia was routinely sending lengthy declarations of love and descriptions of the kinds of emotional, physical, and spiritual pain she wanted him to help her heal. But by the beginning of June, she had noticed that he was barely responding to her emails.
“So what do you have against chatting with me?” she wrote, adding “just curious.”
She accused him—in half a dozen separate emails—of killing the romance. He had broken her heart, she said, in this life and in her previous ones. She alternated sending messages contemplating suicide, and pictures of flowers.
During the month and a half of correspondence, Julia and Flor had briefly discussed the possibility of her working a few hours each week as his assistant doing data and analytics. As the messages make clear, he proposed using leftover money from a National Science Foundation grant, which came to a grand total of $703. That meant 35 total hours of work, spread out across 7 weeks.
They couldn’t quite work out the logistics, and Julia declined the offer in a June 9 email. But a few days later, she asked about it again. By this point, Flor had quite sensibly decided to spend the money elsewhere, on new equipment, and told her so.
It was on June 24 that Julia made her first threat. She referenced Flor’s boss, and asked what he would think if she sent the boss screenshots of their romantic correspondence. Flor stopped responding to her emails, so she began texting him.
“I’ll also unfortunately keep on this til it’s addressed,” she said, referencing Flor’s refusal to answer her. “I’m still relentless.”
She also began stalking him on social media, sending him screenshots of a tweet he had liked. This tweet belonged to another female student.
“That’s what made her go ballistic,” Flor recalls.
The texts came at all hours of the day. On June 29, Julia texted him every few minutes, from 5:20 a.m. until 8:30 a.m. Over and over again, she repeated her threat to embarrass him by making public their earlier conversations.
text from Julia
Flor says he realized he could no longer ignore her threats, and felt he had no choice but to inform the university administration. He told his boss that he was experiencing harassing behavior from Julia, and his boss reported the matter to the university’s Title IX office, which deals with gender and sex-based misconduct. Flor met with the university’s compliance specialist on July 2. According to the investigative file, he told the specialist that Julia was harassing him because he would not pursue a relationship with her.
When Julia learned she was the subject of a Title IX investigation, she filed her own complaint, accusing Flor of quid pro quo harassment and retaliation. The university referred the matter to an independent investigator, who interviewed both parties over the next few weeks.
Flor had to come clean to his wife, something he described as “the hardest part of all of this.” They talked about everything, and though his behavior damaged their relationship, Flor says they have stayed together.
“It’s so hard to recover from,” he says. “But I feel like our relationship is stronger now because we talk so much about it.”
At the end of November, the independent investigator issued his preliminary findings, subject to comment from both Flor and Julia. Flor says at that point his attorney was optimistic.
Two weeks later, Flor learned that the university had taken the independent investigator off the case and replaced him with a woman, the interim Title IX coordinator at the university’s Office of Equal Opportunity (OEO). The documents informing Flor of this development included no explanation for it.
The interim Title IX coordinator then ruled that Julia had not sexually harassed Flor. In fact, her threats to publish their correspondence was “good faith civil rights protected activity,” the coordinator wrote in her report. The coordinator went so far as to dismiss the idea that revenge played any part in Julia’s decision making: Rather, “she presents as a very hurt individual grasping for some sort, any sort, of communication from a former lover.” (Again, Flor and Julia had never had a physical relationship.)
Flor did not get off so easily. The report found him responsible for quid pro quo sexual harassment and retaliation. In the OEO’s view, Julia might have believed that she needed to send him sexual messages in order to get the research position—a classic example of quid pro quo harassment. Flor’s decision to report Julia’s threats constituted retaliation.
“They kept her retaliation complaint but threw away mine,” says Flor. “They found me guilty. I don’t see how.”
The case went on for several more months, as Flor filed a series of fruitless appeals. Finally, in October 2019, it was time for sentencing. I spoke to Flor a few days before the hearing. He told me he was expecting to get off lightly: a 30-day unpaid suspension, perhaps. That had been the punishment, Flor recalled, when the university disciplined a football coach.
