Month: November 2018

US Manufacturers Warn Trump Tariffs Will Bring Higher Prices, Not More Jobs: Survey 

IHS Markit, a London-based economics research firm, conducted a survey of just over 800 manufacturing companies between October 12-26 and discovered that President Trump’s deepening trade war would raise prices for US consumers (tariffs are a hidden tax), but here is the shocker: it will not bring back many overseas manufacturing jobs.

As the administration’s tariffs on $34 billion worth of Chinese goods kicked in July, President Trump, White House officials, and conservative media unleashed a wave of propaganda emphasizing that higher duties would encourage the revival of America’s manufacturing sector. By Sept., Trump announced another round of new duties of 10% on $200 billion in Chinese imports, which will increase to an eventual rate of 25% by Jan. 01.

To make matters worse, China immediately implemented retaliatory tariff, calling it the “biggest trade war in economic history.”

Months later, the administration’s promise of a manufacturing revival through taxing Chinese imports had backfired. More than 4 in 10 companies surveyed said they are raising prices to offset the higher cost of production (again, a tax on American consumers as real wages remain to stagnate). About 1 in 10 said they expect to reduce the share of total output manufactured outside the US. Approximately the same number said the tariffs would encourage them to move more jobs back home.

Trump has touted on social media that “JOBS are coming back to America” as proof that his strategy is working. On Wednesday, he tweeted a steelmaker’s plan to create “600 good-paying U.S. JOBS.”

However, those gains were wiped out by a headline earlier in the week that General Motors would layoff some 14,000 workers in North America and close five manufacturing plants. GM CEO Mary Barra said the company faced many challenges but did not explicitly link Trump administration tariffs, the automaker has been under severe pain by the rapid rise in steel prices from US duties on imported steel and retaliatory auto tariffs by China.

The layoff list continues to grow this month…

Earlier this month, another survey showed more than 70% of US firms operating in Southern China are considering delaying further investment in the country and are moving manufacturing facilities to other countries as the trade war deepens.

According to the poll by the American Chamber of Commerce in South China, which surveyed over 200 companies, US firms operating in China warned – they are experiencing extreme difficulties from trade disputes than firms from other countries.

64% of the companies said they were planning to relocate supply chains outside of China, but only 1% said they would even consider establishing manufacturing bases in North America.

“While more than 70% of the U.S. companies are considering delaying or canceling investment in China, and relocation of some or all manufacturing out of China, only half of their Chinese counterparts share the same consideration,” the AmCham report said.

As the trade war deepens, supply chains in China are being forced to shift to Southeast Asia – not back to North America, the survey found.

In short, the global supply chain is a huge, complicated process. Nonetheless, we can make some informed assumptions if the tariffs are actually working, in accordance to Trump admin’s revival narrative of the economy. 

Glancing at the Federal Reserve Bank of Philadelphia’s monthly state leading indicator maps. They project state-by-state economic conditions six months into the future based on key metrics like housing permits, initial unemployment benefit claims, delivery time for goods produced by manufacturers, and the spread between short- and long-term interest rates, said The Washington Examiner. 

The first map is for Sept. 2018, along with Aug. 2018 for comparison. The Aug. map shows most states west of the Mississippi River in forest green, indicating high pace growth. However, one month later, in Sept., a number of those states turned a paler shade of green, which showed slower economic growth. 

August 2018 State Leading Indexes 

September 2018 State Leading Indexes 

Across the map, the slowdown was seen in Iowa, Nebraska, North Dakota, and South Carolina. The first three laggards are heavy grain exporting states; South Carolina is a heavy exporter of manufactured goods.

What can we infer? Maybe trade wars are starting to bite, and an economic blowback is shortly around the corner for the Trump administration. 

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Don’t Let Colleges Stamp Out Your Rights During Christmas

Authored by Cory Compton via Campus Reform,

The Christmas season is upon us. It’s the time of year filled with gifts, family, Santa Claus, and, as always, free speech being crushed on college campuses. Every year, new controversies emerge because of colleges and universities inhibiting the Christmas spirit through political correctness.

In the past, colleges have banned Christmas trees, wrapped gifts, non-religious Christmas decorations, and even the word “Christmas.” A professor has called Christmas a “patriarchal construct” and one college even re-named its annual Christmas event to ‘Hotty Toddy Holiday’ in the name of inclusivity.

Legally, how far can public colleges and universities go to stifle free speech? Are these practices protected under the law, or is it a violation of our First Amendment rights on public grounds?

One legal resource by the Pacific Justice Institute provides the answers.

Referred to as the “Christmas Q&A”, the document serves as a guide to provide “detailed answers to frequently asked questions during Christmas,” and the answers are applicable to holidays like Easter and Thanksgiving, as well.

