Month: July 2017

Via The Daily Bell

Germany has taken its war on “hate speech,” also known as free speech, to the people.

Already Germany has pretty strict laws against citizens using Nazi symbols and denying that the Holocaust happened. Apparently, lawmakers miss the irony of going full Gestapo on citizens for free speech, as offensive as it may be.

But they are not stopping there. The German government has raided the homes of 36 people accused of hateful posting on social media.

Most of the raids concerned politically motivated right-wing incitement, according to the Federal Criminal Police Office, whose officers conducted home searches and interrogations. But the raids also targeted two people accused of left-wing extremist content, as well as one person accused of making threats or harassment based on someone’s sexual orientation.

“The still high incidence of punishable hate posting shows a need for police action,” Holger Münch, president of the Federal Criminal Police Office, said in a statement. “Our free society must not allow a climate of fear, threat, criminal violence and violence either on the street or on the internet.”

In order to keep our society free, we must severely restrict the freedom of the people. War is peace, hate is love, and so on and so forth.

You would think that given Germany’s history they would understand the utmost importance of open discussion and debate.

There was a time when children were turning in their parents for what was said in their own homes against the German Nazi government. People were afraid to speak their minds, have political discussions, or debate important issues because there were so many spies around who would gladly turn them into the government.

That is why the Nazis were able to take their insane philosophy so far. People were restricted from talking about it and criticizing the government.

With the internet, the government can simply hear and see for themselves what thought crimes are being committed, especially when people decide to post them on social media. But why shouldn’t people be allowed to be offensive on social media? Sometimes only by poking and prodding do we get to the crux of an issue. There is a place in society for all types of discourse, and when the government gets to define what constitutes “hate speech” they will simply label their enemies’ language as such.

By “right wing extremist” what German authorities really mean is anyone who questions the immigration policies of the Europe, or thinks differently than the general population. Literally simply insulting someone, or talking trash can make you liable for five years in prison in Germany. According to section 130 of their criminal code (emphasis added):

(1) Whoever, in a manner that is capable of disturbing the public peace:

1. incites hatred against segments of the population or calls for violent or arbitrary measures against them; or

2. assaults the human dignity of others by insulting, maliciously maligning, or defaming segments of the population,

shall be punished with imprisonment from three months to five years.

(2) Whoever:

1. with respect to writings (Section 11 subsection (3)), which incite hatred against segments of the population or a national, racial or religious group, or one characterized by its folk customs, which call for violent or arbitrary measures against them, or which assault the human dignity of others by insulting, maliciously maligning or defaming segments of the population or a previously indicated group:

a) disseminates them;

b) publicly displays, posts, presents, or otherwise makes them accessible;

c) offers, gives or makes accessible to a person under eighteen years; or

(d) produces, obtains, supplies, stocks, offers, announces, commends, undertakes to import or export them, in order to use them or copies obtained from them within the meaning of numbers a through c or facilitate such use by another; or

2. disseminates a presentation of the content indicated in number 1 by radio,

shall be punished with imprisonment for not more than three years or a fine.

And while the German government wages this war against citizens on one front, they force companies like Facebook and Google to wage it on another front. Facebook could be fined over $50 million, based on a new German law, for each time they fail to remove “hate speech” within 24 hours.

It’s hard to see this as very different from the restrictive nature of German society during the Nazi era, at least when it comes to freedom of speech. It has become dangerous for an individual to speak their mind lest it is labeled hate speech simply for going against the mainstream. And it has become expensive for companies to not play along with the government’s game of oppression against the people. Look to history to see what these conditions can lead to.

The rest of the world would do well to take a good look at what Germany is doing. Any efforts to curb “hate speech” in America will take on the same arbitrary standards defined by the government which will endanger any opponents to the government guilty only of free speech.

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Authored by EconomicPrism's MN Gordon, annotated by Acting-Man's Pater Tenebrarum,

Disproportionate Rewards

The International Monetary Fund reported an unpleasant outlook for the U.S. economy on Wednesday.  The IMF, as part of its annual review, believes the U.S. economic model isn’t working as well as it could to generate shared income growth.

 

Supping with the IMF (we recommend trying to avoid invitations to structurally adjusted suppers if possible. Their air of finality is reportedly unbearable). [PT]

On the same day, in an unrelated interview on PBS Newshour , billionaire investor Warren Buffett offered a similar outlook:

“The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people.

 

“If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion.  They now have $2.4 trillion, [a multiple of] 25 for one.  This has been a prosperity that’s been disproportionately rewarding to the people on top.”

No doubt, U.S. wealth has become exceedingly concentrated into a very small number of hands over the last 40 years.  At the same time the middle class has been hollowed out into a shell of its former self.  Wages have stagnated.  Well-paying jobs that could support a family on a single income have disappeared.

On the other hand, asset prices, like stocks and real estate, have gone sky high. These increases in asset price have served to magnify wealth at the upper end of the wealth spectrum while pricing out everyone else, particularly millennials with entry level incomes and massive student loan debt.

Certainly, asset prices will crash again like in 2000-02 and 2007-09.  But this won’t do anything to balance out middle class incomes.  What to do about it?  Both the IMF and Buffett offer several recommendations…

 

The homely sage is known for frequently complaining that he “doesn’t pay enough in taxes”. But nothing would be easier than to cut the IRS a check voluntarily. We’re sure they would gladly take his money. Funny enough, after realizing that he couldn’t take the loot with him to the grave, Buffett decided not to trust the State with his moolah after all – instead he gave it away to a private foundation. That is exactly how it should be. Zthroughout history many of America’s self-made rich – including the much bemoaned “robber barons” of the Gilded Age – were well-known for their generous philanthropy. Throwing money into the insatiable maw of the State so that politicians can waste it would be utterly insane, which is why Buffett has presumably avoided doing so to the best of his legal possibilities for his entire life (we have little doubt he and his company employ an army of accountants and tax consultants to make sure of that).  So when he publicly complains that he doesn’t pay enough in taxes, he probably means to say that you don’t pay enough. [PT]

 

Insider Claims to the Pie

The clever fellows at the IMF identified with careful detail and delicate precision how to go about fixing the U.S. economy to “ensure a broad-based improvement in living standards.”  Their recommendations even include the “need to incorporate reforms on multiple, macro-critical fronts.”

