The Other Way To Steal Crypto – Armed Robbers Storm Ontario-Based Bitcoin Firm

While sophisticated hackers breached CoinCheck’s security systems and ‘escaped’ with $400 million worth of NEM, criminals in Canada were a little less finesse and little more physical…

Employees at a Nepean, Ontario bitcoin business received a nasty surprise earlier this week: Three armed men showed up at their business, held them up at gunpoint, tied them up and tried to force them to transfer a bitcoin ransom to one of their accounts.

Robbers

The incident occurred at 10:55 am when the three suspects gained entry to Canadian Bitcoins on Concourse Gate, which is just west of the intersection of Colonnade Road and Prince of Wales Drive, Ottawa Citizen.

A fifth employee was in another office and called the police; the three masked men fled when the squad cars arrived…

Armed with handguns, police said they tied up four employees, one of whom would later need medical attention after being hit in the head with a handgun.

The suspects tried to coerce employees into completing a transaction, Staff Sgt. Michael Haarbosch said. Bitcoin is not a physical currency, but a cryptocurrency that can be exchanged for other currencies, products and services. At the moment, one bitcoin is worth around $13,700.

A fifth employee was in another office and called police. The suspects fled empty-handed.

Officers quickly spotted a suspect running into a ravine north of Colonnade Road and called for backup. One suspect was arrested without incident while two others were still at large.

One of the men was caught by police, but apparently has refused to divulge the identities of his compatriots.

Jimmy St-Hilaire, 19, was scheduled to appear in court Wednesday on charges including five counts each of robbery, pointing a firearm and forcible confinement plus wearing a disguise and conspiracy to commit an indictable offence. He also faces charges that he carried a concealed weapon and had a loaded gun to commit a crime while banned from having firearms.

The two suspects at large are described as black men. Police also want to talk to a “person of interest” who was inside the business when the suspects arrived.

On Wednesday afternoon, police returned to the scene to search for a gun used in the robbery.

A message posted on the door of Canadian Bitcoins advised customers that the office would be temporarily closed to walk-in customers until Jan. 28 at noon, although online orders were being processed as usual.

Businesses next to Bitcoin were not open, but a worker at a company a few doors down said he saw police cruisers screech into the commercial building’s parking lot and get out with their guns drawn Tuesday morning.

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“Micro-Schools” Might Be the Next Big Education Thing: Podcast

One-room schoolhouses are making a comeback in the “micro-schooling” movement. While a typical public high school might cram 2,000 students into a single grade, micro-schools cap out at 150 (and often far fewer) students for all grades. That allows students to mix across ages and interests while building skill-based knowledge and proficiency. Teachers function more as guides than instructors and learning is intensely personalized, individualized, and task-oriented. Think of micro-schools as “Montessori meets Silicon Valley.”

Reason‘s Nick Gillespie spoke with Tyler Koteskey, an education analyst at Reason Foundation, who has a story on the micro-schooling movement in the March issue of Reason (subscribe here). They discuss the personalized approach of micro-schooling, the militaristic, Prussian origins of American factory-model education, and the costs and benefits of different modes of learning.

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Reason is a proud media partner of National School Choice Week, an annual event promoting the ability of parents and students to have greater options in K-12 education. Go here to get more information about events and data about how increasing school choice—charters, vouchers, educational savings accounts, and more—is one of the best ways to improve education for all Americans. For a constantly updated list of stories about school choice, go to Reason‘s archive page.

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

Nick Gillespie: This is the Reason podcast, and I’m your host Nick Gillespie. Thanks for listening. Please subscribe to us at iTunes, and rate, and review us while you’re there. Today we are talking with Tyler Koteskey. He’s an education analyst, and researcher for Reason Foundation, the nonprofit that publishes the Reason podcast as well as Reason magazine. Reason.com, and basically everything else with the Reason brand. This is also National School Choice Week, which is an annual event that celebrates the depth, and breadth, and just variety of school choice around the country. Reason is a national media partner with School Choice Week. The people who celebrate this are literally 10’s of thousands of events happening all over the country. If you go to schoolchoiceweek.com you can find a list of events in your state, and probably even in your own town. There is well over 20,000 events happening during the course of school choice week.

Tyler, thanks so much for talking with me today.

Tyler Koteskey: Pleasure to be here Nick.

Gillespie: You have in the current issue. The new issue of Reason magazine, a story that is called micro-schools. Are micro-schools the next big thing? The promise, and peril of tiny, private schools. Let’s talk about that during School Choice Week especially. What are micro-schools, and why should we be excited about them?

Koteskey: So I think the best way to describe micro-schools is probably just thinking about them as kind of a revived one-room schoolhouse stuck into the 21st century. There’s not really a hard, and fast definition, but some of the features that you usually see are that it’s a small size. You have anywhere from maybe even just half a dozen kids to under 150 is the upper limit a lot of people use. The kids tend to learn amidst age groups. There’s no age-based grades usually, and the teacher’s kind of function more as these guides who are helping you kind of discover the learning yourself rather than these sages that are all-knowing, and telling you the content directly as we’re kind of used to. There’s a big emphasis also just on digital content, and sort of personalized learning through projects, and things like that also.

Gillespie: I don’t mean to shortchange, or reduce things in a bad way, but it’s almost kind of like Montessori meets Silicon Valley. It seems very individualized, very personalized. You’re roaming up, and down in age ranges, and the kids seem to be doing from your story, and we’ll talk about a couple of the specific schools that you discuss, and that you visited for the story, but they do a lot of projects, or tasks. It’s experiential learning? Is that fair to say?

Koteskey: Yeah. I think that’s a good way to put it, and like you say, there have been schools like Montessori’s, and things like that before that also have kind of similar, non-hierarchical models, and I think the main difference is that there’s a lot more technology, and I think kind of forward looking focus in a lot of these.

Gillespie: Let’s talk about one of the schools that you talk about, which I guess was in New York City. It’s called The Portfolio School. What did you find there, and what does that illustrate about the micro-school movement?

