Month: January 2022

It’s COVID Year 3 and the CDC Is Still Confused and Confusing


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Trust the experts? If the pandemic were high school, we’d be juniors by now. Yet the fact that we’ve entered our third calendar year of full-blown pandemic—yes, technically it started in 2019, but the World Health Organization declared it a pandemic in 2020—feels surreal and almost unbelievable. While a lot has changed since early 2020, many things remain stubbornly and depressingly similar.

Schools are still closing without much warning, plagued by both politics and logistics. COVID-19 tests are still hard to come by. We’re still arguing about how to keep people in jails and prisons safe. Shows and festivals are once again shutting down. Hospitals are being overwhelmed. Flights are getting canceled.

And public health officials still can’t get it together. Their guidance is slow-moving, prone to flip-flopping, and weird, often out of line with scientific best practices, practical behavior, or both.

Take the latest from the U.S. Centers for Disease Control and Prevention (CDC), which since the start of the pandemic has been providing a master class in how to confuse the American public. For a long time, the agency recommended that Americans who test positive for COVID-19 quarantine for 10 days.

We now know that most infected people are not contagious for that long—here’s a great thread about testing and contagiousness that elaborates on this. Which means that officials have been asking many people to disrupt their lives for days longer than is necessary.

We’ve known this for a while. So, last week—finally—the CDC shifted course from its 10-day recommendation, saying five days of isolation were sufficient.

“People with COVID-19 should isolate for 5 days and if they are asymptomatic or their symptoms are resolving (without fever for 24 hours),” the updated CDC guidance says. “The change is motivated by science demonstrating that the majority of SARS-CoV-2 transmission occurs early in the course of illness, generally in the 1-2 days prior to onset of symptoms and the 2-3 days after.”

Great, right?

Welllllll…kind of. The agency forgot to include in its advice one important step: a negative COVID-19 test. Meanwhile, it did include some scientifically dubious (or at least incomplete) advice.

The CDC says infected people should follow isolation with “5 days of wearing a mask when around others to minimize the risk of infecting people they encounter.” But cloth masks, no matter how well-fitting, likely aren’t enough to stop transmission. Even common surgical masks may not do that; for effective mitigation, N95 masks are where it’s at. Still, officials refuse to say much about what types of masks people should wear, instead preferring the simple but potentially dangerous message that general masking is protective. This gives people a false sense of security and—if they’ve read much about transmission and masking—makes the agency seem scientifically unreliable.

Meanwhile, something that actually is consequential for determining—and stopping—potential contagiousness is whether a rapid antigen test comes back negative. Yet this was left out of the CDC’s updated advice last week.

Now, top White House COVID-19 adviser Anthony Fauci says the CDC is considering updating its recommendation to say that a five-day isolation period and a negative rapid test are recommended.

The paucity of rapid tests in America may explain why the CDC didn’t put that in its new guidance already. Unlike in Europe, rapid tests here remain hard to come by and relatively expensive. And why? Once again, we can blame the federal government. The U.S. Food and Drug Administration has been painfully slow to approve new rapid tests.

Regardless of why the CDC didn’t recommend testing before ending isolation, the result is once again making the agency appear wavering and unsure.

The oversight—and potential correction—marks the latest in a line of questionable CDC guidance, regarding everything from how the virus spreads to masking to what to do if you are infected. Since the start of the pandemic, messaging from the CDC and other government actors has been confused and confusing. At every step, it seems the agency has managed to undermine public confidence or put politics over clarity.

Is it any wonder many Americans aren’t keen to simply “trust the experts” anymore?

(If you’d prefer to end on a more positive note, here’s The New York Times with some ways that this point in the pandemic is not the same as two years ago and some reasons for hope.)

FREE MINDS

The conspiracy theory spiral. In two new studies, researchers found that “increases in conspiracy beliefs predicted subsequent increases in conspiracy beliefs, suggesting a self-reinforcing circle,” write researchers in the journal Personality and Social Psychology Bulletin.

FREE MARKETS

The student loan forgiveness debate is raging again. In his newsletter, Matthew Yglesias—who formerly supported such action—makes good arguments against this plan:

The economy is not depressed, and instead the Federal Reserve is pivoting to fight inflation. That means student loan forgiveness in 2022 is a purely distributive issue — one that will shift resources from the majority of Americans with no student loan debt to the minority of Americans who have it.

Both the debtors and the non-debtors are highly heterogeneous groups, but it’s pretty clear that the non-debtors are both more numerous and poorer on average.

So while there are certainly lots of individual cases where debt relief sounds like an appealing idea, under the current circumstances the case for broad debt relief has become extremely weak. There’s basically no other situation in which progressives would talk themselves into this kind of idea, which is currently being propped up with some very odd math about the racial wealth gap.

But I’d also say that the discourse around this seems to me to be largely driven by a correct sense that the higher education finance system in the United States is messed up and bad. The problem is that the form of debt relief that is being contemplated — one with no forward-looking reforms and in which even the most dysfunctional or abusive institutions still get paid in full — won’t fix anything about the system and could make it worse. Last but not least, I think the fascination with this idea represents a kind of unhealthy obsession with executive branch unilateralism. It’s important to understand and exploit the powers of the presidency, but the thing that sane people want here is not achievable through those means. What you need is a legislative coalition for reform, and probably a bipartisan one at that.

More here.

QUICK HITS

• The “plot” to kidnap Michigan Gov. Gretchen Whitmer was an FBI creation, argue defense lawyers for those charged with conspiracy.

• Violence against the government can sometimes be justified, say one-third of Americans polled by The Washington Post. This is up from 23 percent saying so in a 2015 poll and 16 percent back in 2010.

