Zoning Laws Make Child Care Unaffordable in Utah

Pre-school children playing with their teacher on the floor

Utahns fork over half a paycheck (or more) for child care, while child care workers struggle with low pay. And costly zoning laws are to blame.

Utah has a child care shortage, with long waitlists for parents trying to get babies and toddlers into centers. According to Susan Madsen, a Utah State University leadership professor who testified to the state’s Economic Development and Workforce Services Interim Committee last year, over 150,000 children in Utah under 6 possibly need child care, but only 63,000 slots are available in formal child care programs or other state-licensed ones.

In that same hearing, Johnny Anderson, a former state lawmaker and the president and CEO of ABC Great Beginnings child care centers, told the committee that growing areas in the state don’t have an adequate amount of child care facilities. 

But building them can be a nightmare. During a May 2021 hearing at the state Capitol, child care center owners told lawmakers about the many obstacles certain zoning practices create for them. Many of those laws add hundreds of thousands of dollars to a project before a center even opens, keeping would-be center owners from entering the child care market and keeping costs high for families.

“You gotta spend money not only on the property, you gotta spend money on engineering, architecture to get something that you can finally get in front of a city staff to get approval to move to the next stage, which is often a planning commission,” Anderson said last year. “You’re going to get an up-or-down vote from them or recommendations of things that you gotta change before you can finally get over to a city council.”

Anderson recalled that after finding a property in a master-planned community that had the zoning for a child care center, he still had to go through a frustrating rezoning process.

“It takes four months to get in front of a city council just for the rezone. And as I’m sitting in that city council meeting, the city council members start arguing amongst themselves whether or not the zone that they had identified on a master plan was really the zone that they want in that space.” The city attorney ultimately asked Anderson to go through the rezoning process again.

Anderson believes local officials have no idea what these delays and denials cost. “I said, ‘I am paying $13,000 a month in interest on this piece of ground. And you act as though it’s nothing for me to go back and start this process over.'”

In addition, he had to bury power lines and install a new sidewalk. Then the city changed its water detention standards before he got his building permit. “All of this resulted in about $400,000 above what the construction costs were going to be for this facility,” Anderson said. Not many child care center owners have an extra $400,000 lying around.

Staffing child care facilities is another hurdle. Anderson said that while child care centers in Utah spend about $0.50 on staffing for every dollar in revenue, “We have to figure out a way to get more money to our staff.” Not forcing centers to spend hundreds of thousands of dollars to meet unnecessary zoning requirements could help.

An easy zoning fix would be to give child care centers the same development flexibility as charter schools. “Charter schools are basically treated like public schools, which are basically treated like state facilities,” said Anderson. “Where, as long as you are [sticking to a] uniform building code, cities really can’t get in your way.”

Both Republicans and Democrats in the Utah Legislature tell Reason that they have not decided what child care bills, if any, they will run next session. However, they also pointed to recent bills that reduced regulations and expanded access to child care. Lawmakers consistently get pushback from cities that don’t want the state butting into local zoning decisions, no matter how unreasonable those rules are. And the powerful Utah League of Cities and Towns, a nonpartisan cooperative of localities, is also known to fight state laws targeting local zoning.

But the major problems won’t be solved if petty city tyrants are allowed to jerk around small business owners. And Utahns will continue paying the price for the state’s child care shortage as potential owners face many setbacks in opening new centers. As Anderson said, “The new people…who want to take that risk cannot do this.”

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The Can Has Reached The End Of The Road

The Can Has Reached The End Of The Road

Authored by Omid Malekan,

Markets are like children. They can only learn the most important lessons the hard way, by making mistakes and suffering the consequences.

One of my earliest memories is of a visit to a local park with my father and my sister. This park had a big fountain full of fish and my sister climbed up to get a closer look while my dad repeatedly warned her to be careful. She didn’t listen and fell in, so dad had to pull her out. The water was cold and she was shivering.

Years later, my father told us that he intentionally fought the urge to grab her before she fell, even though he was certain that she would. He wanted her to learn an important lesson about listening to her parents, and being careful around water. He even let her stay in the cold water a beat longer to make sure the lesson stuck.

I share this story as an allegory of the right way to manage an economy and a financial system. Good policymakers know that economic agents (of any age) are like children. If you prevent them from suffering the consequences of their own decisions — however painful those consequences might be — then they will never learn. Investors, bankers, and borrowers are always probing the boundaries of what they can get away with. Bail them out from stupid risk taking and they will get stupider.