Koteskey: Portfolio School was kind of in my view sort of represented the top of the market in terms of the offerings that you can find in this pretty diverse movement. This was in downtown Manhattan. It’s in Tribeca, and founded by a former Intel employee, and a cell maker, and they were both Princeton graduates, and you walk in, and the walls were all-

Gillespie: I hate them already. Intel, science-based Princeton grads, but … So you walk into the room, and they were working—

Koteskey: It’s the first thing I noticed was that the walls are all whiteboard. They’re all covered with these diagrams about the planets, and different equations, and everything. The time that I had gone specifically they were doing this whole Mars exploration unit. It was this big, long, interdisciplinary unit where they’re learning how to get to Mars, because you know that’s something that engages the kids, but to learn how to get there you’ve got to learn about Newton’s Laws. They do things like go to the local playground, and film each other using these apps that they could then … They go back to school, and they see how when you’re on a swing, or something like that, you can see the law that you’re learning about in action. They make a big effort to relate what they’re learning in school to their daily lives so that it seems relevant as opposed to just kind of being sat down, and told, hey just learn this, because you have to accept that it’s important without—

Gillespie: With the age range, and with the mixed ages, which sounds really kind of great, because school is the one place in our life when we’re five, or six years old, we go to this place for the next 12 years, and then another four more if you go to college, or grad school where you’re hanging out with people who are basically the same age as you. It’s a very strange thing that we take for granted, but what is the age range? Say at Portfolio, or a typical micro-school, and what do you do with a seven, or eight year old who can’t really read that well, and then there might be somebody who is 15, or 16. How do they get engaged?

Koteskey: With Portfolio school they’ve been around I believe for about two years now so they’re still in the elementary school stage. I guess it would go from about five to 10, and they break up the kids based on, again, not age, but sort of their competency at various skills, and things like that. You might have a reading group that’s taking more basic tech, and everything, and one that’s a little bit more advanced, and because of their use of a lot of personalized learning software, they can have a decent sense of where each individual student is in terms of their achievement on just the core scale is like reading, and math, and things like that to be able to then figure out where to place them in some of these differentiated lesson groups.

Gillespie: And then what happens, or where do the teachers come from? Because this seems like it’s not just students who get regimented, and taught a very kind of inside-the-box way of thinking about school. It’s true that education programs turn out teachers who think of the students as widgets somewhat. Where are the teachers coming from at Portfolio?

Koteskey: So I know the head of their curriculum design, and everything had a pretty extensive career working both in psychology, and various lab schools, and trying to pile it out different innovative learning techniques. It’s clear that that philosophy was informing a lot of what they were doing. Especially in trying to make what they were learning relevant to their daily lives. I know at least the two teachers who they call ‘Master Educators’ which I suppose in New York City you got to try different [inaudible 00:08:07]. Kind of like that. They’ve both had careers teaching for about 15 years beforehand at various different schools so I think they both seem to have a general openness to trying something new, and at Portfolio school, and other places we’ve tried to do the new approaches that we wanted in public schools, or even traditional private schools, and it just hasn’t been possible in those contexts so we’re trying something new.

Gillespie: How much does the school cost? This one?

Koteskey: It’s hefty. It’s about $35,000, which is a lot, and it’s certainly not in reach of a lot of folks, but the important thing is your average private school tuition in New York City is about $44,000, and some of the more expensive ones are even topping $50,000 now. It’s a significant savings in context, but I think that’s one of the potential drawbacks of the model is depending on where you are in certain cities it may still be out of reach for your average person without some kind of program like a voucher, or education savings account to help make it more viable.

Gillespie: Do you know offhand, what does the New York City public school systems spend per student? It’s got to be north of 20 grand itself, right?

Koteskey: Yeah. I’m blanking on what the exact figure is here, but I think it is definitely in … I think about 15, or $20,000. It’s definitely investment-wise it’s not getting a lot of ROI on that.

Gillespie: So then you talk about a place that’s in Oakland, California. It’s the opposite side of the country. It’s called Quantum Camp. What was interesting about Quantum Camp as a micro-school for you?

Koteskey: That one it was I think really innovative in the sense that it wasn’t even necessarily a full school. They were just offering sort of STEM curriculums. The science, and math courses from … You could do that from sort of first grade level. Ages like 7, or so. All the way up to high school, and it’s just this guy who had taught in Oakland public schools for a good 10 years, or so. Was just totally disillusioned with the science curriculum ’cause he knew just kind of implicitly what would be more engaging for his kids. Wanted to try it out, but just with the structure of the curriculum, and union constraints, and how you can teach things like that really didn’t have the flexibility so a friend sent him that he couldn’t teach quantum physics to 12 year olds, and he basically said, ‘Hold my beer.’ And started this school. I think that the thing is most interesting to me is that is also … A big part of their customer base are part-time home schoolers.

I think about if I wanted to homeschool my kid I would be very scared about trying to teach them physics, or chemistry. So to have a place where you can basically have all of your math, and science content taken care of for three, four thousand dollars is incredible. In a way it seems to really engage the kids from what I saw.

Gillespie: And then you also talk about another school. The Acton Network. I guess they’re business schools, or business academies. What’s going on there?

Koteskey: The Acton Academy it was started by Jeff Sandefer who also created The Acton Business School. That’s a highly-rated school on the Princeton Review hype ratings, and stuff like that. He’s already had a non-traditional model. They always fire the lowest-rated teacher every year, and things like that.

Gillespie: That’s really got to make for a tough spirit rally at the end of the year. I don’t know.

Koteskey: A little Hunger Games, you know.

Gillespie: Yeah, or “Vice Principals.” The HBO show. It seems a little grim.

Koteskey: Right, right, but at least with Acton Academy, which is a bit of a school obviously, that’s the whole post-grant deal, but for Acton Academy it’s all this … They have this philosophy of them viewing of a sense of hero’s journey into their kids, and sort of the belief that they’re seeking their passion, and trying to find something that they can get excited about that’s meaningful, and productive to contribute. For instance, you see the philosophy of the business school coming through, because one of their defining projects is the Acton Business Fair that every school will do. They basically tell the kids alright, create a product, and you’re going to sell it to strangers on the street at this thing we have set up, and you’re going to have to keep track of your cost, and materials, and everything like that, and we’re going to grade you on if you’re ending up in the black, or not. How real life works.

