Month: July 2022

Understanding The Economic Crisis In Sri Lanka

Understanding The Economic Crisis In Sri Lanka

Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments. The country is also nearly at empty on their foreign currency reserves, decreasing the ability to purchase imports and driving up domestic prices for goods.

As Visual Capitalist’s Avery Koop details below, there are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

A Timeline of Events

The ongoing problems in Sri Lanka have bubbled up after years of economic mismanagement. Here’s a brief timeline looking at just some of the recent factors.

2009

In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production. However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.

2019

Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already cash-strapped country.

2020

The COVID-19 pandemic hit the world causing border closures globally and stifling one of Sri Lanka’s most lucrative industries. Prior to the pandemic, in 2018, tourism contributed nearly 5% of the country’s GDP and generated over 388,000 jobs. In 2020, tourism’s share of GDP had dropped to 0.8%, with over 40,000 jobs lost to that point.

2021

Recently, the Sri Lankan government introduced a ban on foreign-made chemical fertilizers. The ban was meant to counter the depletion of the country’s foreign currency reserves.

However, with only local, organic fertilizers available to farmers, a massive crop failure occurred and Sri Lankans were subsequently forced to rely even more heavily on imports, further depleting reserves.

April 2022

In early April this year, massive protests calling for President Gotabaya Rajapaksa’s resignation, sparked in Sri Lanka’s capital city, Colombo.

May 2022

In May, pro-government supporters brutally attacked protesters. Subsequently, Prime Minister Mahinda Rajapaksa, brother of President Rajapaksa, stepped down and was replaced with former PM, Ranil Wickremesinghe.

June 2022

Recently, the government approved a four-day work week to allow citizens an extra day to grow food, as prices continue to shoot up. Food inflation increased over 57% in May.

Additionally, the increasing prices on grain caused by the war in Ukraine and rising fuel prices globally have played into an already dire situation in Sri Lanka.

The Key Information

“Our economy has completely collapsed.”

– PRIME MINISTER RANIL WICKREMESINGHE TO PARLIAMENT LAST WEEK.

One of the main causes of the economic crisis in Sri Lanka is the reliance on imports and the amount spent on them. Let’s take a look at the numbers:

  • 2021 total imports = $20.6 billion USD

  • 2022 total imports (to March) = $5.7 billion USD

In contrast, the most recent reported foreign currency reserve levels in the country were at an abysmal $50 million, having plummeted an astounding 99%, from $7.6 billion in 2019.

Some of the top imports in 2021, according to the country’s central bank were:

  • Refined petroleum = $2.8 billion

  • Textiles = $3.1 billion

  • Chemical products = $1.1 billion

  • Food & beverage = $1.7 billion

Of course, without the cash to purchase these goods from abroad, Sri Lankans face an increasingly drastic situation.

Additionally, the debt Sri Lanka has incurred is huge, further hampering their ability to boost their reserves. Recently, they defaulted on a $78 million loan from international creditors, and in total, they’ve borrowed $50.7 billion.

The largest source of their debt is by far due to market borrowings, followed closely by loans taken from the Asian Development Bank, China, and Japan, among others.

What it Means

Sri Lanka is home to more than 22 million people who are rapidly losing the ability to purchase everyday goods. Consumer inflation reached 39% at the end of May.

Due to power outages meant to save energy and fuel, schools are currently shuttered and children have nowhere to go during the day. Protesters calling for the president’s resignation have been camped in the capital for months, facing tear gas from police and backlash from president Rajapaksa’s supporters, but many have also responded violently to pushback.

India and China have agreed to send help to the country and the the International Monetary Fund recently arrived in the country to discuss a bailout. Additionally, the government has sent ministers to Russia to discuss a deal for discounted oil imports.

A Foreshadowing for Low Income Countries

Governments need foreign currency in order to purchase goods from abroad. Without the ability to purchase or borrow foreign currency, the Sri Lankan government cannot buy desperately needed imports, including food staples and fuel, causing domestic prices to rise.

Furthermore, defaults on loan payments discourage foreign direct investment and devalue the national currency, making future borrowing more difficult.

What’s happening in Sri Lanka may be an ominous preview of what’s to come in other low and middle-income countries, as the risk of debt distress continues to rise globally.

The Debt Service Suspension Initiative (DSSI) was implemented by G20 countries, suspending nearly $13 billion in debt from the start of the pandemic until late 2021.

Some DSSI and LIC countries facing a high risk of debt distress include Zambia, Ethiopia, and Tajikistan, to name a few.

Going forward, Sri Lanka’s next steps in managing this situation will either serve as a useful exam for other countries at risk or a warning worth heeding.

Tyler Durden
Sun, 07/03/2022 – 19:05

via ZeroHedge News https://ift.tt/k5K7Xow Tyler Durden

Supreme Court Ruling in “Remain in Mexico” Case is a Win for Biden, Migrants – and Fans of Presidential Power


MPP
(ACLU)

 

In Biden v. Texas, the very last case of the just-concluded Supreme Court term, the Court rejected a legal challenge to President Biden’s termination of Donald Trump’s “Remain in Mexico Policy” (more formally known as the Migrant Protection Protocol). MPP forced many non-Mexican migrants to wait in Mexico for months at a time, as their asylum and removal cases were considered. The ruling was 5-4, with Chief Justice Roberts and Justice Kavanaugh agreeing with the three liberal justices. Justice Amy Coney Barrett dissented only on a procedural issue, and in fact agreed with the majority on the merits. In most years, this ruling might have attracted widespread attention. In 2022, it has attracted much less interest, because there have been so many high-profile rulings on other, more salient, issues.

