Tag: news

Iran Seizes Foreign Oil Tanker Accused Of Smuggling Fuel

In what will be seen as another escalation of tensions in the Persian Gulf, Iran’s Revolutionary Guards seized a foreign oil tanker in the Persian Gulf on July 31, adding to rising concerns about the safety of shipping in a region crucial to oil exports.

The vessel – the third foreign ship seized by Iran in the Gulf since July 14 in response to a UK seizure of Iran’s own ship – is suspected of smuggling a large volume of fuel, the Guards said on their Sepah News portal according to Bloomberg. They did not, however, give any details about the flag or nationality of the ship or its operator.

The ship’s seizure took place last Wednesday, Sepah News, the Revolutionary Guard’s official news service, reported, a day after United Arab Emirates officials traveled to Iran to discuss maritime border cooperation and the flow of shipping traffic, including illegal movements.

The ship was carrying 700,000 liters (4,403 barrels) of smuggled fuel when it was seized near Farsi Island in the western part of the Gulf, off Iran’s southwestern coast, Sepah News reported. The island is located about 400 miles (640 kilometers) from the Strait of Hormuz, the volatile center of Iran’s standoff with the West in recent weeks. Iran’s state-run Press TV reported that the seized ship is an Iraqi tanker that was delivering the fuel to some Arab countries in the Persian Gulf.

Iranian state news agency IRNA reported that a video of the moment the vessel was seized showed it was Iraqi, although as the WSJ notes, maritime confrontations between Iran and Iraq are considered rare. The Iraqi ship’s seizure would follow July’s visit to Tehran by Prime Minister Adel Abdul-Mahdi, who has sought to ease tensions between the U.S. and Iran, both close allies of Iraq.

Gen. Ramezan Zirahi, a navy forces commander in the Guard, was quoted by Iran’s Fars News Agency as saying the fuel had been transferred to the vessel from another ship, and was bound for Arab countries in the region when it was impounded. The seven detained crew members – who were arrested – were foreign, he said, without naming their nationality or that of the vessel. The ship was taken to Bushehr port on Iran’s southwest coast, and its cargo was confiscated and handed over to the National Oil Distribution Company of Iran.

The announcement of the ship’s capture coincides with a joint meeting between the Iranian and Qatari coast guards in Tehran aimed at improving and developing maritime cooperation between the Gulf neighbors, state-run Islamic Republic News Agency reported earlier Sunday. That gathering follows a rare meeting between the coast guards of Iran and the U.A.E. last week.

* * *

The impounding of the ship will escalate the tensions that have flared in the region’s waters as Iran resists U.S. sanctions that are crippling its all-important oil exports and retaliates after one of its ships was seized July 4 near Gibraltar. Iran grabbed a British tanker, the Stena Impero, in Hormuz two weeks later and continues to hold it. Iran also detained a small Emirati-based vessel, the Riah, earlier in July and accused it of smuggling fuel. Nine of the 12 Indian crew members have since been released, but the vessel remains impounded. Ship-tracking experts noted the size of the cargo on the vessel seized on Wednesday was even smaller. Petroleum products sold domestically in Iran are heavily subsidized, so it is potentially lucrative to divert them to foreign markets, where they can be sold for a higher price.

The passage at the mouth of the Persian Gulf accounts for about a third of the world’s seaborne oil flows. To reduce the risks of navigating the waterway, the Royal Navy has started to escort British ships, and a plan for a European naval mission is taking shape.

Meanwhile, the U.S. has blamed Iran for attacks on oil tankers in the region in recent months, a charge Tehran has denied.

The crisis in the Gulf has caused oil prices and shipping premiums to rise and prompted some vessel owners to avoid the region. Last week, Bloomberg reported that British oil giant BP, which had to shelter one of its tankers in the Persian Gulf this month in fear it could be targeted by Iranian forces, was avoiding sending ships to the region after tensions flared between Tehran and London.

BP is “certainly not sending British ships and crews” through the Strait of Hormuz, the only way for tankers to reach the world’s biggest oil-exporting region, Chief Executive Officer Robert Dudley said in a Bloomberg TV interview.

Earlier this month, a BP tanker had to abandon a plan to load Iraqi crude and instead took shelter near Saudi Arabia because the company feared the ship could be targeted in a tit-for-tat response for British Royal Marines seizing a vessel transporting Iranian crude in the Mediterranean, a person familiar with the matter said at the time.

At the same time, the U.S. has boosted military deployments in the Persian Gulf and Strait of Hormuz and is trying to pull together an international maritime force to patrol the region. The British also plan to create a separate European maritime security force.

Ironically, it remains unclear if allies in the North Atlantic Treaty Organization will cooperate: as the WSJ notes, the U.K., Germany and France are at odds with the Trump administration over its decision to pull out of the 2015 Iranian nuclear deal to which they are co-signatories, and are working to keep the deal alive and to ease tensions with Tehran.

For its part, Iran says it is trying to maintain maritime security in the region. But its officials also have repeatedly warned they would block the Strait of Hormuz—through which a third of the world’s seaborne oil is transported—in response to crippling U.S. sanctions. Iran has accused the Europeans of not providing adequate relief from American pressure.

 

 

 

 

via ZeroHedge News https://ift.tt/31lT4S3 Tyler Durden

Trump To Address Nation Monday Over Mass Shootings, Says More Gun Control May Be Needed

In the wake of multiple mass shootings over the weekend, President Trump on told reporters on Sunday that “hate has no place in our country and we’re going to take care of it.“

He added that “perhaps” more needs to be done with respect to gun control. 

Trump added that he will deliver a formal statement on Monday at 10 a.m. Monday at the White House. 

