William Weld For Libertarian Vice President Winning Respectful Attention

The announcement of William Weld as Gary Johnson’s choice for his running mate in his run for the presidential candidacy of the Libertarian Party (the Party’s delegates will be making their choice at their convention over Memorial Day weekend in Orlando) got the Washington Post to imagine the possibilities of the L.P. actually pushing the election into the House of Representatives.

The Weld pick is already paying off in other respectful media attention.

• Former L.P. supporter Jim Sullivan writes in the Boston Herald from the state Weld governed in the 1990s that this is an opportunity so great it would take a Party as often wrong-way as the L.P. to blow it, and he looks forward to:

watching so many Republicans tripping over themselves in a rush to discredit two of their most popular multi-term ex-governors. New Mexico had 20 of 24 previous years under Democratic rule prior to Johnson’s two terms, voted for Obama in 2012, and also seats a large majority of Democrats in its state legislature. The credentials of Massachusetts as a Democratic bastion are unimpeachable. So both Johnson and Weld won in primarily blue states initially and were re-elected solidly. I can’t wait to hear the whirling dervish sort of spin some Republicans will use in an attempt to make their accomplishments sound like a bad thing.

The Christian Science Monitor wonders, under the headline “Could a Libertarian Party bid Derail Trump or Clinton?”:

 if many of Senator Sanders’s supporters don’t support Clinton – and if some Republicans such as Sen. Ben Sasse of Nebraska turn from Trump –   the Libertarians could have a wider opening than previously thought. The potential Libertarian duo both have political histories including time served as state governors, and could feed off of the energy of Sanders and Trump, who rose to the top of their parties’ races despite their outsider statuses.

• The notorious political operative and dirty trickster Roger Stone, who linked up with the L.P. in 2012 and has lately been on the Trump train, says Johnson and Weld are personal friends, great candidates, and should be in the debates.

• David Boaz of the Cato Institute gets in the Daily Beast to call a Johnson/Weld ticket “An opportunity to pick a positive good, not just the lesser of two evils.” Boaz writes that:

they will present a clear alternative to Trump and Clinton: strong and coherent fiscal conservatism, social liberalism, drug-policy reform, criminal-justice reform, reining in mass surveillance, ending executive abuse of power, and a prudent foreign policy that is neither promiscuously interventionist nor erratic and bombastic — all grounded in a philosophical commitment to liberty and limited government.

• The Boston Globe reported on how Weld apparently kept his decision very secret until its public relevation, and that how it highlights chaos in the GOP’s status in Massachusetts:

The state’s popular Republican governor, Baker, has said he would vote in November for neither Trump nor Clinton.

The state’s last Republican to serve in Congress, former US senator Scott Brown, has backed Trump, as has its longtime national committeeman, Ron Kaufman. The party’s chairwoman, Kirsten Hughes, has said she would back the party’s nominee, but has not explicitly endorsed Trump.

And the party’s last GOP governor, 2012 presidential nominee Mitt Romney, has actively worked against Trump and warned of a disastrous presidency if he is elected — as has former acting governor Jane Swift.

• A Wall Street Journal headline says the Weld idea is “boosting Libertarians.”

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Ronald Bailey Argues for Transhumanism at the Washington Post

TranshumanismBioethicscomTechnology Won’t Undermine Human Dignity: Fear of Change Will,” is my contribution to the Washington Post’s In Theory symposium on transhumanism. In that column, I argue against opponents that the decisions to use life-enhancing bio-, nano- and infotech should be left to individuals, not decided by majority vote. From the column: 

The prospect of technologically enhanced humans flourishing makes some people uncomfortable. The “bioconservative” alliance of moralizing neoconservatives and egalitarian left-wingers fears that the new bio-, nano-, and info-technologies threaten human dignity and human equality, but these egalitarian worries are overblown — and, in fact, they go against the liberal society that transhumanism’s opponents revere.

The highest expression of human nature and dignity is to strive to overcome the limitations imposed on us by our genes, our evolution and our environment. Future generations will look back at the beginning of the 21st century and be astonished that some well-meaning and intelligent people actually wanted to stop bio-nano-infotech research and deployment just to protect their cramped and limited vision of human nature. If transhumanism is allowed to progress, I predict that our descendants will look back and thank us for making their world of longer, healthier and abler lives possible.

