July 2014 – Page 58

Pentagon Says Russia Preparing To Transfer “Powerful Weapons” To Ukraine

No red lines, no YouTube clips, no “satellite images” of WMD this time: just more “straight to propaganda” speculation by the Pentagon. From Reuters:

The Pentagon said on Friday the transfer of heavy-caliber multiple-launch rocket systems from Russia to Ukrainian separatists appeared to be imminent with the arms close enough to the border they could be handed over “potentially today.”

“We have indications that the Russians intend to supply heavier and more sophisticated multiple-launch rocket systems in the very near future,” said Army Colonel Steve Warren, a Pentagon spokesman, adding that the weapons were in the over-200mm range.

Warren indicated the weapons had been seen getting closer to the border and the Pentagon believed a transfer was imminent and could happen “potentially today.”

“We believe that they are able to transfer this equipment at any time, at any moment,” he said.

So Russia “could”, “potentially today” transfer rocket launchers to Ukraine. But wait, wasn’t the same Pentagon reporting hours ago that Russia is now, with the entire world clearly watching, no longer even pretending to be not engaged and is firing at Ukraine forces directly from its own territory? Why would they stop now? And surely with every US spy satellite trained at east Ukraine, the moment this happens it will be blasted to every media outlet. Right?

A multiple-launch rocket system is a wheeled or tracked vehicle mounted with multiple tubes capable of firing a half dozen or more guided or unguided rockets in quick succession at targets scores of miles (km) away. The rockets are generally 100mm to 300mm, with those over 200mm in the heavier-caliber category.

“We’re very concerned with the quantity and the capability of weapons flowing from Russia into the Ukrainian separatists’ hands,” Warren said.

“There has been a continuous flow over the last several weeks of weapons and equipment from Russia to Ukraine,” he said, noting that the “most egregious example” was a column of more than 100 vehicles crossing the border.

The Pentagon’s assessment that a transfer of heavy weaponry was imminent came as Russian authorities accused Ukraine of firing a volley of mortar rounds across the frontier into Russia on Friday while a group of investigators was in the area assessing reports of cross-border shooting.

A Russian security official said up to 40 mortar bombs fired by Ukrainian forces fell in the Russian province of Rostov near the border where Ukrainian government forces are fighting pro-Russian separatists. There were no reports of injuries.

Then there was this:

EARNEST SAYS U.S. TALKING WITH EU ABOUT MORE RUSSIA SANCTIONS

And then, just to hammer home the message that crazy Putin, the “West’s Public Enemy Number One” is about to invade Ukraine, we get this from Reuters:

MORE THAN 15K RUSSIAN TROOPS ON UKRAINE BORDER

Ok, we get it: the former KGB spy is on full tilt and deserves every #hashtag the West can unleash. So please activate the sanctions already, those including Gazprom and not the purely theatrical ones to date, and let’s all sit back and watch what happens to Europe’s economy.

In the meantime, due to popular demand, here is some cover art courtesy of William Banzai.

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Obamacare Architect Jonathan Gruber Says, On a Second Occasion, that States That Do Not Set Up Exchanges Lose Access to Obamacare Subsidies

Last night,
a video surfaced showing Massachusetts Institute of Technology
economist Jonathan Gruber saying in 2012 that if states do not set
up their own exchanges under Obamacare, they lose access to the
law.

The clip was important because Gruber is an influential health
policy analyst who helped author the law, and because his statement
matched both the plain language of the law, which says subsidies
are only available state-established exchanges, and the argument
made by legal challengers who have argued in court that the Obama
administration’s implementation of the law—which allowed subsidies
in federally run exchanges—is illegal. The timing was also notable.
Gruber made the statement before the paper laying out the legal
case against the administration’s implementation had been
published, and before the legal challenge against it had been
filed.

Gruber has over the past year and a half repeatedly taken the
other side of the argument, saying on MSNBC this week, “It is
unambiguous this is a typo. Literally every single person
involved in the crafting of this law has said that it’s a
typo, that they had no intention of excluding the federal
states.”

This morning, in response to the clip, Gruber
told The New Republic that the comment was a mistake.
“I honestly don’t remember why I said that. I was speaking
off-the-cuff. It was just a mistake,” he said.

He continued: “There was never any intention to literally
withhold money, to withhold tax credits, from the states that
didn’t take that step” [of creating their own
exchanges]. That’s clear in the intent of the law and if
you talk to anybody who worked on the law. My subsequent statement
was just a speak-o—you know, like a typo.”