Still, it’s a significant case, both for its likely policy effects, and for its impact on presidential power over migration, more generally. While the decision likely allows Biden to end one of Trump’s cruelest migration policies, it also reinforces sweeping presidential control over immigration policy. In combination with the Court’s other rulings on immigration policy, Biden v. Texas  helps ensure there are now very few constraints on the president’s power to bar, detain, or grant entry to almost any potential migrants who who are not already US citizens or permanent residents. While I think the ruling is largely correct on the specific issues it considers, it is nonetheless part of a troubling broader picture.

Adopted in 2019, MPP was one of many Trump administration policies intended to curb immigration – both legal and illegal – as much as possible. It required many non-Mexican migrants crossing from Mexico to be immediately deported back to Mexico and remain there until their asylum and removal cases were resolves (which often takes many months). Tens of thousands of migrants were affected by the policy, and many ended up detained under terrible conditions in Mexico, at grave risk of murder, rape, and assault.

Biden promised to terminate the policy, and in June 2021, his Department of Homeland Security issued a memorandum implementing that promise. When Texas and Missouri challenged the new policy in court, a district judge ruled that the memorandum was a violation of Section 1225 of the Immigration and Nationality Act (INA), and procedurally inadequate under the Administrative Procedure Act. The Biden administration then withdrew the June memo, and replaced it with a far more through analysis issued in October, even as the litigation continued.

The legal issues in the case are only moderately complicated. Section 1225(b)(2)(A) of the INA states that “[i]n the case of an alien . . . who is arriving on land… from a foreign territory contiguous to the United States, the Attorney General may return the alien to that territory pending a proceeding under section 1229a of this title.” Note the word “may” here. As Chief Justice Roberts explains in his opinion from the Court, this clearly indicates that the executive can expel this category of migrants if he wants to, but is not required to do so.

But another provision of Section 1225 states that “an alien seeking admission is not clearly and beyond a doubt entitled to be admitted, the alien shall be detained for a proceeding under section 1229a of this title.” All nine justices – both majority and dissenters – agree that it isn’t actually possible to detain all the people in question, because the federal government has nowhere near enough detention facilities to do that. As the dissent by Justice Alito concedes, “no one suggests that DHS must do the impossible.” This is just one of many situations where the vast scope of federal law makes it impossible to track down and detain more than a small fraction of violators. Thus, law enforcement must pick and choose.

But Alito – backed by Gorsuch and Thomas – also contends that the impossibility of carrying out the detention mandate requires the executive to deport the remaining migrants who would otherwise have to be detained. In their view, this essentially converts the “may” in Section 1225(b)(2)(A) into a “must.”

To my mind, this argument makes little sense. Nothing in the statute indicates that expulsion is somehow a mandatory remedy for violations of the detention mandate. Roberts does a thorough job of addressing this point in the majority opinion, and I won’t try to recapitulate it in detail here.

Roberts’ conclusion is reinforced by the fact that 8 U.S. Code §1182(d)(5)(A) gives the president the power to “parole” otherwise inadmissible migrants into the United States on a “case-by-case” basis, if doing so is “for urgent humanitarian reasons or significant public benefit.” That further suggests that detention is not the only legal alternative to expulsion. The Biden administration has in fact begun to parole many of the migrants who would previously have been forced into MPP, and the horrible conditions they would otherwise face surely qualify as “urgent humanitarian reasons.”

Alito argues that such large-scale use of the parole power cannot really be “case by case.” But unless it is going to be completely arbitrary or random, any use of case-by-case discretion must be guided by general rules. And the authority wielding such discretion can reasonably conclude that, as a general rule, all or most migrants covered by MPP would face grave dangers if forced to remain in Mexico. Thus, their admission is justified by “urgent humanitarian reasons.” I discussed the relationship of case by case discretion and general rules in more detail in this 2016 article focusing on litigation over one of Barack Obama’s immigration initiatives.

The plaintiff states and the lower court ruling also contend that Biden violated the Administrative Procedure Act. Among other things, they claim that the shift from the June memorandum to the October one was an improper post hoc rationalization, barred by the Supreme Court’s 2020 ruling against the Trump administration’s attempts to terminate the DACA program. Chief Justice Roberts explains (correctly, I think) that there is an important distinction between the two cases, because the Biden administration didn’t just provide a new rationale for the June memorandum, but actually withdrew that memo and went back to square one and started the process over. And, unlike in the case of Trump’s effort to terminate DACA, Biden’s rationale for terminating MPP did not simply ignore the main considerations on the other side.

As I explained at the time it was issued, the Court’s ruling in the DACA case was largely a response to the extremely poor handling of the rescission effort by the Trump Administration, and the majority made it clear a future administration could find ways to get rid of the program if it wanted to. The “Remain in Mexico” case reinforces that point.

In her dissenting opinion, Justice Barrett agrees with the majority on the above issues, but argues that the Supreme Court should simply have resolved the case on procedural grounds because Section 1252 of the INA states that “no court (other than the Supreme Court) shall have jurisdiction or authority to enjoin or restrain the operation” of specified immigration provisions (including, the ones at stake in this case) except as applied to “an individual alien against whom proceedings under [those provisions] have been initiated.” The district judge had issued an injunction against Biden’s reversal of MPP, which seems to be illegal under this provision.

Barrett suggests that, if the district court could not issue an injunction, then it also arguably lacked jurisdiction to hear the case at all. I think the majority has some good arguments against this theory, including that the Supreme Court exception to the anti-injunction rule suggests that lower federal courts must have at least some jurisdiction here (otherwise a case like this could never reach the Supreme Court). But I will leave this issue to those with greater expertise on remedies. Here, I just note that all nine justices seem to agree that lower federal courts’ can’t (in most cases) issue injunctions against executive branch actions here, even if the latter actions were actually illegal!