Other participants in the symposium include:

Founder of Yale Students and Scholars for the Study of Transhumanism David Vincent Kimel, “In Defense of Transhumanism.”

In our future, daily life will be transformed through the increasing automation of labor and the rise in sophistication of artificial intelligence. Life may be less about the 9-to-5 grind and more about education, community and the creation and enjoyment of art. Rather than imagining a future in which humans and machines are at odds — as many thinkers have predicted — transhumanists look forward to the advent of cyborgs, in which computers are incorporated into the brain itself, leading to radically enhanced processing power and the ability to preserve consciousness for lengths of time now deemed inconceivable. The ultimate lesson from transhumanism’s origins in science fiction is perhaps to seek those inventions that would radically enhance lifespans and empower the human imagination to control what it experiences in ways hitherto unimaginable, liberated from the genetic and circumstantial wheel of fortune.

Executive director of the Institute for Ethics and Emerging Technologies James J. Hughes, “Soon We Will Use Science to Make People More Moral.”

Drugs, devices and gene therapies will soon allow us to safely suppress our appetites with a level of control only seen in ascetics and achieve transcendent states previously only accessible to yogis. Addictions will be treatable with implants, vaccines and therapies that enable the brain to unlearn dependencies. Psychedelic drug studies and brain imaging of meditators are suggesting ways to turn off neurotic self-absorption and tune into oneness and awe.

Duquesne University political philosopher Charles T. Rubin, “Transhumanists Are Searching for a Dystopian Future.”

With great power ought to come great responsibility. The libertarian strain that is so powerful among transhumanists makes them imagine that such responsibility need be exercised only by individuals making choices about how to modify themselves or their children. What popular culture imagines is that transhumanist promises are being made by flawed human beings to flawed human beings, and that as a result the consequences of their decisions will likely have a broader reach than they anticipate. As a result, the great powers that transhumanism promises are likely to be used not in ways that will solve human problems, but in ways that will perpetuate them yet more terribly.

Washington Post In Theory editor Christine Emba offers a primer on transhumanism for the bewildered, “Will Technology Allow Us to Transcend the Human Condition.”

Transhumanism, in its most extreme manifestation, is reflective of an increasingly pervasive and influential school of thought: that all problems can and should be solved with the right combination of invention, entrepreneurship and resource allocation.

For more background see my article, “The Case for Enhancing People.”

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Firebombing At Google Office Damages Google Earth Demo Car

Less than a month after a still unexplained suicide took place inside a conference room at Apple headquarters, there seems to be more trouble in Silicon Paradise. According to CBS, an incendiary device ignited a fire late Thursday night at the offices of digital giant Google, damaging a Google Earth demo car and leaving a large singe mark on one of the buildings, authorities said.

Mountain View firefighters were called to the massive complex on Salado Drive at about 10:52 p.m.

Arriving firefighters were met by Google security personnel and guided to an area where the car, used in Google’s Street view project, was parked and the grass and building were singed.

The blaze only caused minor damage to the car and building.

Mountain View Police PIO Katie Nelson told KPIX 5 that two incendiary devices were found at the scene and have been sent to a lab for testing.

The incident remains under investigation.

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Maryland Reforms Asset Forfeiture, Mandatory Minimums

Jail cellThough Maryland Gov. Larry Hogan vetoed bipartisan efforts to reform the state’s asset forfeiture and drug laws in 2015, a new push has succeeded. Yesterday Hogan, a Republican, signed a bill that tightens the rules for civil asset forfeiture (the mechanism by which police seize and keep assets and property from people suspected of crimes) and also the Justice Reinvestment Act, which reduces the state’s prison population and potentially reduces sentences for drug and non-violent offenses.  

