“No One Knows How To Interpret The Fed” Trader Reflects On Crushed Curve-Steepening Trade

Authored by Kevin Muir via The Macro Tourist blog,

Last week I got long the US 5-30 year yield spread (Air Says Get Long Steepeners). I thought the seasonality, combined with a bear move in bonds, would cause some steepening in that part of the curve.

http://ift.tt/2fdLBhB

Well, I got the bear move in bonds, but not only was there no steepening, the 5-30 spread flattened down to the previous lows of 92 bps!

http://ift.tt/2walmQj

What the heck is going on? The initial move down to 96 bps could almost be explained by the economic data of the time, and then the climb back up to 100 bps seemed encouraging, but the post FOMC collapse down to 92 bps was peculiar.

If Fed’s FOMC release was hawkish, I could understand the move. And to some extent, that was the first reaction. The US Dollar screamed higher, stocks initially sold off, and bonds got hammered. But if the Fed was so hawkish, the front end of the curve should have borne the brunt. You would logically expect the 2-year to rise the most. Yet the 2-year rose less than the 5’s.

http://ift.tt/2fdL9jt

It’s like the market decided the Fed would be tighter, further out in the future. Yet that’s not what the FOMC committee said, nor what Yellen communicated in the press briefing. In fact, there is a decent argument to make that the chances of a nearby tightening increased, but that the total amount of tightening for this cycle decreased.

Let’s have a look at the Fed’s infamous DOT plots which show the FOMC board’s expected interest rate path.

http://ift.tt/2walnnl

The entire expected interest rate path shifted down! And most importantly, the Fed lowered their terminal fund rate forecast. If anything, this development was dovish. Yet this interpretation is not getting a lot of airplay. Famed ex-Merrill Lynch strategist David Rosenberg is the only one I have seen actively pushing back against the idea that the Fed’s meeting was hawkish.

http://ift.tt/2fdMXJk

So why did the 5-year get hammered? If the market thought the Fed was tightening, then they should have wailed on the two’s. And more importantly, if the yield curve is flattening (indicating the Fed is tightening too quickly), why did stocks rip higher later in the day?

And yet if Rosenberg is correct that the Fed was actually much more dovish, shouldn’t that mean a relatively lower 2 and 5-year yield?

The truth of the matter is that the market doesn’t know how to interpret the Fed. Who knows how many of those governors will be there next year. And how much should we really trust the Fed’s forecasts? The reality is that they have proved time and time again that their words mean jack-squat.

In the meantime, the US 5 year note keeps leading the move to the downside. I am obviously wrong (I won’t insult you with “early”). I could handle being wrong if the whole curve was inverting, but it’s like I picked the absolutely weakest part of the curve to own.

I don’t know if this is just post-FOMC noise, or the market’s collective opinion about where Fed policy is headed. If I had to guess, I would say it is not nearly so well thought out. For whatever reason, there is a big 5-year seller, and that part of the curve is offered. Maybe it is all the new issue supply, or maybe some Central Bank out there is stuffed full of US 5’s and trying to pitch their position. For whatever reason, the market is flattening 5-30’s, and my trade has turned into quite the dud.

*  *  *

Platinum-Palladium/Gold Ratio

Speaking of David Rosenberg, I am pretty sure he was the one who brought the platinum/gold ratio as an indicator for US 10 year yields to my attention, and today’s post jogged my memory enough to dig up the ole’ chart.

http://ift.tt/2walnUn

From 2009 to 2016, this indicator worked well as a proxy for US 10-year yields. But over the last year, it has failed.

But wait! Didn’t the whole platinum/palladium relationship get messed up with the recent diesel gate and increased popularization of electric vehicles?

Maybe we should change that ratio to palladium/gold. Intrigued, I created a new chart.

http://ift.tt/2fdR3kJ

Nope, not really what I was looking for. Maybe the relationship is just broken, and whereas in the past the demand for platinum/palladium for catalytic converters (and other industrial uses) versus gold was a signal of economic activity, today it is not applicable.

Yet what if I took the combined average of the two “white” metals versus gold?

http://ift.tt/2walorp

Hey, that’s better. Dare I say it, but I think I improved on David’s indicator. Someone let him know…

In the meantime, I now have another model that shows bonds are exactly where they should be. Gee, great…

via http://ift.tt/2yu74eQ Tyler Durden

The Juggalos Are the Forgotten Men and Women of America: Podcast

“The [Juggalos] have their own language, they have their own leaders, [and] they have their own ways of talking to each other,” says Paul Detrick, who covered the group’s march on Washington last weekend. “They exist in this strange world of their own.”

Who are the Juggalos? In a nutshell, they’re fans of the rap duo Insane Clown Posse and have built a cultural identity around the music. They’re known for wearing clown makeup, hatchet main logos, and greeting each other with “whoop, whoop!” The Juggalos are mostly working class—these are the people “work at Pizza Huts…and gas stations,” says Detrick—and often refer to each other as “family.”

In 2011, the FBI labeled the group a “hybrid gang” in its National Gang Threat Assessment, which has been causing problems for Juggalos with local law enforcement. Last weekend’s march on Washington was a protest against the gang designation.

Detrick, a journalist at Reason, has been covering the group for years, producing a 2014 documentary on the group that was shot at the annual Gathering of the Juggalos, and more recently a profile and interview with Insane Clown Posse.

Nick Gillespie talks with Detrick about Juggalo subculture, the real life legal perils of gang misclassifications, and the meaning of the “hatchet man” logo.

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This is a rush transcript—check all quotes against the audio for accuracy.

Nick Gillespie: Paul, thanks for joining us.

Paul Detrick: Whoop whoop Nick, whoop whoop.

Gillespie: Whoop whoop, indeed. Well, tell us, as a starting point, before we get to the actual march on Washington and why it was being done and what it hoped to accomplish, let’s lay out some history here. Who are the Insane Clown Posse?