We’ve all met kids who are never punished by their parents or allowed to fail. They grow up to be miserable adults, stumbling from one fiasco to another and eventually spiraling out of control. That’s the state of the global financial system today.

For decades, central bankers and other government officials have been bailing out market participants from the consequences of their own folly. The 1987 crash, Long Term Capital, the 2008 financial crisis, the European debt crisis, and countless other macroeconomic events that should have resulted in major players being punished for making bad decisions did not. Instead, rates were cut, money was printed, stimulus was introduced, and the kids who ignored the warnings of their parents were not allowed to fall. They were given stern warnings after the fact, but kids who didn’t get wet don’t listen.

All of this was done under the guise of protecting ordinary people. Let Wall Street fail, government officials told us, and Main Street would suffer. This was always a dubious claim, but some version of it was embraced by both sides of the political spctrum in almost every country, and the financial system grew ever more fragile.

Then came COVID, and any pretense of discipline went out the window. Bailing out bad actors was now a virtue, no matter how little they deserved it. So the Federal Reserve backstopped the junk bond market then gave a speech about protecting healthcare workers. The most egregious interventions were eventually wound down, but the precedence had been set: the closer the kids got to the edge, the more the government would try to save them. An importat opportunity for a market reset was lost, and the can was kicked further down the road.

All that stimulus — the size and variety of which was unprecedented in modern history — resulted in record inflation. Unlike the prior interventions, whose negative consequences were felt in more implicit ways such as economic inequality, the negative consequences of this affair are front page news. People hate inflation so governments have no choice but to respond, undoing decades of easy money and raising interest rates. Markets are not taking it well. Currencies are plunging, borrowing costs are soaring and the global economy is starting to teeter.

Policy makers are now stuck in a bind. Do nothing and inflation will rage, or do something and important markets may break. The proverbial can has reached the end of the road.

What happened in the UK this week — a collapsing bond market that forced the Bank of England to reverse itself — is only the beginning. You can’t abruptly cut off a kid you’ve been spoiling for years without causing a tantrum. That’s not how people work, and it’s certainly not how markets work. A global economy built on cheap money is about to be tested in unprecedented fashion.

How many public companies who loaded up on cheap debt to finance share buybacks will now have to reverse the process? How many governments who run major deficits will be able to tighten their belts as borrowing costs rise? How many centrist governments will survive simultaneously surging food, fuel and borrowing costs? How many real estate deals will remain viable when mortgage rates approach 8%? Which hedge fund is about to blow up?

Only time will tell, and you’ll have to protect yourself.


As it turns out, there’s one financial system that has never had a bailout, market intervention or outside stimulus. You’ll know it from its extreme volatility, and the fact that its biggest players can and do fail. In this system, the depositors who trust bad banks lose their savings and the traders who used too much leverage lose everything.

The stewards of the old system love to criticize this one, in part because lots of people can and do get wet on a regular basis, some of them undeservedly so. But in a year when the old system keeps teetering on the edge, this one has already had its baptism by fire, making it antifragile and far more trustworthy.

Tyler Durden
Thu, 09/29/2022 – 16:20

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The Crash Just Won’t Stop But Today Something Changed

The Crash Just Won’t Stop But Today Something Changed

After yesterday’s euphoric, BOE-inspired, short-squeezed meltup, today was supposed to be a continuation rally courtesy of one of the most oversold markets in history.

It didn’t quite work out that way, and stocks opened into an absolute rout, with the NYSE TICK indicator not turning positive until almost one hour into trading after one of the biggest negative ticks of 2022.

As a result, those who expected yesterday’s BOE “temporary QE” pivot would be enough to push stocks higher for at least a few more days – here even some of the biggest pessimists expected this bear market rally to last for 2-3 days at least – were promptly disappointed as stocks tumbled all day, dropping almost to new 2022 lows…

…. in a broad, and high-volume selloff which dragged every sector lower.

The selling which for all intents and purposes pushed stocks to 2022 lows (and the lowest since Nov 2020), meant that spoos are now down 7 of the past 8 days, with today’s drop more than wiping out all of yesterday’s gains.

But unlike recent selloffs which were mostly catalyzed by surging yields, or a soaring dollar, today we have seen neither, as both 10Y TSY yields (as 30Y gilts have gone nowhere)…

… and the Bloomberg dollar index slumped all day in what would otherwise have been a huge relief for risk assets.