Here are the most three important points to take away from the guide:

1. Euphemisms have no constitutional authority

“There is zero constitutional authority for the notion that we have to use euphemisms like ‘winter break’ to avoid the reality that Christmas continues to be the most important celebration in the United States,” Pacific Justice Institute says. Colleges also have no authority to replace “Merry Christmas” with “Happy Holidays.”

2. Christmas trees are allowed on public grounds 

“In the Supreme Court’s landmark Lynch v. Donnelly case, the Court’s analysis of the city’s holiday display regarded the tree as being a secular symbol [and thus not a government endorsement of a particular religion],” the guide explains.

3. Christmas literature can be distributed on college campuses and the right to free speech includes literature, gifts, and invitations. 

“Most courts considering the issue have recognized the right for student expression, including gifts, not to be censored based on religious content,” according to the Christmas Q&A.

So, next time your college campus tries to take down a Christmas tree, prevents a student organization from distributing Christmas-themed literature, or bans terms such as “Christmas break,” remember that the law is not on their side — the Supreme Court says so.

Pacific Justice Institute is a nonprofit organization that offers legal defense against violations of religious freedom, parental rights, and other civil liberties. Students can seek legal assistance by clicking here.  

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WSJ Calls It: “US Housing Boom Is Coming To An End, Starting In Dallas” 

About two months after Bank of America rang the proverbial bell on the US real estate market, indicating existing home sales have peaked, reflecting declining affordability, greater price reductions and deteriorating housing sentiment. It now appears The Wall Street Journal has jumped on the bandwagon in calling the housing market top with a new piece that warns: “US Housing Boom Is Coming To An End, Starting In Dallas.”

In a piece published Tuesday, the WSJ hones in on Dallas to explain the national slowdown of the housing market alongside Trump’s “greatest economy ever.” Housing prices have risen far faster than wages, which has triggered an affordability crisis during the same time the Federal Reserve is undergoing monetary tightening – a perfect cocktail that could form a top in the market. More: 

“Yet even with the booming growth, Dallas’s once vibrant housing market is sputtering. In the high-end subdivisions in the suburb of Frisco, builders are cutting prices on new homes by up to $150,000. On one street alone, $4 million of new homes sat empty on a visit earlier this month. Some home builders are so desperate to attract interest they are offering agents the chance to win Louis Vuitton handbags or Super Bowl tickets with round-trip airfare, if their clients buy a home. Yet fresh-baked cookies sit uneaten at sparsely attended open houses.”

WSJ notes that affordability has gotten “out of whack with historical norms.” The median home price in Dallas now costs more than 50% than it did in 2007.

On Zillow’s website, the Dallas market is rated as “cold.” Plano, McKinney, and Allen are each rated cold, as well, while Frisco is “very cold.”  

The WSJ interviewed a millennial family who purchased a home earlier this year in the Dallas metro area; they said the market “felt extremely hot,” but struggled to sell their previous home for five months as interest rates surged. In mid-October, they sold it for $16,000 less than their original asking price.

Mortgage rates positively correlate to 10-year Treasury notes, which have been all year because of growing inflation fears and massive deficit spending by the Trump admin. 

“Some [buyers] are adjusting their budget. They’re shopping more for different mortgage companies,” said Amy Downs, a real-estate agent at Keller Williams Realty. “They still think they can find a lender that can get them a better rate, but it doesn’t really exist.”

Signs Of A Housing Slump: 

Housing Starts for single-family 

Three-month average sales, change from a year earlier 

Inventory, change from a year earlier in October 

Home values, change from a year earlier 

The Dallas market is one of the most sensitive regions in the country to volatility in mortgage rates. The average household finances 83% of its home purchase, slightly higher than the national average of 81%, according to Black Knight Inc., a mortgage data company.

“As mortgage rates rise, buyers increasingly look for less-expensive homes. That is pushing builders further out to the fringes in search of lower-cost land where they can try to build more homes priced at $300,000 or less. The median price for a new home in Dallas has dropped by some $3,000 this year compared with last year, according to Metrostudy, which suggests builders are building at lower price points.

That can be a risky strategy after the heat has already started to come out of the market. During the last downturn, it was precisely those exurban neighborhoods that got hit the earliest and the hardest as buyers migrated back to more desirable neighborhoods when prices fell.”

“Dallas has been the “canary in the mine shaft” this housing cycle,” said Paige Shipp, regional director for Metrostudy, a consultant to home builders. “Homes are taking longer to sell, bidding wars are rarer and price cuts are more common as buyers absorb the impact of higher rates.”

