The prevalence of immunity to the coronavirus that causes COVID-19 may be much higher than previous research suggests according to an intriguing new study by researchers associated with Karolinska Institute in Sweden. In addition, a new German study by researchers associated with the University Hospital Tübingen in Germany reports that people who have been previously infected with versions of the coronavirus that cause the common cold also have some immunity to the COVID-19 virus. If these reports stand up to further scrutiny, it would be very good news because they suggest that the pandemic could be over sooner and ultimately be less lethal than feared.
First, a few caveats: Both studies are based on small sample sizes and neither have yet been vetted by peer review.
In the Swedish study, researchers not only checked 200 participants for the presence of immunological proteins called antibodies produced in response to COVID-19 infections, but also for T-cells which are another virus-fighting component of the immune system. Detecting and evaluating T-cells is a bit trickier than measuring antibodies.
The Karolinska researchers, according to the accompanying press release, “performed immunological analyses of samples from over 200 people, many of whom had mild or no symptoms of COVID-19.” The study tested COVID-19 patients, exposed asymptomatic family members, healthy blood donors who gave blood during 2020, and a 2019 donor control group.
“One interesting observation was that it wasn’t just individuals with verified COVID-19 who showed T-cell immunity but also many of their exposed asymptomatic family members,” said Karolinska researcher Soo Aleman. “Moreover, roughly 30 per cent of the blood donors who’d given blood in May 2020 had COVID-19-specific T cells, a figure that’s much higher than previous antibody tests have shown.”
“Our results indicate that roughly twice as many people have developed T-cell immunity compared with those who we can detect antibodies in,” noted Karolinska Center for Infectious Medicine researcher Marcus Buggert.
Study co-author Hans-Gustaf Ljunggren toldThe Telegraph that if the study’s findings are replicated, they would apply to any country. London, for instance, might have about 30 percent immunity and New York above 40 percent. If so, some parts of the U.S. are much closer to herd immunity than population-wide antibody testing currently suggests.
Herd immunity is the resistance to the spread of a contagious disease that results if a sufficiently high proportion of a population is immune to the illness. Some people are still susceptible, but they are surrounded by immune individuals who serve as a barrier, preventing the microbes from reaching them. Epidemiologists typically estimate that the COVID-19 threshold for herd immunity is around 60 to 70 percent.
Still the Swedish researchers caution, “It remains to be determined if a robust memory T cell response in the absence of detectable circulating antibodies can protect against [the virus].”
In a second study, German researchers analyzed blood samples of 365 people, of which 180 had had COVID-19 and 185 had not. When they exposed the blood samples to the COVID-19 coronavirus, they found, as expected, that blood from those who had had the illness produced a substantial immune response. More significantly, they also found that 81 percent of the subjects who had never had COVID-19 also produced a T-cell immune reaction, reportsTheScience Times. If the German study’s results prove out, that would suggest that earlier common cold coronavirus infections may provide about eight in 10 people some degree of immune protection from the COVID-19 virus.
The findings in both of these studies are potentially very good news with respect to public health and the course of the COVID-19 pandemic. Here’s hoping that future replications will validate them.
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Not after six shootings and two teenage deaths, as hedge fund manager and author James Altucher notes – rather, after protesters threatened to take over Mayor Jenny Durkan’s 5,000 sqft., $7.6 millionhouse.
Let’s see: six shootings, two teenage deaths, and @MayorJenny still says “it’s an arts festival”. THEN, the CHAZ threatens to take over her 5,000 sq ft house worth $7.6 million after her new addition. A DAY LATER, she brings in the police, “end the chaos!” #Leadership#Comedy
Last weekend, City Councilmember Kshama Sawant led a march to Durkan’s home, where she railed against the Mayor and police brutality to a whipped-up crowd of BLM protesters.
Days later, police issued an order to disperse the ‘Capitol Hill Autonomous Zone’ (CHOP) also known as the Capitol Hill Organized Protest (CHOP) at 5 a.m. PST on Wednesday.
At least 13 protesters were arrested after failing to adhere to multiple warnings, according to Fox News.
The East Precinct, which police abandoned last month following standoffs and clashes with demonstrators, was cleared of protesters, Police Chief Carmen Best told reporters from inside CHOP. Best said police were not moving into the building yet, but would clear the area of barricades before beginning operations as soon as reasonably possible.
As officers in riot gear performed the predawn sweep to clear holdouts from the streets, police said a woman apparently went into labor on the east side of Cal Anderson Park inside the CHOP. Seattle Fire said it was responding to the scene. –Fox News
“Officers enforcing today’s order are wearing a higher-level of protective gear,” said Seattle PD in a statement. “Police are utilizing this equipment because individuals associated w/the CHOP are known to be armed and dangerous/may be associated with shootings, homicides, robberies, assaults & other violent crimes.”
