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Falling Oil Prices Could Push Venezuela Over The Edge

"There is nothing good to say about the state of Venezuela’s economy, and this isn’t helping," warns Danske's Lars Christensen as tumbling prices for Venezuela’s oil are threatening to choke off funds (oil is 95% of exports) needed to pay debt.. and that is clear from the collapse of bond prices. The Maduro government desperately needs a rise in oil prices, but Saudi Arabia has so far rebuffed calls for an emergency meeting as it pursues a strategy of waiting out higher cost competitors. OPEC does not plan on meeting until Nov. 27. That is an eternity for a country that is beginning to unravel.

Submitted by Nick Cunningham via OilPrice.com,

Oil prices continue to slide, putting enormous pressure on oil producers around the world.

Saudi Arabia has insisted it is willing to live with lower prices for quite a while as it seeks to maintain a grip on its market share. Kuwait also indicated its willingness to slash prices in order to keep output level. That sent oil prices lower on Oct. 14, as the markets reacted with a bit of surprise to the unwavering stance by OPEC’s leading members: WTI dropped 4.5 percent.

Lower oil prices are putting a strain on all producers, including Saudi Arabia, but Riyadh is hoping that the economic pain will be much greater for some of its competitors. That includes U.S. shale producers, which have higher average production costs.

In fact, an estimated 2.8 percent of total worldwide oil production could become unprofitable if oil prices drop below $80 per barrel, according to a new report from the IEA. Canadian oil sands projects topped the list, but U.S. shale might not be far behind.

But while Saudi Arabia tests the mettle of North American producers, it could be Venezuela that is the most vulnerable. As a fellow OPEC member, Venezuela has been the most vocal about the need to cut oil production and has called for an emergency meeting of the 12-member oil cartel. That is because Venezuela is in a much weaker position than many of the other member countries, and the recent drop in prices has raised alarm in Caracas.

Using state-owned oil company PDVSA as a piggy bank has allowed the Venezuelan government to increase social spending over the last decade, a key political objective of the late President Hugo Chavez and his successor, Nicolas Maduro. However, using oil revenues for a wide array of spending priorities has also starved PDVSA of money needed for investment in order to boost oil production, let alone keeping output level. Since 2000, Venezuela has seen its oil output drop from 3.5 million barrels per day (bpd) down to 2.5 million bpd.

Venezuela Oil Production

The bad news for President Maduro is that there was major unrest earlier this year even when oil prices were above $100 per barrel. That is because oil makes up 97 percent of Venezuela’s foreign earnings, and the country needs oil prices of around $120 per barrel for its bloated budget to break even.

Venezuela is in an economic crisis. Annual inflation is estimated to be in excess of 60 percent. The country’s economy actually shrank at a rate of 5 percent in the first six months of 2014. Shortages of food, medicine, shampoo, diapers, and other basics are so common that the government rolled out a plan this past summer to fingerprint people at grocery stores.

Crime is so rampant in the capital that people are afraid to go out at night. For those who can afford it, leaving the country has become the best option.

The government is heavily indebted, and Venezuela’s bonds are now competing with Ukraine’s for the mantle of the world’s riskiest. With bond yields surpassing 16 percent, Venezuela cannot keep up. There is a 50-50 chance of default within the next two years, according to credit rating agency Standard & Poor’s.

The sudden 20 percent decline in oil prices since June is compounding the problem and has the potential to throw the country into crisis. “Venezuela’s oil prices have been high for several years now, and the country is still struggling to pay its debt at those prices,” Russ Dallen of Caracas Capital Markets told The Wall Street Journal. Lower oil prices could bring things to a head.

The Maduro government desperately needs a rise in oil prices, but Saudi Arabia has so far rebuffed calls for an emergency meeting as it pursues a strategy of waiting out higher cost competitors. OPEC does not plan on meeting until Nov. 27. That is an eternity for a country that is beginning to unravel.

via Zero Hedge http://ift.tt/1F5nKan Tyler Durden

NYPD Commissioner Bratton: Broken Windows “Is the Linchpin of Effective Policing”

At a breakfast forum held today
in Manhattan, NYPD Commissioner William Bratton vigorously defended
what he called the “policing of incivility,” commonly known as
“broken windows,” arguing that it’s the “linchpin of effective
policing.” He credited the approach with the steep crime decline in
New York and other cities that began in the mid-1990s. The event
was hosted by the Manhattan Institute to mark the 20th anniversary
of the broken windows approach in New York.