“It seems like that’s the worst thing they do to you,” says Flor.
On October 17, I received a frantic email from Flor. “It is worse than I ever imagined,” he wrote. The university had suspended him without pay for a full year.
The university declined to comment about the case, replying instead with a boilerplate statement.”The University of New Mexico abides by [university] policies and state and federal laws relating to disciplinary matters,” a spokesperson wrote in an email to Reason. “It is our practice not to discuss individual personnel matters.”
Julia would have preferred an even stronger sanction, according to her victim impact statement.
“Submission to the sexual advances were the basis of Professor Flor’s offers of employment to me,” she wrote in calling for his dismissal. “I was forced to make a decision: either 1) tolerate the increasing misconduct, sexual advances, and harassment from a professor in order to receive a Graduate Assistant/Project Assistant position and advance in my field and school of study, or 2) report the misconduct and policy violations. When I decided I had to report Professor Flor’s conduct things went from bad to exponentially worse because he chose to use his might to fire numerous false and retaliatory statements and allegations against me.”
Samantha Harris of FIRE believes the university has violated Flor’s due process rights.
“This is one of the most egregious cases of university malfeasance that I have seen in my nearly 15 years with FIRE,” Harris says. “The university found Professor Flor responsible with zero due process—no hearing, no opportunity to question his accuser—in a case where credibility was of critical importance.”
It has become much more common over the last decade for universities to adjudicate misconduct—particularly sexual misconduct—in a manner that disregards due process. In 2011, the Obama administration’s Education Department released a “Dear Colleague” letter that contained new requirements for publicly funded educational institutions. The department’s Office for Civil Rights instructed colleges and universities to take sexual misconduct accusations much more seriously, and to investigate them using a framework that would minimize the possibility of retraumatizing the victim. This meant lowering the burden-of-proof threshold to a preponderance of the evidence, defining misconduct broadly as “any unwelcome conduct of a sexual nature,” and discouraging investigators from allowing cross-examination.
The result was that many schools stopped holding adjudicatory hearings altogether, and instead moved to a single-investigator model, in which one administrator would decide which witnesses to question, produce a report based on these interviews, and then recommend a finding. Such procedures give accused parties very little opportunity to present evidence on their behalf.
Last year, under the guidance of Sec. Betsy DeVos, the Education Department rescinded its previous guidance. But many universities have vowed to continue operating as if nothing has changed.
Flor’s case is emblematic of this widespread abuse of the rights of accused students and professors. In a letter to the university, Harris wrote that the OEO’s findings do not establish that Flor “implicitly or explicitly conditioned employment on submission to sexual conduct.”On the contrary, FIRE points out, Julia declined the position after Flor had ceased his overtures. She was not interested in working with him if they were going to be mere work associates. Flor did not condition Julia’s employment on a romantic relationship—Julia did.
FIRE’s letter notes that Flor never received so much as a hearing, let alone an opportunity to cross-examine his accuser. He was not able to pose questions that a panel might ask of Julia. He was not able to present witnesses on his behalf—even though he knew of another professor who had received similar correspondence from Julia and would have been willing to appear on his behalf.
Indeed, documents forwarded to Reason by Julia’s attorneys make reference to this other professor, Smith. (I have changed his name to protect his anonymity.) Julia had also accused of Smith of sexual misconduct following an email- and text-based relationship that failed to yield an employment offer for her, but OEO cleared Smith of wrongdoing. On October 8, Julia wrote to the university’s board of regents, urging them to reverse this decision and sanction Smith. According to Julia, Smith broke off contact with her after his wife demanded that he do so.
“Professors must not dangle promises of job and project opportunities in front of a student with whom they are communicating with in a personal nature and then use their wife as an excuse to retract the offer and all communication,” wrote Julia in her appeal. “This decision was based on sex/gender and directly violates University Policy.”
Smith did not respond to a request for comment.
On November 13, Flor inquired about the outcome of a separate investigation: The university had also sought to determine whether he had violated Policy 2215, which deals with consensual relationships and conflicts of interest. This investigation had determined that Flor “did not exercise authority over a subordinate,” since he had not been teaching, supervising, or evaluating Julia. In this case, he had been cleared.
