Tag: news

Citi Warns “Everything Is Expensive – Pretty Much”

Citi's credit group is bullish; but, as they admit, for all the wrong reasons. Bullish, because they still believe that the extraordinary liquidity environment which has dominated the last four years will remain in place this year (despite tapering) and for the wrong reasons because aside from their doubts about the foundations of much of the economic recovery itself, nearly all the factors that they would normally base their view on the markets on seem to be pulling in the opposite direction. In their own words, "everything is expensive; and the market is driven purely by a variant of the Greater Fool's Theory."

 

Via Citi's Credit group:

…We are bullish…

For the wrong reasons, because aside from our doubts about the foundations of much of the economic recovery itself, nearly all the factors that we would normally base our view on credit on seem to be pulling in the opposite direction:

Credit fundamentals are deteriorating. Although the fragile European and global recovery should support earnings, we expect leverage to rise further as companies push shareholder value.

 

Valuations are increasingly unattractive. Scored against 20 different fundamental metrics, credit spreads come in as 'Tight' or 'Very tight' on every single one of them at the moment. The yield offered by € IG corporate credit is in the 4th percentile looking at the last ten years – hardly a compelling case for investing if you look at credit from a total-return perspective.

 

The marginal money is going elsewhere. Judging by our survey, inflows into corporate credit have been on a falling trend for 18 months and are now close to neutral at a five-year low. This weakens the technical that has so often left the credit market almost impervious to negative headlines in recent years.

 

Market composition is deteriorating. We think the European credit market should see a record volume (~€90bn) of subordinated debt issuance next year. While some of that (the AT1 issuance) will remain outside the indices for now, the market will still have to absorb a lot of additional risk.

 

And to top it off, positioning in the credit market is very different. The rush into beta may have further to go, but already the rally we have seen since September has created a vulnerability through higher-beta exposure in the market. We reckon that it is at least comparable to the one that was exposed by the Fed's change in tone on tapering in May.

We'd argue that markets may be driven by a variant of the Greater Fool's Theory, where the underlying rationale for many would in essence be:

"I don't like credit here, but I don't like other assets very much either (other than, perhaps, equities). I don't see what turns the market any time soon and I can't afford to sit and wait for a better entry point, especially while central banks are backstopping everything. I'll have to take more risk and then sell to someone else when I see a trigger ahead. Worst case, I'll be in the same boat as everybody else."

We are not arguing that this is irrational – on the contrary, for individual investors whose performance is tracked on a monthly, weekly or daily basis, this argument seems entirely rational – especially against the perception that central banks can no more afford to let the prevailing equilibrium slip today than they could in 2009.

But the sum of that individual rationality is a market with a very obvious vulnerability.

When no one sees an immediate risk of losing, when positions get ever longer and when valuations are stretched further and further as a result, less and less is needed to eventually topple the consensus. Longer-term, it is a recipe for breeding black swans.

So the inherent challenge is to predict how long the Greater Fool's game goes on.

However, the more tension that builds up between market valuations and fundamentals and the more stretched positions get, the more likely a subsequent selloff becomes.

Where's the value? Spreads look tight to fundamentals on every single one of the 20 metrics

By our metrics non-financial leverage has been rising for the past two years now (spreads are ignoring that)…

To strengthen the case for that link between central bank actions and market performance, we’ve regressed US credit spreads (in differences) against 1) the Fed’s holdings of long-dated securities (in differences), 2) US GDP5, 3) non-farm payrolls, 4) US economic surprises and 5) US earnings revisions. It’s pretty clear from Figure 29 below that most of the cumulative contribution to spread tightening in this simple framework is coming from the Fed’s balance sheet, rather than the fundamental economic variables.

Even in the darling asset class of the day – equities – attractive opportunities are getting harder and harder to come by.

 

To be clear, we do still prefer long equity versus credit strategies, where possible, but there too valuations are full, if not stretched already in many places. The rally in small-caps, for instance, has left valuations at historical extremes versus large caps in both Europe and the US.

 

So you decide – play the game knowing you're a greater fool… or exit now?


    



via Zero Hedge http://ift.tt/1f7y8lg Tyler Durden

Citi Warns "Everything Is Expensive – Pretty Much"

Citi's credit group is bullish; but, as they admit, for all the wrong reasons. Bullish, because they still believe that the extraordinary liquidity environment which has dominated the last four years will remain in place this year (despite tapering) and for the wrong reasons because aside from their doubts about the foundations of much of the economic recovery itself, nearly all the factors that they would normally base their view on the markets on seem to be pulling in the opposite direction. In their own words, "everything is expensive; and the market is driven purely by a variant of the Greater Fool's Theory."

