One of the reasons I left the money management game was that many of the theories that I had used to manage money stopped working. Some of them were original, some I taken from others, and some I had modified. I knew I need to take time off and have a think. I also knew that I needed to read different books to get my mind thinking differently. As it happens, I have just finished reading Agatha Christies “Death on the Nile” (excellent book), and I particularly enjoyed how he looked at all the clues, organized them, and then slowly but surely eliminate suspects until only the murderer, however unlikely, was left.
For me, recent market action has eliminated the final suspect for what has caused the extremely long lived bull market in US equities. I had speculated that robustness of the US stock market was a feature of extremely loose credit conditions. These loose credit conditions were only possible due to a long drawn out commodity bear market, and hence if we had a spike in commodity prices which led to rising bond yields, then were likely to see a much weaker equity market.
Commodity prices, and particularly food prices have spiked. Food prices had spiked in 1996 before the Asian Financial Crisis, again in 2007 before the GFC and in 2011 during the Eurocrisis. My working assumption was that another spike would also signal problems. But with the exception of Chinese equities, major equity market returns over last 12 months have been robust. MSCI World is barely 5% from highs. I have used food, but energy price spikes have also led to weaker equity markets historically too.
I have also learnt to be cautious on equities when the Asian Dollar Index is going sideways or falling. Even after the Asian Financial Crisis, Asian currencies strengthened during the dot com bubble. Since a beak in 2010, they have been generally poor, even as U S equities have powered on.
I have also used net international investment position data to inform whether to be bearish on a currency or equity market. This worked well on pointing out danger in the dot-com bubble, and the top in the US dollar in the early 2000s. It also worked well for the Japanese bubble economy, the Asian Financial Crisis and the Eurocrisis. But this model has had me bearish on the US dollar and US equities since 2016, so very wrong indeed (see Spotting Property Bubbles in East Asia in my Archive for more details).
On a much shorter term basis, the S&P 500 has seemingly broken out of its relationship with HYG US (High Yield ETF). A similar chart can be drawn using mortgage rates, which have spiked. I would include – but Substack says I am at the limit already in this post!
I realized that I needed to look at all this clues again, and have a think about why they worked before, but did not work this time. And, by eliminating suspects, and having a long think, I think I have the answer. The murderer of all possible bear markets in the US dollar and US equity is….. (to be continued).
Shanghai Officials Conceal COVID Deaths At City Nursing Homes Amid Punishing Lockdown
As local authorities in Shanghai prepare to start the second phase of the Shanghai lockdown, the western press has seized on reports that the death toll from the omicron-driven outbreak in China’s most populous city (and its financial capital) has been even larger than authorities have let on – the latest indication that the numbers being released by China’s public-health authorities have been sanitized, and that the true scope of the outbreak is even larger than believed.
An outbreak at a Shanghai home for the elderly has killed a handful of residents in recent days, deaths that haven’t been reflected in authorities’ official numbers, which haven’t reported any deaths in the hundreds of homes for the elderly in the city.
Citing a group of orderlies who had been sent to one of China’s quarantine facilities, WSJ reported that an unknown number of bodies had been removed from the facility, where at least 100 positive cases have been confirmed among its residents.
Of course, concealing deaths in the city’s nursing homes might strike a chord with Americans, who remember all too well former New York Gov. Andrew Cuomo’s deliberate under-reporting of the number of deaths at nursing homes in the Empire State during the first months of the pandemic.
In Shanghai, one of the orderlies who spoke with WSJ said they were tasked with dressing the body of one dead patient, an order that made the orderly fear for their safety.
“I was scared to death. I said, ‘Look, look, those are for dead bodies,'” another orderly said, recalling the sight of half a dozen hearses parked at the hospital gate at night.
But the orderlies weren’t the only sources who spoke with WSJ (speaking with members of the foreign press is, of course, discouraged by the CCP, and these individuals spoke out at great personal risk). Separately, the son of a patient at the hospital said that his father had died within the past week, a friend of the son told the Journal, adding that others who had visited the hospital reported seeing the bodies of at least a dozen deceased patients.
More than half a dozen users on several of China’s major social-media platforms have also posted messages alleging unreported deaths at the hospital in recent days.
Another orderly told WSJ that a surprising number of providers and staffers at the facility had been infected.
“Orderlies, nurses and doctors, we’re all infected,” she said.
The facility, Shanghai Donghai, has been around for 20 years, and is run by a state-owned food conglomerate with 1,800 beds and an orthopedics ward that also treats younger patients. It’s the city’s biggest elder-care facility by capacity, and it reported zero COVID infections in 2021.
But why would local authorities want to hide the number of infections and deaths if they’re ordering lockdowns anyway?
Well, as Nikkei noted on Thursday, the reputations of prominent local bureaucrats are being threatened, so they’re doing anything they can to mask the severity of the situation to try and salvage their reputations. With the National Party Congress set for later this year, Li Qiang, the Communist Party secretary of Shanghai, is hoping to be elevated to the Politburo Standing Committee, China’s most powerful policy-setting body. He’s seen as one of President Xi’s closest allies, and before the lockdown, he had been expected to move to Beijing and become a vice premier in charge of the economy. Unfortunately for him, the lockdown looks to have disrupted such plans.
Now, those within the party who oppose President Xi’s power grab (the party’s paramount leader is expected to clinch a third term as leader during the party Congress this fall, making him the first leader since Chairman Mao to break the limit of two five-year terms) are hoping to use the situation in Shanghai to block Li’s promotion, depriving Xi of an important ally in the Politburo.
Reflecting the outpouring of public anger stoked by the Shanghai lockdown (as supplies of food and medicine have grown increasingly strained), one local official told ABC News that the city’s leadership failed to adequately prepare.
Ma Chunlei, a senior Shanghai official, acknowledged shortcomings in the city’s response. Authorities have rushed to bolster food deliveries to the city after panic buying stripped store shelves of necessities.