On Saturday, a gunman entered an El Paso, Texas Walmart, killing 20 people and wounding 26 others. Less than 24 hours later, at least nine people were killed and 26 more injured when 24-year-old Connor Betts of Bellbrook Ohio used a .223 caliber rifle to open fire at a crowd on East 5th street in the city’s popular downtown Oregon district. 

via ZeroHedge News https://ift.tt/2OBl0jd Tyler Durden

Going Against The Wall Street Crowd Is The Most Profitable In 5 Years

Six years ago, back in 2013, we presented what we then viewed (and still view) as the best trading strategy of the New Abnormal period, when we said that buying the most shorted names while shorting the names that have the highest hedge fund and institutional ownership is the surest way to generate alpha, to wit:

… in a world in which nothing has changed from a year ago, and where fundamentals still don’t matter, what is one to do to generate an outside market return? Simple: more of the same and punish those who still believe in an efficient, capital-allocating marketplace and keep bidding up the most shorted names.

Fast forward to today, when Bank of America confirms once again that with just one exception, the historically unvolatile 2017, going long the most shorted names and shorting the most popular ones has continued to be not only the most consistently profitable, alpha-generating strategy, but that in 2019 YTD, the top 10 crowded stocks underperformed the 10 most neglected stocks by 19% YTD, a 5-year record!

One simplistic reason for this – besides the ones we enumerated six years ago – is that the most overowned stocks are generally clustered in either high secular growth or defensive/yield/low beta, leaving a broad swathe of high quality cyclical stocks neglected and inexpensive.

It’s also why high quality cyclicals are BofA’s preferred area of the market, because as the bank claims, absent a full-blown recession, cyclicals likely represent “coiled springs”.

There is another, more credible reason why such a contrarian strategy continues to be the best performing one: technicals, specifically crowding, and massive lazy bets among Wall Street professionals which, when unwound once a poorly-researched thesis collapses, result in a major overshoot in the opposite direction that is a gift to those who had the trade on. 

Indeed, never has the power of positioning been more actuve than in 2019, when as BofA recently calculated, the overlap between positioning by mutual funds and hedge funds reached an all time high, and as a result, “positioning has been a big driver of returns in 2019” (we discussed this topic far more extensively back in April in “BofA Finds The Secret Recipe How To Consistently Beat The Market“)

This means that if one were to short those stocks that were bought by virtually everyone (and vice versa on the short side), it was only a matter of time before a paradigm shift resulted in countless stop outs, and a generous payday for those who bet against the crowd.

Something like that happened last week on Wednesday, when the Fed cut rates by 25bps, and provided commentary interpreted as somewhat more hawkish than market expectations. What happened next – the sharp initial selloff – confirmed that active positioning was far more dovish than what we got. Indeed, as we warned last weekend, based on CFTC data, not only were stocks massively overbought ahead of the Fed’s (disappointing rate cut), but asset managers’ equity futures exposure reached a post-crisis high.  In other words, contrary to the fake news spewed on CNBC, everyone was – in fact – long, and the whiplash that ensued resulted in substantial losses for countless hard and trend-following funds.

Meanwhile, as BofA warns, the only two industries with Fed risk that were overweight by both “long only” funds and hedge funds, were dovish beneficiaries (Multi-Utilities and Equity REITs).

It is these most crowded, high-dividend yielding segments that could be at risk if the Fed fails to mollify or reverse the market’s hawkish interpretation.

And while that is BofA’s micro recommendation, the big picture still stands: for anyone who wants to consistently make money in this broken market in which nothing is as it seems, and in which the vast majority is always wrong, the best way to do that is to do what we said back in 2013, namely to always bet against the crowd on both the long and short side.

The bottom line: when we said 6 years ago to buy the most hated names while shorting the most loved ones, we were right. As shown by BofA, this is how much alpha this strategy has returned in subsequent years:

  • 2014: +17.8% (12.3% from shorts, 5.5% from longs)
  • 2015: +12.6% (3.9% from shorts, 8.7% from longs)
  • 2016: +7.5% (13.4% from shorts, -5.9% from longs)
  • 2017: -10.6% (-9.5% from shorts, -1.1% from longs)
  • 2018: +5.0% (0.4% from shorts, 4.6% from longs)
  • 2019 YTD: 18.8% (9.0% from shorts, 9.8% from shorts)

The question now is whether this apparently still obscure trade will finally stop generating alpha if more investors put it on. On the other hand, since by definition there will always be stocks that are “most crowded” and “most shorted”, this may be a strategy that is limited to those who are relatively small and nimble and can avoid moving the entire market. Which incidentally may be the latest reason why this is a market where smaller, contrarian traders will be rewarded even as the “whales” who trade based on idea dinner recommendations are doomed to fade into obscurity.

via ZeroHedge News https://ift.tt/2T9uGQz Tyler Durden

The Perils of Zero-Sum Worldviews Revisited

The terrorist mass shooter who killed some twenty people in El Paso yesterday was motivated by a combination of racism and xenophobia and seemingly left-wing concerns about protecting the environment and expanding the welfare state. The “manifesto” he wrote combines elements of both. It attacks racial mixing and condemns Hispanic immigrants as “invaders,” but also seeks to bar them in order to protect the environment, expand the welfare state, and curb the supposedly malign influence of corporations. Graeme Wood of the Atlantic summarizes:

The author of the manifesto pronounced himself in “general” agreement with the Christchurch murderer. He opposed racial mixing; he thought America was committing suicide by letting Hispanics “invade….”