Detrick: The Insane Clown Posse are a rap duo from 25 years ago. They’ve been around for a really long time, but they are a horrorcore rap group from Detroit. And they’re sort of this underground rap group that has never really hit the mainstream, but has gained a lot of popularity in just the last few years, ever since this gang classification happened in about 2011.

Gillespie: It’s Violent J and Shaggy 2 Dope. Is that correct, are the two main guys?

Detrick: That’s right. Yes, Viol-

Gillespie: And they wear clown makeup. I mean, it’s somewhat reminiscent of KISS, I guess, back in the ’70s up to the early ’80s. But it’s weird kind of clown makeup, and they do rap, and you said it’s horrorcore. Can you explain to people what horrorcore is?

Detrick: Horrorcore music is something that they invented. Horrorcore music is like horror movies, but in music form. So the lyrics are very, very violent lyrics, they’re always talking about murdering people. But the trick of it is that if you really listen to the lyrics, they’re murdering people that are bigots, and racists, and that represent parts of society that they don’t like.

And the clown makeup comes from the fact that they come from very poor backgrounds, and they’ve always thought that people always thought of them as a joke, so they decided to take that on and make it a part of their act. So, everybody thinks of them as a joke, “Okay, we’ll wear clown makeup, we’ll drink the cheapest soda out there. We’re not going to drink Coca-Cola, we’re not going to drink Dr. Pepper. We’re going to drink Faygo and we’re going to spray it on the audience.”

It all worked into what their persona was. They just kept playing into that. And they targeted people just like them, that grew up in poor white neighborhoods like that they grew up in. And it’s worked out for them.

Gillespie: I mean, they’re kissing cousins to Eminem, as white rappers from a poor part of Detroit. And of course they had at various points, like all rap artists, whether you’re born rich or poor, white or black, you’re going to get into a lot a feuds. They have an ongoing feud with Eminem and a bunch of other people.

And then the Juggalos are their fans, and their symbol is the hatchet man. Why are they called Juggalos and who is the hatchet man?

Detrick: Well, they’re called Juggalos because I think it was a song that came out in the ’90s. It was sort of like a throw-away lyric from a song during a concert that Violent J was, I think singing at the time.

So yes, it’s just a name, that’s all it is. Yes. And they-

Gillespie: And the fans also dress up in … or, you know, put on makeup and kind of show they represent their loyalty to the band by showing up wearing makeup and similar clothes, right?

Detrick: Yes. That’s even an understatement. They show up in full clown makeup, they wear the hatchet man on them. The hatchet man looks like a cartoon little guy with a hatchet in his hand. And yes, they show up, they have tattoos. I’d say the majority of them have these hatchet man tattoos, or have Juggalo tattoos. They’d be across their chest or on their arm or something. They’re very enthusiastic.

Gillespie: What do the fans love about the band so much? Because they have a fan following that is every bit as dedicated as Deadheads for the Grateful Dead, or Phish fans, to name a couple of jam bands. What do the Juggalos love so much about the Insane Clown Posse?

Detrick: Juggalos are Insane Clown Posse. Insane Clown Posse is Violent J and Shaggy 2 Dope. They come from poor white backgrounds. The Juggalos, they’re people that work at Pizza Hut, they work at gas stations, and they are one and the same. They are attracted to the music because ICP is targeting to them, they’re speaking to them. The jokes and the lyrics are tailored to a group of people that are forgotten by society. Or you know, when, say mainstream people walk down the street, they look at them and then they turn the other way. They-

Gillespie: So the Juggalos are kind of like the forgotten men and women of America. Even Donald Trump supposedly won the presidency by appealing to white working class people that’d been forgotten. He wasn’t even getting near where the Juggalos are. They’re further down, they’re kind of a pyramid.

Detrick: They are way further down, way further down than that. That’s interesting to point out, because when we talk about Juggalos, we try to understand it in the mainstream world by giving out these terms for … I don’t know, like mainstream terms for understanding it, just like well, they’re like Trump voters, well, where do they exists? Are they Democrats, are they Republicans or anything?

They’re not really anything. They exist in this strange world of their own, where they have their own language, they have their own leaders, they have their own ways of talking to each other. They have their-

Gillespie: You had mentioned at the beginning, you said “Whoop whoop,” and whoop whoop is kind of the general-

Detrick: It’s like saying hello.

Gillespie: … greeting.

Detrick: Yeah. It’s like saying hello to each other, it’s like saying, “hey, how are you doing?” They also say things like, “You staying fresh?” Staying fresh is like, “Hey, are you doing well?” Instead of saying friend, they’ll say ninja. So they’ll say, “How are you doing ninja? Oh, that’s my ninja over there, that’s my friend.” Or they’ll say like, “Wicked clown love,” which is just a way of saying, “I love that guy, I love these people.”

Gillespie: Is there any sense of how many Juggalos there are?

Detrick: It’s funny. No, there’s no sense of this, and I hope that they ask this as a census question in a few years. But there’s no real sense of how many there are, but thousands of Juggalos show up every year to the Gathering of the Juggalos, whatever city’s it in.

Gillespie: And that’s kind of like an annual camp out, kind of a Woodstock every year for Insane Clown Posse fans.

Detrick: Exactly. Yes, exactly. But Juggalos exist everywhere. I thought it was just the Midwest for a while, but it’s not. There’s Juggalos in every city, in every part of America.

They are these people that exist below the surface. And they may not talk about being a Juggalo publicly, but they may have a tattoo, or they may listen to the music, or they may have been to a concert in their day. They are the people that are pumping your gas, they are the people that are a part of your life and you wouldn’t even know it.

Gillespie: And sometimes I’ve noticed, I’ve seen bumper stickers on cars that have the hatchet man. I live part-time in Oxford, Ohio, which is near Cincinnati, and there was a car in Oxford, there’s college there, but there was a car that was spray-painted with stencils of the hatchet man in black and green all over the car.

I was with a couple of people who had no idea what it was, and I was like, “Oh yeah, that’s an Insane Clown Posse thing,” which is kind of fascinating that they walk, and live, and breathe among us, but we don’t know that if we don’t know where to look.

