Earlier today, the 5th Circuit Court of Appeals
stayed the imminent execution of a convicted murderer named
Scott Panetti. He was set to be killed less than eight hours later
at 6 p.m. local time.
The reasoning given was “to allow us to fully consider the late
arriving and complex legal questions at issue in this matter.” It’s
not clear what new information or “late arriving” developments
sparked the decision, but it seems highly likely that sustained,
vocal opposition from a large number of conservative leaders,
including former Texas Rep. Ron Paul, played a role. A
letter signed by nearly two-dozen such individuals argues that
Panetti is not of sound mind and that, as a result, taking his life
would be immoral.
Said Marc Hyden of the group Conservatives Concerned About the
Death Penalty in a statement after the announcement:
Political conservatives and Evangelicals from Ron Paul to Jay
Sekulow have helped awaken our nation to what many view as a
travesty of justice. Texas was about to cross a line by executing a
severely mentally ill man. A wide array of conservative and faith
leaders have spoken out in record numbers about this case. We have
made it abundantly clear that numerous conservatives and
Evangelicals view executing those who are mentally ill as a
violation of our values as Americans. Conservatives have
demonstrated we are firmly part of what appears to be a national
consensus against executing people who are mentally ill.
See my colleague Lauren Galik’s discussion of the Panetti case
here.
Read my examination of shifting conservative attitudes about
capital punishment here.
Free Minds and Free Markets aren’t free! Support
Reason’s annual Webathon with a tax-deductible donation
and help change the world in a libetarian direction. For details on
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here now.
Reason has previously noted
that for 2013, violent crime in the United States is down, killing
of police officers (and violence directed toward police officers)
is
down, but
homicides by police that were subsequently ruled justified were
up. Law enforcement officers killed more than 400 people in
2013.
But that number is known to be inaccurate. The FBI tracks
justified homicides by police, but participation is voluntary.
There is no actual national tracking of deaths at the hands of
police unless they are to determined to be crimes and therefore
show up in violent crime statistics. We don’t have a real, credible
number of how many people the police kill every year. So TheWall Street Journal attempted to
compare numbers from law enforcement agencies with the numbers
on the FBI’s reports between the years 2007 and 2012. They found
more than 500 deaths at the hands of law enforcement agencies
unaccounted for in the FBI’s reports. They conclude “it’s nearly
impossible to determine how many people are killed by the police
each year”:
The reports to the FBI are part of its uniform crime reporting
program. Local law-enforcement agencies aren’t required to
participate. Some localities turn over crime statistics, but not
detailed records describing each homicide, which is the only way
particular kinds of killings, including those by police, are
tracked by the FBI. The records, which are supposed to document
every homicide, are sent from local police agencies to state
reporting bodies, which forward the data to the FBI.
The Journal’s analysis identified several holes in the FBI
data.
Justifiable police homicides from 35 of the 105 large agencies
contacted by the Journal didn’t appear in the FBI records at all.
Some agencies said they didn’t view justifiable homicides by
law-enforcement officers as events that should be reported. The
Fairfax County Police Department in Virginia, for example, said it
didn’t consider such cases to be an “actual offense,” and thus
doesn’t report them to the FBI.
The State of New York does not participate in the reporting
program, according to the Journal, and therefore 68
homicides by New York City Police Department officers between the
years 2007 to 2012 are not even in the FBI’s count. It also means
that
Eric Garner’s choking death at the hands of officers from the
NYPD will not show up in the numbers next year when the FBI
releases its statistics for 2014.
Pension funds and other investors called for changes Tuesday in the way hedge funds charge fees.
The proposed changes were outlined in a statement by the Alignment of Interests Association (AOI), a hedge fund investor group to which many pension funds belong.
The group said that hedge funds should only charge performance fees when returns beat benchmarks, and that fee structures should better link fees to long-term performance.
The Teacher Retirement System of Texas and MetLife Inc. are among investors that yesterday called on managers to beat market benchmarks before charging incentive fees in a range of proposals that address investing terms. Funds should base performance fees on generating “alpha,” or gains above benchmark indexes, and impose minimum return levels known as hurdle rates before they start levying the charges, said the Alignment of Interests Association, a group that represents investors in the $2.8 trillion hedge fund industry.
“Some managers are abiding by the principals to some extent but we are hoping to move everyone toward industry best practices,” said Trent Webster, senior investment officer for strategic investments and private equity at the State Board of Administration in Florida. The pension plan, a member of the association, oversees $180 billion, of which $2.5 billion is invested in hedge funds.
[…]
To better link compensation to longer-term performance, the AOI recommended funds implement repayments known as clawbacks, a system in which incentive money can be returned to clients in the event of losses or performance that lags behind benchmarks. The group said performance fees should be paid no more frequently than once a year, rather than on a monthly or quarterly basis as they are at many firms.
AOI also called on the hedge fund industry to lower management fees – or make operating expenses more transparent so higher management fees can be justified. From Bloomberg:
Management fees, which are based on a fund’s assets, should decline as firms amass more capital, the investor group said.