One possible reason for the continued USD weakness: after a modest attempt to rebound, Nov Fed hike odds slumped again, and after pricing in nearly 90% odds of a 75bps in Nov, the odds are back to just 63% and dropping.

But while oil did indeed enjoy the slide in the dollar, avoiding an even bigger rout thanks to a Reuters report that OPEC+ would cut output by 500K-1MMb/d next week…

… the same can not be said for US stocks obviously, as instead of macro traders today were focused on the micro, with Apple tumbling for a second day in a row, and one of its biggest slides in the past year…

… this time following a rare downgrade from BofA.

The continued implosion in AAPL and other tech names has pushed Goldman’s most-shorted tech index to March 2020 levels, and is about to take out that particular support, bringing the index back to Dec 2018 levels.

Additionally, the absolute disintegration in used car retailer, Karmax, which lost a quarter of its market cap today following catastrophic earnings and a dire assessment of the industry, certainly did not help the apocalyptic investor sentiment.

In any case, whatever prompted today’s sell off – and as Goldman explained there is much more selling to come – one thing is certain: stocks can keep crashing 10% every day in perpetuity and thanks to Zeno’s paradox, they still won’t hit bottom.

Tyler Durden
Thu, 09/29/2022 – 16:05

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“We’re Horrified”: Major Brands Pull Twitter Ad Campaigns Over Child Porn

“We’re Horrified”: Major Brands Pull Twitter Ad Campaigns Over Child Porn

When it comes to policing mean tweets – or any opinion to the right of Mao, Twitter’s army of pink-haired social justice censors is on it.

But when it comes to pedophiles, the social media giant’s censorship is so lax that major advertisers – including Dyson, Mazda, Forbes and PBS Kids – have suspended their marketing campaigns or removed ads from ‘parts of Twitter’ because their promotions were featured next to tweets soliciting child pornography, Reuters reports.

DIRECTV and Thoughtworks also told Reuters late on Wednesday they have paused their advertising on Twitter.

Brands ranging from Walt Disney Co, NBCUniversal and Coca-Cola Co to a children’s hospital were among more than 30 advertisers that appeared on the profile pages of Twitter accounts peddling links to the exploitative material, according to a Reuters review of accounts identified in new research about child sex abuse online from cybersecurity group Ghost Data. -Reuters

Easily filtered keywords including “rape” and “teens” were featured alongside promoted tweets from corporate advertisers, a Reuters review found.

In one case, a Cole Haan ad appeared next to a tweet in which a user solicited “trading teen/child” content.

We’re horrified,” said Cole Haan brand president, David Maddocks. “Either Twitter is going to fix this, or we’ll fix it by any means we can, which includes not buying Twitter ads.”

In another example, a user tweeted searching for content of “Yung girls ONLY, NO Boys,” which was immediately followed by a promoted tweet for Texas-based Scottish Rite Children’s Hospital. Scottish Rite did not return multiple requests for comment. -Reuters

Twitter offered a boilerplate response, telling Reuters that the company “has zero tolerance for child sexual exploitation,” and is investing more resources dedicated to child safety, adding that the company is working closely with advertisers and partners to investigate and avoid embarrassing corporate clients in the future.

Twitter’s child porn issues were noted by The Verge in late August, causing pushback from advertisers that are critical to the company’s revenue stream.

After Reuters presented Twitter with a sample of 20 accounts promoting child porn last Thursday, the company removed around 300 additional accounts from the network, but over 100 remained on the platform the following day, according to Ghost Data and Reuters.

Then on Monday, Reuters shared a full list of more than 500 accounts furnished by Ghost Data, which Twitter reviewed before permanently suspending them.

Twitter scrambled to do damage control Wednesday morning ahead of the Reuters story, telling advertisers in an email that it had “discovered that ads were running within Profiles that were involved with publicly selling or soliciting child sexual abuse material.”

“Twitter needs to fix this problem ASAP, and until they do, we are going to cease any further paid activity on Twitter,” said a Forbes spokesperson.

Mazda, meanwhile, said “There is no place for this type of content online,” adding that the company is now prohibiting ads from appearing on Twitter profile pages.

A Disney spokesperson called the content “reprehensible” and said they are “doubling-down on our efforts to ensure that the digital platforms on which we advertise, and the media buyers we use, strengthen their efforts to prevent such errors from recurring.”