Bratton said that “in the vast majority of cases” the NYPD
reacts to quality of life offenses only after a citizen calls in a
complaint, such as “a prostitute in the doorway” or “a group of
kids smoking marijuana in the hallway.” He attributed the
contentious debate over broken windows to “the residue of
controversy” over stop and frisk, adding that “the same groups
involved in that debate are fueling the debate over the policing of
incivility.” Bratton said the NYPD is working at “building
legitimacy” in the eyes of the community in part by dealing with
the small number of police officers who are bad actors.

New York County District Attorney Cyrus Vance, Jr., who was also
on the panel, said he’d like to see many quality of life crimes
downgraded from criminal to civil offenses. This would clear
roughly 12,000 cases off his docket annually, Vance said, allowing
his office to focus on serious crimes. Richard Aborn, president of
the Citizens Crime
Commission of New York, said that it was clear that the
“community wants quality of life enforcement,” but echoed Vance’s
call for downgrading minor offenses, floating an idea for a system
in which “community-based panels” adjudicate small infractions.

In response to a question, Vance said he supports downgrading
the public display of marijuana to a violation. Thanks to the
Marijuana Reform Act of 1977, carrying less than 25 grams of pot in
New York State is a civil violation that draws a maximum fine
of $100. However, as Jacob Sullum has
written about in Reason, a citizen caught with the
same quantity of pot in public view faces up to three
months in prison. Vance called the two scenarios a “distinction
without a difference,” and said changing the law is “sensible.”

According to the Marijuana Arrest Research Project, in the
first four months of 2014 the NYPD arrested about 80 people daily
for publicly displaying cannabis.

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Mayor De Blasio Looking to Ban Large Sugary Drinks Because That Went So Well the First Time

The more things change, the more
they stay the same. New York City mayor Bill de Blasio is
reportedly mulling a large sugary drink ban 2.0, according to

The Wall Street Journal:

Mayor Bill de Blasio’s administration is exploring new ways
to regulate the size of large sugary drinks in New York City,
holding high-level meetings behind closed doors with health
advocates and beverage industry executives.

“Mayor de Blasio has made clear he supports a ban on large
sugary drinks,” his spokesman, Phil Walzak, said on Thursday. “The
administration is currently considering plans on the best way to
reach that goal.”

Earlier this year, a New York State court
gave the beat down to former mayor Michael Bloomberg’s ban on
16-ounce sodas. The court found that the city’s Board of Health did
not have such wide-sweeping authority.

But that victory might be shortlived. The court’s findings
didn’t put the kibosh on bans qua bans: It merely found issue with
the procedural methods the administration pursued to achieve its
intrusive goals. Only the elected City Council has the authority to
ban saccharine libations, the court said. The door for new
prohibitions was left wide open—a door the de Blasio administration
is looking to slink through

De Blasio is treading softly and carrying a big soda, however.
He realizes that at the moment the City Council would
probably not sign off on a large sugary beverage ban:

While Mr. de Blasio said last year he would pursue legislation
if the state’s highest court agreed the council was the proper body
to impose such regulations, the administration has been wary of
introducing a bill. A majority of council members, including
Speaker Melissa Mark-Viverito, voiced opposition to the
Bloomberg-backed regulations.

Yet if Councilman Corey Johnson is a reliable bellwether, the
Council won’t take too much convincing:

He opposed Mr. Bloomberg’s ban largely because of jurisdictional
reasons. Mr. Johnson also said he was concerned Mr. Bloomberg’s
plan treated “similar businesses in an uneven way.” “I am
completely open to looking at a fair and healthy way” to regulate
sugary beverages citywide, he said.

Dr. Thomas Farley, health commissioner under Bloomberg and the
Oz of the first soda ban, thinks the uphill battle to convince the
Council to meddle
even further into personal affairs is winnable. He “said the
council could approve regulations that are broader than the
original Bloomberg proposal.”

The effectiveness of such soda bans is
debatable, to say the least. What isn’t debatable is that de
Blasio is trying his best to keep alive a cherished NYC tradition
of banning everything in sight. Gone are the days of smoking

flavored cigarettes in
public while stuffing your face with
salty trans-fat
flavored French fries. Now even
horse-drawn carriages and Big Gulps are (once again) under
threat.

