- John Pilger: Assange Arrest A Warning From History
The glimpse of Julian Assange being dragged from the Ecuadorean embassy in London is an emblem of the times. Might against right. Muscle against the law. Indecency against courage. Six policemen manhandled a sick journalist, his eyes wincing against his first natural light in almost seven years.
That this outrage happened in the heart of London, in the land of Magna Carta, ought to shame and anger all who fear for “democratic” societies. Assange is a political refugee protected by international law, the recipient of asylum under a strict covenant to which Britain is a signatory. The United Nations made this clear in the legal ruling of its Working Party on Arbitrary Detention.
But to hell with that. Let the thugs go in. Directed by the quasi-fascists in Trump’s Washington, in league with Ecuador’s Lenin Moreno, a Latin American Judas and liar seeking to disguise his rancid regime, the British elite abandoned its last imperial myth: that of fairness and justice.
Imagine Tony Blair dragged from his multi-million pound Georgian home in Connaught Square, London, in handcuffs, for onward dispatch to the dock in The Hague. By the standard of Nuremberg, Blair’s “paramount crime” is the deaths of a million Iraqis. Assange’s crime is journalism: holding the rapacious to account, exposing their lies and empowering people all over the world with truth.
The shocking arrest of Assange carries a warning for all who, as Oscar Wilde wrote, “sew the seeds of discontent [without which] there would be no advance towards civilization.” The warning is explicit towards journalists. What happened to the founder and editor of WikiLeaks can happen to you on a newspaper, you in a TV studio, you on radio, you running a podcast.
Assange’s principal media tormentor, The Guardian, a collaborator with the secret state, displayed its nervousness this week with an editorial that scaled new weasel heights. The Guardian has exploited the work of Assange and WikiLeaks in what its previous editor called “the greatest scoop of the last 30 years.” The paper creamed off WikiLeaks’ revelations and claimed the accolades and riches that came with them.
With not a penny going to Julian Assange or to WikiLeaks, a hyped Guardian book led to a lucrative Hollywood movie. The book’s authors, Luke Harding and David Leigh, turned on their source, abused him and disclosed the secret password Assange had given the paper in confidence, which was designed to protect a digital file containing leaked US embassy cables.
Revealing Homicidal Colonial Wars
When Assange was still trapped in the Ecuadorian embassy, Harding joined police outside and gloated on his blog that “Scotland Yard may get the last laugh.” The Guardian then published a series of falsehoods about Assange, not least a discredited claim that a group of Russians and Trump’s man, Paul Manafort, had visited Assange in the embassy. The meetings never happened; it was fake.
But the tone has now changed. “The Assange case is a morally tangled web,” the paper opined. “He (Assange) believes in publishing things that should not be published …. But he has always shone a light on things that should never have been hidden.”
These “things” are the truth about the homicidal way America conducts its colonial wars, the lies of the British Foreign Office in its denial of rights to vulnerable people, such as the Chagos Islanders, the exposé of Hillary Clinton as a backer and beneficiary of jihadism in the Middle East, the detailed description of American ambassadors of how the governments in Syria and Venezuela might be overthrown, and much more. It is all available on the WikiLeaks site.
The Guardian is understandably nervous. Secret policemen have already visited the newspaper and demanded and got the ritual destruction of a hard drive. On this, the paper has form. In 1983, a Foreign Office clerk, Sarah Tisdall, leaked British Government documents showing when American cruise nuclear weapons would arrive in Europe. The Guardian was showered with praise.
When a court order demanded to know the source, instead of the editor going to prison on a fundamental principle of protecting a source, Tisdall was betrayed, prosecuted and served six months.
If Assange is extradited to America for publishing what The Guardian calls truthful “things,” what is to stop the current editor, Katherine Viner, following him, or the previous editor, Alan Rusbridger, or the prolific propagandist Luke Harding?
What is to stop the editors of The New York Times and The Washington Post, who also published morsels of the truth that originated with WikiLeaks, and the editor of El Pais in Spain, and Der Spiegel in Germany and The Sydney Morning Herald in Australia. The list is long.
David McCraw, lead lawyer of The New York Times, wrote: “I think the prosecution [of Assange] would be a very, very bad precedent for publishers … from everything I know, he’s sort of in a classic publisher’s position and the law would have a very hard time distinguishing between The New York Times and WikiLeaks.”
Even if journalists who published WikiLeaks’ leaks are not summoned by an American grand jury, the intimidation of Julian Assange and Chelsea Manning will be enough. Real journalism is being criminalized by thugs in plain sight. Dissent has become an indulgence.
In Australia, the current America-besotted government is prosecuting two whistle-blowers who revealed that Canberra’s spooks bugged the cabinet meetings of the new government of East Timor for the express purpose of cheating the tiny, impoverished nation out of its proper share of the oil and gas resources in the Timor Sea. Their trial will be held in secret. The Australian prime minister, Scott Morrison, is infamous for his part in setting up concentration camps for refugees on the Pacific islands of Nauru and Manus, where children self harm and suicide. In 2014, Morrison proposed mass detention camps for 30,000 people.