But according to Flor, the university only belatedly informed him of this important fact after he asked about it. If he had been told in August, when the decision was reached, he could have cited the outcome in his appeals concerning the Title IX matter.
“I look at this as withholding exculpatory evidence,” says Flor.
In the meantime, Flor can’t even look for alternative long-term work. The University of New Mexico has a policy prohibiting employees from working at any other job for more than 39 days per year. Flor asked the administration if he still counted as an employee during the term of his suspension. He was informed that he did.
He’s also worried that he will never again receive any grant money, since the OEO reported his Title IX violation to the National Science Foundation.
Flor is currently waiting for the outcome of another appeal. This “peer review” appeal, permitted under university policy, gives faculty members the power to review the appropriateness of a colleague’s sanction. They could opt to lessen Flor’s punishment, though his suspension—which goes into effect on January 1—is likely to begin before the faculty reach any kind of decision.
“FIRE will not rest until Professor Flor gets some justice in this egregious case,” says Harris.
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Impeachment articles are here. Democratic leaders in the U.S. House of Representatives unveiled the charges today, officially accusing President Donald Trump of abuse of power and obstruction of Congress for his alleged “quid pro quo” with Ukraine and efforts to cover it up.
“President Trump solicited a foreign nation, Ukraine, to publicly announce an investigation into an opponent [Joe Biden] … to help his reelection campaign,” said Rep. Adam Schiff (D–Calif.) at a press conference this morning, calling the evidence of Trump’s guilt in this regard “overwhelming and uncontested.” And “when the President got caught, he committed his second impeachable act,” said Schiff.
House Speaker Nancy Pelosi’s (D–Calif.) schedule sends a bit of a confusing message, however:
Pelosi has literally scheduled back-to-back press conferences to announce articles of impeachment against Trump and then support for his trade deal.
The House Judiciary will vote on the impeachment articles Thursday, and if they get through (as expected), a full House vote will happen the following week.
FREE MINDS
The Inspector General report on the federal investigation into the 2016 Trump campaign speaks to the FBI’s corruption and incompetence, independent of any partisan angle. Democrats and Republicans are both spinning it to their benefit…
But at the heart of the matter lies the same old overreach and incompetence among America’s top law enforcement agency.
Initial reaction: The IG report is indeed incredibly bad for the FBI, though not for the reasons Trump & his defenders assert. Only against the backdrop of their exaggerated claims could anyone call this any sort of “vindication” of the Bureau.
Said Hina Shamsi of the American Civil Liberties Union in a statement yesterday:
While the report found that there wasn’t an improper purpose or initiation of the investigation, it also found significant problems that are alarming from a civil liberties perspective…. The system requires fundamental reforms, and Congress can start by providing defendants subjected to FISA surveillance the opportunity to review the government’s secret submissions. The FBI must also adopt higher standards for investigations involving constitutionally protected sensitive activities, such as political campaigns.
No shortage of news today, but House Ethics Committee report on Duncan Hunter includes this line itemization of campaign funds spent on personal trips, items. Included: "Flights for pet rabbit"- $625 pic.twitter.com/ZnIIjV4Vgq
DOJ has done it again. A handful of people from New Jersey were released last month after serving 19.5 years, thanks to the crack retroactivity provision in the First Step Act. Today, on the 30th day of their freedom, DOJ filed appeals to send them all back. Disgraceful.
The Federal Bureau of Investigation’s Domestic Investigations and Operations Guide, the bible for agents, has long recognized that journalists, the clergy and lawyers deserve special protections because of the constitutional implications of investigating their work. Penitents who confess to a priest, sources who provide confidential information to a reporter, and clients who seek advice from counsel are assumed to be protected by a high bar of privacy, which must be weighed against the state’s interests in investigating matters or subpoenaing records. Judges and members of Congress also fall into a special FBI category because of the Constitution’s separation of powers.
