The Oil War Is Only Just Getting Started

Submitted by Tsvetana Paraskova via OilPrice.com,

It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how U.S. shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60.

The U.S. rig count has been rising, while OPEC seems unfazed by the resurgence in North American shale activity and is trying to convince the market (and itself) and prove that it would be mostly adhering to the promise to curtail supply in an effort to boost prices and bring markets back to balance. In the next couple of months, official production figures will point to who’s winning this round of the oil wars.

This would be the short-term game between low-cost producers and higher-cost producers.

In the longer run, the latest energy outlook by supermajor BP points to another looming battle for market share, where low-cost producers may try to boost market shares before oil demand peaks.

BP’s Energy Outlook 2017 estimates that there is an abundance of oil resources, and “known resources today dwarf the world’s likely consumption of oil out to 2050 and beyond”.

“In a world where there’s an abundance of potential oil reserves and supply, what we may see is low-cost producers producing ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out,” Spencer Dale, BP group chief economist said.

In BP’s definition of low-cost producers, the majority of the lowest-cost resources sit in large, conventional onshore oilfields, particularly in the Middle East and Russia.

Although this view that low-cost producers would try to seize more market share comes from an oil major with significant interests in Russia and Iraq, for example, BP may not be wrong in predicting that the abundance of oil resources would prompt the lowest-cost producers to pump the most out of low-cost barrels before the world starts to unwind from too much reliance on oil.

Oil demand growth is expected to slow down in the years to come. BP pegs the cumulative oil demand until 2035 at around 700 billion barrels, “significantly less than recoverable oil in the Middle East alone”.

Middle East OPEC production growth would account for all OPEC output growth by 2035, BP reckons, noting that other OPEC production typically has a higher cost base and its market share would drop.

The U.S. liquids production is expected to rise by 4 million bpd to 19 million bpd by 2035, with growth mostly in the first half of the period, driven by tight oil and NGL output.

So, both OPEC’s Middle East members and the U.S. are seen increasing oil and liquids production in the next two decades.

However, OPEC – especially Saudi Arabia – has the recent bitter experience of its pump-at-will policy for market share backfiring on its economy when oil prices crashed.

Another market-share war would involve too many unknowns, including supply-demand basics, leaner and meaner non-OPEC producers, oil price effects on oil-revenue-dependent economies, or rationale for investments in higher-cost areas.

OPEC’s decision to deliberately cut supply and abandon the strategy of pursuing market share at all costs is currently benefiting the cartel’s competitor, U.S. shale.

Commenting on OPEC’s current and future relevance and influence on the oil markets, Wood Mackenzie said in an analysis last week:

“The group may still be able to control oil prices to a limited degree, but the benefits of that control will accrue to parties outside the cartel. If OPEC remains a functional entity by the end of 2017, its greatest hits will surely be in the past.”

Five or ten years from now, a possible market share ‘oil war’ would take place on a totally different battleground, and some regiments or battalions may lack essential armory to wage such war.

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Increasingly, Evolution Has No Proof

Via The Daily Bell

 

A cluster of ghostly hand- and footprints on a mountain north of Lhasa offers evidence that humans scratched out a permanent existence in the thin air of Tibet much earlier than commonly thought, according to a new study.  Some locals believe the prints, pressed into an ancient slab of limestone located 14,000 feet above sea level near the present-day village of Chusang, were left behind by mythical beasts. A team of researchers say that the impressions were left by people and that they offer intriguing clues to the puzzle of Tibetans’ ethnic origins.  –WSJ

The dating of an ancient slab of limestone in Tibet has now been attributed to human beings between 7,000 and 12,000 years ago. But that’s still fairly recent so far as we are concerned.

More than ever we are partial to the idea that people in great civilizations  were alive 20,000 or 30,000 or 40,000 years ago. And we’re willing to consider the possibility it goes back a lot further than that.

A 900 page book on the subject citing a good many examples intends to show human beings on earth go back hundreds of millions of years. The evidence is being removed from museums in favor of proofs that support the idea that human beings are not so old.

This story in Science is example of an article that pushes on the boundaries of science without blowing up the theory in its entirety.

The researchers, whose latest findings are published in the latest issue of Science, say they’ve now developed a clearer picture of the site’s significance. According to their calculations, Chusang was very likely used by inhabitants of a nearby year-round settlement between 7,400 and 12,700 years ago — at least 2,200 years before permanent villages are believed to have been established elsewhere on the Tibetan Plateau.