We’re not quite sure what that all means.  Fortunately, the IMF dumbed it down for us into a single sentence synopsis of what’s needed to improve living standards across the income spectrum:

“[B]uilding a more efficient tax system, improving education and developing skills, reprioritizing federal spending, improving the effectiveness of the regulatory system, and reforming the immigration and welfare systems.”

Piece of cake, right?  A splash of this.  A dash of that.  Before you can say Jack Robinson the policy makers have mixed up just the right policy elixir.  Higher living standards for all are attainable in our time.

Yet this makes the erroneous assumption that Congress will snub its individual commitments to lobbyists and special interests.  These commitments, remember, include applications of massive amounts of lard to all efforts at tax reform, education improvements, regulations, spending allocations, and immigration and welfare policy.

 

An illustration of the little flaw the IMF’s planners have overlooked. This image is a little dated, as the size of the IOU is approaching $20 trillion by now. Other than that, the illustration is timeless. [PT]

 

For every reform effort, there are armies of special interests that have already bought a claim to a piece of the pie.  Instead of streamlining persistent drags on the economy, government reforms increase them.  The insiders get their bread buttered on both sides and the politicians get their campaigns financed.

The broad populace – that’s you – is left paying for programs that don’t work, which the country can’t afford. The reality is, the recommendations offered by the IMF are impossible for the U.S. government of the early 21st century to execute.   And, as elaborated below, they are also pointless.

 

Work is for Idiots

Buffett’s recommendations, on the other hand, are more lofty.  Specifically, Buffett wants rich people to give their money away.  In fact, that’s what he and fellow billionaire Bill Gates are doing.  They even co-founded the GivingPledge so that rich people can make a voluntary commitment to give away at least half of their wealth.

The goal of the GivingPledge, you see, is not only to help those in need.  But to encourage others to do the same.  They call it a commitment to philanthropy. Surely, this is a noble cause.  Certainly, if you are super rich, it helps flatter your ego.  But what good is it, really?

 

Uncle Warren outed himself as a bit of a crony capitalist during the GFC if memory serves. He certainly advocated the employment of tax payer money to support companies he had pretty sizable interests in at the time – and he ultimately profited handsomely from the crisis, as a 100% side effect of assorted bail-outs and massive money printing by the Fed. Oddly enough, he has never had anything critical to say about the monetary system – on the contrary, if anything, he has frequently voiced his disdain for the most sound currency known to man.  [PT]

 

Does giving people money for nothing help them or handicap them?  Moreover, does it correct the inherent injustice perpetrated by misguided, or perhaps sinister, monetary policies which inhibit people from being self-supporting through their own contributions?

When it comes down to it, the IMF’s and Buffett’s recommendations merely rearrange the deck chairs as the Titanic takes on water.  Even if they’re executed with flawless perfection these recommendations won’t stop the ship’s hull from filling up and sinking.

 

Unfortunately many of today’s self-anointed world improvers are not without their flaws. We have nothing against their charitable efforts as such, but their political agenda is often marred by hypocrisy. And we do of course agree with Matt that hand-outs are not the best help people can be offered. An environment that encourages self-help by making it worthwhile is worth a lot more. [PT]

 

As far as we can tell, a trifecta of offenses has over taken the U.S. economy that debase the rewards of hard work, saving money, and paying one’s way.  Plain and simple, central bank fiat money creation, multiplied by commercial banks through fractional-reserve banking, propagates financial and economic chaos.

For each new digital monetary credit the banking system creates, value is subtracted from the existing money stock.  This has the ill effect of covertly confiscating wealth from people’s wages and savings while inflating asset prices.

It also has the ill effect of reducing the idea of ‘an honest day’s work for an honest day’s pay’ to a fool’s tale. Thanks to the Fed, hard work is now for idiots.  The dole pays better for more and more people.  After that, gambling and gaming schemes offer more opportunity.

 

A chart our readers should know quite well by now – the US true broad money supply TMS-2. There is now 4.32 times more money in the US economy than 18 years ago.  It is an apodictic certainty that each money unit is worth a lot less than it would otherwise be.  It is by the way irrelevant in this context that consumer prices have risen at a significantly slower pace than the money supply – that only means that they would have declined absent this increase. Consumers still ended up paying a lot more for everything than they should be paying and incomes and savings that are worth less than they should be worth. As an aside, the notion – much-beloved by central bankers – that declining consumer prices are somehow “bad” for the economy is complete balderdash. This can be shown both theoretically and empirically – this is even admitted in the Fed’s own historical studies. [PT] – click to enlarge.

 

Until the Fed’s mischief is stopped, and Federal Reserve Notes are replaced with honest money, no IMF policy recommendation, philanthropic commitment, or silly minimum wage increase, will do a lick for rewarding hard work with equitable pay.  All efforts otherwise are merely noise.

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Despite a hiccup in the last week or so, global stocks survived as the best-performing asset class of the year (with the MSCI All-Country World Index wrapping up its best first half in 19 years)…

But, as Bloomberg reports, Wall Street strategists are fighting historic odds when urging investors not to chase the rally in the U.S. stock market.

They’re predicting the S&P 500 Index will see momentum fade in the second half after shares climbed 8.2 percent for the best first-half performance since 2013.

The average year-end prediction, 2,439, represents a 0.6 percent increase by December, the least bullish forecast at this time of year since 1999, data compiled by Bloomberg show.