The most immediate bottom line here is that the Biden administration will likely succeed in ending MPP. The majority does remand the case to the lower courts for further consideration of whether Biden violated Section 706 of the APA, which among other things, bars policy changes that are  “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” But it seems unlikely the plaintiff states can prevail on this basis, given the thoroughness of the October memorandum, and the Court’s apparent endorsement of its thoroughness.

But, while this is a victory for supporters of migration rights, it’s also a win for executive power. Today’s ruling indicates that the President has near-total discretion to decide whether most migrants crossing a land boundary must “remain in Mexico” (or Canada, if they came from there), detain them (at least if resources allow), or parole them into the United States (so long as there is a “humanitarian” or “public benefit” rationale for their admission).

The Court’s 2018 travel ban ruling indicates he also has near-total discretion to exclude such migrants from the US entirely, even if his motive for doing is one that would be ruled unconstitutional in almost any other context. The Court has also ruled that habeas corpus constraints do not apply to immigration detention, and more generally largely exempted immigration restrictions from a wide range of constitutional constraints that apply to other areas of government policy.

When you put it all together, the president ends up with sweeping power to exclude, detain, or parole the vast majority of potential migrants. Such massive discretionary power is at odds with the text and original meaning of the Constitution, and it’s certainly inimical to the major questions and nondelegation principles the Court – especially its conservatives – have applied in other contexts. The Supreme Court has not yet considered a major question or nonedelegation case in the immigration field. But, when they do, I hope conservative justices resist any temptation they might feel to carve out an ad hoc exception for immigration.

In the meantime, presidential power over immigration has grows apace. Much can and should be done to curb it. But neither Congress nor the Supreme Court have – so far – made more than minimal efforts to step up to the challenge.

The post Supreme Court Ruling in "Remain in Mexico" Case is a Win for Biden, Migrants – and Fans of Presidential Power appeared first on Reason.com.

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To Avoid Civil War, Learn To Tolerate Different Laws In Different States

To Avoid Civil War, Learn To Tolerate Different Laws In Different States

Authored by Ryan McMaken via The Mises Institute,

Most commentary on the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization—which overturns Roe v. Wade—has focused on the decision’s effect on the legality of abortion in various states. That’s an important issue. It may be, however, that the Dobbs decision’s effect on political decentralization in the United States is a far bigger deal.

After all, the ruling isn’t so much about abortion as it is about the federal government’s role in abortion. State governments are free to make abortion 100 percent legal within their own borders. Some states have already done so. The court’s ruling limits only the federal government’s prerogatives over abortion law, and this has the potential to lead to many other limitations on federal power as well. In this way, Dobbs is a victory for those seeking to limit federal power. 

The decentralization is all to the good, and there’s nothing novel about it. Historically, state laws in the US have varied broadly on a variety of topics from alcohol consumption to divorce. This was also true of abortion before Roe v. Wade. 

Moreover, decentralizing abortion policy in this way actually works to defuse national conflict. This is becoming even more important as cultural divides in the United States are clearly accelerating and become more entrenched. Rather than fight with increasing alarm and aggression over who controls the federal government—and thus who imposes the winner’s preferences on everyone else—people in different states will have more choices in choosing whether to live under proabortion or antiabortion regimes. In other words, decentralization forces policymakers to behave as they should in a confederation of states: they must tolerate people doing things differently across state lines.  This will be essential in avoiding disaster, and laissez-faire liberals (i.e., “classical liberals”) have long supported decentralization as a key in avoiding dangerous political conflicts. Ludwig von Mises, for example, supported decentralization because, as he put it, it “is the only feasible and effective way of preventing revolutions and civil … wars.”

The Impulse to Use Federal Power to Force Policy on Everyone

Law has never been uniform across state lines in the United States, although this was not for a lack of trying on the part of the federal government. As the power of the federal government grew throughout the twentieth century, the central government repeatedly sought to make policy uniform and put it under the control of federal courts and regulatory agencies. Prior to Roe v. Wade, abortion was a state and local matter only. Before the drug war, the federal government did not dictate to states what plants they should let their citizens consume. Before the Volstead Act, “dry” states and “wet” states had far different policies on alcohol sales. Some states had lenient divorce laws. Some did not. Some states allowed gambling. Even immigration was once the domain of state government. Although some federal law enforcement agents existed in the nineteenth century, “law and order” was overwhelmingly a state and local matter prior to the rise of agencies like the FBI. 

The cumulative effect of making all these areas the prerogative of federal regulators, agents, and courts has been to convince many Americans that the United States government ought to federalize most areas of daily life. In the modern way of thinking, only less important or trivial matters are to be left up to the state and local governments. For many Americans, they learned to just think that it was abnormal for the state next door to have different gun policies or drug policies than one’s home state. 

Drugs, Alcohol, and Guns

In the past decade, this impulse to intervene in neighboring states has been highlighted by the de facto end of nationwide marijuana prohibition in the United States. Beginning in 2012 with Colorado and Washington State, recreational marijuana use has become essentially legal in nearly two dozen US states. This means a resident of one state can travel to a neighboring state to consume a drug that is illegal in his or her home state. Some state governments have a hard time dealing with this. Politicians in antimarijuana states complained that their citizens had too much access to prohibited substances. Not surprisingly, attorneys general in Nebraska and Oklahoma sued Colorado in federal court in an attempt to force Colorado to reimpose marijuana prohibition on its citizens. Fortunately, these lawsuits—which if successful would have greatly expanded federal power over states—failed. 