A spokesperson for Coca-Cola, which had a promoted tweet appear on an account tracked by the researchers, said it did not condone the material being associated with its brand and said “any breach of these standards is unacceptable and taken very seriously.”

NBCUniversal said it has asked Twitter to remove the ads associated with the inappropriate content. -Reuters

When will Elon Musk enter the Reuters story into evidence?

Tyler Durden
Thu, 09/29/2022 – 15:45

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The University of Idaho Tries To Force Faculty To Remain ‘Neutral’ on Abortion

University of Idaho

At the University of Idaho, administrators can pass out condoms to prevent the spread of STDs but not to prevent pregnancy. Why? The University has adopted an extreme set of policies as part of an overzealous attempt to comply with an Idaho state bill banning the use of public funds for abortion—violating faculty free speech rights in the process.

Last week, the University of Idaho’s General Counsel released a policy aimed at directing faculty and staff behavior following the enforcement of Idaho’s “No Public Funds for Abortion Act.” However, the policy appears to go beyond the requirements of Idaho law, instead banning faculty and staff from expressing opinions on the subject of abortion. The university’s policy not only is unconstitutional but also shows how free speech is often on the chopping block when vague laws and nervous administrators collide.

In 2021, the Idaho Legislature passed a bill prohibiting the use of public funds to “provide, perform, or induce an abortion; assist in the provision or performance of an abortion; promote abortion; counsel in favor of abortion; refer for abortion; or provide facilities for an abortion or for training to provide or perform an abortion.” The law also bans public university tuition and fees from being used for these purposes. Further, public university–run health clinics and university employees are also prohibited from providing emergency contraception, except in the case of rape, in addition to other limits on their conduct.

The law is vague, and it is unclear whether the bill would pass First Amendment muster. Whether the law is constitutional would primarily depend on an interpretation of the word “promote.” As Eugene Volokh wrote in The Volokh Conspiracy this week, “In this sort of context, it seems to me, ‘promote’ does not refer to abstract advocacy, such as the statement ‘I believe that abortion should be legal’ or even ‘I encourage you to obtain an abortion.’ It refers to the recommendation to a particular person to get an abortion.”

In that case, banning the “promotion” of abortion is likely compliant with the First Amendment. As Volokh argues, the act of “promoting” abortion, applied to mean specifically urging someone to obtain an abortion “would probably also be constitutionally unprotected [speech], at least if it’s urging an abortion in Idaho, since that would be solicitation of a crime.”

However, the University of Idaho appears to interpret “promotion” to include any action that appears to show a favorable opinion of abortion. In doing so, the school has banned expression clearly protected by the First Amendment—which, as a public institution, it is directly prohibited from doing.

The University of Idaho’s policy goes beyond what is explicitly banned in law. In addition to banning employees from promoting abortion, counseling in favor of it, providing referrals for abortion, or contracting with abortion providers, the university’s policy curtails faculty speech in typical classroom discussions.

“Classroom discussion of [abortion] should be approached carefully. While academic freedom supports classroom discussions of topics related to abortion, these should be limited to discussions and topics relevant to the class subject,” wrote the university’s General Counsel. “Academic freedom is not a defense to violation of law, and faculty or others in charge of classroom topics and discussion must themselves remain neutral on the topic and cannot conduct or engage in discussions in violation of these prohibitions without risking prosecution.”

The university’s “neutrality” mandate also applies to classroom discussions of contraception. The university justifies this by invoking an existing Idaho law that prohibits anyone who isn’t a doctor or medical professional acting under a doctor’s orders from distributing or advertising contraceptives. The university defends its interpretation of the law—an interpretation that also led the school to allow university employees to provide condoms to students to prevent the spread of STDs but not for pregnancy prevention—by arguing that relevant state law is “unclear and untested in the courts. Since violation is considered a felony, we are advising a conservative approach here, that the university not provide standard birth control itself.”

Such a restriction on academic freedom clearly violates the First Amendment. “No statute can authorize a public university to censor pedagogically relevant classroom discussion,” said Adam Steinbaugh, an attorney with the Foundation for Individual Rights in Education, in a press release about the policy. “Speech about abortion—legal or not—cannot be limited based on its viewpoint.”