Among the 20 strategists surveyed by Bloomberg, stretched valuations and decelerating profit growth are often cited as reasons for caution. Yet stocks have shrugged off everything from monetary tightening to oil’s slump to drama at the White House, surging past Wall Street forecasts that at the start of the year were the least bullish in more than a decade.

Of course there are always those who remain serial extrapolators…

Laszlo Birinyi, a steadfast bull during the eight-year equity rally, said the prevailing caution among strategists is one reason why he’s optimistic. The president of Birinyi Associates Inc. recently said his firm would buy calls betting on the S&P 500 to reach 2,500 by September.

 

“Wall Street continues to be unenthusiastic regarding the market,” Birinyi wrote to his clients this week. “New highs are generally greeted with a yawn. Especially encouraging is the fact that investors have cash,” he said. “As the year proceeds, we are actually feeling better about the market.”

Others are sticking to bearish calls.

Tom Lee, Fundstrat Global Advisors co-founder who’s the most bearish with a prediction of 2,275, last week slashed his S&P 500 earnings forecasts for this year and next, citing weaker inflation, rising labor costs and a delay in President Trump’s growth agenda.

And while VIX just had its biggest intraday surge since last year’s Brexit vote result, it just posted its second quarterly decline, with a 7.5% drop. The VIX came within 5% of its record low earlier in June and averaged 11.4 in the past three months, the lowest quarterly average since 2006.

 

And it is not just US equities that are concerning, the cost to hedge against European stock swings just saw its biggest monthly surge since January 2016.

The VStoxx Index jumped 21 percent in June, reaching its highest level since before the French election in April. The Euro Stoxx 50 Index is poised for a quarterly decline on growing speculation the region’s central banks will tighten policy — something that would likely trigger market turmoil in the medium term, JPMorgan said.

Of course Wall Street strategists aren't alone in their skepticism of US equity exuberance…

"Transitory"

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Authored by Lynn Paramore via INETEconomics.com,

Since the election of Donald Trump, the stock market has soared and many pundits have noted positive economic trends in the US. Jim Chanos of Kynikos Associates, known for his financial prescience, is less sanguine. He sat down with INET’s Lynn Parramore to discuss the underlying components of the economy, in which he finds several areas of concern. Chanos is a member of INET’s Global Partners Council.

Lynn Parramore: Let’s talk about perceptions of the U.S. economy. You’ve pointed out that surveys asking how people feel about the economy show optimism, while actual hard numbers look disappointing. What do you make of this gap?

Jim Chanos: It’s intriguing that people are reporting they’re feeling better, particularly in the corporate sector, but even among consumers. People say they feel good about the economy and yet they apparently don’t have any money at the end of every month to keep spending.

We’re seeing weak consumer spending numbers in both auto and housing, which are big drivers of the economy. With unemployment so low and the expansion where it is, these figures should be better than they are. There are portents of even worse things when you look at state and federal tax receipts, which are down, and other leading indicators.

It could all just be a soft spot in an ongoing expansion — time will tell. But the narrative we were told is that animal spirits would take us to the next level of economic activity. That clearly is not happening in mid-2017. We’re 8 years into an economic expansion, and economists say that the modern U.S. economy has never gone more than 10 years without a recession. So as recoveries go we are well into it.

People have bought their cars and remodeled their houses and done a lot of things that one does in an economic recovery. I think incremental spending [spending based on increased disposable income] is going to be harder and harder to come by as time goes on.

LP: What about the health care industry? What impact would the GOP plans have on the economy?

JC:  The Senate bill is really onerous on the backs of consumers and patients. It appears that they need it to get tax cuts and tax reform done. But I don’t think the GOP understands the political minefield they’re laying for themselves here.

Americans are getting unexpectedly higher copay and deductible expenses. They’re shouldering more and more of the health care obligation themselves, and that’s something a lot of families haven’t budgeted for. It was already a going trend in our employer-based system at the time of Obama’s election — remember, about 50 percent of us get health care through our employers. But now it’s also happening in Obamacare’s individual and small group markets. That means people have less money to spend even if their income isn’t shrinking.

Winter is coming for the U.S. health care industry. So many businesses have been structured for ongoing health care usage and inflation that they’ve just gotten fat. People tend to extrapolate from the near-term past and by and large that’s ok, but it catches you flatfooted when there’s a real tectonic shift. I think we have one of those coming in U.S. health care. Just as the shale revolution has changed the energy business, I think the advent of the consumer paying more out of pocket is changing the politics of U.S. health care. Remember, the government pays about half the top line for U.S. health care companies in the form of reimbursement. So politics does matter.

LP: In terms of the energy business, how is it changing and how do those changes impact the economic road ahead?

JC: The energy business will be far more troubled going forward. Much of it is uneconomical. Global demand for oil, gas and fossil fuel is dropping, but supply keeps increasing. Exxon used to have returns on capital in the high 20s, now they’re in the single digits.

The good news is that America, because of the shale revolution, has lots of cheap natural gas. The bad news is that coal is not coming back, whatever President Trump might think. More good news is the increasing adaption of solar and wind and renewables. The bad news is that it’s going to leave a lot of energy companies out in the cold, for lack of a better term. I keep pointing to the fact that Saudi Arabia seems to be rushing to sell the public part of its oil patrimony via the Aramco IPO [the state-owned Saudi Arabian Oil Company] and I think there’s a reason for that.

Frackers are in trouble. They’ve raised so much capital and they’ve been very successful in increasing production, but not in creating cash flow for their investors. A couple of years ago when the Saudis began to put pressure on oil prices intentionally, it was to pressure the frackers and hasten their demise — but the business brought costs down just as fast as oil prices. Frackers were able to stay in business. The capital markets, which froze to them for about six months, opened back up, and that was key because this is a negative cash flow business and the fact that they could access capital again meant they just kept drilling. They keep drilling, but they will have to figure out a way to turn a profit.

LP: Much has been made of the tech companies, the celebrated “disrupters,” as drivers of American prosperity. What’s your view of these firms, the Facebooks and Ubers and Netflixes?

