FBI Arrests State Department Employee For Contacts With Chinese Spies

In an example of a FISA-warranted surveillance done right, on Wednesday the FBI announced the arrest of a veteran State Department employee with access to top secret information, who was accused of failing to report numerous contacts with Chinese foreign intelligence agents who provided her with “tens of thousands of dollars in gifts and benefits” in exchange for diplomatic and economic information, federal prosecutors said.

Candace Claiborne, 60, was charged in a Washington federal court with obstruction of justice and making false statements to the FBI. As Reuters reports, Claiborne appeared before a magistrate judge with her lawyer, David Bos, but both declined to speak to reporters. Claiborne will remain confined to house arrest until an April 18 preliminary hearing. According to the Federal complains, Claiborne was given tens of thousands of dollars in gifts and wire transfers by Chinese agents beginning in 2011 in exchange for information about U.S. economic policy in relation to China and other diplomatic matters.

The Justice Department alleges that she wrote in her journal that she could “generate 20k in 1 year” through her work with one of the intelligence agents.

Among the gifts given to Claiborne and an unidentified co-conspirator were such items as beads, a sewing machine, an iPhone, a laptop computer, slippers, cash, tuition payments to a fashion school in China and an all-expenses paid vacation to Thailand.

Claiborne was caught as a result of monitoring under a Foreign Intelligence Surveillance Court, or FISA warrant, which is the same warrant that has been allegedly used to surveil members of Trump’s campaign, and potentially the president himself.

Claiborne, “allegedly failed to report her contacts with Chinese foreign intelligence agents who provided her with thousands of dollars of gifts and benefits,” said U.S. Acting Assistant Attorney General Mary McCord.

“When a public servant is suspected of potential misconduct or federal crimes that violate the public trust, we vigorously investigate such claims,” said State Department spokesman Mark Toner.

The timing of the charges against Claiborne is peculiar: they come just ahead of an April 6-7 meeting between U.S. President Donald Trump and Chinese President Xi Jinping at a time of heightened tensions between the world’s two largest economies over North Korea, the South China Sea, Taiwan and trade.  U.S. officials have accused China of cyber hacking of U.S. government agencies and American companies in recent years. 

Claiborne had worked at the State Department since 1999, during which time she served in a number of overseas post including embassies and consulates in Iraq, Sudan and China. 

The charges against Claiborne carry a maximum sentence of 20 years in prison for obstruction of justice and five years in prison for making false statements to the FBI.

via http://ift.tt/2nwWVci Tyler Durden

Recent TSA Molestation Video Proves Americans Have Become Authority Worshipping Slaves

Authored by Mike Krieger via Liberty Blitzkrieg blog,

None are more hopelessly enslaved than those who falsely believe they are free.

– Johann Wolfgang von Goethe

TSA treating law-abiding American citizens like livestock for the privilege of boarding a plane has been a festering problem for over a decade. Such demeaning “security” practices represent just one of many unacceptable privacy invasions we’ve allowed to happen to us as a people since being overwhelmed by irrational fears of terrorism following the attacks of 9/11. Such fears are never allowed to dissipate since they’re constantly reinforced and encouraged by corporate media, hack politicians and the military-industrial-intelligence complex looking to make money from imprisoning Americans in an all-encompassing surveillance grid panopticon where we cheer on our own enslavement.

Today’s story brings a very important yet unresolved issue back to the forefront of public discussion, where it must remain until this practice is done away with forever.

The Daily Mail reports:

A furious mom has blasted the TSA officers who she says gave her disabled son an ‘unnecessary’ and ‘horrifying’ pat-down in a Dallas airport on Sunday.

 

Jennifer Williamson says that her son Aaron, who has sensory processing disorder, was detained for more than an hour at Dallas/Fort Worth Airport despite not setting off the metal detector.

 

And although she asked the TSA agent not to perform a pat-down, saying it would upset the boy, the agent went through with it anyway.

 

Williamson then recorded the ‘traumatizing’ incident in a video that has now been seen more than 1.5 million times.

It’s now up to 5.4 million views.

Sometimes the agent appears to pat the boy on areas that he has already checked. 

 

In a Facebook post, Williamson said that she and Aaron were punished and made to wait ‘well over an hour’ because she asked the TSA agents to respect Aaron’s condition.

 

‘We were treated like dogs because I requested they attempt to screen him in other ways per TSA rules,’ she said.

Now watch the video.

Yeah, it’s disgusting, inappropriate and anathema to a free people, but that’s the point. We aren’t a free people. We’ve become a bunch of authority-worshiping subjects toiling on a plantation dominated by multi-national companies who write our laws and manipulate our thoughts through corporate media. The worst part is we don’t do anything about it. We elect Trump and then puff our chests out yelling stupid slogans like MAGA, as molestations from the TSA get worse. Well done everyone.

More invasive TSA searches? What exactly am I talking about? Perhaps you missed the recent Bloomberg article, U.S. Airport Pat-Downs Are About to Get More Invasive:

While few have noticed, U.S. airport security workers long had the option of using five different types of physical pat-downs at the screening line. Now those options have been eliminated and replaced with a single universal approach. This time, you will notice.

 

The new physical touching—for those selected to have a pat-down—will be be what the federal agency officially describes as a more “comprehensive” physical screening, according to a Transportation Security Administration spokesman.

 

Denver International Airport, for example, notified employees and flight crews on Thursday that the “more rigorous” searches “will be more thorough and may involve an officer making more intimate contact than before.”

 

“I would say people who in the past would have gotten a pat-down that wasn’t involved will notice that the [new] pat-down is more involved,” TSA spokesman Bruce Anderson said Friday. The shift from the previous, risk-based assessment on which pat-down procedure an officer should apply was phased in over the past two weeks after tests at smaller airports, he said.

This from an agency that couldn’t find a bomb if it was placed in its hands. Don’t believe me? Perhaps you missed the following:

Big Brother Idiocy – TSA Spent $160 Million on Naked Body Scanners that Fail 96% of the Time

Just great. Unfortunately, the move to more invasive pat downs is merely one aspect of a move to even more idiotic security theater when it comes to air travel. Like the banning of electronics larger than a phone on flights from certain airpots, which a former Israeli airport security boss basically called total idiocy.

