In 2017, [Johanna Maria Vibe] Ener and [Pedro] Martin were parties to several disputes in Florida’s Eleventh Judicial Circuit Unified Family Court and Domestic Violence Divisions …. On July 18, 2017, then-Judge Ariana Fajardo Orshan entered an Order Granting Defendant’s Motion for Sanctions and/or Contempt …, finding that Ener “contemptuously, willfully, and deliberately violated the clear and express orders of [the] Court” by, among other reasons, failing to attend court-ordered mediation, refusing to communicate with the Court-appointed Guardian Ad Litem, and failing to comply with the Court’s visitation order.
Additionally, Judge Fajardo Orshan found that Ener “has absconded with the [the Parties’] children while cutting off all communication with [Martin].” The Contempt Order provided Ener with the opportunity to purge herself of the contempt by complying with the Court’s orders and reimbursing Martin for the reasonable attorney’s fees and costs he incurred because of Ener’s contempt.
On October 31, 2017, over three months after the Contempt Order was entered, Judge Fajardo Orshan entered an Order of Referral to Law Enforcement … finding that Ener violated a Temporary Injunction. More importantly, the Referral to Law Enforcement authorized any Florida law enforcement officer to detain Ener if located in the jurisdiction. Ener was never detained pursuant to the Referral to Law Enforcement and is currently residing in the United Kingdom.
Despite being fully aware of the Contempt Order and the Referral to Law Enforcement in the State Court Proceedings, Ener filed the instant Complaint in this Court … on April 23, 2019 seeking upwards of $200,000,000.00 in damages from Martin and ten unidentified co-conspirators pursuant to six counts: Count I — Defamation, Count II — Invasion of Privacy, Count III — Breach of Contract, Count IV — Intentional Infliction of Emotional Distress, Count V — Civil Conspiracy, and Count VI — Abuse of Process….
[T]he Complaint warrants dismissal pursuant to the fugitive disentitlement doctrine. “The fugitive disentitlement doctrine limits access to courts by a fugitive who has fled a criminal conviction in a court in the United States.” Although the doctrine has traditionally been applied by the courts of appeal to dismiss the appeals of fugitives, district courts “may sanction or enter judgment against parties on the basis of their fugitive status.” And while the doctrine typically applies to criminal defendants, “the doctrine has also been applied where the fugitive was not a criminal defendant, but instead was a civil litigant who continued to ignore court orders and evade arrest.” …
The rationale for the fugitive disentitlement doctrine includes “the difficulty of enforcement against one not willing to subject himself to the court’s authority; the inequity of allowing a fugitive to use court resources only if the outcome is an aid to him; and the need to avoid prejudice to the nonfugitive party.” …
To dismiss an affirmative claim pursuant to the fugitive disentitlement doctrine, the following three elements must be satisfied: (1) the plaintiff is a fugitive; (2) his fugitive status has a connection to his civil action; and (3) the sanction employed by the district court, dismissal, is necessary to effectuate the concerns underlying the fugitive disentitlement doctrine. In order to be considered a fugitive for purposes of the fugitive disentitlement doctrine, “a party must either have ‘absented himself from the jurisdiction with the intent to avoid prosecution[,]’ … or constructively fled, i.e., ‘depart[ed] for a legitimate reason from the jurisdiction in which his crime was committed but who later remains outside that jurisdiction for the purpose of avoiding prosecution….'” …
[Ener] absconded with Martin’s two children in violation of various court orders and has remained outside the United States for purposes of evading arrest pursuant to the Contempt Order and the Referral to Law Enforcement in the State Court Proceedings. In this Court, Ener failed to appear at the Status Conference despite the Court confirming her availability and arranging for her to appear telephonically. Moreover, Ener’s fugitive status has a direct connection to the instant action as many, if not all, of the allegations levied against Martin stem directly from the facts underlying the State Court Proceedings and the State Court Proceedings themselves.
Ultimately, dismissal is necessary to avoid the inequity of allowing Ener, a fugitive, to use court resources to aid only herself, as well as to avoid prejudicing Martin, who has not had access to his children since Ener fled the United States in violation of court orders…. [I]mplementation of the fugitive disentitlement doctrine is a reasonable and measured response to Ener’s contumacious disregard for prior court orders in both the State Court Proceedings and before this Court. Ener cannot avail herself of the benefits of this Court while she openly flaunts her disregard for the authority of the state court. Equitable principles mandate that Ener be disentitled from calling upon the resources of this Court for determination of her claims….
I came across this order because someone using Mr. Martin’s name (who may or may not be Mr. Martin or his agents) has asked Google to deindex a The Real Deal (South Florida Real Estate News) article about the original libel lawsuit—a request that I expect Google to reject, since nothing in the court order suggests that the story is libelous or otherwise a violation of Mr. Martin’s legal rights. (It may be that The Real Deal ought to, as a journalistic matter, update the story to mention the dismissal of the lawsuit, but that’s a separate matter. Compare Petro-Lubricant Testing Labs., Inc. v. Adelman (N.J. 2018), which takes the view that not reporting something that “‘reflects ambiguously on the merits of the action’ and is not a determination of whether the allegations are true or false”—there, a settlement, and here, a dismissal on grounds unrelated to the merits of the libel claim—is not libelous; see also Martin v. Hearst Corp. (2d Cir. 2015).)
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It is absolutely amazing the lengths people will go to in order to deny the most straightforward and obvious explanation; to torture and twist plain evidence. That’s the thing about rationalizing, though. The narrative usually matters more than the facts.
Take tax reform and interest rates. The problem with tax reform wasn’t actually tax reform. The Tax Cuts and Jobs Act of 2017 (TCJA) was chock full of good and reasonable ideas, measures that were desirable on their own merits.
Beside the government “allowing” you to keep more of your own money, the law also encouraged pension funds to do something about their chronic and growing shortfalls. Everyone knows that retirement plans have been depending upon fuzzy math related to investment returns (which can’t be predicted) to keep within even fuzzier guidelines about solvency.
The TCJA encouraged companies to actually set aside real reserves in order to at least partially and somewhat address this pretty hazardous reality. They were given a tax break: though the corporate tax rate was reduced to 21% from 35% as a result of the law, businesses with qualified plans would still be allowed to deduct pension contributions at the old rate.
Many of the world’s biggest firms did just that. A flood maybe even a deluge of new money headed into the portfolios of institutional pockets. And with these new funds there was demand for the safest assets; very much like insurance reserves, a large proportion of pension reserves are tucked away into UST’s and the like given their risk-averse core nature.
The tax break was scheduled to expire in September 2018. Naturally, given what was going on in 2018 this was seen as a huge deal – for the bond market; or, more precisely, because of what wasn’t going on. Everyone said interest rates had nowhere to go but up, and while they were rising they weren’t rising very fast or very far at the long end. The curve had flattened out dramatically.
It was signaling a warning at a time when there seemed no reasonable basis for one.
Jay Powell had said emphatically that inflation and accelerating economic growth were going to pressure bonds – a good thing, all things considered. Under the guise of the looming BOND ROUT!!!, this tax quirk seemed to many as a good explanation for why the curve had flattened when it shouldn’t have given the economic fundamentals as described uniformly by central bankers, Economists, and the mainstream media (redundant).
The apparently artificial pension-driven demand for longer-dated bonds would dry up in the middle of September. ThenBOND ROUT!!!!
“One of the most powerful forces in the market place is this pension buying that is taking place,” said Tom di Galoma, a managing director at Seaport Global Securities…
“Every day for months now there has been steady buying of 30-year Treasuries,” said a trader at one large bank. “That goes away after September.”
As the 30-year bond comes within sight of its record low yield today, obviously that wasn’t the case. The idea of tax reform explaining demand for UST’s was little more than rationalizing. Because the myth of central banks and QE just won’t die, otherwise normal and intelligent people are left with increasingly bizarre and absurd stabs in the dark for why what is plainly obvious just cannot be true.