• Sixty-two percent of people in a recent CBS News poll say they don’t want Donald Trump to run for president again:

• States around the country are raising their minimum wages this week. “Starting Saturday, 20 states saw a rise in their minimum wages take effect, while New York’s increase began Friday,” notes CNN. (See also: “How Economists Learned to Love Minimum Wage Hikes.”)

• “Copyright doesn’t need 95 years to get the job done,” argues Alan Cole at Full Stack Economics.

• Goodbye “genetically modified” food, hello “bioengineered” food.

• France is banning plastic packaging on produce.

• Dutch protesters stand up against new lockdown measures in the Netherlands.

• Another Hong Kong news outlet—Citizen News—is shutting down among diminishing press freedom. Its closure comes “days after police raided and arrested seven people for sedition at a separate pro-democracy news outlet,” notes the Associated Press. “Citizen News is the third news outlet to close in recent months, following pro-democracy newspaper Apple Daily and online site Stand News.”

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Small Caps Could Be In Trouble In 2022

Small Caps Could Be In Trouble In 2022

Authored by Lance Roberts via RealInvestmentAdvice.com,

“Small caps,” or small-capitalization companies, could be in trouble next year if signs from the NFIB survey are correct.

In September 2019, I wrote “NFIB Survey Trips Economic Alarms,” It was just a few short months before the U.S. economy fell into a deep recession. The latest NFIB survey sends a strong warning to investors piling into small-cap stocks.

However, let me recap why the NFIB data is essential to investors. (Data via SBA.Gov)

“There are currently 32.5 million small businesses in the United States. Small businesses (defined as fewer than 500 employees) account for 99% of all enterprises, employ 61 million people, and account for nearly 47% of private-sector employment.” Data as of Dec 2021 

The chart below shows the number of firms that have employees versus none. (Non-employer firms account for tax-shelters, trusts, estate plans, etc.)

A Word On The BLS Employment Report

Notice that the number of firms that have employees remains relatively unchanged. The data below shows the number of births and deaths of businesses over time.

That data is crucial in calculating the employment data for the U.S. When the BLS reports employment data, part of the calculation includes an “adjustment” based on the births of new (small cap) firms. In theory, if the economy is birthing new businesses each month, those businesses should hire at least one employee. However, as we see above, the vast majority of firms, and the only type growing in number each year, have ZERO employees.

Such goes to answer why there is also a significant discrepancy between the labor force participation rate and the BLS’ report of “full employment.” We can see the problem if we assume the SBA’s data is correct and then adjust the BLS data for lack of growth in businesses with employees.

Despite all the headlines about Microsoft, Apple, Tesla, and others, the critical point is that small businesses drive the economy, employment, and wages. Therefore, what the NFIB says is relevant to the economy, and eventually, the stock market.

NFIB Shows Confidence Drop

In December, the survey declined to 98.4 from a peak of 108.8. Notably, many suggest the drop was “politically driven” by conservative-owned businesses. While there was indeed a drop following the election, the decline continues what started in 2018.

That decline in confidence has much to do with the artificial supports put into the economy following the pandemic-driven shutdown and the subsequent surge in inflation. As a result, the number of firms expecting an economical improvement over the next 2-quarters has steadily declined dramatically.

Such should not be surprising given the surge in inflation pressures on input costs. Notably, it isn’t easy for smaller businesses to pass these higher input costs, particularly as waning fiscal stimulus impedes future consumption.

Planning & Doing Are Two Different Things

As noted, since the pandemic-driven shutdown, the massive flush of liquidity created a “demand boom” that outstripped manufacturers’ ability to produce “supply.” That imbalance of “pull-forward” consumption created an inflationary surge which offset the benefits of the “free money” given to lower-income households. As shown, real disposable incomes crashed back to the long-term trend, which will slow future consumption rates. (The gap above the trend in retail sales will close)

Small businesses are highly susceptible to economic downturns and inflationary surges since they don’t have access to public markets for debt or secondary offerings. As such, they tend to focus heavily on operating efficiencies and profitability. In other words, when answering surveys, business owners are always optimistic; otherwise, they would not be running a business. However, there is a big difference between “saying” and “doing.”

If businesses expect a massive surge in “pent up” demand, they will prepare for it. Such includes increasing capital expenditures to meet anticipated demand, increasing employment, and stocking up on inventories. While CapEx improved modestly from the pandemic shutdown, as would be expected, the downturn in economic optimism suggests a reversal in 2022.

There are important implications to the economy since “business investment” is a GDP calculation component. Small business capital expenditure “plans” have a high correlation with real gross private investment. The plunge in the economic outlook will suppress “CapEx” spending. It should be no surprise to see gross private investment on the decline.

As stated, “expectations” are very fragile; as such, we are seeing important diverges where it will matter the most.

Employment To Remain Weak

If small businesses think the economy is “actually” improving over the longer term, they would also be sharply increasing employment. Given business owners are always optimistic, over-estimating hiring plans is not surprising. However, reality occurs when actual “demand” meets its operating cash flows.

To increase employment, which is the single most considerable cost to any business, you need two things:

  1. Confidence the economy is going to continue to grow in the future, which leads to;

  2. Increased production of goods or services to meet growing demand.

Currently, there is little expectation for a strongly recovering economy. Such is the requirement for increasing employment and expanding capital expenditures. Not surprisingly, actual hiring is running well short of expectations.

Now you can understand the biggest problem with artificial stimulus.

Yes, injecting stimulus into the economy will provide a short-term increase in demand for goods and services. When the funds are exhausted, the demand fades. However, small business owners understand the limited impact of artificial inputs. As such, they will not make long-term hiring decisions, an ongoing cost, against a short-term artificial increase in demand. 