Gillespie: The founder of the Acton Academy in Placer County, California. A guy named Matthew Beaudreau. I might be mispronouncing his name, but he also says that he thinks of himself as a ‘creatively insubordinate’ that’s what he’s trying to instill in his kids. Talk a little bit about that. You don’t really typically hear teachers, or principals saying, ‘I want my kids to kind of be a pain in the ass.’

Koteskey: Yeah. Again, he’s part of this team of people who has tried to innovate within a more traditional educational status quo, and have sort of been rebuffed by the constraints of the systems. He was a teacher, and administrator in both public, and private schools, and found the system kind of far too rigid. Basically wanted to create a more non-traditional setting where kids would be kind of more openly thinking for themselves. Not just blindly accepting rules for their own sake. I know one of the things I like about Acton Placer from talking to Matt was their whole system of the students setting their own individual learning goals, and this is part of what I guess the technology enables when you can have this individualized software so you can say ‘Alright, I’m going to learn this many new words in Spanish, or this new type of equation in math, or something like that.’

The kids will kind of pressure each other in some ways to set high enough goals. If you can sort of complete these tasks over time you get lion bucks, which is I guess their mascot. You can use that to buy stuff. This one parent I talked to, her son was kind of more of the spend it immediately type, and got a pop socket grip thing for his phone, whereas the daughter was saving up to maybe buy like a pizza party for her friends, or lunch with one of the teachers they call guides, and everything. It’s kind of a cool incentive system in a sense that you’re not being afraid of harnessing self interest in a positive way.

Gillespie: One of the really remarkable things about your story, which is in the March issue of Reason, which subscribers will have now, and if you buy a print, or digital prescription you would have it too as well by now. It will go up later for free on the website in a few weeks I guess, or whatever. That’s a unveiled subscription pitch, but one of the things that I liked about the story a lot Tyler was your kind of thumbnail history of where, why the American educational system read large. This is true of most private schools as well as most public schools. We have a kind of factory model-education. One of the things that’s interesting about micro-schools. Not only they’re smaller size. Instead of talking about these regional, or mega high schools that might have a couple of thousand students in three, or four grades, or something like that, but you have small classes of mixed ages.

It’s a relative freedom, and it’s that idea of the kids you’re talking to here, and the scenes you’re describing for somebody I went to high school in the 70’s, and 80’s, and The Wall. The Pink Floyd concept album that was all about how shitty, and repressed of the British schooling system was spoke to everybody. School was a drag. Talk about where did the American model of education that we are slowly chipping away at, where did it come from? What are the roots of that? What are the limitations of that?

Koteskey: It’s a pretty interesting story for folks who haven’t looked into it before. For a country like ours where we think of ourself as this liberal democracy, sort of the default standards of our public education systems came from Prussia, which was this 17, 1800’s German kingdom that was super militaristic, regimented, and authoritarian, and more or less were based on the system of public schools that kings there such as Frederick the Great set up with the goal of pretty much creating these disciplines due to full citizen redo, make good soldiers, and administrators, and sort of embody the values of the state to serve the sovereign. A lot of people, especially in Europe as you had the rising nationalist movement, saw education as sort of this key means of forging a national identity that didn’t exist before, and sort of creating it out of thin air.

How it got to translate to America was that Horace Mann, who’s this famous 19th century educator from America.

Gillespie: The father of American education, right? Yeah.

Koteskey: Indeed. He goes, and visits Prussia in 1843, because he’s heard about this system, and he thinks, ‘Oh my goodness, this is great. We can standardize everything, and have great quality control.’ He becomes sort of the first Secretary of Education of Massachusetts, and reforms the school system all on these Prussia lines to create what are called ‘common schools,’ which were basically public schools then. He thought, ‘This is an important part of assimilating those ghastly Catholic immigrants into a homogenized sort of American civic identity.’ People were worried that, ‘Oh maybe these immigrants are going to have dual loyalty with the Pope’ or something like that. It was sort of to forge this baseline kind of Protestant U.S-centric sense of civic values.

Gillespie: It’s kind of to create a civic religion, really. To put a more positive spin, or less dastardly spin on it. It seems similar to the early industrial revolution where one of the great triumphs was that a mass production allowed more people to feed themselves. It comes at the cost of variety, and standardization, and everything. You quote the educational theorist Ken Robinson, who has given, I believe you say, he has the single most-watched TED talk on youtube. He says we have an education model that is essentially built on the model of fast food. That everything is standardized, everything is homogenized. When did that model, which I think most of us recognize unless there was a period of a lot of experimentation I think in the late 60’s, and early 70’s in public schools as well as private schools that kind of faded away, but seems to be coming back.

What is driving that interest in kind of moving away from almost a factory farm version of schools to these more individualized products? What are the drivers of that shift?

Koteskey: I think it’s the change in just educational theory, partly. Just because there’s been a renewed interest in interdisciplinary knowledge, and everything. For instance, Babur Habib whose one of the Portfolio School founders, he’s working at Intel, and he’s noticing that the people who are more successful there aren’t necessarily the best coders. You have to be confident at that, but it’s people who can interact well with others, and work in groups. Be empathetic, be creative, things like that. As Tony Robertson who formerly at the Harvard Innovation Lab said it’s, ‘The world no longer cares how much you know in trivial pursuits, it’s about what you can do, and with the knowledge that you have to apply it in a useful way.’ I think probably a shift in some of the background theories behind that, and also just a cultural shift among parents.

I think like you say with Pink Floyd, and other people sort of talking about seeing this stagnating process in our public schools, right? Where since the 70’s I think the total cost of educating someone from Kindergarten to 12th grade has tripled in real dollars, and our sort of national test scores have been stagnant. I think it’s probably a reaction just against the status quo not working.

Gillespie: Yeah, and you know part of when I was reading your story I was moved to think of John Mackey, the co-founder, and former CEO of Whole Foods. A book that he put out a couple of years ago called, ‘Conscious Capitalism’ he talked about moving past the industrial revolution model of standard products, or standard ingredients in, and then you have standardized products coming out, which is part of quality control, and was an important era to pass through an industrial production of food, and clothing, and you name it. You have the dean of Stanford Education School. A guy named Ellwood Cubberley who in 1917 actually wrote that schools were, ‘factories in which the raw products, children are to be shaped, and fashioned into products to meet the various demands of life.’ I mean without saying this without any kind of qualification, but it seems like we’ve evolved as a society past that. We don’t want to think about our kids as products.