“We didn’t prepare sufficiently enough,” Ma said. “We sincerely accept the criticisms from the public and are making efforts to improve it.”
Meanwhile, city of Shanghai was preparing to reopen the eastern half of the city, and shut its western half, as the staggered 9-day lockdown continues. While Shanghai’s lockdown has slowed factory output (a byproduct of lockdowns across China), authorities have decided to lift a lockdown in Jilin Province (the epicenter of China’s worst outbreak since Wuhan). Starting tomorrow, locals will be able to move about freely, although they will be required to wear masks and, when indoors, stay 1 meter (3 feet) apart. Public gatherings in parks and squares are prohibited.
This was more than a theoretical question because two of the refiners excluded from the gold and silver Good Delivery Lists by the LBMA were JSC Krastsvetmet (located in Krasnoyarsk) and Prioksky Plant of Non-Ferrous Metals, and both Krastsvetmet and Prioksky were also accredited refiners on the LPPM’s Good Delivery List for both Platinum and Palladium .
For anyone reading BullionStar Blogs, this LBMA – LPPM conundrum was not a surprise since we highlighted it on 28 February, saying that:
“Note too that the LBMA also administers the London Platinum and Palladium Market (LPPM), and there are two Russian refineries on both the current LPPM Good Delivery List for Platinum and the LPPM Good Delivery List for Palladium, namely “The Gulidov Krasnoyarsk Non-Ferrous Metals Plant” and the “Prioksky Plant of Non-Ferrous Metals” (a.k.a. Krastsvetmet and Prioksky).
To make matters worse, since the CME Group (operator of the COMEX) more or less clones the LBMA Good Delivery Lists and had the 6 Russian refiners on the COMEX “Approved Brands” lists, this forced the COMEX to follow the LBMA’s lead on 7 March and exclude the same 6 Russian precious metals refiners from these ‘Approved Brands’ lists for gold and silver, while leaving the Krastsvetmet and Prioksky refiners on the COMEX Approved List for Platinum and leaving Krastsvetmet on the COMEX Approved List for Palladium.
For how could the LBMA in London, as it said in its press release on 7 March, suspend the 6 Russian refiners “with immediate effect” and “in light of UK/EU/US sanctions”, while its sister organization, the LPPM in London, did nothing about Krastsvetmet and Prioksky?
And how could the Commodity Exchange (COMEX) also on 7 March “effective immediately“ and “until further notice”, suspend “the approved status for warranting and delivery” of the 6 Russian refiners for their gold and silver brands, while leaving Krastsvetmet and Prioksky on its Platinum/Palladium approved brands lists?
The answer is of course about money, and the fact that sanctions are a political weapon which can be ignored in hypocritical closed doors meetings in the City of London and Chicago/New York when it affects the bottom line too much.
“The London Platinum and Palladium Market (LPPM), an industry association, said it would keep the two Russian refiners it accredits on its “good delivery” list of firms whose material is eligible to trade in London.
“Traders and analysts said removal of the palladium refiners from London trading would have worsened worries over Russian supply that have sent prices to record highs.”
On 8 March, the LPPM also – with a straight face – added a hypocritical press release to its website, which said:
LPPM GOOD DELIVERY PLATINUM AND PALLADIUM UPDATE
Due to the terrible events taking place in Ukraine, the LPPM has reviewed its Good Delivery list and the US, EU and UK sanctions. Following that review it has decided to make no changes to the Good Delivery list.
We will however continue to monitor and review the situation.”
In other words, due to, in the words of the LPPM, “terrible events” in Ukraine, the LPPM decided to do nothing, all because Russian palladium and platinum are too important to sanction.
On the same day, Reuters published another version of its 8 March article – which is now only available on the NASDQ website and is titled ”Russian refiners still OK to trade, says London Platinum and Palladium Market”, in which Peter Hobson wrote that:
“Following a meeting of the Management Committee of the LPPM…, there will be no changes to our Good Delivery list,” the LPPM’s Chief Administrative Officer, Jane-Anne Wardley, said.
So now we know that it was the LPPM Management Committee which made the decision to ‘make no changes’ to the LPPM Good Delivery Lists, despite what they called the ‘terrible events’ in Ukraine.
It’s A Big Club & You Ain’t In It!
And what or who is this LPPM Management Committee?
From the LPPM website management committee page we see that the LPPM Management Committee comprises individuals representing 9 heavy weight entities which are involved in the global platinum and palladium market, four of which are bank entities. These 9 entities and their representatives are:
Chairman – John Cullen, Johnson Matthey Plc (US/UK refinery)
Members – Vincent Domien, HSBC (bank)
Thomas Kendall, ICBC Standard Bank (bank)
Anton Down, Royal Bank of Canada (bank)
Vikas Chamaria, T D Securities (bank)
John Metcalf, BASF Metals Limited (trader – note BASF which took over the old Engelhard)
Andy Daniel, Heraeus Metals Germany GmbH (German refinery)
Joe Stefans, MKS Pamp SA (Swiss refinery)
David Jollie, Anglo Platinum Marketing Ltd (part of Anglo American Platinum, miner)
Note – Vincent Domien, now of HSBC, was a SocGen director of the London Gold Market Fixing Limited (the old London Gold Fixing) until 30 August 2019.
Seven of these Management Committee members are Full Members of the LPPM, namely HSBC, ICBC Standard, Toronto Dominion (TD), Johnson Matthey, Heraeus, MKS PAMP, and BASF Metals. The other two, Royal Bank of Canada and Anglo Platinum, are associate members of the LPPM.
As there are only 14 Full Members of the LPPM, the other 7 full members of the LPPM which are not on the LPPM Management Committee are 4 banks – Goldman Sachs, JP Morgan Chase, UBS, and Standard Chartered Bank, and 3 precious metals refiners – Metalor (Swiss), Valcambi (Swiss) and Tanaka Kikinzoku Kogyo (Japanese).