The very few noteworthy sections of the manifesto are the ones that reveal a broader range of influences than one might suspect. The author reserves his greatest rage not for Hispanics, but for “the takeover of the United States by unchecked corporations.” The corporations, he says, are pro-immigration and befoul our natural environment. Once automation spreads and causes mass unemployment, Hispanic invaders will demand government freebies—specifically a universal basic income (UBI)—and will cause civil unrest if not placated. Oddly enough, the author shares some of these goals, for white people anyway: “Achieving ambitious social projects like universal healthcare and UBI would become far more likely to succeed if tens of millions of dependents are removed…”

Many of these ideas, including some of the most stupid and craven ones, come not from the right, as traditionally conceived, but from the left as well. The left has peddled conspiracies of corporations as diabolical puppeteers (while the right has credulously promoted corporations as angelic job creators). Lack of confidence in job markets’ ability to digest and repurpose displaced workers is typically a concern of the left, and, of course, the Democratic presidential candidate Andrew Yang has been the most vocal figure on the subject of job loss due to automation. UBI and health care have been proposed by Swedish-model Democrats and ridiculed by Republicans. The belief that poor immigrants would, if given the chance, fill our welfare rolls and capsize the ship of state—that’s the position not only of the Trump adviser Stephen Miller but also of Bernie Sanders and a long tradition of labor leftists eager to keep “American jobs” safe from immigrants. Combine these ideas, which have traction now in both major parties, with straightforward racism and xenophobia, which have traction in one major party, and you get what we saw yesterday in El Paso.

Wood argues (correctly, in my view) that Donald Trump’s anti-immigrant rhetoric contributes to this ideological potpourri in a more reprehensible way than that of current American left-wing politicians. He is likely right on that point. But that should not lead us to ignore the left-wing side of this equation, especially since the problem is far from confined to the US, and in many ways predates Trump’s unexpected rise to power.

As Wood notes, the El Paso killer’s ideology resembles that of the shooter who killed over fifty Muslims in New Zealand earlier this year. Indeed, the former even cited the latter’s manifesto in his own. While some of the combination of right and left-wing ideology in both men’s worldviews is eccentric, both also have deeper roots in a world-view common to many on both the nationalist right and the socialist left: the assumption that the world is a zero-sum game where some groups can only prosper and succeed at the expense of others. What I wrote in March after the New Zealand shooting remains just as relevant today:

Some may find it surprising that the perpetrator of the recent horrific New Zealand terrorist attack that killed fifty Muslim worshipers in two mosques, combined seemingly right-wing nationalism with seemingly left-wing socialism and environmentalism….

But in this case, the terrorist’s worldview is less unusual than it might seem. A similar combination of views is evident in many xenophobic nationalist movements, both past and present. Socialists and nationalists have their differences. But they also have much in common, including a zero-sum view of the world.

Anti-immigrant nationalist parties in Europe often combine hostility to nonwhite immigration with support for extensive government control of the economy. That’s true of such cases as the National Front in France (now renamed as the “National Rally”) and the AfD in Germany. Such parties often also often blame immigrants for real and imagined environmental degradation, just as the perpetrator of the New Zealand attack does….

Similarly, the perpetrator of the New Zealand attack argues that environmentalism and immigration restriction “are the same issue [because] the environment is being destroyed by over population,…” Some influential far-left environmentalists have also advocated coercive population control, including defending China’s cruel “one child” policy….[note: the El Paso killer also uses the supposed need for population control as a justification for keeping out immigrants].

Racial nationalists and socialist far leftists share a common zero-sum view of the world under which some groups can succeed and prosper only at the expense of others. It is easy to see how that sort of world view often leads adherents to believe that drastic action—including violence—is essential to ensure that the “right” people end up as winners in this cruel zero-sum world. I discussed this crucial commonality in greater detail here…

Zero-sum thinking need not always lead to racial and ethnic hostility, or xenophobia. It is also often channeled in other directions, such as hostility to the wealthier members of one’s own ethnic group or society. In some cases, it leads to a combination of both fear of foreigners and fear of the wealthy.

For example, unexpectedly popular Democratic presidential candidate Bernie Sanders echoes Donald Trump’s hostility to international trade, while simultaneously arguing that ordinary Americans can only be economically successful by redistributing vast wealth from “the 1 percent.” Until recently, he also expressed considerable hostility towards immigration, denouncing the idea of free migration of labor as a plot by “the Koch brothers” and other malevolent billionaires, which would impoverish the working class and end up “doing away with the concept of a nation state.”

“Lone wolf” terrorist attacks like those in New Zealand and El Paso are far from the only dangers of zero-sum thinking, or even the most significant. The far bigger danger is the impact of these ideas on “mainstream” politics and public policy—an impact that goes well beyond a few extremist killers:

Fortunately, most nationalists and socialists aren’t willing to go so far as to personally commit acts of terrorism. But all too many are willing to advocate large-scale coercion that inflicts great harm on large numbers of people, in order to ensure that they and their preferred causes don’t end up as losers in a zero-sum world. Everything from barring migrants fleeing horrible oppression, to separating immigrant children from parents in order to deter them from entering, to coercive population control, to massive expropriation of property, and repression of “capitalists” in order to transfer the nation’s wealth to “the people.” The list can easily be extended.

There is no easy antidote to the spread of dangerous zero-sum ideas. But perhaps the beginning of wisdom is to recognize the danger they pose, and understand why they are wrong:

Far from enriching natives, immigration restrictions often end up undermining their freedom and prosperity as well as that of potential immigrants. Standard economic estimates indicate that free migration throughout the world would double world GDP, with many of the gains going to natives, not just migrants. Natives lose the gains from trade with immigrants, and also suffer from the civil liberties violations inherent in efforts to keep out and deport migrants. Rich and poor are not locked in a zero-sum game either. To the contrary, they can prosper together through mutual exchange, and historically often have.