Pension reserves sounded plausible; liquidity fears never do, certainly not with all those trillions in bank reserves that the Fed skillfully added with four QE’s. It can’t be the bond market acting on survival instincts because why would anyone be concerned about such things after years and years of money printing – and the obvious success of so much money printing which is why interest rates had nowhere to go but up.
It was two intellectual leaps folded into one giant case of disbelief; UST demand due to rising liquidity fears would mean QE and bank reserves aren’t what everyone believes they are, and it further would mean the economy isn’t recovering when everyone said it was already booming.
Imagine “everyone’s” shock over the trend in interest rates since last November. If the bond market was clearly artificial for technical reasons before September 2018, there surely must be other even more compelling explanations for why in early 2019 lower yields are absolutely guaranteed to be transitory!
The Federal Reserve’s surprise policy shift last week shook markets, but, even still, the intensity of the ensuing drop in U.S. bond yields has puzzled many observers. A massive wave of hedging in the swaps market helps explain the scale of the eye-catching move.
Portfolio managers especially those invested in MBS were caught wrong-footed by the direction of interest rates, supposedly. They had believed the BOND ROUT!!! was coming and when it didn’t they had to do something about duration and negative convexity (don’t ask, it doesn’t really matter).
In other words, it was a technical-sounding answer to why interest rates were moving the wrong way and quickly. Once MBS managers had repositioned their duration risks, so the thinking went, then this “artificial” interruption would dissipate and the bond market would start behaving the “right” way again.
Except, obviously, it hasn’t. Because convention has it all backward from start to finish, the effect is always confused as the cause. Treasury (and swap) rates weren’t being pulled downward by excess hedging, there was excess hedging being triggered by interest rates moving downward for their own reasons.
Liquidity risks are and have been rising. It is that simple but, again, for much of the conventional landscape this is an impossible development.
Once you get past that myth, once you translate the world into its reality outside the myth, you don’t need to desperately search for the next flavor-of-the-month benign sounding technical excuse. Falling bond yields are exactly what they appear to be.
One of the last big indications which would fall into this category is the global dollar basis. It’s like a ripple of waves eventually spreading out across the entire surface of what had been, and was supposed to be, an otherwise calm body of water; or an infection that begins localized before spreading the disease into the vital organs of a susceptible individual. Despite the doctrine and acceptance of “abundant reserves”, we now have basis swaps (and mainstream acknowledgement) confirming bond yields:
Theory says there should be no such dearth of dollar funding obtained synthetically, but since the 2008 crisis there’s a scarcity that comes and goes, signaling fear ahead of rockiness in the global economy. Right now, the dollar squeeze isn’t awful, but it’s worsening, with implications for everyone from Japanese banks and South Korean insurers to the Indian government.
This dollar scarcity comes and goes, alright, and for longtime readers you’ll immediately recognize the pattern and the timing:
Only, it wasn’t subprime, it wasn’t “Euro fear”, and those China worries were created because of the same thing as those two before it.
The bond yields and basis swaps of 2019 are moving in the wrong direction, true, but it’s not trade wars, either.
The negative yen basis swap acts like leverage where even yields on the interim “investment” are negative. Any speculator or bank with spare “dollars” could lend them in a yen basis swap meaning an exchange into yen. Because you end up with yen you are forced into some really bad investment choices such as slightly negative 5-year government bonds, but that is just part of the cost of keeping risk on your yen side low. Instead, the real money is made in the basis swap itself since it now trades so highly negative. The very fact of that basis swap spread means a huge premium on spare dollars; which is another way of saying there is a “dollar” shortage. Because of the shortage and its premium, you can swap into yen and invest in negative yielding JGB’s in size and still make out handsomely.
These are huge potential returns embedded in a negative basis (especially averaged across all the major currencies). The fact that it can get so negative to begin with tells you that there aren’t enough takers for the other side, the fat side of the trade – those with “spare dollars” which is really just balance sheet capacity. The fact that it persists for long periods of time means something other than temporary, the very condition that would drive market participants more and more into UST’s no matter how many times they are assured by all the right people to never fight the Fed because there’s nothing but curious trivia setting the market.
But it’s not just basis, is it? It is the consistency across so many definitions and market prices, data and indications. They all say the same thing and at these same times. Nobody can make out where they are saying because it’s a very different language than what is spoken in the mainstream.
The two most important takeaways: they really have no idea what they are talking about, meaning central bankers, Economists, and the vast majority of the financial media; more importantly, liquidity pressures really are escalating globally.
Not that we needed any more confirmation. If the world hadn’t been fooled into blindly following central bankers, to rationalize and make excuses for simple and straightforward facts, all anyone would’ve needed this whole time to perfectly understand the situation was Treasury rates and the yield curve.
via ZeroHedge News https://ift.tt/2KLNXUB Tyler Durden
In the early 1760s, Mayer Rothschild began building a banking dynasty that would last for centuries.
The elder Rothschild sent his five sons across Europe to establish banks in cities like Paris and London.
One son, Nathan Rothschild, took the lead and expanded the family’s banking dynasty.
With siblings in different countries, the family now had a trusted network of lenders with whom they could finance large government projects like infrastructure and war.
To quicken the pace of their financial transactions, the brothers used a network of carrier pigeons to send messages to one another across Europe.
This allowed them to quickly react to financial news from other markets. That way they could always be the first in a local market to react to news from abroad.
Bad news in Paris markets could be sent by pigeon to London, where Nathan could sell a stock that would be negatively affected.
Things have gotten a lot faster these days.
Scientists have discovered how to accelerate an ion to 99.9999% the speed of light.
The Internet allows us to speak to someone across the globe, instantaneously, anytime of day or night.
We’re even on the verge of commercial space flights. By 2023, SpaceX plans to send a Japanese billionaire around the moon.
And yet, despite all this speed, it can still take several DAYS to send money from one person to another using the traditional banking system.
Rather humorously, the Federal Reserve announced last week that a ‘real time’ payment system would be (hopefully) released in about FOUR YEARS time.
Bear in mind that companies like PayPal that allow for real time payments have been around for 20 years. Cryptocurrencies like Bitcoin have been around for more than a decade.
And now, FINALLY, the Federal Reserve might get around to implementing the same thing.
This is pretty crazy when you think about it. The Fed is supposed to be leading the way in banking; they’re the top regulator and largest central bank in the world.
But they’re hilariously far, far behind the rest of the industry.
Domestic money transfers in the United States rely on the ‘ACH’ payment network to send and receive money.
If your paycheck is direct deposited into your bank account, or mortgage payment automatically deducted, these typically use ACH.
ACH payments take 2-3 DAYS to clear. That’s totally insane in this day and age. Seriously, the Rothschilds’ network of carrier pigeons didn’t even take that long.
And if you’ve ever dealt with international financial transactions, you have probably heard of the SWIFT network.
SWIFT is a worldwide banking network that allows financial institutions to ‘securely’ send and receive messages about wire transfers and payments.
I’m putting ‘securely’ in quotes because the system has been hacked a number of times. And it runs on pathetically outdated technology.
As many readers know, I own a bank. And I’ll never forget when we joined SWIFT, they told us that in order to run some of their software we needed to install an obsolete version of Windows that Microsoft stopped supporting years ago.
Seriously? This is the ‘secure’ system that is responsible for trillions of dollars of worldwide financial transactions?
Nearly every major worldwide banking authority is playing a pitiful game of catch-up with non-bank technology companies that have developed vastly superior ways to conduct financial transactions.
Think about it– nearly every single function of a bank– deposits, loans, foreign exchange, payments– can be done better, faster, and cheaper outside of the banking system.
You can hold money in the Blockchain (or even something low-tech like T-bills, which pay 100x more interest than your bank account. Or gold.). You can borrow money from peer-to-peer websites. You can send money with firms like Venmo or TransferWise.
Banks are becoming useless antiques. And by the time the Federal Reserve has figured out how to make real time payments, I expect the technology at that time will have leapfrogged their best efforts.