 

… By positing an earlier date of settlement on the Tibetan plateau, the study is likely to be controversial in Chinese archaeological circles. It could also irk Communist Party officials, for whom the question of where Tibetans came from is freighted with political significance.  Pushing back against advocates for Tibetan independence, the Chinese government recently began arguing that Tibet has been a part of China, not just during the imperial era, but “since ancient times.”

China is using archaeology to make political points. And it is not just China. Archaeology throughout the West has been put in a similar position. It is at least partially in the service of specific political persuasions.

In the West, for instance, the idea is that civilization has been on a constant upward curve. With a certain jaggedness, the curve has been maintained with a regular ascension.

But perhaps this ascension has been maintained dishonestly. Human skeletons for instance, seem to have been buried within strata that is 10, 20 or even 100 million years old. The strata is contiguous and set up in a way that proves the bodies couldn’t have drifted down from a higher level

There is almost as much evidence, it seems, for man being hundreds of millions of years old as there is that modern man is 60,000 years old. The human construct of Petra in Jordan is said to be millions of years old just based in the sites massive erosion. And  the same erosion is said to have affected various sites in South America.

The result has been especially injurious to Darwin’s theory of evolution. Darwin noted a good deal of micro evolution between species and thus concluded that macro evolution must take place. But in nearly 200 years of looking, not a single case of macro-evolution has been definitively proven from what we can tell.

Horses were supposed to have grown from small to large, shedding toes in the process. But these days, there is a good deal of doubt whether the initial multi-toed animal was ever some sort of horse to begin with. Simply calling it a horse does not make it one.

Saying man evolved from apes  sounds good but the evidence may not be there. Great apes did evolve to walk, but not much else actually changed. Great brow ridges remained. The rib cage still went from in to out. The arms still dangled nearly to the knees. The strength of these creatures was five to ten times that of modern man.

Neanderthals are said to be proto-humans, but some have now noted that even the Neanderthal had a strong resemblance to an ape. The shape of the body, including the lengthy arms, barrel chest, prominent brow ridges and other elements far more represent an ape than a modern human. Thus even the Neanderthal could be said to represent an extreme form of ape.

Human beings are far different than apes. Their strength is much diminished, their heads are much different as are the length of their arms. An upright walking ape may still be a kind of ape despite his stance. But a human is a human.

The idea here is that there are many micro-evolutions but these do not add up to a single macro-evolution.

It is also noted that macro-evolutions take place after great extinctions when there are numerous additional animal niches to fill. In very short periods of time, macro-evolution must take place to fill literally thousands of these now vacant niches. Since we cannot definitively identify a single clear-cut macro-evolutionary example, granting an explosion of them in a few thousand years seems at least suspicious.

Conclusion: None of this means the theory of evolution is dead. But much of it seems questionable and the burden of proof after so many years should surely fall at least in part on those who espouse it. Right now, evolution has a lot of adherent including major scientists, but at some point they will have to move beyond theory and actually provide solid evidence.

Other stories:


Now the Entire EU Is Urged to Adopt a Basic Income

Negative Trump Coverage Is Long-Term Threat to His Presidency

 

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Why One Trader Thinks “The Fed Is About To Take Out The Last Pillar Supporting The Dollar”

From Mark Cudmore, former FX trader who now writes for Bloomberg

Fed Can’t Help Dollar Bulls in Denial

Expect the Fed to take out one of the last pillars of dollar support today.

Dollar bulls are still not capitulating despite it being on target for a sixth consecutive week of losses. While some doubts are finally starting to creep in, the majority of analyst notes this week suggest the FOMC can put the dollar uptrend back on track. I’m surprised.

It’s hard to see how the Fed can be hawkish given the economic policy turmoil of the last couple of weeks.

All measures taken so far by Trump’s administration are negative for growth rather than reflationary. This is particularly pertinent when put in context of how optimistic expectations were only two months ago.

The pro-growth policies may come soon but, importantly, there’s no sign of them yet, and the FOMC is obliged to deal in facts rather than speculation and hope.

The economy is nowhere near running “hot.” Inflation is picking up but still hasn’t reached target, let alone given any indication it might run away to the topside.

And now the hard economic data is just starting to roll over, relative to expectations, as shown by the Bloomberg Economic Surprise Index.