“We need good managers, not asset gatherers,” Webster said. “The incentives are currently skewed.”
[…]
Firms should disclose their operating expenses to investors so they can assess the appropriateness of management fee levels, the group said.
“Management fees should not function to generate profits but rather should be set at a level to cover reasonable operating expenses of a hedge fund manager’s business and investment process,” the AOI said.
The fees should fall or be eliminated if a manager prevents clients from withdrawing money, according to the group.
Hedge funds typically utilize a “2 & 20” fee structure; but in the second quarter of 2014, hedge funds on average were charging “1.5 & 18”.
* * *
As we concluded previously, as Reuters reports, the redemption flood has finally arrived and "client requests to take out money from hedge funds rose to an 11-month high in November, data released on Thursday showed."
The SS&C GlobeOp Forward Redemption Indicator, a snapshot of hedge fund clients giving notice to withdraw cash expressed as a percentage of assets under administration, rose to 5.05 percent in November from 3.12 percent in October and the highest since December last year. The index is compiled by fund administrator SS&C Technologies Holdings Inc and is based on data provided by its fund clients, who represent about 10 percent of the assets invested in the hedge fund sector.
Our condolences to the hedge funds, most of them, who for the 6th year in a row failed to outperform stocks: it probably will be your last. But feel free to send your complaints to the No Rat's Asses to Give Here Department at the Marriner Eccles building c/o Janet Yellen and her Princeton- and MIT-educated central-planning peers around the globe.
And look at the bright side: since in the current risk-free, centrally-planned environment, virtually all hedge funds are assured a quiet, painless (one hopes) death, you will at least have a head start on your peers, who are still in the industry betting it all on lucky year 7, and maybe learn an actual skill that has practical uses in the real world aside from just clicking a red or green button.
After last night’s marvelous Bloomberg profile of Bill Gross’ last days at PIMCO, we were confident that no written material today could surpass Mary Child’s fascinating narrative of the fallen bond king. And then we read Cannell Capital’s activist letter to one James J. Cramer, of CNBC and TheStreet director infamy, which is hands down the blockbuster reading material du jour.
Why?
Because where else can you find out how the Mad Money anchor with the record low Nielsen rating would have “assorted assistants spray ionized lavander water on his barren cranium“;
Where else could someone ask Cramer “when you lie upon your deathbed, how will you reflect upon on your legacy? Once a $70 stock, TST is now $2.20. The market capitalization of TST has declined from a peak of approximately $1.7 billion in 1999 to $75 million today. This represents the dissipation of about $1.6 billion of sharheolder value.“
Where else can a disgruntled shareholder tell Jim Cramer to “resign from CNBC and align your considerable energy and talents to helping your fellow shareholders crawl back from Hades.”
Where else does one do the actual math: “You have already extracted more than $14 million dollars from TST. In the very best years for the shareholders of Apple, Steve Jobs was paid only $1.00 per year. Warren Buffett’s salary has been $100,000 for more than 25 years. Why in the very worst years for TST shareholders must you pay yourself more than $3.5 million per year…. The four year employment agreement you signed in November 2013 guarantees you total compensation of at least $3.5 million per annum – nearly 5% of the market capitalization of TST and more than the cumulative dividends expected to be paid out this year to common shareholders.“
And then there is Cramer’s whole record low Nielsen rating “thing”, first reported here. So how does it feel to be on the other side this one time, Jim?
The author of the letter’s modest proposal: “collapse your inflated employment contract and conflicts and push to propel the business forward.” However, since there is nothing in the letter about collapsing Cramer’s “ego”, nothing will change.
So sell, sell, sell, TST stock, because while Jim Cramer collects his monthly paycheck from the sinking ship, shareholders will be left with nothing.
Of course, the end will only come if and when Cramer himself opines on TST stock: “TheStreet is fine” should about do it.
“I think we’ve forgotten many important lessons of the Cold
war,” says human-rights activist and former World Chess
Champion Garry
Kasparov. Especially when it comes to dealing with Russian
leader Vladimir Putin: “You cannot project weakness….Putin’s game
is [not chess but] poker. And he knows how to bluff.”
As the leader of United
Civil Front and chairman of the Human Rights Foundation,
Kasparov also worries that business and political leaders in what
used to be called “the Free World” are no longer interested in
backing large, transformative projects similar to landing a man on
the Moon and the creation of the Internet. “It is very important
that we have these projects to energize society,” he says. “And
also that we don’t eliminate risk. Because it seems to me that now
we teach kids from school that failure is nothing but failure. If
you fail, you are a failure. No, no, I believe that failure is a
logical move on the way to success.”
After becoming the youngest World Chess Champion in 1985,
Kasparov went on to a career that is among the greatest in the
sport. Originally supportive of Gorbachev’s reform, when the Soviet
Union collapsed, Kasparov became increasingly outspoken against the
failures of Russian leadership, especially under Putin.
Reason’s Nick Gillespie interviewed Kasparov in New York in
November at a dinner co-hosted by the Atlas Network, a nonprofit that
promotes free-market think tanks in the developing world.