And Shipp could be right, new home-price gains data in 20 US cities grew in September at the slowest pace in almost two years, adding to signs that real estate has hit a cyclical peak.

“The 20-city index of property values increased 5.1% from a year earlier, the least since November 2016, after rising 5.5% in the prior month, according to S&P CoreLogic Case-Shiller data released Tuesday. The median estimate in a Bloomberg survey of economists called for a gain of 5.2%. Nationally, home prices were up 5.5% from September 2017,” said Bloomberg.

With BofA and WSJ months apart in calling the US housing top, it seems that the affordability crisis and higher interest rates could have pricked the bubble.

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This Is How The “Everything Bubble” Will End

Authored by Nick Giambruno via InternationalMan.com,

I think there’s a very high chance of a stock market crash of historic proportions before the end of Trump’s first term.

That’s because the Federal Reserve’s current rate-hiking cycle, which started in 2015, is set to pop “the everything bubble.”

I’ll explain how this could all play out in a moment. But first, you need to know how the Fed creates the boom-bust cycle…

To start, the Fed encourages malinvestment by suppressing interest rates lower than their natural levels. This leads companies to invest in plants, equipment, and other capital assets that only appear profitable because borrowing money is cheap.

This, in turn, leads to misallocated capital – and eventually, economic loss when interest rates rise, making previously economic investments uneconomic.

Think of this dynamic like a variable rate mortgage. Artificially low interest rates encourage individual home buyers to take out mortgages. If interest rates stay low, they can make the payments and maintain the illusion of solvency.

But once interest rates rise, the mortgage interest payments adjust higher, making them less and less affordable until, eventually, the borrower defaults.

In short, bubbles are inflated when easy money from low interest rates floods into a certain asset.

Rate hikes do the opposite. They suck money out of the economy and pop the bubbles created from low rates.

It Almost Always Ends in a Crisis

Almost every Fed rate-hiking cycle ends in a crisis. Sometimes it starts abroad, but it always filters back to U.S. markets.

Specifically, 16 of the last 19 times the Fed started a series of interest rate hikes, some sort of crisis that tanked the stock market followed. That’s around 84% of the time.

You can see some of the more prominent examples in the chart below.

Let’s walk through a few of the major crises…

• 1929 Wall Street Crash

Throughout the 1920s, the Federal Reserve’s easy money policies helped create an enormous stock market bubble.

In August 1929, the Fed raised interest rates and effectively ended the easy credit.

Only a few months later, the bubble burst on Black Tuesday. The Dow lost over 12% that day. It was the most devastating stock market crash in the U.S. up to that point. It also signaled the beginning of the Great Depression.

Between 1929 and 1932, the stock market went on to lose 86% of its value.

• 1987 Stock Market Crash

In February 1987, the Fed decided to tighten by withdrawing liquidity from the market. This pushed interest rates up.

They continued to tighten until the “Black Monday” crash in October of that year, when the S&P 500 lost 33% of its value.

At that point, the Fed quickly reversed its course and started easing again. It was the Chairman of the Federal Reserve Alan Greenspan’s first – but not last – bungled attempt to raise interest rates.

• Asia Crisis and LTCM Collapse

A similar pattern played out in the mid-1990s. Emerging markets – which had borrowed from foreigners during a period of relatively low interest rates – found themselves in big trouble once Greenspan’s Fed started to raise rates.

This time, the crisis started in Asia, spread to Russia, and then finally hit the U.S., where markets fell over 20%.

Long-Term Capital Management (LTCM) was a large U.S. hedge fund. It had borrowed heavily to invest in Russia and the affected Asian countries. It soon found itself insolvent. For the Fed, however, its size meant the fund was “too big to fail.” Eventually, LTCM was bailed out.

• Tech Bubble

Greenspan’s next rate-hike cycle helped to puncture the tech bubble (which he’d helped inflate with easy money). After the tech bubble burst, the S&P 500 was cut in half.

• Subprime Meltdown and the 2008 Financial Crisis

The end of the tech bubble caused an economic downturn. Alan Greenspan’s Fed responded by dramatically lowering interest rates. This new, easy money ended up flowing into the housing market.

Then in 2004, the Fed embarked on another rate-hiking cycle. The higher interest rates made it impossible for many Americans to service their mortgage debts. Mortgage debts were widely securitized and sold to large financial institutions.

When the underlying mortgages started to go south, so did these mortgage-backed securities, and so did the financial institutions that held them.

It created a cascading crisis that nearly collapsed the global financial system. The S&P 500 fell by over 56%.

• 2018: The “Everything Bubble”

I think another crisis is imminent…

As you probably know, the Fed responded to the 2008 financial crisis with unprecedented amounts of easy money.