JC: With the exception of Facebook, the disrupters — Netflix, Uber, etc.— don’t seem to be scaling. The Harvard Business Review has a great story out which concludes that unlike dotcom 1.0 when Amazon and Facebook were inventing whole new markets and were relatively cash-flow positive right away, companies like Uber and Tesla are more personal fiefdoms of their CEOs.

Uber is going to be an interesting story. We’ve heard a lot about how they have manipulated workers and consumers, and the governance disasters. Lost in the story of corporate governance is the story of an unprofitable model. They haven’t figured out how to operate a sustainable business.

LP: What about Trump’s infrastructure proposals? Could they help the economy?

JC: That’s just another sort of fake fiscal news, if you will. It’s going to be public-private partnerships. I have a long experience with those: I was short Macquarie Bank, which was the originator of these sorts of things in ’05-’06.

Macquarie started the idea of infrastructure as an asset class idea. But it always revolved around things like parking structures and toll roads — anything where you can have clearly definable cash flow and where you can get an immediate cash payment for use. It’s not water culverts or county service roads. Macquarie did a famous deal on the Indiana toll road (which filed for bankruptcy in 2014, collapsing in debt). It’s things like that.

Because private investors need high rates of return, these deals generally haven’t been good deals for anybody. They haven’t generated the cash investors anticipated. Consumers end up avoiding the toll roads or using different parking facilities if you raise the rates too much. In reality, we already have something [that] create[s] these infrastructure projects: It’s call municipal finance, where municipalities and states can set up funding vehicles and sell bonds to finance the projects.

Now we’re told that the private sector will be able to do this better. Well, they might be able to do it better and faster, but only for a small number of projects. Real projects that we need — repairing, refurbishing, whatever — are tougher. You’re not going to get private investors to sign up for those without definable cash flows. It’s something that sounds good but when we actually start looking at projects that make sense for private investors leveraged up with state-backed or federally-backed bonds to do a project, we’re going to find that it winnows down the list dramatically.

LP: Who is actually going to benefit from such projects?

JC: In my own view, these public-private projects are not what core supporters thought they were getting with Trump.  It’s going to be great for Wall Street investment banks, but I’m skeptical that a lot of people are going to be able to get excited about the economic growth coming from them. Rural people won’t benefit from them. They won’t be happening in the Deep South, where you might need new levees. This is for parking garages at JFK. The reconstruction of New York City’s Tappan Zee Bridge is being funded this way, a public-private partnership.

In the U.S., an attitude of hostility toward government involvement in the economy has developed over the last several decades. In the U.K., when it comes to the economy, the Conservative Party and the Labour Party both see a role for government. The Conservatives see a role that needs to be shaped and controlled and limited, while Labour feels that government should have a bigger role. But they both understand that it has a meaningful role to play. In the U.S. we have a much different situation. The Democratic Party in the U.S. is more like the Conservative Party in the U.K., while the GOP is a party that is actually opposed to the government, taking the view that the government is bad and needs to be reduced or limited. That’s a significant difference, and it shows up in our infrastructure.

LP: How serious do you view the weaknesses in the economy we’ve discussed?

JC: One of these things that we’ve talked about wouldn’t be so bad, but you put them all together and the U.S. economy doesn’t look so great.

The big 3 drivers are still housing, autos, and health care. They disproportionately count for a huge amount of activity. What we see is that housing has stalled, autos have turned down, and health care is possibly about to turn down. Retail is also turning down. Nike is laying off 2 percent of its workforce. I can’t remember the last time Nike said it was laying off people.

Again, this could simply be cyclical, and as we reach the end of the expansion it gets harder and harder to generate new sales as peoples’ leverage has gone up. It could be that, but the problem is that we’re not well equipped to handle anything other than a downturn that’s mild because the Fed is already at near-zero interest rates.

Interestingly, the deficit is starting to go back up because of lower tax receipts. That’s the wrong way for the deficit to go up. New spending, like government spending on infrastructure, would be the right way.

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Together with lashing out at the anchors of Morning Joe, slamming “garbage” fake news CNN, and suggesting that Greta Van Susteren was fired because she “refused to go along with Trump hate”, President Trump on Saturday blasted the 29 (and rising) states refusing to comply with his election fraud commission’s request for voter data to a commission he created to investigate alleged voter fraud, asking “what are they trying to hide?“

Numerous states are refusing to give information to the very distinguished VOTER FRAUD PANEL. What are they trying to hide?

— Donald J. Trump (@realDonaldTrump) July 1, 2017

Last Wednesday, Trump’s Presidential Advisory Commission on Election Integrity – which was formed to investigate his claim that millions of illegal votes cost him the popular vote in the 2016 presidential election – sent a letter to all 50 states asking them to turn over voter information including names, the last four digits of social security numbers, addresses, birth dates, political affiliation, felony convictions and voting histories.  The request was for information publicly available under each state’s laws. And while some states are providing part of this information, many states immediately raised concerns and voiced their opposition to providing the information, and as of Saturday morning, more than half of all US states – 29 at last count – had refused to comply with the commission’s requests, saying they are unnecessary and violated privacy, according to statements from election officials and media reports.

“This commission was formed to try to find basis for the lie that President Trump put forward that has no foundation,” Kentucky Secretary of State Alison Lundergan Grimes told Reuters previously in an interview.

Among the states refusing to comply with Trump’s request are both Democratic and Republican states.

* * *

Echoing Trump’s skepticism, Kansas Secretary of State Kris Kobach, the vice chair of the commission, had a similar response to the president on states refusing to comply.

“Frankly, if a state like Kentucky or California won’t provide available information, one has to ask the question, ‘Why not?’” Kobach said Friday during an interview with NPR. “I mean, what are they trying to hide if they don’t want a presidential advisory commission to study their state voter rolls?” he asked.

Several states replied to that question, as the Hill reports.