Detrick: It’s interesting that you bring that up, because that is what has gotten them in trouble, is having the balls to have the enthusiasm that they do to put a sticker on their car. That’s gotten them pulled over by local law enforcement, local cops.

Gillespie: Let’s talk about that. In 2011, the FBI, the Department of Justice puts out a national gang assessment, or their crime assessment that includes gang classifications. And in 2011 Juggalos were considered, or they were listed as a hybrid gang.

What does that mean, and how did they come to be on that? If they were music fans, we don’t get mad at Jimmy Buffett’s parrot hats who probably caused more monetary damage in America driving home from Jimmy Buffett concerts than Juggalos. What was it about the Juggalos that so scared law enforcement?

Detrick: Well, the FBI gets information from local police departments to put on this Gang Threat Assessment report, to report to everybody, report to law enforcement entities across the United States. Police departments started reporting these incidents with Juggalos. I’m sure everything from burglaries to being drunk in public, or just someone just put-

Gillespie: Shoplifting.

Detrick: Shoplifting, petty-

Gillespie: Methamphetamine drug sales-

Detrick: Yeah, I mean, drug possession. But they put two and two together and said, “Well, this looks like a gang, it smells like a gang. This must be a gang,” so the FBI reported it like so.

It doesn’t really mean that they’re a gang. These are poor, scrubby kids. They’re going to get themselves into trouble, they’re going to do stuff like that, but it’s not because they are fans of Insane Clown Posse, not because they’re Juggalos, it’s just because that’s what happens with poor people sometimes.

You mentioned parrot hats, but I think of the Beyhive. Think if this happened to Beyonce’s fans or something. People would be shocked. And I think people were shocked right away. In 2011 when the Gang Threat Assessment came out, they were like … Juggalos are sort of a punchline to pop culture, so when the Gang Threat Assessment came out, it was sort of like, really? Oh my gosh. It became an internet joke for a while. Then the shit hit the fan. People started getting arrested.

Gillespie: And I guess you were pointing to this that they have all of the accoutrement of gang membership. They have a secret language, they have secret signs, tattoos, a kind of dress code. People start getting arrested merely for driving while Juggalo, I guess. How did Violent J and Shaggy 2 Dope take it? What was their response to this?

Detrick: Right away they thought it was pretty cool. They thought it was like, “Wow. We are so out there that we’re on the FBI’s Gang Threat Assessment.” They didn’t really see the end of that, or the ramifications of that.

It took Juggalos reporting to them that they were going through these horrible situations where they would be pulled over by the cops, or they were losing custody of their children, or losing their jobs over being a Juggalo. It’s sort of interesting. When you get arrested for a crime, the sentence can be a lot harsher if there’s a gang association with it, because district attorneys want to be tough on crimes.

Gillespie: Right, so there’s all kind of enhancements that they can do to the sentence if you fall into this or that category of offender.

Now, the march on Washington, this has been a long time coming, but what was the aim of having a massive showing of Juggalos in Washington D.C.?

Detrick: Well, the point of it was sort of an answer to, well, ICP has been for the last few years trying to fight this in court with the American Civil Liberties Union and it hasn’t worked out very well. The lawsuit has gotten thrown out of court a few times, they’ve appealed that and try to get back into court and it hasn’t worked out.

So they were a little frustrated, so they decided that they wanted to tell everybody in Washington, tell everybody in the world that they were not okay with this Gang Threat Assessment, this gang label. So they decided, “We’ll do this in the most public way possible. We’ll make a publicity stunt by marching on Washington,” and they did.

There’s like a little bit of apprehension from people that are no Juggalos and maybe even internally from ICP about like, well, what will that look like and we don’t want Juggalos being Juggalos, if you will, on the National Mall and falling into the Reflecting Pool or something. But everything pretty much was very peaceful at the march. There were even Juggalos going around picking up trash.

Gillespie: Where did they march? And then was there a concert? I mean, there were a series of talks. You did a Reason TV video of this, which is up at our YouTube channel and Facebook page, as well as at Reason.com. But what was the program?

I don’t mean this in a douchey way, it’s a civil rights march, right? The Juggalos were saying, “Look, we’re legitimate people here and we have every right to live how we want as long as we’re not hurting other people.” Were there speeches? And what was being talked about from the dias?

Detrick: Well, there were speeches that were made right in front of the Lincoln Memorial, right where Martin Luther King gave his “I Have a Dream” speech. There were speeches from Juggalos, talking about situations they’ve had with police, people that lost their jobs over being a Juggalo.

The speech from ICP was particularly interesting, because they talked about the gang classification and how it was horrible, but then they also made jokes about sewing up a guy’s butthole. I mean, it was for Juggalos and for the world to hear. It was one of the best representations of protected speech I think I’ve ever seen in my life.

And then they did the march part, where they marched down the Reflecting Pool, around the national monuments, or the Washington Monument, and then came back all the way to the Lincoln Memorial.

And in the midst of all of this, there were concerts going on, but late, just around 9 o’clock or so, they had a concert from ICP, where they did everything that they would do at an ICP concert, which is a lot of unexpected things, where they would spray the audience with Faygo. They took chicken feathers and threw them on the audience at one point. There are dozens of clowns up on stage throwing confetti.

If you’ve ever gone to an ICP concert … I’m going to assume that no one has gone to an ICP concert that listens to this podcast, but it’s a spectacle, it is a big deal in a surprising way. Even Nathan Rabin, a writer who writes about Juggalos a lot, has written two books on them. He’s in our video talking about how there’s always some sort of unexpected event, there’s always some sort of spectacle to this, there’s always some sort of bigger thing that happens.

You could say that that is true with this march as well, that there was something in the air that made it not just another Juggalo event, that made it very, very significant. This is them sticking their flag in history.

Gillespie: Well, talk a bit about the … yeah. I mean, your video has been very warmly received and it’s been shared by a lot of different music sites and other places online. For people who aren’t Juggalos, or aren’t into that particular band’s music, what’s the interest? What’s the appeal do you think? And what’s the libertarian message coming out of all of this?