Think of the trillions of dollars in money printing programs – euphemistically called quantitative easing (QE) 1, 2, and 3.

At the same time, the Fed effectively took interest rates to zero, the lowest they’ve been in the entire history of the U.S.

Allegedly, the Fed did this all to save the economy. In reality, it has created enormous and unprecedented economic distortions and misallocations of capital. And it’s all going to be flushed out.

In other words, the Fed’s response to the last crisis sowed the seeds for an even bigger crisis.

The trillions of dollars the Fed “printed” created not just a housing bubble or a tech bubble, but an “everything bubble.”

The Fed took interest rates to zero in 2008. It held them there until December 2015 – nearly seven years.

For perspective, the Fed inflated the housing bubble with about two years of 1% interest rates. So it’s hard to fathom how much it distorted the economy with seven years of 0% interest rates.

The Fed Will Pop This Bubble, Too

Since December 2015, the Fed has been steadily raising rates, roughly 0.25% per quarter.

I think this rate-hike cycle is going to pop the “everything bubble.” And I see multiple warning signs that this pop is imminent.

• Warning Sign No. 1 – Emerging Markets Are Flashing Red

Earlier this year, the Turkish lira lost over 40% of its value. The Argentine peso tanked a similar amount.

These currency crises could foreshadow a coming crisis in the U.S., much in the same way the Asian financial crisis/Russian debt default did in the late 1990s.

• Warning Sign No. 2 – Unsustainable Economic Expansion

Trillions of dollars in easy money have fueled the second-longest economic expansion in U.S. history, as measured by GDP. If it’s sustained until July 2019, it will become the longest in U.S. history.

In other words, by historical standards, the current economic expansion will likely end before the next presidential election.

• Warning Sign No. 3 – The Longest Bull Market Yet

Earlier this year, the U.S. stock market broke the all-time record for the longest bull market in history. The market has been rising for nearly a decade straight without a 20% correction.

Meanwhile, stock market valuations are nearing their highest levels in all of history.

The S&P 500’s CAPE ratio, for example, is now the second-highest it’s ever been. (A high CAPE ratio means stocks are expensive.) The only time it was higher was right before the tech bubble burst.

Every time stock valuations have approached these nosebleed levels, a major crash has followed.

Preparing for the Pop

The U.S. economy and stock market are overdue for a recession and correction by any historical standard, regardless of what the Fed does.

But when you add in the Fed’s current rate-hiking cycle – the same catalyst for previous bubble pops – the likelihood of a stock market crash of historic proportions, before the end of Trump’s first term, is very high.

That’s why investors should prepare now. One way to do that is by shorting the market. That means betting the market will fall.

Keep in mind, I’m not in the habit of making “doomsday” predictions. Simply put, the Fed has warped the economy far more drastically than it did in the 1920s, during the tech or housing bubbles, or during any other period in history.

I expect the resulting stock market crash to be that much bigger.

*  *  *

Clearly, there are many strange things afoot in the world. Distortions of markets, distortions of culture. It’s wise to wonder what’s going to happen, and to take advantage of growth while also being prepared for crisis. How will you protect yourself in the next crisis? See our PDF guide that will show you exactly how. Click here to download it now.

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New Tracks From Meek Mill and Chance the Rapper Tackle Criminal Justice and Trump

|||Twitter/@MeekMillMeek Mill and Chance the Rapper both released music this week that sees the iconic hip-hop artists taking on criminal justice reform, economics, and Trump/Kanye. It’s good stuff and you can listen to it below.

Championships by Meek Mill

Oh, say can you see, I don’t feel like I’m free/Locked down in my cell, shackled from ankle to feet/Judge bangin’ that gavel, turned me to slave from a king/Another day in the bing, I gotta hang from a string/Just for poppin’ a wheelie, my people march through the city/From a cell to a chopper, view from the top of the city
—”What’s Free”

Philadelphia rapper Meek Mill dropped Championships on Friday. His first studio album since being released from prison in April, Mill’s decision to collaborate with Drake on “Going Bad” signifies the end of a long feud between the two, while “What’s Free” shows Mill riffing deeply on the wheelie that cost him his liberty.

First convicted in 2008 at the age of 19 for possessing a gun in a grocery store, Mill has spent the lat 10 years in and out of prison and on probation. His most recent stint hinged on a farcical and petty abuse of state power: a social media video showed him popping a wheelie on a motorbike. The subsequent reckless endangerment and reckless driving charges violated the terms of his probation and saw him sentenced to two to four years in prison.

Since his release, Mill has used his story to show how easy it is to become swept up in the criminal justice system. He has has vowed to lobby for criminal justice reforms, especially for those facing long probation times.

