Month: February 2018

For a long time, Martin Shkreli approached reality the way a drunk alcoholic approaches, well, reality: his arrest, his court appearances, his house detention, to him it all seemed like a surreal, vast, elaborate joke. However, as time went by, as the judge found Shkreli personally responsible for $10.4 million in losses, and the prospect of spending years in a higher-security prison, it finally dawned on the scrawny 34-year-old that his near-to-mid term future is suddenly disastrously bleak.

As a result, the remorseful former hedge fund manager and pharmacist wrote a letter to the judge who will sentence him next Friday, begging for forgiveness and promising that he’ll be “more careful, open and honest” if she doesn’t impose a long prison term, admitting the he “was a fool” and “should have known better.”

“I assure you that any mercy shown at sentencing will be met with a strict adherence to this oath and I hope to make your honor proud of me in the years ahead,” Shkreli said in a letter he wrote on Feb. 26 from the Brooklyn detention center where he’s been holed up since September.

It wasn’t always like that: Shkreli, who in the summer of 2015 was dubbed “the most-hated-man in America” after raising the price of a life-saving drug by 5,000%, mocked and blasted members of a congressional panel who had quizzed him about the price hike, calling them “imbeciles” on Twitter.

Things got weirder last September when Shkreli issued a bounty for a sample of Hillary Clinton’s hair, an act which prompted Judge Kiyo Matsumoto to revoke his house arrest and send him to prison.

And now, with Shkreli’s sentencing just days away on March 9, the infamous hedge funder and former biopharma exec is suddenly begging if not for forgiveness then understanding. The reason? As we reported two days ago, Judge Matsumoto found that Shkreli caused investors to lose more than $10.4 million, rejecting his claim he made them money. 

Shkreli’s blockbuster legal team led by Ben Brafman, said that decision means Shkreli could face a sentence of more than 30 years in prison, arguing it’s a term he doesn’t deserve. “He is a caring intellectual” who’s helped find cures for diseases that afflict kids, Brafman said of Shkreli. But he’s is plagued by “personal demons hell bent on self-destruction,” the lawyer added according to Bloomberg.

It gets worse: according to prison consultant Joel Sickler while Shkreli would ordinarily be eligible to serve his time in a minimum-security federal camp that resembles “an austere college campus,” officials will instead place him in a higher-security facility because of his threat against Clinton.

That will mean Shkreli will be housed in a crowded prison filled with felons who’ve been convicted of violent crimes ranging from racketeers, drug cartel leaders and sex offenders, all posing a threat to what Sickler called Shkreli’s “fragile mental state.”

Which again brings us to the letter, where in Shkreli’s first direct communication with the judge, he called his five-week trial a “frightening wake-up call” and blamed his actions on insecurity, saying, “I wanted to be more than I was. I exaggerated.”

He admitted that he’d “dodged” questions posed by his investors or gave answers “that were only correct if put in a certain assumed context.” He described himself as a “irreverent and free-wheeling individual” whose comments and actions didn’t reflect his true nature.

“I regret where my temper can take me when I get angry or feel betrayed,” he pleaded.

His verbal contrition may not be enough.

Prosecutors are scheduled to make their sentencing recommendation on March 5.

Shkreli’s full letter is below:

* * *

Your Honor,

I hope my trial gave the Court sufficient insight into the case, and also to me as a person. I hope Your Honor will treat me as an individual. I acknowledge and respect the Jury’s verdict, but the verdict is not who I am.

Despite the Jury’s verdict, I maintain that I never intended to actually harm anyone. I am not trying to be defiant or obstinate. I accept the fact that I made serious mistakes, but I still believe that I am a good person with much potential.

I have watched this process unfold, from indictment to verdict and although Mr. Brafman and his colleagues are peerless defenders, they cannot fully reproduce my own perspective, only I can try. I understand it, I am very far from blameless. I caused this entire mess to happen. I lost the trust of my investors who now have questioned my motives and integrity. This is a painful realization that I will never forget. I had pride in the final results of MSMB, but after hearing the investor testimony, the concept of “all’s well that ends well” is clearly a poor attempt to excuse my many preventable mistakes.