But as it turns out, earlier in the month, he made the exact
same point, using similar language, once again calling the
possibility that states won’t set up their own exchanges a “threat”
to the law, and saying that residents in states that don’t set up
their own exchanges would not have access to tax credits.

“The third risk, and the one folks aren’t talking about, which
may most important of all, is the role of the states. Through a
political compromise, it was decided that states should play a
critical role in running these health insurance exchanges. And
health insurance exchanges are the centerpiece of this reform,
because they are the place that individuals can go to shop for
their new, securely priced health insurance. But if they are not
set up in a way which is transparent, and which is convenient for
shoppers, and which allow people to take their tax credits and use
them effectively by health insurance, it will undercut the whole
purpose of the bill. Now a number of states have expressed no
interest in doing so.

A number of states—like California, has been a real leader—one
of, I think it was the first state to pass an exchange bill. It’s
been a leader in setting up its exchange. It’s a great example. But
California is rare. Only about 10 states have really moved forward
aggressively on setting up their exchanges. A number of states have
even turned down millions of dollars in federal government grants
as a statement of some sort—they don’t support health care
reform.

Now, I guess I’m enough of a believer in democracy to think that
when the voters in states see that by not setting up an exchange
the politicians of a state are costing state residents hundreds and
millions and billions of dollars, that they’ll eventually throw the
guys out. But I don’t know that for sure. And that is
really the ultimate threat, is, will people understand that, gee,
if your governor doesn’t set up an exchange, you’re losing hundreds
of millions of dollars of tax credits to be delivered to your
citizens.” [emphasis added]

If this is another mistake, it is an awfully strange one that
just happens to match—not only with the statement he made a week
later, but also with the plain language of the health law and
the argument advanced by legal challengers to the IRS rule allowing
subsidies within Obamacare’s federal exchanges.

Listen to the complete clip, via John Sexton at Breitbart:

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Ronald Bailey on Using Gene Drive Technology to Manage Wild Ecosystems

Gene Drives Wouldn’t it be great if
scientists could genetically engineer mosquitoes to be immune to
the malaria parasite, thus protecting people from that disease? How
about restoring the effectiveness of a pesticide by eliminating
resistance genes in weeds and insect pests? Or altering genomes to
eradicate a pesky invasive species? These are exactly the sorts of
things that a brand new biotechnological tool could do, and it’s
got some people worried. Reason Science Correspondent
Ronald Bailey looks into how “gene drives” can be used safely to
manage wild ecosystems.

View this article.

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David Einhorn On The M&A Bubble And "Dreams" As An Investment Thesis

Yesterday, we were beyond amused when we reported that the market’s response to rumors of Zillow’s $2 billion take over of Trulia was not only to push Trulia stock higher by $500 million but send the market cap of incomeless, EBITDAless Zillow higher by $1 billion. It appears we are not the only ones fascinated by the market’s reaction to every M&A announcement, which is to send not only the target but the acquiror stock soaring. One other such person is David Einhorn who laments precisely this bubblyness in his just released letter to investors, saying that “takeover season has returned and in a new twist, the buyers’ stock prices are also advancing in response to announced deals, enabling companies, including some of our shorts, to see gains as acquirers – even of other troubled companies.”

He proceeds to give several examples of how his shorts have worked against him, a trend which as we reported first in 2012 will continue indefinitely under a centrally-planned regime in which the Fed is the Chief Risk Officer of the market, and where no price declines are allowed, and thus the need to hedge (which means that going long the most hated, vile, worthless companies will, sadly, by and large continue to be a winning strategy).

Still, with a return of 5.2% in Q2 and 7.1% YTD, at least Greenlight is only barely underperforming the market, something that 90% of his hedge fund peers can only dream about.

Here are Einhorn’s full thoughts on the M&A bubble:

Costly takeovers of our shorts appear to be a cyclical phenomenon: We went from 1996-2003 without incurring a single material loss due to a takeover. Then in 2006-2007 we had a number of our shorts taken over in rapid succession, the most costly being Medtronic’s $4.2 billion acquisition of Kyphon at a 32% premium over Kyphon’s already lofty share price. In reviewing historical takeovers of our shorts where we lost money, almost none proved to be good deals for the acquirers.

Well, yes: it’s called forced capital misallocation for a reason.