Finally, while we know the TSA isn’t good at catching terrorists, we do know its agents are very good at theft and sexual perversion. How do we know this? Take a read:

TSA Agents Caught Gaming System so Male Screener Could Grope Attractive Passengers; No Criminal Charges Filed

Caught on Tape – TSA Gropes 10 Year Old Girl for Two Minutes Due to Capri Sun in Baggage

TSA Agent Caught Stealing From Passenger’s Wallet at NYC Airport Checkpoint

TSA Agent Arrested for Sexually Molesting South Korean Woman at NYC’s LaGuardia Airport

Judicial Watch Obtains Documents Proving Systemic Sexual Abuse by TSA Workers at Airports Nationwide

TSA Air Marshal Arrested for Taking Photos Up Passengers’ Skirts

This is not what freedom looks like.

via http://ift.tt/2nBqCdO Tyler Durden

Rep. Thomas Massie: ‘We don’t really have 218 conservatives here [who] meant what they said when they said they wanted to repeal Obamacare’

The man does not lack a sense of humor. ||| Rep. Thomas MassieAs referenced earlier today, last night The Fifth Column invited to its podcast-waves Rep. Thomas Massie (R-Ky.), one of the most libertarian members of Congress, and a man well-known to Reason readers (you can consume our previous interviews with congressman from June 2013, March 2016, and May 2016; watch him eat a hemp bar on The Independents, and read what he’s written for us).

With the Ryancare debacle (in which Massie was a firm “Hell no“) still fresh in the memory tubes, and with the Trump administration collaborating with the existing GOP establishment to marginalize the crazies in the Massie-friendly House Freedom Caucus, the triumvirate of Kmele Foster, Michael C. Moynihan, and myself wanted to know how the Obamcare-reboot failure looked like from the inside (“this was a big game of chicken”), where Congress goes from here on swamp-draining, and whether there’s any meaningful overlap between Trump/Steve Bannon economic nationalism and Tea Party-flavored libertarianism (in mutual opposition to the World Trade Organization, he suggested). Along the way Massie spelled out the virtues (and limitations) of his bill to abolish the Department of Education, ruminated on whether the HFC’s intransigence has allowed libertarian-leaners to retake the lunatic lead from Donald Trump, and busted Moynihan’s chops for being a diva.

You can listen to the whole thing here; Massie in the first 37 minutes:

After the jump a quickie edited transcript, thanks to Lindsay Marchello:

Never forget! ||| Fox Business NetworkWelch: Give us a bit of a snapshot of what it was like there in the final 24 hours in that push.

Massie: Oh my gosh, this thing was like a rocket whose fins had fallen off. It started off in the wrong trajectory 18 days before…and there in the last few days it was traveling erratically, and I said on Thursday—obviously they pulled the bill on Friday from consideration—but on Thursday I said “This rocket has gone crazy. The best we can hope for is it lands in the ocean and sinks.”

Welch: Now I should just interject here that you are an MIT graduate, so you are only capable of speaking in rocket metaphors.

Massie: I’m an electric engineer, I’m not a rocket scientist, but I like to pretend I’m one when I’m in Congress.

You know, I did a lot of media last week; I probably went on TV more last week than I’ve been on TV in my life. And I was trying to get the message out there that this was a big game of chicken, and that reality…is going to come crashing down on Thursday. They were able to avoid reality for one day by postponing the vote, but then reality came crashing down. And I also predicted that they would claim they had the votes right up until they pulled the bill, which is also what happened.

The speaker did Congress a great disservice by going on TV for literally the entire week leading up to the debacle of the bill being pulled and saying that they had the votes, so I felt compelled to go on TV and say they don’t have the votes. And then, on I believe it was Thursday or Wednesday, Mick Mulvaney came—he’s a former Freedom Caucus member who is now the OMB director—he came to our Republican conference, and he was carrying a message from Trump. He said “I’ve got a message from my boss. He’s rather remarkable; he’s not like most of us politicians, and he wants you to know that number one, he’s done negotiating. There will be no changes to this bill. And number two, the vote is going to happen tomorrow, and he doesn’t care if it passes or fails. We are going to have a vote and he’s going to find out who is on his side and who’s not.” And then the third thing he said is, “If this fails, we are done with health care. You’re done with health care, we are moving on.”

Foster: Wow.

Massie: They asked me, “What do you make of all that?” And I said it’s all a big bluff.

Foster: Did you say that before or after you pissed yourself?

Massie: Just shaking. I was terrified. In fact I sent out a tweet that said, if the executive branch tells the legislative branch what to vote on, when to vote, how they are going to vote, and what he’s going to allow them to do if the vote fails, is that a republic? And that got a little coverage. […]

#Facts ||| Adrian K. NguyenMoynihan: Congressman, this is Michael Moynihan, I’m the one who is fashionably late—I like to make a grand, rather dramatic entrance….When you are dealing on an issue like health care, and you are dealing with a president who is nominally—and I mean to underline that word a few times—of your party, I was trying to pull up the quote from a debate in which Donald Trump was asked, you know, “15 years ago you called yourself a liberal on healthcare and you praised the Canadian system.” This is a point in which the soon-to-be president would maybe pivot and say “You know my ideas have evolved on the issue,” but he responded that “As far as a single payer, it works in Canada, it works incredibly well in Scotland”…. I mean we have a president, don’t we, who has been pretty clear about his ideas and visions about health care?

Massie: Let me be clear: I am still operating under the assumption that this president wants to accomplish those things he campaigned on. And I’m not saying that ironically or sarcastically. I think that he got bad advice from Paul Ryan; I am not laying the blame for this at Donald Trump’s feet. He’s a big-picture guy, and when he picks the right sub-contractor, good things happen. So he went to—here’s an example—he went to Heritage and he went to the Federalist [Society] and he asked them for a list of Supreme Court nominees, and they gave him a lot of good candidates, and he picked one of those, and he’s a hero for it right now; there are very few if any Republicans who are upset with that choice. Contrast that to the way he went shopping for a health care plan. He came to the swamp and asked the folks in the swamp to write him a health care plan, and then adopted this swamp creature, and I think that’s where he went wrong, frankly.

I do think he wants—he’s not concerned with the particulars of what repeal or replace means, he just wants a good repeal and a good replacement. And I think he just latched on to the first thing that came along, and it was the worst thing that came along.