Of course the Fed won’t be raising rates today, but it would be just as irresponsible of them to indicate a hike is imminent. Unless Trump changes tack rapidly, March is looking far too soon to even consider tightening policy.

The dollar’s fate is clinging to yield support after technical levels were broken across the board last night: there may be nothing solid left for it to hold on to. The correction lower could accelerate.

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Trump, Obama and the Approval of the Dakota Access Pipeline

DAPLErikMcGregor/SipaUSA/NewscomPresident Trump signed an executive order last week directing the Army Corps of Engineers to “review and approve in an expedited manner, to the extent permitted by law” the easements across federal lands necessary to complete the construction of the Dakota Access Pipeline (DAPL). At issue is permission to finish construction of the last segment of the pipeline underneath Lake Oahe in North Dakota. Last July, the Corp completed and issued an environmental assessment (EA) with a “Finding of No Significant Impact” with regard to the construction of the pipeline beneath Lake Oahe.

The Standing Rock Sioux Tribe objected to the construction due to expressed concerns that an upsteam pipeline leak could contaminate their drinking and irrigation water supplies. However, the Corps’ environmental assessment specifically noted, “The tribes argue the District did not adequately consult on the DAPL pipeline alignment. The EA establishes that the District made a good faith effort to consult with the tribes and that it considered all tribal comments.” The Corps’ assessment concluded that measures adopted to mitigate any spills were adequate to protect Lake Oahe. Environmental activists opposed the construction of the pipeline in the hope that stopping it would prevent the production and burning of fossil fuels that contribute to man-made global warming.

As the fall wore on, thousands of protesters set up camp near Lake Oahe to block construction of the pipeline and to put pressure on the Obama administration to overrule the Corp’s environmental assessment. Without speculating on the behind-the-scenes maneuvering by Obama administration officials, it is the case that acting Assistant Director of the Army for Civil Works Jo-Ellen Darcy issued in December a memorandum that voided the Corps’ assessment. In her memo Darcy did observe:

I want to be clear that this decision does not alter the Army’s position that the Corps’ prior reviews and actions have comported with legal requirements. Rather, my decision acknowledges and addresses that a more robust analysis can be done and should be done, under these circumstances (emphasis hers), before an easement is granted to the Dakota Access Pipeline to cross the Missouri River on Corps land.

Under the circumstances, Darcy then declined to approve an easement that would enable the completion of the pipeline. In addition, Darcy ordered the Corps to undertake a full-blown environmental impact statement, a process that could take as long as two years more to complete.

Now just two months later, North Dakota Sen. John Hoeven has reportedly been told that Army Secretary Robert Speer will soon order the Corps to issue the easement necessary to complete the pipeline. Whether this apparent impending approval is “permitted by law” will, of course, be contested by Sioux and environmental activists in court.

Ultimately, this episode is an example of how arbitrary politically motivated bureaucratic decisions are replacing the rule of law. This should worry every American.

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The Triumph Of The Technocrats

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

We cannot advance until we dump the Technocrat Class and decentralize the power that the Liberal Establishment happily concentrated into the hands of corporate cartels and the central state.

Those who don't yet understand our centrally-planned cartel-state system will benefit from reading How Democrats Killed Their Populist Soul (The Atlantic). I've presented related analyses in three recent essays:

The Protected, Privileged Establishment vs. The Working Class

The Collapse of the Left

25 Years of Neocon-Neoliberalism: Great for the Top 5%, A Disaster for Everyone Else

What we're talking about here is the Triumph of the Technocrats. There are multiple levels to this triumph of the technocrat class:

1. The dumbing down of the Technocrat Class via a Higher Education system that optimizes technocrat specialization at the expense of real-world business experience and broad-based knowledge.

As a result, the technocrat class has a very high opinion of its intelligence and judgment because it has no idea how little it actually knows or understands. It believes Higher Education's hype that specialization has given it a superior understanding that entitles it to control and power.

This overweening belief in its own superiority sets the stage for hubris and catastrophically ungrounded decisions.

Need we look any farther than the invasion of Iraq or the Establishment's response to the insolvency of self-liquidating money-center banks in 2008?

The roots of the Technocrat Class's hubris and self-congratulatory bias go all the way back to the 1960s-era "whiz kids" described by David Halberstam's classic account The Best and the Brightest.

The rise of computers (albeit primitive by today's standards) enabled the first Technocrat romance with "big data", i.e. a reliance on data analysis to make decisions about a real world that cannot be reduced to quantification without a loss of decision quality and humility.

