Sanders Called Out for His Incoherent “War on Clean Energy” by the Washington Post

SandersDreamstimeMarionRushI’ve already denounced Democratic Socialist presidential hopeful Bernie Sanders for his ignorant attacks on fracking and natural gas production. Now the editors of the Washington Post join in with a terrific excoriation of Sen. Sanders’ opposition to using natural gas and nuclear power to generate electricity. The Post notes that the senator wants to ban all fracking and retire all nuclear power plants in the U.S. As the Post editors observe:

In fact, if we are serious about global warming, we will ignore Mr. Sanders’s sloganeering.

When burned, natural gas produces about half the carbon dioxide emissions of coal. The recent fracking boom contributed to a reduction in national carbon dioxide emissions over the past several years, as utilities switched from cheap coal to now-cheaper gas. It is true that some concerns remain. Methane leaks from natural gas wells and pipelines. Many worry about drinking water near fracking operations. But the government can require drillers to address these issues without shutting the industry. It is also true that natural gas is a waystation; though it is cleaner than coal, natural gas still produces carbon dioxide emissions. Yet gas’s price and emissions profile is still attractive enough that the Environmental Protection Agency’s Clean Power Plan, the most aggressive global warming policy the country has ever had, relies on gas displacing coal to meet medium-term emissions goals.

Mr. Sanders’s rhetoric on nuclear power is even more concerning. Nuclear accounts for about a fifth of the country’s electricity, and it is practically emissions-free. Shutting down that much clean electricity generation would put the country into a deep emissions hole. Mr. Sanders argues that he will invest heavily in renewables. Yet every dollar spent to replace one carbon-free source with another is a dollar that could have been spent replacing dangerous and dirty coal plants (emphasis added). Under Mr. Sanders’s vision, either the country would fail to maximize emissions cuts, or it would waste huge amounts of money unnecessarily replacing nuclear plants. Unsurprisingly, the Clean Power Plan relies on nuclear, too, assuming that the country will get about the same amout of electricity from nuclear in 2030.

Mr. Sanders is right that climate change demands an aggressive response, and he is right to favor a carbon tax. He should leave it at that: put a price on carbon, insist on adequate regulation and let the market find the fastest and most efficient road to slowing the warming of the planet.

Actually, for consistency, the Post’s editors might well have further argued that the whole panoply of subsidies for renewables and the Clean Power Plan mandates promoted by the Obama administration and other progressives could be entirely replaced by a revenue neutral carbon tax.

For more background on environmentalist progressives’ counterproductive war against nuclear power see my 2009 article, “The Cultural Contradictions of Anti-Nuke Environmentalists.”

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Why President Obamas DAPA Order Oversteps His Immigration Powers: New At Reason

On Thursday, constitutional scholars Ilya Shapiro and Ilya Somin will debate the constitutionality of President Obama’s executive order immigration in an event at Reason’s Washington, DC office moderated by Reason Foundation Senior Analyst Shikha Dalmia. 

Both scholars are previewing their arguments at Reason.com today. Here’s Ilya Shapiro’s argument that the Obama administration’s movie is not constitutional: 

One test of the integrity of legal scholars is when they can cite an example of a good policy they find illegal or unconstitutional. An example of that for me is President Obama’s Deferred Action for Parents of Citizens and Lawful Permanent Residents (DAPA).

Immigration is quite possibly the most feckless part of the federal government. More than advancing bad policy, our immigration system consists of schizophrenic laws that don’t advance any particular goal.  If you tried to draw up rules for how foreigners enter a country, how long they can stay, and what they can do here, you’d be hard-pressed to come up with anything worse than our hodge-podge of conflicting regulations.

This immigration non-policy serves nobody’s interest, except perhaps lawyers and bureaucrats. And yet Congress has shamelessly refused to fix it. 

This unfortunate circumstance, however, doesn’t give the executive branch the power to rewrite the law itself. Yet in November 2014, President Obama did exactly that when he unveiled DAPA, which officially defers deportations and grants temporary legal status to more than four million illegal aliens, entitling them to work authorizations and other benefits. 

View this article.