Welch: You brought up Paul Ryan—you were part of the group that defenestrated his predecessor John Boehner…

Massie: I’m going to have to look that up. […]

Welch: You chucked him out of the window in 16th century Prague. I’m pretty sure I heard you say in close proximity to me at some point that “Ah well, you know what? We will give Paul Ryan a year. We’ll see how he does, we’ll see if he goes through the kind of procedural reforms of ‘Hey, if you are going to pass a bill, do it this way.'” So can you talk about how you see his role in terms of fulfilling that little aspect that you were asking for—that he do things in a new and better way that’s pleasing to you regardless of what the content of the bill was at the end?

Massie: You know, he has clamped down on the process more than John Boehner did…. Every year that I was here under John Boehner, he always allowed an open-amendment process on the appropriations bills, and I was able to offer some wonderful amendments on industrial hemp…rolling back firearm regulations in D.C., and they passed, and these were great things. But then when Paul Ryan came along he would not allow the very same gun amendment that John Boehner allowed me to get a vote on….So in that regard he’s doing worse.

And something else that I want to talk about is that…Congress, I think, always worked this way: You basically got your committee assignments in December, you know November-December, so that when the Congress started in January you could hit the ground running. We didn’t have committees established in January. We didn’t even have committee chairman established in January after Trump was elected. One of the reasons we got off to such a slow start…was, we didn’t have committees, because Paul Ryan wouldn’t give anybody a committee assignment, much less a chairmanship, until he won the vote on the floor on January 3rd for speaker. So…that was a little more Machiavellian than even John Boehner.

Foster: You mentioned that phrase “repeal and replace,” a phrase that has been with us since March of 2010, when the Affordable Care Act was actually passed….Why isn’t there a Republican proposal? Like, a sound one?…It’s been a really long time, and what I saw happen was just this dog’s breakfast of bad ideas, and I don’t know that this would have been much better if any other Republican had been elected president, because the president didn’t have any ideas, but it didn’t seem like there was a real, concrete idea among Republicans more broadly.

Massie: Well I can tell you what if we had elected Rand Paul we wouldn’t be in this malaise right now with regards to health care. I mean, he’s a doctor and he understands what’s broken. […] And I co-sponsored his offer here in the House to reform health care, or health insurance.

But let me say there are a lot of members on the Hill here who are walking around as if somebody shot their dog. They look so depressed—and it’s just a few of them, I’m not going to name their names—borderline in tears, because they have come to the realization that we don’t really have 218 conservatives here in the House that meant what they said when they said they wanted to repeal Obamacare root and branch. That’s sort of the terrifying thing here….There is this sense, this coming to grips with reality, that it’s going to be hard to get anything done that resembles what we campaigned on, given the lack of a moral constitution among our colleagues here. And some of that is pressure from lobbyists, from the health insurance industry, some of that is just fear of not getting re-elected. But they really have sort of lost their constitution here.

Moynihan: […] You saw this tweet where [President Trump is] attacking the Freedom Caucus, attacking Heritage and Club for Growth, and the Freedom Caucus is something that was created with ideology in mind, with ideological principles. You have a president who seems to be rather shaky on what his own ideological principles are. Steve Bannon, obviously, as you well know, is a populist and somebody who hates trade….As a person like you, a congressman like you, when you are in the Freedom Caucus, when you’re lined up ideologically, and you have a president that is like this, what is it like for governing, and what is your hope like for the future?

Massie: Well, I’m still hopeful, okay? There are moments when populism lines up with libertarianism. But let me tell you about a realization that I came to when I was in Iowa campaigning for Senator Rand Paul to be president.

You see in 2012, his dad did very well in Iowa, got like a quarter of the vote and a quarter of the vote in New Hampshire, and did very well in Nevada. I ran in 2012 on the same sort of libertarian ideas. Senator Rand Paul had blown a hole through the establishment Republican Party in Kentucky in 2010 on libertarian/republican ideas, and so I thought the libertarian ideology within the Republican party was really catching on, that it was popular. But then when I went to Iowa I saw that the same people that had voted for Ron Paul weren’t voting for Rand Paul, they were voting for Donald Trump. And the same thing happened in Kentucky, the people who were my voters ended up voting for Donald Trump in the primary. And so I was in a funk because how could these people let us down? How could they go from being libertarian ideologues to voting for Donald Trump? And then I realized what it was: They weren’t voting for the libertarian in the race, they were voting for the craziest son of a bitch in the race when they voted for me and Rand and Ron earlier. So Trump just won, you know, that category, but dumped the ideological baggage. […]

Welch: That leads to a follow-up, which is that right now we are in this weird position where after the Friday vote, Trump’s original comments were kind of magnanimous, he blamed Democrats halfheartedly, he said they are going to come and eventually realize that they need to help write the bill. But as the weekend progressed you saw a lot of Trumpworld going after the House Freedom Caucus pretty strenuously. And so isn’t it so that perhaps in this moment, 30 of you people—and again, I realize you’re not in the Freedom Caucus, but you are next to them—you guys are once again the craziest people in the room, you are crazier than Trump? Trump is now collaborating with Paul Ryan, he’s getting like plaudits from the Marc Thiessens of the world, the Wall Street Journal editorial page, all of these kind of institutional sellouts are sitting there and saying “It’s all you crazy people over there who are the problem.” So maybe you guys can get some of your lunatic mojo back?

Massie: You know, Donald Trump campaigned on draining the swamp. If he gets up here and hops in and thinks it’s a hot tub, like the rest of these guys, we’re going to be in trouble. This was my great fear. You know, I joked about ideology and why Trump was elected, but I think when people looked at 16 candidates on the stage they said “That’s the guy that doesn’t owe anybody in Washington, D.C. anything, and that’s the guy least likely to fall in league with the rest of them when he gets there, and the guy most likely to get us some change.” And that’s why they voted for him.

The biggest risk of this is going to be if he comes here and he doesn’t do what he said, and if he becomes establishment, then the next revolution is not going to be at the ballot box. I mean they are literally going to be here with pitchforks and torches if electing Donald Trump didn’t change anything. What the hell is going to change anything? That’s what I think may be the next step.

But I’m still hopeful. I think he’ll realize—hopefully, because he has lashed out at the Freedom Caucus, but I think he’s lashed out at everybody over this—I’m hoping when it all settles that he’ll see that we did him a favor, that conservatives in the House did him a favor by showing him that this next real estate purchase had a bad foundation.