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Forget about Ebola – here’s why US banks (and your savings) are now EXTREMELY vulnerable

October 16, 2014
New York, USA

For a casual observer of the US economy (most “experts”), you could say that things look pretty good. Unemployment is at its lowest rate in six years. Earnings of S&P 500 companies are higher than ever, while their debt is lower than it’s been in the last 24 years.

Nonetheless, rather than getting excited for good economic times, the big commercial banks are all battening down the hatches. They’re preparing for bad times ahead.

I often stress the importance of being prepared, so in theory, that should be a great sign.

But then, you look at what they are “defensively” investing in, and you see that what they consider as prudence is simply insanity.

What banks are stockpiling these days are US government bonds, and they’re not doing this casually, they’re going nuts for them.

In just the last month alone American banks increased their holdings of US treasuries by $54 billion, to a record $1.99 trillion.

Citigroup, for example, held $103.8 billion worth of bonds at the end of June, up 19% from the end of last year.

This is like preparing for an earthquake by running out and buying whole new sets of porcelain dishes and glass vases.

All it’s going to do is make things more dangerous, and even if you somehow make it through the disaster, you have a million more shards to clean up.

With government bonds you are guaranteed to lose both in the short-term and the long-term. Bonds keep you consistently behind inflation (even the deceptively named TIPS—Treasury Inflation Protected Securities), so the value of your savings is slowly being chipped away.

But that’s nothing compared to the long-term threats of the US government not being able to repay the loans.

Facing $127 trillion in unfunded liabilities – which is nearly double 2012’s total global output – and with no inclination to reduce those numbers at all, at this point disaster for the US is entirely unavoidable.

Never before in history has a government stretched itself so thin and accumulated anywhere close to this amount of debt.

So when the day comes, it won’t be a minor rumble. It will be completely off the Richter scale.

These facts about the US government are in no way secret. Every bank out there knows it, yet they keep piling in.

Why do they keep buying bonds that they know the government will never be good for?

Even though people know in their guts that the government has no earthly possibility to ever repay its debt, on paper it’s a no risk investment.

The US government’s sovereign debt has an AA+ rating after all. They might not make money off it, but no fund manager and investment banker is going to get fired for investing in “risk-free” US government debt.

Under the rather arbitrary Bank of International Settlements Basel capital adequacy rules government debt rated at least AA continues to carry a “zero risk” weighting. Meaning that banks do not need to set aside capital against it.

Beyond that, regulations imposed after the last crash to reduce risk require banks to hold $100 billion in liquid assets, which of course includes bonds. Thus, they are not only encouraged, but actually forced to buy government bonds.

With a combined position of nearly $2 trillion in US government debt, against which they hold little or no capital buffer, US banks are now EXTREMELY vulnerable to a bond market sell-off.

In the aftermath of the meltdown of 2008, banks were made to pay multi-billion dollar fines for having “knowingly sold toxic mortgages to investors”. Will politicians and central bankers ever be held responsible for not only “knowingly selling” their toxic debt to investors, but actually forcing it on the banks?

The global economy shivered when the consequences of lending to subprime homebuyers came to fruition. Just imagine how it will quake when the US government – the largest subprime borrower in history – eventually defaults (or hyperinflates) its debt away.

There’s nowhere in the world the tremors won’t be felt.

More on how you can protect your savings from this folly next time.

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Why The State Has Failed to Reform Our Broken Financial System

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Expecting the state to truly reform the nation's engines of financialization is like asking the cocaine addict married to the wealthy dealer to divorce the dealer.

Most observers think they know why the government (i.e. the state) has failed to truly reform the financial system: corrupt politicos on the receiving end of the Too Big to Fail (TBTF) banks and financiers' millions of dollars in lobbying and campaign contributions do the banks' bidding.

While the reduction of democracy to an auction in which the highest bidder controls the state is certainly one systemic reason for this abject failure,there is an even greater, more deeply systemic reason why the state cannot reform the rotten core of financialization.

The state has become dependent on the wages and profits of finance for its own revenues.

Here's an analogy of what's happened in the past few decades of financialization: you meet Mr./Ms. Right (he/she is attractive, makes a lot of money, well-dressed, good social skills, etc.), fall in love and marry.