“There’s not enough bourbon here in Kentucky to make this request seem sensible,” Kentucky’s Democratic Secretary of State, Alison Lundergan Grimes, said on MSNBC. “Not on my watch are we going to be releasing sensitive information that relate to the privacy of individuals.”

Mississippi Secretary of State Delbert Hosemann, a Republican, also said he won’t turn over any information to the panel, telling members of the voter fraud commission to, “go jump in the Gulf of Mexico.”

Pennsylvania Gov. Tom Wolf, a Democrat, took a similar line, calling the Trump investigation an attempt to suppress the vote.

You can add PA to that list. We will not participate in this systematic effort to suppress the vote. https://t.co/EHnY2NJI5R

— Governor Tom Wolf (@GovernorTomWolf) June 30, 2017

Election officials from both sides of the aisle expressed skepticism about Trump’s claim of voter fraud:  “In Ohio, we pride ourselves on being a state where it is easy to vote and hard to cheat,” said Jon Husted, Ohio’s Republican secretary of state. “Voter fraud happens, it’s rare and when it happens we hold people accountable. I believe that as the Commission does its work, it will find the same about our state.” 

Several states, among them California and New York, said participating in the attempt to compile voter data would only serve to legitimize the false and already debunked claims of massive voter fraud,” according to Democratic Secretary of State Alex Padilla. On the other hand, by refusing to participate in the first place, they force Trump himself to question what it is they are hiding.

New York Gov. Andrew Cuomo and Virginia Gov. Terry McAuliffe, both Democrats, said their states would not provide confidential information. “New York refuses to perpetuate the myth voter fraud played a role in our election,” Cuomo said in a statement. “We will not be complying with this request.”

Even Kansas, where Kobach is secretary of state, will not share voters’ Social Security information with the commission. “In Kansas, the Social Security number is not publicly available,” Kobach told the Kansas City Star. “Every state receives the same letter, but we’re not asking for it if it’s not publicly available.”

Officials in Connecticut, Minnesota, Rhode Island, Utah and Washington also expressed skepticism and said their states would withhold nonpublic information. North Carolina will provide all but the last four digits of Social Security numbers, dates of birth and driver’s license numbers.

Rhode Island Secretary of State Nellie Gorbea (D) took her criticism further, saying Kobach was unfit to lead the commission, given his record of strict voting laws and a recent court fine for failing to produce documents related to a lawsuit over voting laws. 

* * *

Trump has made such allegations of voter fraud before, including claiming that that millions of people voted illegally in the 2016 election.

Kobach says he does not know if such claims are true but the commission is investigating them. He is an advocate of strict voter identification laws, which he says are necessary to combat fraud. Opponents say those laws hinder access to the polls primarily for elderly and minority voters.

Meanwhile, the Hill reported that officials have raised questions about the commission’s discretion obtaining the confidential documents.

“State statutes permit the [Wisconsin commission] to share confidential information in limited circumstances with law enforcement agencies or agencies of other states,” Haas said. “The presidential commission does not appear to qualify under either of these categories.” 

 

Trump appointed another voter identification supporter, Heritage Foundation fellow Hans von Spakovsky, to the commission Thursday. Von Spakovsky, one of Kobach’s mentors, has long advocated for stricter voter access rules.

As of noon on Saturday, the states who have refused the Commission’s demands are: Arizona, California, Connecticut, Indiana, Iowa, Kansas, Kentucky, Massachusetts, Minnesota, Mississippi, Montana, New Mexico, Nevada, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.

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Authored by Daniel Lang via SHTFplan.com,

Most people inside and outside of the US believe that this country’s gun ownership rate is unique, but that’s not exactly true. Though America has the most privately owned guns per capita, there are other countries that aren’t too far behind us, such as Serbia, Yemen, Cyprus, and many Western nations like Finland and Switzerland. In most cases, these countries don’t have access to the same kind of firearms that we do, but nonetheless there are a ton of guns floating around in these places.

What really separates the US from every other country in the world, is that we have the right to bear arms preserved in our constitution. Technically, Honduras and Mexico have the same right in their constitutions, but in both cases it comes with a lot of restrictions. Their right to bear arms doesn’t have any teeth. The Swiss are known for letting many of their citizens own guns, but gun ownership for most Swiss citizens is more of a duty than a right.

America stands alone in this regard. We’re the only country with a constitution that gives civilians a clear and explicit right to own and carry firearms. In every other nation, civilians don’t own firearms unless their governments let them.

That however, is about to change. While most EU governments are eyeing more restrictive gun laws, the Czech Republic is about to add the right to bear arms to its constitution.

Czech Lawmakers have passed legislation in the lower parliament that would see the right to bear firearms enshrined in the country’s constitution in a move directed against tighter regulations from the European Union.

 

The legislation was passed with 139 deputies agreeing to the amendment to the constitution with only nine deputies voting against. The amendment will now be considered by the Czech Senate where it will require a supermajority of three-fifths of the members in order to pass into law, Die Presse reports.

 

Similar to the U.S. second amendment to the Constitution, which gives Americans the right to keep and bear arms, the Czech legislation reads: “Citizens of the Czech Republic have the right to acquire, retain and bear arms and ammunition.”

 

The amendment also notes that the right is there to ensure the safety of the country, similar to the provision of a “well-regulated militia” in the American amendment.

After the bill passes through the senate, it’s expected to be signed into law by President Milos Zeman, who changed his mind on privately owned guns last year.

“Earlier I spoke often about limiting the ability to have large quantities of weapons. But after the terrorist attacks, I have changed the idea.”

Though the Czech Republic has always had loose gun laws compared to its neighbors, this law represents a major shift in the European public’s stance on firearm ownership. If anything, it could be just the tip of the iceberg. All across the continent, as migrants grow more violent and as terror attacks become more frequent, we’re seeing Europeans buy more firearms. In some cases, firearm sales have spiked by 350%.