Foster: Well the rumblings out of Washington now suggest that with the debacle of this health care reform effort in the rearview mirror that we are moving quickly toward potentially some sort of tax reform. You talked a moment ago, you suggested that there were some parallels, some similarities, some points of overlap between sort of economic nationalism, populism in other words, and libertarianism. Where are those points and how do they come into play here? I mean Paul Ryan is a guy who has traditionally been about balanced budgets and reducing taxes and all those traditional conservative things…but more recently he’s talking about this border tax that’s been floated around, and there’s nothing particularly free market about that. That is populist as all hell…. [So] where are these points of agreement? How do you see things breaking down when it comes to the tax proposal that is yet to materialize, but seems to be developing? […]

Massie: Where I thought that populism and libertarianism might overlap is the fact that we are sick and tired of paying for the defense of other countries, and sick and tired of all these wars in the Middle East and elsewhere. That seems to be a populist thing, and I was hopeful that Trump would get here and follow through on that…

Welch: I appreciate the past tense there.

Foster: He seems to be disappointing on that score.

Massie: Yeah, well, I didn’t say I’m no longer hopeful….

Also the concept that we are a sovereign country. Now…libertarians may disagree on this, maybe they like the World Trade Organization, but I can tell you Ron Paul was never a fan and I’m not a fan either for the same reason: that we are giving up sovereignty to them. And so that’s sort of a populist notion that overlaps at least with my flavor of libertarianism.

Taxes are bad, okay? All taxes are bad. But the border adjustment tax is similar in effect, or at least economically, to the economic distribution of a Fair Tax, which is a very popular notion. The libertarian concept is that you have no tax, I guess, but you have to collect a tax somewhere, and the economic result of a Fair Tax is very similar to the border adjustment tax.

Moynihan: […] To the point you were saying about foreign policy: Lindsey Graham—and talk about people who have been denounced by Donald Trump, though I guess everybody has at this point—Lindsey Graham today was talking to Hugh Hewitt, and he said, “You know, I talked to Donald Trump on the phone today and it was a lovely conversation.” Hugh Hewitt said “He’s taking shots at you.”

“He takes shots at everyone! Now we are pals, and here’s why we’re pals.” And he said “Look, you know, Donald Trump said to me on the phone today”—and this was today on Hugh Hewitt’s show—”the military that you want is the one that I’m going to build, don’t you worry about it for one second.” And of course we see this with this idea of, you know, a 300-ship Navy, and expanding military spending greatly, and of course what we’ve seen already is not only the failed raid in Yemen, a strike in Mosul that appears to have had the largest civilian casualty count since America pulled out of Iraq, apparently an attack in Aleppo that killed a lot of civilians too. And Lindsey Graham was saying that “I have nothing but the utmost faith in Donald Trump that his military so far and his military actions have made me happier than anything in the past eight years.” I’m paraphrasing, but that’s what he said….

You know, it strikes me that there is a lot that we can’t really trust him on this. I know there was some excitement among anti-war libertarians, or sort of more inward looking—I don’t want to say isolationist—libertarians. Does the feeling that you get is that Donald Trump is going to be swallowed by the machine or be stewing in—your words—in the hot tub swamp of Washington, D.C., and just become like Obama, like George W. Bush before him? Is that something that concerns you?

Massie: […] It’s too early to tell. Really, it’s too early to tell.

Moynihan: But trending in a bad direction?

Massie: Well, you know, I hate to keep saying “I was hopeful,” but I was hopeful when he hired Mick Mulvaney to be the head of OMB, because Mulvaney was always the guy that would offer amendments on the DoD appropriations bills to cut money here or there, spending that the generals and admirals didn’t want but the congressmen did. Like there’s a law—there is literally a law—that says they have to, regardless of what the admirals want, the Navy has to keep I think it’s 11 aircraft carriers, regardless of whether that’s really what they believe is best. And this probably has to do with the people that supply parts to the aircraft carriers and put them in dry docks and whatnot. But Mulvaney offered the amendment every year to reduce the minimum requirement from 11 to 10, and it was one of those things the Heritage organization always scored against. And I like those guys at Heritage, but you know, they’re definitely not against global involvement and a very large military. […]

In any case, what we’ve seen from the budget is actually probably the dream of the neocons for military spending. And it’s spending-neutral, I guess: They cut as much as they add to the military, they cut elsewhere in domestic spending. But I would have loved to see them put that toward deficit reduction.

Welch: Quick question on the spending: They basically traded I think it’s $60 billion dollars of money for military, Department of Homeland Security and Veteran’s Affairs in return for $63 billion in cuts to agencies like the EPA and whatnot, 31 percent. I’m not going to accuse you of hanging out with Democrats all day long, however, what is your sense of the…realistic possibilities that any Congress that you are familiar with is going to cut 31 percent out of the Environmental Protection Agency this year?

Massie: You want me to give you odds?

Welch: Yeah I do, MIT.

Massie: I’m going with five percent odds.

Welch: So we are going to get those military boosts, because Paul Ryan and everybody else there not named you or Justin Amash has been bitching and moaning about the sequestration cuts forever, we’ve never seen a military so cut to the bone as what we have right now. So they are going to jump all over that, and then they are not going to make all these steep agency cuts that [are] the only way that the Trump budget is going to be maintain the same levels of spending as the Obama budget.

Massie: I didn’t say they wouldn’t, I said there was a five percent chance they would. I’m an optimist! […]

Here’s the problem. I didn’t realize this until I got to Congress, and I serve on three different committees. The EPA is in somebody’s committee. There’s a chairman of a committee that has jurisdiction over the EPA, and all the chairmen are Republican chairmen, and they have got, everybody’s got a castle, and they are always trying to fortify it. Every chairman thinks it’s his job to make sure all the money keeps flowing into his committee, and they really don’t want to give up money. It’s like we’ve spent $100 billion dollars in Afghanistan rebuilding their infrastructure and we are on the hook to spend another $10 billion. Now, 90 percent of America would like to take that $10 billion and put it down toward our own infrastructure, but there’s a chairman of the committee somewhere that’s saying “By God, you are not touching my money that I’m giving to Afghanistan!” And he’s Republican, and that’s the problem. […]

Welch: Let me throw one last question before we let you go here. You have authored a terrific one-sentence bill to get rid of the Department of Education by 2018, if I have it correctly. So I was just working on a feature for Reason about the possibilities for deregulation during the Trump presidency, which are actually pretty great; they are interesting to watch. And one skeptic about your bill said eliminating the Department of Education actually doesn’t do very much because the underlying legislation dates from 1965 and it authorizes the federal government to throw a bunch of money into local education systems, school systems, and until you go after the underlying legislation, there’s got to be some agency out there that’s overseeing the program and spending the money. So what is your response to this critique, sir?