Detrick: I think the appeal of ICP is that they are a rap duo that has served an answer to gangsta rap. They exist as a foil to gangsta rap, even though they’re fans of gangsta rappers, they are … you know, they have very violent lyrics, but it’s all posturing, it’s all like a character that they’re playing on stage.

There’s a lot of violent lyrics, but they’re also a lot of weird jokes in the lyrics that are the kind of jokes you would make if you were a twelve-year-old kid or something. It’s like this very disgusting humor. But is also kind of pop-y and fun and it’s not meant to-

Gillespie: Some of the horrorcore stuff reminds me of there was a subset of punk that was sometimes called the psychobilly, or shockabilly. The Cramps were probably the best known practitioners of it. But yeah, where it merged horror movies and kind of Rotting Corpse’s zombies and violence with just a really kind of anarchic sense of comedy and fun. It’s like Abbott and Costello meets Frankenstein.

Detrick: Yes, yes.

Gillespie: This isn’t a David Fincher movie. This is Abbott and Costello meeting Frankenstein, or Dracula, or the Wolfman.

Detrick: Yes, exactly. It almost feels like a parody sometimes, of the mainstream world, but not quite. They’re pretty sincere about it.

Gillespie: Yes. I avoid criticism, and obviously musical taste is to each his own, but in a weird way, for all of the kind of threat that they menace or posture as. Their lyrics tend to be almost like an afterschool special. It’s like hey kids, stay in school.

I suspect that their best known song might be “Miracles,” which has the incredible line in it where they’re talking about there’s all sorts of bad things in the world, but they see miracles every day and then at one point they say, “Magnets, how do they fucking work?” Which is kind of great. But it’s guys who are like taking a deep breath and just in love with the world. That’s not violent at all.

Detrick: Even better was the signs at the Juggalos march that said, “Dragnets. How do they work?”

Gillespie: Tell us what was the mood like? Because rock concerts, or concerts in general, they can get violent. From Altamont to various Central Park free concerts in the ’70s and ’80s led to massive public riots and things like that. Was it a mellow mood? Was it fun? Was it scary for you at all?

Detrick: The Juggalo march was not scary at all. It was like any other concert that one would go to, except that there was a sense of, I think among Juggalos, ‘let’s not fuck this up. Let’s not fuck this up at all. We are trying to get the world on our side and show the world that we’re not threatening, we’re just lovable people that are just different.” That’s it.

There were Juggalos walking around picking up trash, there were Juggalos handing out free water and Faygo to people. It felt a little like the Gathering of the Juggalos. That’s what happens there. You can ask for a beer from somebody at a Gathering of Juggalos and they’ll more than gladly give it to you. You can ask for anything.

Gillespie: In a way, do you think the Gathering of the Juggalos, or the Juggalos march, it’s almost more of a radical … is it more of a radical experiment in kind of self organization, and even something like Burning Man?

Detrick: Yeah. I mean, it was something maybe like Burning Man now. Maybe Burning Man 10 years ago or so was different. But yeah, Burning Man now is all upper middle class white girls with thorn crowns and their flower crowns and drinking rosé.

But yeah, it’s sort of an experiment in this very … I guess you could put the libertarian label on it, but it also exists outside of that. It is its own thing, but it doesn’t have a mainstream label at all.

I’m likening Juggalos and Juggalo culture to gay culture, in that they … at different times were demonized by society, by government, but-

Gillespie: I’m sorry, you liken it to what kind of culture?

Detrick: To gay culture. There’s a whole language to Juggalo culture, there’s a whole language to gay culture that exists on its own. And it happens because these groups of people turned inward and supported each other, and created societies that worked for them. You could even say drag queens are just like Juggalos. They create their own terrible music just like ICP, that is an answer to the mainstream culture.

Gillespie: Right. It’s not explicitly libertarian or dogmatically libertarian in the sense that ICP isn’t calling for the abolition of the Post Office, or privatizing sidewalks or anything, but you can see how they use whatever tools, whatever resources are around them, to create a world that they want to live in. And that’s a pretty good definition of a libertarian impulse in a subculture. And they find meaning and community through that.

What do they do next? What happens next for the ICP and for Juggalos?

Detrick: Well, next is they’re going back to court. On October 11th they are going to the Sixth District for oral arguments, trying to sue the FBI again. They are trying to at least go to the court system one more time to try to fix this. But it is a really hard thing to make that happen.

You have to try to get a judge to understand Juggalos and understand their cause. That’s a hard thing to do, because they don’t exist in the Juggalo world, although, I don’t know, maybe there is a judge out there that would understand what-

Gillespie: That would be pretty wild, wouldn’t it? If they show up and the judge is wearing Juggalo makeup.

Detrick: Yeah. If the judge is wearing Juggalo makeup.

Gillespie: You can see them giving the thumbs up to each other, “I got a good feeling about this.”

Detrick: I just hope that they see one of Reason TV’s videos or something and have their hearts changed or something nice happens because of this.

Gillespie: Well, the videos you’ve done, and you did one a couple of years ago with Alex Manning recording from the Gathering of the Juggalos. And it was after the gang assessment had been published. But yes, it was fascinating because those show a real voluntary society at work and it’s kind of beautiful and kind of moving. And I think that comes through in the march video as well.

So the next big court date is October 11th.

Detrick: Yes. That’s the next big court date. They’ll have another Gathering of the Juggalos next summer sometime. Who knows where it will be? They tend to get kicked out of a lot of states, a lot of concert venues, so you might not even know until a few weeks before where it’s going to be. But yes, it will happen. That’s for sure.

Gillespie: All right. Well, we’ll leave it there. Thank you so much. We’ve been talking with Paul Detrick, Reason TV video producer. He’s been covering the Juggalos march on Washington fans of the Insane Clown Posse who were protesting being assessed as a gang by the FBI. Paul, thanks so much for talking and for the work that you’ve done.