About 30 minutes.
Camera by Meredith Bragg and Jim Epstein. Edited by Joshua
Swain.
Free Minds, Free Markets, and Free Kasparov aren’t free!
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Here is a rush transcript of the interview (check all quotes
against video for accuracy):
Reason TV: This is not just the
anniversary of the Berlin’s Wall’s Collapse, it is also the
anniversary of your world championship.
Garry Kasparov: I celebrated this date
four years before the collapse of Berlin Wall. November 9, 1985, I
won my world championship title in Moscow.
Reason TV: We’d like to think that the two
events are not unlinked. Talk a little bit about what the enduring
lessons of the fight against communism, that we are in 25 years it
seems a couple of worlds ago. What are the lessons that we’re in
the danger in losing from long after the twilight of the cold
war.
Kasparov: I think we’ve forgotten many
important lessons of the Cold war. I have to say that when I
entered this field in the mid 80’s as the newly born world
champion, it was not as dangers. So Gorbachev badly needed to
reconcile with the west. The soviet economy was in terrible shape.
Oil prices were sharply falling thanks to the cooperation between
Reagan’s administration and the Saudis. And it was absolutely clear
even for the soviet politburo that the arms race in the competition
against the United States on the global scale was no longer a
plausible option.
So Gorbachev tried hard and he made several attempts to convince
Ronald Reagan to accept some sort of peace accord. Thanks to
Reagan’s intuition and despite the advice of all his advisors, his
administration, the state department, the pentagon, he said no in
Reykjavik. And I think by saying no in Reykjavik, Reagan made
Perestroika and the eventual collapse of the Soviet Union
inevitable in such a short period of time.
Reason TV: And of course Reykjavik…
Kasparov: A symbolic place. 1972, Bobby
Fisher beat Boris Spassky. That was another episode of the big
victory of the free world in the cold war.
Reason TV: And thereby condemning
all of us in grammar school in the 70’s to joining chess clubs.
What was it like to grow up in the Soviet system? You were in the
relatively privileged position.
Kasparov: I was relatively privileged,
because of my chess.
Reason TV: What was it like and what was
the psychological effect on yourself on people around you?
Kasparov: I think certain things are very
hard to describe. Because to understand them, you have to live with
them. I was always amazed to hear comparison in America or Western
Europe about Soviet Union and certain wrong doings of the
governments in the free world without recognizing that in the
Soviet Union, just was a dictatorship.
I grew up in the later 60’s, 70’s, early 80’s. Of course I
haven’t experienced horrors of Stalin’s time. But it was still the
country that was not free and thanks to my ability to place chess
and the fact that I was a chess prodigy, I could travel abroad. SO
my first trip to France was when I was 13. And it was a very
shocking experience.
Reason TV: What was shocking about it?
Kasparov: I don’t think that in my family
and I’m not just talking about very few people, but extended
family, cousins and among my friends, there was no single person
that had visited a capitalist country. So at age 13, I carried a
sacred knowledge of how people lived on the other side of the Iron
Curtain. So people knew that there was another world. They could of
course read some literature that was officially banned but you
could buy and listen to radio liberty or voice of America and
BBC.
You could not find hard believers in a Communist regime, so it
was all dying down. My grandfather, my mother’s father was a
diehard communist. He died in 1981. I was 18, and we were talking
about Afghanistan. And he was shocked after spending 15 years in
the Communist party, he had to line up to buy butter and bread. It
was mind boggling. So something went wrong. So that’s why the
collapse of the Communist system was somehow imminent. I think’s
Gorbachev’s plan was not to remove communism and replace it with
something more plausible but without giving up the role of the
communist party.
Reason TV: Do you think that in the end,
that there’s no way to do that. It’s kind alike being a little but
pregnant. If you give people a little bit of freedom, the whole
thing’s going to collapse. Don’t follow that illusion all the
way.
Kasparov: I don’t think that you can
divide people genetically by saying these nations are not ready to
embrace democracy and I hear this argument about Russia or China.
You have two Koreas. If you look at the north, you can come up with
the conclusion that Koreans are born to be slaves and they live in
gulags. Unless you are aware that there is a South Korea, one of
the most flourishing economies in Asia. And again it’s a democracy
and market economy. And in China, you have China on the one side
but you have Taiwan. It’s a rocky island with the same people. And
I’m not even mentioning two Germanies.
I think people have the same aspirations. They want to be
successful. They want their kids to have good education. They want
to spend some money to have a vacation in a decent place. The
moment they are given this opportunity, I don’t think you can force
them back to the Communist stable.
Reason TV: You’ve been very forward and
very courageous in speaking out against Putin and other forms of
dictatorships, creepy fascism, and corporatism. You’re very
critical of the West’s engagement with Putin, with China. You’ve
written that we’re willing to trade with them, but we don’t draw a
line when they obviate civil liberties. When they continue to act
repressively. How should we be engaging them, those of us in the
free world?
Kasparov: We have to go back to the 1989,
1990, 1991, it was a great moment in history. Everyone was…
Reason TV: A lot younger.