In addition, the ‘Market Making’ members of the LPPM (whose trading desks make two-way markets in palladium and platinum) are Goldman Sachs, HSBC, ICBC Standard Bank, JP Morgan Chase, Standard Chartered Bank, Toronto-Dominion Bank, and UBS.
And there’s more. Each business day in London, a group comprising Goldman Sachs, HSBC, ICBC Standard, Johnson Matthey, BASF Metals, along with StoneX, take part in the daily LBMA platinum and palladium auctions so as to ‘establish’ benchmark prices for the daily LBMA Platinum Price and the LBMA Palladium Price (price data which by the way is intellectually owned by Precious Metals Prices Limited – which is a subsidiary of the LBMA).
As George Carlin once said “It’s A BIG Club & You Ain’t In It!”
Shockingly, the LPPM’s decision to keep the Russian refiners Krastsvetmet and Prioksky on the LPPM Good Delivery Lists for Palladium and Platinum comes despite the fact that the LPPM’s own ‘Responsible Sourcing program” which is overseen by the LPPM Management Committee, has a “Sanctions Policy” which says:
“SANCTIONS POLICY
Failure to meet the standards required could have serious implications for LPPM Good Delivery refiners. Sanctions could include suspension subject to resolution or being transferred to the Former List with immediate effect.”
However, on this occasion, the LPPM Management Committee seems to have thrown its sanctions policy out of the window, hoping that no one would notice.
While South Africa is responsible for 75% of global Platinum mining supply, with Russia accounting for just over 10% (Russia is forecast to generate a 2022 supply of 661 koz out of a global total of 6119 koz according to the World Platinum Investment Council (WPIC)), it is in the Palladium market where Russiaan supply is critical, since Russia accounts for 40% of the global palladium supply. See the latest WPIC presentation slide desk (dated March 2022) here.
In Russia, mined palladium is a by-product of nickel mining, with nearly all Russian palladium supply being mined by the mammoth MMC Norilsk Nickel The next biggest palladium producer is the South African-US combine Sibanye-Stillwater.
According to the latest Heraeus “Palladium Standard” report from September 2021 (produced by SFA Oxford), Russian palladium production in 2021 was forecast to be 2350 koz out of a global total of 6,770 koz (or 35% of global palladium mine supply).
However, in 2021, Russian palladium supply was less than normal due to mine flooding and a concentrator accident, which reduced supply by about 365 koz. So in a normal year, Russian palladium supply is about 2800 koz, or about 40% of global annual supply of 7000 koz. See the Heraeus ‘Palladium Standard’ report here.
On the demand side, palladium is critical for the global automobile industry (along with platinum), where both metals are used in auto-catalytic converters that reduce exhaust emissions – as both palladium and platinum are excellent catalysts and are somewhat substitutable. Both palladium and platinum are also used widely in industry, e,g. in computer chips and electronic devices.
Furthermore, both metals have a large demand driver in the form of jewelry and importantly, platinum and palladium are both investment precious metals, with both metals are held in physically backed Exchange Traded Funds (ETFs), and both metals are fabricated into investment platinum and investment palladium bars and coins.
Conclusion
So now you can see how important Russian palladium is to the LPPM trade group, and to the banks, traders, and refiners of the LPPM.
If Russian palladium stopped flowing to market, there would be serious problems, especially for the global auto and computer chip industries. And the same, to a lesser extent, goes for Russian platinum supplies.
And since the LPPM could hardly sanction Russian platinum without sanctioning palladium as this would draw even more attention to the double standards and political nature of the sanctions, hence the LPPM put its head in the sand and sanctioned neither, hoping that it would all blow over.
Which is also why the US/UK/EU sanctions have avoided sanctioning the ‘final boss’, the giant Norilsk Nickel. Because Norilsk Nickel, the world’s largest palladium producer and a major producer of platinum is, as the Wall Street Journal put it recently, ‘Too Big to Sanction’.
So now you can see why the LPPM Management Committee threw its sanctions book out the window when confronted with having to sanction the Russian palladium and platinum refiners Krastsvetmet and Prioksky, despite what the LPPM called the ‘terrible events” in Ukraine. Because, in the world of the bullion bank controlled palladium and platinum markets in the City of London and on COMEX, money talks while everything else walks.
And the bullion banks couldn’t have the palladium and platinum prices spiking in London in the same way as the nickel price debacles. What if it spilled over into silver? Or gold?
And which is why on 24 March, when UK prime minister Boris Johnson, ahead of the NATO-G7-EU meetings in Brussels, talked about “tightening the economic vice” on Vladimir Putin, and “looking at what we can do to stop Putin using his gold reserves”, while not surprisingly failing to mention the LPPM and the double standards of the City of London when it comes to palladium and platinum.
Because “tightening the economic vice” on Russian palladium and platinum, would seize up the global auto industry and could find Boris having to ride his bike to work each day instead of being chauffeured in a 2022 emissions-friendly Bentley.
US Army Proposes To Cut Troop Levels Under 1 Million For The First Time In 20 Years
What better time for the U.S. Army to considering cutting its numbers than right now, with tensions between the U.S. and both Russia and China likely at multi-decade highs? But that’s exactly what a new budget proposal suggests, according to a new report by Bloomberg.
The Army would fall under 1 million soldiers for the first time in 20 years under the new proposal, with active duty Army falling from 485,000 soldiers to 473,000. That number, combined with National Guard and Reserve forces, puts the U.S. total at 998,500 soldiers.
National Guard and Reserve numbers are expected to stay at 336,000 and 189,500 for fiscal 2023, the report says. Gabe Camarillo, the undersecretary of the Army, commented: “We did not want, as we looked ahead at recruiting projections, to take any decrease in our quality.”