Jay-Z also addresses his own friendship struggles with Kanye West on the song. Calling out his old collaborator by name, HOV makes it clear that he won’t be donning a red MAGA hat anytime soon. As for his friendship with West, who has spent the better part of 2018 declaring his love for the president, Jay-Z’s general attitude in the song indicates that those Watch the Throne days are very much over.

New Tracks from Chance the Rapper

Don’t gifts get re-wrapped?/That shit could get sticky like tree sap/I gave you free raps, that shit sound like free facts/Which is ’bout as common as free Blacks
—”The Man Who Has Everything”

Though Chance the Rapper hasn’t released an album since 2016, he’s kept fans fed with the occasional single. We got a double delight on Friday, when Chance uploaded “The Man Who Has Everything” and “My Own Thing (feat. Joey Purp)” to SoundCloud. The songs are personal, focusing on topics like his relationship with his fiancée. In between those reflections, however, is some commentary on his decision to release music for free.

As Sean McBride wrote at the Foundation for Economic Education (FEE) in 2016, the free-music strategy is a capitalist one. By advertising his product that way, Chance’s raps become accessible to all kinds of crowds. When people begin to yearn for more, he can make up the cost, in part, with sold-out tours and merchandise sales.

While Chance himself has not used the c-word to describe what he does, he did tell the Chicago Tribune, “I put my music out there for free because I wanted people to see and notice it as a beacon for what I’m doing…” But make no mistake. Chance added that he’s never been “against” selling his product, which he believes has value.

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Putin Spokesman Confirms 15-Month-Old News That Trump Lawyer Wrote To Kremlin

It’s still unclear whether President Trump and President Vladimir Putin will meet at the G-20 this weekend (the prospects for a meeting have been repeatedly confirmed and denied by both sides), but there’s little doubt that, back in Washington, the talk of the town will focus on whether Michael Cohen’s guilty plea represents an important turning point in the Russia collusion investigation (as the Washington Post suggested in a Page 1 story published in Friday’s paper).

But as Trump lawyer Rudy Giuliani confirmed yesterday in an interview with the New York Times (and as the president himself told a group of reporters before departing for Argentina), the Cohen story is really just more of the same.

Cohen

And as if the media needed more evidence that the Trump Tower Moscow controversy has already been litigated in the public eye,  Kremlin spokesman Dmitry Peskov on Friday offered a quick reminder when he showed two of Cohen’s emails to a group of reporters, confirming a 15-month old report that Cohen had reached out to him to ask for help with facilitating the project (none was offered, and the project was eventually abandoned), the Daily Mail reported.

As a reminder, here’s what Peskov and Cohen said about Cohen’s ‘contact’ with the Kremlin at the time (per CNN). Cohen has since admitted to lying about the talks ending in January 2016, and has instead claimed that they continued – with the president’s involvement at times – until the summer of 2017.

“This email said that a certain Russian company together with certain individuals is pursuing the goal of building a skyscraper in the ‘Moscow City’ district, but things aren’t going well and they asked for help with some advice on moving this project forward,” Peskov said. “But, since, I repeat again, we do not react to such business topics — this is not our work — we left it unanswered.”
He added: “We cannot discuss with President Putin hundreds and thousands of different requests, which, by the way, come from a variety of countries.”

Cohen revealed Monday that he had made the overture to Moscow at a point well into Trump’s presidential campaign.

“The Trump Moscow proposal was simply one of many development opportunities that the Trump Organization considered and ultimately rejected,” Cohen said in a written statement.

“In late January 2016, I abandoned the Moscow proposal because I lost confidence that the prospective licensee would be able to obtain the real estate, financing and government approvals necessary to bring the proposal to fruition,” he added. “It was a building proposal that did not succeed and nothing more.”

Sound familiar?

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Laughable but Widely Cited Report on the Cost of Legalizing Pot Does Not Even Try to Measure the Cost

A new report from Colorado Christian University’s Centennial Institute claims that “for every dollar gained in tax revenue, Coloradans spent approximately $4.50 to mitigate the effects of [marijuana] legalization.” That factoid is already showing up in arguments against legalization, even though it is plainly fallacious.

Centennial Institute Director Jeff Hunt, who is also the university’s vice president of public policy, takes the approach favored by anti-pot polemicists, conflating correlation with causation and counting every purported cost to which a number can be attached, no matter how implausibly, while ignoring every benefit except for tax revenue and the increased value of Colorado homes since legalization (which suggests the state has not turned into the drug-addled dystopia predicted by prohibitionists).