Detrick: Thank you, Nick.

from Hit & Run http://ift.tt/2xUXWCW
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Taiwan Cuts Off Fossil Fuels To North Korea

Authored by Zainab Calcuttawala via OilPrice.com,

Taiwan will no longer offer its fossil fuels to North Korea, the island announced on Tuesday in a bid to emerge as a responsible member of the international community.

Taiwan also said it would immediately halt any remaining clothing and textile imports from North Korea, in line with recent economic sanctions against Pyongyang for its missile tests over Japan. Preexisting contracts in force before September 11th would continue to be honored until December 10th, a notice from the economics ministry said.

The bans hope to “denounce North Korea’s recent successive nuclear tests and actions that jeopardize regional security,” the economics ministry said in a statement.

The island is not officially a member of the United Nations apart from Beijing, which insists Taiwan is just one of China’s provinces.

Taiwan and North Korea have seen bilateral trade fall 90 percent in volume in the first six months of this year, compared to the year prior. This is mostly due to the increasing scope of punitive sanctions against Pyongyang in recent months.

Russia and China have previously made a commitment never to support sanctions against Pyongyang that could negatively impact the civilian population, a stance that would almost certainly include a full-scale oil embargo.

Even prior to the new threat of sanctions, North Korea has been increasingly self-sufficient in beginning to tap its still largely unused oil reserves.

However, the country’s political climate, including the sanctions currently in force, and water depths of up to 2,500 meters off the east coast present barriers to development. A shortage of funds is likely to further hamper development.

In the 1990s, North Korea couldn’t provide food for its population, and it continues to struggle to meet the energy demands of its population, generally falling short even in providing electricity to its capital city.

via http://ift.tt/2fdH5Qe Tyler Durden

Menthol Cigarette Bans Sweep the Nation

Marlboro Menthol cigarette boxes.Once nanny-staters wanted to take the fun out of smoking. Now they’re trying to take the flavor out.

This week Oakland prohibited the sale of flavored tobacco products, including flavored cigar papers, vaping liquids, and menthol cigarettes. San Francisco passed a similar ordinance in June of this year. Minneapolis did the same in August.

Even the feds are looking to get in on this action. On August 22, eight Democratic senators sent a letter to the Food and Drug Administration demanding that the agency take actions to “remove menthol cigarettes from the market place.”

What, you might ask, could possibly justify such a petty restriction? Racial justice, apparently. San Francisco Supervisor Malia Cohen, has promised her city’s ban will put a stop to tobacco companies “selectively targeting our young adults in the African American community, the Asian Pacific Islander community, the LGBT community.” (She also describes the rule, which she introduced, as “groundbreaking” and “Earth-shattering.”) Similar justifications have been offered in Oakland, Minneapolis, and elsewhere.

It is true that black smokers use menthol cigarettes at a greater rate than the average American smoker. 88 percent of black smokers choose menthol cigarettes, compared with the 30 percent market share menthol cigarettes have among smokers nationwide. But does that mean the proper anti-racist response is to crack down on menthol? Indeed, is it not perhaps a tiny bit discriminatory to prohibit a product primarily because of the race of the people buying it?

Cohen and company have a readymade response to this: Far from being a genuine expression of their preferences, minorities have been hoodwinked into liking menthol cigarettes by a tobacco industry that “loves vulnerable populations” and “targets” them accordingly.

The Centers for Disease Control loves this line of though. On a webpage titled “African Americans and Tobacco Use,” the agency treats us to some of the ways evil tobacco companies have allegedly inculcated a desire for menthol cigarettes among the black population. They includes giving menthol products more shelf space in black neighborhoods, having price promotions on menthol products, and running “culturally tailored” advertisements.

To progressive prohibitionists, this all is evidence of a grand conspiracy to create demand for menthol cigarettes. To me, it looks like businesses servicing a preexisting demand.

You don’t have to take that from me, though. Take it from the city council president and vice mayor of Oakland, whose report on the supposed need for a menthol ban states this explicitly: “As a result of market research, the cigarette companies know that most African-American smokers prefer menthol cigarettes.”

The report goes on to quote internal tobacco marketing documents confirming this. “Marlboro would probably have a very difficult time getting anywhere in the young black market. The odds against it there are heavy. Young blacks have found their thing, and it’s menthol,” reads one 1974 report at Phillip Morris.

On top of that, I’m hard pressed to understand what exactly these bans will accomplish. Many smokers will make do with all the other sorts of cigarettes that will still be available. And people who really crave that cool, minty flavor will have the option of stocking up in the next city, or will just source their smokes from the inevitable black market that arises to meet their needs. Does anyone think the ban will actually cause a substantial number of smokers to quit?

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Spain’s Crackdown in Catalonia Won’t Stop the Push for Self-Determination

As Catalonia prepares for an October 1 vote on whether to secede from Spain, the government has cracked down on the unauthorized referendum. Yesterday the country’s high court announced it had arrested more than a dozen regional officials on charges of disobedience, abuse of power, and embezzlement. (It’s unclear whether the embezzlement charges stem from the idea that the vote is a misuse of public money or if there is a claim of broader corruption.)

Catalan leaders say the raids and arrests have undermined the push for independence. But in the end the crackdown may well end up increasing sympathy for the secessionists.

The referendum faced long odds even before the government roadblocks: Polls show only about 40 percent of the region favoring independence. But a majority does want a vote. Spain’s effort—animated in large part by a fear that other regions will follow suit with independence votes of their own—could only boost support for self-determination movements.

The doubletalk from the authorities isn’t likely to help. “Don’t go ahead, you don’t have any legitimacy to do it,” Spanish Prime Minister Mariano Rajoy told Catalans in a televised address. “Go back to the law and democracy. This referendum is a chimera.” When you defend a decision to suppress a vote by calling it a return to democracy, who exactly are you going to persuade?