The USA has gone so crazy in these months of the coronavirus freak-out that an orgy of looting, arson, and murder, on top of epic job loss and business failure, propelled the stock markets up-up-and-away back to near-record highs.
Makes sense, right?
The market came down a bit towards the end of the week, but don’t worry. The Fed will make another announcement that it’s going to do something or other and presto, the market will be off to the races again.
In the background of these weeks of protests, riots, looting, and arson is the disintegrating economy, which signifies that pretty much everybody in this land will not be able to keep on keeping on in the ways we’re used to.
Reduced Living Standards
Everybody will have a harder time making a living. Everybody will endure shocking losses in wealth, status, and comfort. And, sadly, everybody will be too perplexed and bamboozled by the rush of events to understand why.
The short version of that story is we’ve overshot our resources, especially the basic energy resources that all other activities require.
This mystifies the public, too, but you can boil it down to the cost of getting oil out of the ground being too high for customers and not high enough for the oil producers to cover their costs — a quandary.
One result has been the rapid bankruptcy of the shale oil industry. Another is the incremental impoverishment of what used to be America’s broad middle-class — a malady that has, just for now, fenced off the denizens of Wall Street, the notorious One Percent (of the population), who still luxuriate in zooming share prices and dividends while everybody else sucks wind in a ditch with-or-without the added affliction of Covid-19.
The perplexed and bamboozled include the entire leadership nucleus of the land, who seem starkly unable to act coherently in the tightening vortex of crisis.
Piling on More Debt
While Mr. Trump seems to dimly apprehend the urgent need for economic restructuring, he’s able to express it only in messages that sound like a 1961 Frigidaire commercial, with overtones of Marvel Comics superhero grandiosity.
The president may understand that a country can’t consume stuff without producing stuff, but he doesn’t get that it’s too late to bring back all that activity at the scale we used to run it when he was a young man in the 1960s.
His answer to the call of restructuring — what the Soviets called perestroika before they fell apart — is to pile on more debt, that is, borrow more from the future to pay for hamburgers today.
That dovetails neatly with the needs of the financial community, led by the hapless “Jay” Powell at the Federal Reserve, who is on a mission to destroy the U.S. dollar in order to save the banking system and its auxiliaries in the stock markets.
He literally doesn’t know what to do — except “print” more dollars to support share prices, a symbolic talisman of theoretical economics that has less and less to do with what people actually do on-the-ground in the hours when they’re not sleeping.
It looks unlikely that the Fed will rescue either Wall Street or Main Street. The longer he props up the former at the expense of the latter, the more certain it is that it will provoke insurrection that goes well beyond the current hostilities.
Vanishing Commerce From Cities
The looting and arson of recent days hugely aggravated a central feature of it: the destruction of small business.
In Minneapolis alone, the damage stands at $100-million. Things were difficult enough under the strictures of Covid-19, but this guarantees that many cities will not see the return of commerce — and there are only a few other reasons for cities to even exist.
Not only did the Democratic Party fail to object to the mayhem, but the city governments they controlled abetted, incited, and applauded the anarchy.
Meanwhile, last Saturday in Tulsa, Mr. Trump made the signal error of bragging on the latest highs in the stock markets. Hasn’t he learned by now what a flimsy representation of reality that is?
Evidently not. The air may be coming out of that lifebuoy in the next couple of weeks, and his election prospects will sink with it.
This will happen as the nation approaches the dark moment when the postponement of debt repayments ends. Imagine how many mortgage, car payments, and small business loan defaults will crackle across the land, and how that will thunder through the banking system.
Civil and Social Collapse Before November 3?
Anyone with half a brain knows that only the strenuous manipulations of the Federal Reserve have kept stocks levitating, doing the only trick they know how to do: printing money by digital keystrokes.
There are so many dimensions to that blunder, it could hasten a more complete economic, civil and social collapse before November 3.
If markets somehow magically stayed elevated, would all those Americans dispossessed of houses, cars, and businesses not feel more resentful than ever about the skullduggery of the elites?
And might they form a third faction in a burgeoning civil war against both the Woke Left and the Trump-led government? And what if the Federal Reserve’s stupid trick of money-printing destroys the value of the dollar per se?
That’s hardly a far-out scenario.
Beware the 4th of July
Events are rushing ahead at a pace you can barely follow. Summer is underway and why, now, would you expect any lessening in civil disorders?
The summer heat is always an invitation to raucous behavior on the steamy streets. Have Chuck Schumer and Nancy Pelosi appealed to their followers to end their violence?
Maybe I missed that. They are hinting at a return to Covid-19 lockdown conditions — but you can forget about anyone following that when the temperature tops ninety degrees (and certainly the Dem leadership knows that).
Meanwhile, the devastation of small business, careers, livelihoods, households, and futures continues.