Unbeknownst to you, Mr./Ms. Right is a cocaine dealer. When you find out the source of the fat paychecks, he/she reassures you it's just business and that he/she never uses the stuff. But if you want to try a taste, go ahead–it won't hurt you.

You think about leaving him/her, but the money is just so good. Life without all that easy money looks bleak and difficult.

Just to see what all the fuss is about, you try the cocaine.

So now you're addicted not just to the easy money but to the cocaine, too. Now it's impossible to leave the dealer.

Substitute finance-dependent profits and wages for cocaine and you now understand the marriage of the state and the engine of financialization: financialization has generated the big profits, the hefty wages that pay most of the state's income taxes and enabled most of the consumption of the past three decades.

Were the state to actually limit financialization–excessive debt, leverage and risk– it would be cutting the primary source of its own revenues. The wages and profits generated by financialization aren't limited to banks and financial institutions–every industry that depends on leveraged debt and cheap credit is ultimately an arm of financialization.

This includes the entire FIRE economy–finance, insurance and real estate–as well as the auto industry, home furnishings, boating, recreation, tourism–every industry that has been living off credit cards, home equity lines of credit (HELOCs) and other sources of cheap credit.

Cheap credit is the cocaine, and not only is the state addicted to the cocaine of cheap credit that enables its own stupendous borrowing, it's also addicted to the easy money that is generated by our economy's addiction to credit.

Take a look at this chart of financial sector profits. Recall that all corporate profits are about 11% of gross domestic product (GDP). So purely financial profits are about one-third of all corporate profits–an extraordinarily high percentage historically.

But this chart vastly under-represents the true impact of financialization on profits and jobs. How many homes would be sold if all buyers had to put down 20% istead of 3.5% for FHA loans? How many vehicles would be sold if buyers had to put down 20% of the vehicle's cost in cash and qualify for a 3-year loan? How much of the economy's consumption would go away if credit cards had to paid in full every month?

How much federal income tax does a minimum-wage retail worker pay? Zero. How much income tax does a $300,000 a year finance worker pay? A lot. Truly reforming the financial sector to eliminate the cocaine of financialization would gut not just credit-based consumption but state tax revenues.

Expecting the state to truly reform the nation's engines of financialization is like asking the cocaine addict married to the wealthy dealer to divorce the dealer.

This is why socio-economist Immanuel Wallerstein characterizes our finance-dependent version of capitalism as “a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success.”

via Zero Hedge http://ift.tt/1xVTwBT Tyler Durden

Propaganda 101 – How the Pentagon is Trying to Rewrite Vietnam War History

Screen Shot 2014-10-16 at 11.40.25 AM

In case you weren’t aware, the Pentagon is set to roll out a 50th anniversary commemoration of the Vietnam War. Personally, it’s hard to get excited about commemorating an event that led to the death of over 58,000 American soldiers and more than a million Vietnamese, particularly since much of it was the direct result of well documented lies and deception, such as the Gulf of Tomkin incident.

What’s worse, the Pentagon intends to rewrite history by whitewashing this period of civil unrest and government shame from American history. The propaganda is so blatant that it has resulted in many of the era’s most well known protestors and activists to come together in order to stop it.

The New York Times reports that:

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Did The Saudis Just Get A Tap On The Shoulder?

The US-Saudi "secret" plan that was supposed to crush Putin quickly turned sour when as we reported several days ago, one after another America's own shale plays, which recently entered a very sharp bear market, started appearing on various death watches (case in point today's MHR Second Lien refi which repriced from L+500 to L+750 in minutes).

As a result, one wonders: did Obama realize that Russian "costs" which as everyone knows by now include a Eurpoean triple-dip recession, could also very soon include an insolvent US shale industry, and thus may be just a little too much, and, one further wonders, if he is the one who just tapped Saudi Arabia on the shoulder?

WTI – granted, record oversold as is – explodes higher (on no news whatsoever)

As Brent-WTI compresses…

and Shale stocks are bouncing…

Charts: Bloomberg

via Zero Hedge http://ift.tt/1rAPjy2 Tyler Durden

Peek Inside The Ebola Transport Jet

For a virus that is not airborne, the authorities sure take a lot of precautions to make sure it doesn’t enter the common airspace. Well, maybe not when infected nurses fly commercial, but certainly when doctors transport Ebola patients from point A to point B on the world as can be seen in the following documentary of the Ebola transport jet that is used for such purposes.