Most glaringly, as Paul Danish notes in the Boulder Weekly, Hunt et al. make no attempt to isolate the impact of legalization, which is supposed to be the subject of the report. Instead they tote up supposedly marijuana-related costs without regard to whether they were caused by the change in policy the report claims to be analyzing.

“The figures, even if accurate, represent the economic and social costs of marijuana use,” Danish observes. “But the study’s supposed purpose is to identify the economic and social costs attributable to marijuana legalization, which are different [from] the overall costs (real, imaginary or theoretical) of marijuana use generally.”

In other words, if you assume (as Hunt et al. do) that marijuana makes people fat and lazy, resulting in $54,833,218 in extra health care costs related to “physical inactivity” each year, you need to estimate what share of those fat and lazy potheads would not be consuming cannabis but for legalization. The fact that Hunt does not even make a gesture in that direction says a lot about his analytical rigor and intellectual honesty.

Does marijuana make people fat and lazy? “People who use marijuana more frequently,” Hunt et al. say, “tend to be less physically active.” He assumes the difference is entirely attributable to their marijuana use, as opposed to other ways in which people who consume cannabis might be different, on average, from people who don’t. That is like observing that fans of professional wrestling are fatter than people who have never heard of Kenny Omega (I have no idea whether that is true) and concluding that watching WWE matches makes people fat.

Hunt et al. likewise assume that a correlation between marijuana use and dropping out of high school means that marijuana makes people drop out of high school, even though he notes that “these figures do not demonstrate causation.” Lost productivity related to dropping out of school, which the report puts at $423,362,337.22 (multiplying “marijuana-related drop-outs” in 2016-17 by $334,716.12, “the cost of not completing high school”) is the biggest component of the $1.1 billion annual cost that the Centennial Institute attributes to legalization. It is quite a stretch to count a high school dropout’s future loss of income as money “spent” by Coloradans in 2017, but that is what Hunt et al. do. And as with “physical inactivity,” they do not try to estimate how many of those students would have dropped out even if marijuana had never been legalized, even though the whole point of this exercise is to show what a disaster legalization has been.

The second biggest component of the Centennial Institute’s legalization bill is marijuana-related hospitalizations and emergency room visits, which the report says cost $381,915,043 in 2015. The number of these cases did rise following legalization, but it is hard to tell how much of that change represents a real increase in problems caused by cannabis consumption. Now that marijuana is legal, people are probably more willing to admit that they use it (as Hunt et al. concede) and to seek help when they run into trouble. Medical staff may also be more likely to note marijuana use in hospital records. But none of that really matters in the Centennial Institute’s analysis, because once again the report looks at the total cost, as opposed to the portion that might plausibly be attributed to legalization.

The same goes for traffic accidents, where Hunt et al. not only assume that marijuana was the cause whenever a driver tested positive for THC, regardless of whether he was actually impaired by it at the time of the crash, but also act as if there were no stoned drivers prior to legalization. Even when spending has declined since legalization, as with marijuana arrests and “treatment for marijuana use disorder,” Hunt et al. count the current cost as part of the tab for letting Coloradans use cannabis without a doctor’s note.

Hunt claims the report is “fair” and takes “a conservative approach to calculating the costs and fees associated with increased marijuana use.” In reality, it does not even attempt to calculate the costs associated with increased marijuana use. At best, it calculates the cost associated with marijuana use, period, and the manner in which it does that will not seem “fair” to anyone who does not already agree with Hunt that legalization is a huge mistake.

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Central American Migrants Begin Hunger Strike In Tijuana

A group within the 6,000 or so Central American migrants currently stuck in Tijuana have begun a hunger strike to try and pressure US and Mexican authorities to stop blocking their entry into the United States, and process their applications for asylum in the United States more quickly, according to DW. 

The group of protesters is part of the more than 6,000 migrants, mostly from Honduras, who have travelled by caravan towards the United States in the hope of applying for asylum and fleeing violence and poverty in their home countries. They are now stuck at the border city of Tijuana, Mexico.

Many of those taking part in the hunger strike are women. –DW

“Since no one is listening to us, we’ve decided as a women’s movement… to launch a hunger strike,” announced Honduran Claudia Miranda during an improvised press conference in Tijuana. 

The migrants face long wait times and an uncertain future as they line up and put their names on a list to be heard for Asylum claims – which are currently being processed at a rate of less than 100 per day. Doing the math, it could be months before the roughly 6,000 migrants holed up in Tijuana shelters and a squalid soccer field camp are processed. Not only that, there is no guarantee they will be granted asylum – as migrants have to show evidence of valid claims.

The women were initially prevented from setting up a picket in front of the border immigration offices. 