The FBI and Justice Department have therefore created specific rules governing agents’ actions involving special-circumstances professionals, which include high-level approval and review. There are also special rules for subpoenaing journalists.
If the executive branch, and by extension the courts that enforce these privacy protections, observe the need for such sensitivity, it seems reasonable that Congress should have similar guardrails ensuring that the powers of the state are equally and fairly applied.
House Intelligence Committee Chairman Adam Schiff apparently doesn’t see things that way.
His committee secretly authorized subpoenas to AT&T earlier this year for the phone records of President Trump’s personal attorney, Rudy Giuliani, and an associate. He then arbitrarily extracted information about certain private calls and made them public.
Many of the calls Mr. Schiff chose to publicize fell into the special-circumstances categories: a fellow member of Congress ( Rep. Devin Nunes, the Intelligence Committee’s ranking Republican), two lawyers (Mr. Giuliani and fellow Trump lawyer Jay Sekulow ) and a journalist (me).
More alarming, the released call records involve figures who have sometimes criticized or clashed with Mr. Schiff. I wrote a story raising questions about his contacts with Fusion GPS founder Glenn Simpson, a key figure in the Russia probe, that brought the California Democrat unwelcome scrutiny. Mr. Nunes has been one of Mr. Schiff’s main Republican antagonists, helping to prove that the exaggerated claims of Trump-Russia election collusion were unsubstantiated. Messrs. Sekulow and Giuliani represent Mr. Trump, who is Mr. Schiff’s impeachment target.
Mr. Schiff’s actions in obtaining and publicizing private phone records trampled the attorney-client privilege of Mr. Trump and his lawyers. It intruded on my First Amendment rights to interview and contact figures like Mr. Giuliani and the Ukrainian-American businessman Lev Parnas without fear of having the dates, times and length of private conversation disclosed to the public.
Contrary to Mr. Schiff’s defense that he was simply serving the investigative interest of Congress, the release of the phone records served much more to punish people whose work Mr. Schiff found antagonistic than to fulfill an oversight purpose. And it served Congress poorly because it spread false insinuations. Mr. Schiff’s report suggested, for instance, that Mr. Giuliani called the White House to talk to the Office of Management and Budget, implying he might have been trying to help Mr. Trump withhold aid to Ukraine as Democrats allege. The White House says that claim is wrong; the number was a generic phone entry point and no one in OMB talked to Mr. Giuliani.
Likewise, Mr. Schiff published call records between Mr. Giuliani and me and suggested they involved my Ukraine stories. Many contacts I had with Mr. Giuliani involved interviews on the Mueller report and its aftermath or efforts to invite the president’s lawyer on the Hill’s TV show, which I supervised.
Mr. Schiff’s team has tried to minimize the conduct because he never subpoenaed my phone records directly but extracted them from others’ call records. That defense is laughable.
Once a journalist and his calls are made public through the powers of the surveillance state, there is an instant chilling effect on press freedom.
I know this firsthand. In 2001 and 2002, when I was a reporter for the Associated Press, the Justice Department obtained my home phone records and the FBI illegally seized my mail without a warrant in an effort to unmask my sources on federal corruption and stop publication of a story about the government’s counterterrorism failures before 9/11. In the end the FBI returned my reporting records, apologized to me privately, and announced new rules to avoid a repeat for other journalists.
Yet by that time many of my longtime sources had told me they had chosen not to contact me for fear of being detected. Others would only meet in person, concerned that my phones were wiretapped.
Similarly, in the days since Mr. Schiff’s phone-record release, I have had people who openly talked to me on the phone this year suddenly ask to communicate only by encrypted apps. They don’t want their names splashed in the next congressional report. And they fear a bipartisan open season on phone records of political opponents in the future.
Rep. Mike Turner (R., Ohio), a member of the Intelligence Committee, tells me he’s drafting legislation to put guardrails on future congressional subpoenas for phone records. That’s a good start, butmore needs to be done sooner.