This is how we ended up with a nation in which Technocrats with no real-world military combat experience are running America's wars and Technocrats who have never started a single company or paid a single employee with their own money are running America's economy.

2. As outlined in How Democrats Killed Their Populist Soul, the Liberal Establishment melded Corporate-banking cartels and the central state into one centrally planned, technocrat-controlled cartel-state system. This has created millions of well-paying, protected Technocrat jobs in an expansive Deep State that stretches from universities to the corporate media to the federal agencies to Silicon Valley cartels and monopolies.

Here is my simplified chart of the Technocrat Deep State:

Here's a chart that reflects the massive expansion of Technocrats in the healthcare system: charts of Higher Education track this same Triumph of Technocrats: the number of administrators has exploded while the number of tenured professors has essentially flatlined.

The top 5% is the Technocrat Class. The phenomenal rise in the income and spending of the Technocrat Class is illustrated in this chart:

No wonder the Liberal Establishment is freaking out: they've failed. Despite their multiple degrees, they are ignorant. Despite their confidence in "we're the best and brightest," The economy inhabited by the bottom 95% has stagnated, and all the wars of choice run by the technocrats have become unwinnable quagmires (despite Rummy's claim that "we don't do quagmires").

Even worse, "lesser beings" (i.e. the rest of us) are challenging their central planning power, which they view as their birthright / entitlement. Here's the Liberal Establishment's view in a nutshell: How dare they challenge our power? The reality that "lesser educated" people actually have a better grasp of the real world than Technocrats is simply unacceptable to the Liberal Establishment Technocrats.

We cannot advance until we dump the Technocrat Class and decentralize the power that the Liberal Establishment happily concentrated into the hands of corporate cartels and the central state.

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What To Expect From Today’s Fed Rate Decision

Despite today’s unexpectedly strong ADP and ISM report, which however followed a disappointing Q4 GDP print, the FOMC meeting at 2pm should be largely uneventful. The Federal Reserve, which won’t have seen Friday’s payroll report yet, will only release its statement without a press conference or Summary of Economic Projections. This offers market participants less information to digest and react to, and therefore consensus expects no change from the Fed.

A quick reminder on what has happened in markets since the Fed’s latest, and only second in the past decade, rate hike which has seen the yield curve has flatten:

While gold has been the best performing asset class:

Although the odds of a move at this meeting are small, March is still a possibility with futures pricing in around a 15% chance of a 25bps hike.

Odds are slim as there is still a great deal of uncertainty surrounding the new President and his policies and the USD has been volatile as a result. In light of Fed rhetoric on the subject however, the Fed is not expected to give commentary to how, if at all, the potential Trump stimulus will affect the course of monetary policy.

The median FOMC participant is expected to still call for three hikes this year, a divergence from the market’s less hawkish expectations (like in 2016). The three hikes priced by the Fed do not correlate with the two hikes priced with the market, as traders are more sceptical that they will be able to increase rates at that pace, given the uncertainty surrounding Trumps potentially protectionist policies.

One development the Fed have referred to several times, and with increased stress, is the potential deflationary affect from a stronger USD and weaker global demand. The inflation data has held up so far with the core PCE figure printing just 30 bps below the Feds mandate in December. Growth figures are less favourable for the Fed — with the advanced reading for first quarter printing well below analyst expectations (1.9% vs. Exp. 2.2%) but this will be played down by the Fed until later readings confirm this (earlier today the Atlanta Fed raised its Q1 GDP forecast to 3.4% from 2.3%). Employment remains strong as well and continues to be a pillar upon which the Fed rest the normalization process.

That said, some changes to the language of the FOMC statement are expected. In particular, the Fed may highlight the reduction in labor market slack, given that the unemployment rate has fallen to 4.7%. The Fed may also note that confidence measures have improved, both business and consumer surveys. Both of these changes would be perceived as a bit more hawkish. 

In the forward-looking language, the Fed may note that inflation is expected to rise to 2% over the medium term. It is possible that they strengthen this language by noting that the reduction of labor market slack and gain in energy prices should underpin inflation in the medium term. In terms of the balance of risks, it is likely the statement will read that the near-term risks to the economic outlook “appear roughly balanced”, but it is possible that they remove the word “appear” to show a greater degree of confidence.