Facebook could easily have hundreds of millions of people using its digital currency Libra within 12 months.
So sending money could become as easy as sending an email, all without using a bank, and three years before the Fed joins the 21st century.
In 2017, [Johanna Maria Vibe] Ener and [Pedro] Martin were parties to several disputes in Florida’s Eleventh Judicial Circuit Unified Family Court and Domestic Violence Divisions …. On July 18, 2017, then-Judge Ariana Fajardo Orshan entered an Order Granting Defendant’s Motion for Sanctions and/or Contempt …, finding that Ener “contemptuously, willfully, and deliberately violated the clear and express orders of [the] Court” by, among other reasons, failing to attend court-ordered mediation, refusing to communicate with the Court-appointed Guardian Ad Litem, and failing to comply with the Court’s visitation order.
Additionally, Judge Fajardo Orshan found that Ener “has absconded with the [the Parties’] children while cutting off all communication with [Martin].” The Contempt Order provided Ener with the opportunity to purge herself of the contempt by complying with the Court’s orders and reimbursing Martin for the reasonable attorney’s fees and costs he incurred because of Ener’s contempt.
On October 31, 2017, over three months after the Contempt Order was entered, Judge Fajardo Orshan entered an Order of Referral to Law Enforcement … finding that Ener violated a Temporary Injunction. More importantly, the Referral to Law Enforcement authorized any Florida law enforcement officer to detain Ener if located in the jurisdiction. Ener was never detained pursuant to the Referral to Law Enforcement and is currently residing in the United Kingdom.
Despite being fully aware of the Contempt Order and the Referral to Law Enforcement in the State Court Proceedings, Ener filed the instant Complaint in this Court … on April 23, 2019 seeking upwards of $200,000,000.00 in damages from Martin and ten unidentified co-conspirators pursuant to six counts: Count I — Defamation, Count II — Invasion of Privacy, Count III — Breach of Contract, Count IV — Intentional Infliction of Emotional Distress, Count V — Civil Conspiracy, and Count VI — Abuse of Process….
[T]he Complaint warrants dismissal pursuant to the fugitive disentitlement doctrine. “The fugitive disentitlement doctrine limits access to courts by a fugitive who has fled a criminal conviction in a court in the United States.” Although the doctrine has traditionally been applied by the courts of appeal to dismiss the appeals of fugitives, district courts “may sanction or enter judgment against parties on the basis of their fugitive status.” And while the doctrine typically applies to criminal defendants, “the doctrine has also been applied where the fugitive was not a criminal defendant, but instead was a civil litigant who continued to ignore court orders and evade arrest.” …
The rationale for the fugitive disentitlement doctrine includes “the difficulty of enforcement against one not willing to subject himself to the court’s authority; the inequity of allowing a fugitive to use court resources only if the outcome is an aid to him; and the need to avoid prejudice to the nonfugitive party.” …
To dismiss an affirmative claim pursuant to the fugitive disentitlement doctrine, the following three elements must be satisfied: (1) the plaintiff is a fugitive; (2) his fugitive status has a connection to his civil action; and (3) the sanction employed by the district court, dismissal, is necessary to effectuate the concerns underlying the fugitive disentitlement doctrine. In order to be considered a fugitive for purposes of the fugitive disentitlement doctrine, “a party must either have ‘absented himself from the jurisdiction with the intent to avoid prosecution[,]’ … or constructively fled, i.e., ‘depart[ed] for a legitimate reason from the jurisdiction in which his crime was committed but who later remains outside that jurisdiction for the purpose of avoiding prosecution….'” …
[Ener] absconded with Martin’s two children in violation of various court orders and has remained outside the United States for purposes of evading arrest pursuant to the Contempt Order and the Referral to Law Enforcement in the State Court Proceedings. In this Court, Ener failed to appear at the Status Conference despite the Court confirming her availability and arranging for her to appear telephonically. Moreover, Ener’s fugitive status has a direct connection to the instant action as many, if not all, of the allegations levied against Martin stem directly from the facts underlying the State Court Proceedings and the State Court Proceedings themselves.
Ultimately, dismissal is necessary to avoid the inequity of allowing Ener, a fugitive, to use court resources to aid only herself, as well as to avoid prejudicing Martin, who has not had access to his children since Ener fled the United States in violation of court orders…. [I]mplementation of the fugitive disentitlement doctrine is a reasonable and measured response to Ener’s contumacious disregard for prior court orders in both the State Court Proceedings and before this Court. Ener cannot avail herself of the benefits of this Court while she openly flaunts her disregard for the authority of the state court. Equitable principles mandate that Ener be disentitled from calling upon the resources of this Court for determination of her claims….
I came across this order because someone using Mr. Martin’s name (who may or may not be Mr. Martin or his agents) has asked Google to deindex a The Real Deal (South Florida Real Estate News) article about the original libel lawsuit—a request that I expect Google to reject, since nothing in the court order suggests that the story is libelous or otherwise a violation of Mr. Martin’s legal rights. (It may be that The Real Deal ought to, as a journalistic matter, update the story to mention the dismissal of the lawsuit, but that’s a separate matter. Compare Petro-Lubricant Testing Labs., Inc. v. Adelman (N.J. 2018), which takes the view that not reporting something that “‘reflects ambiguously on the merits of the action’ and is not a determination of whether the allegations are true or false”—there, a settlement, and here, a dismissal on grounds unrelated to the merits of the libel claim—is not libelous; see also Martin v. Hearst Corp. (2d Cir. 2015).)
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In a shockingly bizarre turn of events in the Jeffrey Epstein saga, New York Times columnist James B. Stewart published an article on Monday claiming that Jeffrey Epstein told him he was helping Elon Musk find a new chairman for Tesla almost one year ago to the day.
The Times column then hastily noted that both Elon Musk and Tesla “vehemently deny” these claims. A spokesperson for Elon Musk told CNBC:
“It is incorrect to say that Epstein ever advised Elon on anything.”
Stewart, however, says that he contacted Epstein to begin with in August 2018 because he had “heard a rumor that he was advising Tesla’s embattled chief executive, Elon Musk, who was in trouble after announcing on Twitter that he had lined up the funding to take Tesla private.”
Stewart writes:
“I’d heard that Mr. Epstein was compiling a list of candidates at Mr. Musk’s behest — and that Mr. Epstein had an email from Mr. Musk authorizing the search for a new chairman.”
We’d be interested in knowing where Stewart heard that rumor to begin with.
Musk and Ghislaine Maxwell, 2014
But regardless, when the columnist met Epstein in 2018, he pushed him on the purported e-mail, only to be told it was from “someone close” to Musk, and not Musk himself:
When I pressed him on the purported email from Mr. Musk, he said the email wasn’t from Mr. Musk himself, but from someone very close to him. He wouldn’t say who that person was. I asked him if that person would talk to me, and he said he’d ask. He later said the person declined; I doubt he asked.
The columnist makes his own assessment of the situation, claiming that he believes Epstein was exaggerating or simply making up his story about Musk in order to embellish his role in the Tesla situation to enhance his own importance and gain attention.
But that doesn’t gel with the fact that the columnist himself says that Epstein wanted to do the interview on background.
When I contacted Mr. Epstein, he readily agreed to an interview. The caveat was that the conversation would be “on background,” which meant I could use the information as long as I didn’t attribute it directly to him. (I consider that condition to have lapsed with his death.)
Along those same lines, Epstein supposedly avoided specifics about his work with Tesla because he claimed to Stewart that he was “radioactive”:
Mr. Epstein avoided specifics about his work for Tesla. He told me that he had good reason to be cryptic: Once it became public that he was advising the company, he’d have to stop doing so, because he was “radioactive.” He predicted that everyone at Tesla would deny talking to him or being his friend.
Epstein also said that he had “spoken to the Saudis about possibly investing in Tesla, but he wouldn’t provide any specifics or names.” The column notes that Epstein pointed out a photo of him and Mohammed bin Salman to the writer when he arrived at his home for the interview.