He told Bloomberg that the move was “pro-active” and said that the decision to make the cuts was catalyzed by “a focus on recruiting high-quality soldiers without lowering standards” and not to free up cash in the budget.
He also said he still expects the Army’s numbers to rise within the next five years.
Then, he attributed some of the “pro-active” decision to a “tight labor market”, stating: “All employers, to include the Army, are facing significant challenges just as a result of a tight labor market that we see across our economy. That creates a lot of the conditions that we are responding to.”
The Army is asking for $178 billion in funding for 2023, up $2.8 billion from 2022. The additional funds are being used for “real growth” and “inflation”, the Army’s Director of Budget, Maj. Gen. Mark Bennett, said.
“We are able to maintain our momentum. We did not need to look at our modernization accounts as sources of major reductions of any kind,” Camarillo concluded.
In a new report on America’s 50 governors, Gov. J.B Pritzker was ranked 47th because of the harm he’s done to the state economy. Voters saved him from a lower rank by rejecting his ‘fair tax.’
Gov. J.B Pritzker finds himself near the bottom of a new report on how America’s governors are guiding their state economies.
The American Legislative Exchange Council’s rankings are in the 2021 report on Economic Freedom: Grading America’s 50 Governors. The report ranked Pritzker overall at No. 47 – fourth from the bottom – by using a combination of Pritzker’s policies and the state’s economic performance under his leadership to form a list of 12 criteria.
One measure was Illinois’ 2021 economic performance: 48th in the nation, the third worst. Economic performance was mainly held back by Illinoisans moving out of the state. Illinois lost population during 2021 in 81 of 102 counties.
Voters prevented Pritzker from ranking even lower by defeating his state income tax hike, said Jonathan Williams, chief economist for ALEC.
“Voters in Illinois saved him from becoming 50th if they would have passed the progressive income tax that was on the ballot recently that I know he advocated very strongly in favor of,”Williams said.
Pritzker invested $58 million of his own dollars in the campaign to pass the “fair tax,” which would have allowed Illinois to start taxing retirement income and allowed state lawmakers to gradually increase taxes on different income brackets. Voters soundly rejected the tax in 2020, 55% to 45%.
Williams also pointed to pension debt as a major issue for Illinois.
“Whether it’s the massive amount of debt with Illinois’ public pension liabilities, whether we look at the income taxes on corporate income, personal income, down the line of all the things that we measure,” Williams said.
ALEC’s rankings feature a new metric for 2021: how states spent their federal pandemic relief funds. Illinois still has an outstanding balance of unemployment debt that could be paid down using federal relief. A proposal to use $2.7 billion in federal funds falls short of the $4.5 billion debt and would trigger job-killing payroll taxesmandated by federal law to refill the unemployment trust fund.
State leaders have also given Illinois’ economy another potential hit by pushing Amendment 1. If voters pass the constitutional change Nov. 8, public union bosses will be empowered to demand and strike over a virtually limitless array of issues guaranteed to drive up taxation in a state already suffering under the nation’s highest tax burden.
Highly Pathogenic Avian Flu Detected In Five More US States
An outbreak of the deadly strain of bird flu is quickly spreading across the U.S. The risk to humans is low, but bird flu could wreak havoc in the nation’s poultry industry ahead of Easter.
The United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) announced on Wednesday that highly pathogenic avian influenza (HPAI) was detected in five new states.
A non-commercial, mixed-species backyard flock (non-poultry) in Berkshire County, Massachusetts;
A non-commercial, mixed-species backyard flock (non-poultry) in Johnson County, Wyoming;
A commercial poultry flock in Johnston County, North Carolina;
A non-commercial, backyard chicken flock (non-poultry) in Franklin County, Ohio;
And a backyard chicken flock (poultry) in Kidder County, North Dakota.
According to Bloomberg, USDA data shows the bird flu has been found in 23 states in flocks totaling about 17 million birds up and down Mid-Atlantic and Northeast and across the Midwest.
On Mar. 21, the official figure for culled chickens and turkeys stood around 12 million. Infected flocks have been culled to mitigate spreading, and USDA has implemented an A.I. surveillance program to look for the disease in commercial poultry operations.
Since the HPAI spread is recent, there’s no telling when it will abate. The last outbreak, in 2015, resulted in the culling of 50 million laying hens across 15 states, pushing the prices of chicken and eggs higher.
Ahead of Easter, a dozen of Grade A Eggs are priced around the $2 mark and set to move higher.
Retail prices are at the highest in five years for springtime.
Chicken breast prices are at new highs, averaging around $3.81 per pound at U.S. supermarkets.
Bloomberg reports top foreign buyers of US poultry could soon balk at purchases.
“Top buyers such as Mexico, China and Cuba could bring in less poultry following the discovery in North Carolina, a major producer of chicken and turkeys,” said Jim Sumner, president of the USA Poultry & Egg Export Council in Tucker, Georgia.
The most significant concern is the continued spread of HPAI at commercial poultry farms as wild flocks migrate across the country. This could continue pressuring poultry prices higher that would feed into record-high food inflation.
From yesterday’s pseudonymized decision in Kareem K. v. Ida I. (handed down by Justices Ariane Vuono, Sookyoung Shin, and Sabita Singh):
In the spring of 2021, the defendant and her husband sought legal advice from the plaintiff, an attorney. When the plaintiff later presented his findings, the defendant and her husband expressed displeasure with his work. The representation was then terminated.
On June 25, 2021, the plaintiff filed a complaint under G. L. c. 258E [the harassment restraining order statute] … against the defendant only. The affidavit, which we quote verbatim except where indicated, alleged the following acts of harassment: “[t]he defendants were unhappy with our findings and proceeded to go on Facebook and make a public post calling us thiefs and making up things that did not happen”; “[t]hey then proceeded to call us three times on June 25th, 2021”; “[t]hey proceeded to email our secr[e]tary …, as well as copying multiple people on the email”; and “[the defendant’s husband] then proceeded to send [the secretary] a [Facebook] message trying to speak with us.”