Investors deserve truth. Investors deserve transparency. Any loss of trust in the sacred relationship between investor and manager is the manager’s fault and could have been avoided. At times, I dodged answering questions at other times I provided answers that were only correct if put in a certain assumed context. These choices are now seen as attempts by me to deceive and manipulate, and it is my fault.

The truth is somewhere in between. I wanted to be more than I was. I exaggerated if I felt I had any basis to make the claim. I am now, however, a more self confident and secure person. The demons that haunted me — the root cause of my insecurity in my life — no longer all exist. I have learned a very painful lesson. Never again will I prevaricate or omit or mislead-intentionally or not. There are ways to communicate which eliminate the possibility of doubt and alternative interpretations of fact. I take responsibility for the fact that I used to behave and communicate in this way. It was wrong. I was a fool. I should have known better. Watching my trial was a very scary experience. For the first time in my fife I saw me from other people’s perspective and realized that most people don’t share my perspective.

It breaks my heart that good and honest people were dragged into this mess because of me. Some of my investors who took a chance on me; my colleagues, many of whom now regret having partnered with me; my family and friends, whose worry is more painful to me than anything else; patients and charitable organizations, whose fives and activities have been upended in some cases; and the huge loss of economic resources and productivity that this case represents. It wouldn’t have happened if I was more careful, more honest, more reasonable and far wiser.

Today I am the majority owner of businesses worth many millions of dollars, but more importantly, I employ over a hundred people globally, in high-paying jobs who have critical roles and responsibilities. They are counting on me, and I let them down. I have learned a harsh lesson. The trial and six months in a maximum security prison has been a frightening wake-up call. I now understand how I need to change.

I feel I should try to explain my personality. I am an irreverent and free-wheeling individual, who has never been shy about speaking my mind. I am an individual who prizes equal rights, scholastic achievement and individuality. Please understand that when I get into a public war of words with someone, my comments do not always reflect my true nature. Sadly, when I get dragged into mud fight, I often dive in, head first. I pray Your Honor doesn’t hold this behavior against me or mistake it for my regular approach to life. At times, I have been characterized totally incorrectly at trial by some who are biased, as litigation opponents for example do not make fair critics. I regret where my temper can take me when I get angry or feel betrayed. I have worked on this bad habit for some months now and will try to find equanimity in the future.

Prison has been both the most frightening experience in my life but also an opportunity for me to see a side of the world seldom seen or discussed. I have tried my best to make a positive impact on many of the people I encounter here. If I have something to teach my fellow inmates, I implored them to listen and learn. I have comforted the forlorn and forgotten men facing long sentences, many are severely depressed, and sadly, suicidal. I try my best to set a good example for these individuals too, knowing my fame and achievements were something they might know of, and I try my best to explain that in order to have a chance to succeed, they had to make a serious commitment to lifelong education and move far away from poisonous surroundings and attitudes that lead to a temptation to cut corners and commit crimes.

My own advice has not gone unheeded by me. I have also been lucky in my life to be surrounded by some wonderful people who have been better to me than I deserve. I owe them a life built on honesty, integrity and achievement that advances humanity. I assure you that any mercy shown at sentencing will be met with a strict adherence to this oath and I hope to make Your Honor proud of me in the years ahead. I promise to be more careful, open and honest in my business dealings so that I never again have to hear people who once had faith in me and trusted me testify or complain that I misled them or let them down terribly. Just as important, however, is my pledge to Your Honor that if you find it appropriate to impose a sentence that does not include an extended period of incarceration, I will do my absolute best to use my skills and whatever talents I have been blessed with for the betterment of humanity. I honestly believe that I can contribute and really make a difference if Your Honor gives me a chance.

 

via Zero Hedge http://ift.tt/2ozWMWY Tyler Durden

Authored by Philip M. Giraldi, Ph.D., Executive Director of the Council for the National Interest,

” … it is wise to be skeptical about Israeli claims regarding Iranian intentions to build bases and construct missiles in Syria.