Pollution and global warming are genuinely serious problems. But addressing them does not require massive coercion or keeping millions of people in poverty. Historically, increasing wealth has actually led to reductions in pollution (after an initial increase early in the process of industrialization), as wealthy societies can more easily afford to invest in reducing pollution. Even when it comes to the particularly difficult challenge of climate change, there are ways to combat that simultaneously increase prosperity rather than stifle it. They include reducing regulatory obstacles to using nuclear power, cutting back on zoning restrictions that make it hard to build denser housing, and offering prizes for the development of new “clean” energy technologies. Where regulation is needed to cut back on carbon dioxide emissions, it should take the the scalpel form of a revenue-neutral carbon tax, rather than the meat cleaver of coercive population control and government takeovers of huge portions of the economy.

It would be naive to imagine that zero-sum games never occur. But they are far less common than either the far left or the nationalist right imagine. The more people come to understand that, the better.

 

NOTE: Because perpetrators of terrorist attacks often undertake them in large part to gain fame and media attention for themselves and their ideas, I have refrained from mentioning the names of the men who committed the New Zealand  and El Paso’s attack or linking to their “manifestos.” I have instead linked to others’ summaries of their ideas.  But both the names and the manifestos are easily found online, for those who wish to read them for themselves. Ultimately, the reason to focus on these types of ideas is not so much that they motivated these terrorists, but that they have a much broader pernicious influence on political discourse and public policy.

from Latest – Reason.com https://ift.tt/31h0fLa
via IFTTT

The Perils of Zero-Sum Worldviews Revisited

The terrorist mass shooter who killed some twenty people in El Paso yesterday was motivated by a combination of racism and xenophobia and seemingly left-wing concerns about protecting the environment and expanding the welfare state. The “manifesto” he wrote combines elements of both. It attacks racial mixing and condemns Hispanic immigrants as “invaders,” but also seeks to bar them in order to protect the environment, expand the welfare state, and curb the supposedly malign influence of corporations. Graeme Wood of the Atlantic summarizes:

The author of the manifesto pronounced himself in “general” agreement with the Christchurch murderer. He opposed racial mixing; he thought America was committing suicide by letting Hispanics “invade….”

The very few noteworthy sections of the manifesto are the ones that reveal a broader range of influences than one might suspect. The author reserves his greatest rage not for Hispanics, but for “the takeover of the United States by unchecked corporations.” The corporations, he says, are pro-immigration and befoul our natural environment. Once automation spreads and causes mass unemployment, Hispanic invaders will demand government freebies—specifically a universal basic income (UBI)—and will cause civil unrest if not placated. Oddly enough, the author shares some of these goals, for white people anyway: “Achieving ambitious social projects like universal healthcare and UBI would become far more likely to succeed if tens of millions of dependents are removed…”

Many of these ideas, including some of the most stupid and craven ones, come not from the right, as traditionally conceived, but from the left as well. The left has peddled conspiracies of corporations as diabolical puppeteers (while the right has credulously promoted corporations as angelic job creators). Lack of confidence in job markets’ ability to digest and repurpose displaced workers is typically a concern of the left, and, of course, the Democratic presidential candidate Andrew Yang has been the most vocal figure on the subject of job loss due to automation. UBI and health care have been proposed by Swedish-model Democrats and ridiculed by Republicans. The belief that poor immigrants would, if given the chance, fill our welfare rolls and capsize the ship of state—that’s the position not only of the Trump adviser Stephen Miller but also of Bernie Sanders and a long tradition of labor leftists eager to keep “American jobs” safe from immigrants. Combine these ideas, which have traction now in both major parties, with straightforward racism and xenophobia, which have traction in one major party, and you get what we saw yesterday in El Paso.

Wood argues (correctly, in my view) that Donald Trump’s anti-immigrant rhetoric contributes to this ideological potpourri in a more reprehensible way than that of current American left-wing politicians. He is likely right on that point. But that should not lead us to ignore the left-wing side of this equation, especially since the problem is far from confined to the US, and in many ways predates Trump’s unexpected rise to power.

As Wood notes, the El Paso killer’s ideology resembles that of the shooter who killed over fifty Muslims in New Zealand earlier this year. Indeed, the former even cited the latter’s manifesto in his own. While some of the combination of right and left-wing ideology in both men’s worldviews is eccentric, both also have deeper roots in a world-view common to many on both the nationalist right and the socialist left: the assumption that the world is a zero-sum game where some groups can only prosper and succeed at the expense of others. What I wrote in March after the New Zealand shooting remains just as relevant today:

Some may find it surprising that the perpetrator of the recent horrific New Zealand terrorist attack that killed fifty Muslim worshipers in two mosques, combined seemingly right-wing nationalism with seemingly left-wing socialism and environmentalism….

But in this case, the terrorist’s worldview is less unusual than it might seem. A similar combination of views is evident in many xenophobic nationalist movements, both past and present. Socialists and nationalists have their differences. But they also have much in common, including a zero-sum view of the world.

Anti-immigrant nationalist parties in Europe often combine hostility to nonwhite immigration with support for extensive government control of the economy. That’s true of such cases as the National Front in France (now renamed as the “National Rally”) and the AfD in Germany. Such parties often also often blame immigrants for real and imagined environmental degradation, just as the perpetrator of the New Zealand attack does….

Similarly, the perpetrator of the New Zealand attack argues that environmentalism and immigration restriction “are the same issue [because] the environment is being destroyed by over population,…” Some influential far-left environmentalists have also advocated coercive population control, including defending China’s cruel “one child” policy….[note: the El Paso killer also uses the supposed need for population control as a justification for keeping out immigrants].