The University of Idaho is clearly afraid of scrutiny from overzealous prosecutors. However, fear does not justify silencing academic freedom. “U of I’s sweeping policy directly contravenes the university’s legal obligations and impermissibly chills in-class speech by placing faculty in perpetual fear of punishment for their protected expression,” wrote Graham Piro, a program officer at FIRE, in a letter addressing the university. “It does not take a significant stretch of the imagination to see how the university’s guidance will adversely impact classroom instruction. For example, a political science professor publishing a public policy argument that abortion should be lawful will have to self-censor to ensure the discussion is not perceived as being ‘in favor of abortion.'”

The University of Idaho’s actions show what can happen when nervous university lawyers are put in charge of interpreting vague state laws. Ultimately, when a university places its desire to avoid controversy over protecting academic freedom, First Amendment rights are often the first to go.

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“You’re Nobody” and the Law: Removing Candidate’s Ballotpedia Page Isn’t Libelous

From Magistrate Judge Phillip Green’s Report & Recommendation Tuesday in Trouten v. Ballotpedia (W.D. Mich.):

Plaintiff alleges that Ballotpedia “has withdrew the ‘Bryan Trouten for United States House of Representatives Campaign’ on their website.” Plaintiff alleges that this action constitutes libel and/or defamation under state law. Plaintiff seeks $5,000,000.00 in damages….

It must first be noted that Plaintiff does not allege that Defendant made any false or defamatory statement concerning him. Instead, Plaintiff alleges that Defendant merely removed information from its website concerning him. Defendant argues that Plaintiff’s claim fails the first element. But Plaintiff further alleges that, by removing the information in question from its website, Defendant was falsely “claiming that [Plaintiff] withdrew his campaign.” Thus, Plaintiff asserts that Defendant’s actions implied, falsely, that Plaintiff had withdrawn his campaign.

Michigan recognizes a cause of action for defamation by implication. To prevail on such a claim, Plaintiff must establish that the defamatory implication is “materially false.” Plaintiff alleges that he did not withdraw his candidacy for the U.S. House of Representatives and, moreover, that he timely submitted with the State of Michigan the paperwork necessary to be considered a write-in candidate. Thus, contrary to Defendant’s arguments, Plaintiff’s allegations satisfy the initial element of the analysis.

{Defendant asserts that it merely “listed [Plaintiff] as an inactive candidate after the Michigan Department of State released an official candidate list without [Plaintiff’s] name on it.”  Defendant further asserts that “[w]hen Trouten informed Ballotpedia that he was an active write-in candidate, Ballotpedia updated its encyclopedia to reflect that status.” These assertions are not supported by any evidence and go beyond the scope of a motion asserted under Federal Rule of Civil Procedure 12(b)(6). The Court has, therefore, disregarded the assertions in question. If Defendant wanted to present evidence and argue that it is entitled to relief as a matter of law, it should have asserted a motion [for summary judgment] under Federal Rule of Civil Procedure 56.}

Plaintiff’s claim nevertheless fails because the implication that Plaintiff withdrew his candidacy for the U.S. House of Representatives is simply not defamatory because it does not tend to harm Plaintiff’s reputation or deter third persons from associating with Plaintiff. See, e.g., Kevorkian v. American Medical Association (Mich. Ct. App. 1999) (the court “may determine, as a matter of law, whether a statement is actually capable of defamatory meaning”).

Plaintiff’s claim fails for a second reason as well. Because Plaintiff was a candidate for public office, he is considered, for present purposes, a public figure. As such, Plaintiff must establish that Defendant acted with “actual malice” or “with knowledge that [its implied statement] was false or with reckless disregard of whether it was false or not.” Plaintiff has failed to allege any facts which, if proven, would satisfy this standard. Thus, Plaintiff’s claim fails, in the alternative, for this reason.

In his response to the present motion, Plaintiff fails to present any argument, or identify any authority, in opposition to Defendant’s motion. Rather, Plaintiff merely states, “I didn’t want to[o] much information about my case being exposed to the defense, because I actually have material facts as well as many other factual evidence that are deemed troublesome to this case.” This vague, unsworn statement fails to advance Plaintiff’s position. Plaintiff further states, “I want to end with this” and requests that he be permitted to “express [his] side of the case in person” because “[i]t will definitely provide the material needed in understanding the case a little better….” The Court appreciates Plaintiff’s desire to be heard, but Plaintiff has presented no argument or authority suggesting that oral argument would assist the Court in determining the legal sufficiency of the allegations in Plaintiff’s complaint….