The asset forfeiture bill, HB 336, is modest in scope, but will nevertheless improve the situation for anybody caught up in the system. It raises the standard of proof for seizing property to “clear and convincing evidence.” Because asset forfeiture is often a “civil” not criminal process, officials don’t generally have to prove guilt “beyond a shadow of a doubt” like they do in criminal trials, making it easier to take somebody’s property than it is to actually convict him or her. In order to seize a citizen’s principal home in Maryland, though, officials actually will have to get a criminal conviction. That’s an additional new requirement in the law. The law also eliminates cash forfeitures for simple drug possession cases, but maintains it for trafficking arrests.

The new rules also forbid the transfer of seized cash to federal agencies unless the amount seized is more than $50,000. This is an attempt to prevent law enforcement agencies from bypassing the tighter state rules by turning to the federal Equitable Sharing Program at the Department of Justice. This federal program has looser rules than state laws, and as a result we’re seeing more and more law enforcement agencies attempt to use the federal program to keep what they seize. (A pack of representatives just introduced a bill to try to make the federal rules less prone to abuse.) Unfortunately, there’s an exception in the law to allow for a transfer if there’s a federal warrant involved, and the Institute for Justice warns that this loophole could be pursued even more frequently to bypass Maryland’s new restrictions.

The Justice Reinvestment Act is estimated to reduce Maryland’s state prison population by more than 1,000 over 10 years and to save the state $80 million dollars (that will be spent on other programs). The new law allows for earlier releases of those convicted of non-violent drug offenses and thefts under $1,500. It completely eliminates mandatory minimum sentences for nonviolent drug offenses. It leaves the sentence ranges intact, though, giving judges the discretion over how harsh to be. Mandatory minimums will remain for violent drug-related crimes. It will also significantly increase the types of crimes (from nine to 50) that can be wiped from an offender’s record.

Read more about the provisions of the Justice Reinvestment Act here. Both of these laws ended up a bit more modest but they could have been, but the reforms are valuable and needed. 

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Friday A/V Club: Popeye, Bluto, Daffy Duck, Snoopy, and Betty Boop Run for President

Has there ever been a more cynical campaign than the presidential race of 1956? To judge from this documentary, neither candidate took a stand for principle or for sound public policy; instead Popeye, nominee of the Spinach Party, promised free ice cream, while Bluto, of the Blutocratic Party, offered free cigars. The election eventually came down to just one vote—Olive Oyl’s—and the candidates competed for her support by doing her work for her. I don’t know how exactly anyone knew in advance that she was going to cast the deciding ballot; the Constitution, clearly, had been thrown out the window.

Things were different when Daffy Duck tried to run for president. His Trumpish platform of banning rabbits hit a snag when Bugs Bunny explained the Constitution’s limits on presidential power; even after Daffy managed to get elected to Congress instead, he was hemmed in by constitutional restraints. It’s all in this film from 2004, which also includes a brief discussion of the protections to be found in the Fourth Amendment:

Snoopy’s successful bid for the White House—not to be confused with his later service as head beagle—offers a lesson in America’s openness to new religious movements. We’re used to seeing Christian candidates claim that God asked them to run for office; Snoopy instead obeyed a message from the Great Pumpkin. Or so it says in this 1968 report from the Royal Guardsmen, who pretty much owned the “novelty songs about Snoopy” genre back in the ’60s. As in the Popeye/Bluto race, Snoopy’s victory came down to a single vote—and a puzzling one, as I’m pretty sure this voter was actually a citizen of Germany:

The country could have gotten rid of the presidency altogether back in 1932, if Americans had backed the WavyGravyesque candidacy of Mr. Nobody, depicted in the last of our films. But instead they preferred Betty Boop, whose elaborate platform included trollies that pick you up at your second-story window and privacy for dogs who pee in public. Worthy causes, no doubt, but I can’t help imagining the road not taken.

(There was a “Linda Lovelace for President” movie too, but I’ll let you Google that yourselves. For past editions of the Friday A/V Club, go here.)

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Will Venezuela Be Forced To Embrace The Dollar?

Submitted by Daniel Fernandez Mendez via The Mises Institute,

The country of Venezuela is dangerously approaching hyperinflation. At 2015’s year-end, official figures had yearly inflation at or above 180 percent (some private sector sources estimated it at 330 percent). The technical definition of hyperinflation is when inflation is at 50 percent or more per month, meaning that Venezuela is not yet at this point, but does seem to be approaching at an accelerated pace. The South American country finds itself with inflation rates at their worst in its history (1996 saw 103 percent yearly inflation) and the highest in the world (Ukraine is second with 50 percent yearly inflation).