As raw materials, and then as products. Especially if they’re standardized, and they’re like everybody else. How do we know then? You raise us in your story as well. How do we know that this isn’t a fad? How many micro-schools are there? What do we look for say in a couple years to see if this is panning out, or if it is influencing broader parts of the educational system?

Koteskey: Well unfortunately the answer right now is we don’t know if it’s going to be a fad, or not, and hopefully it isn’t. We saw one of the highest profile micro-schools that was getting a lot of the coverage was AltSchool, which had four campuses in New York, and San Francisco. Started by a former Google employee. Got tons of venture capital from folks like Peter Thiel, and Mark Zuckerberg. In any case, lots of fanfare when they started, but over time they sort of got away from the schooling aspect, and decided they wanted to go more into educational software. There were some anecdotal parent concerns reported out. Not necessarily being attentive about kids falling behind, and things like that. I think it goes to show that … Now they’re closing two of their four schools as a result. I think it just goes to show that you can’t rest on the laurels of having an interesting concept.

You have to actively engage these parents, because by nature anyone who’s going to sign their kid up for something that is so different from what we’ve been conditioned to believe just has to be the default of education is done. They’re financially going to be a risk taker so you have to convince them that the investment that they’re making is worth it, and so I think in the micro-schools that seem to be succeeding, and hopefully will succeed in the future, it’s about that parent engagement, and making them feel like their part of the process, and able to easily attract how their kids are doing.

Gillespie: Is a lot of the action in school choice, and kind of fragmentation, and disruption of the public school monopoly, and public school still serve what over I think it’s around, or a little bit over 90 percent of the student population for K through 12, are any charter schools, or public voucher schools doing micro-schools, or something like that, or has this mostly been a product of private education so far?

Koteskey: It’s a interesting mix. Some people see micro-school as being sort of useful pilot labs. What practices that a lot of charter schools could adopt. I also know with Quantum Camp for instance, there’s a lot of parents who will have their kids in independent study charter schools, and Quantum Camp is listed sort of as a vendor that they can use their funding for to get their science, and math content. Quantum Camp itself actually has started marketing out it’s instruction to other schools, which I think is a great way, especially if we’re going to facilitate a more dynamic education market. If you can just contract out the curriculum that you might not have … You might not know where to get as the teachers, or it’s lowering the transaction cons for new schools to spring up. There’s a variety of ways that people can access these courses, and put more price points on more parts of education so they can ultimate how we get more choices instead of priority.

Gillespie: Speaking of this idea of breaking down the kind of mental model of school. A school. You can go to any town in the country, and you know what the school buildings are, because they all look basically the same, and they all look a little bit about minimum security prisons. It is so hard even among kind of radical libertarians to break out of that mindset of saying, ‘Well you know, education first off it’s not going to last from September to June. It’s not going to last from the time you’re six until you’re 18. It’s not all going to take place at the same place.’ I love the idea of an educational savings accounts, and a couple of other places where parents have an essentially almost unrestrictive pot of money, and they can say, ‘Well I’m going to send my kid to mornings at this language camp, because that’s good, and then I’m going to send them on a trip, because that will be educational, and I’m using dollars that are allotted, and set aside for education.’

That idea of thinking so broadly, and so differently than what we’re used to, which is school is a place that you go, and kind of nap from 9AM to 3PM every day, and then you get excited about one, or two classes. You do something after school, etc. I want to ask you your general thoughts on school choice. We seen school choices growing. The number of charter schools continues to double, and triple every few years. It is really hard to get out of that mindset in which we’re raised. Where do you see a part from micro-schools? What are the parts of the school choice movement, or the school choice reality that you see that are particularly exciting to you?

Koteskey: Well I do agree with you. I think probably the education savings accounts represent just the leading edge potential for where school choice could go in terms of being able to give every child sort of this individualized boutique experience, because why not? Especially if we can do it on average far cheaper than what the status quo has been in this sort of subpar model.

Gillespie: Kind of theoretically an education savings account would be something instead of a state, or locality saying okay, we’re going to spend 15 grand, or 20 grand a year per pupil, that money, or some portion of it gets put into an account that the parents, or guardian of kid just uses to kind of stitch together whatever educational experience they want for the kids, and it could be mix, and match of all sorts of things.

Koteskey: Exactly. It really provides the ultimate flexibility for parent preferences, and because it rolls over each year, it gives you an incentive to actually save, and spend the money on high quality materials and schools, and things so it almost helps produce its own sense of incentive for parent accountability. You could use it at your local public school, or charter school potentially for certain courses if you thought they were providing them well. It’s not necessarily anti-public education, but gives so much more options to people than they usually have.

Gillespie: Here’s an off beat question to talk about during school choice week, and both acceptance of school choice, because everybody in every parts of our lives were looking for more individualized, and personalized experiences. We don’t want to eat what everybody else is eating. We want our clothing to be personalized, etc. It’s coming to our kids education finally, but two things. One is what is the role of sports teams in keeping the public school monopoly? And actually even the private school monopoly, because where I grew up in New Jersey the sports power house teams particularly in basketball, and football were almost always Catholic schools, because they could be single sex, and they could effectively recruit much easier from all over the place than a local public school, but how much is the sports culture that almost … The United States is almost the only industrialized country that has done this where they fused sports culture, and school culture in education.

How big an obstacle is that to just change in the way we think about school choice?

Koteskey: It’s funny you mention that, because it is this sort of sleeper element that you might not think about if you’re talking to a state legislature, or something. You might think the only consideration is oh, it’s just going to be cheaper, better quality, yada, yada, yada, but yeah. There’s a lot of times where a legislature might think, ‘Well if the starting quarterback at my hometown public school has school choice, we might lose him to somewhere.’ Our team has enough experience in places where, and states where this sports culture is. Really big deal to sort of know that this implicit barrier in the back of some people’s heads. It is really interesting to see that pop up sometimes even though if athletes had school choice it would probably be better off for them because-

Gillespie: Yeah. Of course.

Koteskey: … they’d be able to go to a program where they could play more whether, or not they were star athletes or not.