Things got quieter again for a few years but now takeover season has returned and is again causing losses in our short portfolio. Companies we are short often have serious problems of which the boards and management are probably aware. This makes them more eager than usual to sell at any sort of premium. The prospective buyers ought to discover these problems during due diligence, which should make them walk away. But in the current environment, debt financing is so inexpensive that acquirers can pay premiums and have the deals be accretive to EPS, making them more willing to overlook or ignore any problems they discover.

Bingo.

And speaking of bubble, here is Einhorn on a topic near and dear to Yellen Capital Advisors, LLC: the tech bubble:

In our last quarterly letter, we wrote about the bubble in momentum stocks, most of which are in the technology sector. The media latched onto a single sentence embedded in a lengthy discussion about ‘cool kid’ stocks and suggested that we were declaring all technology stocks to be in a bubble. Nothing could be further from the truth. Many of our largest long positions are in technology, and we are not holding them with a cynical view that we want to play a bubble. We believe that stocks including Apple, Lam Research, Marvell Technology and Micron Technology have strong prospects and are undervalued.

At the same time, there are a number of tech stocks that are caught up in a smaller version of the 1999-2000 internet bubble, and as we mentioned, we created a bubble basket to short them. At this year’s Sohn Investment Conference in May, David presented athenahealth (ATHN), a healthcare IT company, as an example of a bubble basket stock. In response to our assertion that the shares are absurdly overvalued, CEO Jonathan Bush summed things up perfectly a few days after the conference when he told Bloomberg TV, “And those who buy our stock should not be sort of bottom [line] watching value investors. They should be people who dream of a health care cloud.” At Greenlight, dreams do not form the basis of investment theses.

How about hope? We only ask, because that seems to be the most profitable and widespread investment strategy over the past 5 years.

via Zero Hedge http://ift.tt/1lE3Uae Tyler Durden

David Einhorn On The M&A Bubble And “Dreams” As An Investment Thesis

Still, with a return of 5.2% in Q2 and 7.1% YTD, at least Greenlight is only barely underperforming the market, something that 90% of his hedge fund peers can only dream about.

Here are Einhorn’s full thoughts on the M&A bubble:

Costly takeovers of our shorts appear to be a cyclical phenomenon: We went from 1996-2003 without incurring a single material loss due to a takeover. Then in 2006-2007 we had a number of our shorts taken over in rapid succession, the most costly being Medtronic’s $4.2 billion acquisition of Kyphon at a 32% premium over Kyphon’s already lofty share price. In reviewing historical takeovers of our shorts where we lost money, almost none proved to be good deals for the acquirers.

Well, yes: it’s called forced capital misallocation for a reason.

Things got quieter again for a few years but now takeover season has returned and is again causing losses in our short portfolio. Companies we are short often have serious problems of which the boards and management are probably aware. This makes them more eager than usual to sell at any sort of premium. The prospective buyers ought to discover these problems during due diligence, which should make them walk away. But in the current environment, debt financing is so inexpensive that acquirers can pay premiums and have the deals be accretive to EPS, making them more willing to overlook or ignore any problems they discover.

Bingo.

And speaking of bubble, here is Einhorn on a topic near and dear to Yellen Capital Advisors, LLC: the tech bubble:

In our last quarterly letter, we wrote about the bubble in momentum stocks, most of which are in the technology sector. The media latched onto a single sentence embedded in a lengthy discussion about ‘cool kid’ stocks and suggested that we were declaring all technology stocks to be in a bubble. Nothing could be further from the truth. Many of our largest long positions are in technology, and we are not holding them with a cynical view that we want to play a bubble. We believe that stocks including Apple, Lam Research, Marvell Technology and Micron Technology have strong prospects and are undervalued.

At the same time, there are a number of tech stocks that are caught up in a smaller version of the 1999-2000 internet bubble, and as we mentioned, we created a bubble basket to short them. At this year’s Sohn Investment Conference in May, David presented athenahealth (ATHN), a healthcare IT company, as an example of a bubble basket stock. In response to our assertion that the shares are absurdly overvalued, CEO Jonathan Bush summed things up perfectly a few days after the conference when he told Bloomberg TV, “And those who buy our stock should not be sort of bottom [line] watching value investors. They should be people who dream of a health care cloud.” At Greenlight, dreams do not form the basis of investment theses.

How about hope? We only ask, because that seems to be the most profitable and widespread investment strategy over the past 5 years.

via Zero Hedge http://ift.tt/1lE3Uae Tyler Durden

Does Mary Poppins Want a Higher Minimum Wage Or Lower Taxes?