Racial nationalists and socialist far leftists share a common zero-sum view of the world under which some groups can succeed and prosper only at the expense of others. It is easy to see how that sort of world view often leads adherents to believe that drastic action—including violence—is essential to ensure that the “right” people end up as winners in this cruel zero-sum world. I discussed this crucial commonality in greater detail here…

Zero-sum thinking need not always lead to racial and ethnic hostility, or xenophobia. It is also often channeled in other directions, such as hostility to the wealthier members of one’s own ethnic group or society. In some cases, it leads to a combination of both fear of foreigners and fear of the wealthy.

For example, unexpectedly popular Democratic presidential candidate Bernie Sanders echoes Donald Trump’s hostility to international trade, while simultaneously arguing that ordinary Americans can only be economically successful by redistributing vast wealth from “the 1 percent.” Until recently, he also expressed considerable hostility towards immigration, denouncing the idea of free migration of labor as a plot by “the Koch brothers” and other malevolent billionaires, which would impoverish the working class and end up “doing away with the concept of a nation state.”

“Lone wolf” terrorist attacks like those in New Zealand and El Paso are far from the only dangers of zero-sum thinking, or even the most significant. The far bigger danger is the impact of these ideas on “mainstream” politics and public policy—an impact that goes well beyond a few extremist killers:

Fortunately, most nationalists and socialists aren’t willing to go so far as to personally commit acts of terrorism. But all too many are willing to advocate large-scale coercion that inflicts great harm on large numbers of people, in order to ensure that they and their preferred causes don’t end up as losers in a zero-sum world. Everything from barring migrants fleeing horrible oppression, to separating immigrant children from parents in order to deter them from entering, to coercive population control, to massive expropriation of property, and repression of “capitalists” in order to transfer the nation’s wealth to “the people.” The list can easily be extended.

There is no easy antidote to the spread of dangerous zero-sum ideas. But perhaps the beginning of wisdom is to recognize the danger they pose, and understand why they are wrong:

Far from enriching natives, immigration restrictions often end up undermining their freedom and prosperity as well as that of potential immigrants. Standard economic estimates indicate that free migration throughout the world would double world GDP, with many of the gains going to natives, not just migrants. Natives lose the gains from trade with immigrants, and also suffer from the civil liberties violations inherent in efforts to keep out and deport migrants. Rich and poor are not locked in a zero-sum game either. To the contrary, they can prosper together through mutual exchange, and historically often have.

Pollution and global warming are genuinely serious problems. But addressing them does not require massive coercion or keeping millions of people in poverty. Historically, increasing wealth has actually led to reductions in pollution (after an initial increase early in the process of industrialization), as wealthy societies can more easily afford to invest in reducing pollution. Even when it comes to the particularly difficult challenge of climate change, there are ways to combat that simultaneously increase prosperity rather than stifle it. They include reducing regulatory obstacles to using nuclear power, cutting back on zoning restrictions that make it hard to build denser housing, and offering prizes for the development of new “clean” energy technologies. Where regulation is needed to cut back on carbon dioxide emissions, it should take the the scalpel form of a revenue-neutral carbon tax, rather than the meat cleaver of coercive population control and government takeovers of huge portions of the economy.

It would be naive to imagine that zero-sum games never occur. But they are far less common than either the far left or the nationalist right imagine. The more people come to understand that, the better.

 

NOTE: Because perpetrators of terrorist attacks often undertake them in large part to gain fame and media attention for themselves and their ideas, I have refrained from mentioning the names of the men who committed the New Zealand  and El Paso’s attack or linking to their “manifestos.” I have instead linked to others’ summaries of their ideas.  But both the names and the manifestos are easily found online, for those who wish to read them for themselves. Ultimately, the reason to focus on these types of ideas is not so much that they motivated these terrorists, but that they have a much broader pernicious influence on political discourse and public policy.

from Latest – Reason.com https://ift.tt/31h0fLa
via IFTTT

Jim Grant: The Trouble With Modern Monetary Theory

Authored by James Grant via Barrons.com,

Modern monetary theory is not so theoretical anymore. In all but name, it’s the description of Republican fiscal policy in this living moment. “Federal Borrowing Soars as Deficit Fear Fades,” said the headline on page one of Tuesday’s Wall Street Journal. For the second year in a row, the Trump administration is spending $1 trillion more than the government expects to extract from the taxpayers.

The Bourgeois Gentleman is the Molière play in which a character comes to the proud realization that he has been speaking prose all his life without even knowing it. By the same token, the Trump administration has been implementing the essential doctrines of “functional finance,” also known as MMT, without seeming to realize it.

No harm came to Molière’s character, M. Jourdain, for his funny lack of self-awareness. The stakes are higher for all who live under the influence of the 20th-century progenitor of MMT, the economist Abba Lerner.

Abba Lerner, the progenitor of MMT.

You can boil down MMT, as James Montier did in Barron’s last week, to a few handy precepts. The first is that money is the government’s creation, not society’s. It derives its value from the fact that you can pay your taxes with it.

Right away, you understand the political foundation of the body of ideas associated with Lerner, an avowed Marxist. But MMT is a big tent, and there’s plenty of room for Republicans.

“[W]hatever may have been the history of gold,” Lerner wrote in 1947, “at the present time, in a normally well-working economy, money is a creature of the state. Its general acceptability, which is its all-important attribute, stands or falls by its acceptability by the state.”

President Donald Trump has never put it exactly that way, but Lerner’s idea is implicit in the way 21st-century central banks do business. They set interest rates and print money to achieve prosperity—full employment, as Lerner defined it; full employment plus record-high stock prices, for Republicans. Borrow money, spend it, materialize it out of thin air, Lerner counseled. Stop when economic growth reaches its physical constraints of spare labor and capital. If inflation accelerates, lower the boom by taxing the rich instead of borrowing from them. Except for the admonition to tax, the White House and Lerner are on the same page.