Then, there’s the sinister joker-in-the-deck next week. It’s called the Fourth of July. It’s hard to imagine a fatter target for those who are truly intent on making things as bad as possible than that particular holiday. Hey, they’ve already torn down statues of George Washington.
What else is left to trash?
Take measures to protect your own future, as far as possible. Put your energy into imagining how you can be helpful to other people, and perhaps incidentally earn their trust and their assistance in mutually beneficial ways.
Think about finding a plausible place to live where the rule of law perseveres. Think about how you might fit into an economy run at a smaller scale. Start taking action on that thinking.
There’s potential for a lot of people to get hurt in the disorders-to-come.
There’s plenty you can do to not be one of them.
via ZeroHedge News https://ift.tt/3dRj79g Tyler Durden
Trump Slams De Blasio’s Call To Paint “Symbol Of Hate” BLM Sign On NYC’s 5th Avenue Tyler Durden
Wed, 07/01/2020 – 11:00
We suspect this will turn up the outrage mob to ’11’ on the Spinal Tap amplifier of “see, he is hitler”-ism.
In two tweets this morning, President Trump slammed New York Mayor Bill de Blasio’s plan to paint a Black Lives Matter mural on the street outside Trump Tower, saying the effort will antagonize police and will be “denigrating this luxury Avenue.”
“Maybe our GREAT Police, who have been neutralized and scorned by a mayor who hates & disrespects them, won’t let this symbol of hate be affixed to New York’s greatest street,” Trump tweeted.
“Spend this money fighting crime instead!”
The New York City mayor discussed his plan Tuesday morning during an appearance on MSNBC, saying that he plans to paint the area along 5th Avenue between 56th and 57th streets.
“We’re going to take this moment in history and amplify it by taking the Black Lives Matter symbolism and putting it all over this city, including right in front of Trump Tower,” de Blasio said.
“It’s an important message to the whole nation, and obviously we want the president to hear it, because he’s never shown respect for those three words.”
The same was done on a street leading to The White House…
President Trump tweeted further, reminding his followers that:
“NYC is cutting Police $’s by ONE BILLION DOLLARS, and yet the @NYCMayor is going to paint a big, expensive, yellow Black Lives Matter sign on Fifth Avenue, denigrating this luxury Avenue.”
Adding that:
“New York’s Finest vividly remembers the horrible BLM chant, ‘Pigs In A Blanket, Fry ‘Em Like Bacon’.”
We suspect this is far from over.
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This article is the first of a four-part series on the vectors driving future economic growth. Forthcoming articles will tackle Depression, Demographics, and De-globalization.
The discussions about economic recovery and the path ahead are ongoing. The shape it will take will defy the simplistic “V”, “W”, and “L” expressions being used by forecasters. One thing, however, is certain. Every bazooka, tank, and A-bomb of stimulus is being used to combat the downturn.
The question, so few seem to ask, is at what cost?
“Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,”
– 5/29/2020 Jerome Powell Peterson Institute of International Economics.
As we will explain, what is best for economic growth and prosperity is not what Powell’s Fed is doing. Power, influence, and intellectual elitism may be winning today’s battle, but they are losing the war. The evidence is compelling.
Yardeni et al.
In a recent Grant’s Current Yield podcast, guest Ed Yardeni, said: “I find too many investors…act like preachers. They judge the Fed, good or bad, a moralistic approach. My approach, as an investment strategist is bullish or bearish.”
Yardeni’s only concern appears to be whether Fed actions are good or bad for his portfolio. Specifically, good or bad for his career.
Like all investors, we also need to understand whether Fed actions are bullish or bearish. However, we have a conscience and care about what is best and right. Yardeni’s comments remind us of the Niemoller prose, “First they came…”.
Yardeni’s view represents the epitome of expedience over principle. His perspective is not a one-off, in fact, far from it. It is a consensus among financial and political insiders. It runs through the veins of Wall Street, Congress, and the White House.
Planning Ahead
The United States is in the midst of an unprecedented third asset bubble in twenty years. The recent crisis is being blamed on COVID. We disagree, COVID is the pin that pricked the bubble.
“There is a popular game called Jenga in which a tower of rectangular blocks is arranged to form a sturdy tower. The objective of the game is to take turns removing blocks without causing the tower to fall. At first, the task is as easy as the structure is stable. However, as more blocks are removed, the structure weakens. At some point, a key block is pulled, and the tower collapses. Yes, the collapse is a direct cause of the last block being removed, but piece by piece the structure became increasingly unstable. The last block was the catalyst, but the turns played leading up to that point had just as much to do with the collapse. It was bound to happen; the only question was, which block would cause the tower to give way?”