Bust most, virtually nobody expects any change in policy at the meeting, either in terms rates or reinvestments. The Fed is, for the time being, content to stay on hold and monitor economic conditions and potential changes to fiscal policy. That said, the FOMC will spend time discussing the exit strategy in more detail, particularly about the plan for the balance sheet as well as the dominante topic of the day in recent weeks – how to unwind the Fed’s $4+ trillion balance sheet . We will have to wait for the FOMC minutes to get more specifics, however.

Market reaction:

Give there is only a 14.5% chance of a rate hike at this meeting, fast money moves surrounding the decision itself are expected to be minimal, with the accompanying statement set to take focus. Given a lot of Fed rhetoric has been rather upbeat about inflation expectations, any deferral from this line may be considered dovish. The Fed will have to be quite bullish for the market to catch up to the three that the Fed expect and one would expect to see something along the lines of ‘Global and USD headwinds weighing upon inflation have eased’. It’s worth noting though that given the volatility of late in the USD — choppy price action could come even if everything is as expected i.e. Fed hold rates and reiterate data dependency.

Finally, here is what one indicative bank – Nomura – expects will happen today.

We expect the FOMC to keep the federal funds target unchanged at 0.50-0.75% at the conclusion of the 31 January –1 February meeting. The data on economic activity and inflation since the last meeting have been in line with expectations.

 

We anticipate few changes in the FOMC’s statement overall:

 

The paragraph on current economic conditions (the first paragraph) should be updated modestly to reflect recent developments. But we expect the general thrust of the paragraph to be unchanged. The labor market has continued to strengthen and economic activity expanded at a moderate pace.

 

For the economic outlook (the second paragraph), we also expect only minor changes. The most recent inflation data suggest that inflation continues to very gradually creep up towards the 2% target. We expect the risk statement from the December meeting, “Near-term risks to the economic outlook appear roughly balanced,” to be repeated.

 

One area where there may be a change is the description of the labor market. During her speech on 19 January at Stanford University, Chair Yellen stated that the economy is close to full employment, or in her language, “I judge labor utilization to be reasonably close to its normal longer-run level.” Other members have expressed similar sentiments. Thus, the FOMC may change its language on the outlook for the labor market to reflect this view. However, we don’t think that this is likely. If the FOMC statement stresses that the employment has essentially reached its maximum “sustainable” level, market expectations for a hike in March would likely rise, but the uncertainty about the outlook for fiscal, and other, policies remains high.

 

Given false starts in the past – in the run ups to “tapering” in 2013 and to their rate hike in December 2015 – we do not think that the FOMC wants to send a strong signal about what they are likely to do at their meeting in March.

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Here’s That Time Jeff Sessions Wanted to Execute Drug Dealers

The Senate Judiciary Committee approved the nomination of Republican Sen. Jeff Sessions to Attorney General on Wednesday morning along a party-line vote, clearing the way for a floor vote in the Senate to confirm his appointment. But there’s a little bit of unfinished business that should be cleared up.

Back during Sessions’ confirmation hearings before the Judiciary Committee in December, Democratic Sen. Pat Leahy asked Sessions about his previous support, while he was the attorney general of Alabama, for making repeat drug trafficking offenses punishable by the death penalty.

“[Y]ou have some very strong views,” Leahy said. “You even mandated the death penalty for anyone convicted of a second drug trafficking offense, including marijuana, even though mandatory death penalties are, of course, unconstitutional.”

“Well, I’m not sure under what circumstances I said that,” Sessions replied. “But I don’t think that sounds like something I would normally say. I will be glad to look at it.”

If Sessions wants to look at it, here it is: The proposal was part of a package of crime bills introduced by the Alabama governor and Sessions, then state attorney general, in 1996. The details of the crime package were reported in a ’96 issue of Alabama Lawyer, the magazine of the state bar association. This has been reported elsewhere, but I haven’t seen a link to the article and the details of the bill. Take a look for yourself on pg. 155.

“In addition to ‘tort reform’ bills, Governor James and Attorney General Sessions have proposed 31 crime bills, that they propose will ‘fix a broken system,'” the magazine wrote.

According to Alabama Lawyer, one of those bills, would have amended Alabama’s Drug Trafficking Enterprise Act to change the punishment for a second conviction from mandatory life imprisonment to a sentence of death.