Alcohol prohibition grew out of the same desire to force some states’ preferences on all other states. In 1917, only twenty-seven states embraced statewide prohibition. It took a constitutional amendment to impose prohibition on all the rest. 

Moreover, laws governing the purchase and carry of firearms vary broadly from state to state, with “constitutional carry” allowing permitless carry in some states. Some states allow for private gun sales without any background checks. Other states greatly restrict these activities. Naturally, policy makers who oppose the freedom to carry firearms have sought for many decades to impose uniform gun policy nationwide. 

Federal Centralization Run Amok: The Fugitive Slave Acts 

The most notorious case of using the federal government to impose nationwide uniformity is likely the Fugitive Slave Acts (passed in 1793 and 1850). Contrary to the myth that slave owners hated a strong federal government and wanted only local control, slave drivers enthusiastically and repeatedly invoked the federal fugitive slave laws. This was done in order to force Northern governments to cooperate with Southern states in kidnapping runaway slaves and returning them to their “owners.” The Dred Scott decision extended federal protections of slavery even further, and the ruling allowed many slave owners to argue they could even take their slaves into nonslave states and territories, regardless of state and local laws prohibiting slavery.

Many abolitionists refused to acknowledge federal prerogatives and actively opposed federal agents who attempted to enforce federal laws extending slavery beyond the slave states. Some Northern governments explicitly refused to cooperate with the Fugitive Slave Acts. So successful were these efforts to undermine federal law that South Carolina secessionists listed the failure of federal slave laws as a reason for secession in 1860. Slavery advocates were enraged by the idea that their neighbors in other states weren’t being forced to help prop up the slave system. 

After Roe, States Are Quickly Decentralizing American Abortion Law

In all of these cases, the perceived “answer” offered by proponents of legal uniformity was to bring in the federal government to force people in state A to do the bidding of people in state B. Thanks to the overturning of Roe, however, many states are moving in exactly the opposite direction. 

Some states have moved toward prohibiting abortion within their own borders. But proabortion states are also taking some key legal steps toward further decentralizing policy. Policy makers in Massachusetts have moved to protect the state’s citizens from extradition to antiabortion states for abortion-related crimes. The state’s governor also signed an executive order prohibiting the state’s agencies “from assisting another state’s investigation into a person or entity” for abortion-related activities. New York’s governor has signed legislation “that shields [abortion] providers and patients from civil liability” in abortion-related claims. The message here: “Those laws in antiabortion states have no power here.”

Centralization Breeds Conflict

This is the way the system was designed to work. People can choose to live in state A, where abortion is illegal. But should some of those people travel to state B to get an abortion, state B ought to be under no obligation to help state A enforce its laws either inside or outside the state. To demand anything more than this inevitably ends up involving the federal government to impose new obligations on every state. (This strategy of centralizing power should not be confused with trying to directly change laws within those states. It is, of course, a good thing to pressure governments to end unjust laws from within, but such efforts are totally different than calling in the federal government to end abortion by federal fiat.)

As we have seen with abortion, slavery, drugs, and guns, when the feds are involved, every national election ends up being a referendum on whatever issue is deemed so important that the federal government must impose one way of doing things on everyone. This only makes national politics even more nasty.

The end of Roe v. Wade may end up emphasizing the political and cultural divisions in America by forcing many Americans to recognize that the United States is not one place. It is many places. This is not a problem, however, if we relearn that rather than employ federal coercion to “solve” the world’s problems, it’s perhaps better to tolerate others doing things differently in other parts of the world. On the other hand, if Americans can’t shake the idea that the regime must force one way of life on everyone, we can expect national political divides to grow ever more bitter. 

Tyler Durden
Sun, 07/03/2022 – 18:25

via ZeroHedge News https://ift.tt/pPOTab0 Tyler Durden

Supreme Court Ruling in “Remain in Mexico” Case is a Win for Biden, Migrants – and Fans of Presidential Power


MPP
(ACLU)

 

In Biden v. Texas, the very last case of the just-concluded Supreme Court term, the Court rejected a legal challenge to President Biden’s termination of Donald Trump’s “Remain in Mexico Policy” (more formally known as the Migrant Protection Protocol). MPP forced many non-Mexican migrants to wait in Mexico for months at a time, as their asylum and removal cases were considered. The ruling was 5-4, with Chief Justice Roberts and Justice Kavanaugh agreeing with the three liberal justices. Justice Amy Coney Barrett dissented only on a procedural issue, and in fact agreed with the majority on the merits. In most years, this ruling might have attracted widespread attention. In 2022, it has attracted much less interest, because there have been so many high-profile rulings on other, more salient, issues.

Still, it’s a significant case, both for its likely policy effects, and for its impact on presidential power over migration, more generally. While the decision likely allows Biden to end one of Trump’s cruelest migration policies, it also reinforces sweeping presidential control over immigration policy. In combination with the Court’s other rulings on immigration policy, Biden v. Texas  helps ensure there are now very few constraints on the president’s power to bar, detain, or grant entry to almost any potential migrants who who are not already US citizens or permanent residents. While I think the ruling is largely correct on the specific issues it considers, it is nonetheless part of a troubling broader picture.

Adopted in 2019, MPP was one of many Trump administration policies intended to curb immigration – both legal and illegal – as much as possible. It required many non-Mexican migrants crossing from Mexico to be immediately deported back to Mexico and remain there until their asylum and removal cases were resolves (which often takes many months). Tens of thousands of migrants were affected by the policy, and many ended up detained under terrible conditions in Mexico, at grave risk of murder, rape, and assault.