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Stocks Soar As Corporations Are Defaulting On Their Debts Like It’s 2008 All Over Again

Submitted by Michael Snyder via The Economic Collapse blog,

The Dow closed above 18,000 on Monday for the first time since July.  Isn’t that great news?  I truly wish that it was.  If the Dow actually reflected economic reality, I could stop writing about “economic collapse” and start blogging about cats or football.  Unfortunately, the stock market and the economy are moving in two completely different directions right now.  Even as stock prices soar, big corporations are defaulting on their debts at a level that we have not seen since the last financial crisis.

[ZH: As we wodnered previously,if at that moment when total 2016 to date defaults surpass 2009 (in roughly 2-3 months), whether the so called “market” will also hit fresh all time highs.

 

In fact, this wave of debt defaults have become so dramatic that even USA Today is reporting on it

Get ready to step over some landmines, investors. The number of companies defaulting on their debt is hitting levels not seen since the financial crisis, and it’s not just a problem for bondholders.

 

So far this year, 46 companies have defaulted on their debt, the highest level since 2009, according to S&P Ratings Services. Five companies defaulted this week, based on the latest data available from S&P Ratings Services. That includes New Jersey-based specialty chemical company Vertellus Specialties and Ohio-based iron ore producer Cliffs Natural. Of the world’s defaults this year, 37 are of companies based in the U.S.

Meanwhile, coal producer Peabody Energy (BTU) and surfwear seller Pacific Sunwear (PSUN) this week filed plans for bankruptcy protection.

 

Shares of Peabody have dropped 97% over the past year to $2 a share and Pacific Sunwear stock is off 98% to 4 cents a share.

A lot of big companies in this country have fallen on hard times, and it looks like bankruptcy attorneys are going to be absolutely swamped with work for the foreseeable future.

So why are stock prices soaring right now?  After all, it doesn’t seem to make any sense whatsoever.

And it isn’t just a few bad apples that we are talking about.  All across the spectrum, corporate revenues and corporate earnings are down.  At this point, earnings for companies on the S&P 500 have plunged a total of 18.5 percent from their peak in late 2014, and it is being projected that corporate earnings overall will be down 8.5 percent for the first quarter of 2016 compared to one year ago.

As earnings decline, a lot of big companies are getting into trouble with debt, and we have already seen a very large number of corporate debt downgrades.  In recent interviews, I have been bringing up the fact that the average rating on U.S. corporate debt has now fallen to “BB”, which is already lower than it was at any point during the last financial crisis.

A lot of people don’t seem to believe me when I share that fact, but it is absolutely true.

One of the big reasons why corporate debt is being downgraded is because a lot of these big companies have been going into enormous amounts of debt in order to buy back their own stock.  The following comes from Wolf Richter

Downgrades ascribed to “shareholder compensation,” as Moody’s calls share buybacks and dividends, have been soaring, according to John Lonski, Chief Economist at Moody’s Capital Markets Research. The moving 12-month sum of Moody’s credit rating downgrades of US companies, jumped from 32 in March 2015, to 48 in December 2015, and to 61 in March 2016, nearly doubling within a year.

 

The last time the number of downgrades attributed to financial engineering reached 61 was in early 2007. It would hit its peak of 79 in mid- 2007, a few months before the beginning of the Great Recession in Q4 2007. At the time, stocks were on the verge of commencing their epic crash.

When corporations go into the market and buy back their own stock, they are slowly cannibalizing themselves.  But we have seen these stock buybacks soar to record levels for a couple of reasons.  Number one, big investors want to see stock prices go up, and so big investors tend to really like these stock buybacks and will generally support corporate executives that wish to engage in doing this.  Number two, if you are a greedy corporate executive that is heavily compensated by stock options, you very much want to see the stock price go up as well.

So the name of the game is greed, and stock buybacks have been fueling much of the rise in U.S. stock prices that we have been seeing recently.

However, the truth is that nothing in the financial world lasts forever, and this irrational bubble will ultimately come to an end as well.

Earlier today, I am across an article that included a comment from Michael Hartnett of Bank of America Merrill Lynch.  He believes that there are a lot of parallels between what is happening today and the period of time that immediately preceded the bursting of the dotcom bubble

Back then, as could be the case today, a bull market & a US-led economic recovery was rudely interrupted by a crisis in Emerging Markets. The crisis threatened to hurt Main Street via Wall Street (the Nasdaq fell 33% between Jul-Oct 1998, when [Long-Term Capital Management] went under). Policy makers panicked and monetary policy was eased (with hindsight unnecessarily). Fresh liquidity combined with apocalyptic investor sentiment very quickly morphed into a violent but narrow equity bull market/bubble in 1998/99, one which ultimately took valuations & interest rates sharply higher to levels that eventually caused a “pop”.