Those claims made by Israel’s Mossad have not been confirmed by any western intelligence service, not even by America’s totally corrupted and subservient CIA.“

The original title of this article is “Blundering Into Iran”

The deluge of recent reporting regarding possible conflict with nuclear armed North Korea has somewhat obscured consideration of the much higher probability that Israel or even Saudi Arabia will take steps that will lead to a war with Iran that will inevitably draw the United States in.

This has gone way too far

Israel is particularly inclined to move aggressively, with potentially serious consequences for the U.S., in the wake of the recent incident involving an alleged Iranian drone and the shooting down of an Israeli aircraft. Prime Minister Benjamin Netanyahu has been repeatedly warning about the alleged threat along his northern border and has pledged that Israel will not be in any way restrained if there are any hostile moves directed against it. The Israeli Transportation Minister Ysrael Katz has warned that Lebanon will be blasted back into the “stone age.”

There is also considerable anti-Iran rhetoric currently coming from sources in the United States, which might well be designed to prepare the American people for a transition from a cold war type situation to a new hot war involving U.S. forces. The growing hostility towards Iran is coming out of both the Donald Trump Administration and from the governments of Israel and Saudi Arabia. National Security Adviser H.R. McMaster is warning that the “time to act is now” to thwart Iran’s allegedly aggressive regional ambitions while U.S. United Nations Ambassador Nikki Haley sees a “wake-up” call in the recent shooting incident involving Syria and Israel. The hostility emanating from Washington is increasing in spite of the fact that the developments in the region have little or no impact on vital U.S. national interests, nor is Iran anything like an existential threat to the United States that would mandate sustained military action.

Houston, we have a problem

Iran’s alleged desire to stitch together a sphere of influence consisting of an arc of allied nations and proxy forces running from its western borders to the Mediterranean Sea has been frequently cited as justification for a more assertive policy against Tehran, but that concern is certainly greatly exaggerated. Iran, with a population of more than 80 million, is, to be sure, a major regional power but militarily, economically and politically it is highly vulnerable. Its economy is struggling and there is a small but growing protest movement regarding the choices being made for government spending.

Iran’s Revolutionary Guard is well armed and trained, but much of its “boots on the ground” force consists of militiamen of variable quality. Its Air Force is a “shadow”of what existed under the Shah and is significantly outgunned by its rivals in the Persian Gulf, not to mention Israel. Its navy is only “green water” capable in that it consists largely of smaller vessels responsible for coastal defense supplemented by swarms of Revolutionary Guard speedboats.

When Napoleon had conquered much of continental Europe and was contemplating invading Britain in 1804 it was widely believed that England was helpless before him. But Admiral Earl St Vincent was nonplussed. He said at the time: “I do not say the French can’t come, I only say they can’t come by sea.” In a similar fashion, Iran’s apparent threat to its neighbors is in reality decisively limited by its inability to project power across the water or through the air against other states in the region that have marked superiority in both respects.

And the concern over a possibly developing “Shi’ite land bridge,” also referred to as an “arc” or “crescent,” is likewise overstated for political reasons to make the threat more credible. It ignores the reality that Iraq, Syria, and Lebanon all have strong national identities and religiously mixed populations. They are influenced and sometimes more than that by Iran, but they are not puppet states and never will be. Even Lebanon’s Hezbollah, often cited as Iran’s fifth column in that country, is not considered a reliable proxy.

Majority Shi’a Iraq, for example, is generally considered to be very friendly to Iran but it has to deal with considerable Kurdish and Sunni minorities in its governance and in the direction of its foreign policy. It will not do Iran’s bidding on a number of key issues, including its relationship with Washington, and would be unwilling to become a proxy in Tehran’s conflicts with Israel and Saudi Arabia as such a move would be extremely unpopular. Iraqi Vice President Osama al-Nujaifi, the highest-ranking Sunni in the Prime Minister Haider al-Abadi government, has, for example, recently called for the demobilization of the Shi’ite Popular Mobilization Forces or militias that have been fighting ISIS because they “have their own political aspirations, their own [political] agendas. … They are very dangerous to the future of Iraq.”