If there’s any silver lining to the massive influx of migrants into Europe over the past few years, it’s that it has taught ordinary Europeans how important it is to let civilians own firearms.

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Just four months after threatening to invoke the 25th Amendment unless Trump "gets a grip," it appears the President's ongoing tweet-tirades have given 25 House Democrats the ammunition to take a radical approach to impeachment – proposing the creation of an "Oversight Commission on Presidential Capacity."

A group of 25 House Democrats, including House Minority Leader Nancy Pelosi and former DNC Chair Debbie Wasserman-Schultz, have been quietly working on a bill to impeach Trump since April, Yahoo News' Michael Isikoff reports.

Rep. Jamie Raskin of Maryland is the main sponsor of the bill, which takes a radical and unprecedented approach to impeaching President Trump under the 25th Amendment.

 

At 12:56 p.m. Thursday, barely four hours after Trump tweeted attacks against MSNBC cable host Mika Brzezinski in crude, personal terms, Rep. Jamie Raskin, D-Md., the chief sponsor of the bill, sent out an email to his colleagues, urging them to get behind the measure, writing it was of “enduring importance to the security of our nation.”

 

“In case of emergency, break glass,” Raskin told Yahoo News in an interview. “If you look at the record of things that have happened since January, it is truly a bizarre litany of events and outbursts.”

 

Asked if Trump’s latest tweets attacking Brzezinski and her co-host Joe Scarborough — which were roundly condemned by members of both parties as beneath the dignity of his office — strengthened the grounds for invoking the 25th Amendment, Raskin replied: “I assume every human being is allowed one or two errant and seemingly deranged tweets. The question is whether you have a sustained pattern of behavior that indicates something is seriously wrong.”

 

After Trump’s Thursday morning tweets, four more Democrats signed on to Raskin’s bill, his office said Friday.

To be sure, even Raskin acknowledges Congress and the country are in largely uncharted waters.

But Raskin, a former constitutional law professor, has seized on some largely overlooked language in Section 4 as the basis for his bill.

As a reminder, Rep. Raskin is not known for his 'honesty'…

So, what’s Article 4 to the 25th Amendment? In the abstract, the amendment itself is about presidential succession, and includes language about the power of the office when a president is incapacitated. But Digby recently highlighted the specific text of growing relevance:

“Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.”

What does that mean exactly?

Well, it means Congress isn’t the only institution that can remove a president from office between elections. Under the 25th Amendment, a sitting vice president and a majority of the executive branch’s cabinet could, on their own, agree to transfer power out of the hands of a sitting president. At that point, those officials would notify Congress, and the vice president would assume the office as the acting president.

And what if the challenged president wasn’t on board with the plan to remove him/her from the office? According to a recent explainer, “If the president wants to dispute this move, he can, but then it would be up to Congress to settle the matter with a vote. A two-thirds majority in both houses would be necessary to keep the vice president in charge. If that threshold isn’t reached, the president would regain his powers.” All of this comes up in fiction from time to time, and in all likelihood, Americans will probably never see this political crisis play out in real life. And that’s probably a good thing: by all appearances, the intended purpose of the constitutional provision was to address a president with a serious ailment – say, a stroke, for example – in which he or she is alive, but unable to fulfill the duties of the office.

In other words, for the first time, the concept of a "soft palace coup" has been officially brought up on public media; we expect such speculation will only get louder with each tweet.

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It’s been just over two months since thousands of attendees at an ill fated music festival in the Bahamas were left to fend for themselves in a Millennial’s worst nightmare of dying cell phones, cardboard sandwiches, burning tents, roving bands of thieves, feral dogs, and worst of all – anarchy at the bar.  Advertised as having “first-class culinary experiences and a luxury atmosphere,” things like the “Private Luxury Villas” turned out to be nothing more than USAID disaster relief tents. As reported in late April, the festival was quickly canceled after the story broke, with event organizers Ja Rule (Jeffrey Atkins) and Billy McFarland “sort of” apologizing:

.@Ruleyork OMG. This is the only way I’m apologizing from this moment on: http://pic.twitter.com/zxlwBc1ITF

— Omri (@Omri_Rawrlan) April 28, 2017

Fast forward to Friday night, when two months after Geragos and Geragos slapped Ja Rule and McFarland with a $100 million class action lawsuit, the Manhattan US Attorney’s office announced that Fyre Festival founder Billy McFarland, the organizer of the disastrous music festival, was arrested on federal charges that he defrauded investors who bought a stake in the media company.

Fyre Music Festival creator arrested and charged with wire
fraud in Manhattan federal court https://t.co/Yb6Tob5Ztx

— US Attorney SDNY (@SDNYnews) July 1, 2017

In the complaint, the 25-year-old MacFarland reportedly cheated at least two investors out of about $1.2 million by lying about the revenue and income of Fyre Media  which he founded last year. He gave them phony documents claiming the company generated millions of dollars in revenue from thousands of artist bookings in a single year, when it really earned just $60,000 from about 60 performances.

Billy McFarland at a benefit event in Water Mill, NY.

Acting Manhattan U.S. Attorney Joon Kim said: “As alleged, William McFarland promised a ‘life changing’ music festival but in actuality delivered a disaster. McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival. Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”

He continued: “McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals. In the end, the very public failure of the Fyre Festival signaled that something just wasn’t right.”

The fraudulent investment scheme unraveled in April when as we reported at the time, the Fyre Festival – which was advertised as a luxury getaway for moneyed millennials, who paid up to five figures for VIP packages – collapsed. Touted as an exotic festival with the promise of supermodels, haute cuisine, and wall-to-wall excess, guests instead arrived to a lack of facilities, sparse lighting, inadequate housing, and lots of cheese sandwiches. Many attendees were stranded in an airport through the night as they tried to get off the Bahamian island of Great Exuma.

That said, the festival fiasco certainly provided a novel spin on ponzi schemes.