Like Hartnett, I definitely believe that a major “pop” is on the way, although I would like for it to be delayed for as long as possible.

Someday we will look back on these times with utter amazement.  It has been absolutely incredible how the financial markets have been able to defy economic reality for so long.

But they can’t do it forever, and according to a brand new CNN survey Americans are becoming increasingly pessimistic about where the real economy is heading…

In a new CNNMoney/E*Trade survey of Americans who have at least $10,000 in an online trading account, over half (52%) gave the U.S. economy as a “C” grade. Another 15% rated the economy a “D” or “F.”

This gloom persists despite the fact that the stock market is on the upswing again. The Dow topped 18,000 Monday for the first time since July 2015.

If some Americans think that the U.S. economy deserves a “D” or an “F” grade right now, just wait until they see what is in our immediate future.

Personally, I give our economy an “A” for being able to maintain our unsustainable debt-fueled standard of living for as long as it has.  Somehow we have managed to consume far more than we produce for decades, and the largest debt bubble in the history of the planet just keeps getting bigger and bigger and bigger.

Of course we are very much living on borrowed time at this point, but I truly hope that the bubble economy can keep going for at least a little while longer, because nobody should want to see what is coming afterwards.

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Two Key Soros PMs Depart Over “Disagreement About Direction Of Global Markets”

In late January, when George Soros was interviewed in Davos, he revealed what may have been his most bearish outlook yet, revealing that he is not only short the S&P 500, saying the Fed rate hike was a “mistake” (something the Fed’s subsequent relent and global easing U-turn have confirmed), and that China will have a hard landing.

In retrospect, Soros did not factor in for the latest coordinated central bank response, which has seen not only every developed market CB rotating strongly to the dovish side, the Fed included, but culminated with China injecting a record $1 trillion in loans in the first quarter.

 

That may have cost the aging billionaire.

According to Bloomberg, two of the key portfolio managers working at Soros’ family office, David Rogers and Joshua Donfeld, are leaving the firm over disagreements with its new chief investment officer about the direction of global markets, according to people with knowledge of the matter.

It was not immediately clear if the PMs expected markets to keep rising or falling.

According to Bloomberg, David Rogers, a protege of Soros’s former chief investment strategist Stan Druckenmiller, managed a portfolio of about $3 billion at the $28 billion Soros Fund Management. Rogers, 38, made his name as a commodities trader, while Donfeld, 40, focuses on stock investing, said the people, adding that both men are expected to leave the family office next month.

“I don’t know what his plans are, but he’s extremely talented and he did a great job when he worked for me,” Druckenmiller said about Rogers, whom he trained at his former hedge fund Duquesne Capital Management, which boasts one of the best long-term track records in the industry. Rogers also spent some time at PointState Capital, which was started in 2010 by former employees of Duquesne after Druckenmiller closed his firm and started a family office. 

Bloomberg adds that the exit of the two portfolio managers comes just months after Ted Burdickwas appointed chief investment officer to replace Scott Bessent, who started his own hedge fund at the beginning of the year. Bessent was the chief investment officer at Soros Fund Management, which oversees the personal wealth of the billionaire, from September 2011 until 2015, and is now managing $4.5 billion at his Key Square Group, including $2 billion for Soros. Both Donfeld and Rogers were hired by Bessent.

Needless to say, if the departures are due to a disagreement with Soros’ bearish bets from the start of the year, they are far more reflective of the PM’s compensation expectations, which leads us to wonder: just how much money has Soros lost during this latest market meltup from the February 11 lows, lows incidentally hit just as Yellen was concluding her confidential phone call with BoE’s Mark Carney.