The bill included a host of other punitive proposals such as:

  • Abolishing parole, similar to the federal prison system.
  • Eliminating the state court of criminal appeals from review of death penalty cases, instead sending death penalty appeals directly to the Alabama Supreme Court. This would have had the effect of curtailing the number of appeals death row inmates could file.
  • Expanding the number of persons ineligible for bail from those convicted of capital offenses to those charged with Class A or B felonies.
  • Allowing “warrantless searches for violations as well as felonies and misdemeanors.”
  • It would have also strengthened the mandatory penalties for anyone convicted of a drug crime while possessing a firearm, expanded the definition of felony murder, and raised a second conviction of possession of marijuana for personal use from a misdemeanor to a felony crime.

The bill ultimately failed. Sessions’ views on drugs and crime have softened in the years since, as have many politicians whose careers outlasted the “tough on crime” demagoguery of the ’90s, but it never hurts to take a trip down memory lane, especially when one of those politicians is poised to become U.S. attorney general. And especially when that presumptive attorney general is reportedly the “intellectual godfather” behind the current administration’s policies.

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Trump Tells McConnell “Go Nuclear” If You Have To

Donald Trump has made his first comments since nominating Judge Gorsuch for The Supreme Court, stating that “I don’t know how anyone can opposed Gorsuch” warning that if Congress ends up in gridlock, he would tell Majority leader Mitch McConnell to “go nuclear” – referring to a rule change enabling a simple majority to confirm his picks.

“He’s pefect in almost every way”…

As a reminder, the “nuclear option” refers to a move by the majority party in Senate — in this case the Democrats — to change the Senate rules to allow most executive branch and judicial nominations to be approved with a simple majority – 51 votes — rather than the 60 votes now required. Under longstanding rules, the minority party has been able to block a nomination with just 41 votes, commonly called a filibuster.

“I want Gorsuch to go through an elegant process, as opposed to a demeaning process… of course the press can be very demeaning too, so…”

 

Judge Gorsuch met with VP Pence And Leader McConnell earlier in the day…

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Meet the MSNBC Legal Eagle Who Proposes Destroying the Free Press

Ari MelberIt’s the early days of a presidency that has openly declared itself to be hostile to the media (and to be fair—the reverse is also true), and Ari Melber, MSNBC’s legal correspondent and a lawyer, has what he thinks to be a brilliant idea—let’s have the federal government get more involved in evaluating the legitimacy of news.

I’m not a big MSNBC viewer, but I’m fairly sure that they haven’t suddenly become big supporters Donald Trump’s presidency. That’s not what Melber is going on about. Rather, what Melber has suggested is that the federal government, particularly the Federal Trade Commission (FTC), can use its authority to protect consumers from fraudulent advertising claims in order to fight the existence of “fake news.” He suggests that by classifying disprovable media claims as fraudulent, the government has the authority to intervene. “Fraud” is not considered protected speech. He makes the case in a piece for the New Jersey State Bar Association:

To follow First Amendment precedents, the framework could limit the FTC to only regulating posted articles—not seeking prior restraints against future articles—and to only regulate businesses devoted to fraud news.

Legally, a focus on deceptive businesses keeps the FTC in the ballpark of commercial speech, patrolling deceptive practices taken in pursuit of commerce. During the election, the most popular fraud news sites were launched by business people, often abroad, enticed by the market online for political news. They were trying to make money, not express any particular view. …

Since these sites are clearly operating as businesses, it is logical to regulate their commerce and deceptive practices like any other business.

A focus on deceptive businesses would also keep the government away from meddling with actual journalists or citizens exercising their right to lie while engaged in politics.

Where to begin here. First of all most media outlets—whether legitimate or “fake”—are trying to make money, most were launched “by business people,” and many are not trying to express any particular view. But some are. “Making money” and “expressing any particular view” are neither opposing choices, nor or they determinants of the validity of the existence of a media outlet. And that a media outlet might be a venture designed to make money doesn’t mean it suddenly becomes exempt from the First Amendment protections that the government cannot censor the press.

But that’s just semantics (and frustration at people who work in the media who think they aren’t already engaged in acts of commerce). The much bigger, so much more important issue here is what it would actually look like were a government agency to decide that it can use a tool to fight consumer fraud to monitor the legitimacy of news.

We already saw what happened when the whole latest outburst about “fake news” happened during the election. People went looking for resources that separated “real” news from “fake” news and we ended up in a place where media outlets with heavily ideological slants were dumped in with media outlets that were deliberately making up stuff.