According to Bloomberg, McFarland was arrested in New York and charged with wire fraud, which carries a maximum 20-year prison sentence. He is scheduled to appear Saturday in Manhattan federal court. His lawyer couldn’t be immediately contacted.

Some more details from the Justice Department’s complaint, courtesy of Bloomberg:

Fyre Media sought to build a mobile phone app that could be used to hire entertainers for clubs, concerts and parties. Later in the year, McFarland launched a subsidiary that began promoting his festival, claiming it would bring a global audience together to share a life-changing event, prosecutors said.

 

Meanwhile, the government said, McFarland was misleading his investors. Besides providing phony documents about the company’s performance, he is alleged to have altered a stock ownership statement to make it appear that he could personally guarantee an investment. He made it indicate that he owned shares valued at more than $2.5 million when he really owned stock worth less than $1,500, prosecutors said.

As we reported at the time, after the concert’s collapse, McFarland and his company were quickly hit with at least a half-dozen lawsuits from furious customers and unpaid vendors, up to and including the $100MM class action lawsuit noted above. Those complaints were followed by demands from backers looking to recoup their investment: funding that in one case was directly connected to how much attendees spent on such extras as tours, booze, and “upgrades.”

Ironically, the amateur fraud wasn’t even enough as organizers ended up borrowing as much as $7 million in a last-minute bid to fund the doomed Bahamas music showcase, according to Bloomberg. One of those loans, for $3 million, is currently the subject of a civil case after the lender, EHL Funding LLC, claimed Fyre defaulted on payments.

Even more amusing, Bloomberg reports that in a March term sheet, Fyre Media claimed to be worth $90 million. The venture capital division of Comcast chose not to invest as much as $25 million in Fyre Media after issues in due diligence, according to a person familiar with the negotiations. Which deserves at least some modest congratulations for Comcast: it appears the company was the only one who actually did some diligence on the ponzi scammer; thousands of clueless, nouveau riche millennials did not .

It remains unclear where the stolen funds have been parked. To all those civil and criminal plaintiffs seeking to recover something – or anything, good luck.

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One day after the NY Post issued its shortest ever editorial on the topic of “Trump’s tweets”, writing just three words: “Stop. Just Stop”…

Editorial: The Post’s take on Trump’s tweet https://t.co/BUudoFRkNT http://pic.twitter.com/dcet5SQZoX

— New York Post (@nypost) June 30, 2017

… and which came on the heels of Trump’s latest Twitter controversy, where the president targeted MSNBC’s Morning Joe hosts Mika Brzezinski and Joe Scarborough for their coverage of the president and his administration, saying Scarborough was a “psycho” and Brzezinski “crazy” before going on to claim that Mika was “bleeding badly from a face lift” when she was at his Florida resort around New Year’s 2016, it seems that Trump has again ignored the advice, and in a burst of angry tweets, the president has doubled down by not only targeting Morning Joe’s Mike, whom he called “dumb as a rock”, but also commenting on the unexpected departure of Greta van Susteren from MSNBC, and perhaps less surprisingly, the ongoing CNN “fake news” fall out.

It all started off politely enough, withTrump wishing “Happy Canada Day to all of the great people of Canada and to your Prime Minister and my new found friend @JustinTrudeau. #Canada150”

Happy Canada Day to all of the great people of Canada and to your Prime Minister and my new found friend @JustinTrudeau. #Canada150

— Donald J. Trump (@realDonaldTrump) July 1, 2017

However, things quickly went downhill from there, with Trump first speculating on the reason for Van Susteren’s depature, saying “Word is that @Greta Van Susteren was let go by her out of control bosses at @NBC & @Comcast because she refused to go along w/ ‘Trump hate!'”

Word is that @Greta Van Susteren was let go by her out of control bosses at @NBC & @Comcast because she refused to go along w/ ‘Trump hate!’

— Donald J. Trump (@realDonaldTrump) July 1, 2017

He next lashed out at CNN, again, saying “I am extremely pleased to see that @CNN has finally been exposed as #FakeNews and garbage journalism. It’s about time!”

I am extremely pleased to see that @CNN has finally been exposed as #FakeNews and garbage journalism. It’s about time!

— Donald J. Trump (@realDonaldTrump) July 1, 2017

Before finally taking aim, for the second time in three days, at the Morning Joe hosts: “Crazy Joe Scarborough and dumb as a rock Mika are not bad people, but their low rated show is dominated by their NBC bosses. Too bad!”

Crazy Joe Scarborough and dumb as a rock Mika are not bad people, but their low rated show is dominated by their NBC bosses. Too bad!

— Donald J. Trump (@realDonaldTrump) July 1, 2017

Trump’s Saturday tweetstorm may or may not be over, but it is sure to provoke more protests about unpresidential and/or improper language – by both democrats and republicans – from Trump, which in turn demonstrates that the president intends to continue defying the “proper” protocols of appropriate behavior. What his strategy is by doing so, if of course there is one, remains unclear.

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First Maine, then Connecticut, and finally late on Friday, confirming the worst case outcome many had expected, Illinois entered its third straight fiscal year without a budget as Republican Governor Bruce Rauner and Democratic lawmakers failed to agree on how to compromise over the government’s chronic deficits, pushing it closer toward becoming the first junk-rated U.S. state.

By the end of Friday – the last day of the fiscal year – Illinois legislators failed to enact a budget, and while negotiations continued amid some glimmers of hope and lawmakers planned to meet over the weekend, the failure marked a continuation of the historic impasse that’s left Illinois without a full-year budget since mid-2015, and which, recall, S&P warned one month ago will likely result in a humiliating and unprecedented downgrade of the 5th most populous US state to junk status.

Then came the begging.

According to Bloomberg, on Friday Illinois House Speaker Michael Madigan, a Democrat who controls much of the legislative agenda, pleaded with rating companies to “temporarily withhold judgment” as lawmakers negotiate. “Much work remains to be done,” the Democrat said on the floor of the House Friday, before the chamber adjourned for the day. “We’ll get the job done.”