 

Via Citi's Credit group:

…We are bullish…

For the wrong reasons, because aside from our doubts about the foundations of much of the economic recovery itself, nearly all the factors that we would normally base our view on credit on seem to be pulling in the opposite direction:

Credit fundamentals are deteriorating. Although the fragile European and global recovery should support earnings, we expect leverage to rise further as companies push shareholder value.

 

Valuations are increasingly unattractive. Scored against 20 different fundamental metrics, credit spreads come in as 'Tight' or 'Very tight' on every single one of them at the moment. The yield offered by € IG corporate credit is in the 4th percentile looking at the last ten years – hardly a compelling case for investing if you look at credit from a total-return perspective.

 

The marginal money is going elsewhere. Judging by our survey, inflows into corporate credit have been on a falling trend for 18 months and are now close to neutral at a five-year low. This weakens the technical that has so often left the credit market almost impervious to negative headlines in recent years.

 

Market composition is deteriorating. We think the European credit market should see a record volume (~€90bn) of subordinated debt issuance next year. While some of that (the AT1 issuance) will remain outside the indices for now, the market will still have to absorb a lot of additional risk.

 

And to top it off, positioning in the credit market is very different. The rush into beta may have further to go, but already the rally we have seen since September has created a vulnerability through higher-beta exposure in the market. We reckon that it is at least comparable to the one that was exposed by the Fed's change in tone on tapering in May.

We'd argue that markets may be driven by a variant of the Greater Fool's Theory, where the underlying rationale for many would in essence be:

"I don't like credit here, but I don't like other assets very much either (other than, perhaps, equities). I don't see what turns the market any time soon and I can't afford to sit and wait for a better entry point, especially while central banks are backstopping everything. I'll have to take more risk and then sell to someone else when I see a trigger ahead. Worst case, I'll be in the same boat as everybody else."

We are not arguing that this is irrational – on the contrary, for individual investors whose performance is tracked on a monthly, weekly or daily basis, this argument seems entirely rational – especially against the perception that central banks can no more afford to let the prevailing equilibrium slip today than they could in 2009.

But the sum of that individual rationality is a market with a very obvious vulnerability.

When no one sees an immediate risk of losing, when positions get ever longer and when valuations are stretched further and further as a result, less and less is needed to eventually topple the consensus. Longer-term, it is a recipe for breeding black swans.

So the inherent challenge is to predict how long the Greater Fool's game goes on.

However, the more tension that builds up between market valuations and fundamentals and the more stretched positions get, the more likely a subsequent selloff becomes.

Where's the value? Spreads look tight to fundamentals on every single one of the 20 metrics

By our metrics non-financial leverage has been rising for the past two years now (spreads are ignoring that)…

To strengthen the case for that link between central bank actions and market performance, we’ve regressed US credit spreads (in differences) against 1) the Fed’s holdings of long-dated securities (in differences), 2) US GDP5, 3) non-farm payrolls, 4) US economic surprises and 5) US earnings revisions. It’s pretty clear from Figure 29 below that most of the cumulative contribution to spread tightening in this simple framework is coming from the Fed’s balance sheet, rather than the fundamental economic variables.

Even in the darling asset class of the day – equities – attractive opportunities are getting harder and harder to come by.

 

To be clear, we do still prefer long equity versus credit strategies, where possible, but there too valuations are full, if not stretched already in many places. The rally in small-caps, for instance, has left valuations at historical extremes versus large caps in both Europe and the US.

 

So you decide – play the game knowing you're a greater fool… or exit now?


    



via Zero Hedge http://ift.tt/1f7y8lg Tyler Durden

Peter Schiff Destroys The “Deflation Is An Ogre” Myth

Submitted by Peter Schiff via Euro Pacific Capital,

Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom… they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

A January 5th article in The Wall Street Journal described the economic situation in Europe by saying "Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s." Really, blighted the lives of millions? When was the last time you were "blighted" by a store's mark down? If you own a business, are you "blighted" when your suppliers drop their prices? Read more about Europe's economy in my latest newsletter.