Biden promised to terminate the policy, and in June 2021, his Department of Homeland Security issued a memorandum implementing that promise. When Texas and Missouri challenged the new policy in court, a district judge ruled that the memorandum was a violation of Section 1225 of the Immigration and Nationality Act (INA), and procedurally inadequate under the Administrative Procedure Act. The Biden administration then withdrew the June memo, and replaced it with a far more through analysis issued in October, even as the litigation continued.

The legal issues in the case are only moderately complicated. Section 1225(b)(2)(A) of the INA states that “[i]n the case of an alien . . . who is arriving on land… from a foreign territory contiguous to the United States, the Attorney General may return the alien to that territory pending a proceeding under section 1229a of this title.” Note the word “may” here. As Chief Justice Roberts explains in his opinion from the Court, this clearly indicates that the executive can expel this category of migrants if he wants to, but is not required to do so.

But another provision of Section 1225 states that “an alien seeking admission is not clearly and beyond a doubt entitled to be admitted, the alien shall be detained for a proceeding under section 1229a of this title.” All nine justices – both majority and dissenters – agree that it isn’t actually possible to detain all the people in question, because the federal government has nowhere near enough detention facilities to do that. As the dissent by Justice Alito concedes, “no one suggests that DHS must do the impossible.” This is just one of many situations where the vast scope of federal law makes it impossible to track down and detain more than a small fraction of violators. Thus, law enforcement must pick and choose.

But Alito – backed by Gorsuch and Thomas – also contends that the impossibility of carrying out the detention mandate requires the executive to deport the remaining migrants who would otherwise have to be detained. In their view, this essentially converts the “may” in Section 1225(b)(2)(A) into a “must.”

To my mind, this argument makes little sense. Nothing in the statute indicates that expulsion is somehow a mandatory remedy for violations of the detention mandate. Roberts does a thorough job of addressing this point in the majority opinion, and I won’t try to recapitulate it in detail here.

Roberts’ conclusion is reinforced by the fact that 8 U.S. Code §1182(d)(5)(A) gives the president the power to “parole” otherwise inadmissible migrants into the United States on a “case-by-case” basis, if doing so is “for urgent humanitarian reasons or significant public benefit.” That further suggests that detention is not the only legal alternative to expulsion. The Biden administration has in fact begun to parole many of the migrants who would previously have been forced into MPP, and the horrible conditions they would otherwise face surely qualify as “urgent humanitarian reasons.”

Alito argues that such large-scale use of the parole power cannot really be “case by case.” But unless it is going to be completely arbitrary or random, any use of case-by-case discretion must be guided by general rules. And the authority wielding such discretion can reasonably conclude that, as a general rule, all or most migrants covered by MPP would face grave dangers if forced to remain in Mexico. Thus, their admission is justified by “urgent humanitarian reasons.” I discussed the relationship of case by case discretion and general rules in more detail in this 2016 article focusing on litigation over one of Barack Obama’s immigration initiatives.

The plaintiff states and the lower court ruling also contend that Biden violated the Administrative Procedure Act. Among other things, they claim that the shift from the June memorandum to the October one was an improper post hoc rationalization, barred by the Supreme Court’s 2020 ruling against the Trump administration’s attempts to terminate the DACA program. Chief Justice Roberts explains (correctly, I think) that there is an important distinction between the two cases, because the Biden administration didn’t just provide a new rationale for the June memorandum, but actually withdrew that memo and went back to square one and started the process over. And, unlike in the case of Trump’s effort to terminate DACA, Biden’s rationale for terminating MPP did not simply ignore the main considerations on the other side.

As I explained at the time it was issued, the Court’s ruling in the DACA case was largely a response to the extremely poor handling of the rescission effort by the Trump Administration, and the majority made it clear a future administration could find ways to get rid of the program if it wanted to. The “Remain in Mexico” case reinforces that point.

In her dissenting opinion, Justice Barrett agrees with the majority on the above issues, but argues that the Supreme Court should simply have resolved the case on procedural grounds because Section 1252 of the INA states that “no court (other than the Supreme Court) shall have jurisdiction or authority to enjoin or restrain the operation” of specified immigration provisions (including, the ones at stake in this case) except as applied to “an individual alien against whom proceedings under [those provisions] have been initiated.” The district judge had issued an injunction against Biden’s reversal of MPP, which seems to be illegal under this provision.

Barrett suggests that, if the district court could not issue an injunction, then it also arguably lacked jurisdiction to hear the case at all. I think the majority has some good arguments against this theory, including that the Supreme Court exception to the anti-injunction rule suggests that lower federal courts must have at least some jurisdiction here (otherwise a case like this could never reach the Supreme Court). But I will leave this issue to those with greater expertise on remedies. Here, I just note that all nine justices seem to agree that lower federal courts’ can’t (in most cases) issue injunctions against executive branch actions here, even if the latter actions were actually illegal!

The most immediate bottom line here is that the Biden administration will likely succeed in ending MPP. The majority does remand the case to the lower courts for further consideration of whether Biden violated Section 706 of the APA, which among other things, bars policy changes that are  “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” But it seems unlikely the plaintiff states can prevail on this basis, given the thoroughness of the October memorandum, and the Court’s apparent endorsement of its thoroughness.

But, while this is a victory for supporters of migration rights, it’s also a win for executive power. Today’s ruling indicates that the President has near-total discretion to decide whether most migrants crossing a land boundary must “remain in Mexico” (or Canada, if they came from there), detain them (at least if resources allow), or parole them into the United States (so long as there is a “humanitarian” or “public benefit” rationale for their admission).

The Court’s 2018 travel ban ruling indicates he also has near-total discretion to exclude such migrants from the US entirely, even if his motive for doing is one that would be ruled unconstitutional in almost any other context. The Court has also ruled that habeas corpus constraints do not apply to immigration detention, and more generally largely exempted immigration restrictions from a wide range of constitutional constraints that apply to other areas of government policy.