Kasparov: Don’t mention that. We believe
that it was all over. If in August 1991, anyone would say in Moscow
or outside of Soviet Union, “in nine years, a KGB lieutenant would
be the President of Russia,” people would be laughing. It was
really impossible to believe that after all these changes, we can
go back.
In 1992, one of the best sellers was the End of History, by
Francis Fukuyama. The end of history, liberal democracy has won,
that’s it. I think this book ignored the fact that every generation
has to fight it own Berlin Wall. As Ronald Reagan said, “Freedom is
only one Generation away from Extinction.”
So there’s no physical Berlin Wall, but there are walls. And the
problem of the Soviet Union specifically, that unlike Germany, Nazi
Germany, or Imperial Japan, there was no cleansing process. The
society couldn’t feel responsibility for the Communist crimes. For
ordinary Russians, “okay, that’s over.” Same as in 1918, in
Germany, we lost the war, but maybe somebody betrayed us. While we
had some good moments under Yeltsin, you could feel in the 90’s,
trying to build a system similar to the free world with parliament,
with presidential power, with checks and balances, with independent
court system, they failed. Because Russian people believe that all
we needed was to have the voting procedure and if we implemented,
it would immediately lead to the dramatic improvement in living
standards.
The irony is that nobody could see an improvement in the ’90s.
The majority couldn’t see it. When Putin took over, thanks to the
high oil prices, suddenly, life improved. It’s a very odd
connection. But in the minds of many ordinary people, “Wow! That’s
a democracy.”
Reason TV: They feel loyalty to Putin
rather than to democratic Institutions.
Kasparov: Absolutely.
Reason TV: How much of the problem of with
Russia is specifically a problem with Putin? You’ve written that
distinct from their Soviet Union, it is about him. He’s building a
cult of personality, where the state revolves around. You write
about the Sochi Olympics. That’s it was a glorification of him
similar to the way the Berlin Olympics were (for Hitler). So if
Putin is gone, does the trouble go away from within Russia or what
needs to happen within the country?
Kasparov: If dictator goes away, it
doesn’t happen through the normal election process. So that’s why
you can expect turmoil. Most likely uprising in Moscow, in the
capital. It won’t end up with a very peaceful resolution. Because
political opposition has been destroyed and I don’t think you can
have anything worse than Putin. All these threats that Putin is the
last line of defense, and if not Putin. Putin is the main problem.
Putin is a paranoid, aging dictator who believes he is Russia. The
same way Hitler believed he was Germany. And it’s not surprising
that Kremlin propaganda has been repeating the classical “Hitler is
Germany, Germany is Hitler” now “Putin is Russia, Russia is Putin.”
It is extremely dangerous because for him, his own collapse means
the collapse of his country. And unlike Hitler, he has his finger
on the nuclear button.
He is by far more dangerous to threat to world peace because
Russia today is not as old Soviet Union or modern China. It is not
an ideological dictatorship with politburo central committee of the
Communist Party. It’s one0man dictatorship. It means that this man,
if he believes he is the country, he can do whatever.
Reason TV: So how should the West, the
free world, the OECD countries, NATO, the US, what should they be
doing differently in dealing with Putin. Because you’re not talking
about military engagement but you have written a lot about economic
engagement and other types of trade policy. What are good way to
bring Putin to heel?
Kasparov: We have been facing this problem
for quite a while. And so many mistakes have been made. These
mistakes created an impression for Putin and his cronies and also
his clients like Assad and others in the world. Iranian Ayatollahs.
The West is weak. The west is not willing to get engaged. So the
west will give them anything they want. Before we talk about the
right strategy, what the leaders of the free world must do, let’s
talk about what they must not do. You cannot project weakness. Yes,
I know that America will never consider seriously boots on the
ground in Ukraine. Why are you talking about it. Why do you say
publicly that you will not do that?
I could give you many examples where they violate the simplest
rules of negotiation. The secret letter from Obama to the
Ayatollahs, without mentioning the fact that it’s an insult for
Sunni allies. It’s the first time that the United States and the
free world had a great chance of creating a Sunni coalition to stop
Sunni terror. Then stabbing them in the back by writing a letter to
the Ayatollahs. By the way, they never responded. And now, at the
time when the nuclear deal is about to be reached or not. He’s
asking them to help with ISIS. ISIS will probably be destroyed. You
need more planes, maybe some soldiers, material resources. ISIS is
not a global threat, it’s very local. For the sake of Iranian
cooperation, this relatively small issue to put at stake the global
cooperation of Sunnis and also the non-proliferation policies,
that’s exactly what you’re not supposed to do.
Reason TV: You’ve written about how
starting under Clinton, as well as under George W. Bush, and under
Barack Obama, you talked about Bush being reckless, Obama being
aimless. Who are these Western leaders you think that are heads of
states who have actually articulated a post-cold war framework for
spreading democracy and market liberalism?
Kasparov: I don’t think that any Western
leader even thought about doing that because again, the mood was
“we won.” Many talk about Clinton’s presidency as a great success.