The second big idea in MMT concerns the nature of the public debt. There’s nothing to fear from it, said Lerner – at least, not if a government can borrow indefinitely in its own currency.

“The greater the national debt,” the economist wrote, “the greater is the quantity of private wealth. The reason for this is simply that for every dollar of debt owed by the government, there is a private creditor who owns the government obligations…and who regards these obligations as part of his private fortune.”

Lerner carried the argument to its logical Keynesian conclusion: The greater our collective fortune, the less we need to save. The lower our savings, the greater our spending. The greater our spending, the higher the level of our employment.

The Trump White House talks an orthodox fiscal game, even now; Lerner made no such pretense, believing as he did that the public’s liabilities are identical to the public’s assets. We owe it to ourselves, in other words—and, of course, nowadays, to the foreign bondholders, too.

Lerner was a close reasoner and lucid writer. In his carefully constructed theoretical world, the public debt would not grow indefinitely but rather tend to melt away. Why?

“The greater the national debt, the greater is the quantity of private wealth” and, hence, the lower the need to borrow.

It has not worked out quite that way. Famously, the debt has not melted away, but spurted. In the past 20 years, the ratio of federal debt to gross domestic product has leapt to 105% from 60%. Over the same two decades, observe Van Hoisington and Lacy H. Hunt, guiding lights at Hoisington Investment Management, in Austin, Texas, GDP has grown at 1.2% a year per capita, 37% below the long-term U.S. average.

Lerner failed to anticipate today’s looming entitlements crisis, the falling national birthrate, and the striking decline in the rate of private saving these past 10 post-crisis years.

The empirical fact, again to draw on Hoisington and Hunt, is that “large indebtedness eventually slows economic growth as resources are transferred from the highly productive private sector to the government sector.”

“We have, indeed, been told that the public is no weaker upon account of its debts,” wrote an earlier commentator, “since they are mostly due among ourselves, and bring as much property to one as they take from another. It’s like transferring money from the right hand to the left; which leaves the person neither richer nor poorer than before.”

That was David Hume, Scottish philosopher and contemporary of Adam Smith, writing in 1777.

Anticipating MMT in an essay entitled “Of Public Credit,” Hume called it “buncombe.”

In fairness to MMT, England did not default, as Hume feared it would, and as American patriots, then fighting the Revolutionary War, hoped it would. In fairness to Hume, many another nation did subsequently default. Indeed, in 1933 and 1971, the U.S. itself left its creditors high and dry by refusing to honor its promise to pay dollars denominated in a fixed weight of bullion.

Now that dollars are fashioned from paper or (an even lighter-weight material) digital keystrokes, formal default is unnecessary. The government can print whatever it needs to service its fixed charges. The question is whether the creditors will cheerfully accept the currency so effortlessly tossed off the 21st-century presses.

Hume, steeped in the classics, reminded his readers that Roman emperors stored up treasure against some future day of peril.

The “modern” expedient, Hume disapprovingly continued, “is to mortgage the public revenues, and to trust that posterity will pay off the encumbrances contracted by their ancestors: and they, having before their eyes so good an example of their wise fathers, have the same prudent reliance on their posterity; who, at last, from necessity more than choice, are obliged to place the same confidence in a new posterity.”

Speaking for the newest posterity – that’s us – I have arrived at one certain conclusion: The word “modern,” written or spoken in the fiscal, monetary, or financial context, is trouble – nothing but trouble.

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

FBI: Amazon Drivers Involved In Multi-Million Dollar Theft Ring Involving Pawn Shops

Two contracted Amazon delivery drivers routinely stole items out of packages they were handling, selling the contents at local pawn shops and through a theft ring that accounted for more than $10 million in sales on Amazon.com since 2013, according to AP, citing a FBI search warrant affidavit unsealed last month. 

A police detective last summer noticed that one of the drivers had dozens of pawn shop transactions, and thus began an investigation that uncovered a theft ring that sold millions of dollars’ worth of stolen goods on Amazon.com in the past six years, the FBI said.

According to the search warrant affidavit, two storefront businesses posing as pawn shops bought the goods from shoplifters, then had the items shipped to Amazon warehouses, where they were stored until sold online. –AP

According to the FBI, the agency is still waiting on records from Amazon to determine the full extent of the thefts. 

Federal investigators raided the pawn shops and the home of the scheme’s ringleader, 44-year-old Aleksandr Pavlovskiy of Auburn, Washington. That said, charges have yet to be filed in the case. 

The investigation began last summer when a police detective in Auburn, a south Seattle suburb, was perusing a record of pawn shop sales and noticed that one man had made 57 transactions. It turned out to be one of the drivers.

He had received nearly $30,000 selling items to the pawn shops between February and July last year, the affidavit said. Police initially arrested the driver, but released him from jail to avoid disrupting their larger investigation.

The other driver, identified as Abbas Zghair, was believed to be a roommate of the first. Amazon told investigators that Zghair stole about $100,000 worth of property, including gaming systems, sporting goods and computer products — items he sold to one of the pawn shops for less than $20,000, the agent wrote. –AP

One man named Alex who answered the door at one of the named pawn shops told the Associated Press that his business was legitimate and his good record-keeping should keep him out of any trouble. According to FBI agent Ariana Kroshinsky, the two Amazon drivers were among those providing stolen goods to the pawn shops. 