The Journal is advancing a classic "wet sidewalks cause rain" argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse.  The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing. A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can't afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy – -try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation

In another article two days later, the Journal hit readers with the same message: "Annual euro-zone inflation weakened further below the European Central Bank's target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area's fragile economy." In this case, the paper adds "too little inflation" to the list of woes that needs to be avoided. Apparently, if prices don't rise briskly enough, the wheels of an economy stop turning

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce's Statistical Abstract of the United States, the "General Price Index" declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team.They certainly would have advised him to raise prices to increase sales. But Edison's strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the Government seem to be perfectly aligned.

 


    



via Zero Hedge http://ift.tt/LVIVVx Tyler Durden

Peter Schiff Destroys The "Deflation Is An Ogre" Myth

Submitted by Peter Schiff via Euro Pacific Capital,

Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom… they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

A January 5th article in The Wall Street Journal described the economic situation in Europe by saying "Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s." Really, blighted the lives of millions? When was the last time you were "blighted" by a store's mark down? If you own a business, are you "blighted" when your suppliers drop their prices? Read more about Europe's economy in my latest newsletter.

The Journal is advancing a classic "wet sidewalks cause rain" argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse.  The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing. A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can't afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy – -try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation

In another article two days later, the Journal hit readers with the same message: "Annual euro-zone inflation weakened further below the European Central Bank's target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area's fragile economy." In this case, the paper adds "too little inflation" to the list of woes that needs to be avoided. Apparently, if prices don't rise briskly enough, the wheels of an economy stop turning

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce's Statistical Abstract of the United States, the "General Price Index" declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team.They certainly would have advised him to raise prices to increase sales. But Edison's strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the Government seem to be perfectly aligned.

 


    

< /div>



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Former Connecticut Cop Given Prison Sentence After Arresting Priest Who Was Recording Him

Former
Connecticut cop David Cari, who was filmed by a priest as he
harassed an Ecuadorian immigrant in 2009, has been given a 30-month
prison sentence after having been convicted of civil rights
abuses.

From
Photography is Not a Crime:

An East Haven cop who claimed he was in fear for his life when
he arrested a priest for video recording him as he bullied an
Ecuadorian immigrant in a convenience store was sentenced to
30 months in prison Tuesday, indicating that justice prevails
every once in a while.

Even if the cop was allowed to retire with a full pension.

The 2009 incident, which went viral, opened a federal
investigation against David Cari and several other officers,
revealing that they were engaging in an ongoing harassment campaign
against the immigrants living in that community.

But it was only because Father James Manship filed a federal
complaint after his charges were dropped two weeks after his
arrest.

And it was only because it was all caught on video.

The
New Haven Register reports that audio from the footage
shot by Rev. James Manship discredited Cari’s arrest report:

Lima Church in Fair Haven and the man whose 26-second video
shotwhile inside an East Haven general store proved to be the most
crucial piece of evidence in the government’s case against
Cari.

“Never did I think that video would get us to where we are
today,” he said outside the courthouse, after Thompson handed down
Cari’s 30-month sentence.

But it was precisely the audio of Manship’s February 2009
video that proved to discredit the arrest report Cari filed
when he slapped handcuffs on the priest for filming him and
Spaulding in the process of ordering employees at the
Hispanic-owned My Country Store to remove more than 70 license
plates mounted on the back wall.

Reason‘s Jacob Sullum wrote about the case and the
harassment suffered by East Haven’s Latino residents in
January 2012.  

Follow these stories and more at Reason 24/7 and don’t forget you
can e-mail stories to us at 24_7@reason.com and tweet us
at @reason247.

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Tonight: Nick Gillespie vs. Patrick Kennedy on Pot Legalization; CNN 7.10pm ET

Note: This was scheduled for yesterday but was
pushed back due to weather coverage. Tune in to CNN’s Erin Burnett
Outfront around 7.10pm ET for a debate between me and former Rep.
Patrick Kennedy (D-R.I.) about pot legalization. Guest host Don
Lemon moderates. More details below.

UPDATED, 4:45PM ET: This has been bumped and rescheduled
for tomorrow (Wednesday) night. Will keep you posted.

Last night, I discussed pot legalization on CNN’s Erin Burnett:
OutFront with guest host Don Lemon and CNN Legal Analyst Dan
Callan. The starting point of the discussion was President Obama’s
recent acknowledgement that pot “is no more dangerous than
alcohol.”

Watch the segmant above or by
going here.

I’ll be back on OutFront again tonight, around
7.10pm ET, continuing the discussion about ending the war on pot.
Don Lemon is back as guest host and we’ll be joined by former Rep.
Patrick Kennedy (D-R.I.), who cofounded the anti-marijuana group
Project
SAM since leaving Congress.