A
Funny or Die video released earlier this week stars Kristen
Bell as an underpaid Mary Poppins singing about why the federal
minimum wage is too low. Ostensibly, that’s the message—raise the
minimum wage—and it’s what thousands of people watching the video
on Facebook are hearing.

They should listen closely, though. Bell’s Mary Poppins is
actually upset that her paycheck is too low after the
government takes its cut.
Seriously:

“You get your paycheck and snap. Federal and state income tax,
Medicare and Social Security? Why, you’re living below the
poverty line.”

One way to address the problem of government gobbling up
workers’ paychecks would be to mandate that some earners
(employers) must give more money to other earners (employees),
indirectly covering the difference between the amount workers
deserve and the amount they actually earn after the government
pilfers their pockets. In other words, raise the minimum
wage.

Another way to address the problem of government gobbling
up workers’ paychecks would be to not have government do that. In
other words, reduce taxes and entitlement spending.

Maybe if the government didn’t force Mary Poppins to cover
its
massive liabilities stemming from generous public employee
compensation, for instance, she could afford to keep dancing with
penguins.

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Federal Judge to Camera-Shy Austin Cops: People Have a Right to Record You. Deal With It.

As
my colleagues and
I frequently note, Americans have a well-established
constitutional right to record police officers as they publicly
perform their duties. Yet cops across the country continue to
harass and arrest people for exercising that right, using bogus
charges such as wiretapping, resisting arrest, and interfering with
police. Yesterday yet another federal judge issued a clear message
to those cops: Cut it out.

The case was brought by Antonio Buehler, an Austin, Texas,
activist who has had several run-ins with camera-shy cops. The
first incident occurred on January 1, 2012, when Buehler pulled
into a 7-11 in Austin to refuel his truck and observed a traffic
stop during which police dragged a screaming passenger from a car
and knocked her to the ground. After Buehler took out his phone and
began taking pictures of the encounter from a distance, Officer
Patrick Obosrki manhandled him and arrested him for “resisting
arrest, search, or transportation.”

Buehler filed a complaint about the incident with the Austin
Police Department but never received a satisfactory response. The
experience led him to start the Peaceful
Streets Project, which aims to help
“individuals understand their rights and hold law
enforcement officials accountable.” The
organization routinely records police encounters “to prevent and
document police brutality.” That work led to two more arrests of
Buehler, both for “interference with public duties,” on August 26,
2012, and September 21, 2012. The third arrest again involved
Oborski. On both occasions police took Buehler’s camera and never
returned it.

In response to Buehler’s federal lawsuit, Oborski
and several other officers claimed they did not realize he had a
right to record them. But according to U.S. Magistrate Judge Mark
Lane, they really should have. In yesterday’s
decision, which allowed the lawsuit to proceed, Lane cited “a
robust consensus of circuit courts of appeals”—including the 1st,
7th, 9th, 10th, and 11th—that “the First Amendment encompasses a
right to record public officials as they perform their official
duties.” He also notes two decisions in which the U.S. Court of
Appeals for the 5th Circuit, which includes Texas, “seems to
assume, without explicitly stating, that photographing a police
officer performing his official duties falls under the umbrella of
protected expression.”

This is not some newly discovered right that Oborski and
his colleagues might have understandably overlooked. To the
contrary, it rests on longstanding principles repeatedly recognized
by the Supreme Court. “If a person has the right to
assemble in a public place, receive information on a matter of
public concern, and make a record of that information for the
purpose of disseminating that information,” Kane writes, “the
ability to make photographic or video recording of that information
is simply not a new right or a revolutionary expansion of a
historical right. Instead, the photographic or video recording of
public information is only a more modern and efficient method of
exercising a clearly established right.” He therefore concludes
that Oborski et al. cannot claim qualified immunity by arguing that
the right was not clearly established at the time of Buehler’s
arrests.

In addition to
his First Amendment claims, Buehler accuses Oborski and the others
of false arrest, and Kane allowed him to pursue those claims as
well. The charge of resisting arrest—which in Buehler’s case
presumably referred to the arrest that he photographed in the first
incident, as opposed to his own arrest for resisting
arrest—involves “using force,” and Buehler claims he never did
that. “Accepting as true Buehler’s factual allegations,”
Kane writes, “Oborski and [Officer Robert] Snider did
not have probable cause to arrest Buehler on January 1, 2012 for
Resisting Arrest, Search, or Transportation.” A
charge of interference with public duties is also inconsistent with
the facts as described by Buehler, says Kane, since he claims he
was merely observing and recording, which he had a right to
do.