Venezuelen official inflation rate
Source: NSI Bolivarian Republic of Venezuela

The main effects of hyperinflation are beginning to be felt. In every case in history where there has been hyperinflation, the main cause has been fiscal imbalance, and the case in Venezuela is no different. When there is a surge in the deficit, the same applies for inflation (graph 2).

Budget deficit and inflation
Source: Central Bank of Venezuela; International Monetary Fund

Normally, moderate inflation follows the path of the deficit with a relatively large delay, because economic agents are unable to anticipate deficit values and monetization with precision. On the other hand, in times of hyperinflation, inflation anticipates the deficit (economic agents overestimate new monetization policies and there is a universal tendency to evade local currency). In Venezuela, we can see that since 2013 (graph 3) inflation has increased at a faster rate than the deficit, and for this reason we can consider the country in a state of hyperinflation as of that date.

Rates of change inflation and budget deficit
Source: Self-prepared using data from: Venezuela Central Bank; International Monetary Fund

This creates a big problem for the government of Venezuela due to the fact that real tax revenues decrease (just as in all cases of hyperinflation). During the time between receipt of tax revenues and actually putting these taxes to use, inflation eats up the real value providing the government with less real revenue.

An inverse relationship exists between inflation in Venezuela and crude oil prices (graph 4). This relationship is such that inflation increases rapidly when the main source of government revenue (revenue from oil) decreases due to the fact that the government does very little to reduce costs when decreases in revenues are experienced (thus deficits are monetized and amounts of currency rise at aggressive rates).

Oil price and inflation
Source: NSI Bolivarian Republic of Venezuela; OPEC

One of the most surprising and paradoxical aspects of hyperinflations is the shortage of money. When rises in prices grow out of control (which is starting to be the case in Venezuela), the amount of new money created is not enough to suffice for these increases in prices. In other words, the real money supply drops (nominal money supply / price levels).

Money supply growth
 

The last phase in all cases of hyperinflation is currency stabilization. This phase is inevitable whether it be because of changes introduced by the government or due to complete rejection of local currency by the population. In order for such a monetary reform to be successful, it is essential that the government first eliminate the main cause of the inflation (the budget deficit). Unfortunately, it does not seem as though the Venezuelan government has any plans to decrease spending, nor does it appear that revenue from oil will be recovering any time soon, meaning that any attempts at currency stabilization will surely fail (just as it did the last time when the bolivar fuerte was introduced in 2008).

In light of this situation, it seems that Thiers’ Law is inevitable. Thiers’ Law is the reverse of Gresham’s Law. Good money eventually takes bad money out of circulation as the latter becomes abandoned. Currently, the US dollar serves as a store of value for Venezuelans, and to a lesser extent, the unit of account. The only function that the bolivar currently serves is as a medium of payments, which is only a matter of time before this function is abandoned, as well (in fact, alternatives to using local currency have begun to spring up in the form of bartering and trade). Seeing that the US dollar is already serving various functions that replace the Venezuelan currency, it is all too possible that it becomes the undesired successor to the bolivar.

Most certainly, Venezuela finds itself in hyperinflation for which there exist only two solutions; drastically reduce spending and the deficit and execute monetary reform or lose the bolivar and adopt the dollar. Both are equally unpopular for the government of Venezuela, but the difference is that if the first option (the deficit) goes unattended, the second (dollarization) is inevitable. Then, one of the most anti-US governments in the world will have to accept the US dollar as its only remedy against hyperinflation.

In Venezuela, despite enormous levels of money creation; money shortages are more and more common (graph 5). While the money supply has doubled since last year, real money supply has decreased 30 percent.

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Poll Finds 90 Percent of Native Americans Not Offended by Washington Redskins

The Washington Post polled 504 Native American adults, finding that 90 percent said the Washington Redskins name did not bother them. Only 9 percent said they found the name of the NFL franchise offensive. Just 21 percent said they felt the term redskins was offensive in general, with 17 percent saying they’d be offended if a non-Native American called them a redskin.