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As Olympics Looms Officials Warn Rio Is “Close To Social Collapse”

With feces-infested waterways, Zika-carrying mosquitoes, a collapsing economy, and political corruption that runs from top to bottom, Brazil is in trouble. But just a few short weeks ahead of The Olympics, the people are revolting as Sao Paulo state governor Geraldo Alckmin warns “Rio de Janeiro is close to social collapse” after state payments to retirees have not been made. Of course, none of this matters as long as Ibovespa is soaring and Real is strengthening…

  • *RIO DE JANEIRO STATE CHIEF OF STAFF LEONARDO ESPINDOLA SPEAKS
  • *ESPINDOLA:RIO DE JANEIRO HASN’T MADE MARCH PAYMENTS TO RETIREES

To which Governor Alckmin adds…

  • *BRAZIL’S RIO DE JANEIRO ‘CLOSE TO SOCIAL COLLAPSE’: OFFICIAL
  • *BRAZIL’S RIO DE JANEIRO STATE OWES BRL52B: OFFICIAL
  • *BRAZI’S SAO PAULO STATE OWES BRL224B: GOVERNOR ALCKMIN

Which does not look like being solved any time soon:

  • *BARBOSA: BRAZIL FED. GOVT HAS TROUBLE MEETING FISCAL GOAL
  • *BARBOSA: FED. GOVT. IS AWARE, CONCERNED ABOUT STATE SITUATION

Which seems like exactly what you want to hear to buy the F**king dip in Ibovespa…

 

Still on the bright side…

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Zoolander 2 Is Too Offensive for Students University Shows Deadpool Instead

ZoolanderClaremont McKenna College’s student programming board cancelled a planned screening of Zoolander 2 because the film’s humor is inappropriate and comes “at the expense of individuals of marginalized identities.” 

The college ultimately decided to show Deadpool instead. 

Of course, many people would probably find the R-rated Deadpool a whole lot more offensive than the PG-13 rated Zoolander 2. I’ve seen Deadpool. It’s incredibly violent, graphically sexual, and contains plenty of offensive humor of its own. (It’s also a great film.) 

The difference, it seems, is that Zoolander 2 offends “marginalized identities.” 

“Though ‘Deadpool’ is a R-rated movie it does not target marginalized identities the way Zoolander did,” the programming committee wrote in an email to The College Fix. “Our choice to cancel the film was a calculated choice that we felt would support and respect our community on campus.” 

I’ve seen Zoolander, but not it’s sequel. The second film has been criticized for the problematic manner in which it introduces a possibly transgender character, “All,” played by Benedict Cumberbatch. Owen Wilson’s character asks “All” whether he/she “has a hot dog or a bun.” This isn’t the greatest joke ever, and I’m open to the argument that Zoolander 2 might just be a terrible film, or at least, a vastly inferior film to Deadpool

But the idea that “marginalized identities”–the trans community, in this case—can’t handle one stupid joke is more than a little insulting to them. No one should strive to be so fragile. 

Can We Take a Joke? a new documentary produced by former Reason staffer Ted Balaker and the Foundation for Individual Rights in Education asks whether college campuses are where humor goes to die. Increasingly, the answer seems to be yes. 

Maybe next time the college should just show Paddington. 

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Ronald Bailey on Climate Change Panel at Earth Day Texas in Dallas

BaileyCheetahRightSizedThe Earth Day Texas 2016 opens at the Dallas Fair Park on April 22nd and runs through the weekend. I will be on a moderated open-to-the public panel with U.S. EPA General Counsel Avi Garbow discussing public policy related to climate change. Garbow will be focusing on the Obama administration’s regulatory efforts to cut greenhouse gas emissions. According to the organizers I am supposed to address wider policy and energy technology issues related to man-made global warming. From the event website:

Please join the General Counsel of the U.S. Environmental Protection Agency, Avi S. Garbow, for a discussion of what EPA hopes to accomplish in the last 8 months of the Obama administration as EPA implements The President’s Climate Action Plan, publishes and finalizes regulations, defends its major initiatives in court, continues its efforts on the international front, and prepares for the anticipated impacts of climate change.

What are the legal challenges ahead? What are the next steps in the legal arena if the Clean Power Plan is not upheld? What should we expect from the anticipated heavy duty vehicle emission standards to be published in the next few months, and what impact will these standards have on the environment? What can businesses and citizens do to participate as these critical issues are addressed?

Joining Mr. Garbow will be Ronald Bailey, a leading author on the subject of climate change, whose recent work includes the widely praised 2015, “The End of Doom, Environmental Renewal in the Twenty-first Century.” Mr. Bailey will offer his observations on the most recent science describing climate change, available technologies to reduce carbon, the timing and costs of unleashing innovation, and the role that the federal government might play in supporting research and development.