Spanish courts have repeatedly ruled it illegal for Catalonia to hold a referendum on independence, and earlier this month the Spanish Constitutional Court suspended the currently scheduled vote so the judges could hear arguments about whether it is constitutional. Catalan officials decided to hold the referendum anyway, whether or not the results would be binding. The national government responded by threatening to arrest 700 regional mayors if they went on with preparations for the voting. This week’s crackdown followed.

European Union leaders have backed the Spanish government, though Reuters reports that this “belies some disquiet that his hardline tactics might backfire.” Nicola Sturgeon, Scotland’s pro-independence leader, has urged Spanish and Catalan leaders to resolve their differences at the negotiating table, not with police raids.

We’ll see. The case for self-determination is clear enough: By reducing the distance between the governing and the governed, local rule could make officials more responsive and make it harder for majorities to lord over minorities. But local rule also makes central planning more difficult, and so the central planners who claim to be the standard-bearers of democracy tend to oppose it. In Spain, that opposition reveals that they’re not so democratic after all.

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A Look At How Nestle Makes Billions Selling You Groundwater In A Bottle

A few weeks ago we shared with readers a lawsuit filed in Connecticut against Nestle Waters North America, Inc. alleging that the water they marketed as Poland ‘Natural Spring Water’ was actually just bottled groundwater…the same water that runs through the taps of many American households. 

Now a new investigation from Bloomberg Businessweek reveals how large water bottling companies choose their plant locations based not on the steady supply of pristine, natural drinking water, as their labels and other marketing campaigns would lead you to believe, but based on which economically depressed municipalities offer up the most tax breaks and have the most lax water laws. 

As an example, even in the drought stricken state of California, Bloomberg notes that Nestle was able to strike a sweetheart 20-year supply agreement with the U.S. Forest Service to pay roughly $0.000001 for the water in each bottle that consumers blindly drop a couple bucks to purchase.

But it illuminates how Nestlé has come to dominate a controversial industry, spring by spring, often going into economically depressed municipalities with the promise of jobs and new infrastructure in exchange for tax breaks and access to a resource that’s scarce for millions. Where Nestlé encounters grass-roots resistance against its industrial-strength guzzling, it deploys lawyers; where it’s welcome, it can push the limits of that hospitality, sometimes with the acquiescence of state and local governments that are too cash-strapped or inept to say no. There are the usual costs of doing business, including transportation, infrastructure, and salaries. But Nestlé pays little for the product it bottles—sometimes a municipal rate and other times just a nominal extraction fee. In Michigan, it’s $200.

 

Elsewhere, Nestlé has largely prevailed against opposition. In Fryeburg, Maine, it took the company four years to successfully appeal a zoning board resolution to build a facility it said it needed for its Poland Spring line. Last year it gained rights to extract water for the next 20 years—and perhaps 25 more after that. In San Bernardino, Calif., Nestlé has long paid the U.S. Forest Service an annual rate of $524 to extract about 30 million gallons, even during droughts. “Our public agencies have dropped the ball,” says Peter Gleick, co-founder of the Pacific Institute, which focuses on water issues. “Every gallon of water that is taken out of a natural system for bottled water is a gallon of water that doesn’t flow down a stream, that doesn’t support a natural ecosystem,” he says.

Water

Not surprisingly, Nestlé isn’t the only bottled water company playing these games. As Bloomberg notes, Pepsi and Coca-Cola bottle municipal water from Detroit for their Aquafina and Dasani brands, respectively; they pay city rates, then sell the product back for a massive profit.

Of course, even if it is pulled from a ‘natural spring’, which often times it is not, bottled water isn’t necessarily more safe than tap water despite the fact that you’re paying a 1,000,000x markup for the product. In the U.S., municipalities with 2.5 million or more people are required to test their supply dozens of times each day, whereas those with fewer than 50,000 customers must test for certain contaminants 60 times per month. 

Bottled water companies, on the other hand, aren’t required to monitor their reserve or report contamination, even though most will say that they do…you just have to take their word for it.  That said, as we pointed out in the post below, American’s are increasingly no longer willing to do that…

* * *

A group of bottled water drinkers has brought a class action lawsuit against Nestle, the company which owns Poland Spring, alleging that the Maine business has long deceived consumers by mislabeling common groundwater. The lawsuit was filed on Tuesday in a Connecticut federal court and accuses Nestle Waters North America Inc. of a “colossal fraud perpetrated against American consumers” the Bangor Daily News reports.

The plaintiffs claim that falsely labeling its “groundwater” product as pure spring water allowed Nestle to sell Poland Spring water at a premium; as a result the consumers who brought the legal action are seeking at least $5 million in monetary damages for a national class and several state subclasses. They requested a jury trial. The civil suit was brought by 11 people from the Northeast who collectively spent thousands of dollars on Poland Spring brand water in recent years. It seeks millions of dollars in damages for a nationwide class and hinges on whether the sources of Poland Spring water meet the Food and Drug Administration’s definition of a spring.

The 325-page lawsuit, which was filed by lawyers from four firms, claims that none of the company’s Maine water sources meets the federal definition for spring water and that the company has “politically compromised” state regulators. Rather than spring water, Nestle Waters is actually purifying and bottling groundwater, some of which comes from sites near waste and garbage dumps, the suit claims. The legal challenge comes as Nestle is looking to expand its operations in Maine.

For instance, the suit claims that the company’s wells in Poland, Maine, have never been scientifically proven to be connected to a spring and draw in surface water, which cannot legally be called spring water. It further alleges that the company has put water from some of these wells through a purification process that disqualifies it as spring water under federal regulations.

 

The suit makes similar claims about Poland Spring water sources in Hollis, Fryeburg, Denmark, Dallas Plantation, Pierce Pond Township and Kingfield.

Poland Spring has gotten away with this deception for years, the suit claims, by co-opting state regulators and interweaving its interests with those of state government. Since 1998 the company has generated millions of dollars for Maine through licensing agreements, and since 2003 it has had an executive on the governor-appointed body that oversees the state drinking-water regulation enforcement agency, the suit states.