“We’re in really bad shape,” Cindy Pinera told DW. “Everything is wet and that is hard for the babies.” –DW

The migrants have been camped out at overcrowded shelters and an outdoor sports facility for the last three weeks, while Mexican authorities have begun transporting migrants to a new shelter in order to try and ease tensions and improve the migrants’ living conditions as they wait for their asylum applications to be processed – which could take months. 

In response to President Trump’s efforts to strengthen immigration policies and ban migrants who enter the country illegally from applying for asylum, many caravan members have requested humanitarian and working visas in Mexico instead. 

On Sunday, several hundred migrants attempted to breach the US border, resulting in the deployment of tear gas to stop the group from rushing the fence. Mexico vowed to deport those who “violently” charged the US border in response. 

Meanwhile, Fox News has reported that a member of the notorious MS-13 gang admitted to having traveled north with the migrant caravan before trying to enter the United States, bolstering claims by the Department of Homeland Security and President Trump that there are criminal elements among the group. 

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Lawsuit Alleges California Cops Stole Weed and Cash During Traffic Stops

A Texas man is accusing several police officers in Northern California of stealing three pounds of legal marijuana from him during a traffic stop, according to a federal civil rights lawsuit filed earlier this month. And he’s not the only one who says he was essentially robbed by a group of rogue police officers.

Zeke Flatten alleges that three police officers from the town of Rohnert Park and Hopland Band of Pomo Indians pulled him over last December while he was driving through Mendocino County. The officers were not wearing name tags or badges, and they identified themselves as federal agents from the Bureau of Alcohol, Tobacco, and Firearms, rather than local police officers, the lawsuit says.

Flatten told the officers about the marijuana and offered to show them his paperwork for it, but they seized it and left without issuing him a ticket or running his name to check for outstanding warrants.

Flatten is not the only alleged victim. The lawsuit, citing recent local news investigations, says police from the town and tribe have a pattern of using a lucrative civil asset forfeiture program to shake down motorists for marijuana and cash during traffic stops.

Rogue Rohnert Park police “conspired to expand the legitimate interdiction mission to one of personal financial gain, and over the years seized thousands of pounds of cannabis and hundreds of thousands of dollars of currency without issuing receipts for the seizures, without making arrests for any crimes, and without any official report of the forfeitures being made,” the lawsuit says.

And when arrests were made, “cash and cannabis seized was significantly underreported in furtherance of the conspiracy allowing the officers to skim off the top of even otherwise legal interdictions,” the suit continues.

Under civil asset forfeiture laws, police can seize cash, cars, and even houses suspected of being connected to criminal activity, even if the owner is not charged with a crime. Law enforcement groups argue that civil forfeiture is a vital tool to disrupt drug trafficking and other organized crime, but civil liberties groups say there are far too few due process protections for property owners and far too many perverse profit incentives for police.

“It’s the government agencies typically that have been enriched as a result of those seizures,” Flatten’s attorney Izaak Schwaiger says. “What’s different in Mr. Flatten’s case is that it’s individuals who are getting enriched—individual officers who under the color of law are abusing their authority to conduct traffic stops without the requisite legal cause and then robbing people of their cash, or in this case their cannabis.”

An independent blogger first began scrutinizing Flatten’s case in February after he contacted local police and media to complain. Although local and state police often partner with federal authorities for asset forfeiture cases, the ATF said it wasn’t involved.

Rohner Park Sgt. Jacy Tatum issued a press release and an incident report to try and justify the stop, but the report appeared to confuse Flatten’s case with another large marijuana seizure, getting several key details, such as the car make and model, wrong. “As a result his press release defended the wrong illegal seizure, and instead of diffusing the scrutiny plaintiff’s allegations had brought, it brought the allegations more clearly into focus,” the lawsuit says.

KQED, working with several other newspapers, then published an investigation this June that uncovered similar complaints by nine other motorists who say they were essentially robbed by Rohner Park police. For example, Huedell Freeman says Tatum and Rohnert Park police officer Joseph Huffaker, also named in Flatten’s lawsuit, seized 47 pounds of marijuana from him, despite Freeman’s having a permit to grow.

Tatum and another Rohner Park officer were sued for seizing $120,000 from a man in 2016 who said he was on his way to a high-stakes poker game in Las Vegas.

The stories also detailed complaints by area defense attorneys who said Tatum had earned a spot on the Sonoma County District Attorney’s Office “Brady list,” an ignominious list of officers whose history of false testimony must be disclosed if they are called as witnesses.

A month after KQED published its story, Tatum left the police department, as did the police chief of Rohnert Park. The town has hired an independent investigator to audit its asset forfeiture program, and the department ceased most of its marijuana interdiction efforts in 2017.