I wouldn’t doubt certain achievements in economy. But
geopolitically, it was the greatest disaster among all because it’s
not about the final position. The game is still on. In 1992,
America was all powerful. It could design the world map the way it
wanted. In 2000, al Qaeda was ready to strike. So what happened in
these eight years?
Eight years of complacency, of doing nothing. Nobody formulated
policies for Russia for Soviet Union, for Islamic terrorism. It
requires a global vision. The same way as Winston Churchill, Harry
Truman had these policies designed in 1946, in 1947. The Marshall
plan. There were plans. Plans they learned from World War II and
they knew that to oppose Stalin and to oppose Communism, they
needed to come up with a grand strategy and also leadership.
When I hear about potential dangers of confronting Putin today,
my first question is, “Is he more dangerous than Joseph Stalin in
1948?” For 11 months, American and British planes had been
supplying West Berlin besieged by Stalin’s troops. And Joseph
Stalin didn’t shoot a single American plane. Why? Because Harry
Truman already used nuclear weapons. And Stalin, as every good
dictator, had an animal instinct. He knew where he could be
repulsed. So he knew that Harry Truman could not play a game. It
happened in 1962, when Khrushchev recognized that he pushed JFK to
the ropes. And Ronald Reagan. And don’t tell me that the Soviet
Union in 1981, 82, 83, was less powerful than Putin’s Russia
today.
Reason TV: You have written recently about
how America is hugely important to the world and that America needs
a strong economy and that economic force will help spread democracy
and freedom, markets throughout the world. You’ve talked about how
people in America don’t seem to have the kind of bold sense of
vision, of innovation, of change. Can you talk a little bit about
that? What happened to that? The idea that we were going to
reinvent the world.
Kasparov: I wish I knew. You can just look
at the literature that says in the 1950’s, 60, science fiction was
the most popular genre. It has disappeared. Now, you either talk
about elves, or magic, or it’s dystopia. It’s all you talk about is
machines attacking us. There’s no more positive vision, of machines
cooperating.
Reason TV: Let me push back on that
though, because you talk about 40 years ago…
Kasparov: 50 years ago.
Reason TV: But since then we’ve had things
like the Internet; we’ve had things like fracking, which has
totally undermined Russia’s ability to dictate oil prices. Does
anybody here think that the world is less good than it was 50 years
ago?
Kasparov: Let’s be very specific. You
mentioned the Internet, it is a result of the space race. The
foundation for the Internet was created, designed, and eventually
developed by the scientist from DARPA—Defence Advanced Research
Projects Agency— 1962, and 1963. So from packet switching, to the
full description of every element, including Skype. And in 1969 the
first signal came, via ARPANET, from UCLA to Stanford. So what you
are talking about today, www, the world-wide-web, is commercial
application of technology that has been developed 20 years
before.
Reason TV: Which also is the thing that
makes it transformative, though.
Kasparov: Yes I know, but we are talking
about break-through technology.
Reason TV: So do we need another Cold War?
Is that what we need, a kind of regimented goal that society is
moving towards?
Kasparov: It’s 2012, 50 years after the
JFK speech in the Rice University, about the Moon project. America
had no more rockets, no more means to send it’s astronauts into
space, they had to use Russian ones, which were also built in the
60s and 70s. So I think it constitutes a disaster, a scientific
disaster, because space projects are important, not just for the
sake of landing on the Moon or on Mars, but because of the side
effects. As we had GPS, we had Internet, and many other things that
have been developed alongside the space project. For instance, the
expedition to Mars, which has probably a 50-50 chance of safely
returning the crew, will force us to do more work on diet, and on
medicine. And while today—people here, I am sure, know much better
than I do—what are the chances of introducing a new drug? If you
have one out of 1000, the rate of failure, out of production? Now,
if you produce new drugs or new food, for the expedition, with
50-50 chance of return, then one out of three is already good. So
it is very important that we have these projects to energise
society, and also not to eliminate risk. Because it seems to me
that risk, now—we teach kids from school that failure is nothing
but failure. If you fail, you are a failure. No no, I believe that
failure is a logical move on the way to success.
Reason TV: Well as somebody who fails more
often than I succeed, I feel much better, in this conversation.
We were talking earlier in the evening, and you said there is a
huge amount of complacency, in what used to be called “The Free
World”. Is this kind of a Marxist analysis of capitalism, that we
get fat and lazy because things comes easily after a certain point,
and we fall into an inability to actually take the kinds of risks
or create the kind of innovations that will actually push us
forward?
Kasparov: Again, the Free World needs
challenges. Definitely wars, and the Cold War, were challenges. We
don’t want to see these challenges again, but it is natural, and we
have to recognize that the real innovation is not the IPhone 6,
it’s Apollo 6. There is a fundamental difference. And it seems to
me that we have multinational corporations that are now sitting on
hundreds of billions of dollars of cash, without investing them in
new ideas. I understand that paying shareholders in important, but
creating new value is probably more important.
Reason TV: Alright. And at that point we
are going to turn it over to some questions. And also, by the way,
if any of you are sitting on billions of dollars of cash, I do want
to point out that both Atlas and Reason 501(c3)s.