When you put it all together, the president ends up with sweeping power to exclude, detain, or parole the vast majority of potential migrants. Such massive discretionary power is at odds with the text and original meaning of the Constitution, and it’s certainly inimical to the major questions and nondelegation principles the Court – especially its conservatives – have applied in other contexts. The Supreme Court has not yet considered a major question or nonedelegation case in the immigration field. But, when they do, I hope conservative justices resist any temptation they might feel to carve out an ad hoc exception for immigration.

In the meantime, presidential power over immigration has grows apace. Much can and should be done to curb it. But neither Congress nor the Supreme Court have – so far – made more than minimal efforts to step up to the challenge.

The post Supreme Court Ruling in "Remain in Mexico" Case is a Win for Biden, Migrants – and Fans of Presidential Power appeared first on Reason.com.

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Apple Hikes iPhone 13 By 19% In Japan Months After CFO Cites FX Concerns

Apple Hikes iPhone 13 By 19% In Japan Months After CFO Cites FX Concerns

People in Japan who want the latest iPhone are going to have to pony up nearly 20% more, according to Nikkei Asia and confirmed by 9to5Mac.

iPhone 13 Pro (left) and iPhone 13 Pro Max. David Phelan via Forbes

While the iPhone 14 is set to launch in September, Apple hiked the the price of the existing iPhone 13 from 62,800 yen ($423) to 144,800 yen ($1,060), up from $423 and $899 respectively.

According to 9to5Mac, the higher prices – which are still less than US consumers are paying – may be a reflection of a weakening yen.

During an April 28 earnings release, Apple CFO Luca Maestri said that foreign exchange rates were becoming a problem for the company, as revenue forecasts are calculated in dollars, and turbulent FX rates will likely impact sales numbers for the June quarter.

As you can see, iPhone prices in Japan were even lower than in the United States. Unfortunately, Japan’s local currency has lost about 15% of its value compared to the US dollar in the last three months, which ultimately has an impact on the price of imported products.

Despite the price increase, iPhone sales in Japan seem to be doing well. Recent research shows that the new third-generation iPhone SE has been in strong demand in the Asian country, accounting for 18% of local smartphone sales in April. -9to5Mac

Meanwhile, iPads are now 25% more expensive at 49,800 yen ($368), and the Apple Watch saw a boost as well. In June, there was a 10% price hike on MacBook Air and MacBook Pro models for the Japanese market.

The higher price point all but ensures that the iPhone 14 will have a higher price in Japan compared to the iPhone 13’s launch price last year.

 

Tyler Durden
Sun, 07/03/2022 – 17:45

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Shellenberger: Yes, You Can Blame Biden For High Energy Prices

Shellenberger: Yes, You Can Blame Biden For High Energy Prices

Authored by Michael Shellenberger via Substack,

The experts were wrong once again…

This July 4th, as you fill up your car or truck, you might be tempted to blame President Joe Biden for high gasoline prices.

You shouldn’t, say some experts. It’s Russian President Vladimir Putin’s fault, they say. The US had to cut off Russian oil imports to punish Putin for invading Ukraine.

Meanwhile, Biden himself has blamed the American energy industry.

“At a time of war,” Biden wrote in an open letter to the industry on June 15, “high refinery profit margins being passed directly onto American families are not acceptable… companies must take immediate actions to increase the supply of gasoline, diesel, and other refined product.”

But US refineries are already operating at 94 percent of their capacity, with US refineries in the Gulf of Mexico running at 98 percent, which is the highest rate in 30 years. Running refineries at a higher capacity than that risks damaging the equipment. As such, Biden isn’t just wrong, he insulted some of the hardest working people operating in one of the most dangerous industries in America.

But, on May 12, Biden’s Interior Department blocked a proposal to open up more than one million acres of land in Alaska for oil and gas drilling. Two days later, Biden’s Environmental Protection Agency blocked plans to expand an oil refinery in the US Virgin Islands.

Biden and his defenders said he had to block the expansion of the Virgin Islands refinery, given how polluting it was.

But had Biden’s EPA allowed the Virgin Island refinery to expand, the owners would have poured nearly $3 billion into retrofitting the plant so it produced gasoline and other products more cleanly, while significantly increasing production at the same time.

Furthermore, anybody who cares about air pollution and climate change should want more oil and gas drilling, not less. US emissions declined 22% between 2005 and 2020, mostly because cheap natural gas has replaced coal.

In truth, there are many things Biden could have done, and still should do, to lower energy prices. He could invoke the National Defense Act to accelerate the rate of oil and gas permits. He could set a floor of $80/barrel for re-filling the Strategic Petroleum Reserve (SPR), which would be a powerful incentive for the industry, because it would prevent prices from falling to unprofitable levels. Biden could announce trade agreements with American allies to supply them with liquified natural gas, which would incentivize more natural gas production and lower prices.

If Biden got America on a wartime footing, as he should be given Russia’s aggression in Europe, we would see the lowering of oil, gas and petroleum prices in less than one year.

Why won’t Biden do it?

Because he has declared war on fossil fuels.

 “I guarantee you, we’re going to end fossil fuel,” Biden promised a student climate activist in 2019.

“I am not going to cooperate with them,” he said, referring to the oil and gas industry.

And indeed, he hasn’t.

When oil and gas executives visited the White House in June, Biden snubbed them by refusing to attend the meeting. Instead, at the very same moment, he met with wind industry executives. A few days earlier, Biden administration officials signaled they may support a large new tax on the oil industry proposed by a Senator from Oregon.