Employment gets driven by demand, which we can explore through reported sales.

The Big Hit Is Coming

Retail sales make up about 40% of personal consumption expenditures (PCE), roughly 70% of the GDP calculation. Each month the NFIB tracks actual sales over the last quarter and expected sales over the next quarter. There is always a significant divergence between expectations and reality.

As noted, stimulus leads to a short-term boost in consumption; the impact of higher inflation, lack of wage growth, and weak employment growth will suppress consumption longer-term.

The weakness in actual sales explains why employers are slow to hire and commit capital for expansions. As noted, employees are among the highest costs associated with any enterprise, and “capital expenditures” must pay for themselves over time. The actual underlying strength of the economy, despite cheap capital, does not foster the confidence to make long-term financial commitments to anything other than automation.

Despite mainstream hopes, business owners must deal with actual sales at levels more commonly associated with ongoing recessions rather than recoveries. 

Of course, this remains our argument over the last couple of years. But, while the media keeps touting the strength of the U.S. consumer, the reality is quite different. If such were indeed the case, there would be no requirement to inject billions of dollars in stimulus to keep individuals afloat.

So what does all this have to do with small-cap stocks?

Small Caps May Disappoint

This background makes it easier to understand why small-cap stocks failed to keep up in 2021 and may continue to underperform in 2022.

At the beginning of 2021, the expectations were for surging economic growth, and business confidence was high. However, as the reality of deficit-based and non-productive spending set in, confidence waned. The subsequent deterioration in business confidence is not surprising, and importantly, small-cap stocks have a high correlation to small-business confidence. 

The reality is that despite media commentary to the contrary, debt-driven government spending programs have a dismal history of providing the economic growth promised. As a result, the disappointment of economic and earnings growth over the next year is almost a guarantee.

Rising inflation, surging labor costs, and concerns over additional socialistic policies and mandates from the White House will continue to weigh on small business confidence. Business owners need stability within which to operate and a constructive environment to make long-term commitments to employment and business development. When those concerns get coupled with weak growth in actual sales, you can understand their caution.

Most importantly, there is a massive difference between “getting back to even” versus “growing the economy.” One creates economic prosperity by expanding production, which creates consumption. The other does not.

Please pay attention to small-business owners; they may tell you something fundamental about 2022.

Tyler Durden
Mon, 01/03/2022 – 09:25

via ZeroHedge News https://ift.tt/3EQEaXh Tyler Durden

Dr. Fauci Warns CDC Might Change Quarantine Guidelines Yet Again

Dr. Fauci Warns CDC Might Change Quarantine Guidelines Yet Again

Americans around the country are already bewildered by the CDC’s constantly-shifting quarantine guidelines. But for some reason, the agency feels the need to further complicate things with yet another change.

As schools struggle with empty classrooms after the winter break as teachers and students fill quarantine lists, and thousands of flights continue to be canceled, Dr. Anthony Fauci said on Sunday that the agency is preparing to change its quarantine guidelines once again by adding that patients need a negative test result if they’re asymptomatic and want to exit quarantine after just five days.

But for some reason, Dr. Anthony Fauci wants to further complicate things. To wit, the good doctor teased on Sunday that the CDC was considering allowing asymptomatic COVID sufferers to end isolation after just 5 days if they test negative.

Unfortunately, millions of Americans have already needed to end isolation and get back to work even without a test since tests are hard to come by the guidance from the CDC has encouraged people to get back to work to stop the economy from freezing up. Unions have criticized this change, saying it was designed to help employers and prevent staffing shortages over protecting people.

“There has been some concern about why we don’t ask people at that five-day period to get tested,” Fauci told ABC News. “That is something that is now under consideration”

According to the CDC, the decision would be “low risk” because the likelihood of passing COVID on falls dramatically after 5 days of infection. Also, the CDC is aware of the pushback about the change in isolation guidance, but Fauci told ABC News that despite this, the agency could announce something in the next couple of days.

During a later interview with CNN, Fauci said that it was “reasonable” to test infected people who have no symptoms during the second half of their quarantine.

“There’s no doubt that you do want to get people out into the workplace if they are without symptoms,” he told CNN. “There’s a big picture of trying to do it in a way that is scientifically sound, but that also gets people back to work.”

Dr. Fauci added that the CDC is expected to “clarify” its guidance soon.

Last week, American health officials cut the recommended isolation time to five days from 10, a decision that elicited complaints from some, and cheers from others (including the millions of asymptomatic patients who had been forced to isolate despite not being sick themselves). But apparently, Dr. Fauci has faced “pushback” over this decision.

Tyler Durden
Mon, 01/03/2022 – 09:05

via ZeroHedge News https://ift.tt/3qGCXN7 Tyler Durden

“No One Has a First Amendment Right to Physically Assault Another,”

From State v. Locke, decided Thursday by the Ohio Court of Appeals, in an opinion by Judge Sean Gallagher, joined by Judges Mary Boyle and Michelle Sheehan:

On the evening of the debate between the then-candidates for President of the United States in September 2020, Locke participated in a protest near the debate area. Locke was detained by police officers for a reason that has not been explained by the record or the parties. During this detention, Locke “kneed” Sergeant Sean Dial after he asked her to sit down. Locke was arrested and charged with a violation of R.C. 2903.13(A) for attempting to or actually inflicting physical harm upon a law enforcement officer, a fourth-degree felony offense and an enumerated “offense of violence” under R.C. 2901.01(A)(9). Locke was one of only two arrests made on the evening of the presidential debate.