The real catalysts include the following:
Accumulated leverage
Poor use of cash for stock buybacks
Fragile financial infrastructure
Lack of productive investment
Overzealous speculation
Unfettered government spending
Preference for consumption over savings
In sum, capital has been grossly misallocated towards speculation and away from productive investment. These outcomes are, in large part, a result of prior and current Fed policy.
Like households and corporations, the government also reacts to the “signals” being sent through the market. When interest rates are manipulated, strange things happen and ripple throughout an economy. When that currency is the global reserve currency, the word “strange” takes on a new definition.
Past Experience
In the current set of circumstances, the economy and markets are experiencing a confluence of shocks that are both extreme and unique. Regardless, we can still reflect on past episodes that caused great turmoil and anxiety. Although the analysis does not provide explicit answers, the rigor offers insight and direction.
As James Grant once said, “My goal is to have everyone agree with me, later.”
Foresight with confidence offers early, cheap entry into opportunities that everyone else sees “tomorrow”.
A New Trajectory for U.S. Growth
The chart below offers a substantive context for what has transpired over the past 40 years. The colored lines show what economic activity would have been had the growth rate of the prior expansion held true in the following expansion.
As shown, after each successive bubble, the trajectory of growth, GDP shifts lower. Slow economic growth implies that the time to full recovery is elongated.
To predict a post-COVID growth trajectory we need only look at the ratio of Federal debt to GDP. As shown below, the trend lines of that ratio to trend economic growth are negatively correlated. Since 1990 the relationship has a very high r-square of .928. Simply, as the ratio of Federal debt to GDP rises, economic growth declines.
The next graph projects GDP based on the expected ratio of Federal Debt to GDP. For this exercise, we conservatively assume the ratio will be 115% when the economic recovery begins. That compares to 82% in 2009 and 55% in 2002. We also assume economic growth falls by 10% in the second quarter and 1% in the third quarter. GDP then grows at our projected growth rate of 1.07%.
Based on this analysis, the economy will not regain pre-COVID economic levels this decade.
The Culprit
The new paradigm of weak recoveries is due to the Fed’s policy prescription for recessions; debt-fueled consumption. Through lower interest rates they incentivize people, corporations, and the government to borrow. The benefits are here and now as economic recovery ensues. The cost is paid tomorrow.
The debt is increasingly put to unproductive uses, and the obligations grow exponentially larger than income. As we discussed in Why the Recovery Will Fall Short of Forecasts, given the issues facing productivity and demography, this is a troubling outlook.
Recessions are a normal part of the economic cycle. They are a healthy reset that purges weak businesses and encourages productive capital investment for the future, not speculation. The resumption of growth takes time in a recession left to its course. However, improved productivity and prudent use of resources sets the economy on a sustainable path to healthy growth.
The New Order
Modern-day Fed policy encourages speculation over productivity growth. The result is sustained unemployment and low wage growth. The longer people are out of work, the less likely they are to re-assimilate into the productive workforce. This means they require and expect more government assistance, which further raises the debt obligation on the dwindling taxpayer.
Revisiting one of our cornerstone concepts, economic growth hinges upon two key elements:
Growth in the labor force
Productivity gains
The regressive trajectory of GDP growth reflects that those factors of growth are diminishing.
A Fine Mess
Even after the surprisingly positive payroll report for May 2020, the chart below illustrates the magnitude of our predicament. It also reflects the mischaracterizations being used to discuss the post-COVID19 economic circumstance.
Note that the last four recessions required longer periods consecutively for jobs to recover fully.
The amount of non-productive debt used to combat downturns compounds the pre-existing debt problem. It ensures that the economy will continue to struggle for years to get back to pre-COVID levels of economic activity.
“Much higher public debt levels will become a permanent feature of our economies and will be accompanied by private debt cancellation.”
– Mario Draghi, March 2020, FT
At $6 trillion in December 2001, then $11.5 trillion in June 2009, U.S. government debt has now ballooned to $26 trillion. Tragically, debt continued to pile up over the last decade despite economic recovery. It, in fact, was the economic recovery. Without that expansion of debt, there would have been little to no economic growth.
To characterize it otherwise as Fed and government officials have done is intellectually dishonest. When the debt-to-GDP graph below updates next, the ratio will be close to 120%. The pattern since 1980 is clear.
The Fed is extraordinarily accommodative in both their interest rate posture and their willingness to fund massive federal deficits.
They deliberately encourage everyone to borrow. That occurs with lower rates and expansion of the Fed balance sheet (QE) as shown in the chart below. They have also promised near-zero rates and QE for the foreseeable future. This is, indeed, a fine mess.
Evidence
Despite the information we present, the same talking points justify the same actions. The actions do not serve the best long-term interests of the public. The tools the Fed is employing destroys wealth for all but the top 1%.