Gillespie: Yeah. I know that this is generally considered one of the reasons why Texas, which in many ways is a great, innovative state. It deregulates a lot of business stuff. It’s good for business, but it’s a relative laggard particularly for a red state in school choice, and part of the blame gets put on the fact that Texas has a particularly a football culture where you’ll get 30, 40 thousand people turning out on Friday night for high school football, and you don’t mess with that. It also doesn’t have the same tradition of really high powered Catholic schools, and private schools that would build a sport’s monopoly. Here, the other question. This will be the last one that I ask of you, but does an individualized education on the one hand at reason, and another libertarian, and free market groups, and individualists outfits. On the one hand we keep talking about how we want individualized education. Individualized experience.

We talk about molecular medicine where Doctors should be treating people based on their god damn DNA, because everyone is different, and yet when it comes to higher education we’re constantly talking about snowflakes, and people who … Students who can’t deal with any kind of negative feedback, or anything that seems to impose on their unique vision of the world, and their place in it. Is school choice, or micro-schools, or charter schools, or schools that cater to students needs, are they creating a generation of super duper snowflakes who will be fit for nothing in the world? Is there attention there, or am I just being puckish by asking that?

Koteskey: I mean considering the state of our college campuses, it’s an important one to ask. I would say that I think if you look at the research on things like civic engagement, volunteerism, tolerance of people who don’t share your political beliefs, they’ve done studies on students in traditional public schools versus in school choice options. Even just traditional private schools, and it shows that these students have better ‘civic values’ I think most importantly in the sense that they are more tolerant of people who disagree with them. In a micro-school context though I can see very much why, especially if there’s more of an emphasis on working with others, thinking critically, being able to civilly articulate your viewpoints, especially when they oppose someone else’s.

I think there’s a lot more of a culture of taking personal responsibility for what you believe, and what you’re saying than in the public school system where I think it’s much easier to just get by, by keeping your head down, and completing the right tasks without actually having to have this journey of self reflection that I think a lot of the places that I visited in the micro-schools movement wanted to facilitate.

Gillespie: That’s a very convincing, and compelling argument. It’s also very comforting to hear that. Who knew that individualism breeds respect for others, and tolerance, and an ability to engage people that you disagree with. I hope that’s all true. I want to thank Tyler Koteskey. He is an education analyst at Reason Foundation. He has a great new story in the latest issue of Reason magazine. It’s called are micro-schools the next big thing? Tyler, thanks for talking to me today.

Koteskey: It’s been a pleasure Nick, thank you.

Gillespie: This has been the Reason podcast. I am your hose Nick Gillespie. Thanks so much for listening. Please subscribe to us at iTunes, and rate, and review us while you’re there. Also given that it’s school choice week, go to schoolchoiceweek.com, and check out all of the things. All of the events. 10’s, of thousands. 20 of thousands of events happening all over the country. Looking at the variety, and range of school choice options. Thanks for listening.

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“Leave Us Alone” – Saudi Oil Minister Slams Shale Hype

Authored by Nick Cunningham via OilPrice.com,

“Leave us alone and leave all these issues. We had enough of shale oil and talks of shale. Please talk about anything else,” Saudi oil minister Khalid al-Falih said in Davos, snapping at reporters.

Al-Falih has clearly become annoyed at all the pestering from reporters and market analysts about the prospect of U.S. shale spoiling OPEC’s plans this year. He put on a brave face and dismissed questions about OPEC losing market share as U.S. drillers continue to ramp up. “The market is in an excellent condition, the demand and supply are good, the inventories are good,” he said, according to the WSJ. “I told you I was relaxed, and I’m still relaxed about the meeting.”

His testy response won’t kill rumors about discord growing from within OPEC. In fact, the WSJ reported that a delegate from an unnamed OPEC country said that falling shipments to the U.S. are a concern. The delegate said that OPEC’s leadership “needs to make some progress on addressing shale.”

But al-Falih didn’t want to hear any of it, and he blamed reporters for stirring up controversy where he says there wasn’t any to begin with. “Why are you all excited all of a sudden on shale? You know why, because you like to chit chat … you are an agent of disturbance,” he said, pointing to a reporter.

At a panel event at the World Economic Forum in Davos, Switzerland, al-Falih said that the IEA is overhyping the impact of U.S. shale.

“I was not disputing the amazing revolution of shale … [but] in the overall global supply demand picture it’s not going to wreck the train,” al-Falih said, claiming that the IEA is overstating the role of shale in a global market.

“We should not be scared,” he added. “That’s the core job of the IEA, not to take it out of context.”

The comments come a week after the IEA published its January Oil Market Report, in which it said that “explosive” shale growth, combined with production gains in Canada and Brazil, would “far outweigh” any declines from Venezuela and Mexico. The conclusion was the basis for the IEA predicting non-OPEC supply growth of 1.7 million barrels per day (mb/d) in 2018, a figure that exceeds demand growth of 1.3 mb/d. In other words, the IEA says the oil market will once again be oversupplied, largely because of U.S. shale.

But in Davos, al-Falih was exasperated with those claims. He argued that natural depletion, plus strong demand growth meant that there was plenty of room for new supply, and that shale drillers wouldn’t crash the market. He criticized the IEA for an “oversized focus” on U.S. shale.

With some unfortunate timing for him, the EIA published production figures for the week ending on January 19, which showed a massive jump in output to 9.878, an increase of 128,000 bpd from a week earlier. That puts U.S. production at another record high, although it should be noted that these weekly estimates are subject to revision. Nevertheless, the EIA sees U.S. oil production passing 10 mb/d in February, scaling up to 11 mb/d by the end of 2019.

Still, al-Falih expressed resolve, stating that it would be “very unlikely” that the OPEC/non-OPEC coalition would abandon their production cuts at their upcoming meeting in June. Earlier in the week, al-Falih said that Saudi-Russian cooperation in the oil market would last for “decades and generations,” and that he wanted to work out a more permanent framework for OPEC coordination beyond 2018.

The comments from al-Falih were quickly met with pushback from the IEA’s top officials. IEA executive director tweeted on Thursday a not-so-subtle dig at al-Falih: “Delighted to participate in this stimulating discussion about the future of energy markets. @IEA analysis has been consistent for many years about the shale oil and gas revolution in the United States and its impact on global markets.”