Epstein also told the columnist that he knew a great deal about rich, famous and powerful people, with “some of it potentially damaging or embarrassing, including details about their supposed sexual proclivities and recreational drug use.”
Epstein also said he had “witnessed prominent tech figures taking drugs and arranging for sex (Mr. Epstein stressed that he never drank or used drugs of any kind).”
So now, we can’t help but ask:
1. Why would Epstein want to do the story on background if its sole purpose was to “enhance his own importance?”
2. Why would Epstein be mum about the details if he wanted to “gain attention?”
3. Why wouldn’t Epstein have reached out to a reporter, instead of waiting for a reporter to reach out to him, to break the story?
Regardless, if there are emails out there between “someone close” to Musk and Epstein, a connection between the two may become impossible to disprove. In the meantime, we’ll keep our eyes open for Hillary Clinton’s “server people” performing “tech support” at Elon Musk’s home or Tesla’s headquarters.
via ZeroHedge News https://ift.tt/2H64yRI Tyler Durden
Blain’s Morning Porridge, submitted by Bill Blain of Shard Capital
Global Credibility Under Pressure – We’ve been Tangoed!
This morning’s headlines are screaming how Argentina and President Mauricio Macri have precipitated yet another crisis on the stressed geopolitical battlefront… Relax. We are more than used to dealing with Argentina defaults… But, its far more complex than that. The latest Argentina Dance Macabre is all about Global Credibility. It’s another Massive Fail!
What does it say about the credibility of Global Institutions and Policy when Argentina’s whole market collapsed following a primary for an election in December? Ex-IMF president, and soon to be head of the ECB, Christine Lagarde personally staked her support for President Mauricio Macri’s pro-market government when she steamrollered through the IMF’s biggest ever bailout of $56 billion for Argentina last year.
It now looks an extremely poor call on Lagarde’s part. Macri won a mere 32% of the vote, while former president Cristina Fernandez de Kirchner won 47%. Don’t Cry for Me Argentina indeed… Domestic Argentine Politics have left the IMF looking stupid.
There are three major issues to consider here:
First there is the absolute predictability of what’s just happened in Argentina:
In return for the 2018 Bailout, the IMF demanded its usual pound of flesh policies: Austerity, Austerity and Austerity, spiced with inflation-targeted monetary policy, fiscal tightening, currency controls, and the keys to the Peso printing presses. Give Lagarde some credit – she did give lip service to the people with a smattering of minor austerity mitigants in terms of gender equality and social provision. But, essentially the IMF’s answer to yet another predictable Argentinian crisis was more of the same programme. You know the definition of madness…
The programme did achieve some minor success: bringing down Argentina’s primary deficit and putting the trade balance in to surplus – but only because they spent IMF money supporting the peso. “Surprisingly” Austerity wasn’t to the electorate’s taste – inflation remains out of control and poverty is rising allowing politicians to exploit the widening income-gap divide. What a complete shock! Who could have possibly predicted an unhappy electorate would damn Macri at the polls and favour former Peronista’s from the last century instead? (US Readers – Massive Sarcasm Alert.)
While the new Macri government was welcomed by markets in 2015 – it was immediately clear it didn’t have widespread and deep-rooted political support. His government was perceived as a tool of global investment banks, global money and the supranationals. The electorate went along with it for a while, but the results of “neo-liberalising” the economy were disastrous; killing jobs, creating a balance of payments crisis, devaluation, driving inflation, and yet another flirtation with default – hence the new IMF bailout.
Macri failed to deliver on his promises to the electorate: inflation wasn’t reined in, but soared to 60-70. Instead of growth the economy tumbled into recession. And more and more people fell into extreme poverty. Compare and contrast with the experience of Argentina under the populist Peronistas, the Kirchners, who drove recovery in the early 2000s via easy monetary and a massive fiscal spending initiatives. These didn’t work so well when commodities declined, recession struck the currency sagged and massive monetary corruption followed. Argentina came close to default in 2012, and a naval vessel was actually seized by one creditor!
The Macri programme effectively went to the dogs y’day. The laughable Argie Century Bond crashed as low as 60 y’day. Default swaps are 40 cents upfront (pay $40mm to insure $100mm). Short-term debt is yielding near 40%. Argentinians voted for former leftist politician Kirchner instead, despite the widespread accusations of corruption, and the likelihood her election will simply deepen ongoing crisis.
The second point to this on-going Argentine Crisis is what does it say about Lagarde?
She is a gifted politician, a former French finance and apparently very efficient. She is not a trained central banker, but give her credit for being self-aware. She recently admitted: “The Argentine economic situation has proved incredibly complicated and I dare say that many of those involved, including us, underestimated a bit, when we started with the Argentine authorities building the programme.”
Her new job at the ECB is going to be a political minefield. She will need to draw Europe into agreement on fiscal policy support for Southern European Economies – which is a massive political issue when she’s seen as Macron’s candidate, Merkel is about to exit the stage, and the next crop of German Leader’s look crushingly incompetent in the leadership department. The Italian League has already thrown down it’s gauntlet – if they don’t get permission to start spending their way out of recession, they are going to do it anyway.
Lagarde has to balance the economic conservatism of Europe’s strongest economy, Germany, against the risks of “free-spending” other European’s creating further debt crisis. And she has to do it while holding the Euro together, dealing with consequences of Brexit, and being a distinct number 2 on the priority list for national governments. Is she up to it?
If Lagarde thinks Argentina’s economic situation is complex, wait till she tries to balance the ECB. Her job is not to simply continue the “do-what-ever-it-takes” Mario Draghi “keep-the-Euro-going” mantras, but to actually move the European economy forward in a political vacuum. The answer is not Austerity, Austerity, Austerity – but that’s her most likely only weapon in the ECB’s armoury. There are clear parallels between Argentina and Europe – much to be learnt in how not to handle recovery in the face of populism and undeliverable political promises.
The third point to learnt from the new Argentina crisis is who leads the IMF now that Legarde is off to Frankfurt?
The European’s have decided they want their compromise candidate, Kristalina Georgieva, to lead the institution. Its always been led by a European. Rest of world don’t like that. While I’m sure Ms. Georgieva of the World Bank is an excellent candidate… I am sure there are better. Mark Carney – Canadian and Irish. Why Not. He’s a proper banker..
What a complete ClusterF**k.
via ZeroHedge News https://ift.tt/2Z9s2jq Tyler Durden
The overnight session was largely a repeat of Monday, if somewhat less extreme.
Just like yesterday, the overnight mood was lifted early, after the PBOC fixed the yuan weaker for the 9th consecutive session, however at 7.0326, it was once again stronger than the 7.0421 consensus expected, helping push US futures higher. But this time the optimism from China’s tentative olive branch was short-lived, and it didn’t take lone before a bearish tide swept across markets, as first Asian stocks slumped, then European shares fell…
… and US equity futures erased all gains…
… as turmoil in Hong Kong – which canceled all departing flights for a 2nd day – and total chaos in Argentina spooked investors already on edge over the trade war.
The weeks-long protests in Hong Kong began in opposition to a bill allowing extraditions to mainland China but have quickly morphed into the biggest challenge to China’s authority over the city since it took Hong Kong back from Britain in 1997. A state of “panic and chaos” now exists, the city’s embattled leader Carrie Lam said on Tuesday, defying fresh calls to quit. As she spoke, the Hang Seng index hit a seven-month low. By the close, it had dropped 2.1%, dragging down markets across Asia and taking its losses past 6% since the protests began in June.
As a result, global markets dropped for a third straight day on Tuesday as investors huddled in bonds, gold, and the Japanese yen for safety. While Hong Kong’s airport, the world’s busiest cargo hub, reopened briefly after protests closed it the previous day, renewed protests resulted in reports that all departing flights had been canceled for a second day even as Chinese forces were massing across the border with China in Shenzhen.