Read my new Daily Beast article, “Ending
the War on Pot is Obama’s Last Chance for a Legacy.”

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Netflix Soars To All Time High After Hours On Small Beat; Unfazed By Net Neutrality

NFLX is soaring after hours to fresh all time highs, not so much due to some blockbuster numbers, but because the company reported results that beat Wall Street’s lowballed estimates once again. These were as follows:

  • Revenue of $1.175 billion
  • EPS of $0.79, or $48.4 million, beating expectations of $0.66
  • Domestic net adds were 2.33 million, Estimate 2.05 million, leaving a total of 33.4 million subs at the end of the quarter, and 31.7 million paid subs.

In terms of the company’s business model, the things are as they were: NFLX is using the cash generated from its doomed, runoff legacy DVD rental business, which in Q4 generated $110MM of the total profit, or half of total, and is using that to fund its international expansion. So far, NFLX has 10.9 million total international streaming subs, which resulted in losses of $57.2 million. It remains unclear what the breakeven on this international growth strategy is in terms of subs, although NFLX has so far burned $663 million on foreign expansion in the past two years, offset by $991 million in profits at its domestic streaming operations. Does this justify a 300x P/E? For now the market’s answer is a resounding yes, having sent the stock higher by $55 in the after hours, up 17%!

 

The company’s forecast is below: the bottom line is that NFLX anticipates 1.6 million net adds in Q1 2014 higher than the 1.275 consensus, and expects EPS of $0.78 compared to the estimated $0.75.

However, EPS for this company, which has massive company content acquisition costs, are largely meaningless.

Additionally, since everyone is wondering just what pricing power NFLX has, here is how the company plans to once again reintroduce plan tiering – it bears remining what a horrible idea this was the last time around.

Last April we introduced a 4-concurrent stream $11.99 option to begin our evaluation of plan tiering. Since late last year, we have also been testing 1-stream and 3-stream variants, as well as SD/HD variations, at various price points. Eventually, we hope to be able to offer new members a selection of three simple options to fit everyone’s taste.

 

If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices, so there would be no material near-term revenue increase from moving to this potential broader set of options. We are in no rush to implement such new member plans and are still researching the best way to proceed.

…

In Ireland, on January 10th, we increased our monthly subscription price for new members by one Euro from €6.99 to €7.99, bringing Ireland pricing in line with our other Euro-zone countries. Existing members in Ireland received two-year grandfathering of their existing €6.99 pricing. Because of this grandfathering, there will be no material revenue impact from this change in 2014. It’s too early to tell if this change will materially affect our growth in Ireland.

Netflix also admitted the competition is growing fast:

We think YouTube, Amazon Instant Video, iTunes video and BBC iPlayer are also growing fast. In the traditional MVPD sector, there is lots of activity that may affect us on the margin. Verizon is buying the Intel Internet MVPD system and recently bought a CDN (EdgeCast) and streaming software firm (UpLynk). These are big  investments, so they clearly have big plans. Sony announced they are launching an Internet MVPD system this year. Finally, depending on the decision of the Supreme Court, Aereo will either have to pay for the broadcast content like MVPDs, or the MVPDs will no longer be obliged to pay. Within the MVPD ecosystem, there are potentially big shake ups. In contrast, we continue licensing and producing more exclusive content for our direct-to-consumer business, and are relatively unaffected by the big bundle questions.

As for the one biggest item that everyone is, or should be, concerned about, the recent passage of Net Neutrality, NFLX was surprisingly non-challant, and its only argument against the potential collapse in profits once ISP start putting up gates, is that there is “broad public support” for cheap content, and “ISPs will “avoid this consumer-unfriendly path of discrimination.” Good luck with that – the reality is that ISPs can’t wait to start charging NFLX now that they have a legal backstop.

On Net Neutrality:

 

Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide. The motivation could be to get Netflix to pay fees to stop this degradation. Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.

 

The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.

 

Moreover, ISPs have very profitable broadband businesses they want to expand. Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video. ISPs appear to recognize this and many of them are working closely with us and other streaming video services to enable the ISPs subscribers to more consistently get the high-quality streaming video consumers desire. In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless. To the degree that ISPs adhere to a meaningful voluntary code of conduct, less regulation is warranted. To the degree that some aggressive ISPs start impeding specific data flows, more regulation would clearly be needed.