Mr. Bailey will also discuss the polarized and contentious history of the climate change debate, explore the role of cultural values, and suggest a productive approach for businesses and citizens to take as they continue to participate in these important policy decisions. In the town hall format, the speakers will take questions from the audience and discuss paths forward.

The panel is on Earth Day, Friday April 22 in the Hall of State (next to the Cotton Bowl stadium) in the 2nd floor library at the Fair Park (see map). The event begins at 1:30 pm and runs until 3 pm. RSVP not required but appreciated, bruce@earthdaytx.org.

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Bribery Charges Indict New York City’s Unconstitutional Gun Restrictions

Yesterday federal prosecutors in Manhattan charged the leader of a volunteer neighborhood patrol in Borough Park, Brooklyn, with bribing New York City police officers to facilitate pistol permits. According to the criminal complaint prepared by FBI Special Agent Joseph Downs, Alex Lichtenstein bragged about obtaining 150 permits through his connections with the NYPD License Bureau, reportedly charged his clients $18,000 each, and last week offered one officer (who was secretly recording the conversation) $6,000 for every license he helped expedite.

“Corruption in any part of government cuts at the very fabric of our society,” says U.S. Attorney Preet Bharara. “It is particularly damaging when it undermines public safety.” But there is not much evidence that Lichtenstein’s operation endangered public safety, and the bribery charges represent an indictment of New York City’s unconstitutionally restrictive and burdensome gun policies as well as Lichtenstein and the officers who assisted him.

Why, after, all would people be willing to pay as much as $18,000 for the privilege of exercising a constitutional right? You might surmise that many or most of Lichtenstein’s clients were legally disqualified from owning guns. But prosecutors cite just one example of a customer with a problematic background, and it sounds like even he did not meet any of the federal criteria for disqualification. “Prior to his application for a gun license,” the U.S. Attorney’s Office says, “License Holder-1 had been arrested for forgery, received approximately 10 moving violations and three vehicle-related summonses, and had been the subject of at least four domestic violence complaints, including one in which he was accused of threatening to kill someone.” Unless one of those domestic violence complaints resulted in a conviction (which prosecutors presumably would have mentioned), this man had a legal right to own a gun under federal law.

But not in New York City, which requires a license not just for carrying a gun in public but for keeping one at home or work. Despite the Second Amendment’s guarantee of the right to “bear” as well as “keep” arms, the former type of license is reserved for celebrities and people whose jobs require them to carry guns. The latter type of license is notionally available to ordinary citizens, but the application process is expensive, complicated, time-consuming, and uncertain—so much so that attorneys specialize in guiding people through the ordeal. Bharara’s office notes that even when you jump through all the hoops, including the fees, the fingerprinting, the documentation of your identity and residence, the letters of reference, the confession of every brush with the law, and the in-person interview, the NYPD may reject your application based on fuzzy discretionary criteria: 

Certain findings, such as a prior felony conviction, result in the automatic disapproval of an applicant. Pursuant to New York State Law, the NYPD License Division has discretion to reject gun license applications for additional reasons, such as moral character, mental health issues, or substance abuse issues. On its website, the NYPD License Division indicates that it may reject applications if the investigation reveals a history of arrest, driving infractions, or domestic violence incidents, among other reasons. Typically, the processing, investigation, and approval or disapproval of an application takes several months and, for licenses to carry guns, at times in excess of one year.

Given how the licensing process works (or doesn’t), you can start to understand the business opportunity that Lichtenstein perceived. According to Agent Downs’ complaint, Lichtenstein told the cop who turned him in “his customers needed assistance obtaining licenses…because the License Division denies Applications ‘for the biggest stupidity,’ such as ‘somebody got a moving violation.'” That detail is supposed to make Lichtenstein look bad; it actually makes the License Division look bad.

Downs says Lichtenstein “maintained that his customers were deserving of gun licenses, and that all he was asking…was to ‘expedite’ the process, which I believe to be a reference to foregoing the full investigation typically conducted before the NYPD License Division approves or disapproves an Application.” The problem is that “the full investigation” goes well beyond the highly questionable federal criteria for owning a gun, which are unfair and largely illogical but at least objective. By piling on requirements in the name of public safety and giving police the power to reject applications based on subjective criteria such as “moral character” and “mental health issues,” New York City not only creates a market for license facilitation that leads to official corruption; it arbitrarily deprives people of their Second Amendment rights.

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