A seemingly legitimate major concern driving much of the perception of an Iranian threat is the possibility that Tehran will develop a nuclear weapon somewhere down the road. Such a development is quite plausible if only from a defensive point of view as Iran has been repeatedly threatened by nuclear armed Israel and the United States, but the current Joint Comprehensive Plan of Action provides the best response to the possible proliferation problem. The U.N. inspections regime is rigorous and Iran is reported to be in compliance with the agreement. If the plan survives the attacks by the White House, there is every reason to believe that Iran will be unable to take the necessary precursor steps leading to a nuclear weapons program while the inspections continue. And it will be further limited in its options after the agreement expires in nine years because it will not be able to accumulate the necessary highly enriched uranium stocks to proceed if it should ever make the political and economic decisions to go ahead with such a program.

The recent incident involving the shoot-down of a drone alleged to be of Iranian provenance followed by the downing of an Israeli fighter by a Syrian air defense missile resulted in a sharp response from Tel Aviv, though reportedly mitigated by a warning from Russian President Vladimir Putin that anything more provocative might inadvertently involve Russia in the conflict. Israeli Prime Minister Benjamin Netanyahu accordingly moderated his response but his government is clearly contemplating a more robust intervention to counter what he calls a developing Iranian presence in Syria. It is important to recall that Netanyahu’s prime objective in Syria and Lebanon is to have both nations in turmoil so they cannot threaten Israel. With that in mind, it is wise to be skeptical about Israeli claims regarding Iranian intentions to build bases and construct missiles in Syria. Those claims made by Israel’s Mossad have not been confirmed by any western intelligence service, not even by America’s totally corrupted and subservient CIA.

Netanyahu is also facing a trial on corruption charges and it would not be wildly off target to suggest that he might welcome a small war to change the narrative, just as Bill Clinton did when he launched cruise missiles into Afghanistan and Sudan to deflect congressional and media criticism of his involvement with Monica Lewinsky. Unfortunately, if Netanyahu does wind up being charged and going to prison his successor will likely be even more hardline.

It must be understood that the mounting Iran hysteria evident in the U.S. media and as reflected in Beltway groupthink has largely been generated by allies in the region, most notably Saudi Arabia and Israel, who nurture their own aspirations for regional political and military supremacy. There are no actual American vital interests at stake and it is past time to pause and take a step backwards to consider what those interests actually are in a region that has seen nothing but U.S. missteps since 2003.

Countering an assumed Iranian threat that is no threat at all and triggering a catastrophic war would be a major mistake that would lead to a breakdown in the current political alignment of the entire Middle East. And it would be costly for the United States. Iran is not militarily formidable, but its ability to fight on the defensive against U.S. Naval and air forces is likely to be considerable, producing high casualty levels on both sides. How would the U.S. public respond if an aircraft carrier were to be sunk by a barrage of Iranian shore-to-ship missiles? And Tehran would also be able to unleash terrorist resources throughout the region, particularly endangering U.S. military and diplomats based there as well as American travelers and businesses. The terror threat might easily extend beyond the Middle East, into Europe and also within the United States while the dollar costs of a major new conflict and its aftermath could also break the bank, literally.

Promoting a robust U.S. role in “regime change” for Iran as a viable military option to support objectives largely fabricated by allies would be a phony war fought for bad reasons. It is not commensurate with the threat that the Mullahs actually pose, which is minimal, and is just not worth the price either in dollars or lives.

*  *  *

[This article is an edited and expanded version of a memorandum that I prepared for Veteran Intelligence Professionals for Sanity which has been released separately on Consortium News].

via Zero Hedge http://ift.tt/2FFWuW5 Tyler Durden

Media companies have been waiting for the other shoe to drop since Facebook announced changes to its all-important newsfeed algorithm that (at least on paper) were designed to stop posts from businesses, brands and media from “crowding out” personalized content.

Now, barely six weeks after the changes were first announced, Facebook’s decision to deprive publishers from a crucial stream of user traffic has claimed its first casualty: A four-year-old publisher called LittleThings.