Massie: It’s a fair charge. I had to decide whether to write a one-sentence bill that I could get a lot of people to agree with, or a very involved bill that talks about what happens to all that funding, and then people start disagreeing. But I thought, let’s cut the head off the beast first and then we will figure out how to distribute its parts. […] My bill says “The Department of Education shall terminate on December 31st, 2018.” Eight words and two numbers, that’s it, that’s the whole bill. And I thought if I keep it short I can get some of these guys to read the bill. And I still get people coming up to me asking me “What’s your bill say? What’s it do?” […]

So I’ve said there are three things you could do after you eliminate the Department of Education. By the way, what I’m eliminating is Betsy DeVos’ job, which is what the liberals wanted me to do; I introduced the bill the day the Senate confirmed her, literally while they were voting on her. But it eliminates 4,500 other jobs in Washington, D.C., that are an average salary of a $105,000 dollars apiece, so you are talking about half a billion dollars in salaries that it would get rid of. Okay, that, unequivocally, the bill does, but what to do with the grants and whatnot?

You could either send things like Pell grants to the Treasury to administer for instance, and student loans to the Treasury. Head Start is already administered by Health and Human Services and the School Lunch Program is already administered by the USDA. You could either assign those programs to other departments and totally eliminate this department, which gets you back to about where you were before Jimmy Carter put the department in place, or you could block-grant this stuff back to the states. Every state has a Department of Education and they can do a better job administering these programs. Or third option, my favorite, is get rid of the funding for these programs and let the states fund the program so that the states collect the money and distribute the money within their states, because there’s no magic about sending the money to Washington, D.C., and then begging to get it back, and then agreeing to jump through hoops in order to qualify for that money. Just let the states collect it and distribute it and that would be the constitutional thing.

Foster: Well Congressman Massie I appreciate you joining us, we will not hold you any longer sir. Thank you for playing ball and for chopping it up.

Massie: Thanks for having me here. Michael can you show up on time next time please?

Moynihan: No, I can’t. I’m usually late for congressmen, just to show my contempt for the process in Washington, D.C. But you are one of the good ones so I admit to an error this time.

Massie: The contempt is warranted, trust me.

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6 Charts Screaming Buy GOLD – Sell USD! Are US Equities On The Verge Of A Major Sell-Off?

1.) Long-term readers of Palisade Research know this chart well. We are now 297 trading days into a bull market on the TSX Venture Exchange, as depicted by our 1990 to Present – Bull & Bear Markets Chart. During that time, the TSX Venture has had some sell-offs, but history says this is inevitable. In fact, we are currently mired in a several month long pull-back. So what comes next? We took a look at the USD and the US equities market to formulate an idea.

2.) The Bloomberg Commodity Index (BCI) is a diversified price index distributed by Bloomberg Indexes. Since January 2016, gold has outperformed its peers, with a significant divergence taking hold. However, the recent pull-back has allowed the BCI to catch-up. That is until recently, when gold started to charge ahead, yet again.

3.) Gold bugs are paying close attention to the US equity markets, which have been embroiled in a multi-year bull market. If money continues to pour into the S&P, little capital is left to fuel a gold bull market. The following chart looks at company leverage, calculated as debt/EBITDA. This is a common metric to assess a company’s ability to pay off its debt. This ratio has been increasing in tandem with the market caps of the S&P 500 companies. When looking at these two numbers as a ratio, it appears debt loads are reaching capacity, and can no longer fuel growth. It seems there is still some runway, but the downtick suggests a swift fall.

4.) Another key indicator and Warren Buffett’s favourite – The S&P 500 market cap to GDP ratio. This ratio is often used to gauge market sentiment and determine if the overall market is under or overvalued. When the metric is greater than 100%, it is often a sign the market is overvalued. In 2000, the ratio was 153%, and the markets fell sharply due to the dot-com bust. We are currently over 100%, a good deal higher than the average of 0.86.

5.) But maybe one of the most compelling cases to be made for exhaustion in the bull market can be seen when looking at margin. When buying on margin, investors borrow funds from their brokers to buy shares. The debit margin is the total money owed by an investor; the higher this number, the more leveraged he is. Buying on margin has been a good bet to date, however, margins are hitting all-time records, and investors are very vulnerable to any sort of market shock. Selling will be exaggerated as margins unwind, which in turn can extend the length of any sort of market downturn.

6.) No one knows what will mark the top for US equity markets. We feel they are due for a major correction, but that correction could be months or years away. What we can say for certain is that the USD is weakening despite the Fed increasing rates. The weakness can be attributed to Yellen’s dovish tone. Another major factor? Trump’s repeal of Obamacare was a major pledge, and its failure only emphasized the rifts within the GOP, which has the potential to derail other major promises, including tax reform and spending. In times of uncertainty, gold is the go to safe haven for every investor!

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Jim Rogers Warns, The Fed “Has No Clue… Will Ruin Us All”

“What worries you?” asks a Bloomberg TV anchor of billionaire investor Jim Rogers. Rogers was not shy in his response: “The Federal Reserve… has no clue what they are doing. They are going to ruin us all.”

Having driven rates to record lows and with debt sky-rocketing, Rogers warns “this is all going to end very, very, very badly.” Rogers slams the ‘counterfactual’ arguments that things would have been a lot worse if The Fed had not done all this, “propping up zombie banks and dead companies is not the way the world is supposed to work.”

“It’s been nine years and we have nothing to show for it [economically] except staggering amounts of debt.”

We have missed Mr. Rogers painful truthiness…

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Ivanka Trump Becomes Official US Government Employee

After getting an office (and access to classified information and a government-issued phone) in the White House West Wing, President Trump's eldest daughter Ivanka is becoming an official government employee, joining her husband in serving as an unpaid adviser to her father in the White House.