European stocks dropped as much as 0.6% in early trading after heavy drops in China, Hong Kong, Japan and other parts of Asia left MSCI’s main 47-country world index down nearly 4% for August so far. With bond yields slumping to unprecedented negative levels, the Stoxx 600 Bank Index falls 0.9%, the worst performer on Tuesday’s European sector leaderboard, and headed for a sixth consecutive week of declines. The decline was led by banks more exposed to low rates, such as Germany’s Commerzbank falling -2.1%, as well as Italian lenders as the political uncertainty in the country drags on. Banking stocks are down 11% this year, making them the worst- performing sector against Stoxx 600 Index’s 9.3% gain.
Earlier in the session, Asian stocks tumbled, with MSCI’s index of Asia-Pacific shares skidding 1.2% as Chinese stocks and the Nikkei in Tokyo both fell around 1%, led by technology and financial firms. Almost all markets in the region were down, with Hong Kong and Thailand leading declines. The Topix retreated 1.2%, erasing its 2019 gains, after the yen climbed to the strongest level since March 2018. The Shanghai Composite Index fell 0.6%, with large insurers and banks weighing on the Chinese benchmark. The Hang Seng Index dropped 2.1%, as the Hong Kong airport continued to suffer flight cancellations in the wake of a mass protest. India’s Sensex slipped 0.8%, dragged by HDFC Bank and Housing Development Finance. Shares in Reliance Industries Ltd. surged as much as 12% after billionaire Mukesh Ambani revealed a plan to slash debt
Investors also remained on edge over the damage caused by Monday’s crash in Argentina – the 2nd biggest one day market crash in history which saw about 50% of the local stock market value wiped out in one session – after its President Mauricio Macri became the latest pro-free market, pro-reform leader to be given a beating at the polls by a populist rival.
The response was brutal. The peso collapsed 15%, equities crumbled 48% in dollar terms and the bond market crashed, with a 100-year bond that investors had recently gobbled up tumbling 20% as fears of yet another government default spiked.
“Yes, Argentina is a small economy. However, the last thing global markets want to see is another market-friendly government fall to populism and/or geopolitics,” said Rabobank strategist Michael Every. He added the “wall of worry” also now includes: the trade war, Brexit, China, Hong Kong, Iran, Italy, Kashmir, North Korea, South China Sea, Turkey, and Venezuela. “Did I miss anything with tired eyes?”
With investors fleeing risk assets – which Morgan Stanley now sees in a bear market, one which will only get worse – investors parked in traditional safe havens such as the 10-year German government bond, whose yields hit a new record low, even as the German economy appears to have passed right through recession and is fast approaching depression levels, with the ZEW Economic Sentiment crashing from -24.5 to -44.1, shattering expectations of only a -28.5 print.
Across the Atlantic, US Treasury yields dropped to the lowest level in almost three years, gold was pinned close to six-year highs and the yen was within a whisker of a seven-month peak versus the dollar. Quoted by Reuters, ING analysts said the yen was benefiting “from the best of both worlds”, pointing to general risk aversion and a rush to price in more interest rate cuts by the Federal Reserve.
The dive for safety pushed gold up another 0.5% to $1.523 per ounce and its latest six-year high. Oil prices meanwhile held their ground as expectations that major producers will continue to reduce supplies balanced out worries about sluggish economic growth. Brent inched up to $58.74 while U.S. West Texas Intermediate futures were flat at $54.81 a barrel. It comes too with Saudi Arabia repushing plans to float its national oil company Saudi Aramco in what could be the world’s largest initial public offering (IPO).
“With Saudi Aramco reportedly eyeing an IPO once again, there is some support to the idea that Saudi Arabia has a heightened interest in strong crude prices and will cut its own output accordingly,” Vienna-based consultancy JBC Energy said.
Today’s economic data include July CPI figures, small business optimism
Market Snapshot
S&P 500 futures down 0.1% to 2,877.25
STOXX Europe 600 down 0.4% to 369.12
MXAP down 1.2% to 150.37
MXAPJ down 1.3% to 482.67
Nikkei down 1.1% to 20,455.44
Topix down 1.2% to 1,486.57
Hang Seng Index down 2.1% to 25,281.30
Shanghai Composite down 0.6% to 2,797.26
Sensex down 0.9% to 37,243.13
Australia S&P/ASX 200 down 0.3% to 6,568.54
Kospi down 0.9% to 1,925.83
German 10Y yield fell 2.0 bps to -0.612%
Euro down 0.2% to $1.1189
Brent Futures down 0.05% to $58.54/bbl
Italian 10Y yield fell 10.1 bps to 1.348%
Spanish 10Y yield fell 0.7 bps to 0.223%
Gold spot up 0.9% to $1,524.86
U.S. Dollar Index up 0.2% to 97.57
Top Overnight News from Bloomberg
In the wake of President Mauricio Macri’s stunning rout in primary elections over the weekend, investors dumped its stocks, bonds and currency en masse in a selloff that left much of Wall Street wondering whether the crisis-prone country was headed for yet another default
Deputy Premier Matteo Salvini will likely have to wait a week to move ahead with his power grab in Italy. Senate leaders on Monday failed to agree on a date for the confidence vote that could bring down the curtains on the country’s populist coalition, pushing back a decision until Tuesday. The full upper chamber will set a date at a session beginning at 6 p.m. in Rome
The U.K. government doesn’t expect the European Union to shift its Brexit position for at least a month while it waits to see how British politicians opposed to leaving the bloc play their hand in Parliament, according to a person familiar with the matter
The rate on 30-year Treasury bonds approached an all-time low and a closely monitored section of the U.S. yield curve hurtled closer to inversion as investors sought shelter amid a fraught geopolitical backdrop. China 10- year sovereign yield falls to 3% first time since 2016
Australia’s back-to-back interest-rate cuts are flowing through the financial system and into the economy, while the falling currency should provide a similar stimulus to sustained declines of previous years, Christopher Kent, RBA assistant governor for financial markets said
Oil holds steady after Saudi Aramco’s first-half earnings contained no surprises for the market, while sentiment remained cautious amid ongoing trade tensions between the U.S. and China and deepening unrest in Hong Kong
Asian equity markets followed suit from the losses on Wall St with global risk sentiment sapped by the continued overhang from the US-China trade war and after the disruption in Hong Kong where there are growing fears of Chinese intervention. ASX 200 (-0.3%) was subdued but with losses stemmed by strength in tech and mining related sectors, while Nikkei 225 (-1.1%) was among the underperformers as participants returned from the extended weekend and reacted to recent flows to the currency. Chinese markets also traded lower after Chinese Lending/Financing data disappointed and with heavy losses in Hong Kong after its airport was shut by a mass sit-in and although flights have since resumed, hundreds remained cancelled as they try to deal with the back log from the disruption. Furthermore, increased concerns China may intervene as the People’s Armed Police were reportedly gathering and heading towards the bordering city of Shenzhen, has added to the pressure for the Hang Seng (-2.1%) which declined to its weakest since early January, while losses in the Shanghai Comp. (-0.6%) were somewhat cushioned after the PBoC set a firmer than expected reference rate and continued its liquidity injections. Singapore’s STI (-0.9%) suffered from a double-whammy in which Q2 GDP missed estimates and the MAS dashed easing hopes by not considering an off-cycle policy meeting. Finally, 10yr JGBs were marginally higher and the 30yr yield dropped to 0.2% for the first time in 3 years amid the risk averse tone and following the bull flattening in the US, although upside was capped amid lack of BoJ presence in the market and given that prices were already at record levels.