The IEA’s head of oil division, Neil Atkinson, also rejected al-Falih’s characterization that the IEA has overhyped shale. “U.S. shale in the past decade is one of the biggest game changers in oil production history and it’s leading 1.7 mb/d of non-OPEC growth in 2018. Other countries e.g. Brazil and Canada are growing fast too,” he said in a tweet on Thursday.

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Georgia’s Campus Free Speech Bill Protects Some Students’ Rights, May Threaten Others

Eariler this week, Georgia State Sen. William Ligon, a Republican, introduced the Campus Free Speech Act, a bill designed to uphold students’ First Amendment freedoms. Following a year in which there were plenty of campus speech meltdowns, this bill attempts to address the growing resistance to a free and open campus, though it also creates new concerns.

The bill, which is based on the Goldwater Model, would require universities to take action against students who shut down speakers. Stanley Kurtz, a senior fellow at the Ethics and Public Policy Center and co-author of the Goldwater proposal upon which this bill was based, feels strongly about this specific bill.

“The Georgia bill and the Goldwater model that inspired it aims to secure campus free-speech in the most balanced and comprehensive way possible,” said Kurtz in an email to Reason. “It’s often forgotten that the principle of institutional neutrality is a pillar of campus free-speech. Universities should resist the temptation to take official institutional stands on political controversies… the Goldwater proposal is the only model to affirm this principle of institutional neutrality.”

In addition to requiring universities to create a policy on free speech, wherein universities must “strive to ensure the fullest degree of intellectual freedom and free expression,” they must also agree that “it is not the proper role of the institution to shield individuals from speech” and that their protection must also extend to speech which some may “find unwelcome, disagreeable, or even deeply offensive.”

The bill protects public demonstrations, provided that they do not “materially and substantially” infringe upon the rights of others. Campuses must be open to any speaker who is invited by student groups or faculty members, and these speakers must be given the same terms. Universities also may not charge a security fee based on the content of the invitee’s speech (something Berkeley tried in the past).

Students who break these policies are entitled to certain due process rights that are spelled out in the document, but the bill states that “any student who has twice been found responsible for infringing upon the expressive rights of others shall be suspended for a minimum of one year or expelled.”

Joe Cohn, the Legislative and Policy Director at Foundation for Individual Rights in Education (FIRE), said FIRE is troubled by this aspect of the proposal.

“We are always concerned about mandatory punishments that do not take into account individual culpability,” said Cohn in an interview with Reason. “There is a difference between someone who has gotten in trouble for counter protesting as a freshman and then again as a senior, three credits shy of graduating, and someone who gave a professor a concussion at a rally.”

This bill comes after a series of incidents involving Georgia state schools. In 2017, the University of North Georgia’s former Student Code of Conduct was given FIRE’s harshest rating—red—for substantially burdening free speech.

“We are glad speech speech codes are being addressed, and we will be watching and engaging in the process as this bill moves through legislation,” Cohn says.

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Common sense investing wisdom from Mr. Miyagi

Almost exactly a year ago to the day, on January 23, 2017, I wrote to you in this column that the US dollar was overvalued against almost every currency in the world.

Specifically, I described how Donald Trump and Fed Chair Janet Yellen BOTH wanted a weaker US dollar:

Donald Trump told the Wall Street Journal last week that the US dollar is “too strong. And it’s killing us.”

On that single statement alone, the dollar index fell 1%.

Fed Chair Janet Yellen has also weighed in on the overvalued US dollar, calling it “a drag on U.S. growth”.

No one has a crystal ball, and it’s impossible to predict precisely WHEN this bubble starts to deflate.

In fact, it’s possible that the dollar becomes even stronger than it is today.

But when the two most powerful policymakers in the country both want the US dollar to get weaker, it’s pretty clear what’s going to happen.

At the time that article was published, the US Dollar Index was within 1% of its 15-year high.

That turned out to be the peak. Since then, dollar has been on a relentless and punishing slide, with the Dollar index falling nearly 13% in twelve months.

(Source: http://ift.tt/2qXMtjg)

The US dollar’s overvalue had been a theme in this letter for some time; going back to at least May 2016, we had often discussed the idea of trading overvalued US dollars for undervalued assets in undervalued currencies.

As an example, I acquired a business in Australia about two years ago at a time when the Australian dollar was at a near decade low against the US dollar.

Even better, I picked up the business for an amazing deal, roughly 1x the company’s annual profit (about $1.5 million).

In an age of bubble markets where even poor-quality assets trade for 100x annual earnings on major stock exchanges, this Australian business was a real bargain… a deeply undervalued asset.

Plus, since the Aussie dollar has increased so much in value since then, I’m able to earn an additional 10% on my investment just from the exchange rate boost.

We did the same thing in Chile, acquiring and developing tens of millions of dollars’ worth of productive farmland at a time when local land prices were depressed and the Chilean peso was exceptionally weak.

Land prices are rising once again, and the peso is more than 17% stronger than its 2016 low.

I’m definitely no genius. And I’d never pretend to have a crystal ball or be able to predict the future of financial markets.

But one of the few things that we know for certain is that NOTHING goes up or down in a straight line.

There are always cycles… periods of time when particular assets do very well… and then don’t do so well.

Oil is a classic example; it reached nearly $150 per barrel back in 2008 before collapsing down to $40 during the Global Financial Crisis less than 6 months later.

Then it rose again steadily to surpass $100 per barrel by mid-2014 before sinking below $30 eighteen months later.

Now it’s around $65.

You get the idea. It’s just like Mr. Miyagi said about Paint the Fence: Up. Down. Up. Down.

Nearly everything conforms to these cycles– stocks, real estate, commodities, Bitcoin, and the US dollar itself.

And understanding this cyclical nature is an important element in avoiding big mistakes.

It’s in our nature to buy assets when their prices are rising and near the top of their up cycle.

And we tend to sell in a panic when prices are falling, i.e. near the bottom of their down cycle.

In reality it should be the opposite– we should be sellers when prices are rising and buyers when prices are falling.

But as we’ve been discussing lately, this requires emotional detachment… and patience to wait out the cycle.