Finally, curious how much cash a company that tomorrow will likely have a $23 bilion market cap, generates, here is the answer: $5.2 million in the quarter, and 16.3 million for all of 2013…. negative, that is.


    



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Petition In Support of Lifting the FDA Ban on 23andMe Gene Testing Reaches 10,000

23andMeBack in November, the Food and Drug
Administration
sent a letter to the genotype-screening company, 23andMe, basically ordering it to
stop offering its $99 direct-to-consumer Personal Genome Service to
the public. In December, the company knuckled under the regulators’
demands.

The TechFreedom think tank launched a
Change.org petition with the goal of urging FDA regulators to
back off. The petition stated:

The FDA seems to think that Americans can’t be trusted with more
information about their potential health risks because some people
might make rash decisions with it. But hampering the sales of
personal genomics devices isn’t the answer.

We haven’t all used 23andMe yet, but those of us who have know
the real problem is that doctors themselves are behind the curve.
When 23andMe sent us our results, we followed their advice: we
asked our doctor to talk about them. Most doctors didn’t know where
to begin. But the more of us ask, the more the medical profession
is catching up: brushing up on genomics, taking the time to
understand the site, and talking to us about our results and what,
if anything, to do about them. By prompting such dialogue, 23andMe
has sparked a revolution in how the medical profession uses genetic
information.

We urge you not to short-circuit this revolution. Please trust
us — and our doctors — to make responsible use of our own genetic
information. Instead of hamstringing new technologies, the FDA
should focus on educating doctors and patients about the benefits,
and limitations, of genetic testing.

The TechFreedom petition has now garnered 10,000 signatures. In
a media statement, TechFreedom president Berin Szoka said:

As our petition shows, thousands of Americans were appalled when
the FDA ordered 23andMe to stop marketing its home genetics testing
kits. The agency claims such tests will cause users to get too
little, or too much, treatment. But the FDA hasn’t offered any real
evidence that Americans are so foolish about their own health — not
a single example of someone being hurt, even indirectly, from a
test like 23andMe. Nor does the FDA acknowledge perhaps the
greatest benefit of 23andMe: encouraging Americans to talk to their
doctors about genomics, thus
forcing old docs to learn new tricks.

The FDA crackdown has forced 23andMe to cease providing new
customers with health-related reports, the primary value of the
service. Worse, it has forced at least one
upstart competitor to close its doors. This regulatory
uncertainty will only slow the inevitable integration of genomics
into everyday medicine.

Then-Senator Barack Obama acknowledged this coming revolution in
2007, declaring that “in no area of research is the promise greater
than in personalised medicine.” Unfortunately, his FDA has
undermined this revolution by denying Americans access to
information about their own genomes.

See Reason’s topic tag for 23andMe more background on
this sorry example of regulatory overreach.

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Grand Jury Declines to Indict North Carolina Cop Who Shot an Unarmed Motorist 10 Times at Close Range

Yesterday a North Carolina grand jury
declined to indict Charlotte-Mecklenburg police officer Randall
Kerrick for voluntary manslaughter in connection with the September
14
shooting of Jonathan Ferrell, an unarmed motorist who
apparently was seeking help after an early-morning crash. Kerrick,
who was responding to a burglary report, fired 12 rounds at Ferrell
from a few feet away, striking the 24-year-old former Florida
A&M football player 10 times. Kerrrick said Ferrell was moving
toward him and two other officers and did not stop when instructed
to do so. “The officers gave several verbal commands to ‘get on the
ground, get on the ground,’ at least three commands,” one of
Kerrick’s attorneys
told reporters. “He continued approaching the officers,
advancing toward them.”

Kerrick, who had been on the force three years at the time, was
charged with voluntary manslaughter later that same day. The
Charlotte Observer reports
that Police Chief Rodney Monroe and his top commanders made the
unusually swift decision after watching a 15-second video of the
encounter captured by a camera mounted on a police car.