Congratulations to Joseph E. Richotte, Jennifer A. Dukarski & Barrett R.H. Young of Butzel Long, P.C., who represent Ballotpedia.

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Professor’s Prior Restraint Lawsuit Against Collin College Can Go Forward

From Judge Amos Mazzant’s decision Monday in Phillips v. Collin Community College Dist. (E.D. Tex.):

This case arises from a series of statements—a newspaper publication, an interview, class discussions, and social media posts—made by Phillips during the time he was a professor at Collin College. According to Phillips, Defendants “violat[ed] his constitutional rights by retaliating against him for speaking as a private citizen about public issues” in each of the enumerated instances. Specifically, Phillips complains that Defendants placed a prior restraint on his speech through a number of policies and directives, all of which Phillips claims were “attempt[s] to silence College faculty” from speaking “as private citizens on matters of public concern.”

Phillips asserts that the conflict between Phillips and Defendants began in 2017 when Phillips co-authored an open letter published in the Dallas Morning News advocating for the removal of Confederate memorials. In the letter, Phillips identified himself as a professor at Collin College and listed his faculty email as a point of contact. According to Phillips, he co-authored the letter as a private citizen. Nonetheless, after the letter was published, two Collin College administrators met with Phillips and reminded him of Collin College’s policy that requires faculty to “‘exercise appropriate restraint, exhibit tolerance for differing opinions, and indicate clearly that they are not an official spokesperson for the College’ when they speak or act as private citizens.”

Later, in 2019, Phillips granted the Washington Post an interview wherein he discussed race relations and the then-recent shooting at an El Paso, Texas grocery store. The shooter was a former Collin College student but was not a former student of Phillips’s. Prior to Phillips’s interview, Collin College’s President, H. Neil Matkin, sent out a directive via email to the Collin College campus:


The press has reached out to multiple campus administrators and district personnel regarding the El Paso shooting. At this time, it is believed that the shooter was a college student as late as spring 2019.I have issued a statement as follows (forgive the size—working from home): [attached]

Please refer all press inquiries you may receive to Marisela Codena-Smith at mcsmith@.collin.edu or by phone to the president’s office (972-758-3800). Any law enforcement personnel should be referred to Chief Bill Taylor at wtavlor@collin.edu or by phone to the president’s office.

Please keep the El Paso (and also the Ohio) victims and their [families] in your thoughts and prayers.

Thank you all,


Ten days after the directive was sent out and five days after the interview was published, Defendants required that Phillips meet with Associate Dean Kristin Streater … to discuss his violation of the directive. Nearly a month later, on September 3, 2019, Defendants provided Phillips with an “Employee Coaching Form” related to the interview, informing Phillips that “[e]xpectations moving forward are to follow the President’s directives when approached by the media.”

In June of 2020, shortly after the start of the global COVID-19 pandemic, Phillips commented on Collin College’s response to the pandemic in a post to his personal Facebook account. Following his post, Defendants called Phillips into a meeting with Streat and then-Dean Mary Barnes-Tilley … to discuss the Facebook post. During the meeting, Barnes-Tilley asked Phillips “do you still want to work here?” and told him that his post violated the Collin College Employee Standards of Conduct’s. According to Phillips’s, he interpreted Barnes-Tilley’s comments during the meeting “as a threat to terminate his employment if he continued to speak out.”

On August 11, 2021, Phillips posted a photo of a slide from a faculty meeting on his personal Facebook and Twitter accounts. The slide in the photo indicated that faculty were forbidden from requesting, requiring, or recommending masks be worn. Defendants offered Executive Order GA-38 as the basis for this policy. Following these posts, on August 27, 2022, Streater issued Phillips a “Level I Warning” for insubordination and failing to use internal communication channels to address his concerns. The warning referenced the two latest posts, continuous failure of Phillips to bring his concerns in an appropriate manner, the 2019 interview, and the 2020 Facebook post.

At the beginning of the Fall 2021 semester, Phillips assigned his students an essay on the history of pandemics and epidemics from the time of Columbus to the current COVID-19 crisis. During the class discussions pertaining to pandemics, Phillips voiced his annoyance with wearing masks, but commented that resistance to similar policies in the past had hindered societies from combatting the spread of other viruses in an attempt to engage his class in discussion on the issue. Due to these class discussions, Defendants asked Phillips to meet with Chaelle O’Quin …. During the meeting, O’Quin informed Phillips that “in order to make sure no one mandates masks, it is best to never discuss them at all” and then placed Phillips on a “Performance Improvement Plan.”