The policies incite inflation, much of which is hidden by faulty government reporting. As detailed in a previous article, Two Percent for the One Percent, inflation erodes living standards for the broad population.
Even after years of botched policies that damage the organic economy, no one in Congress challenges the Fed’s counter-factual. Given the evidence from their inability to forecast even one or two quarters ahead, how do they know what they are doing works? How do they know the long-term implications of their policies will not be disastrous? The answer, of course, is they do not know.
Summary
As mentioned, based on this analysis using the trends of the past 40 years, the economy will not regain pre-COVID output levels until sometime in the 2030s. The implications of that scenario are weak GDP growth, poor labor market growth, and high market volatility, among many other unknowns. It might also imply continuing civil unrest and potentially war.
All of those in power appear to be complicit in advancing this agenda. Why not? They are rewarded handsomely for their compliance. That is how politicians and the corporate elite get wealthy from their positions of power.
Meanwhile, the rest of us watch and wait, hoping that someone will show up to represent the community in this injustice.
What the Fed is doing to save today will cause problems tomorrow. We have two choices; we can recognize the problem and force change by electing like-minded legislators. Or, we can stand aside. The latter, of course, only furthers behavior detrimental to our country.
Instead of cheering Fed actions today, consider what they are doing to the future.
If nothing changes, then the problem will eventually take care of itself. It will not be peaceful or pleasant, but it will come to a resolution. The outcome will not be favorable for investors or what was once the greatest economy in history.
via ZeroHedge News https://ift.tt/2ZqCf98 Tyler Durden
John Paulson Converts Hedge Fund Into Family Office Tyler Durden
Wed, 07/01/2020 – 10:42
Following in the footsteps of many of his hedge fund peers, one-hit wonder John Paulson, who became famous for collaborating with Goldman on shorting subprime by picking the constituents of a CDO that he then bet against, is turning his hedge fund firm into a family office after setting the stage for the conversion last year, according to Bloomberg.
“After considerable reflection and careful thought, Paulson & Co. will convert into a private investment office and return all external investor capital,” Paulson wrote in a letter to investors seen by Bloomberg.
The move was inevitable: back in January 2019, following years of underperformance or outright losses, leading to widespread redemptions, Paulson said that he was considering turning the firm into a family office or making it a hybrid business with one part running his money and another running client capital. At the time, approximately 80% of the money his namesake hedge fund ran was his, making the conversion to a family office merely a formality.
The news comes one day after we learned from Reuters that more hedge funds went out of business during the first three months of 2020 than at any other time since 2015 as the coronavirus led to heavy losses and investors pulled out billions in assets.
Hedge Fund Research reported on Tuesday that 304 funds liquidated around the world in the first quarter, marking the highest level since the fourth quarter of 2015 when 305 funds shut down. The number of closures is 50% higher than it was during the last three months of 2019 when 198 funds were liquidated, HFR data show. Investors pulled $33 billion out of hedge funds in the first quarter, HFR reported earlier, marking the fourth-largest outflows ever.
At the same time only 84 new funds opened for business in the first quarter of 2020, the slowest pace of new launches since the financial crisis when 56 new funds opened for business in the fourth quarter of 2008, HFR said. The pace of new launches fell off even from late 2019 when 89 funds opened in the last three months of the year.
This leaves 8,081 hedge funds and 1,167 funds of hedge funds, number which will continue to shrink now that the Fed is explicitly backstopping risk assets making it unnecessary to hedge any risks.
via ZeroHedge News https://ift.tt/2BZ3gZm Tyler Durden
WTI Fades Despite Biggest Crude Draw Since 2019 Tyler Durden
Wed, 07/01/2020 – 10:35
Oil prices extended gains overnight after API reported a surprisingly large crude inventory draw (the biggest in 2020) and bounced back above $40 this morning after the vaccine headlines.
“The market’s main concern is demand and how Covid-19 affects it,” said Louise Dickson, an analyst at consultant Rystad Energy AS.
This follows Dr. Fauci’s warning yesterday that the U.S. is “going in the wrong direction” in its effort to contain the outbreak; but for now, all eyes on whether the official inventory data confirms API’s surprise.
API
Crude -8.156mm (-2.7mm exp)
Cushing +164k
Gasoline -2.459mm (-2.7mm exp)
Distillates +2.638 (+900k exp)
DOE
Crude -7.195mm (-2.7mm exp, BBG -500k exp) – biggest draw since Dec 2019
Cushing -263k – 8 week streak of draws
Gasoline +1.19mm (-2.7mm exp)
Distillates -593k (+900k exp)
After three straight weeks of builds, DOE confirmed API’s report of the biggest crude draw since 2019…
Source: Bloomberg
After a rebound (from storm Cristobal’s shut-ins) in the prior week, US crude production was flat week-over-week…
Source: Bloomberg
WTI was trading just below $40.00 ahead of the DOE print and after briefly popping, began to fade back to pre-API levels…
As the OPEC and its allies stick with efforts to balance the market, Bloomberg notes that analysts were casting doubt on the longer-term prospects for oil consumption. Citigroup said on Wednesday that demand growth for oil products will never return to pre-virus levels. Standard Chartered said that short-term oil demand risks are to the downside as the virus spreads across the southern U.S.