As The New York Times reports, this move from being an informal advisor to becoming an official federal employee follows criticism from ethics experts, who said it would allow her to avoid some rules and disclosures.

Ms. Trump said in a statement on Wednesday…

I have heard the concerns some have with my advising the president in my personal capacity while voluntarily complying with all ethics rules, and I will instead serve as an unpaid employee in the White House office, subject to all of the same rules as other federal employees."

 

“Throughout this process I have been working closely and in good faith with the White House counsel and my personal counsel to address the unprecedented nature of my role."

Ms. Trump’s title will be special assistant to the president.

Her husband, Jared Kushner, has the title of senior adviser.

A spokeswoman for the president said to The New York Times in an email…

“We are pleased that Ivanka Trump has chosen to take this step in her unprecedented role as first daughter and in support of the president.” 

 

“Ivanka’s service as an unpaid employee furthers our commitment to ethics, transparency, and compliance and affords her increased opportunities to lead initiatives driving real policy benefits for the American public that would not have been available to her previously.”

Ms. Trump’s lawyer, Jamie S. Gorelick, said that her decision stemmed from “her commitment to compliance with federal ethics standards and her openness to opposing points of view.”

Does this break the media narrative around Ivanka? Who knows – we are sure Maxine Waters will have something to say about it.

Too late, MSNBC's Chris Matthews already has… (via Gateway Pundit) Comparing Trump's children to Saddam Hussein's sons…

“You know, we kid,” he said, “I kid about everything, but Uday and Qusay working for Saddam Hussein — you couldn’t go to a restaurant and have eye contact with those guys without getting killed.

 

“These people are really powerful,” he explained. “Imagine getting into a fight in the office with Jared or Ivanka. They have enormous power, and they’re always gonna be there.”

 

“This is what I worry about for other people in the White House,” Politico’s Annie Karni responded.

 

“Ivanka Trump has been described as her father’s eyes and ears on the ground. That’s a little scary if you’re just a regular White House staffer.”

As a reminder, The Telegraph described Hussein's sons thus…"Uday, the psychopathic playboy, and Qusay, the cold, calculating and ruthless heir apparent, summed up the two sides of Saddam’s Iraq. They were living proof of how their father’s brand of tyranny combined wanton brutality with the cunning acumen that won more than three decades of dominance."

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Judicial Watch Releases New Huma Abedin Emails, Including Hillary Funeral Plans

Conservative wachdog Judicial Watch today released another 1,184 pages of State Department records, including previously unreleased Hillary Clinton email exchanges which according to the legal organization revealed “additional instances of Abedin and Hillary Clinton sending classified information through unsecured email accounts and contributors being given special access to the former secretary of state.”

The records contain 29 previously undisclosed Clinton emails – of a total of which is now at least 288 emails that were not part of the 55,000 pages of emails that Clinton turned over to the State Department. This further appears to contradict statements by Clinton that, “as far as she knew,” all of her government emails were turned over to the State Department. Two of these emails are now available on the State Department’s website.

In one notable email exchange from February 23, 2010, ambassador and long-time friend to Hillary Clinton sought to map out her – and Bill Clinton’s – funerals in 2010 because “planning is best done when they are still with us.”

Capricia Marshall, who was chief of protocol for the State Department when Hillary Clinton served as secretary of state, wrote to Huma Abedin, Doug Band and Cheryl Mills on Feb. 23, 2010, saying “everytime someone significant passes, I am flooded with requests” about the Clintons’ arrangements.

“Planning is necessary and best done when they are still with us,” she wrote to top Clinton aide Abedin.

“As well, Hum – I would make the same suggestion to you – for her it will be a little different … And once affirmed it will be very hard for someone to deny the type of ceremony she wanted — as well I understand that the President can request certain arrangements for her that she/her rep cannot (ie if you want the motorcade to go through DC — stop somewhere),” Marshall wrote.

She told the aides she needed to contact the military to prepare for the funerals — “as Protocol has a lot to do with planning, notification etc.”

* * *

Another email exchange between Abedin and Doug Band revealed tension between Clinton’s top personal aide and the former secretary of state’s chief of staff, Cheryl Mills. The rift was revealed when Chelsea Clinton asked Band if he could arrange a White House tour for a female Haitian-American sailor from the USS Comfort. 

“I don’t want to get cross wise with cdm [Cheryl Mills] on anything Haiti related,” Abedin replied. Three minutes later she wrote again. “HAVE YOU MET CHERYL MILLS,” Abedin asked in all caps about Hillary Clinton’s former chief of staff when she was secretary of state. “You have no idea.”

Band replied, “Good point.”

“She will kill the tour if she find out i set it up …,” Abedin wrote back. “Wow,” Band replied.

* * *

Among the other emails, is a February 2010 exchange in which Jake Sullivan, then-Deputy Chief of Staff to Clinton, sent to Clinton’s and Abedin’s unsecure email accounts information that the State Department has classified as the material includes information “to be kept secret in the interest of national defense or foreign policy; foreign relations or foreign activities of the US, including confidential sources.” The redacted information concerns “former GTMO [Guantanamo] detainee Binyam Mohamed” and Mohamed’s request for “various classified intelligence documents” that contained U.S. intelligence information related to his detention before he was taken to Guantanamo.

In other emails, Clinton’s “final” schedules with specific details concerning her whereabouts were transmitted by Lona Valmoro to the unsecure emails accounts of Clinton Foundation officials Doug Band, Terry Krivnic Margaret Steenberg and others, and forwarded to Abedin’s unsecure email account.

In April 2010, Sid Blumenthal sent two email memos to Clinton containing information now classified.  Clinton forwarded this material to Abedin’s unsecure email account. The classified information, which Clinton asks Abedin to print off for her, concerns the change of government in the Kyrgyz Republic.

In a statement by Tom Fitton, the Judicial Watch President said that “these emails are yet more evidence of Hillary Clinton’s casual and repeated violations of laws relating to the handling of classified information. The Justice Department should finally begin an independent investigation into the Clinton email matter.” But why, when every day there is a new daily dose of dripping red meat – or rather make that Russian salad – involving Trump’s ties to Putin to keep the media and authorities more than busy with constant speculation that Trump is a Kremlin spy.