Northern California has for decades been the marijuana-growing capital of the U.S., and traditionally such seizures have been a lucrative and reliable revenue source for local police departments, and a more or less accepted cost of doing business for black market growers.

Tatum, Whitaker, and several other officers were part of a drug task force that seized hundreds of pounds of marijuana and a small mountain of cash. “Between 2016 and 2017, the Rohnert Park Department of Public Safety kept $1.2 million in seized funds for its own,” Flatten’s lawsuit says.

To hone their skills, the department paid to send Tatum and the other task force members to attend training sessions hosted by Black Snow, a private company that teaches police how to target and perform roadside asset seizures. It also operates Black Asphalt, a private surveillance network police can use to identify potential motorists to target.

In a 2014 investigation into how police use highway traffic stops to seize hundreds of millions of dollars from motorists without charging them with crimes, The Washington Post reported on Desert Snow:

“All of our home towns are sitting on a tax-liberating gold mine,” Deputy Ron Hain of Kane County, Ill., wrote in a self-published book under a pseudonym. Hain is a marketing specialist for Desert Snow, a leading interdiction training firm based in Guthrie, Okla., whose founders also created Black Asphalt.

Hain’s book calls for “turning our police forces into present-day Robin Hoods.”

But now marijuana is legal in California, and Schwaiger says growers who used to be cowed by the threat of felony charges are now finally able to speak up about police misconduct.

“What we’ve seen is people are proud of the fact that their industry has come out of the shadows and they feel like they should be able to operate without fear of persecution from the government,” Schwaiger says. “Years ago, when you could get a felony for growing marijuana in California, everyone just considered getting ripped off by the cops the price of doing business. Now people feel entitled to engage in legitimate commerce, and they’re willing to complain if something goes bad.”

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Former DOJ Official Admits Accepting Bribes From Fugitive Who Masterminded 1MDB Fraud

The DOJ has secured its second guilty plea in its investigation of what it alleges was a $4.5 billion fraud at 1MDB, the Malaysian sovereign wealth fund that was allegedly ransacked by corrupt officials with the help of a Malaysian financier, who allegedly paid bribes and kickbacks to Malaysian officials – including former Prime Minister Najib Razak – so they would keep quiet.

On Friday, George Higginbotham, a lawyer who left the DOJ just three months ago, pleaded guilty to one felony count of “conspiracy to make false statements” over allegations – detailed earlier this month in an ABC News report – that he sent emails lying to an unidentified US bank vouching for the source of funds funneled into the US by Jho Low, the corrupt Malaysian financier whom the DOJ has accused of masterminding the 1MDB fraud (and who met with former Goldman CEO Lloyd Blankfein and other senior Goldman bankers, despite objections from the bank’s compliance department). Low is presently a fugitive whose whereabouts are unknown, having fled before the DOJ charged him for his role in the fraud earlier this month.

He was already wanted in Malaysia for crimes related to 1MDB. Higginbotham allegedly opened accounts on Low’s behalf inside the US, into which he deposited tens of millions of stolen 1MDB funds.

Goldman

According to Bloomberg, some of the money funneled into the US by Low was intended to sway a DOJ investigation into 1MDB, though BBG didn’t specify how he intended to accomplish this, or which investigation he intended to sway.

Higginbotham allegedly plotted with two co-conspirators to “knowingly” mislead a specific financial institution about “tens of millions of dollars” in funds, according to a criminal complaint. According to BBG, Higginbotham held a “non-lawyer position” at the DOJ.

According to court documents, Low funneled cash through former Fugees member Pras Michel, who then passed money on to a political fundraiser who was identified only as Individual 2, as well as one of the fundraisers’ associates, an investment firm owner identified only as Individual 1.

Prosecutors have alleged that Higginbotham lied in the email “for the purpose of influencing [the bank’s] due diligence in connection with applications for recently opened accounts.”

More details are spelled out in a civil suit filed on Friday which is seeking to seize $74 million from Higginbotham’s law firm, and two other entities.

Higginbotham is the second person to plead guilty in the case after Goldman Partner Tim Leissner, who pleaded guilty earlier this month and agreed to cooperate with federal investigators. In his plea agreement, Leissner alleged a “culture of corruption” at Goldman that helped him circumvent the bank’s compliance department. Other Goldman employees – and possibly the bank itself – have found themselves in the crosshairs of the DOJ, including another banker, Roger Ng, who has been arrested and is being extradited to the US to face money laundering charges. A former co-head of Goldman’s investment bank is also being investigated, and has been temporarily put on leave. Earlier on Friday, Bloomberg reported that the New York Fed has launched its own investigation into how Goldman managed to evade its own compliance controls and move ahead with underwriting the three 1MDB bond deals – which netted the bank a combined $600 million.

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