So let’s go to questions, please.
Questioner: I asked you earlier,
privately, Sir, why you played the Sicilian Defence to win your
first World Chess Championship, and you declined to answer. So I
just want to ask that question publically, and then I want to ask
you how you would apply that to the global scene today.
Reason TV: And for those of us who only
play checkers, what is the Sicilian Defense?
Kasparov: It doesn’t matter. It was a game
that I was leading, 12 to 11. Karpov had to win the game—he played
with white, so he started the game—to retain the title. So I could
be happy with a draw. Now the question is why I played a very sharp
opening, instead of trying to play very defensive. Now, the answer
is very simple: when you reach the climax of any battle, you better
be in the situation that feeds your nature. So I was much more
comfortable in a sharp position. It doesn’t matter, we play a
game—I could win, I could lose, it could be a draw—but I am
comfortable. And my calculation was right, because at the crucial
moment of the game Karpov had to push, had to make a sacrifice, but
it was against his nature. He tried to improve his position, he
wasted time, and eventually I could make a powerful counter attack.
It is the same in politics; you have to play the game that feeds
your strengths. So again, there are so many arguments, there are so
many trump cards in the hands of the Free World, and you have to
start using them.
From the crowd: So what game do you
play?
Kasparov: I play the game of Chess.
Unfortunately the parallels between the game of Chess and modern
geopolitics is very questionable, because Putin’s game is more of a
Poker, and he knows how to bluff. Normally he has a very weak hand,
I would say a pair of nines, but he bluffs, and he knows that his
opposition always tries to fold out the cards. So once I said that
Putin has this pair of whatever—eight, nine, or ten—and he acts as
if he has a Royal Flush; and Obama has a Full House, and he flushed
it down the toilet.
Reason TV: Do you believe that Putin would
be expansionary beyond the confines of the former Soviet Union? And
then what is the challenge that is posed by a country like China,
is it similar in kind to the Russian challenge, or is it something
very different?
Kasparov: I think that the nature of
Putin’s challenge, today, is very much domestic. He has a
fundamental problem of finding the rationale for staying in power.
He has been in power for 15 years. And every dictator, who is not
relying on democratic institutions, must come up with a story, a
myth, an idea about why the hell they are there. For many young
Russians this is a question. The economy doesn’t offer any more
excuses, to the contrary, it all goes down. So the Russian middle
class that used to see gradual improvements in their living
standards—in money, in perks, in their ability to travel around, in
their communications—suddenly they just recognized that it all
could disappear. So now Putin’s only rationale is to present
himself as a big hero, “Vladimir the Great”; “The collector of
Russian lands”; “Putin, the man who is restoring the Russian
empire”. Again, for him, the main audience for him is inside the
country. The propaganda—and I can still hear it by just listening
to Russian television, or just reading the press—it’s worse than Dr
Goebbels, it’s Orwell, it’s “War is peace, slavery is freedom”.
Twenty-four-seven, it’s anti-American. And they keep talking about
horrible things, including even using nuclear weapons. Even Putin
himself, in his latest speech, praised Nikita Khrushchev for making
these threats. It’s almost quote-unquote, when he said that
Khrushchev acted like a crazy man, banging with his shoe at the
United Nations, but everybody respected him because they knew he
was crazy and they were afraid that he would throw nuclear missiles
at them—that is literally quote-unquote. Now, combine it with his
clear statement that all the borders of the former Soviet Union are
in question—that is why he believes that Russia was in it’s rights
to challenge Ukrainian borders, and others as well. Now the
question is whether he could attack Estonia and Latvia, they are
members of NATO—with article five. My answer is: he might do that,
because he doesn’t have to start a whole invasion. He could provoke
violence in the Russian enclaves, in Estonia or in Latvia, and then
you could see some volunteers crossing the border. At the end of
the day it is not about “Invading” Latvia or Estonia, it’s all
about undermining NATO. Obama had a big speech in Tallinn, claiming
that the United States was behind Estonia—nice. The next day,
Russian intelligence kidnapped an Estonian officer from Estonian
territory, dragged him into Russia, and he is now in a Russian jail
awaiting trial for espionage. The next day! Why? Just to show that
there was no protection. So it is all about undermining western
institutions, and NATO, and demonstrating that the United States is
a paper tiger, is an empty shell.
As
noted earlier, the cop who put Eric Garner in the chokehold
that led to his death was not indicted by a Staten Island grand
jury. Whatever you think about that, it’s time to examine the
“broken windows” policing policies that contributed to a man dying
after being accused of selling loose cigarettes.
Garner’s death in July after being placed in a chokehold is not
simply about race. It’s about community policing and the ability of
top brass to enforce restrictions on beat cops’ behavior. As
cell phone footage of the incident makes clear, the police
approached the 43-year-old Garner after he had helped to break up a
fight on a busy street in Staten Island. The cops were less
interested in the fight than in asking Garner whether he was
selling loose cigarettes or “loosies,” which is illegal. “Every
time you see me, you wanna arrest me,” says Garner, who had a
rap sheet for selling loosies and was in fact out on bail when
confronted.