A vast majority, 73 percent, said the use of Native American imagery in sports didn’t bother them. A majority of respondents said the issue of the Washington Redskins’ name wasn’t important to them at all, even though three-quarters had heard at least something about it.

The Washington Redskins have been called the Redskins longer than they’ve been in Washington. They moved to the city from Boston in 1937—but changed their name from the Braves to the Redskins in 1933.

The most recent wave of controversy over the Redskins name started about half a decade ago. In 2013, a report from the National Congress of American Indians explained the organization’s opposition to the use of offensive Indian imagery, singling out the Washington Redskins. In 2014, the Redskins lost a series of trademarks related to their team name. The Post‘s poll this week appears to be the first one to actually survey Native Americans on their opinion.

“Cultural appropriation” has become a hot topic in the renewed political correctness/culture wars. Anything from chanting to dreadlocks to tequila to yoga can be identified as cultural appropriation by the perpetually aggrieved. It’s a 21st century academic play on the “white man’s burden,” with American “activists” taking up the burden of fighting cultural appropriation. Cultural appropriation critiques “reaffirm the very thing they intend to oppose,” Minh-ha Phan wrote in The Atlantic, “white Western domination over and exploitation of culture at the expense of everyone else.”

While sports commentators who’ve chimed in on the Washington Redskins naming issue before, like ESPN’s Michael Wilbon on Pardon the Interruption yesterday, expressed shock at the results of the Post poll, perhaps it shouldn’t have been so surprising. In 2013, ESPN.com’s Rick Reilly wrote about the attitudes of actual Native Americans he talked to, and pointed to the numerous majority-Native American high schools that use the Redskins name and Indian mascots for their sports teams.

At the intersection of the issues of Native Americans, race in the U.S. and cultural appropriation: despite the mainstream left police reform movement largely organizing around the mantra “Black Lives Matter,” Native Americans are the most likely racial group to be killed by police.

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Something Stunning Is Taking Place Off The Coast Of Singapore

   “I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,”

   – Senior European oil trader a day after arriving in the city-state.

 

Back in November, when the world-record crude inventory glut was still in its early innings, we showed what we then thought was a disturbing image of dozens of oil tankers on anchor near the US oil hub of Galveston, TX, unwilling to unload their cargo at what the owners of the oil thought was too low prices.

 

* * *

Little did we know that just a few months later this seemingly unprecedented sight of clustered VLCCs would be a daily occurrence as oil producers, concerned by Cushing hitting its operating capacity, would take advantage of oil curve contango to store their oil offshore indefinitely.

However, while the “parking lot” off Galveston has since normalized, something shocking has emerged and continued to grow half way around the world, just off the coat of Singapore. This.

 

The red dots show ships either at anchor or barely moving, either oil tankers or cargo, which have made the Straits of Malacca, one of the world’s most important shipping lanes which carries about a quarter of all seaborne oil primarily from the Persian Gulf headed to China, into a “bumper to bumper” parking lots of ships with tens of millions of barrels in combustible cargo.

it is also the topic of the latest Reuters expose on the historic physical crude oil glut which continues to build behind the scenes, and which so far has proven totally immune to dissipation as a result of the sharp increase in oil prices over the past three months.

Indeed, as Reuters notes, prices for oil futures have jumped by almost a quarter since April, lifted by severe supply disruptions caused by triggers such as Canadian wildfires, acts of sabotage in Nigeria, and civil war in Libya. And yet flying into Singapore, the oil trading hub for the world’s biggest consumer region, Asia, reveals another picture: that a global glut that pulled down prices by over 70 percent between 2014 and early 2016 is nowhere near over, and that financial traders betting on higher crude oil futures may be in for a surprise from the physical market.

“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,” said a senior European oil trader a day after arriving in the city-state.

As Asia’s main physical oil trading hub, the number of parked tankers sitting off Singapore’s coast or in nearby Malaysian waters is seen by many as a gauge of the industry’s health.  Judging by this, oil markets are still sickly: a fleet of 40 supertankers is currently anchored in the region’s coastal waters for use as floating storage facilities.