During the pretrial proceedings, Locke’s attorney of record negotiated a plea arrangement with the state. Approximately one month before the scheduled trial date, at the final pretrial conference, Locke agreed to plead guilty to obstruction of official business under R.C. 2921.31, a felony of the fifth degree because Locke agreed that her violation created “a risk of physical harm to any person.” There is no dispute that the trial court conducted a thorough and complete plea colloquy under Crim.R. 11, which included, in pertinent part, Locke advising the court that she was satisfied with her attorney’s representation during the pretrial proceedings.

During the sentencing hearing, postponed to permit the victim’s attendance, Sgt. Dial stated that he did not provoke or otherwise instigate Locke’s attempt to hurt him. In fact, nothing in the record indicates that any force, much less unreasonable or excessive force, was used to detain Locke. For her part, at the time of sentencing Locke accepted responsibility for her conduct and apologized to Sgt. Dial for not “paying [him] the respect [he] deserve[s], not only as a police officer, but as a human being.” After considering the statements and the record, the trial court sentenced Locke to serve a one-year term of community control sanctions that included ten days of jail that were served in Cuyahoga County Jail over the course of five subsequent weekends, fines, and court costs. Locke did not directly appeal her conviction.

One month after being sentenced, Locke retained new counsel who filed a motion to withdraw her guilty plea. In her motion, Locke claimed her previous attorney failed to adequately represent her and explain the ramifications of her pleading guilty to a fifth-degree felony offense. “Without divulging specific facts related to the incident,” Locke claimed that her attorney failed to explain the existence of certain challenges to her initial detention, failed to disclose that her case implicates rights guaranteed under the First Amendment, and that her defense counsel failed to “defend the charge on the elements of the offense itself.”

Further, Locke had become concerned about the impact the felony conviction will have on her future; she claimed in her appellate briefing that a college scholarship she received from The School of Art Institute of Chicago, beginning in the fall term of 2020, had been retracted as a result of the conviction. That claim is not supported by any verified statement or other evidence presented to the trial court and, in fact, is contradicted by the sentencing transcript in which it was disclosed that she declined to attend the institution due to financial reasons….

Locke’s concerns with what her trial counsel did not explain are misplaced, even if accepted as true.

No one has a First Amendment right to physically assault another, especially a law enforcement officer acting according to their official responsibilities. Wisconsin v. Mitchell, (1993) (“A physical assault is not … expressive conduct protected by the First Amendment”), and NAACP v. Claiborne Hardware Co. (1982) (“The First Amendment does not protect violence”). Further, as it pertains to law enforcement officers, under well-settled Ohio law, “‘[i]n the absence of excessive or unnecessary force by an arresting officer, a private citizen may not use force to resist arrest by one he knows, or has good reason to believe, is an authorized police officer engaged in the performance of his duties, whether or not the arrest is illegal under the circumstances.’“

Although we emphasize that there are no arguments, much less any supporting evidence, that police officers illegally detained Locke before her assault, even if we took the extraordinary step of presuming the invalidity of the initial detention against which Locke claims she could defend on the merits, the outcome would be the same.

Irrespective of the circumstances leading to her initial detention and arrest, her unprovoked use of physical force in response to a benign request is not justified, nor would it be excused under First Amendment jurisprudence. More to the point, even if Locke could legally challenge the initial detention, the legality of her initial detention would not have justified her unprovoked conduct in attempting to strike or actually striking a police officer, which in and of itself justified her arrest.

From all accounts, Locke resorted to physical force against an officer who had asked her to sit down after she was detained for a reason Locke has failed to disclose—Locke’s appellate briefing, in fact, refuses to divulge the underlying conduct that led to her initial detention, and that information is not part of the appellate record since the detention itself was not an issue during the change-of-plea colloquy or the sentencing hearing. Regardless of the nature of the initial detention, the First Amendment does not preserve an offender’s right to physically assault a law enforcement officer. Even if we were to presume that Locke’s trial counsel failed to explain the well-settled law precluding her from asserting her First Amendment right or the privilege to resist against excessive force, that failure could not support the claimed existence of a manifest miscarriage of justice in support of the belated motion to withdraw the guilty plea….

From the limited record presented, Locke’s unprovoked aggression was the result of being told to sit down and, therefore, cannot be considered the product of a struggle in which it could be claimed that the strike was “accidental.” Locke’s unspecified claim to having defenses to the merits of the assault charge and arrest are without merit. Locke has not identified any defenses to the underlying assault charge or strategies for trial that would have been available in support of her claim that but for the failure of her trial counsel to explain those factually inapplicable defenses, she would not have pleaded guilty to the felony charge….

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Food Costs Likely To Rise as Farmers’ Expenses Shoot Up


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Famine is one of the four horsemen of the apocalypse for good reason; hunger was an unwelcome companion for most of human history. The threat it poses declined in recent decades because of innovations in agriculture and increasing prosperity. But the largely policy-inflicted economic disruptions of the past two years partially reversed progress made towards feeding the world and alleviating poverty. Now, with food prices on the rise, there’s a danger that hunger will follow. 

“I want to say this loud and clear right now, that we risk a very low crop in the next harvest,” Svein Tore Holsether, the CEO and president of fertilizer giant Yara International, warned in November. “I’m afraid we’re going to have a food crisis.”

Holsether worried about the rising cost of energy and especially of natural gas, which is needed to make ammonia from which urea, a key fertilizer component, is synthesized.

“Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade,” The New York Times agreed a month later. “People and industries of all kinds are feeling the shocks.”

A combination of always-unpredictable nature, bad policy, and busted supply chains (also largely from policy decisions) dramatically hiked prices for natural gas and its products. Prices for alternatives to urea are also rising because of demand and parallel political decisions. The U.S. Treasury agreed in December to suspend sanctions on potash from Belarus from which about 20 percent of the world’s supply of the stuff is sourced, but other high trade barriers remain in place for fertilizer and its components. The result is that major inputs for producing the food that we eat are becoming increasingly dear when they can be found at all.