Footage of the incident shows New York Police Department Officer
Daniel Pantaleo placing Garner in the chokehold that was the
main cause of death according to the coroner, who further
ruled the death a “homicide.” (Police at the scene initially
claimed that the asthmatic, 350-pound Garner had suffered a heart
attack). Like Wilson, Pantaleo was not indicted….
There’s little question that New Yorkers support arrests for
low-level offenses. A Quinnipiac Poll of New Yorkers in
August found that 60 percent of respondents agreed that “when a cop
enforces some low-level offense…it improve[s] quality of life.”
Only 34 percent said it increased neighborhood tensions, with “very
little difference among black and white voters.”
Yet clearly something has gone horribly wrong when a man lies
dead after being confronted for selling cigarettes to willing
buyers. Especially since, as even Bratton has acknowledged,
the chokehold applied by the restraining officer is prohibited by
the NYPD’s own rulebook. Does the commissioner really control his
officers, and is it time to rethink nanny state policies that
create flourishing underground markets?
Recently, National Basketball Association
commissioner Adam Silver became the first major professional sports
commissioner to endorse legalizing sports betting. Silver writes,
“There is an obvious appetite among sports fans for a safe and
legal way to wager.”
But bills to legalize betting go nowhere in Congress. John
Stossel argues that legalization efforts might get farther if we
stopped thinking of betting as a vice and instead recognized that
it’s a useful part of rational decision-making. There’s knowledge
to be tapped in people’s heads about what will happen next, and
markets, as usual, are the best way to unleash that wisdom.
After tabling plans to buy a
drone with federal grant funds in 2013 because of public outcry
over privacy, Alameda County Sheriff Gregory Ahern has bought two
drones with $97,000 from the county’s own budget.
“We try to keep our agency equipped with the best technology so
that we can provide the best service to the community and allow our
people to do their job safely,”
Ahern told the San Francisco Chronicle on December
2. Although the sheriff has maintained that the
drone will be used for public safety, privacy advocates have been
skeptical that it will only be used for that.
“This is a troubling example of law enforcement trying to
acquire invasive and extremely unpopular surveillance technology in
secret,” said Linda Lye, staff attorney at the American Civil
Liberties Union of Northern California to the Chronicle.
“There was a huge hue and cry when he did in secret, and he’s done
it in secret a second time,” says Lye.
The first time Sheriff Ahern tried to acquire a drone
began in 2012, when he asked for Department of Homeland Security
(DHS) grant money to fund the purchase but neglected to go to the
public with his intentions. According
to MuckRock.com, who got a hold of
the grant letter proposal, Ahern was looking to use a drone for
public safety and surveillance purposes, pointing out he wanted to
purchase a device equipped with a “Forward
Looking Infrared camera,“ or a
thermal-imaging detection dee.
In February of last year privacy advocates from the American
Civil Liberties Union (ACLU) of Northern California and the
Electronic Frontier Foundation and citizens in Alameda County
voiced their concerns at a public protection committee
meeting. Linda
Lye, a staff attorney with the ACLU, told Reason TV at the time
that strict rules for how the drone would and would not be used was
what she wanted from the department.
“If the sheriff wants a drone for search and rescue then the
policy should say he can only use it for search and rescue,” said
Lye. “Unfortunately under his policy he can deploy a drone for
search and rescue, but then use the data for untold other purposes.
That is a huge loophole, it’s an exception that swallows the
rule.”
It is these unforeseeable and uncontrollable consequences that are poised to wreak havoc on the global financial system.
Here's the thing about risk: it bursts out of whatever is deemed "safe." It wasn't accidental that the Global Financial Meltdown originated in home mortgages; it was the perceived safety of the mortgage market that attracted all the speculative debt and leverage.
The authorities (those few who weren't bribed to look the other way) were caught off-guard by this explosion of risk in a presumably "safe" market, but this was entirely predictable: this is the nature of systemic risk.
Since 2009, central state/bank authorities have backstopped the private banking sector and the sovereign debt market with everything they've got. The Federal Reserve alone threw something on the order of $23 trillion in guarantees, loans and backstops at the private banking sector, and the other central banks have thrown trillions of yuan, yen and euros to shore up the banking sector and sovereign debt.
They did this because they identified the banking sector and sovereign debt as the sources of systemic risk. Now that they've effectively shored up these two risk-laden sectors with the full weight of the central state and bank, they presume the systemic risk has been eradicated.
They could not be more wrong. As I often note, risk cannot be disappeared, it can only be masked or transferred. The systemic risk will not manifest in the heavily protected banking sector or the sovereign debt market–risk will break out of sectors that are considered 'safe"–like oil.
Yesterday, I described how The Financialization of Oil has followed much the same path as the financialization of home mortgages in the 2000s: a "safe" sector has been piled high with highly profitable and highly risky debt and leverage.
Once the narrow base of collateral shrinks (as it has in oil), the inverted pyramid of debt and leverage collapses, distributing losses that then trigger defaults as the dominoes fall.