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A little more than 26 years after it ushered in a new era of continent-wide trade, the North American Free Trade Agreement (NAFTA) is no more. Starting today, the United States-Mexico-Canada Agreement (USMCA) takes over.
The new trade deal is the result of more than two years of negotiation among the leaders of the three countries. It is the most substantial accomplishment of President Donald Trump’s trade policies, but it also demonstrates the extent to which Trump’s unorthodox views on trade have been successfully tempered. After taking office with a vow to tear up NAFTA, Trump ultimately settled for a minor revision to the status quo.
Still, the USMCA is a big deal. Canada and Mexico are the top recipients of U.S. exports. The United States imports more goods from those two countries than anywhere else except China. The deal will affect more than $1 trillion in annual trade between the U.S. and its two neighbors.
Here are three big things to know about the USMCA.
A small retreat for free trade and a win for protectionism.
Although Trump’s supporters sometimes claim that the president is actually pursuing a radical free-trade agenda and only using protectionist tactics to achieve it, the USMCA is strong evidence that Trump would prefer to see more barriers to trade.
For example, the administration pushed for the inclusion of stricter rules that make it more difficult for cars and car parts to cross national borders duty-free. Under the USMCA, 75 percent of the component parts of vehicles would have to be produced in North America to avoid tariffs, and 40 percent would have to be built by workers earning at least $16 an hour—effectively putting a minimum wage on Mexican manufacturing plants with lower wages.
Rather than completely reshaping their supply chains, automobile manufactures are likely to just pay the tariffs. As a result, the International Trade Commission (ITC) estimates that consumer prices on cars in the U.S. will increase, resulting in an estimated 140,000 fewer vehicles sold.
The USMCA also gives Trump (and future presidents) greater powers to impose new tariffs against Canada and Mexico. Already, the Trump administration is looking to do exactly that in response to claims that aluminum imported from Canada have increased this year (even though imports of the metal are still below 2017 levels and well within historical norms). But isn’t the point of a trade deal to encourage more trade?
All trade deals are managed trade, of course, but relative to the standards set by NAFTA, the USMCA seems like a step backward.
2. Crucial updates to protect the flow of data across North American borders.
When NAFTA launched in 1994, there were a few dozen websites online. Today there are…a lot more. Importantly, the USMCA includes a new chapter of provisions aimed at digital trade, ensuring that real-world international borders won’t start popping up in cyberspace.
For example, the USMCA bans the creation of so-called “data-localization requirements”—rules that limit how much traffic can flow from a data center in one country to servers in another. The new agreement also prohibits tariffs on data transfers, and it includes a provision shielding tech companies from liability for content, similar to the protections offered by Section 230 of the Communications Decency Act.
These are necessary and worthwhile updates to NAFTA that will give businesses more certainty about cross-border digital work.
3. More trade, but also more uncertainty.
The ITC’s analysis estimates that the USMCA deal will boost U.S. gross domestic product by about $68 billion while adding an estimated 176,000 jobs in the United States, with the manufacturing sector set to benefit the most. Exports to Canada and Mexico are expected to increase by between 5 and 7 percent.
Politics will always be a threat to free trade, but one of the more worrisome elements of the USMCA is that it will expire after 16 years. That creates built-in uncertainty. Jared Kushner, Trump’s son-in-law and a key White House adviser, has argued that the trade deal’s sunset clause “is not to encourage USMCA’s early demise, but to ensure that the agreement will continue to serve America’s interests over the long run” by forcing the three countries to return to the negotiating table periodically.
Maybe so, but it also means that we’ll have to cross our fingers and hope there aren’t protectionist governments in power in Mexico City, Ottawa, or Washington, D.C., in 2036.
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As Americans celebrate Independence Day this week, state authorities will be armed with all sorts of new ways to restrict our liberty and control us. This includes several states starting to crack down on any cellphone use while driving—and giving police a new pretense for pulling people over.
Idaho, too, will ban drivers from using cellphones or any other handheld devices, including when they’re stopped at a traffic light or stop sign, starting today.
Similarly, in Indiana, touching a phone while driving is now off-limits. “You can however make phone calls using a hands free device, or there will be exceptions for calling 911 in an actual emergency situation,” notes WOMI.
In South Dakota, drivers are now banned from using their phones for anything other than talking—and cops can pull over people if they think they see them looking at a phone. (What could go wrong?)