Following these incidents, Barnes-Tilley informed Phillips that his contract would not be renewed. Despite attempts to appeal the decision not to renew his contract, Phillips was terminated from his position once his current contract expired….

Defendants moved to dismiss, but the court disagreed:

Moving Defendants allege that their policies and directives do not amount to a prior restraint on speech because they do not expressly forbid certain speech or require prior approval to speak. Rather, Moving Defendants contend that the issue in the case at hand relates entirely to punishments placed on Phillips subsequent to his speech. Phillips, on the other hand, maintains that the policies and directives put forward and enforced by Defendants were meant to, and did, chill potential speech before it happened. The Court, accepting as true all well-pleaded facts in the complaint and viewing those facts in the light most favorable to Phillips, agrees with Phillips….

Moving Defendants are correct that “[t]he term ‘prior restraint’ is used to describe administrative and judicial orders forbidding certain communications when issued in advance of the time that such communications are to occur.” Moving Defendants’ narrow interpretation of the word “forbidding,” however, does not comport with well-established caselaw on the matter. See United States v. Nat’l Treasury Emps. Union (1995) (holding that a ban which did not expressly prohibit any particular kind of speech was nonetheless a ban that abridged the First Amendment because it induced employees to “curtail their expression if they wish[ed] to continue working for the Government.”); Baker v. City of Fort Worth (N.D. Tex. 2020) (holding that a city council permission scheme requiring the city council approve all posters is a prior restraint on speech despite no specific kind of poster being banned).

Accordingly, after reviewing the current complaint, and the arguments presented in the briefing, the Court finds that Phillips has stated plausible claims for relief in his fifth cause of action….

Congratulations to Greg Rebuel, Joshua Bleisch, JT Morris, and Katlyn Patton of the Foundation for Individual Rights and Expression, as well as Robert Wayne Schmidt of the Crews Law Firm PC, who represent Phillips. (Note that I’ve consulting for FIRE on various matters, but not on this case, and no-one asked me to blog about it.)

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When We’ll Know The Bear Market Is Over

When We’ll Know The Bear Market Is Over

By Simon White, Bloomberg Markets Live reporter and analyst

It’s a Gordian Knot, but it remains the central question for investors: When will the bear market in US equities and other risk assets be over?

Nobody has a crystal ball, but there are three strong contenders for conditions that will first need to be met:

  • A return of “fiscal credibility”.
  • Real-yield curve inversion.
  • Positive and rising liquidity.

Today’s backdrop is all about inflation. The seismic moves in assets and currencies around the world all boil down to the world’s largest central bank locked in a “death or glory” fight with unanchored price rises. The corollary is we won’t get a green light for risk assets to climb on a sustainable basis until the Federal Reserve has done enough to return inflation to a low and stable regime
The ultimate cause of the current inflation is the large fiscal deficits funded by monetary largesse in the years leading up to the pandemic. The pandemic itself and the Ukraine war didn’t jump-start the rise in prices, they merely worsened the already-changing underlying inflation dynamics.

The role of government spending is critical to understanding this. In a recent Fed paper presented at Jackson Hole, the authors show that when investors do not believe large fiscal imbalances will be stabilized the job of the central bank becomes extremely difficult.

Simply put, if there is a belief public debt will not be contained, it leads to a structural rise in inflation because any monetary tightening by the central bank causes growth to slump and the debt-to-GDP ratio rise. Due to the lack of fiscal credibility, debt buyers assume the rise in the ratio will have to be inflated away, and therefore expect higher inflation.

This is termed “fiscal stagflation,” and it means that the central bank can exacerbate inflation pressures by tightening rates when fiscal credibility is in short supply. The paper shows the massive fiscal interventions in Covid led to this loss in fiscal credibility in the US (although it is arguable it predated that, when Modern Monetary Theory came into vogue).

The first condition for an end to the bear market is thus fiscal credibility. With no strong commitment to bring debt down, there is little sign of it in the US at the moment.

The second condition is an inversion in the real-yield curve (as defined in the chart below). The curve steepened consistently all through the 1970s despite periods of very large interest-rate rises. The Fed in that decade did not have the will or the mandate to raise rates aggressively and persistently enough to break the back of inflation.