What are the risks that result from the drop in oil prices? We can identify four right off the top:
1. Financial market turmoil. Right now, the extent of the losses created by oil's sharp decline have yet to become visible. Everyone holding the losses is scrambling to hide them and sell positions to limit the losses. The full consequences of losses and defaults will only become public in the weeks and months ahead.
Those who think the losses are confined to the oil patch and lenders are mistaken. How many hedge funds and pension/mutual funds own oil stocks or oil-related bonds, loans and instruments?
2. Currency market turmoil. Venezuela is the leading candidate for currency collapse resulting from the drop in oil prices. Russia's currency (ruble) is already in a free-fall, and though some may blame Western sanctions, the real driver is the collapse in oil revenues.
3. Geopolitical conflicts. History suggests that declining oil revenues tend to spark geopolitical conflicts as those losing revenue seek scapegoats in other oil exporters who refuse to cut production to support higher prices.
There are a host of other reasons for geopolitical conflicts to arise out of oil's price decline. Stronger rivals may seek to exploit the weakened state of oil-exporting competitors. Oil exporters might seek to trim supply by disrupting rivals' production via fomenting domestic unrest. The temptation to invade and conquer rises in parallel with desperation.
4. The unknown unknowns and the rising odds of miscalculation. As I noted in The Oil-Drenched Black Swan, Part 1, the The Smith Uncertainty Principle expresses the multiple ways risk can manifest:
"Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences."
The highlighted passage echoes the impact of Black Swans and Donald Rumsfeld's famous encapsulation of the risks implicit in the unknown:
"Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones."
I think this is an ontological (intrinsic) source of risk: we know our activities and choices are piling up risk, but we refuse to acknowledge this because we do not want to deal with the consequences of all that risk accumulating.
This is the root of Chuck Prince's famous line about dancing (i.e. pursuing reckless financial speculations) as long as the music is playing ("As long as the music is playing, you've got to get up and dance."): everyone engaged in speculation knows the risks are piling up, but to avoid having to exit the game, they deny knowledge of the risks that are visibly piling up.
Then when the house of cards predictably collapses, they can plead ignorance.
The Power of Black Swans lie in the unanticipated consequences of the unknown unknowns. Some of the consequences of lower oil prices are known, but some are unknown. It is these unforeseeable and uncontrollable consequences that are poised to wreak havoc on the global financial system.
Several Texas counties are opting out of a state law requiring
the launch of controversial “prostitution diversion” programs. The
2013 law ordered counties with more than 200,000 people to start
such programs and, in some counties, has spawned a robust cycle of
police stings and social-services meddling aimed at “treating
prostitutes like victims rather than criminals”.
The state allowed for counties to apply for a waiver, however,
and Dallas-neighboring Collin and Denton Counties did so soon after
the law’s passing. “It’s just not an issue in Denton County,” Judge
Mary Horn told The Dallas Morning News. “We have
not and we will not be doing anything on this.”
“We have not and we will not be doing anything on
this.” Aren’t those beautiful words to hear coming from a
state official? But of course not everyone’s taking kindly to this
laissez-faire attitude toward the sex lives of others. Proponents
of the diversion programs seem to think Collin and Denton county
officials are being Pollyanna-ish about the problem:
Renee Breazeale, a senior case manager in the Dallas County
district attorney’s office who started the program in 2007 with
Dallas police Sgt. Louis Fellini, said she also isn’t surprised by
counties opting out. “We’re a metropolitan area, so we’re a little
more open-minded,” Breazeale said. “If you’re in a community that
doesn’t really kind of force those issues forward, it’s really easy
to say, ‘No, that doesn’t exist here.'”
In “open-minded” places like Dallas, monthly sting operations
serve as the cornerstone of the program:
Police go out and round up women and bring them back to a
staging area, where they receive information, counseling and a run
through the legal process.
As with similar programs in Arizona and New York City, those who meet certain criteria
can opt for a “rehab” program instead of jail time. In contrast,
the oh-so-backward folk of Denton and Collin counties seem to think
that setting up special task forces and elaborate operations to
ferret out people who may be having sex for money is a bit
silly:
Officials in Denton and Collin counties say that
prostitutes, if they are in their jurisdictions, aren’t at the
street level. They are hidden from view in brothels or on posts on
websites such as Craigslist and Backpage.com. Busting those
prostitutes requires more proactive and lengthy investigations,
police officials say.
(…) Plano police spokesman David Tilley said they only
occasionally get complaints about a lone prostitute roaming the
streets. And, he said, “getting one every so often doesn’t really
justify putting anyone to look at those things on a regular
basis.”
“I kind of have to agree with Collin County on this that it’s
not a problem that has reached a level where putting together a
group would get a lot of attention or a lot of traction—at least in
our city,” Tilley said.
It’s not much, but… in what’s generally an endless stream of
cities, counties, and states competing to overhype the problem of
prostitution—and the need for ever-increasing state power and
resources to combat it—any slight nod to reality is noteworthy and
refreshing.