Meanwhile, the state remains without a spending plan, its tax receipts and outlays mostly on “autopilot”, leaving it with a record $15 billion of unpaid bills as it spent over $6 billion more than it brought in over the past year, and with $800 million in interest on the unpaid bills alone. The impasse has devastated social-service providers, shuttering services for the homeless, disabled and poor. The lack of state aid has wrecked havoc on universities, putting their accreditation at risk.

However, in a “shocking” development, just hours remaining before the midnight deadline to pass the Illinois budget, and Illinois’ imminent loss of its investment grade rating, federal judge Joan Lefkow in Chicago ordered Illinois to come up with hundreds of millions of dollars it owes in Medicaid payments that state officials say the government doesn’t have, the Chicago Tribune reported. Judge Lefkow ordered the state to make $586 million in monthly payments (from the current $160 million) as well as another $2 billion toward a $3 billion backlog of payments – a $167 million increase in monthly outlays – the state owes to managed care organizations that process payments to providers.

While it is no secret that as part of its collapse into the financial abyss, Illinois has accumulated $15 billion in unpaid bills, the state’s Medicaid recipients had had enough, and went to court asking a judge to order the state to speed up its payments. On Friday, the court ruled in their favor. The problem, of course, is that Illinois can no more afford to pay the outstanding Medicaid bills, than it can to pay any of its $14,711,351,943.90 in overdue bills as of June 30.

The backlog of unpaid claims the state owes to managed-care companies directly, as well as to the doctors, hospitals, clinics and other organizations “is crippling these providers and thereby dramatically reducing the Medicaid recipients’ access to health care,” Lefkow said in her ruling (attached below).

* * *

Friday’s court ruling, which meant that the near-insolvent state must pay an additional $593 million per month, may have been the straw that finally broke the Illinois camel’s back.

“Friday’s ruling by the U.S. District Court takes the state’s finances from horrific to catastrophic,” Comptroller Susana Mendoza, a Democrat, said in an emailed statement after the ruling.

As a result of the court decision, “payments to the state’s pension funds; state payroll including legislator pay; General State Aid to schools and payments to local governments — in some combination — will likely have to be cut.” 

“As if the governor and legislators needed any more reason to compromise and settle on a comprehensive budget plan immediately, Friday’s ruling by the U.S. District Court takes the state’s finances from horrific to catastrophic,” Mendoza said in a statement. “A comprehensive budget plan must be passed immediately.” Realizing where all this is headed, she said that payments to bond holders won’t be interrupted (more below).

Illinois Comptroller Susana Mendoza

Friday night’s legal decision followed a previously discussed ruling, when on June 7, Judge Lefkow ordered lawyers for the state to negotiate with Medicaid recipients to come up with more money, but she stopped short of dictating how much more the state should pay each month, or when. That decision sent Illinois General Obligation bond soaring.

Earlier this week, the parties again went before the judge to say they were at an impasse, with lawyers for Medicaid recipients asking for more than $1 billion a month to cover past and ongoing costs.

Lawyers for Illinois countered that they could only come up with approximately $75 million more a month, which would translate to $150 million with federal matching dollars. Although the state is way behind, state officials said in court filings that they have been making more than $1 billion in Medicaid related payments each month in 2017, “including payments to safety net hospitals, MCOs, and other providers.”

While the state was livid over the decision, plaintiffs were delighted. Tom Yates, one of the lawyers who represented the Medicaid recipients. said the judge’s ruling is a “fair result” that will help them have access to care. “Medicaid is an incredibly important program for 25 percent of the state’s population,” Yates said. It remains unclear, however, where Illinois would find the required funds.

In her ruling, Lefkow said the state must pay the $2 billion toward its past obligations beginning July 1 and ending June 30, 2018. She ordered the state to file monthly reports showing that it’s making the payments consistent with the ruling. The Judge said she considered submissions by managed care organizations, including The Meridian MCO and Aetna Better Health Inc., in reaching her decision. Meridian is owed $540 million and Aetna is owed $700 million, the judge said. In addition, she considered submissions from doctors and clinics.

Adding insult to crippling financial injury, the judge also ordered the state to file monthly reports showing that they are making the payments consistent with the ruling.

* * *

Meanwhile, despite the recent fireworks, things in Illinois remain on autopilot as the state needs a new budget to change financial direction.

Without a budget, Bloomberg writes, the state has continued to spend more than it brings in. That’s forced it to cover “core priority” payments first, including payroll, debt service and pensions that total about $1.85 billion a month. While those bills include some Medicaid-covered payments like health services for children and adults, the state has said there aren’t enough funds to include general payments to managed-care organizations as a top priority.

Also, without a budget that includes borrowing to pay down the bill backlog, Illinois by August will run out of money for key expenses for the first time since the stalemate began, according to Comptroller Mendoza. That means school funding, state payroll, and pension payments could be affected, she said. There won’t be enough money for these mandated or court-ordered payments.

As noted above, Mendoza said that this won’t jeopardize debt-service payments, however she probably should have added “for now.” For now, Illinois hasn’t missed any bond payments and state law requires it to make monthly deposits to its debt-service funds.

For now, despite the Illinois deadline coming and going, the political standoff shows no signs of ending.

And now the market is set to react: investors have already punished Illinois for its fiscal woes. Yields on the state’s 10-year bonds have soared to 4.8%, 2.8% points higher than benchmark debt. That’s the highest yield of all 22 states that Bloomberg tracks.

Summarizing best the chaos in Illinois was John Humphrey, the head of credit research for Gurtin Municipal Bond Management, which oversees about $10.1 billion of state and local debt who said that “recognizing that they’re continuing to work through the weekend, it doesn’t look good to adjourn halfway through your last day.”

* * *

The case is Memisovski v. Wright, 92-cv-01982, U.S. District Court, Northern District of Illinois. Full court ruling below:

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