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The Market Has Its Head Buried Deep In The Sand

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The Market Has Its Head Buried Deep In The Sand

Posted with permission and written by Dave Kranzler (CLICK HERE FOR ORIGINAL)

 

 

 

Several “black swans” are looming which could inflict a financial nuclear accident on the U.S. markets and financial system. I say “black swans” in quotes because a limited audience is aware of these issues – potentially catastrophic problems that are curiously ignored by the mainstream financial media and financial markets.

 

The most immediate problem is the Treasury debt ceiling. The Treasury is now projected to run out of cash by mid-summer. Of course, in the spurious manner in which the markets evaluate the next trade, July may as well be a decade away. My best guess is that the “market” assumes that, after drawn out staging of DC’s version of Kabuki Theatre, Congress will raise the debt ceiling, probably up to $22 trillion. Then the Fed will extend its highly secretive “swap” operations to foreign “ally” Central Banks (hint: Belgium and Switzerland) in order to fund the onslaught of Treasury issuance that will ensue. Problem solved…or is it?

 

(Note: Plan B would be another one of Trump’s bewildering Executive Orders removing the debt ceiling. Plan B is another form of “fiat” currency issuance)

 

The second “black swan” seen by some but invisible to most is the ongoing collapse the shopping mall business model, erroneously blamed on the combative growth of online retailing. But when I look at the actual numbers, that argument smells foul. 


Is Online Retailing Actually The Cause Of Brick/Mortar Retail Apocalypse?


More than 3,500 stores are scheduled to be shuttered in the next few months. JC Penny, Macy’s, Sears, Kmart, Crocs, BCBC, Bebe, Abercrombie & Fitch and Guess are some of the
marquee retailing names that will be closing down mall and strip mall stores. The Limited is going out of business and closing down all 250 of its stores.

 

The demise of the mall “brick and mortar” retail store is popularly attributed to the growth in online retail sales. To be sure, online retailing is eating into the traditional retail sales distribution mechanism – but not as much as the spin-meisters would have you believe. At the beginning of 2015, e-commerice sales were about 7% of total retail sales. By the end of 2016, that metric rose to 8.3%. However, looking at the overall numbers reveals that nominal retail sales have increased for both brick/mortar stores and online. In Q4 2015, total nominal retail sales were $1.186 trillion. Brick/mortar was $1.096 trillion and online was 89.7 billion, which was 7.6% of total retail sales. In Q4 2016, total sales were $1.235 trillion with brick/mortar $1.133 trillion and online $102.6 billion, which was 8.3% of total retail sales.

 

As you can see, there was nominal growth for both brick/mortar and online retailers. My point here is that the spin-meisters present the narrative that online retailers are eating alive the brick/mortar retailers. That’s simply not true. Part of the problem that the total retail sales “pie” is shrinking, especially when analyzing the inflation-adjusted numbers. I created a graph on from the St. Louis Fed’s “FRED” database that surprised even me (click to enlarge):

 

 

The graph above shows the year over year percentage change in nominal (not inflation-adjusted) retail sales on a monthly basis from 1993 (as far back as the retail sales data goes) thru February 2017, ex-restaurant sales, vs. outstanding consumer credit. As you can see, since 1994 the growth in nominal retail sales on a year over year basis has been in a downtrend, while the level of consumer credit outstanding as been in a steady uptrend. Since 2014, the rate of growth in debt has exceeded the rate of growth in retail sales. If we were to adjust the retail sales using just the Government-reported CPI measure of “inflation” retail sales would be outright declining.

 

The problem with the mall business model is debt. The mall-anchor retailers who are vacating mall space like cockroaches vacate a kitchen when the light is flipped on have been leveraged to the hilt by the financial engineers who control them who in turn have been enabled by the most permissive Federal Reserve in U.S. history. To be sure, online retailing is cutting into the margins of Macy’s, JC Pennies, Sears, Dillards, etc. But these companies would have no problem “fighting back” if they were not over-leveraged to the eyeballs.

 

Layer on top of that the leverage employed by the mall REITs and the recipe for a financial crisis larger than the 2008 “big short” mortgage/housing crisis has been created. To compound this problem, mall owners are now starting to mail in the keys to financially troubled malls: More mall landlords are choosing to walk away from struggling properties, leaving creditors in the lurch and posing a threat to the values of nearby real estate…[as] some of the largest U.S. landlords are calculating it is more advantageous to hand over ownership to lenders than to attempt to restructure debts on properties with darkening outlooks (LINK).

 

But it gets worse. I referenced the consumer’s ability to borrow in order to spend money. Economic activity in the United States has relied heavily on an increasing amount of debt issuance for several decades. At some point consumer borrowers reach a point at which they can no longer support taking on more debt, whether in the form of mortgages, auto loans/leases or credit cards. The problem for the U.S. financial system is that there will be widespread defaults on the consumer debt that’s already been issued. The average U.S. household has “hit a wall” on the amount of debt it can absorb. This is why restaurant and retail sales are dropping and why auto sales have rolled over. All three will get worse this year.

 

This Will Crush The Pensions


Finally, the third “invisible” black swam is the looming pension crisis. A colleague of mine who works at a pension fund did a study last year in which he concluded that, because of the extreme degree of public pension underfunding, a 10% decline in the stock market for a sustained period – i.e. more than 3 or 4 months – would cause every single public pension fund to blow up. As he has access to better data than most, he also surmised that the degree of underfunding is 2-3x greater than is publicly acknowledged by the mainstream media (see this article for instance: Bloomberg claims $1.9 trillion underfunding).

 

Circling back to the mall/REIT ticking time-bomb, while the Fed can keep the stock market propped up as means of preventing an immediate nuclear melt-down in U.S. pensions (all of which are substantially “maxed-out” in their mandated equities allocation), the collapse of commercial mortgage-back securities (CMBS) will have the affect of launching a nuclear sub-missile directly into the side of the U.S. financial system.

 

The commercial mortgage market is about $3 trillion, of which about $1 trillion has been packaged into asset-backed securities and stuffed into yield-starved pension funds. Without a doubt, the same degree of fraud of has been used to concoct the various tranches in these CMBS trusts that was employed during the mid-2000’s mortgage/housing bubble, with full cooperation of the ratings agencies then and now. Just like in 2008, with the derivatives that have been layered into the mix, the embedded leverage in the commercial mortgage/CMBS/REIT model is the financial equivalent of the Fukushima nuclear power plant collapse.