(These cycles can sometimes last for several years. So only buy what you’re comfortable holding for a LONG time.)

Obviously it’s impossible to nail the timing– no one rings a bell at the top or the bottom. And only a fool pretends to have a crystal ball.

But… even though you might not hit the exact top, it’s hardly ever a bad thing to take some money off the table to lock in some gains.

Similarly, you won’t be worse off acquiring a fantastic, undervalued asset at a cheap price, even if you don’t buy at the precise bottom.

In upcoming letters we’ll talk about the dollar’s down cycle… and what types of assets will do very well– including precious metals, commodity currencies like the Australian dollar, and other real assets.

Source

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California Budget in Decent Shape, but Jerry Brown Missed Vast Opportunities: New at Reason

California’s governor often talks about fiscal frugality, responsibility and reform, but there isn’t much follow-up action.

Steven Greenhut writes:

Chalk it up to a sort of political guilty pleasure. But even though my libertarian political views are vastly different from those of Democratic Gov. Jerry Brown, I’ve always enjoyed his philosophical ramblings and musings. He’s certainly more entertaining to write about than any other California politician in memory.

There was that time at a press conference when a reporter asked him why he was cutting spending on some social program. “Because that’s where the money is,” he retorted (or something close to that). It was funny and refreshing—and typical Brown. At times he sounds like a fundamentalist preacher warning about the end of the world, but it’s all part of that Moonbeam charm.

However, after introducing his 16th budget last week, I’m left with that same nagging feeling that’s dogged me throughout his two recent terms. It’s known as disappointment. Brown surely knows about the depth of the state’s fiscal problems—and the fact that our public services cost far more and deliver far less than those in other states. Why hasn’t he done more?

View this article.

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Over $400 Million Stolen From Hacked Japanese Cryptocurrency Exchange

Earlier today we reported that cryptocurrencies tumbled  overnight after one of the most popular, if unregistered, Japanese exchanges, Coincheck, halted withdrawals amid general confusion as to what prompted the halt.

Furthermore, Coincheck said it had stopped deposits into NEM coins, a hint that something fishy was taking place withthe 10th-largest cryptocurrency by market value, which quickly fell nearly 20% overnight.

 

Speculation was rife: “Coincheck is a very well-known exchange in Japan,” said Hiroyuki Komiya, Chief Executive Officer of Tokyo-based Blockchain Technology Consulting. “We’ve seen several outages at various crypto exchanges recently, so the extent and seriousness of Coincheck’s halt isn’t yet clear. We’re all very eagerly awaiting to hear more detail on what’s happening.”

Shortly after the closure, theories started to emerge as to what may have happened, when some noticed that a massive ($110 million) transfer from Coincheck’s Ripple wallet sparked speculation that the exchange may have been hacked:

And then, the worst case scenario was confirmed moments ago when Coincheck itself told financial authorities that it had lost 500 million NEM cryptocurrency coins in today’s cyberheist, which at the current exchange rate amounts to roughly $400 million!

While little additional information was available, Coincheck says that the hacked NEM was sent illicitly outside exchange, at which point the trail was lost. No other issues found with other currencies on exchange.

The Japnese exchange also said that it was working hard to secure client assets, and that it doesn’t know how many total coins were lostl adding that it was not clear if NEM losses were internal or external.

And while memories of the historic Mt.Gox hack suddenly back front and center, Coincheck said that it plans to start trading of unaffected currencies. In retrospect that may not be a good idea…

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WSJ Asks What Are Adam Schiff, The Justice Department, & The FBI Trying To Hide?

Authored by Kimberley Strassel via The Wall Street Journal,

Operation ‘Sabotage The Memo’

Rep. Adam Schiff has many talents, though few compare to his ability to function as a human barometer of Democratic panic. The greater the level of Schiff hot, pressured air, the more trouble the party knows it’s in.

Mr. Schiff’s millibars have been popping ever since the Permanent Select Committee on Intelligence, on which he is ranking Democrat, last week voted to make a classified GOP memo about FBI election year abuses available to every House member. Mr. Schiff has spit and spun and apoplectically accused his Republican colleagues of everything short of treason. The memo, he insists, is “profoundly misleading,” not to mention “distorted” and “political,” and an attack on the Federal Bureau of Investigation. He initially tried to block his colleagues from reading it. Having failed, he’s now arguing Americans can know the full story only if they see the underlying classified documents.

This is highly convenient, given the Justice Department retains those documents and is as eager to make them public as a fox is to abandon the henhouse. Intelligence Chairman Devin Nunes had to threaten a contempt citation simply to get permission for his committee to gain access, and even then investigators had to leave Capitol Hill to view them, and were allowed only to take notes. Mr. Nunes has no authority to declassify them. The best he can do in his continuing transparency efforts is to summarize their contents. Only in Schiff land is sunshine suddenly a pollutant.

The Schiff pressure gauge is outmatched only by the Justice Department and the FBI, which are now mobilizing their big guns to squelch the truth. That included a Wednesday Justice Department letter to Mr. Nunes—written by Assistant Attorney General Stephen Boyd, designed as a memo to the media, copied to its allies in Washington, and immediately leaked to the public. And the department wonders why anyone doubts the integrity of all its hardworking professionals.

Mr. Boyd gets in his cheap shots, for instance slamming Mr. Nunes for moving to release a memo based on documents that Mr. Nunes hasn’t even “seen.” He apparently thinks Rep. Trey Gowdy —the experienced former federal prosecutor Mr. Nunes asked to conduct the review of those docs—isn’t qualified to judge questions of national security. He hyperventilates that it would be “reckless” for the committee to make its memo public without first letting the Justice Department review it and “advise [the committee] of the risk of harm to national security.” Put another way, it is Mr. Boyd’s position that the Justice Department gets to provide oversight of Congress. The Constitution has it the other way around.

The bigger, swampier game here is to rally media pressure, and to mau-mau Mr. Nunes into giving the department a veto over the memo’s release. Ask Sen. Chuck Grassley how that goes. Mr. Grassley, chairman of the Judiciary Committee, recently sent a referral to the department for a criminal probe into dossier author Christopher Steele. He then in good faith asked the department its views on an unclassified portion of that referral that he wants to make public. The department invented a classified reason to block public release, and has refused to budge for weeks.