The change, according to LittleThings’ COO Gretchen Tibbits, had a “material” impact on the site’s traffic, killing 75% of its organic reach, according to DigiDay. 

LittleThings’ comScore traffic declined to 40 million this month from 58 million last May. The closure will leave the company’s 100 employees without jobs.

Facebook CEO Mark Zuckerberg unveiled the changes in a blog post published early last month, claiming that Facebook’s internal research had determined that its users are happier when their feeds are filled with personalized content – like photos from their neice’s graduation – while news and paid advertising typically lead to feelings of malaise.

Of course, anybody who’s been following the monthslong battle between Facebook and Democratic lawmakers over its “failure” to stop a Russian troll farm that has since been indicted by Special Counsel Robert Mueller from distributing $100,000 worth of paid political content on Facebook’s platform.

Unfortunately for the media industry, the fallout from this decision has only just begun to be felt.

Facebook’s algorithm change will probably do lasting harm to dozens – if not hundreds – of publishers who depend on the company’s algorithm to drive traffic to their content. But LittleThings’ aversion to taking outside money (the site was self-funded) meant there was little in the bank to tide the company over during a downturn. The site was in the middle of a pivot away from programmatic advertising toward more lucrative direct sales, as giant American consumer brands felt LittleThings’ inspirational content would be an important counterpoint to the often dreary news cycle.

Because it will also de-prioritize paid ads, the decision is expected to harm the company’s bottom line. Unsurprisingly, its shares tanked after Zuckerberg announced the changes.

LittleThings had other factors working against it. Unlike a lot of distributed media upstarts that chased audiences on platforms using VC money, LittleThings was self-funded, which meant there wasn’t a big cushion when things went south. It largely built its business on programmatic advertising, but then pivoted to more lucrative direct sales.

LittleThings’ inspirational stories were a safe haven for advertisers that were increasingly getting spooked by the contentious news climate, but there was a downside there, too. “The brand safety was a huge selling point for us, but the flip is, our audience is women over 30 in middle America, and they’re not sexy,” Tibbits said. The company made some inroads, getting buys from blue-chip advertisers including Procter & Gamble and eBay, but it wasn’t enough, and the first quarter of the year is typically slow for advertising.

Other publishers are looking to Google and Twitter to make up for what they’re losing from Facebook, but for LittleThings, there was nowhere else to go. LittleThings’ comScore traffic had declined to 40 million from 58 million last May, according to Tibbits.

“For our audience, there’s not another platform right now,” she said. “There are 100 great, talented people who were here and doing content that resonated with an audience that’s just harder to find right now.”

As LittleThings crumbles, other publishers are hoping Google and Twitter will help them compensate for Facebook’s retrenchment.

But whether these strategies will ultimately pan out remains to be seen.

Though perhaps an even more important question would be: Is this also Putin’s fault?

via Zero Hedge http://ift.tt/2CQ84L6 Tyler Durden

Authored by Nikita Vladimirov via Campus Reform,

Arizona colleges and universities are implementing new academic programs designed to broaden intellectual diversity by examining the importance of Western culture and America’s founding.

According to The New York Times, the new initiatives, referred to by some as “freedom schools,” are backed by Arizona’s GOP lawmakers and funded by the state.

Arizona State University describes its School of Civic and Economic Thought and Leadership as a “new kind of program” that “looks beyond time and borders to explore the fundamental questions of life, freedom, and governance.”

The school explains that the new initiative “looks inward to the guiding principles of America’s founders and the leaders who have inspired us,” while also seeking to combine “classic works and altruistic statesmanship to develop a new kind of leader: trained in critical thought, humble about human imperfection, and ready for anything.”

Last weekend, ASU’s newly-funded school hosted a conference that welcomed students and faculty to discuss “the meaning of the First Amendment on college campuses and free inquiry and intellectual diversity in higher education.”

The conference included lectures by various experts from across the country and panels on free expression, diversity, and challenges in higher education. Other events addressed topics on “Negotiating Controversial Speakers on Campus,” “Freedom of Speech and Thought on Campus: What Role for the First Amendment?” and “State Legislative Remedies to Free Speech Challenges on Campus: Are They Consistent with Academic Freedom?”