The grand jurors asked North Carolina Attorney General Roy
Cooper, who is handling the case because the local district
attorney used to work with Ferrell’s lawyers, to “submit a bill of
indictment to a lesser-included or related offense.” That request
is puzzling for a couple of reasons. Assuming the shooting was not
justified (which is for the jury at Kerrick’s trial to determine),
it is hard to see how it would not amount to voluntary
manslaughter, which North Carolina
defines as “the unlawful killing of a human being by an
intentional act.” There is no dispute that Kerrick shot Ferrell on
purpose or that the gunshots killed him. If Kerrick reasonably
believed shooting Ferrrell was necessary to prevent death or
serious bodily harm, the shooting was justified as an act of
self-defense. But if not, how could it be anything but voluntary
manslaughter? It does not seem to meet the criteria for involuntary
manslaughter, which is “the unintentional killing of a human being
by an unlawful act not amounting to a felony, or by an act done in
a criminally negligent way.” In any case, if Ferrell were
charged with voluntary manslaughter (a Class D felony with a
presumptive sentencing range of 51 to 64 months), the jury would
still have the
option of finding him guilty of involuntary manslaughter (a
Class F felony with a presumptive sentencing range of 13 to 16
months).

When police officers are accused of wrongdoing, their bosses
tend to defend them or reserve judgment until an investigation is
completed, which generally takes weeks or even months. The fact
that the police department in this case quickly decided that a
manslaughter charge was appropriate suggests the recording of the
shooting was pretty damning. It is not clear whether the grand
jurors watched the video, which has not been released to the
general public.

Although the basis for the decision in this case is murky, it is
in a sense refreshing to see a grand jury decline to indict someone
for a change. According to Steve Ward, a former prosecutor
interviewed by the Observer, that happens maybe 10 times a
year in Mecklenburg County, where thousands of indictments are
issued each year. Ward said he had never heard of a grand jury
requesting a lesser charge. The rubber-stamp
tendencies of modern grand juries makes it hard to take them
seriously as check against prosecutorial power.

Cooper, the attorney general, now has the option of complying
with the request for a lesser charge or asking again for the same
indictment. Two grand juries are empaneled at any given time in
Mecklenburg County, serving on alternate weeks. Cooper could even
go back to the same grand jury. Twelve votes are needed for an
indictment, and several of the grand jury’s 18 members were absent
yesterday. Cooper said “it would be in the best interest of justice
to resubmit this case to a full grand jury, which we plan to do as
soon as possible.”

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Remember the Hakkens? Man Who Fled to Cuba with Children Declared Insane.

Joshua and Sharyn HakkenLast spring, Joshua and Sharyn
Hakken made national news when, after losing custody of their
children in Louisiana, they subsequently kidnapped them in Tampa,
Florida, and attempted to flee to Cuba in a boat. The country
returned them and the couple was arrested and charged with a host
of
kidnapping and abuse claims that could have landed them life in
prison.

Part of the reason the story made national news at the time was
because there was a lot of confusing reporting about why the
Hakkens were doing what they were doing. They were described as
anti-government, though as former Reason Editor Mike Riggs
researched
at the time, the case seemed to have started with an arrest
over marijuana possession.

Eventually the media moved on to other matters, but Joshua is
back in the news again today. He’s been declared insane and will
likely be sent to a mental hospital. Here’s the
Tampa Bay Times:

Doctors have determined that Joshua Hakken, the Tampa engineer
whose anti-government paranoia drove him to abduct his children and
flee to Cuba, is insane, making it likely he will be treated in a
mental hospital before standing trial.

Hillsborough Circuit Judge Chet Tharpe said in a hearing
Wednesday that he plans to determine within six weeks where to send
Joshua Hakken, 36, for mental health treatment. Defendants who are
incompetent to stand trial because of mental illness are ordinarily
treated until they have recovered enough acuity to understand
courtroom proceedings.

The fate of Hakken’s wife and co-defendant is less clear. It
appears the prosecution of Sharyn Hakken will continue, although
the couple’s trial date, previously set for next week, has been
postponed. Her attorney has said she was an unwitting victim who
got bullied into the kidnapping scheme by an abusive husband.

So we’re back to anti-government paranoia, but this time the
evidence released by the prosecution takes it further than the
vague information we were getting last year. Hakken is described is
being part of the chemtrail, government-weather-control conspiracy
crowd (if you’re unfamiliar with this group, just Google
“HAARP”).

And so this saga comes to an awkward end, but with a frankly
weird epilogue from Times reporter Peter Jamison. In an
explanatory video posted with his story, Jamison describes these
conspiracies as originating from the far right and casually
associated them with the Tea Party. He is not incorrect to point
out that there are Tea Party members that are openly protesting
chemtrails, as a quick online search will uncover. But a quick
online search with the right keywords will also find some libertarians
and
progressives also buying in to chemtrail concerns. There’s no
information out there that suggests that chemtrail and weather
control conspiracy theories are in any way part of the Tea Party
movement, so it’s an odd connection for Jamison to try to make.

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