The Boyd letter is also a first step toward a bigger prize: President Trump. Under House rules, a majority of the Intelligence Committee can vote to declassify the memo. Mr. Trump then has up to five days to object to its release. If he doesn’t object, the memo goes public. If he does, a majority of the House would have to vote to override him.

The shrieks of reckless harm and national security are designed to pressure Mr. Trump to object.

And wait for it: In coming days the Justice Department’s protectors will gin up a separate, desperate claim that Mr. Trump will somehow be “interfering” in special counsel Robert Mueller’s probe unless he objects to the release. According to this view, it is Mr. Trump’s obligation not just to sit by while the media and the Mueller team concoct their narrative, but to block any evidence that might undercut it.

The slippery shadow in all this is Deputy Attorney General Rod Rosenstein. Attorney General Jeff Sessions’ recusal put Mr. Rosenstein in charge of digging into the actions—right or wrong—of the Justice Department and FBI in 2016. Instead of taking up that challenge, he named an old and dear friend of the FBI as special counsel, and directed him only to look at Mr. Trump. And Mr. Rosenstein appears to have signed up as an active participant in the effort to thwart any congressional investigation of the other side of the issue.

A department head interested in truth doesn’t flout subpoenas. He doesn’t do a runaround of the Intelligence Committee and try to sucker House Speaker Paul Ryan into aiding a stonewall by asking him to intervene just before a deadline and block a contempt citation. He doesn’t sit on the knowledge of outrageous texts between FBI agents and force Congress to drag it out of him. And he doesn’t sign off on the leaks and character assassination in which his department daily engages to undermine Congress.

The good news is that these frantic reactions are a sign Americans are getting closer to the truth. So long as the truth-tellers keep moving forward.

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USDJPY Tumbles On Kuroda’s ‘Optimistic’ Comments

USDJPY tumbled back below 109.00 as market participants interpreted BoJ Governor Kuroda’s comments at a panel in Davos as relatively optimistic (and thus hawkish for one of the world’s most dovish central bankers).

Bank of Japan Governor Haruhiko Kuroda says a 15-year period of deflationary mindset is not easy to eradicate from consumers but sounded an optimistic note.

Kuroda said Japanese growth is moderate, but well-balanced, but noted that wages and prices are picking up, and that the BoJ is “finally close” to its 2% inflation target.

Bloomberg notes that Kuroda sees some risks to Japanese outlook – mostly external and geopolitical – and reassured that BOJ will continue to support the economy.

The reaction was a swift bid for JPY, sending USDJPY back below 109.00

 

For now stocks are shrugging it off…

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BofA Sounds The Alarm: “Biggest Sell Signal In 5 Years Was Just Triggered”

One week ago, Bank of America’s Michael Hartnett showed  that as a result of the ongoing stock market euphoria, the 4-week inflow into stocks had hit the highest ever, although he suggested that we were “not quite there” yet when it comes to euphoria becoming a “selling” trigger.

So fast forward one week, when according to BofA’s latest weekly flow show, we finally made one-week history as investors poured the most money on record into equity funds, and warning that with the Bull & Bear indicator surging to 7.9 “the highest since last sell signal >8 triggered Mar’13”, a tactical pullback in sky-high markets in February and March is now “very likely”.

Overall, as part of what Hartnett calls a “non-stop euphoria cabaret” markets saw a record $33.2bn inflow to equity funds this week, record $12.2bn inflow to active funds, $1.5bn into gold (50-week high), as well as record inflows to tech & TIPS.

And while we all know how overbought the market is, here are two stunning statistics:

  • 98% of global equity markets trading above 50 & 200 day moving averages
  • AUM of SPY ETF now = GDP of Denmark.

Some further details on the historic inflows by region and product:

  • broken by region, it was more of the same as U.S. equities saw $7bn of inflows, Europe $4.6bn, Japan $3.4bn; while EM funds had the 2nd best week of inflows on record at $8.1bn.
  • On the credit IG bond funds gain $2b in 57th straight week of inflows, HY bond funds see outflows of $2.5b, EM debt inflows $1.6b

And while the rotation from debt to equity has not yet happened, a subset of debt – junk bonds – is clearly throwing in the towel, as shown in the chart below, which shows that equity flows relative to credit flows at all-time high (Chart 1 – HY redemptions 11/13 past weeks & slowing IG inflows); here Hartnett reminds us that “credit leads equities (except in bubbles).”

Looking at FX flows, BofA writes that as a result of the “tainted dollar”, EM debt & equity inflows close to May’13 peak, which helps explain recent surge in EM currencies:

d

A little more euphoria and it will be time to sell emerging markets: “EM Equity Flow Trading Rule…$5bn into EM equities next week triggers 1st sell signal since Aug’14

So going back to the BofA “sell signal” that was just triggered, Hartnett explains that the BofAML Bull & Bear indicator just surged to 7.9, highest since last sell signal >8 triggered Mar’13.

From here, inflows into HY/EM debt/equity funds would flip “soft sell” for risk assets to “hard sell”.

Euphoria charted: BofAML GWIM private client equity exposure rising at fastest pace in 10 years…

and cash allocation at record low (10%).

Should one trust the BofA Bull and Bear indicator? Well, yes: “BofAML Bull & Bear indicator has given 11 sell signals since 2002; hit ratio = 11/11;

What happens next? Well, once hit, the average equity peak-to-trough drop following 3 months = 12% (backtested, Table 1); note the last Bull & Bear indicator flashed was a buy signal of 0 on Feb 11th 2016.

Putting it all together, BofA warns that a “tactical S&P500 pullback to 2686 in Feb/Mar now very likely.

And here is what can spark it:

“The Art of Falling Apart: US dollar key catalyst; note US-Europe FX spat sparked ’87 crash; higher US$ “pain trade” = risk-off coming weeks; we reiterate 2018 calls: Big Long = Vol, Big Short = Credit, Big Risk = Equity Bubble (driven by $10.3tn of negatively yielding debt), Big Rotation from Davos Man to Joe-Six Pack portfolio”

Will this time finally be the charm for BofA’s recurring warnings of an imminent market plunge? The next 2 months will reveal if – this time – it was finally right…

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