“Texting and driving already was a secondary offense in South Dakota, meaning a driver had to be pulled over for another reason in order to be ticketed,” notes the Sioux Falls Argus Leader. “But the new state law expands banned uses to include taking photos, using the internet, posting to social media, reading emails and using phone apps, and makes it a primary offense, meaning drivers can be pulled over for only using a cell phone.” The offense is classified as a Class 2 misdemeanor.
South Dakota is also making it a Class 2 misdemeanor offense to join a funeral procession you don’t belong to.
Bad new laws taking effect today extend far beyond the roadways. For instance, new restrictions on buying vaping products, cigarettes, and firearms are also in order.
THE BAD
New vaping and smoking laws in Indiana. The state has more than 100 new rules taking effect today, including raising the legal age to purchase tobacco or vape products to 21, doubling the fine for people who sell these products to people under age 21, and banning new stores that sell tobacco from setting up shop within 1,000 feet of any school.
More gun regulations and higher tobacco taxes in Virginia. The state is launching a range of new gun regulations July 1, including banning the buying of more than one firearm in 30-day time span, requiring a background check for all gun purchases, and “allowing attorneys and law enforcement officers to apply for emergency orders to prohibit a person who poses a substantial risk of injury to himself or others from purchasing, possessing or transporting a firearm,” explains Fairfax County’s website.
The state is also raising taxes on cigarettes (from 30 to 60 cents per pack) and creating a new tax of 6.6 cents per milliliter of vape fluid.
Tax and fee increases are also coming, as are regulations that will burden small businesses still reeling from the COVID-19 lockdowns.
For instance, in California, 13 places—including both large cities (like San Francisco and Los Angeles) and smaller ones—will see minimum wage increases today, raising the rate for any business with one to 25 employees to between $13 and $15.40 per hour. Minimum wage hikes will be higher for bigger businesses and for hotels of any size.
Utah, meanwhile, is raising fees on people who bring in boats from out of state.
And authorities all over have cooked up a range of new ways to limit people’s civil liberties, impede due process, and exact revenge on violators.
Sex-crime panic in Colorado. “Use or dissemination of a recording or photo without consent” will now trigger a requirement that someone be added to the state’s sex offender registry. Meanwhile, paying for sex with someone under age 18 is now enough to be convicted of human trafficking. The state’s new human trafficking law also stipulates that not knowing a minor’s age is no defense.
Panhandling ban in Indiana. The state is making asking for money within 50 feet of an ATM, public monument, or business entrance a crime. (The American Civil Liberties Union is already suing.)
Illegal gambling expansion in Virginia. The state is widening its definition of illegal gambling to include “the playing or offering for play of any skill game.”
Tennessee ratchets up penalties for already dubious crimes. “A new law passed this year cracking down on those who flee an arrest,” reports 1057 News. “The measure requires an offender evading arrest to pay restitution if he or she recklessly damages government property.”
THE GOOD
But there’s some good news in this batch of July 1 law changes, too.
Virginia is decriminalizing marijuana, dropping mandatory minimums for license lawbreakers, stopping collection of marriage/race data, letting nurse practitioners perform abortions, ditching their ultrasound law, and extending absentee voting. In a report on the July 1 changes, the state explains that simple marijuana possession under the new law “provides a civil penalty of no more than $25,” whereas the old law “imposes a maximum fine of $500 and a maximum 30-day jail sentence for a first offense, and subsequent offenses are a Class 1 misdemeanor.” People in Virginia can also administer naloxone to someone who is overdosing without getting in trouble.
The state will also start:
“eliminat[ing] the mandatory minimum term of confinement in jail of 10 days for a third or subsequent conviction of driving on a suspended license”
removing a requirement that requires race to be listed on marriage and divorce reports
It is also eliminating a requirement that a woman seeking an abortion get an ultrasound before offering informed written consent.
In addition, Virginia will extend “no-excuse absentee voting” to a 45-day period. And it will start letting localities make their own decisions about monuments on public property.
Educator licensing simplified in Oklahoma. The state is making it easier for teachers licensed in another state to obtain a teaching certificate in Oklahoma.
Florida takes steps toward school choice and more humane treatment of prisoners. Florida is expanding tax credits and scholarship programs for private schools, as well as making some makes small attempts to better protect pregnant women who are incarcerated. (The law, however, still “maintains current provisions related to the use of restraints on pregnant prisoners” and allows for these restraints, and body cavity searches, so long as facilities have written policies pertaining to them.)
South Dakota loosens voter ID law, protects sexual assault evidence, and limits the criminalization of addiction during pregnancy. The state will start letting people use forms of ID other than a driver’s license to register to vote. In addition, DNA evidence collected in sexual assault investigations will have to be kept longer, up from one year to at least seven years, or until the victim reaches the age of 25. And “certain controlled substances offenses shall be dropped for a woman who is pregnant if she: receives adequate prenatal care from a licensed health care professional during her pregnancy; enrolls in an addiction recovery program before the child is born, remains in the program after the birth and completes the addiction recovery program,” notes the Argus Leader.