All of this has soured the oil and gas industry on investing in production.

“If you were an oil company,” a senior executive at a major US bank told me, “why would you invest hundreds of millions of dollars into expanding refining capacity if you thought the federal government or investors would shut you down in the next few years? The narrative coming from the administration is absolutely insane.”

And it’s about to get more insane. At the G-7 meeting in Germany earlier this week, French President Emmanuel Macron was overheard telling Biden that he couldn’t count on Saudi Arabia and the United Arab Emirates to produce much more oil. Implicit in Macron’s remarks was that the US needs to produce far more than Biden has been willing to allow.

The problem is that Biden is in the grip of a pro-scarcity ideology that demands humankind return to relying 100 percent on renewables, like we did before the industrial revolution. But that’s a delusion…

Keep reading with a 7-day free trial Subscribe to Michael Shellenberger to keep reading this post and get 7 days of free access to the full post archives.

Tyler Durden
Sun, 07/03/2022 – 17:10

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Visualizing Interest Rate Hikes Vs Inflation Rate, By Country

Visualizing Interest Rate Hikes Vs Inflation Rate, By Country

Imagine today’s high inflation like a car speeding down a hill. In order to slow it down, you need to hit the brakes. In this case, the “brakes” are interest rate hikes intended to slow spending. However, as Visual Capitalist’s Jenna Ross explains, some central banks are hitting the brakes faster than others.

This graphic uses data from central banks and government websites to show how policy interest rates and inflation rates have changed since the start of the year. It was inspired by a chart created by Macrobond.

How Do Interest Rate Hikes Combat Inflation?

To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

In an effort to combat inflation, central banks will raise their policy rate. This is the rate they charge commercial banks for loans or pay commercial banks for deposits. Commercial banks pass on a portion of these higher rates to their customers, which reduces the purchasing power of businesses and consumers. For example, it becomes more expensive to borrow money for a house or car.

Ultimately, interest rate hikes act to slow spending and encourage saving. This motivates companies to increase prices at a slower rate, or lower prices, to stimulate demand.

Rising Interest Rates and Inflation

With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.

 

The Euro area has 3 policy rates; the data above represents the main refinancing operations rate. Inflation data is as of May 2022 except for New Zealand and Australia, where the latest quarterly data is as of March 2022.

 

The U.S. Federal Reserve has been the most aggressive with its interest rate hikes. It has raised its policy rate by 1.5% since January, with half of that increase occurring at the June 2022 meeting. Jerome Powell, the Federal Reserve chair, said the committee would like to “do a little more front-end loading” to bring policy rates to normal levels. The action comes as the U.S. faces its highest inflation rate in 40 years.

On the other hand, the European Union is experiencing inflation of 8.1% but has not yet raised its policy rate. The European Central Bank has, however, provided clear forward guidance. It intends to raise rates by 0.25% in July, by a possibly larger increment in September, and with gradual but sustained increases thereafter. Clear forward guidance is intended to help people make spending and investment decisions, and avoid surprises that could disrupt markets.

Pacing Interest Rate Hikes

Raising interest rates is a fine balancing act. If central banks raise rates too quickly, it’s like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980’s when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.

However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.

“There’s always a risk of going too far or not going far enough, and it’s going to be a very difficult judgment to make.”

– JEROME POWELL, U.S. FEDERAL RESERVE CHAIR

It’s worth noting that while central banks can influence demand through policy rates, this is only one side of the equation. Inflation is also being caused by supply chain issues, a problem that is more or less outside of the control of central banks.

Tyler Durden
Sun, 07/03/2022 – 16:35

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Morgan Stanley: As The Recession Arrives, Will We See A Surge In Corporate Defaults

Morgan Stanley: As The Recession Arrives, Will We See A Surge In Corporate Defaults

By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley

For some time, our economists have been highlighting that recession risks are rising globally. In their mid-year outlook, they lowered their 2022 global growth forecast sharply to 2.9%Y, less than half the 6.2%Y level a year ago. Since then, deceleration has continued. The combination of updated forecasts for a recession in the euro area, weaker incoming data, and revisions to 1Q GDP has led our US economists to shift down their 2022 US GDP forecast to 0.9% 4Q/4Q, and they have suggested that the risk of a US recession by the end of this year is high. A hallmark of the last three US recessions has been a spike in corporate credit default rates. We would argue that the credit default experience in a potential US recession may be more moderate this time around. However, despite the significant repricing in June, valuation adjustment is still incomplete.

At the onset of the current hiking cycle, credit fundamentals were on a much healthier footing than in other cycles. Despite some deterioration at the margin in the last quarter, fundamentals remain reasonable and in line with pre-Covid levels – low net leverage, high interest coverage, and still-healthy cash on balance sheet. The ratings mix of the high yield bond market has improved. Currently, over half of the benchmark HY bond index is BB rated, versus 43% in 2018-19 and 40% in the aftermath of the GFC. Furthermore, refinancing needs are low. During 2022-24, only about 10% of the US$3 trillion in leveraged finance debt (high yield bonds and leveraged loans combined) is due to mature.

We expect higher risk premiums in credit but do not anticipate a spike in corporate defaults over the next 12 months. Our credit strategists, led by Srikanth Sankaran, forecast HY default rates to track 2-2.5% on the Moody’s count-weighted measure through 2Q23 – double the current levels but well inside prior recession peaks. While this would be a notable departure from the experience of the last three recessions, it is not without precedent. In the 1970s and 1980s, we had recessions but without a spike in corporate default rates. No doubt stresses could increase over the medium term, but the more imminent concern is downgrades.