“Among farmers and ranchers, very few topics are being discussed as much as the skyrocketing cost of fertilizer and increasing concerns regarding availability,” the American Farm Bureau reports.

If that’s frightening for American farmers and the people who consume their products, it’s potentially disastrous for the rest of the world. 

“High fertilizer prices could exert inflationary pressures on food prices, compounding food security concerns at a time when the COVID-19 pandemic and climate change are making access to food more difficult,” the World Bank notes.

That cautionary tone is a little behind the times, since global food prices were already up by an average of 27.3 percent from a year earlier at the end of November, according to the UN Food and Agriculture Organization’s food price index. Worse, people’s ability to cope with rising food prices has been hit by pandemic-policy-induced setbacks to decades of increasing prosperity.

“In 2021, the average incomes of people in the bottom 40 percent of the global income distribution are 6.7 percent lower than pre-pandemic projections, while those of people in the top 40 percent are down 2.8 percent,” the World Bank noted in October. 

A mix of increasing poverty and rising food prices is a dangerous cocktail for a troubled planet.

“Higher farm input costs, expensive shipping and good demand provide for a grim combination,” predicts Holland’s agriculture-oriented Rabobank in its recent report, Outlook 2022: Hell in the Handbasket. “We should see these inflationary pressures upstream move along the supply chain to reach consumers in 2022, with uncertain social consequences.”

Not all of the factors that led us to this unfortunate point were foreseeable or preventable, of course. Nobody could have anticipated that Hurricane Ida would disrupt the production of natural gas “more than any other hurricane over the past ten years” in the words of the U.S. Energy Information Administration. Nor could anybody have known that low winds would hobble Europe’s growing reliance on renewable energy or that drought would kneecap hydropower production in China and elsewhere, throwing those regions back to fossil fuels in competition with other world users. 

What was predictable, though, is that nature wouldn’t be predictable. Plans dependent on winds and rains adhering to production schedules were doomed to fail eventually. That they failed after policymakers had already disrupted manufacturing, shipping, and overall economic activity in response to COVID-19 just accelerated an unavoidable reckoning.

“In the fall, soaring electricity demand led the southwestern province of Yunnan, a key phosphate producer, to order drastic production cuts by energy-hungry industries, including fertilizer,” The New York Times reported.

“Major fertilizer producers Yara International ASA and CF Industries Holdings Inc. said soaring energy costs are forcing them to halt some output of nutrients crucial for growing crops,” BloombergQuint noted of the effects of Europe’s energy costs.

Curbs on fertilizer exports from China and Russia add to the problem, as the governments of those countries reserve limited supplies for their internal markets. But the U.S. suffers self-inflicted wounds from trade barriers on foreign products.

“Mosaic has almost single-handedly erected an insurmountable tariff barrier to keep its top competitors in Morocco and Russia out of the U.S. phosphate market,” the National Corn Growers Association objected in a December letter to fertilizer giant Mosaic company over its cultivation of policy-making friends. “Only 15% of phosphorous imports now come into the U.S. without tariffs.”

The Biden administration also discourages the production of fossil fuels. It does so with the idea of encouraging a national move to renewable energy, but one (presumably) unforeseen consequence is to tighten the supply of materials required for making fertilizer needed to grow food.

“Heavy-handed interference in market economies tends to produce the same pathologies we see in socialist economies, including shortages and inflation,” British economist Philip Pilkington commented earlier this year.

That interference is tempting for government officials who insist on seeing the world as something they can fine-tune according to their policy preferences. Inevitably, they’re proven wrong, though usually not in disastrous ways. This time though, economic meddling looks to be amplifying nature’s unpredictability to usher in a hungry new year.

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The Coming Retirement Crisis Will Affect Everyone

The Coming Retirement Crisis Will Affect Everyone

Authored by Bruce Wilds via Advancing Time blog,

We are on the cusp of a retirement crisis that will affect everyone. Far too many promises have been made and the demographics we face do not bode well for a bright future. The answer that some people tout is we should have more children or open the borders. This is based on the idea we need more workers and ignores many other factors feeding into this issue. There is simply no way “more children” or workers can ever pay enough into the system to fulfill the promises that have been made. 

The competition for programs from the government to support the needs of different generations is about to explode as young and old Americans reach out for more help. Much of our problems stem from a slew of bad policies either driven by stupidity, corruption, or an unwillingness to accept the reality you can postpone a reckoning for only so long. Investors and the public at large suffer from a “recency bias of hope” that tends to blind them from unpleasant long-term realities.

The coming together of surging investment risk, an interrupted business cycle, and demographics are coming together to form the perfect storm. To clarify, much of the wealth in America is held in the hands of the baby boomers that have just or are about to retire, and over the years, many have moved into risky investment in search of yield. It has been years since we have had a major recession so sooner or later, it is logical one will arrive. Last, but not least, we are now seeing demographics play a larger role in the economy as boomers downsize (sell assets) and cut spending.

While we look upon a world of wealth, we also see a world of debt. Unfortunately, over the last few decades growing inequality has placed much of the wealth in the hands of a few and distributed the debt in places where it will come back to bite us. Below are a few ugly indicators highlighting some frightening imbalances.

Facts Indicating Problems Ahead

  • Demographics show older consumers tend to downsize (sell assets) while spending less

  • The boom-bust business cycle has been largely interrupted by surging government spending

  • Stock buybacks continue to set new records and drive stock markets higher 

  •  The top one-percenters own more than 90% of America’s wealth. Specifically, the 1% collectively own $43.27 trillion, while the bottom 90% earn $40.28 trillion combined.