The glut is not only constant but is rising with every passing week: the tankers are filled with 47.7 million barrels of oil, mostly crude, up 10 percent from the previous week, according to newly collected freight data in Thomson Reuters Eikon.

What is curious is that the glut is persisting despite seemingly relentless demand by China. Earlier today Bloomberg calculated that 74 VLCCs are bound for China, the highest in 3 weeks, and up from 69 a week earlier. Still the inert glut off Singapore is enough oil to satisfy five working days of Chinese demand, suggesting recent supply disruptions – which have mostly occurred in the Americas, Africa and Europe – have done little to tighten supply in Asia as Middle East producers keep output near record volumes in a bid to win market share.

“The volumes of oil stored at sea in South East Asia – predominantly Singapore and Malaysia – appear to have increased significantly,” said Erik Broekhuizen, Global Manager of tanker research and consultancy at New York-based shipping brokerage Poten & Partners. “The current volumes are the highest for at least the last five years.”

What is taking place in the oil market appears to be merely the latest disconnect between the paper and physical markets, something quite familiar to precious metals traders in recent years. As Reuters notes, many participants in the physical market dispute recent notes from financial players like Goldman Sachs that forecast a further rise in crude futures. “There has been quite a bit of bullishness from hedge funds in recent months, betting on higher oil prices, and even the analysts at Goldman Sachs have recently turned more bullish on oil prices,” said Ralph Leszczynski, head of research at ship broker Banchero Costa.

“Prices are unlikely to rise too much as the specter of glut is still there,” he said. However, Leszczynski may be discounting just how powerful algo-driven momentum can be if, or especially when, it is completely disconnected from fundamentals.

* * *

While the sight of tankers at anchor is nothing new, this time something has changed.

Unlike before, when the contango of the oil curve made storing oil offshore profitable, this is no longer the case as contago-funded offshore profits have all but disappeared.

As a reminder, storing oil on ships can be profitable when prices for future delivery of crude are higher than in spot market, a term structure known as contango, as long as future prices are high enough to offset tanker charter costs. However, with the one-year contango for Brent futures collapsing from $7.60 per barrel in January to just $4, far below the $10 that traders say is currently required to make floating storage financially attractive, suddenly parking oil offshore leads to storage losses. The same goes for WTI. 

At a charter cost of more than $40,000 a day for a Very Large Crude Carrier (VLCC) that can store 2 million barrels, the contango is nowhere near steep enough to make it profitable to store oil on tankers for sale at a later date.

 

This has led to a dramatic development in the oil market: debt-funded storage. Reuters writes that the need to store oil is so strong that traders are calling up banks to finance storage charters despite there being no profit in keeping fuel in tankers at current rates.

“We are receiving unusually high amounts of queries to finance storage charters,” said a senior oil trade financier with a major bank in Asia. “These queries come from traders fully aware that they will not make a profit from storing the oil. This isn’t a trade play, it’s the oil market looking for places to store unsold fuel,” he added.

So why are the traders doing this?

Simple: they hope that oil prices will rise fast and soon enough where the capital appreciation in crude will more than make up for the incurrence of new debt which will be repaid with proceeds from “selling higher.” The risk, of course, is that oil does not rise and should prices tumble, traders will not only have a capital loss on their hands, but be forced to deal with the excess leverage they had hoped would promptly disappear.

To be sure, while we have warned in the past about the danger of offshore storage becoming unprofitable and being brought back onto the land market, in the process launching a liquidation dumping scramble, it has never been this bad. A trade financier at a European bank said there had been a “spike in interest from oil traders to finance their storage needs” since the start of the year as onshore facilities were almost full.

Still, with record amounts of oil stored offshore and with the profit on such storage now shifting into a loss, many are scratching their heads how much longer this imbalanced, and bank funded, situation can persist.

“Floating storage is unattractive economically, given the current term structure in crude futures,” BMI Research said this week. Despite this, BMI said that “the volume of crude in floating storage has risen sharply in recent months,” adding that the phenomenon was global, with floating storage up 19.5 percent between the first quarters of 2015 and 2016.

“There is clearly still far too much physical crude going around for the glut to be over,” said the European oil trader after flying in to Singapore.