Alongside ASU’s School of Civic and Economic Thought and Leadership, The University of Arizona has also launched a new academic project called the “Department of Political Economy and Moral Science.” 

According to the school’s website, the new department was approved last October and will teach a variety of courses relating to Political Science, Philosophy, Economics, and Law.

“We also are part of the team of scholars at Arizona that for the past six years has been peer-ranked as the world’s #1 graduate program in political philosophy,” the department boasts. “That astounding ranking seems to be based largely on our distinctively empirical approach to theorizing about principles of morality and justice, and about how people have to live in order to make sure that their world is better off with them than without them.”

Republican State Representative Jay Lawrence, one of the lawmakers who backed the initiatives, told the Times that there is “too much revisionism being taught in universities today,” adding that “it’s a big deal to those of us who feel very strongly about a more conservative education.”

According to the newspaper, Arizona State University President Michael Crow has also welcomed the new program, but admitted that he would have liked to see the legislature also pay for other programs.

“They were interested in having a broader set of curricular offerings than the one we presently have, particularly as it related to economic thought or political theory, philosophy,” he explained.

“The fact that someone from the state came along and gave us money for it, O.K., good. The fact that they weren’t giving us money for other things, bad.”

via Zero Hedge http://ift.tt/2oy7Kwp Tyler Durden

The knives are out for Jared Kushner.

After losing his top secret security clearance and reportedly falling under intense scrutiny by Robert Mueller’s probe, the New York Department of Financial Services has asked Deutsche Bank two local lenders for information about their dealings with Jared Kushner, the Kushner companies and his family, according to Bloomberg. 

Letters were sent by department superintendent Maria Vullo to Deutsche Bank, Signature Bank and New York Community Bank last week, said a person who had seen the letter which seeks a response by March 5. Vullo was appointed by New York’s Democratic governor, Andrew Cuomo.

The requested information is broad, and include the banks’ processes for approving loans.

Vullo requested copies of emails and other communications between the Kushners and the banks related to financing requests that have been denied or are pending. She also asked whether the banks have conducted any internal reviews of the Kushners and their companies and the results of any such inquiries revealed.

The most detailed information about the Kushners’ finances can be found in their government disclosures. The couple had unsecured lines of credit of $5 million to $25 million each from Deutsche Bank, Signature Bank and New York Community Bank according to a late December filing. 

Deutsche Bank’s line of credit was extended to Kushner and his mother; lines from the other two banks were extended to Kushner and his father. Signature Bank also extended a secured line of credit to the couple of $1 million to $5 million, according to the disclosure. –Bloomberg

A spokeswoman for the Kushner Cos, Christine Taylor, said “We have not received a copy of any letter from the New York State Department of Financial Services,” adding “Our company is a multi-billion enterprise that is extremely financially strong. Prior to our CEO voluntarily resigning to serve our country, we never had any type of inquiries. These type of inquiries appear to be harassment solely for political reasons.”

Kushner’s family business, the Kushner Companies, has had longstanding financial troubles related to 666 Fifth Avenue, “the most expensive building ever purchased”, in New York City.

After Kushner bought the Fifth Avenue property in late 2006 for $1.8 billion – with zero skin in the game coming from Kushner, the building came under intense pressure during the financial crisis. Vornado Realty Trust stepped in with financing in exchange for a 49.5% stake in the building, which is now carrying over $1.4 billion in debt according to a March release by Vornado. 

The Kushner companies are also reportedly negotiating with Vornado to buy their stake back. 

While Jared has separated himself from his family’s business and placed assets in a trust, he has fallen into the crosshairs of Special Counsel Robert Mueller. Of interest are discussions between Kushner and Chinese investors during the transition, according to sources familiar with the investigation. Kushner met with executives of troubled Chinese conglomerate Anbang Insurance which was recently taken over by China’s insurance regulator. Talks between Kushner and Anbang’s chairman, Wu Xiaohui, broke down in March 2017, according to the New York Times. 