Pay particular attention to the description of the Hepa air filtration system which is “similar to what the Centers for Disease Control and other research places use in their Level Four laboratories. So that air from the aircraft cabin will enter these filters and go through a filtration process that goes down to even smaller than viruses.”

Because Ebola is not airborne?

In any case, our solemn hopes are that this brief video clip is as far as all will get to seeing the inside of the Ebola transport jet.

Bob Janjuah’s “Interim Capitulation” Line In The Sand

Via Nomura’s Bob Janjuah,

I am glad I got my last note out on Tuesday this week! The key market outlook from that earlier note was:

So notwithstanding that my 1905 S&P 500 level is key, what would I do now? It seems to me that unless we get a major unexpected policy and/or sentiment shift this week, the S&P 500 will close below 1905 this Friday. I would then target 1770 as the next stop. This would lead to UST 10yr yields at or below 2% and the new iTraxx XO index would then trade well above 400bp, perhaps closer to 425bp/450bp. And if the S&P 500 also fails to regain 1905 by next Friday’s close (24 October), then I think it is entirely possible that by late November the S&P 500 could take out not just 1660/1650, but also perhaps 1600/1570. This would take UST 10yr yields well below 2%, perhaps as low as 1.75%, and we could see the new iTraxx XO index closer to 475bp/500bp. Throughout all of this I would expect the USD to sell off a little vs the global basket.

Clearly, the last 48 hours has seen significant price moves and my shorter-term targets have been hit already – UST 10yr yields have traded below 2%, the new iTraxx XO index has traded at 430bp and the USD is weaker. The S&P 500 has not quite hit 1770 but since my note it has traded down from 1899 to 1821. The 1770 level could be taken out today or tomorrow. And, of course, the S&P 500 is merely a proxy for “risk-on” – most other equity markets, particularly in Europe, have been much weaker.

My confidence that we avoid an S&P 500 close above 1905 this Friday is extremely high, as it is for next Friday. As such, I remain confident that by the end of November there will be further risk-off moves that will take UST 10yr yields to 1.75% (or maybe even 1.5%), USDJPY closer to 100 than 105, the new iTraxx XO index up to 475bp/500bp, and the S&P down to 1660/1650, possibly as low at 1600/1570. It would take a sudden unlikely sentiment and/or significant policy shift to force me to re-assess these targets, again with the 1905 weekly closing level on the S&P 500 as my pivot point.

So no change. In this note I focus on two things:

1 – We all hear nonsense in the course of our lives. Sometimes we talk it. Over the past 48 hours I have heard that this apparently unforeseeable re-pricing of global markets is down to Greece, down to Ebola, and/or down to the fact that the street is not offering much liquidity. However, I think the re-pricing was foreseeable and has – so far – barely anything to do with these first two items. At some point I’m sure the market will accept that the re-pricing is much more about reassessing global growth and deflation expectations and collapsing policymaker credibility.

And as for the liquidity argument – which HAS been a factor, in my view – how can this be a surprise? After all, as I see it, one of the cornerstones of regulation over the past five or six years has been to ensure that banks are unable to provide liquidity when clients really need it en masse. Providing so-called liquidity when nobody really wants it and when everyone is buying risk without fear is easy. But every market participant should have had it drummed into them by regulators over the past few years that the sell-side will not be there precisely when liquidity is required en masse by clients.

Risk bulls have always talked about the lack of leverage in the system. They failed to understand that the size of positions on client balance sheets vs the levels of real liquidity on offer from the sell-side which can facilitate risk transformation or portfolio rebalancing represents the new “leverage” in the system. This mismatch – in market panics – runs probably into double-digit multiples. And I don’t see it getting any easier/better.

2 – This week feels like INTERIM capitulation. So I feel that the probability distribution now favours a short-term three- to seven-day period of RELATIVE calm/counter-trend bounce/easing-off of VOL spikes, over next week/the early part of the week of 27 October. I fully expect the market to convince itself that in two weeks’ time the FOMC will deliver us all some relief.