The same day, the plaintiff appeared at an ex parte hearing in Leominster District Court. Elaborating little on his affidavit, the plaintiff claimed that the defendant committed three or more acts of harassment by “slandering [his] name” on Facebook, sending his secretary e-mail and Facebook messages, and making telephone calls to his office. When the judge asked whether the defendant made any personal threats, the plaintiff replied, “Not so much personal threats, … but knowing what I know and her history, … I am in fear of this woman.” When the judge next asked whether the plaintiff feared that the defendant would “physically harm” him or members of his staff, the plaintiff replied, “Definitely members of my staff.”
The judge issued a temporary c. 258E order based on this testimony and included the following provision: “No Internet or social media posts, comments or contact with the complaining witness or office staff.” … [At a later hearing, t]he plaintiff again claimed that the defendant committed three or more acts of harassment by “slandering” him on social media and “harassing [his] staff through email, phone calls, as well as stalking them on social media.” … Based on this testimony, the judge extended the temporary c. 258E order for one year.
Impermissible, said the court:
There is no basis in the record on which a c. 258E order could lawfully have issued. “The definition of ‘harassment’ in c. 258E was crafted by the Legislature to ‘exclude constitutionally protected speech,’ … and to limit the categories of constitutionally unprotected speech that may qualify as ‘harassment’ to two: ‘fighting words’ and ‘true threats.'” Fighting words are not at issue here, and there is no evidence to support the plaintiff’s claim that the defendant made a true threat, let alone three. A true threat must “communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals.” Also, to support the issuance of a c. 258E order, the true threat must be intended to cause “fear of physical harm or fear of physical damage to property” and must in fact cause such fear.
None of the communications identified by the plaintiff qualifies as a true threat, even attributing them all to the defendant, and even assuming, without deciding, that it was proper for the plaintiff to seek an order on behalf of his employees. The plaintiff claimed that the Facebook post was slanderous, not threatening. He offered no detail as to the content of the e-mail and social media messages, nor did he describe what the defendant said when she called his office. Furthermore, the plaintiff admitted at the ex parte hearing that the defendant had not made any threats.
We take this opportunity to reiterate that, where a c. 258E order is sought on the basis of speech alone, the plaintiff must prove that the speech rose to the level of true threats or fighting words and not merely that it was “harassing, intimidating, or abusive in the colloquial sense.” Here, if the plaintiff believed that the defendant defamed him, the proper vehicle for redress was not c. 258E, but an action for defamation. Nor was it proper for the plaintiff to use c. 258E as a means of preventing a former client from contacting his office about an issue related to his representation.
We note also that, even had the plaintiff proved three qualifying acts, it is doubtful that the scope of the extension order—which appears to bar the defendant from making Internet or social media posts that reference the plaintiff in any way—could pass constitutional scrutiny…. “[A]ny limitation on protected expression must be no greater than is necessary to protect the compelling interest that is asserted as a justification for the restraint” …. In light of our ruling, however, we need not resolve that issue or the defendant’s other arguments.
The case is remanded to the District Court for entry of an order vacating and setting aside the extension order and for further actions required by G. L. c. 258E, § 9.
Congratulations to Marc Randazza and Jay Wolman (who were on the briefs, but withdrew before oral argument) and Karen Pickett on winning the case.
From yesterday’s pseudonymized decision in Kareem K. v. Ida I. (handed down by Justices Ariane Vuono, Sookyoung Shin, and Sabita Singh):
In the spring of 2021, the defendant and her husband sought legal advice from the plaintiff, an attorney. When the plaintiff later presented his findings, the defendant and her husband expressed displeasure with his work. The representation was then terminated.
On June 25, 2021, the plaintiff filed a complaint under G. L. c. 258E [the harassment restraining order statute] … against the defendant only. The affidavit, which we quote verbatim except where indicated, alleged the following acts of harassment: “[t]he defendants were unhappy with our findings and proceeded to go on Facebook and make a public post calling us thiefs and making up things that did not happen”; “[t]hey then proceeded to call us three times on June 25th, 2021”; “[t]hey proceeded to email our secr[e]tary …, as well as copying multiple people on the email”; and “[the defendant’s husband] then proceeded to send [the secretary] a [Facebook] message trying to speak with us.”
The same day, the plaintiff appeared at an ex parte hearing in Leominster District Court. Elaborating little on his affidavit, the plaintiff claimed that the defendant committed three or more acts of harassment by “slandering [his] name” on Facebook, sending his secretary e-mail and Facebook messages, and making telephone calls to his office. When the judge asked whether the defendant made any personal threats, the plaintiff replied, “Not so much personal threats, … but knowing what I know and her history, … I am in fear of this woman.” When the judge next asked whether the plaintiff feared that the defendant would “physically harm” him or members of his staff, the plaintiff replied, “Definitely members of my staff.”
The judge issued a temporary c. 258E order based on this testimony and included the following provision: “No Internet or social media posts, comments or contact with the complaining witness or office staff.” … [At a later hearing, t]he plaintiff again claimed that the defendant committed three or more acts of harassment by “slandering” him on social media and “harassing [his] staff through email, phone calls, as well as stalking them on social media.” … Based on this testimony, the judge extended the temporary c. 258E order for one year.
Impermissible, said the court:
There is no basis in the record on which a c. 258E order could lawfully have issued. “The definition of ‘harassment’ in c. 258E was crafted by the Legislature to ‘exclude constitutionally protected speech,’ … and to limit the categories of constitutionally unprotected speech that may qualify as ‘harassment’ to two: ‘fighting words’ and ‘true threats.'” Fighting words are not at issue here, and there is no evidence to support the plaintiff’s claim that the defendant made a true threat, let alone three. A true threat must “communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals.” Also, to support the issuance of a c. 258E order, the true threat must be intended to cause “fear of physical harm or fear of physical damage to property” and must in fact cause such fear.