Detectives staked out the pawn shops, Innovation Best in Kent and Thrift-Electro in Renton, and observed that they appeared to be paying shoplifters and drug users cash for new items from Home Depot, Lowes and Fred Meyer department stores. Unlike typical pawn shops, they didn’t make sales; instead, the products were moved to a warehouse and to Amazon “fulfillment centers,” from where they were shipped when they were sold on Amazon’s website by sellers using the handles “Bestforyouall” or “Freeshipforyou,” the affidavit said. –AP

In a statement, Amazon said: “When we learned there was an investigation into two contracted drivers, we cooperated with law enforcement by providing them the information they requested. Additionally, we strictly prohibit inauthentic or stolen goods from being offered in our store and take action when sellers do not comply.” 

Both drivers were employees of JW Logistics, based in Fricso, Texas. 

According to a database of pawnshop transactions reviewed by Auburn police, the suspect pawn shops paid more than $4.1 million to sellers who brought them nearly 48,000 items in the past six years. The items included allergy medication, razors, electric toothbrushes and tools in their original packaging. Detectives also conducted undercover operations in which they sold new items in their original packaging to the shops, which accepted them no questions asked, Kroshinsky wrote. –AP

“It’s a little bit of an arms race for Amazon to be able to take in product, put it on the web and get it to their customers in a speedy fashion and not unwittingly sell stolen stuff at the same time,” said Jon Reily – a VP for the digital consultancy firm Publicis Sapient and previously the head of e-commerce user experience for Amazon Devices. 

“Ultimately what Amazon has to do is show good faith if the government comes knocking on the door and says, ‘Look, you’re selling stolen goods.’”

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

To ‘Succeed’, Libra Must Prove Itself In The Indian Market

Authored by Huw van Steenis, op-ed via The Financial Times,

If Facebook is serious about the remittances market it needs to convince a wary New Delhi…

As global policymakers try to divine Facebook’s true ambitions for its new digital currency, Libra, one thing is clear: payments are the battleground. Even if it does not succeed, Facebook has upped the stakes for its competitors just by entering the field.

Technology businesses, payments companies and banks are each trying to become the gateway into the platform-based economy. The size of the prize for the winners can be huge: Chinese groups Alipay and WeChat Pay control more than 90 per cent of Chinese mobile payments.

Even in the west, moving money can be costly and inefficient. Those who end up paying the most are often the vulnerable, who can least afford to do so. Improving these processes offers significant returns and social benefits. That is why I argued in my Future of Finance report for the Bank of England that catalysing payments innovation should be a priority for the UK. In emerging markets, the need is greater, and the potential returns even higher. Some of the most interesting innovations are happening outside the west.

The remittance market is ripe for disruption. In India, the largest market globally for remittances, the World Bank calculates that the cost of international peer-to-peer payments was about 7 per cent, for a $200 payment. Families send back home more than $80bn a year — about one-quarter from the US and roughly half from the Middle East, according to a recent Reserve Bank of India survey.

India is also the largest market globally for the unbanked, after China. This means that if Facebook is serious about the remittances market and the unbanked, then India ought to be its number one target.

India is also Facebook’s largest international market, with more than 300m users. The most successful new payment networks of the past decade — Alipay, WeChat Pay and PayPal — each benefited from huge online platform partners to help build their networks. That said, it is not at all clear that Libra can succeed in India.

First, India has largely cracked the identification problem with its own, audacious nationwide scheme, Aadhaar, which dramatically simplifies the way networks know their customers, and helps give access to basic bank accounts.

Then there is the memory of Facebook’s previous attempt to provide its services to India’s unconnected. Its “free basics” programme, which promised to connect millions of Indians to a free version of the internet curated by the company, was stymied in 2016 by local opposition.

Facebook is also entering a fast-moving, competitive field in which the Chinese, Amazon, Apple and Google are already well ahead of Facebook. Paytm, backed by Chinese group Ant Financial, already has 300m customers in India and Google Pay has 50m. Meanwhile, Visa, Mastercard and many others are trying to make cross border payments cheaper, more secure and faster.

Perhaps most importantly, India doesn’t like cryptocurrencies and has proposed a draft bill to ban trading in them, which could carry up to a 10-year jail sentence. While there is a heated debate in cryptocurrency circles as to whether Libra really counts as a cryptocurrency, the country will take some persuading, and a lot of time to counter this wariness. That might be why local media reports suggest Libra is not targeting India. An offering using local currencies and following the Chinese playbook may have been a faster route to market.

As things stand, we don’t know enough to weigh up whether Libra will be a significant presence in the payments sector. But Facebook’s moon shot has raised the stakes for everyone involved. A far more complex payments system that uses new technology calls for updated regulation. And whether Libra is a success or not, it is already a catalyst for banks and payment companies to dramatically up their own games.

via ZeroHedge News https://ift.tt/2GM80B7 Tyler Durden

Morgan Stanley: We Continue To Expect A 10% Correction This Quarter

Authored by Michael Wilson, Morgan Stanley chief equity strategist

Don’t Blame the Fed or Trade – It’s the Fundamentals

Rarely has the adage “Don’t fight the Fed” been more apropos than over the past 18 months. In 2018, the Federal Reserve’s aggressive tightening contributed to a bear market for most stocks, while this year’s equally aggressive dovish pivot has resulted in a new bull market for some. Since our call 18 months ago for a multi-year consolidation in global equities, the average global stock and index is flat to down 10%, while the leading S&P 500 Index is now barely up with a lot of intermittent ups and downs. In short, thanks to the Fed’s policy shift, we’ve seen a consolidation that leaves us at the high end of our expected range.