Also of interest to Mueller are Kushner’s dealings with a Qatari investor over the 666 property, for which Kusher reportedly sought financing from former Prime Minister Jassim Al Thani, according to The Intercept. The discussion apparently went nowhere, similar to the Anbang deal.

Kushner in the crosshairs

Dovetailing off of the reports of Kushner’s meetings to shore up his finances, the Washington Post reported this week that officials from at least four countries – China, Israel, Mexico and the United Arab Emirates have explored ways to manipulate Kushner by taking advantage of his “complex business arrangements, financial difficulties and lack of foreign policy experience.” The story cited current and former US intelligence officials – and noted that it is unclear on whether the cited countries took any action. 

Meanwhile, the presidential son-in-law’s security clearance was downgraded from “Top Secret/SCI-level” to “secret” this week, walling him off from the most sensitive information. 

Many had expected that Trump would grant Kushner a waiver, even though Trump himself said Friday that he would let Chief of Staff John Kelly decide if such an exception should be granted. In a statement issued last week, Kelly said that any changes to Kushner’s security clearance wouldn’t impact his ability to do his job:

“As I told Jared days ago, I have full confidence in his ability to continue performing his duties in his foreign policy portfolio including overseeing our Israeli-Palestinian peace effort and serving as an integral part of our relationship with Mexico,” Kelly said in the statement.

At the end of the day, unless Kushner or his company broke the law, it appears that this entire exercise is meant to embarrass the president’s son-in-law over his troubled 666 property. 

via Zero Hedge http://ift.tt/2owayKa Tyler Durden

We’ve all seen the headlines: the cost of university education in the United States has become completely debilitating. And student debt keeps rising to record high levels.

It’s almost commonplace now for a 22-year old to graduate from university with $50,000+ in student debt.

According to data from the Federal Reserve, the total amount of student debt in the United States is now $1.5 trillion.

As SovereignMan.com’s Simon Black notes, that’s more than the estimated $1.3 trillion in direct costs that the government spent fighting the War in Iraq.

What’s probably even more bizarre is that the US government actually owns about 70% of those student loans– a total of $1.06 trillion.

I discovered this over the weekend when I was reviewing the federal government’s recently published financial statements for fiscal year 2017.

Student loans actually constitute the #1 asset of the US federal government, comprising about 30% of its balance sheet.

In other words, young people of America owe more money to the federal government than the value of every tank, every bullet, every aircraft carrier, every acre of land in the national parks.

That’s a pretty sad statement to make.

And remember that student debt in America is a very special kind of debt: it chases you around forever.

Thanks to a piece of legislation signed into law by Bill Clinton in 1998, student debt is almost impossible to ‘discharge’.

So unlike just about every other type of debt like a home mortgage or medical debt, student debt is extremely difficult to wipe away through bankruptcy procedures.

It’s more a form of indentured servitude than it is debt. There’s no escape.

To me, this really calls into question the long-term value of a university education.

Now, there’s a lot of data on this topic, and it’s all over the board.

A 2016 study in the United Kingdom by the Institute of Fiscal Studies, for example, showed that median salaries for graduates at several dozen universities were lower than non-university graduates.

On the other hand, researchers from the Federal Reserve Bank of New York have argued that university graduates will earn, on average, $1 million more over their lifetimes than people who do not graduate from university.

This is what they call the ‘wage premium’ of a university degree.

But even their own data shows that this wage premium is falling.

Another study from the UK’s Warwick University in 2012 calculated that a university graduate’s wage premium had fallen 22% in a decade.

Factoring in the steep cost (and stress) of student loans, university is not an obvious choice anymore.

More importantly, student debt can really limit a young person’s options.

When you’re staring down the barrel of $50,000 owed to the federal government, you don’t have the luxury to take a year off, travel the world, and learn a foreign language.

Or to NOT take a job and start a business.

Or to take a lower paying job where you’ll learn more.

You’re relegated to the first available option that pays down the most debt.

And that certainly has a long-term impact.