Leveraged loans are the segment of the credit markets most vulnerable to higher rates, given their floating-rate nature. Over the course of past few years, we have seen the loan market drift towards the lower-quality segments (B3/B- ratings). Moody’s estimates that if rates were to increase by 300bp, absent meaningful earnings growth, as many as half of the B3 rated companies would see their interest coverage fall below 1.0x – a level more typical of a Caa rating than B3. Not surprisingly, the downgrade potential is much greater for companies that depend on leveraged loans (floating-rate liabilities) rather than the fixed-rate high yield bonds for funding. Thus we expect downgrades, particularly in the loan market, to be a bigger and more immediate concern for credit markets over the next 12 months rather than spiking defaults.

Until about a month ago, we could argue that credit markets in general, and leveraged credit in particular, were underpricing recession risks. After the sell-off in June, US HY spreads are ~150bp wider, loan prices are down 2.5 points, CCC spreads have breached 1,000bp, and stressed tails have doubled. Clearly, growth risks are starting to be priced, but we think that the credit markets need to calibrate the risk of a recession more fully. For context, IG and HY spreads are at 155bp and 569bp, respectively, while garden-variety recessions/growth scares tend to see spreads go north of 200bp and 750bp, respectively. Thus, more repricing is needed since spreads are still shy of historical levels heading into a recession, especially in the lower-quality segments of the market. Unlike some previous credit cycles (such as the energy sector downturn in 2015-16), we don’t have a ‘problem sector’ per se. As such, identifying defensive sectors and flagging sectors to stay away from is more complicated this time around. Companies with a heavy reliance on low-end consumer demand, elevated wage intensity, and commodity/logistics input costs remain vulnerable in this regard.

As the market recalibrates growth and liquidity risks, we expect decompression and dispersion themes to re-emerge. We would fade any rally in credit markets and recommend investors move up in quality/improve the liquidity profile of their portfolios.

Enjoy your Sunday.

 

Tyler Durden
Sun, 07/03/2022 – 16:00

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“Oregon Health Officials Delayed a Meeting Because ‘Urgency Is a White Supremacy Value'”

Robby Soave reports, here at Reason:

The Oregon Health Authority (OHA) is a government agency that coordinates medical care and social well-being in the Beaver State. During the pandemic, OHA was responsible for coordinating Oregon’s vaccination drive and disseminating information about COVID-19—both vital tasks.

The agency’s office for equity and inclusion, however, prefers not to rush the business of government. In fact, the office’s program manager delayed a meeting with partner organizations on the stated grounds that “urgency is a white supremacy value.” …

“Thank you for your interest in attending the community conversation between Regional Health Equity Coalitions (RHECs) and Community Advisory Councils (CACs) to discuss the Community Investment Collaboratives (CICs),” wrote [the Regional Health Equity Coalition Program Manager]. “We recognize that urgency is a white supremacy value that can get in the way of more intentional and thoughtful work, and we want to attend to this dynamic. Therefore, we will reach out at a later date to reschedule.”

Oddly enough, there also other people who have long believed that whites are more likely than nonwhites to have particular character traits, such as (among other things) being willing to go along with requests to do things urgently. Indeed, I’d heard jokes those people tell reflecting that very perception. I just don’t think highly of those people.

The post "Oregon Health Officials Delayed a Meeting Because 'Urgency Is a White Supremacy Value'" appeared first on Reason.com.

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Home Price Cuts, Rising Inventories Are Ominous Signs Of Top

Home Price Cuts, Rising Inventories Are Ominous Signs Of Top

The pandemic housing boom hit a peak and should start rolling over as rising inventory forces some home sellers to slash prices. The weight of soaring mortgage rates and increasing inventory are the possible markings of a top that has already led some sellers in major US cities to cut listing prices. 

“The housing market is absolutely in need of a reset,” George Ratiu, senior economist at Realtor.com, told Bloomberg. 

Realtor.com’s data showed almost a third of listings in June had price cuts in Austin, Phoenix, and Las Vegas metro areas. Price cuts are a growing national trend as higher rates triggered an affordability crisis, removing millions of new prospective home buyers. 

Bloomberg spoke with Naples, Florida, real estate agent Jennifer DeFrancesco who advised her clients to drop listing prices as she believes the flood of demand from the Northeast has eased. 

Carolyn Young, a broker associate with Christie’s International Real Estate Sereno in the San Francisco Bay Area, said demand for homes in a 55-and-over community in Brentwood had seen dramatic declines since many retirees were battered by awful performance in their stock and bond portfolios in the first half. She advised clients at Trilogy at the Vineyards to lower their listings by $50,000 to $100,000 because of faltering demand. 

“For sellers, it’s devastating, especially if they bought something else earlier and paid too much for that,” Young said.

Price cutting comes as a flood of inventory enters a very tight market. Another Realtor.com report this week showed the number of active US listings soared 18.7% in June from a year earlier.

Danielle Hale, the chief economist for Realtor.com, said, “We anticipated that more inventory will eventually cool the feverish pace of competition.” The rise in inventory was more profound in Austin, Texas; Phoenix, Arizona; and Raleigh, North Carolina, which saw active listings more than double from a year ago. In Nashville, Tennessee, active listings jumped 86%, and 72% in Riverside, California. 

Mortgage applications and pending home sales are down, which suggests the jump in the 30-year fixed-loan mortgage rate from 3% to over 6% this year (back in March, we warned coming rate explosion would trigger a housing affordability crisis) is quickly cooling the market. Next, we should first see price declines in areas that were red hot during the early days of the pandemic.

It’s only a matter of time before the Case-Shiller (newly minted S&P CoreLogic CS) home price index data turns. 

Tyler Durden
Sun, 07/03/2022 – 15:25

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