  • Moody’s estimate of Illinois’ retirement debts, made up of pension and retiree health shortfalls at the state and local level, hits $530 billion in 2020

The example of the pension and retiree health shortfalls in Illinois is well documented. Sadly, many other states and local governments have the same problem. This is despite a massive multi-year stock market rally and huge tax hikes that went to pension funds. It is difficult to imagine how many of these pension plans can avoid default. This is already baked into the cake.

The financial giants aided by media have created the myth that everyone is making money when they invest in a retirement plan. Financial companies often forget to tell investors that when they invest in a 401 plan, the risk falls directly onto the individual owning the plan. Adding injury to insult, looking deeper into these schemes you will find outlandishly high fees buried under a slew of different names.

Often the magic of compounded returns is overwhelmed by the tyranny of compounded cost. A report by Robert Hiltonsmith claims these are a retirement savings drain. Hiltonsmith revealed a slew of pay-to-play and hidden kickbacks dwelling deep in the details of long difficult and boring documents. These tricks used to drain wealth from a customer’s account helps to explain how financial companies pay for all those commercials and slick pamphlets constantly being thrown before us. 

A big problem looms for those Americans that continue to believe disaster is something that hits other people but not them. Sadly, whether you have invested in a pension plan or a 401 account, prior economic crises show there is no guaranty that you will ever see your money again or if you do, that it will have retained its buying power. The risk is not only in stocks, but also lurks in bonds. Investors in bonds face a huge risk of default if they buy junk bonds and a good possibility of getting crushed if interest rates rise.

This Did Not Work For Japan And Is Not Working For America

Based on how Japan has fared over the last several decades it is difficult to see the green shoots of a global economic renaissance suddenly spring forth as the result of even lower interest rates. In fact, the next economic downturn will likely envelop the planet and may last forever and a day. This is because central bank intervention and manipulation often have negative unintended consequences. People often discount how lucky Japan has been following its economic bubble burst in 1992 to be located next to China. Because of China’s years of booming growth, Japan was able to mitigate much of the pain it was forced to endure.

The ramifications of a retirement crisis will affect everyone. When older people lose their savings or watch their wealth fall they have little time to earn more. They cut back or need help to survive. When these people sell their assets it could cause deflation but that is not a certainty. My feeling is inflation is strong enough it will only slow its rate as money flows to tangible assets and away from paper and promises. Regardless of how you view this, it is not a recipe for strong growth. 

Tyler Durden
Mon, 01/03/2022 – 08:44

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Hong Kong Stocks Slip, Worst Start In Years On Evergrande, Alibaba, Omicron

Hong Kong Stocks Slip, Worst Start In Years On Evergrande, Alibaba, Omicron

A confluence of factors on Monday, the first trading session of 2022, marked the worst start to a year for Hong Kong stocks since 2019. 

First, Evergrande Group shares were suspended in Hong Kong after Chinese media reported the heavily indebted property developer was forced to demolish 39 buildings within ten days because it illegally obtained building permits. 

Evergrande has also missed several deadlines on $20 billion of international bonds and defaulted on its debt (read: here & here). The troubled property developer has a mindboggling $300 billion in outstanding debt. 

Then Alibaba Group Holding Ltd. fell 3% after new data showed an increasing amount of investors converted their American Depositary Receipts into Hong Kong shares. 

“Sentiment is generally still weak for China’s consumer-facing tech companies, not just from the risk of further regulations, but also difficult macro conditions due to fresh Covid-19 outbreaks and weaker consumption,” said Vey-Sern Ling, a senior analyst at Union Bancaire Privee.

The MSCI Asia Pacific Index was flat on the session, weighed down by consumer discretionary and healthcare stocks. Hong Kong slid half a percent on the first trading day of the year, marking the worst start to a year since 2019.

There’s also concern about the spread of COVID-19 in Hong Kong as health officials administered more than 7,000 vaccines over the weekend, the most since November. 

“Any further restrictions to curb virus spreads remain a key risk to watch, and more clarity will be sought from economic data over the coming weeks to validate the resilience of the economy” of the U.S., said Jun Rong Yeap, a strategist at IG Asia Pte in Singapore.

Thin liquidity was another significant factor in slumping Hong Kong stocks as China and Japan were shut for holidays. 

Tyler Durden
Mon, 01/03/2022 – 08:36

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“No One Has a First Amendment Right to Physically Assault Another,”

From State v. Locke, decided Thursday by the Ohio Court of Appeals, in an opinion by Judge Sean Gallagher, joined by Judges Mary Boyle and Michelle Sheehan:

On the evening of the debate between the then-candidates for President of the United States in September 2020, Locke participated in a protest near the debate area. Locke was detained by police officers for a reason that has not been explained by the record or the parties. During this detention, Locke “kneed” Sergeant Sean Dial after he asked her to sit down. Locke was arrested and charged with a violation of R.C. 2903.13(A) for attempting to or actually inflicting physical harm upon a law enforcement officer, a fourth-degree felony offense and an enumerated “offense of violence” under R.C. 2901.01(A)(9). Locke was one of only two arrests made on the evening of the presidential debate.

During the pretrial proceedings, Locke’s attorney of record negotiated a plea arrangement with the state. Approximately one month before the scheduled trial date, at the final pretrial conference, Locke agreed to plead guilty to obstruction of official business under R.C. 2921.31, a felony of the fifth degree because Locke agreed that her violation created “a risk of physical harm to any person.” There is no dispute that the trial court conducted a thorough and complete plea colloquy under Crim.R. 11, which included, in pertinent part, Locke advising the court that she was satisfied with her attorney’s representation during the pretrial proceedings.