Top Asian News
Duterte Seen by Public as ‘Selling Out’ to China, Deputy Says
Hedge Fund Warns of ‘Distressed Cycle’ as Trade War Deepens
More Rain Seen in Flood-Ravaged Indian States; At Least 124 Dead
Car Sales in India Drop Most in Two Decades as Slowdown Deepens
European stocks are lower across the board [Eurostoxx 50 -0.70%] following on from a downbeat Asia-Pac handover as global risk sentiment continues to be pressured by the US-China trade overhang and amid growing fears surrounding the violent Hong Kong protests and fears of intervention. Germany’s DAX (-0.9%) underperforms and hit levels last seen at the end of March after falling below a key tech level at 11600 (which was the reversal level during the May rout) with the aid of dismal German ZEW survey data and ahead of German GDP figures tomorrow. Sectors are mostly lower, with some resilience in defensive sectors as investors flock to “safe stocks”, whilst the energy sector outperforms amid the oil sector’s earlier gains, albeit this initial upside has since been retraced. In terms of individual movers, Henkel (-7.0%) rest at the foot of the Stoxx 600 amid a profit warning whilst it also noted that it does not envisage a H2 auto market recovery. Meanwhile, Rolls-Royce (-3.2%) shares continued to fall with today’s downside induced by a Moody’s downgrade to Baa1 from A3.
Top European News
Scout24 Mulls Auto Unit Options After Elliott’s Breakup Call
Swiss Franc Touches Strongest Level Since June 2017
Iran Expects Tanker Held by U.K. to Be Released Soon, Fars Says
In FX, the Dollar remains divergent against G10 currency counterparts, but firm vs EMs as sentiment continues to favour safe-havens amidst ongoing unrest in Hong Kong and other parts of the globe, plus the US-China/EU etc trade conflicts. Hence, the DXY is still anchored around 97.500 and the index taking cues from moves in major basket constituents, like the Euro and Yen ahead of US CPI data.
EUR/GBP – The single currency and Sterling are both holding relatively steady vs the Greenback and thus each other, with Eur/Usd back above 1.1200 despite more dire Eurozone survey news in the shape of the latest ZEW findings for Germany and the bloc as a whole. The Euro is benefiting from its status as a refuge when risk aversion is high, if not rife, but 1.1220 Fib resistance may yet cap the upside having been respected on multiple tests recently. Conversely, the Pound has not really been able to sustain gains/momentum on the back of firmer than forecast UK pay metrics as Cable labours ahead of 1.2100 on persistent no deal Brexit jitters.
AUD/NZD/CAD – Some respite for the Aussie via an uptick in NAB business sentiment overnight and comments from RBA Assistant Governor Kent playing down the prospect of NIRP, as Aud/Usd pares losses from a test of key support towards 0.6770, but the Kiwi appears more vulnerable after relative outperformance or rather resilience yesterday with Nzd/Usd hovering around 0.6450 and Aud/Nzd just under 1.0500. In contrast, the Loonie is lagging either side of 1.3250 after last Friday’s disappointing Canadian jobs update and soft crude prices.
JPY/CHF – The Yen looks ripe for another attempt to breach 105.00 vs the Usd where more hefty option expiries reside and psychological bids/support are propping the headline pair in front of the 104.87 flash crash low, but the Franc has crossed 0.9700 against the Buck and approaching 1.0850 vs the Euro awaiting more Italian political developments alongside any response from the SNB to signs that the Chf is getting too strong.
EM – More broad losses across the region, and the Lira seemingly suffering from a lack of local participation as Turkey observe EID on top of increasingly bearish technical as Usd/Try has broken above the 200 DMA to expose the next significant upside chart level circa 5.6300.
In commodities, marginal losses in the oil complex with WTI and Brent futures choppy, with the former back below 55/bbl (after having visited the level earlier in the session) whilst the latter fell to around 58.50/bbl. News flow for the complex has again been light and the benchmarks seem to be moving off of sentiment/technical factors, with RBC yesterday highlighting that there is limited scope for short covering rallies due to positioning, i.e. speculators seem to have been unwinding long position rather than opening shorts. Nevertheless, participants will be on the lookout for geopolitical/trade developments, whilst Hong Kong also remains on the radar and whether China will intervene amid the rise in violent protests, which is likely to hit sentiment again, especially if US reacts with sanctions/tariffs. Looking at today’s docket, traders will await the weekly API crude data, expected to print a draw of 2.3mln barrels. ING notes that the narrowing of the WTI/Brent Arb (currently 3.6/bbl) could point to another weak of low exports as shown by the prior week’s EIA data. Elsewhere, gold remains on an upward trajectory amid safe-haven demand, with the yellow metal at a fresh 6yr high of 1526.7/oz. Meanwhile, copper is relatively flat on the day. Elsewhere, Dalian iron ore traded in a tight range whilst steel futures rose as much as 3.0% as the pollution curb on steel mills dampens iron ore demand but also disrupts steel supply. GS sees a rebound in iron ore prices as “2019 is on track to post the seaborne market’s first deficit in seven years”, and they see a deficit through 2020. Finally, Indonesia’s Minister noted that revisions to mineral ore export rules are currently being drafted. Indonesia initially planned to ban exporting nickel ore by 2022, in an attempt to build up its manufacturing base by using its raw resources but previously noted that bringing the deadline forward from 2022 will disrupt USD 4bln ore exports.
US Event Calendar
6am: NFIB Small Business Optimism, est. 104, prior 103.3
8:30am: US CPI MoM, est. 0.3%, prior 0.1%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.3%
8:30am: US CPI YoY, est. 1.7%, prior 1.6%; CPI Ex Food and Energy YoY, est. 2.1%, prior 2.1%
8:30am: Real Avg Hourly Earning YoY, prior 1.5%; Real Avg Weekly Earnings YoY, prior 1.16%
DB’s Craig Nicol concludes the overnight wrap
It may be a new week but markets have still been dealing with the all too familiar feeling of risk-off over the last 24 hours.In fairness, there wasn’t actually a great deal of newsflow for markets to get behind yesterday, but poor data from China, signs of further trade war escalation, and additional geopolitical risks – namely Hong Kong and Argentina – all combined to weigh on risk assets and drive another big move lower in rates. The S&P 500 and NASDAQ retreated -1.22% and -1.20% respectively, while the STOXX 600 fell -0.31%. HY credit spreads were also +9.2bps and +0.7bps wider in the US and Europe, respectively.
The real action was in US rates though, where 10-year treasury yields rallied -9.9bps to 1.646% and to within 30bps of their all-time lows from 2016. The move in the 30-year was even more extreme, dropping -12.7bps to 2.133% and to within 3bps of its all-time low. Front-end rates fell as well, with 2-year treasuries down -6.3bps and fed funds futures back to pricing in 67bps of cuts through year end. That understandably weighed on financials, which led losses in both Europe and the US, where indexes of bank shares fell -2.17% and -2.12%, respectively. As for the yield curve, the 2y10y metric flattened another -3.6bps to a fresh cycle low of 5.8bps. Our economists noted that the signal from the 2y10y is now much closer to signals from other yield curves measures which have already inverted: it implies a roughly 40% chance of recession over the next 12 months.
The China credit data from yesterday was the main source of pessimism, with new loans rising by 1.06 trillion yuan. That was well below consensus estimates for a 1.28 trillion print. The year-on-year growth rate for M2 fell to 8.1% (versus expected 8.4%), near its all-time low of 8.0%, and M1 grew only 3.1% (versus expected 4.4%). Credit growth is viewed as a key leading variable for the broader Chinese economy, so the slowdown heightened concerns over global growth. As for the trade war, there was some attention paid to a comment from Global Times Editor Hu Xijin that China’s People’s Daily istoday expecting to publish an article “vowing China can defeat any challenge and pressure the US”.
Those factors combined are weighing on Asian markets overnight with the Nikkei (-1.25%), Shanghai Comp (-0.74%) and Kospi (-0.70%) all lower. The Hang Seng (-1.86%) is leading the declines again though as protests continue and markets react to the city’s airport being brought to a standstill yesterday. In fact, the Hang Seng has now fallen into negative territory for the year – one of the few equity markets to have done so. As for FX, the US dollar is trading strong this morning (+0.22%) while the Chinese yuan is trading at 7.0634 (-0.10%). Elsewhere, futures on the S&P 500 are up +0.15% while spot gold prices are trading at $1516/oz (+0.34%) and 10yr JGB yields are down -1bp to -0.237%. Treasuries are also trading flat following the big rally yesterday.