The court complaint further says that the Maine Drinking Water Program scientist who approved many of the company’s spring water permits spent a decade working with this executive at a private engineering firm and that the agency failed to get independent proof of the springs’ existence.

In response to the lawsuit, a Nestle Waters spokesperson said that its water meets all relevant federal and state regulations on the classification and collection of spring water and that the suit is “an obvious attempt to manipulate the legal system for personal gain.”

“The claims made in the lawsuit are without merit. Poland Spring is 100 [percent] spring water.”

This is not the first time that Nestle Waters has faced such allegations. In 2003, it settled a class action lawsuit alleging that Poland Spring water doesn’t come from a spring. In that case, the company did not admit the allegation but agreed to pay about $10 million in discounts to consumers and charity contributions. In other words, pulling a page from Wall Street, it neither admitted, nor denied guilt.

The full lawsuit is below:

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The Petrodollar Is Under Attack: Here’s What You Need To Know

Authored by Darius Shatahmasebi via TheAntiMedia.org,

Once upon a time, the U.S. dollar was backed by the gold standard in a framework that established what was known as the Bretton-Woods agreement, made in 1944. The dollar was fixed to gold at a price of $35 an ounce, though the dollar could earn interest, marking one notable difference from gold.

The system ended up being short-lived, as President Richard Nixon announced that the U.S. would be abandoning the gold standard in 1971. Instead, the U.S. had other plans for the future of global markets.

As the Huffington Post has explained, the Nixon Administration reached a deal with Saudi Arabia:

“The essence of the deal was that the U.S. would agree to military sales and defense of Saudi Arabia in return for all oil trade being denominated in U.S. dollars.”

This system became known as the Petrodollar Recycling system because countries like Saudi Arabia would have to invest excess profits back into the U.S. It didn’t take long for every single member of OPEC to start trading oil in U.S. dollars.

A little-known economic theory, rejected by the mainstream, stipulates that Washington’s stranglehold over financial markets can be at least partially explained by the fact that all oil exports are conducted in transactions involving the U.S. dollar. This relationship between oil and currency arguably gives the dollar its value, as this paradigm requires all exporting and importing countries to maintain a certain stock of U.S. dollars, adding to the dollar’s value. As Foreign Policy – a magazine that rejects the theory – explains:

“It does matter slightly that the trade typically takes place in dollars. This means that those wishing to buy oil must acquire dollars to buy the oil, which increases the demand for dollars in world financial markets.”

The term “those wishing to buy oil” encompasses almost every single country that does not have an oil supply of its own – hardly a trivial number. An endless demand for dollars means an endless supply, and the United States can print as much paper as it wants to account for its imperial ambitions. No other country in the world can do this.

In 2000, Iraq announced it would no longer use U.S. dollars to sell oil on the global market. It adopted the euro, instead, which was no easy decision to make. However, by February 2003, the Guardian reported that Iraq had netted a “handsome profit” after making this policy change.

Anyone who rejects this petrodollar theory should be able to answer the following question: if currency is not an important factor in America’s imperialist adventures, why was the U.S. so intent on invading a country (based on cold, hard lies), only to make it a priority to switch the sale of oil back to dollars? If they cared so much about Iraq and its people, as we were supposed to have believed, why not allow Iraq to continue netting a “handsome profit”?

In Libya, Muammar Gaddafi was punished for a similar proposal that would have created a unified African currency backed by gold, which would have been used to buy and sell African oil. Hillary Clinton’s leaked emails confirmed this was the main reason Gaddafi was overthrown, though commentators continue to ignore and reject the theory. Despite these denials, Clinton’s leaked emails made it clear that Gaddafi’s plan for the future of African oil exports was a priority for the U.S. and its NATO cohorts, more so than Gaddafi’s alleged human rights abuses. This is the same Hillary Clinton who openly laughed when Gaddafi was sodomized and murdered, displaying no regrets that she single-handedly plunged a very rich and prosperous nation into a complete state of chaos.

At the start of this month, Venezuela announced it would soon “free” itself from the dollar. Barely a week or so later, the Wall Street Journal reported that Venezuela had stopped accepting dollars for oil payments in response to U.S. sanctions. Venezuela sits on the world’s largest oil reserves. Donald Trump’s threats of unilateral military intervention — combined with the CIA’s admission that it will interfere in the oil-rich country — may make a lot more sense in this context.

Iran has also been using alternative currencies  — like the Chinese yuan — for some time now. It also shares a lucrative gas field with Qatar, which could be days away from ditching the dollar, as well. Qatar has reportedly already been conducting billions of dollars’ worth of transactions in the yuan. Just recently, Qatar and Iran restored full diplomatic relations in a complete snub to the U.S. and its allies. It is no surprise, then, that both countries have been vilified on the international stage, particularly under the Trump administration.

In the latest dig to the U.S. dollar and global financial hegemony, the Times of Israel reported that a Chinese state-owned investment firm has provided a $10 billion credit line to Iranian banks, which will specifically use yuan and euros to bypass U.S.-led sanctions.

Consider that in August 2015, then-Secretary of State John Kerry warned that if the U.S. walked away from the nuclear deal with Iran and forced its allies to comply with U.S.-led sanctions, it would be a “recipe, very quickly…for the American dollar to cease to be the reserve currency of the world.”

Iran, bound to Syria by a mutual-defense pact, was reportedly working to establish a natural gas pipeline that would run through Iraq and Syria with the aim of exporting gas to European markets, cutting off Washington and its allies completely. This was, of course, in 2009 — before the Syrian war began. Such a pipeline deal, now with Russia’s continued air support and military presence, could entail the emergence of a whole new market that could easily be linked to the euro, or any other currency for that matter, instead of the dollar.

According to Russian state-owned outlet RT, the Kremlin’s website announced Tuesday that Russian President Vladimir Putin has also instructed the government to approve legislation to ditch the U.S. dollar at all Russian seaports by next year.