During the sentencing hearing, postponed to permit the victim’s attendance, Sgt. Dial stated that he did not provoke or otherwise instigate Locke’s attempt to hurt him. In fact, nothing in the record indicates that any force, much less unreasonable or excessive force, was used to detain Locke. For her part, at the time of sentencing Locke accepted responsibility for her conduct and apologized to Sgt. Dial for not “paying [him] the respect [he] deserve[s], not only as a police officer, but as a human being.” After considering the statements and the record, the trial court sentenced Locke to serve a one-year term of community control sanctions that included ten days of jail that were served in Cuyahoga County Jail over the course of five subsequent weekends, fines, and court costs. Locke did not directly appeal her conviction.

One month after being sentenced, Locke retained new counsel who filed a motion to withdraw her guilty plea. In her motion, Locke claimed her previous attorney failed to adequately represent her and explain the ramifications of her pleading guilty to a fifth-degree felony offense. “Without divulging specific facts related to the incident,” Locke claimed that her attorney failed to explain the existence of certain challenges to her initial detention, failed to disclose that her case implicates rights guaranteed under the First Amendment, and that her defense counsel failed to “defend the charge on the elements of the offense itself.”

Further, Locke had become concerned about the impact the felony conviction will have on her future; she claimed in her appellate briefing that a college scholarship she received from The School of Art Institute of Chicago, beginning in the fall term of 2020, had been retracted as a result of the conviction. That claim is not supported by any verified statement or other evidence presented to the trial court and, in fact, is contradicted by the sentencing transcript in which it was disclosed that she declined to attend the institution due to financial reasons….

Locke’s concerns with what her trial counsel did not explain are misplaced, even if accepted as true.

No one has a First Amendment right to physically assault another, especially a law enforcement officer acting according to their official responsibilities. Wisconsin v. Mitchell, (1993) (“A physical assault is not … expressive conduct protected by the First Amendment”), and NAACP v. Claiborne Hardware Co. (1982) (“The First Amendment does not protect violence”). Further, as it pertains to law enforcement officers, under well-settled Ohio law, “‘[i]n the absence of excessive or unnecessary force by an arresting officer, a private citizen may not use force to resist arrest by one he knows, or has good reason to believe, is an authorized police officer engaged in the performance of his duties, whether or not the arrest is illegal under the circumstances.’“

Although we emphasize that there are no arguments, much less any supporting evidence, that police officers illegally detained Locke before her assault, even if we took the extraordinary step of presuming the invalidity of the initial detention against which Locke claims she could defend on the merits, the outcome would be the same.

Irrespective of the circumstances leading to her initial detention and arrest, her unprovoked use of physical force in response to a benign request is not justified, nor would it be excused under First Amendment jurisprudence. More to the point, even if Locke could legally challenge the initial detention, the legality of her initial detention would not have justified her unprovoked conduct in attempting to strike or actually striking a police officer, which in and of itself justified her arrest.

From all accounts, Locke resorted to physical force against an officer who had asked her to sit down after she was detained for a reason Locke has failed to disclose—Locke’s appellate briefing, in fact, refuses to divulge the underlying conduct that led to her initial detention, and that information is not part of the appellate record since the detention itself was not an issue during the change-of-plea colloquy or the sentencing hearing. Regardless of the nature of the initial detention, the First Amendment does not preserve an offender’s right to physically assault a law enforcement officer. Even if we were to presume that Locke’s trial counsel failed to explain the well-settled law precluding her from asserting her First Amendment right or the privilege to resist against excessive force, that failure could not support the claimed existence of a manifest miscarriage of justice in support of the belated motion to withdraw the guilty plea….

From the limited record presented, Locke’s unprovoked aggression was the result of being told to sit down and, therefore, cannot be considered the product of a struggle in which it could be claimed that the strike was “accidental.” Locke’s unspecified claim to having defenses to the merits of the assault charge and arrest are without merit. Locke has not identified any defenses to the underlying assault charge or strategies for trial that would have been available in support of her claim that but for the failure of her trial counsel to explain those factually inapplicable defenses, she would not have pleaded guilty to the felony charge….

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Food Costs Likely To Rise as Farmers’ Expenses Shoot Up


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Famine is one of the four horsemen of the apocalypse for good reason; hunger was an unwelcome companion for most of human history. The threat it poses declined in recent decades because of innovations in agriculture and increasing prosperity. But the largely policy-inflicted economic disruptions of the past two years partially reversed progress made towards feeding the world and alleviating poverty. Now, with food prices on the rise, there’s a danger that hunger will follow. 

“I want to say this loud and clear right now, that we risk a very low crop in the next harvest,” Svein Tore Holsether, the CEO and president of fertilizer giant Yara International, warned in November. “I’m afraid we’re going to have a food crisis.”

Holsether worried about the rising cost of energy and especially of natural gas, which is needed to make ammonia from which urea, a key fertilizer component, is synthesized.

“Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade,” The New York Times agreed a month later. “People and industries of all kinds are feeling the shocks.”

A combination of always-unpredictable nature, bad policy, and busted supply chains (also largely from policy decisions) dramatically hiked prices for natural gas and its products. Prices for alternatives to urea are also rising because of demand and parallel political decisions. The U.S. Treasury agreed in December to suspend sanctions on potash from Belarus from which about 20 percent of the world’s supply of the stuff is sourced, but other high trade barriers remain in place for fertilizer and its components. The result is that major inputs for producing the food that we eat are becoming increasingly dear when they can be found at all.

“Among farmers and ranchers, very few topics are being discussed as much as the skyrocketing cost of fertilizer and increasing concerns regarding availability,” the American Farm Bureau reports.

If that’s frightening for American farmers and the people who consume their products, it’s potentially disastrous for the rest of the world. 