None of the communications identified by the plaintiff qualifies as a true threat, even attributing them all to the defendant, and even assuming, without deciding, that it was proper for the plaintiff to seek an order on behalf of his employees. The plaintiff claimed that the Facebook post was slanderous, not threatening. He offered no detail as to the content of the e-mail and social media messages, nor did he describe what the defendant said when she called his office. Furthermore, the plaintiff admitted at the ex parte hearing that the defendant had not made any threats.
We take this opportunity to reiterate that, where a c. 258E order is sought on the basis of speech alone, the plaintiff must prove that the speech rose to the level of true threats or fighting words and not merely that it was “harassing, intimidating, or abusive in the colloquial sense.” Here, if the plaintiff believed that the defendant defamed him, the proper vehicle for redress was not c. 258E, but an action for defamation. Nor was it proper for the plaintiff to use c. 258E as a means of preventing a former client from contacting his office about an issue related to his representation.
We note also that, even had the plaintiff proved three qualifying acts, it is doubtful that the scope of the extension order—which appears to bar the defendant from making Internet or social media posts that reference the plaintiff in any way—could pass constitutional scrutiny…. “[A]ny limitation on protected expression must be no greater than is necessary to protect the compelling interest that is asserted as a justification for the restraint” …. In light of our ruling, however, we need not resolve that issue or the defendant’s other arguments.
The case is remanded to the District Court for entry of an order vacating and setting aside the extension order and for further actions required by G. L. c. 258E, § 9.
Congratulations to Marc Randazza and Jay Wolman (who were on the briefs, but withdrew before oral argument) and Karen Pickett on winning the case.
Four years ago, Grant Long, a resident of Forrest City, Arkansas, was acquitted of three criminal charges: harassment, harassing communications, and theft by receiving. In a federal lawsuit against former Forrest City police officer Darren Smith, Long argues that he was prosecuted in retaliation for his constitutionally protected criticism of Smith, who repeatedly lied in the affidavit that led to the charges.
This week a federal judge allowed Long to proceed with that claim and two others against Smith. It is not hard to see why, given the flagrantly fraudulent basis for the charges against Long, who had sued Smith in federal court and criticized him on Facebook. The case vividly illustrates how easy it is for a cop with a personal beef against someone to punish him with baseless criminal charges when prosecutors and judges fail to do their jobs by independently evaluating the allegations.
Why did Smith accuse Long of receiving stolen property? Because Long had used a Freedom of Information Act (FOIA) request to obtain a scathing June 2016 letter describing the results of an internal affairs investigation that was prompted by a personnel complaint Long’s nephew had filed against Smith a month earlier. The nephew, Derrick Long, said Smith had unlawfully entered his home, taken his dog, and stolen $900. In the internal affairs letter, Lt. E.P. Reynolds informed Forrest City Police Chief Deon Lee that “a thorough investigation” had confirmed at least two of those allegations.
“There was NO probable cause (P/C) to enter the citizen’s home,” Reynolds wrote. “Nor was there [probable cause] to seize and remove the dog from the owner’s home. The IA investigation found Officer Smith to be in direct violation of the 4th Amendment.”
Reynolds said “these violations mark yet another recent example of poor judgment on the part of Officer Smith with regard to his conduct and job performance.” He added that “there would appear to be a pattern of behavior from Officer Smith that would place our department in jeopardy of increased liability issues.”
Reynolds told Lee “the results of this most recent IA investigation (coupled with previous IA investigations) substantiate…clear violations of department protocol by Officer Smith” and “demonstrate an obvious pattern of questionable behavior and conduct on the part of Officer Smith.” Noting that Smith had already been temporarily demoted from sergeant as a result of “a previous IA investigation,” Reynolds recommended Smith’s termination.
Lee did not take Reynolds’ advice. But three years later, after Smith was promoted to lieutenant, Lee dismissed him following a complaint that he had shoved a man for no legitimate reason. WREG, the CBS affiliate in Memphis reported that Lee, who initially called Smith “a good officer” after that assault, “said there were many reasons Smith’s employment was terminated but acknowledged the shoving incident was one of them.” Previous complaints against Smith included unnecessary force against a minor, tasing a man without warning at a nightclub, and an incident in which Smith, while off duty, pulled a gun on a Walmart customer he mistakenly suspected of shoplifting.
Long included Reynolds’ prescient letter in a federal lawsuit he filed in 2018 based on Smith’s treatment of his nephew. (That lawsuit, which Long prepared without legal assistance, was dismissed without prejudice because Long had failed to establish his own standing to sue by explaining how Smith’s conduct had injured him, as opposed to his nephew.) Long also posted the internal affairs letter on Facebook. The very next day, Smith wrote and submitted the affidavit that led to the charges against Long.
In his March 2018 affidavit, Smith claimed Long’s FOIA request for the internal affairs letter “was denied due to the record being classified as a personnel record as defined in the statute.” It was therefore clear, Smith averred, that Long had “conspired with others to steal the document” and was “in possession of the stolen property.”
In reality, Lee’s office had given Long the letter, along with other documents related to the internal affairs investigation, in response to his FOIA request. “A rational juror could easily conclude Officer Smith was intentionally lying,” U.S. District Judge Lee Rudofsky notes in his March 28 order rejecting Smith’s motion to dismiss Long’s retaliatory prosecution claim. “A rational juror could conclude that there was no probable cause to prosecute Mr. Long for theft by receiving.”
Why did Smith accuse Long of “harassing communications”? In addition to publicizing the internal affairs letter, Long had posted a body camera video of a traffic stop in which Smith let a driver go after describing him as “dirty” because he had been “drinking with a CDL” (commercial driver’s license). A breath test put the driver’s blood alcohol concentration (BAC) at 0.046 percent, below the 0.08 percent level that would have made him automatically guilty of driving while intoxicated (DWI). But under Arkansas law, a BAC of 0.04 percent or more can be considered, along with other evidence, in determining whether a driver was intoxicated.