You don’t have to go very far to determine what could happen when a politicized apparatus (and every government agency is partly political) can have control over what can be defined as “fraud” when it comes to information. You don’t even have to leave this site! Several attorneys general for states across the country have teamed up to go after ExxonMobil for its participation in the larger debate over climate change. They have decided to attempt to prove that ExxonMobil knew more about what was going on with the burning of fossil fuels and the environment and deliberately attempted to mislead investors and customers. They are attempting to reclassify the debate (free speech) as deliberate consumer fraud (not free speech).

To do so, they’ve attempted to subpoena decades of communications between ExxonMobil and various policy groups in order to fish for information they hope will make that case. One of the policy groups targeted is the Reason Foundation, the nonprofit think tank that publishes Reason.com and Reason magazine. Reason was dragooned into a highly politicized case where government officials deliberately attempted to reclassify public debate as “fraud” in order to target a disliked business. One of the AGs involved, Kamala Harris, is now a United States senator.

Given Trump’s general attitude toward the press and his propensity to declare unflattering coverage to be fake or fraudulent, you don’t have to be either a lawyer or a journalist to recognize the very, very bad potential consequences of Melber’s proposal. Nobody should make the mistake of assuming that the FTC’s behavior would be a value-neutral analysis of truth vs. falsehood. Our government has an extremely lengthy history of applying regulatory pressure in ways that favor whoever is in power and the allies of said people.

Since the left these days is quick to point out the ties between Trump and Russia, let’s remind folks like Melber that Russia passed a law classifying discussions of gay relationships in the media (and the public) as propaganda and criminalized it, meaning that the government sees the concept of same-sex couples and families as a fraudulent proposal. If you give the government the power to decide what news is “fake,” you will create an environment where people will very quickly want to weaponize it for their own ends.

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California Mayor Says There’s ‘No Rational Justification’ For City’s Six-Figure Pensions

A few weeks back, I noted the story of James Mussenden, a retired city manager from El Monte, California.

A quick recap: in a town where more than a quarter of the population is living below the poverty line, and where the median household income is a mere $32,000, Mussenden is pulling down a $216,000 annual pension (along with free healthcare and annual cost of living increases). The Los Angeles Times uncovered Mussenden’s outrageous pension—which, as the paper reported, he feels awkward talking about with his golf buddies.

With retirement promises like that, it’s no surprise that El Monte is dealing with one of the worst pension crises in a state full of municipal pension messes. Last year, more than a quarter of the city’s budget was spent on benefits for retired public workers.

Now, Mayor Andre Quintero tells the Los Angeles Times that there’s “no rational justification” for the extraordinary pensions that are busting his city’s budget and enriching a few hundred former employees. Yet, because those benefits are written into the city’s collective bargaining agreements, he tells the Times that it can be undone only through negotiations with unions.

As the Times put it: “El Monte’s predicament reflects the deep difficulty of reining in public pension costs.”

Yes, but there’s more to it than that. El Monte’s “predicament,” like similar predicaments facing municipalities from coast to coast, is of its own making. City officials signed off on these generous pension benefits when they reached collective bargaining deals with public sector unions. El Monte’s pension problems are particularly acute because of a special loophole opened by the city in 2000 allowing El Monte city employees to qualify for a second pension as county employees too.

Some 200 former city employees, including Mussenden, are legally double-dipping because of that loophole.

The problem is one of incentives. Public sector unions have a strong incentive to get the best possible benefits for their members, of course. City officials are supposed to be negotiating on behalf of taxpayers, but often times they have a stronger incentive to give in to union demands in order to maintain labor peace or to reward valuable political allies who help keep election coffers filled.

The same story plays out in small cities like El Monte and big ones like Chicago.

Adding to El Monte’s predicament is the fact that courts in California (and most other states) have long held that pensions are locked-in and cannot be reduced even if a city is unable to meet the obligations.

That’s one thing that might be changing. The California Supreme Court will take up a case later this year challenging that long-standing legal framework—known as the “California Rule.” If the state Supreme Court upholds a lower court ruling (which upheld a pension reform signed by Gov. Jerry Brown in 2011) saying that says municipalities can cut unearned benefits for future employees, it would give places like El Monte a little bit of flexibility when it comes to paying off their debt.

Even if the Supreme Court upholds the reform, it won’t affect already-retired workers like Mussenden, who will get to keep cashing his six-figure pension checks until he dies.

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