“High fertilizer prices could exert inflationary pressures on food prices, compounding food security concerns at a time when the COVID-19 pandemic and climate change are making access to food more difficult,” the World Bank notes.

That cautionary tone is a little behind the times, since global food prices were already up by an average of 27.3 percent from a year earlier at the end of November, according to the UN Food and Agriculture Organization’s food price index. Worse, people’s ability to cope with rising food prices has been hit by pandemic-policy-induced setbacks to decades of increasing prosperity.

“In 2021, the average incomes of people in the bottom 40 percent of the global income distribution are 6.7 percent lower than pre-pandemic projections, while those of people in the top 40 percent are down 2.8 percent,” the World Bank noted in October. 

A mix of increasing poverty and rising food prices is a dangerous cocktail for a troubled planet.

“Higher farm input costs, expensive shipping and good demand provide for a grim combination,” predicts Holland’s agriculture-oriented Rabobank in its recent report, Outlook 2022: Hell in the Handbasket. “We should see these inflationary pressures upstream move along the supply chain to reach consumers in 2022, with uncertain social consequences.”

Not all of the factors that led us to this unfortunate point were foreseeable or preventable, of course. Nobody could have anticipated that Hurricane Ida would disrupt the production of natural gas “more than any other hurricane over the past ten years” in the words of the U.S. Energy Information Administration. Nor could anybody have known that low winds would hobble Europe’s growing reliance on renewable energy or that drought would kneecap hydropower production in China and elsewhere, throwing those regions back to fossil fuels in competition with other world users. 

What was predictable, though, is that nature wouldn’t be predictable. Plans dependent on winds and rains adhering to production schedules were doomed to fail eventually. That they failed after policymakers had already disrupted manufacturing, shipping, and overall economic activity in response to COVID-19 just accelerated an unavoidable reckoning.

“In the fall, soaring electricity demand led the southwestern province of Yunnan, a key phosphate producer, to order drastic production cuts by energy-hungry industries, including fertilizer,” The New York Times reported.

“Major fertilizer producers Yara International ASA and CF Industries Holdings Inc. said soaring energy costs are forcing them to halt some output of nutrients crucial for growing crops,” BloombergQuint noted of the effects of Europe’s energy costs.

Curbs on fertilizer exports from China and Russia add to the problem, as the governments of those countries reserve limited supplies for their internal markets. But the U.S. suffers self-inflicted wounds from trade barriers on foreign products.

“Mosaic has almost single-handedly erected an insurmountable tariff barrier to keep its top competitors in Morocco and Russia out of the U.S. phosphate market,” the National Corn Growers Association objected in a December letter to fertilizer giant Mosaic company over its cultivation of policy-making friends. “Only 15% of phosphorous imports now come into the U.S. without tariffs.”

The Biden administration also discourages the production of fossil fuels. It does so with the idea of encouraging a national move to renewable energy, but one (presumably) unforeseen consequence is to tighten the supply of materials required for making fertilizer needed to grow food.

“Heavy-handed interference in market economies tends to produce the same pathologies we see in socialist economies, including shortages and inflation,” British economist Philip Pilkington commented earlier this year.

That interference is tempting for government officials who insist on seeing the world as something they can fine-tune according to their policy preferences. Inevitably, they’re proven wrong, though usually not in disastrous ways. This time though, economic meddling looks to be amplifying nature’s unpredictability to usher in a hungry new year.

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Joe Rogan Joins GETTR In Anticipation Of Censorship On Twitter “Getting Even Dumber”

Joe Rogan Joins GETTR In Anticipation Of Censorship On Twitter “Getting Even Dumber”

Authored by Steve Watson via Summit News,

Podcast king Joe Rogan announced Sunday that he has joined social media platform GETTR, following Twitter and YouTube banning people who have shared his latest content.

“Just in case shit over at Twitter gets even dumber, I’m here now as well. Rejoice!” Rogan posted on GETTR, where he has already racked up over 8 MILLION followers.

The platform, which has vowed to allow all opinions to remained uncensored, allows new users to import in their old tweets, in an effort to entice people away from Twitter.

Rogan recently interviewed Dr. Robert Malone, the inventor of the mRNA vaccines, who was recently banned from Twitter for speaking out in opposition of mass inoculations against COVID using the technology.

During the interview, Malone outlined how he believes the world has slipped into a ‘Mass Formation Psychosis’ in accepting the vaccines and far reaching restrictions as a solution.

During the interview, Rogan noted “They removed you for not going along with whatever the tech narrative is, because tech clearly has a censorship agenda when it comes to COVID in terms of treatment, in terms of the— whether or not you’re promoting what they would call vaccine hesitancy, they can ban you for that, they can ban you for in their eyes, what they think is a justifiable offense.”

Malone responded “I try really hard to give people the information and help them to think, not to tell them what to think. Okay? But the point is if I’m not — if it’s not okay for me to be part of the conversation, even though I’m pointing out scientific facts that may be inconvenient, then who is who can be allowed?”

YouTube versions of the interview are being pulled down, along with Rogan’s interview with cardiologist Dr Peter McCullough, while Google has also been charged with altering search results for Malone and the term ‘Mass Formation Psychosis’.

Twitter also permanently banned Rep. Marjorie Taylor Greene Sunday for questioning the narrative. The final straw appears to have been Greene asking extreme leftist Rep. Alexandria Ocasio-Cortez if she has apologized to Governor Ron DeSantis yet for criticising his absence from public, which turned out to be because he was looking after his wife who has cancer.

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Tyler Durden
Mon, 01/03/2022 – 08:15

via ZeroHedge News https://ift.tt/3FVeKsL Tyler Durden