 

It’s a matter of time before a lit match hits one of the three lethal powder-kegs described above. This is why the bank stocks were hit particularly hard last week when the Dow was in the middle of its 8-day losing streak. Of course, all it took to spike the Dow/SPX higher was a couple of immaterial “consumer confidence” reports in order to reflate the stock market with some “hope.” Don’t forget, the last time consumer confidence high-ticked was in 1999, right before the tech bubble imploded.

 

Unfortunately, the next financial catastrophe that is going hit the system, which the Fed is helpless to prevent, will make everyone yearn for just the tech bubble or “big short” bubble collapses. Meanwhile, the stock market and its collective universe of “investors” will continue sticking its head deeper into the sand, oblivious to the sling blade that is swinging closer to its neck.

 

Portions of the above analysis were excerpted from the current Short Seller’s Journal.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

The Market Has Its Head Buried Deep In The Sand

Posted with permission and written by Dave Kranzler (CLICK HERE FOR ORIGINAL)

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Lululemon Plunges Over 16% On Poor Guidance

LULU shareholders may be stunned, but at least someone at United Airlines is smiling.

Moments ago Lululemon reported Q4 earnings of $0.99, missing consensus estimates of $1.01 by 2 cents, hardly a disaster.

However, it was LULU’s guidance that shocked Wall Street.

According to the press release, for Q1 the company now expects net revenue to decline, and be in the range of $510 million to $515 million based on a total comparable sales decrease in the low-single digits on a constant dollar basis. Wall Street had expected the company to generate $552.8 million in revenue in the quarter. 

Worse, the company guided to Q1 EPS of $0.25 to $0.27, far below the consensus estimate of $0.39, and below even the lowest Wall Street forecast of $0.34. LULU noted that the guidance assumes a 31.2% tax rate (perhaps it should simply lower its effective tax rate by reincorporating in Ireland).

For the full fiscal 2017, LULU said it expects net revenue to be in the range of $2.550 billion to $2.600 billion based on a total comparable sales increase in the low-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $2.26 to $2.36 for the full year, modestly higher than the $2.16 estimate however Wall Street does not appear to have some doubts about this longer-term forecast.

While LULU did not explain what caused the sharp slowdown in demand for the company’s products – one doubts the recent United Airlines scandal had a dramatic adverse effect –  LULU warned that 1Q comp sales would be down low-single digits, confirming that there is something very strange when it comes to consumer demand in the current quarter, and which certainly does not jive with reports of soaring consumer confidence.

Needless to say, the market is not happy with LULU’s sudden pivot away from being a growth stock, sending it over 17% lower in after hours trading.

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Mike Tyson vs. The Grilled Cheese Truck

[Editor’s note: This letter was written with Tim Price, London-based wealth manager and co-founder of Price Value Partners.]

It was just over two years ago that “The Grilled Cheese Truck, Inc.” began trading in the US stock market under ticker symbol GRLD.

GRLD was exactly what it sounds like– a truck that sells grilled cheese sandwiches.

Yet despite a history of heavy losses, the stock market valued the company at an extraordinary $107 million.

Skeptical investors would have been sharp to call that the peak of the market.

Yet the irrational exuberance continued.

Earlier this year, Snap Inc., a profitless mobile app which offers its shareholders ZERO voting rights, went public with a $28 billion valuation.

That too seemed like the peak of the market’s insanity. But that turned out to be a premature feeling as well.

Now we see none other than Iron Mike Tyson shilling for a Vanuatu/Latvian brokerage firm, enticing small investors with offers of 400x leverage.

It seems all we are lacking at this point is a Fortune magazine cover with a “DOW 100,000” headline.

Maybe it is the peak. Or perhaps the gains will continue.

Fortunately our job isn’t to make precise predictions; it is to assess risk and avoid taking any which (a) is unnecessary, and (b) fails to offer returns that vastly compensate for the probability of loss.

We have pointed out before that the US stock market’s average Price / Earnings ratio is at highs typically not seen except prior to spectacular declines.

See the chart below, which shows the “Cyclically Adjusted” Price-to-Earnings ratio, or CAPE, at 29. The long-term average is 17.

Cyclically Adjusted P/E ratio for the S&P 500 Index, 1880-2017

Source: http://ift.tt/16rolhY

Since 1880, the CAPE has only been at this level twice before– the first time prior to the Great Depression, and the second time prior to the dot-com crash.

To us, the prospect of gaining an additional 10%… or even 30% in US stocks pales in comparison to the prospect of losses from a major correction.

As Alhambra Investment Partners point out, investment analysts were forecasting back in October that US companies in the S&P 500 would generate $29 in earnings for the 4th quarter of 2016.

As the Q4 earnings reports started rolling in last month, the estimate dropped to $26.37.

Since that time, with now almost all companies now having reported, the current figure is $24.15 – a decline of 8.4% in just four weeks.

That’s bad news for passive “index” investors who are, by default, exposed to every single one of the companies in the S&P 500– most particularly the expensive ones.

Most people don’t realize this, but the S&P 500 does not equally weigh its 500 constituent companies.

In fact, the price of the #1 weighted stock (Apple) influences the S&P 500 index over 240x more than the least weighted stock (Autonation).

In general, more expensive stocks count more than inexpensive stocks.

So if you buy a traditional index fund, you are allocating the majority of your capital to popular companies, and very little capital to overlooked gems that are inexpensive and undervalued.

This is the opposite of what value-oriented investors should be doing.

As Ian Lance of RWC Partners points out,

“Passive [index] investors in 2000 were allocating large chunks of their money to bubble stocks like Cisco, Sun and Yahoo, and also to accounting frauds like Enron and Worldcom which were on their way to zero.”

We have little experience gambling, but we’re pretty sure that you can’t prosper by betting on every number at the roulette table.

That’s essentially what index investing is. And, like casino games, the market is rigged against individual investors.

You’re already fighting an uphill battle against high-frequency traders and dishonest bankers. Overpaying for expensive, popular assets doesn’t help.

Never forget that the world is a big place.

And if your stock market is irrationally overvalued, you have the freedom to allocate your time, effort, and capital to more attractive, undervalued investments elsewhere.

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