Tennessee takes a step toward deregulating health care: “State lawmakers voted this year to expand Tennessee’s Health Care Empowerment Act to allow all licensed medical professionals, instead of only physicians, to use direct medical care agreements without regulation by the insurance laws of this state,” notes 1057 News. “The Health Care Empowerment Act is designed to give healthcare consumers who are struggling to pay the increasing costs of premiums or who have been priced out of the market, an affordable option to contract directly with their physician for health care services. The new law holds that a person seeking medical care outside of an insurance plan, TennCare or Medicare programs and chooses to pay out of pocket, does not forfeit their coverage plan.”
THE WEIRD
Defying the good/bad binary are a few laws that are just plain weird or amusing. For instance, “Hoosier employers will no longer be able to force potential employees to get microchips implanted into their bodies,” notes RTV6 Indianapolis.
A little more than 26 years after it ushered in a new era of continent-wide trade, the North American Free Trade Agreement (NAFTA) is no more. Starting today, the United States-Mexico-Canada Agreement (USMCA) takes over.
The new trade deal is the result of more than two years of negotiation among the leaders of the three countries. It is the most substantial accomplishment of President Donald Trump’s trade policies, but it also demonstrates the extent to which Trump’s unorthodox views on trade have been successfully tempered. After taking office with a vow to tear up NAFTA, Trump ultimately settled for a minor revision to the status quo.
Still, the USMCA is a big deal. Canada and Mexico are the top recipients of U.S. exports. The United States imports more goods from those two countries than anywhere else except China. The deal will affect more than $1 trillion in annual trade between the U.S. and its two neighbors.
Here are three big things to know about the USMCA.
A small retreat for free trade and a win for protectionism.
Although Trump’s supporters sometimes claim that the president is actually pursuing a radical free-trade agenda and only using protectionist tactics to achieve it, the USMCA is strong evidence that Trump would prefer to see more barriers to trade.
For example, the administration pushed for the inclusion of stricter rules that make it more difficult for cars and car parts to cross national borders duty-free. Under the USMCA, 75 percent of the component parts of vehicles would have to be produced in North America to avoid tariffs, and 40 percent would have to be built by workers earning at least $16 an hour—effectively putting a minimum wage on Mexican manufacturing plants with lower wages.
Rather than completely reshaping their supply chains, automobile manufactures are likely to just pay the tariffs. As a result, the International Trade Commission (ITC) estimates that consumer prices on cars in the U.S. will increase, resulting in an estimated 140,000 fewer vehicles sold.
The USMCA also gives Trump (and future presidents) greater powers to impose new tariffs against Canada and Mexico. Already, the Trump administration is looking to do exactly that in response to claims that aluminum imported from Canada have increased this year (even though imports of the metal are still below 2017 levels and well within historical norms). But isn’t the point of a trade deal to encourage more trade?
All trade deals are managed trade, of course, but relative to the standards set by NAFTA, the USMCA seems like a step backward.
2. Crucial updates to protect the flow of data across North American borders.
When NAFTA launched in 1994, there were a few dozen websites online. Today there are…a lot more. Importantly, the USMCA includes a new chapter of provisions aimed at digital trade, ensuring that real-world international borders won’t start popping up in cyberspace.
For example, the USMCA bans the creation of so-called “data-localization requirements”—rules that limit how much traffic can flow from a data center in one country to servers in another. The new agreement also prohibits tariffs on data transfers, and it includes a provision shielding tech companies from liability for content, similar to the protections offered by Section 230 of the Communications Decency Act.
These are necessary and worthwhile updates to NAFTA that will give businesses more certainty about cross-border digital work.
3. More trade, but also more uncertainty.
The ITC’s analysis estimates that the USMCA deal will boost U.S. gross domestic product by about $68 billion while adding an estimated 176,000 jobs in the United States, with the manufacturing sector set to benefit the most. Exports to Canada and Mexico are expected to increase by between 5 and 7 percent.
Politics will always be a threat to free trade, but one of the more worrisome elements of the USMCA is that it will expire after 16 years. That creates built-in uncertainty. Jared Kushner, Trump’s son-in-law and a key White House adviser, has argued that the trade deal’s sunset clause “is not to encourage USMCA’s early demise, but to ensure that the agreement will continue to serve America’s interests over the long run” by forcing the three countries to return to the negotiating table periodically.
Maybe so, but it also means that we’ll have to cross our fingers and hope there aren’t protectionist governments in power in Mexico City, Ottawa, or Washington, D.C., in 2036.
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