The trader’s conclusion: “And the paper market seems blissfully unaware of it.”

He is right… for now. Because all that will take for even the algos to give up their relentless upward momentum, is for some of these tens of millions of barrels to finally come onshore, which now that contango is no longer profitable, is just a matter of time.

In the meantime, just keep track of the unprecedented parking lot of ships off the coast of Singapore: the larger it gets, the more violent the price drop will be once banks say “no more” to funding money losing charters.

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Tear Gas, Bullets Fired As Anti-Government Protesters Storm Baghdad Green Zone, Enter PM’s Office

The situation in Iraq had already become very dangerous, as we reported in earlier in the month, after the Iraq PM ordered arrests in order to disband Green Zone protests.

As Reuters reports, Anti-government protesters are back at it, and have stormed into Baghdad's Green Zone, allegedly reaching the Council of Ministers building.

 

 

 

 

 

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Clarence Thomas Tells SCOTUS to Stop Deferring to Federal Agencies

The U.S. Supreme Court receives hundreds of petitions each term from parties seeking to have their cases heard. Most of those petitions are rejected by the Court without any comment or explanation. But on certain rare occasions, one or more justices will speak out in dissent when the Court refuses to take a case. This week Justice Clarence Thomas did precisely that, lambasting his colleagues for choosing “to sit idly by” while bureaucrats at the Department of Education were allowed to set the scope of their own regulatory powers free from any meaningful judicial review by the federal courts.

Thomas’ dissent came in a case called United Student Aid Funds, Inc. v. Bible. At issue was a 2015 ruling by the U.S. Court of Appeals for the 7th Circuit which granted broad deference to the Department of Education and its interpretation of federal law and accompanying federal agency rules covering the repayment of student loans. “Even if this were not the best interpretation of the statutes and accompanying regulations,” the 7th Circuit declared, “it is at least a reasonable one, and we defer to that interpretation because it reflects the reasoned position of the Secretary of Education, who is tasked with administering the program.”

As authority for this deferential stance, the 7th Circuit cited the Supreme Court’s 1997 decision in the case of Auer v. Robbins. In Auer Justice Antonin Scalia led the Court in granting extremely broad deference to a federal agency’s interpretation of its own rules. Scalia’s Auer opinion relied in turn on the Supreme Court’s 1945 precedent in a case known as Bowles v. Seminole Rock & Sand Co. “Since this involves an interpretation of an administrative regulation a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt,” the Court held in Seminole Rock. “The ultimate criterion is the administrative interpretation, which becomes controlling weight unless it is plainly erroneous or inconsistent with the regulation.”

This week’s rejected case, United Student Aid Funds, Inc. v. Bible, asked the Supreme Court to overturn the 7th Circuit and to overrule Auer and Seminole Rock once and for all.

There is certainly good reason for the Supreme Court to revisit those two misguided precedents. As Columbia University law professor Philip Hamburger and the Washington Legal Foundation argue in an amicus brief they submitted in Bible, “the office enjoyed by judges under Article III of the Constitution is one of independent judgment, not deference, heightened respect, or other predisposed bias towards the most powerful of parties—the federal government. Such deference represents a dramatic departure from judicial independence, due process, and the rule of law.”

I think that’s exactly right. I would also add that the whole idea behind judicial deference is that unelected judges should be reluctant to overturn legislation passed by democratically accountable lawmakers on the grounds that such legislation (in theory) reflects the will of the majority. Yet under Seminole Rock/Auer deference, judges are not deferring to any sort of democratically accountable lawmakers; instead, they are deferring to federal bureaucrats. The traditional case for judicial deference is therefore particularly weak in this area of the law.

The Supreme Court, however, refused to get involved this week and declined to revisit Auer and Seminole Rock at this time. Those precedents remain what lawyers call “good law.” That’s what inspired Clarence Thomas to speak out in dissent. “This case is emblematic of the failings of Seminole Rock deference,” Thomas wrote. “By enabling an agency to enact ‘vague rules’ and then to invoke Seminole Rock to ‘do what it pleases’ it later litigation, the agency (with the judicial branch as its co-conspirator) ‘frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government.'”

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