In addition to Oborski, Snider, and the other officers, Buehler
is suing the city of Austin and the Austin Police Department,
arguing that they had an obligation to make sure that cops
understand their constitutional obligations. This sort of decision
is important not only because it highlights a right that police are
bound to respect but because it puts them on notice that they can
be held personally liable for violating it.

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You Can't Fly a Drone Here, Here, and Here

The Federal Aviation Administration (FAA) is in charge of
regulating unmanned aerial vehicles, or drones. Sort of. Their
regulations aren’t totally comprehensible (when they
actually exist), and a federal court has affirmed that the
FAA’s case-by-case judgment calls
aren’t actually legally binding.

This lack of clarity about what is allowed where has made flying
drones—which is in many cases a glorified term for
remote-controlled toys—difficult and legally tricky for a lot of
people. Services ranging from a beer
delivery business to a
charitable search-and-rescue team have been hassled and shut
down by the FAA. The administration sometimes even throws
hissy fits over people filming their own weddings with
drones.

Bobby Sudekum, a data analyst and engineer for the mapmaking
site MapBox, can’t cure FAA ineptitude and pettiness, but as
consumer sales of drones continue to grow
he is trying “to help people find safe places to fly.” To do so, he
created the above map and published it this week. Click on it, and
it will lead you to an interactive version on which you can zoom
and see more precise locations.

He explains that this
map is “just a start” and that anyone can submit information about
more no-fly spots. So far, the off-limits areas marked are only
national parks, military bases, and 5-mile radii around medium and
large airports. Wired points
out that “you’ll see on the map … that there isn’t a no-fly
area over Berkeley Lab,” which is a secure
national laboratory. “Similarly, there is no zone marked around
Lawrence Livermore National Laboratory, one of the country’s two
nuclear weapons labs.”

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You Can’t Fly a Drone Here, Here, and Here

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Are We Addicted to Failure?

Submitted by Charles Hugh Smith from Of Two Minds

Are We Addicted to Failure?

Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion.

Addiction is many things, but beneath its complexities it is a self-destructive expression of the desire to avoid or suppress pain. The pain might be physical or the stuff of the mind, memories or inner demons or tortured misgivings about one’s choices, soul and life.

Though the self-destructive aspects of the addiction are painfully visible to observers, to the addict they represent a solution: perhaps not the ideal one or even a good one, but a solution nonetheless.

Fear plays a big part in many addictions–fear of life without the addictive salve. The fear in an addict’s eyes when the fix is not forthcoming is haunting to all who witness it.

To the non-addicted observer, addictions are not successes; they are failures of one kind or another, and those who care about the addict seek some way to extract the addict from the grip of his/her addiction, and from the fear that often drives it.

I have recently been wondering if America is addicted to failure. The oft-repeated definition of insanity is doing the same thing over and over again and expecting different results, generally attributed to Albert Einstein.

But given the right mix of blindness and fear, doing the same thing over and over again and expecting different results might not be insanity but a self-destructive addiction to failure.

In this light, please consider this chart of the broad-based U.S. stock market index, the S&P 500, which I have marked up as an addiction to failure:

The source of this addiction is a fear of life without credit/asset bubbles. Fearing life without the rush and high of asset bubbles, we see an addiction to financial bubbles as a solution in the same terrible way a heroin addict sees smack as a solution: not as a long-term solution or even a good one, but a solution nonetheless, because it makes the pain of facing life without Central Planning financial bubbles go away at least temporarily.

But bubbles inevitably leads to overdose and a subsequent self-destructive crash. Our central bankers/planners have injected enough monetary heroin into the nation to guarantee not just the rush and the high but the overdose that leads to a destructive crash.

Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion; it’s the monkey who controls the addict, not the other way round.

If we’re not addicted to failure, why do we tolerate a central bank that creates one rush-high-overdose-crash after another? Perhaps it’s time to confess that we’re addicted to failure because we’re too afraid to face life without this financial addiction.

Pretty sad, huh? Like all observers, those of us without monetary heroin in our veins wonder when the poor addict will finally wake up and choose a path that isn’t self-destructive. But as many of us know from personal experience, it often takes a near-death experience to awaken the instinct for survival in the addict. Sadly, sometimes not even that is enough, and a once-great nation spirals down to ruin.

If you missed this week’s series:

The Rot Within, Part III: Our Political Order Is Defined by Favoritism and Extortion

The Rot Within, Part II: Inflation Is Not “Growth”

The Rot Within, Part I: Our Ponzi Economy