Further, the Asia Times explains that Putin dropped an enormous “bombshell” at the recent BRICS summit in Xiamen early September, stating:

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.” [emphasis added]

According to the Asia Times author, the statement was code-speak for how BRICS countries will look to bypass the U.S. dollar as well as the petrodollar.

China is also on board with this proposal. Soon, China will launch a crude oil futures contract priced in Chinese yuan that will be completely convertible into gold. As reported by the Nikkei Asian Review, analysts have called this move a “game-changer” for the oil industry.

Both Russia and China have been buying up huge quantities of gold for some time now. Russia’s present gold reserves would back 27 percent of the narrow ruble money supply – far in excess of any other major country. The United States’ Federal Reserve admitted years ago that they haven’t held any gold for a very long time.

China is also implementing a monumental project, known as the Silk Road project, which is a major push to create a permanent trade route connecting China, Africa, and Europe. One must wonder much control over these transactions will the U.S. have.

These are just a few of the latest developments that have affected the dollar.

Can those continue to reject this petrodollar-related theory answer the following questions with confidence: Is it a coincidence that all of the countries listed above as moving away from the dollar are long-time adversaries of the United States, including the ones that were invaded? Is it a coincidence that Saudi Arabia gets a free pass to commit a host of criminal actions as it complies with the global financial order? Are Saudi Arabia’s concerns with Qatar really rooted in the latter’s alleged funding of terror groups even though Saudi Arabia leads the world in funding the world’s most vile terror groups?

Clearly, there is something far more sinister at play here, and whether or not it is tied solely to a deranged, psychopathic currency warfare will remain to be seen. The evidence continues to show, however, that the U.S. dollar is slowly being eroded piece by piece and ounce by ounce — and that as these adversarial countries make these developments in unison, there appears to be little the U.S. can do without risking an all-out world war.

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New Sanctions on North Korea, Hurricane Maria-Related Deaths, Russia Warns U.S. on Troops in Syria: P.M. Links

  • Hurricane MariaPresident Donald Trump announced a new set of sanctions against North Korea.
  • Hurricane Maria has killed at least 15 in the Dominican Republic, and parts of Puerto Rico may be without power for months.
  • Facebook says they’ll release the contents of 3,000 ads bought by a Russian agency to Congressional investigators looking into the country’s alleged meddling in the 2016 election.
  • A police officer in Buckeye, Arizona, forcefully tackled an autistic teen after mistakenly believing he was on drugs, and now the kid’s family is demanding more training for police in dealing with people with autism.
  • “Philippine President Rodrigo Duterte has publicly vowed to have his own son killed if rumors about his involvement in drugs turned out to be true.”
  • Russia is warning about at threat of a possible confrontation with U.S. troops in Syria if it came under fire by U.S.-allied Syrian Democratic Forces shelling Syrian government positions.
  • Today’s lesson in why we don’t use the military to engage in nation-building: U.S. troops watched cop shows in order to get guidance in how to teach policing to Afghan security forces, according to an inspector general’s report.

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GOP Leaders are Trying to Bribe An Alaska Senator to Repeal Obamacare—By Letting Her State Keep Obamacare

The desperate Republican effort to cobble together the votes necessary to pass legislation that would rewrite Obamacare has now descended into low farce.

For backers of Graham-Cassidy, which supporters have described as a repeal of Obamacare, the number one target is Alaska Senator Lisa Murkowski, who was one of three Senate Republicans who voted against a previous repeal plan in July. The way they are trying to win her over is by offering legislative kickbacks that are explicitly designed to help Murkowski’s home state.

One funding boost was already included in the initial draft of the legislation. A report this afternoon indicates that the chief backers of the bill, Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) are looking to add several more carve outs that would specifically target Alaska. If added to the legislation, these carve outs would let Alaska escape the core features of Graham-Cassidy.

In essence, they would be attempting to bribe Murkowski to vote to repeal Obamacare by letting her state keep Obamacare.

The core idea behind the Graham-Cassidy legislation is to convert Obamacare into a system of block grants. Medicaid would be transformed into a per-capita grant, meaning that funding would be capped per individual. Obamacare’s premium tax credits for people buying insurance through state health insurance exchanges would be eliminated. Instead, that money would be given to states, which would have more leeway to determine how it is spent.

But according to a report by IJR‘s Haley Byrd, based on information provided by a GOP Senate aide, Sens. Graham and Cassidy are working on a new draft that would keep Obamacare’s premium tax credits in place in Alaska and Hawaii, delay the implementation of the per-capita grants the legislation envisions for Medicaid for both states, and provide both with an additional boost to federal Medicaid funding.

It is possible that these changes will not be inserted into the legislation. But if they were, Alaska would effectively be exempt from the fundamental policy changes that Graham-Cassidy seeks to enact. Adding these provisions to the legislation would constitute an implicit admission that its most prominent reforms are not necessary.

Indeed, the attempted bribe appears to be even more brazen than that. These exemptions would reportedly come in addition to the block grant that Alaska was already scheduled to receive under the proposed legislation.

In other words, Alaska would not merely be allowed to keep Obamacare in its current form. It would also be given a large infusion of new money from the block grant. It would be a bribe on top of a bribe.

This would not be the first attempt to buy Murkowski’s vote with bonus funding targeted at Alaska. The initial draft of the legislation included additional Medicaid money for “low-density states” that have unusually high per-capita health care spending—which curiously seems to apply only to Alaska and possibly North Dakota.

There is real merit to the idea that states should be allowed more flexibility to regulate their health care systems. But there are serious questions about whether this legislation would provide the sort of flexibility its supporters claim.

Yet what the effort to woo Murkowski shows is that Republicans who support Graham-Cassidy are not attempting to win votes for the bill by making the case for its substantive merits. Indeed, few even seem to understand the mechanics of how it would work.

Instead, they are attempting to buy off wavering lawmakers with transparent bribery that not only adds to the cost of the law, but undermines the chief argument for its necessity. If this indicates the general quality of the arguments in favor of the bill, then it does not deserve to pass.

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