Last Wednesday, the Fed made good on its dovish pivot by cutting the fed funds rate by 25bp – the first cut in 11 years by the world’s most influential central bank. While it wasn’t 50bp as our team and some others were expecting, the Fed also announced an immediate end to its balance sheet reduction program (affectionately known as QT for quantitative tightening). This combination is unequivocally positive for asset prices. However, to the chagrin of many, the markets reacted negatively, with stocks selling off on Wednesday afternoon and rates plummeting at every tenor, leaving the yield curve still inverted. Investors were quick to blame Chair Powell for failing to communicate a more dovish message, suggesting that they had been misled by prior Fedspeak. But this seems unfair, given that the Fed delivered a more dovish action than had been priced in if you include the end of QT.

Investors should have been more focused on the fundamentals. Going into the Fed meeting last week, my contention was that stocks had already discounted a dovish pivot and investors were potentially ignoring the continued deterioration in fundamentals, as well as other risks including trade. In short, I argued that no matter the outcome, the meeting was likely to provide an excuse for the rally to roll over. After a decent bounce in stocks on Thursday morning, trade resurfaced with President Trump’s tweet that the US would levy new 10% tariffs on the remaining US$300 billion of Chinese imports. This led to a sharp reversal in the afternoon, quashing any lingering hopes that the rally from June was intact. Markets look to have been overly complacent about trade as well. Given the lack of any real progress in talks with China earlier in the week, that risk was still very much alive prior to the president’s tweet.

From here, investors must decide if the Fed can deliver the growth needed to justify current or higher prices. Most investors I speak with still think that this is a mid-cycle correction in the economy and that any Fed cuts are simply an insurance policy. If one believes this, shouldn’t a “mid-cycle adjustment” (in Chair Powell’s words) be enough? Given the very broad and steep decline in many leading indicators and corporate earnings growth, I’ve made the case that we are far from mid-cycle and closer to end of cycle, especially for corporate profits.

On that note, I adamantly disagree with the claim that 2Q earnings have been strong or even good. To the contrary, the results and guidance so far indicate that S&P 500 forward 12-month consensus estimates remain too high and are likely to fall another 5-10%.

Bottom line, the financial markets’ initial negative reaction to the Fed’s first rate cut since 2008 shouldn’t have come as a surprise. Trade escalation is not a new risk; it was simply overlooked.

Therefore, I continue to expect a 10% correction in the S&P 500 this quarter.

So what about the adage that you shouldn’t fight the Fed? History suggests that Fed pauses after a long rate-hiking campaign, like the one we had in January, always lead to a strong market rally – exactly what we’ve seen this year. However, the beginning of a new rate-cutting cycle is typically not good for stocks, as the last two examples (January 2001 and September 2007) clearly show. The lesson is that while a change in Fed policy can affect financial conditions – and hence asset prices – almost immediately, reversing an economic slowdown with easier monetary policy takes time. Stay more defensively oriented in your portfolios until the slowdown is properly priced.

via ZeroHedge News https://ift.tt/2T80rtd Tyler Durden

FBI Wants Tech To Track Social Media For Criminals And Terrorists Before They Act

Authored by Brandi Vincent via NextGov.com,

Proposals from interested vendors are due later this month…

The Federal Bureau of Investigations aims to acquire access to a “social media early alerting tool” that will help insiders proactively and reactively monitor how terrorist groups, foreign intelligence services, criminal organizations and other domestic threats use networking platforms to further their illegal efforts, according to a request for proposalamended this week. 

“With increased use of social media platforms by subjects of current FBI investigations and individuals that pose a threat to the United States, it is critical to obtain a service which will allow the FBI to identify relevant information from Twitter, Facebook, Instagram, and other Social media platforms in a timely fashion,” the agency said in the RFP.

“Consequently, the FBI needs near real-time access to a full range of social media exchanges in order to obtain the most current information available in furtherance of its law enforcement and intelligence missions.”

Though the request was initially released on July 8, the FBI amended it this week to extend the relevant dates: The agency’s answers to vendors moved from July 25 to Aug. 7, and the proposal due date shifted from Aug. 8 to Aug. 27. Though the original proposal listed the anticipated award date as Aug. 30, it could be pushed back due to these changes. 

Still, the proposal comes at a time when society is growing accustomed to the painful reality of the weaponization of social media outlets to cause harm. Earlier this year, a mass shooter in New Zealand opened fire at two mosques killing 50 people and injuring many more – he posted a 74-page manifesto and images of his weapons online ahead of the attack and livestreamed the shooting directly on Facebook Live. And the shooter who killed three people at the Gilroy Garlic Festival in California Sunday also previously posted online about an 1890 racist manifesto, which has been deemed a “staple among neo-Nazis and white supremacists on extremist sites.”

“It is an acknowledged fact that virtually every incident and subject of FBI investigative interest has a presence online,” the bureau said in the project’s statement of objectives.

“The mission critical exploitation of social media enables the Bureau to proactively detect, disrupt, and investigate an ever growing diverse range of threats.”

The FBI ultimately wants an interactive tool that can be accessed by all headquarters division and field office personnel via web browsers and through multiple devices. Interested vendors should have the capabilities to offer the agency the ability to set filters around the specific content they see, send immediate and custom alerts and notifications around “mission-relevant” incidents, have broad international reach and a strong language translation capability and allow for real-time geolocation-based monitoring that can be refined as events develop. 

And when it comes to specific persons-of-interest and suspects already involved in open investigations, the bureau wants the ability to obtain their full-scope social media profiles from across the various platforms and insights into their affiliations with various groups across the world wide web.

“Items of interest in this context are social networks, user IDs, emails, IP addresses and telephone numbers, along with likely additional account with similar IDs or aliases,” the agency said. 

The firm-fixed-price contract will be awarded on a best-value basis and will include one base year and four one-year option periods. 

via ZeroHedge News https://ift.tt/2T58o2A Tyler Durden