It wasn’t until Paul Volcker was at the helm that real progress was made. The Volcker Fed initially had “imperfect credibility” because it wasn’t willing to raise rates come what may, and the market assumed the central bank would ease when a recession hit, rejuvenating inflation. This was reflected in longer-term yields rising even as the Fed hiked aggressively.

After a false start in early 1980, when the Fed prematurely cut rates due to the slowdown, the central bank eventually got it right when it continued hiking aggressively through the 1981-82 recession, with rates peaking at 20%.

The real-yield curve began to flatten hard in 1980 as short-term real yields started to rise faster than long-term ones, and inverted in April 1981. Still, buying at that point would have been on the early side, before the multi-year rally started in August 1982.

Therefore a final condition is needed for the end of the bear market. Liquidity is one of most important medium-term drivers of equities. Its growth was still negative when the real-yield curve inverted in 1981, but by early 1982, it was positive and rising.

Buying the S&P in February 1982 after liquidity started growing would have faced about 10%-12% downside in the shorter term, before the position enjoyed an almost uninterrupted +220% rally.

With fiscal credibility in abeyance, the real-yield curve steep and still rising, and liquidity conditions very negative, none of the conditions are currently in place. Until they are it is difficult to have much confidence this bear market hasn’t got further to run.

Tyler Durden
Thu, 09/29/2022 – 15:25

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Next Blowup Shows The Sheer Pain In UK Backdrop

Next Blowup Shows The Sheer Pain In UK Backdrop

By Heather Burke, Bloomberg markets live commentator and reporter

To get a sense of the deteriorating UK macro backdrop, look no further than the slump in one of its biggest retailers as UK stocks, the pound and bonds have another tough day.

Next gave its second profit warning this year, saying inflation is keeping UK shoppers from buying non-essential items. The bellwether said in its financial report:

Sales during August were below our expectations and, despite improving sales in September, we think it is sensible to moderate our expectations for sales and profit in the second half. It is important to stress that, with so many variables at play, predicting near-term sales trends is unusually difficult. All the more so with recent Government stimulus measures yet to take full effect.”

Next also said the pound’s devaluation looks set to prolong inflation, even once factory gate prices ease. It looks like “we may be set to have two cost of living crises: this year, a supply side led squeeze, next year a currency led price hike as devaluation takes effect.”

H&M is cutting costs after its exit from Russia and higher garment and transport costs pressured earnings. Retail and autos are leading European stocks lower in early trading as recession fears rise, with Next the biggest Stoxx 600 decliner. UK stocks are lagging peers, with FTSE 100 declines led by retail. S&P 500 futures are also extending declines as the risk-off backdrop picks up.

Tyler Durden
Thu, 09/29/2022 – 15:05

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Facebook Announces Hiring Freeze, Warns Of “Team Restructuring”, Stocks Slumps

Facebook Announces Hiring Freeze, Warns Of “Team Restructuring”, Stocks Slumps

As advertising revenue growth stalls, Meta Platforms Inc., the owner of Facebook and Instagram, told employees that it plans to implement a hiring freeze and restructure employee teams in the latest effort to trim costs, reported Bloomberg

A person in attendance during a company Q&A session said CEO Mark Zuckerberg announced the hiring freeze as this is the latest evidence advertising revenue growth for the social media giant is slowing. There’s also the concern about waning activity among users. 

“For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time,” Zuckerberg told staff Thursday.

“I had hoped the economy would have more clearly stabilized by now, but from what we’re seeing it doesn’t yet seem like it has, so we want to plan somewhat conservatively,” he added.

Last week, Meta began quietly cutting staff by reorganizing departments while giving ‘reorganized’ employees the ability to apply for other roles within the company, according to WSJ. 

The goal of reshuffling employees is to thwart the mass issuance of pink slips. 

Zuckerberg sounded the alarm in July that Meta would “steadily reduce headcount growth … and many teams are going to shrink so we can shift energy to other areas.”

Bloomberg noted Meta’s internal priorities include Reels, focusing on its competitor: TikTok, and Zuckerberg’s futuristic metaverse. 

Meta shares are down more than 4% near session lows.

The company reported having 83,553 employees at the end of Q2, up 32% from a year earlier. 

… “realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said at a company town hall in June. 

Tyler Durden
Thu, 09/29/2022 – 14:50

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