Back to those political developments, where the biggest price action was reserved for Argentina where the peso sold-off -16.96% and to a record low of 53.0 versus the dollar following the weekend election result which saw the populist opposition candidate surprisingly beat President Macri in a landslide in the primary election. In fact, Argentinian assets were hit across the board. The benchmark stock index sank -37.93% – the biggest drop since 1990, while the country’s 100y bond dropped -18.6pts to 56.3. Slightly contrasting fortunes to where Austria’s 100y bond currently trades. Indeed, shorting the former while buying the latter would’ve doubled your money this year. Though of course we still have another 98 years before either bond matures for things to change. The contagion from Argentina into other EM assets was fairly limited in absolute terms however EM equities and FX did still fall -1.24% and -0.38%. In FX the biggest decliners outside of Argentina were currencies in Brazil (-1.03%), Uruguay (-1.41%) and Colombia (-0.91%).
Moving on. While it may have been quiet for data yesterday the good news is that it will pick up today with the July CPI report in the US this afternoon likely the highlight. A reminder that the consensus expects a +0.2% mom reading for the core although you shouldn’t expect anything less given that the last 45 monthly core CPI consensus prints have been for +0.2% mom. You have to go back to September 2015 to find the last time it wasn’t. Anyway, our US economists are below market at +0.13% mom essentially due to them expecting a partial unwind of June’s outperformance. However given that the market is already very dovishly priced for the Fed, it will likely take a lot for the market to become more aggressive on pricing in cuts.
Just wrapping up the other market moves yesterday, Italian assets recovered a bit as stories swirled that the Five Star Movement and Democratic Party are discussing a possible coalition to prevent the need for a new election (per Bloomberg). The Senate will reportedly pick a date for the no confidence motion in the government as soon as today, having delayed the decision yesterday, which could end up being the key date when we’ll know whether or not to expect elections. Ten-year BTP yields fell -10.6bps, but are still +32.6bps higher from their mid-week lows last Wednesday at 1.696%.
In terms of other news yesterday, there was some attention paid to the release of the Swiss National Bank’s sight deposit data, which is used as a proxy for their FX interventions. Sight deposits rose to 585.5bn francs, their biggest increase since early 2017 and suggesting some action by the SNB, but still far less than during periods of heavy intervention. Elsewhere, the US Treasury released its monthly budget statement, showing that the budget deficit was $119.7bn in July. That takes the deficit to $866.8 over the first 10 months of this fiscal year, bigger than the deficit over entire 2018 calendar year ($779.0bn).
Looking at the day ahead now, the aforementioned July CPI report in the US this afternoon is the likely data focus, however prior to that we’ll also get a decent slew of releases in Europe. We kick off with the final July CPI revisions in Germany not long after this hits your email, before the UK June and July labour market data is due to be released. The August ZEW survey in Germany follows while late morning we’re also due to get the July NFIB small business optimism reading in the US. Away from that the NY Fed is also due to release its Q2 household debt and credit report.
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The pay-only-for-shipping purchase of an armored vehicle by the police department in the nearest incorporated town to my home was “the best $4,000 Cottonwood PD ever spent,” according to a recent article in the local newspaper. That’s a debatable assertion, though it probably doesn’t matter to you unless you’re a Cottonwood taxpayer. But it’s a reminder that while Americans may have lost interest in the reports about police militarization that grabbed headlines a few years ago, cops are still armoring up like shock troops.
Reason was on to the steady transformation of America’s police forces from civilian peacekeepers to armies of occupation even before events in Ferguson, Missouri, brought the flow of equipment, weapons, and training from the armed forces to American cops to the country’s attention. “In my research into the rise and overuse of SWAT teams, I found that the single biggest motivating factor behind the surge has been a Pentagon program in place since about 1990 that offers up surplus military equipment to local police departments free of charge,” wrote former Reason staffer Radley Balko (now at The Washington Post) in 2007.
That was the same year U.S. News & World Report discovered the program and noted that “police forces are increasingly turning away from developing trust … and opting instead for arsenals of assault rifles, concussion grenades and the Mine Resistant Ambush Protected vehicles, or MRAPs, that have become ubiquitous to the U.S. military presence in Iraq and Afghanistan.”
And whaddya know, it’s an MRAP that Cottonwood, Arizona police just added to the armory for the local multi-department rural SWAT team! “Verde Valley SWAT uses its MRAP on high-risk search warrants, SWAT events, barricade situations,” reported the Verde Independent. “[Cottonwood Police Chief Steve] Gesell says its role within SWAT is fundamental.”
Gesell is certainly a firm believer in the value of armored vehicles. He lost his previous gig as top cop in San Luis Obispo in part because he held out for up-armoring the department’s motor pool. At least he’s consistent in his beliefs, retaining his faith in rolling fortresses for addressing the sorts of law-enforcement challenges encountered in both coastal California towns and high-desert Arizona communities.
But the police chief’s support for hard-core policing is hardly an isolated phenomenon in law enforcement.
Gesell counted among the many police officials who have traveled to Israel for “training in Israeli police tactics that includes having police wear body armor and carry automatic weapons as they patrol the streets,” according to CalCoastNews in 2014. Other alumni of the training program include the former police chief of Ferguson, Missouri. The program is offered by the Anti-Defamation League as part of a larger package of police-oriented courses that the organization boasts has trained thousands of law enforcement personnel in federal, state, and local agencies.
Participation in such programs is controversial in many communities around the U.S. because of the anti-terrorist focus, with an emphasis on heavy-handed military tactics for patrolling hostile territory. Voicing concerns about that approach, the city council of Durham, North Carolina voted against police participation in any such training, sparking lawsuits in response.
In terms of the gear necessary to implement such training, the federal Defense Logistics Agency’s 1033 program continues to provide a pipeline of military equipment to law enforcement agencies. The tap is as wide open as ever, courtesy of the Trump White House’s cancelation of earlier, short-lived Obama administration restrictions on such transfers. The brief wave of high-level concern over brutal policing and its corrosive effect on relations between cops and the people they supposedly protect also went the way of those restrictions.
“When you see these towns and when you see these thugs being thrown into the back of a paddy wagon, you just see them thrown in, rough, and I said, ‘Please don’t be too nice,'” the president told an audience of law enforcement officers in July 2017.
Not that the police need much encouragement when it comes to pushing the limits of reasonable behavior. In 2016, a team from a joint law-enforcement task force showed up in full battle rattle at my wife’s pediatric clinic to enforce an outstanding non-violent misdemeanor warrant for failure to appear in court against a staffer. In a display of some sort of restraint, they left the MRAP elsewhere.
If you’re wondering, there’s little if any obvious benefit to the army of occupation approach. Militarized policing erodes the public’s opinion of law enforcement and especially targets racial minorities without reducing crime or improving officer safety, according to research published last year in the Proceedings of the National Academies of Science. “In the case of militarized policing, the results suggest that the often-cited trade-off between public safety and civil liberties is a false choice,” writes author Jonathan Mummolo, Assistant Professor of Politics and Public Affairs at Princeton University.
Even people who don’t care much about civil liberties and hostile relations between people and police should give some thought to the dollars-and-cents costs of militarized law enforcement. Whether or not the four grand spent on a junior tank was the “best” expenditure is a judgment call, but it’s hardly the end of the bills for keeping the thing gassed and running.
“These specialty-type vehicles do have some maintenance costs associated with them,” Verde Valley SWAT Team Commander Gareth Braxton-Johnson told my local newspaper. What that means is hard to pin down, since the department didn’t respond to my query about specific numbers.