“Look at the work we pay for,” Long wrote on Facebook above the link to the video, which he had obtained from Smith’s partner, Officer Vanessa Brayboy. “SMITH LETS A DIRTY DWI DRIVER GO.”
The video revealed other questionable conduct: It showed that Smith and Brayboy were wearing each other’s body cameras during the traffic stop and switched them back afterward. “Officer Smith can then be seen manipulating the bodycam previously worn by Officer Brayboy,” Rudofsky notes. In the comment section below the video link, Long wrote that another Facebook user “couldn’t say why the officer deleted the video in the street but this is an officer who say[s] he is missing a whole mo[n]th of video.”
By Smith’s reckoning, Long’s posting of the video and the internal affairs letter, along with the accompanying criticism, amounted to “harassing communications,” which Arkansas defines to include electronic messages “likely to harass, annoy, or cause alarm” that are delivered with that purpose. While it is obvious that Long’s posts did indeed “annoy” Smith, that is not enough to satisfy the elements of this crime. If it were, the statute would be clearly inconsistent with the First Amendment.
One obvious problem with Smith’s reading of the law is that it seems Long did not deliberately “communicate” with him at all: While Smith happened to be a member of the Facebook group (“Let’s Talk Forrest City”) in which Long was participating, Long said he did not know that, and there is no evidence that he did. Furthermore, Rudofsky notes, “the record is replete with genuinely disputed material facts from which a rational juror could find that Officer Smith knowingly lied or recklessly disregarded the truth” in alleging that Long had violated the law prohibiting “harassing communications.”
Smith’s affidavit claimed, for example, that “Grant Long has continually made false statements about [me] on a public for[u]m on Facebook.” Yet as Rudofsky points out, “the record reflects one post involving the Internal Affairs Investigation Letter, one post involving the traffic stop video, and one comment to the post about the traffic stop.” Hence “a rational juror could easily conclude that Officer Smith’s use of the word ‘continually’ to describe Mr. Long’s criticisms was intentionally false.”
Smith also averred that Long “accused me falsely of letting a drunk driver continue to operate a motor vehicle after having conducted tests that show[ed] the driver was intoxicated.” But as Rudofsky notes, “a rational juror could find that Mr. Long said nothing of the sort, and that Officer Smith knew it.” Long described the driver as “dirty,” which was the same word Smith had used. Long also described him as a “DWI driver,” which was arguably true, given that his BAC was high enough to count, along with other indicators, as evidence of intoxication.
Smith said Long “public[ly] accused me of destroying evidence” and “knew when he posted such that he was posting falsehoods.” Yet “a rational juror could view the bodycam switching (between Officers Smith and Brayboy) and Officer Smith’s subsequent manipulation of one of the bodycams as evidence that Officer Smith did delete the video in the street,” Rudofsky says. “Thus, a rational juror could conclude that Mr. Long’s comment was true, that Officer Smith knew it was true, and that
Officer Smith’s description of the comment as false in the Affidavit of Arrest was a lie.”
Smith, who described Lt. Reynolds as “a former disgruntled employee,” asserted that the results of the internal investigation had been “refuted.” Yet “there is no record evidence that the findings in that letter were ever ‘refuted,'” Rudofsky says. “A rational juror could thus conclude that Officer Smith’s statement was intentionally false.”
In sum, Rudofsky says, Long “certainly didn’t communicate with Officer Smith ‘in a manner likely to harass, annoy, or cause alarm.'” And assuming Long was not aware that Smith was part of the Facebook group (which appears to be the case and is taken as true at this stage of the lawsuit), he “could not have the ‘purpose to harass, annoy, or alarm’ Officer Smith.”
Why did Long accuse Smith of “harassment”? That charge, Rudofsky says, “is even more far-fetched.” Under Arkansas law, “a person commits the offense of harassment if, with purpose to harass, annoy, or alarm another person, without good cause, he or she…engages in conduct or repeatedly commits an act that alarms or seriously annoys another person and that serves no legitimate purpose.” A “legitimate purpose,” in other words, bars this charge even when someone’s conduct “seriously annoys” another person.
“If these postings do not serve a legitimate purpose, nothing does,” Rudofsky writes. “If these postings do not serve a legitimate purpose, then the statute violates the First Amendment. Accordingly, there’s no probable cause for the harassment charge.”
As a backup to his argument that he had probable cause to accuse Long of these three crimes, Smith maintained that he was protected by qualified immunity, a legal doctrine that shields government officials from federal civil rights lawsuits when their alleged misconduct did not violate “clearly established” law. Rudofsky rejects that claim as well, since it was well-established in March 2018 that a police officer violates the First Amendment when he uses trumped-up charges to punish protected speech.
Rudofksy also allowed Long to proceed with two other claims against Smith: malicious prosecution as defined by state law and violation of Long’s “right to remonstrate” under the Arkansas Constitution. The same pattern of behavior that supports Long’s “retaliatory-inducement-to-prosecute claim under the First Amendment,” Rudofsky concludes, makes those state law claims viable as well.
The fact that Long will get a chance to hold Smith accountable for his egregious, blatantly dishonest abuse of power is encouraging. But it is more than a little troubling that a St. Francis County District Court judge approved the arrest warrant the same day Smith asked for it (a fact that Smith cited in his defense) and that local prosecutors saw fit to pursue Smith’s vendetta against Long. Even a modicum of skepticism, critical reading, and curiosity would have revealed that Smith’s accusations were driven by personal pique rather than a good-faith, evidence-supported belief that Long had broken the law. Yet somehow these officials perceived probable cause that was plainly lacking.