I say interim capitulation because I think the Fed will likely disappoint at the FOMC meeting at month-end: it may leave the stub of QE open, it may talk about data-dependency and options, it may even highlight (global!) growth and deflation risk. But I firmly believe that for the sake of its own credibility the Fed will not say or do enough to satisfy the market’s plea for more help.

As the market is pleading for help which I doubt the Fed will give (yet), I would focus on the ECB and the BOJ. I think the Italy/Bund 10yr spread needs to get to 250bp or so before the ECB can “act decisively” (i.e. outright QE). In other words President Draghi will need to convince Chancellor Merkel that break-up risk is back on the table before she gives him the go-ahead for outright QE. And USDJPY needs to be a lot closer to 100 before the BOJ can act earlier than expected.

Unfortunately, I think that by definition it will require another round of panic and capitulation in November, perhaps prompted also by another strong NFP (lagging indicator, of course) as well as disappointment with the Fed at month-end. A strong NFP would be bad for risk as markets would have to price out any immediate Fed help even further into the future. So the ECB and the BOJ appear to be the only (semi-) credible saviours, but the pre-conditions they require before they step up, highlighted above, means that first we need to see much more panic and capitulation, over November.

Beyond this week and through to 29 October, where the short-term counter-trend multi-day bounce is my central probability, I would use this period as a time to sell risk, and to reload and get both short stocks and long USTs/Bunds again for the capitulation I expect to see into late November. For non-traders, stay short risk (subject to my 1905 caveat) and long USTs/Bunds through to/through November and until we price in major measures from the ECB and BOJ, which should hopefully be sufficient to turn sentiment and markets around in December. For those who choose to stay short risk don’t be too surprised by some relative calm/counter-trend bounces as a possible theme for next week/into 29 October, at which point I expect the Fed to fail to deliver what the markets want to hear.

One last point – QE4. I received some pretty critical feedback when I said that, over the next 12 months I saw a 50/50 chance that the Fed would be EASING monetary policy vs commencing a hiking cycle. I still think it is 50/50 because the events of the past few days and weeks are not a surprise to me. What has surprised me, however, is how many people are now openly talking about QE4 and no Fed hikes until 2016/2017 – a complete turnaround from the consensus only three days ago. My key point here is that I do not believe the Fed is going to do anything substantive on the easing front (other than as discussed above) anytime soon, but over the next 12 months 50/50 seems a fair assessment to me.

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Mother Jones Claims the Rate of Mass Shootings Has Tripled Since 2011. Is That True?

Mary Harris "Mother" Jones, who did not write the article. Two years ago, Mother
Jones published a “Guide
to Mass Shootings in America,” which claimed to show that such
slayings happen more often now than in the past. The feature, whose
data have been updated periodically since it first went up, has
been both
widely cited and
harshly disputed. This week the outlet has published a
new analysis claiming that mass shootings occur far more
frequently than they did decades ago and that the rate has tripled
since 2011. Whether you buy that depends on whether you buy into
the previous piece, because the new article has essentially the
exact same flaws.

The best critique I’ve seen of the original Mother
Jones article was written by Michael Siegel. You should read
the whole thing, but
this is the key passage:

It is a truism of science that the more narrowly you
define your sample and the more you shrink the number of data
points, the less reliable your conclusions will be. If you were to
analyze all gun shootings and violence over the last thirty years,
you’d have hundreds of thousands of data points to base your
conclusions on. You could, as I like to say, achieve Victory
Through Sheer Data Volume. But when you start parsing the data down
further and further, you become more prone to random variation and
even bias.

Even if we take Mother Jones’ data at face value, we can see we’re
dealing with less than 120 victims every year and frequently less
than 20. That’s an awfully small number to be drawing
conclusions from. To illustrate why, take the Virginia Tech
killings. 56 people were killed or wounded. That is more than all
but five entire years in their database. Something like that is
simply going to swamp the statistics.

But we shouldn’t even take Mother Jones’ data at face value because
it is highly suspect. First, it seems to be based on media
coverage, which is not exactly an objective source and almost
certainly leaves shootings out….Everywhere, they make arbitrary
cuts to exclude murders that may not fit their conclusions. They
limit the sample to lone shooters, but make exceptions for
Columbine and Westside. They exclude gang activity and other crimes
but include the Fort Hood Shootings, which were an act of
terrorism….They arbitrarily throw in a few spree killings.