But the military has extensive experience running these vehicles, even if none of the branches of the armed forces seems to have established a consistent model for estimating ongoing expenses. Annual repair parts alone run at least $15,930 per MRAP, according to a 2010 Naval Postgraduate School thesis. Fuel, labor, spares, overhauls, and the like add tens of thousands of dollars to that tab.
Even if police agencies can improve on the military’s reputation for less-than-stellar cost control, an armored vehicle acquired for anything other than display purposes is a high price to pay for civil liberties violations and strained relations between cops and their nominal employers.
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Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they’re still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.
The ruling by New Zealand’s tax authority allows salaries and wages to be paid in cryptocurrencies such as bitcoin from September 1, as long as the payments are in regular, fixed amounts. The digital currency of choice must also be pegged to at least one regular currency and must be able to be converted directly into a standard form of payment.
This makes New Zealand the first country to legally support payment in crypto. There are, however, some stipulations: In a bulletin dated Aug. 7, New Zealand’s Inland Revenue excluded self-employed taxpayers from earning incomes in cryptocurrencies, and added that some companies that choose to pay their employees in bitcoin or other crypto will be able to withhold tax under New Zealand’s ‘pay as you earn’ income tax scheme.
Crypto enthusiasts celebrated the decision on Twitter.
Move over kiwi — New Zealand becomes the first country to legalize salaries paid in cyrpto — would you want to get paid in bitcoin?
It’s also notable that the decision to allow payment in bitcoin comes around the time that the RBNZ slashed its benchmark interest rate by 50 basis points, causing the kiwi to crater earlier this month. The RBNZ’s board cited downside risks to inflation and jobs as its reason for the cut. The Kiwi is now near its weakest level against the dollar since 2015. Economists said the dramatic cut appeared to be an attempt by the bank to get out in front of a slowing global economy, since NZ’s domestic economic data hardly necessitated such a dramatic action.
Though NZ’s tax authorities don’t consider crypto money, they did note that crypto has many of the same features as money.
Wellington’s Inland Revenue defined crypto assets as property, noting that crypto assets are not defined as “money” anywhere, and therefore are not legal tender. However, the authority will tax crypto-salaries as money because “some cryptoassets have many of the characteristics of money; for example, being…divisible…and hard to counterfeit.”
New Zealand’s decision also follows Facebook’s introduction of its ‘Libra” ‘stablecoin’, which Facebook intends to use to facilitated transnational payments.
Thomas Hulme, a solicitor at London-based law firm, Mackrell Turner Garrett, said the landmark decision is “another step towards governments recognizing that actually people are wanting to be paid in crypto.”
“Some people would rather deal with their wealth in that medium.”
Though he added that accepting payment in crypto is “a bit crazy.”
But after yesterday’s selloff in the Argentine peso, we’d ask: With all the volatility in traditional currency markets, is accepting payment in bitcoin really all that absurd?
via ZeroHedge News https://ift.tt/2Z1n1ZU Tyler Durden
The pay-only-for-shipping purchase of an armored vehicle by the police department in the nearest incorporated town to my home was “the best $4,000 Cottonwood PD ever spent,” according to a recent article in the local newspaper. That’s a debatable assertion, though it probably doesn’t matter to you unless you’re a Cottonwood taxpayer. But it’s a reminder that while Americans may have lost interest in the reports about police militarization that grabbed headlines a few years ago, cops are still armoring up like shock troops.
Reason was on to the steady transformation of America’s police forces from civilian peacekeepers to armies of occupation even before events in Ferguson, Missouri, brought the flow of equipment, weapons, and training from the armed forces to American cops to the country’s attention. “In my research into the rise and overuse of SWAT teams, I found that the single biggest motivating factor behind the surge has been a Pentagon program in place since about 1990 that offers up surplus military equipment to local police departments free of charge,” wrote former Reason staffer Radley Balko (now at The Washington Post) in 2007.
That was the same year U.S. News & World Report discovered the program and noted that “police forces are increasingly turning away from developing trust … and opting instead for arsenals of assault rifles, concussion grenades and the Mine Resistant Ambush Protected vehicles, or MRAPs, that have become ubiquitous to the U.S. military presence in Iraq and Afghanistan.”
And whaddya know, it’s an MRAP that Cottonwood, Arizona police just added to the armory for the local multi-department rural SWAT team! “Verde Valley SWAT uses its MRAP on high-risk search warrants, SWAT events, barricade situations,” reported the Verde Independent. “[Cottonwood Police Chief Steve] Gesell says its role within SWAT is fundamental.”
Gesell is certainly a firm believer in the value of armored vehicles. He lost his previous gig as top cop in San Luis Obispo in part because he held out for up-armoring the department’s motor pool. At least he’s consistent in his beliefs, retaining his faith in rolling fortresses for addressing the sorts of law-enforcement challenges encountered in both coastal California towns and high-desert Arizona communities.
But the police chief’s support for hard-core policing is hardly an isolated phenomenon in law enforcement.
Gesell counted among the many police officials who have traveled to Israel for “training in Israeli police tactics that includes having police wear body armor and carry automatic weapons as they patrol the streets,” according to CalCoastNews in 2014. Other alumni of the training program include the former police chief of Ferguson, Missouri. The program is offered by the Anti-Defamation League as part of a larger package of police-oriented courses that the organization boasts has trained thousands of law enforcement personnel in federal, state, and local agencies.
Participation in such programs is controversial in many communities around the U.S. because of the anti-terrorist focus, with an emphasis on heavy-handed military tactics for patrolling hostile territory. Voicing concerns about that approach, the city council of Durham, North Carolina voted against police participation in any such training, sparking lawsuits in response.
In terms of the gear necessary to implement such training, the federal Defense Logistics Agency’s 1033 program continues to provide a pipeline of military equipment to law enforcement agencies. The tap is as wide open as ever, courtesy of the Trump White House’s cancelation of earlier, short-lived Obama administration restrictions on such transfers. The brief wave of high-level concern over brutal policing and its corrosive effect on relations between cops and the people they supposedly protect also went the way of those restrictions.
“When you see these towns and when you see these thugs being thrown into the back of a paddy wagon, you just see them thrown in, rough, and I said, ‘Please don’t be too nice,'” the president told an audience of law enforcement officers in July 2017.
Not that the police need much encouragement when it comes to pushing the limits of reasonable behavior. In 2016, a team from a joint law-enforcement task force showed up in full battle rattle at my wife’s pediatric clinic to enforce an outstanding non-violent misdemeanor warrant for failure to appear in court against a staffer. In a display of some sort of restraint, they left the MRAP elsewhere.
If you’re wondering, there’s little if any obvious benefit to the army of occupation approach. Militarized policing erodes the public’s opinion of law enforcement and especially targets racial minorities without reducing crime or improving officer safety, according to research published last year in the Proceedings of the National Academies of Science. “In the case of militarized policing, the results suggest that the often-cited trade-off between public safety and civil liberties is a false choice,” writes author Jonathan Mummolo, Assistant Professor of Politics and Public Affairs at Princeton University.
Even people who don’t care much about civil liberties and hostile relations between people and police should give some thought to the dollars-and-cents costs of militarized law enforcement. Whether or not the four grand spent on a junior tank was the “best” expenditure is a judgment call, but it’s hardly the end of the bills for keeping the thing gassed and running.
“These specialty-type vehicles do have some maintenance costs associated with them,” Verde Valley SWAT Team Commander Gareth Braxton-Johnson told my local newspaper. What that means is hard to pin down, since the department didn’t respond to my query about specific numbers.
But the military has extensive experience running these vehicles, even if none of the branches of the armed forces seems to have established a consistent model for estimating ongoing expenses. Annual repair parts alone run at least $15,930 per MRAP, according to a 2010 Naval Postgraduate School thesis. Fuel, labor, spares, overhauls, and the like add tens of thousands of dollars to that tab.
Even if police agencies can improve on the military’s reputation for less-than-stellar cost control, an armored vehicle acquired for anything other than display purposes is a high price to pay for civil liberties violations and strained relations between cops and their nominal employers.
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