In his arrest affidavit, Smith repeatedly noted that Long “had full knowledge that I was a Forrest City Police Office[r].” While Smith’s status as a police officer had nothing to do with the validity of the charges against Long, it helps explain why Smith thought criticizing him was a crime and why no one bothered to correct that misconception until now.
“No Way We Have Enough Agents” – CBP Source Fears “Emergency” At The Border When Biden Admin Ends Title 42
Update (1700ET): Fox News correspondent Hillary Vaughan confirmed, via a brief Twitter thread, that the Biden administration is preparing for the surge in migrants citing a source within CBP who has worked in law enforcement for 20+ years – who is familiar with the process – who agreed to speak on the condition of anonymity – who told her that DHS is bracing for as many as 500,000 migrants in the six weeks following Title 42 being lifted.
Her thread continues:
The CBP source telling me “If half a million people come in one month – that’s an emergency. There is no way we have enough federal agents and NGO’s and NGA’s. There’s not enough people going around. It’s literally going to be a revolving door. Getting people in – getting people out.”
CBP source says DHS is trying to figure out how to get enough medical personnel to provide the COVID vaccines the Biden administration promised migrants – as well as staff to handle any medical issues many migrants will have.
One idea being floated: pulling medical personnel from Veterans Affairs to assist “We’re going to take medical services away from people that really deserve that. Who went to combat…to give free medical attention to illegal migrants” CBP source tell me.
This CBP source tells me that due to the wave of migrants they are expecting after Title 42 lifts – Biden Admin is looking at doing NTA’s (notices to appear) with “minimal biometric data and vetting” to expedite processing.
This CBP source tells me that could mean skipping critical paperwork and vetting that would confirm they have the right name and date of birth for the person entering.
A CBP source tells me the Biden Admin is also looking at deploying a smart app for migrants to use to submit to pre-screening. There is talk of expanding the “CBP1 App” for migrants so they can submit pre-screening prior to approaching a point-of-entry.
This source telling me the “CBP1 app was originally devised to make it easier for known travelers to enter and go across the border…it’s now being thought of to use as an easy way for folks to get in”
CBP source tells me the Biden administration is preparing for double the number of migrants that came in 2021 – in the year after Title 42 lifts – “I would say its conservative to say double what came in last year”
Does anyone else think this sounds like yet another opportunity for the Biden administration to shoot itself in the foot ahead of the Midterms?
The Title 42 policy implemented under the Trump administration in March 2020 enabled border agents to expel illegal immigrants back to Mexico immediately if they potentially pose a health risk amid the COVID-19 pandemic.
On Thursday, the Associated Press reported, citing anonymous sources, that the Biden administration, which has continued the policy, is expected to end it by May 23.
White House director of communications Kate Bedingfield was asked by a reporter whether the administration is “prepared to deal with the aftermath of ending Title 42 and the expected influx of migrants.”
Bedingfield did not confirm the AP report. She responded that the decision as to whether the administration would end Title 42 is “not an immigration or migration enforcement measure” but a “public health directive.”
“So the decision on when to lift Title 42 we defer to the [Centers for Disease Control and Prevention (CDC)],” she said.
The CDC is currently weighing up whether or not it will end Title 42 policy, and has until March 30 to complete its review.
Border Patrol agents apprehend a group of Cubans and Venezuelans that just waded across the Rio Grande from Mexico into Eagle Pass, Texas, on Jan. 25, 2022. (Charlotte Cuthbertson/The Epoch Times)
‘Influx of People to the Border’
She continued, “That being said, of course we are planning for multiple contingencies, and we have every expectation that when the CDC ultimately decides it’s appropriate to lift Title 42, there will be an influx of people to the border.”
Bedingfield said the administration is “doing a lot of work to plan for the contingency.” She noted that on Tuesday the Department of Homeland Security held a briefing to review the plans it has to prepare for a potential spike in illegal immigrants at the border.
“So you heard from them yesterday on some of the planning that they’re doing more broadly—now, not specifically tied to Title 42 or an ultimate decision to lift it, but just more broadly to the work that they’re doing to continue to build up our migration system and ensure that we are restoring order at the border.”
DHS officials told reporters on Tuesday of contingency plans which include a scenario in which up to 18,000 border crossings could be seen per day. Currently, Border Patrol is seeing about 7,100 illegal immigrants a day.
“We need to be prepared for what we’re considering a potential contingency, which is that the lifting of Title 42 could increase flows,” a senior DHS official told reporters during the background briefing, multiple outlets reported.
The DHS on Wednesday released a fact sheet titled “DHS Preparations for a Potential Increase in Migration.” Without citing Title 42, the department noted “unprecedented levels of migration” to the border and that it is “implementing a comprehensive strategy to address a potential increase in the number of border encounters.”
Border Patrol Chief Raul Ortiz said on March 29 that the United States is on track to hit a million illegal alien encounters at the U.S.–Mexico border in the fiscal year 2022. The United States logged over 2 million illegal immigrant arrests in 2021.
Previously, Sen. Rick Scott (R-Fla.) led a group of Republican senators in issuing a letter (pdf) to DHS Secretary Alejandro Mayorkas on March 24, urging the department to prepare in case Title 42 is lifted by the CDC. They said Title 42 is an “effective deterrent to illegal border crossings” and that lifting it would threaten to overwhelm the “already strained immigration system” and will exacerbate the situation at the border.
Sens. Kyrsten Sinema (D-Ariz.) and Mark Kelly (D-Ariz.) also expressed concerns, writing in a March 24 letter (pdf) to President Joe Biden that the administration should, before making changes to Title 42, coordinate a “comprehensive plan that ensures a secure, orderly, and humane process at the border.”
The two Arizona senators on Wednesday discussed with Mayorkas about the prospect of ending Title 42 and the effects on local communities in the state if there is no plan to handle the influx of illegal immigrants. Sinema called for DHS to coordinate communications between federal, state, local, and non-governmental partners to strengthen cooperation, a strategy Mayorkas agreed to.