And as Mauldin Economics’ Patrick Watson notes, this might be okay if the debt enhanced the student’s financial security, but for millions of Americans, that’s not what has happened.

Borrowers don’t achieve the desired results but remain stuck with the debt anyway.

An Explosion of Delinquent Student Loans

While delinquency rates for other forms of debt fell after the recession, student loans didn’t. As of year-end 2017, about 11% of nearly $1.4 trillion in student debt was at least 90 days delinquent.

It’s actually worse than that.

Roughly half of student debt is held by borrowers who aren’t required to make payments yet. That’s because they are still in school, unemployed, or otherwise excused. Much of that debt would likely be delinquent too.

Also important: The delinquent loans tend to be small (less than $10,000) and held by borrowers who never earned degrees.

These borrowers probably thought they were doing the right thing. They wanted decent jobs and saw that having a college degree was necessary to get one.

So why is college the key to gainful employment? It hasn’t always been so.

It’s because employers require a degree as a job qualification… and that’s partly the fault of IQ tests.

As SovereignMan’s Simon Back concludes, it’s not to say that a university education is a waste of time and money (though an electrical engineering degree is probably a better investment than majoring in ‘18th century lesbian studies’).

The point is that going to university and racking up $50,000 in debt solely for the sake of obtaining a piece of paper is bad idea.

Any investment– especially the one you make in yourself and your education– requires careful thought and planning, you can learn more at www.sovereignacademy.org.

So how did we get here? Patrick Watson explains it all began with so-called ‘unreasonable tests’…

In 1971, the US Supreme Court decided a case called Griggs vs. Duke Power Co. The subject was employment requirements.

Duke’s practice – and many other companies at the time – was to give job applicants an IQ test. Supposedly, this let them hire qualified people, but some companies also used tests to discriminate by race. The 1964 Civil Rights Act banned pre-employment tests that were not “a reasonable measure of job performance.”

The court ruled that Duke’s tests were too broad and not directly related to the jobs performed, which made them illegal.

That left a problem, though. How were employers supposed to evaluate job applicants without illegally discriminating?

Soft Skills

Employers really want to know two different things about prospective workers:

• First, can this person perform the specific tasks that go with this job? That means operating a machine correctly, carrying boxes of a certain size and weight, writing computer code, etc. You might call these the “hard skills.”

• Second, there are soft skills. Is this person willing to stick with unpleasant assignments to the end? Will he show up on time? Can she work with others?

Those soft skills are harder to judge but critically important. They’re also what the Supreme Court made hard to test.

College sort of requires those same soft skills. A degree may not give you much useful knowledge, but it shows you have some basic intelligence and literacy. It also shows you will jump through hoops if your organization tells you to. Employers value those qualities.

The Griggs case said nothing about educational requirements. Employers remained free to require high school diplomas or college degrees… and the ruling gave them a big incentive to.

College degrees are convenient, legal substitutes for the kind of testing employers haven’t been able to use since the 1970s. So apart from whatever you learn in college, merely having the credential became necessary to career success.

As a result, everyone in the equation made certain choices.

• Employers: demand a college degree even for jobs that don’t require college-level skills.

• Workers: get a college degree even if you must take on debt.

• Colleges: Raise prices since so many students are begging for degrees.

This made college more expensive, forcing students to borrow more and more money.

Politicians jumped in to promote and guarantee those loans. And here we are. 

College Monopoly

In the Griggs case, the US Supreme Court effectively granted colleges a monopoly. They can discriminate based on a long series of tests that lead to a degree. Employers can’t.

Like most monopolies, this one is inefficient. It creates unpayable debt that burdens students. Some of it eventually falls on taxpayers. Not ideal.

Methods exist to evaluate prospective workers without requiring college degrees, and without racial or other illegal discrimination. But there’s no incentive to try them when you can just screen out the non-college graduates and accomplish the same thing.

Resolving this impasse would help our debt problem and probably our employment problem as well. But the losers would be colleges and educational lenders, so don’t expect them to cooperate, unless someone forces them to.

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via Zero Hedge http://ift.tt/2HQaPQm Tyler Durden