Mr. Schiff appears to assume that Congress enjoys unlimited investigative powers under the Constitution’s Speech or Debate clause. He does not. I recommend the chairman examine the record in McSurely v. McClellan, a two-decade legal battle that began in 1967 and pitted a powerful committee chairman against a liberal activist couple in Kentucky. It is widely regarded—along with the McCarthy hearings of the 1950s—as one of most egregious episodes of misconduct in the modern history of congressional oversight.
In one of the final appellate decisions in that topsy-turvy case, the U.S. Circuit Court of Appeals for the District of Columbia ruled that Congressional oversight isn’t boundless and that the Speech or Debate Clause has limits. The final paragraph of that ruling derided a “sorry chapter of investigative excess.”
The judges wrote that their decision:
“can only stand as a small reaffirmation of the proposition that there are bounds to the interference that citizens must tolerate from the agents of their government—even when such agents invoke the mighty shield of the Constitution and claim official purpose to their conduct.”
Futures Jump On WSJ Report Next Round Of Tariffs To Be Delayed
Following chatter earlier this morning, a WSJ report claiming that the White House and China had agreed to delay a planned tariff hike scheduled for Sunday sent equity futures soaring.
The yuan, a popular gauge of trade-deal sentiment, also rallied on the report.
Though earlier reports hinted that such a delay was in the works, as we mentioned below.
As 2019 comes to a close, the Trump Administration is shifting its focus to working with Mexico, Canada and Nancy Pelosi (despite all the furor around impeachment) to pass USMCA (Nafta 2.0). But although negotiations with China will be put on hold temporarily, a mini-deal to delay the next round of US tariffs from taking effect on Dec. 15 is still possible, according to a report by SCMP.
Meanwhile, on Monday, Secretary of Agriculture Sonny Perdue said the US likely won’t move ahead with imposing new tariffs on a $160 billion swath of Chinese goods, including toys and smartphones, on Sunday, and that talks are progressing on the subject of IP.
Additionally, Commerce Secretary Wilbur Ross told Fox Business that American and Chinese negotiators are working “around the clock” on a deal, but added that it’s more important to win a good deal for the US than to put off the tariffs set to take effect on Sunday. Ross added that the Phase One deal would focus on agriculture and trade. On the other hand, Ross said the US is “within millimeters” of winning a deal on USMCA.
Ross sat for an interview with Marie Bartiromo, where he bashed the Dems for insisting on insignificant changes to enforcement and digital commerce mechanisms that ultimately delayed the deal with little added benefit. Ross added that the final deal is still being drafted.
According to SCMP, Washington has other reasons to hold off on the next round of tariffs: If the US follows through, Beijing could retaliate by introducing its “undesirable entities” list, which it has long threatened. The list would allow Beijing to retaliate against specific US companies, including blocking them from doing business in China.
“I don’t expect a final deal by the 15th. There are still difficult things to work out and Lighthizer is focused on the USMCA end game at the moment. That said, I’m not betting on tariffs either,” said Clete Willems, a partner at law firm Akin Gump and former deputy director of the US National Economic Council. “Another round of tariffs would likely yield the unreliable entities list from China, further political hardening, and all but end the chances of a deal before the election. I don’t think either side wants that.”
Ross insinuated that Dems were holding off on passing the plan, which would create more than 170,000 jobs, because they don’t want to distract from impeachment.
Whatever Beijing decides to do in retaliation to the tariffs, it’ll likely be big. Because adding another 15 percentage points of tariffs on $160 billion of goods being imported to the US will have a tsunami-like impact on China’s already-faltering economy, one analyst said.
If the US does follow through with tariffs on Sunday, it’s extremely likely that the trade talks will collapse.
Chinese analyst Lu Xiang said that the implementation of the 15 per cent tariff on around US$160 billion of Chinese goods would be “treated as a natural disaster.”
“If we see US tariffs on Sunday, it would mean the talks collapse,” said Lu, a research fellow on US-China relations with the Chinese Academy of Social Sciences. “The final decision is in the hands of [US President Donald] Trump. But China has prepared for the worst scenario.”
Of course, at this point, it’s impossible to tell which headlines carry weight, and which are merely just the Trump Administration panic-pumping stocks.