This is simply not a representative sample. It’s cherry-picked to
fit a definition, but leaves huge gaping biases all over the place.
Mother Jones doesn’t even acknowledge this.

All this would be fine if you wanted to create an illustrative or
representative sample. This is even fine if you want to draw some
broad and overwhelming conclusions such as that most spree killers
get their guns legally. But the low numbers and the biases blow up
in your face when you try to do a more rigorous analysis….They’ve
narrowed the sample so far down that they are essentially looking
at noise.

The new analysis looks at the intervals between each incident
rather than the annual numbers of crimes and victims. But aside
from the fact that the list has been updated through 2014, this is
the same data as the original article, with all the problems that
Siegel and others pointed out before.

The Mother Jones team does make one reasonable point,
in the course of arguing against those of us who
aren’t convinced mass shootings have been getting more
common:

So why do we keep hearing in the media that mass
shootings have not increased?

This view stems from the work of Northeastern University
criminologist James Alan Fox, who has long maintained that mass
shootings are a stable phenomenon. (“The growing menace lies more
in our fears than in the facts,” he has said.) But Fox’s oft-cited
claim is based on a misguided approach to studying the problem: The
data he uses includes all homicides in which four or more
people were murdered with a gun. His analysis, which counts the
number of events per year, lumps together mass shootings in public
places with a far more numerous set of mass murders that are
contextually distinct—a majority of which stem from domestic
violence and occur in private homes.

It is true that Fox’s data cover a lot of incidents that don’t
fit the standard conception of a mass shooting, and that it would
be useful to have a more narrowly defined count. The flipside
of this is that Fox’s figures are based on a relatively solid
source—police reports, which are regularly collected and
tabulated—and thus avoid the problems with relying on press
accounts for your list of incidents.

The best alternative measurement that I’m aware of comes from
Grant Duwe, a criminologist at the Minnesota Department of
Corrections. His definition of mass public shootings does
not make the various one-time exceptions and other jerry-riggings
that Siegel criticizes in the Mother Jones list; he simply
keeps track of mass shootings that took place in public and were
not a byproduct of some other crime, such as a robbery. And rather
than beginning with a search of news accounts, with all the gaps
and distortions that entails, he starts with the FBI’s Supplementary Homicide
Reports to find out when and where mass killings happened, then
looks for news reports to fill in the details. According to Duwe,
the annual number of mass public shootings declined from 1999 to
2011, spiked in 2012, then regressed to the mean.

Finally, a note on why this matters. Violent crime rates have
been moving downward for decades now, and mass shootings—by any
definition—are a very rare phenomenon. I’ve heard arguments from
one direction that there’s no point in putting such a small risk
under a microscope when the most pressing threats to people’s lives
lie elsewhere. I’ve heard arguments from another direction that
even one crime this horrible is too many, and that the effect of
noting how infrequently it happens is just to discourage people
from trying to prevent it.

To the first set of arguments, I say that when the press and
politicians present a problem like this as a rising crisis, it’s
worthwhile to see whether it is indeed rising. To the second set of
arguments, I say that absolutely nothing I’ve said here means we
shouldn’t try to prevent future mass murders. Plane crashes are

extremely rare, but that doesn’t mean airlines don’t look for
ways to make them even less likely. If a measure genuinely makes
people safer without creating an intolerable trade-off, I’m for
it.

Such measures are most likely to be incremental changes adopted
at particular places (such as schools) and then imitated elsewhere,
not big anti-crime bills rushed into law by national politicians
eager to be seen Doing Something. But there may well be ways
federal or state officials can make that experimentation and
imitation easier. Good ideas are good—and bad ideas are bad—whether
or not mass shootings are getting more common.

Past Reason coverage of the issue:

• “Are
Mass Shootings Becoming More Common in the United States?”
(December 2012)

• “Making
Sense of Mass-Shooting Statistics” (January 2013)

• “Life During
Wartime” (May 2013)

• “Why
Can’t Anyone Agree How Many Mass Shootings There Have Been In
2013?” (September 2013)

• “Why
Mass Shootings Haven’t Ushered In a New Age of Gun Control”
(February 2014)

• “Are
School Homicides ‘Becoming the Norm’?” (June 2014)

• “The FBI Says
‘Active Shooter Incidents’ Are On the Rise. What Does That
Mean?” (September 2014)