Journalism: a Major Threat
Real journalism is the enemy of these disgraces. A decade ago, the Ministry of Defense in London produced a secret document which described the “principal threats” to public order as threefold: terrorists, Russian spies and investigative journalists. The latter was designated the major threat.
The document was duly leaked to WikiLeaks, which published it. “We had no choice,” Assange told me. “It’s very simple. People have a right to know and a right to question and challenge power. That’s true democracy.”
What if Assange and Manning and others in their wake — if there are others — are silenced and “the right to know and question and challenge” is taken away?
In the 1970s, I met Leni Reifenstahl, close friend of Adolf Hitler, whose films helped cast the Nazi spell over Germany.
She told me that the message in her films, the propaganda, was dependent not on “orders from above” but on what she called the “submissive void” of the public.
“Did this submissive void include the liberal, educated bourgeoisie?” I asked her.
“Of course,” she said, “especially the intelligentsia …. When people no longer ask serious questions, they are submissive and malleable. Anything can happen.”
And did. The rest, she might have added, is history.
* * *
John Pilger is an Australian-British journalist and filmmaker based in London. Pilger’s Web site is: www.johnpilger.com. In 2017, the British Library announced a John Pilger Archive of all his written and filmed work. The British Film Institute includes his 1979 film, “Year Zero: the Silent Death of Cambodia,” among the 10 most important documentaries of the 20thcentury. Some of his previous contributions to Consortium News can be found here.
- Google's Wing Launches Commerical Drone Delivery Service In Australia
The startup air delivery service Wing, a subsidiary of Google’s parent company Alphabet, has launched a drone-based commercial delivery service in Australia.
“Our service allows customers to order a range of items such as fresh food, hot coffee or over-the-counter chemist items on our mobile app, and have them delivered directly to their homes by drone in minutes,” Wing wrote in a press release Monday.
The company launched the air delivery service earlier this week to residents in Crace, Palmerston and Franklin, which are suburbs in North Canberra. Next month, the service is expected to expand into Harrison and Gungahlin suburbs.
Wing partnered with local business in the Gungahlin area, so that merchants can utilize the quick delivery service to reach more customers per day. Some of those partners include Kickstart Expresso, Capital Chemist, Pure Gelato, Jasper + Myrtle, Bakers Delight, Guzman Y Gomez, and Drummond Golf.
Last month, we reported that Wing was “on the verge of launching” its new service. The company tested drones over Bonython, a suburb of Tuggeranong, a township in southern Canberra for about a year. During the trial, the drones delivered food, small household items more than 3,000 times to Australian homes.
The Australian Civil Aviation Safety Authority granted Wing licenses to operate commercial drones after the agency reviewed all flight records and operational plans.
However, many Australians are not too enthusiastic about drones flying above. Some residents earlier this year told law enforcement that they would shoot the drones out of the sky.
Despite dozens of complaints from residents, government officials have asked Wing to reduce the decibel level of the drones so that they don’t startle residents.
“When they do a delivery drop they hover over the site and it sounds like an extremely loud, squealing vacuum cleaner,” Bonython Against Drones said on its website. The Australian aviation authority ordered Wing to modify its drone’s propellers and engines to reduce noise for quieter deliveries. New regulations have limited drone deliveries on weekdays between 7 a.m. and 8 p.m.
“The feedback we have received during the trials has been valuable, helping us to refine our operations to better meet the needs and expectations of the communities in which we operate,” Wing stated.
Wing has said drone deliveries could add $28.5 million to Australia’s annual revenue at its full capacity this year.
In the next 3 to 5 years, drone deliveries could revolutionize supply chain management and transportation planning for the last mile. Google and Amazon have been capturing the headlines with its drones, but other companies are developing their own drone delivery programs. This includes global corporations like Walmart, DHL, and UPS.
Video: Google Drones Can Already Deliver You Coffee in Australia
- Coffee Robots Are Not Causing Homeless People To Starve
Authored by Art Carden via The American Institute for Economic Research,
A couple of months ago, this tweet made the social media rounds:
San Francisco in one photo.
Fully Robotic Coffeeshop next to the Starving Jobless Homeless pic.twitter.com/uwK936Twb5
— ERIK FIN (@erikfinman) January 14, 2019
https://platform.twitter.com/widgets.js
The group of “Starving Jobless Homeless” people huddled outdoors next to a “Fully Robotic Coffeeshop” is jarring. The coffee shop, CafeX, features “Coffee from the best local roasters crafted with precision using recipes designed by top baristas.” It’s an image of the coming techno-dystopia in which robots take our jobs and leave everyone who isn’t a capital-owning plutocrat to starve in the streets, no?
No. There are other things at play here. One reply to the tweet tagged John Stossel and diagnosed the problem immediately: the minimum wage in San Francisco is $15 per hour. That is a wage at which, apparently, the people in the picture cannot be profitably employed and which induces firms to look harder for ways to do with capital what was formerly profitable to do with labor.
Labor and Capital
“But firms will want to innovate and adopt new technology no matter what,” you say. Maybe: it depends on what the technological possibilities are. If labor is extremely abundant, then the low-cost, most efficient production method might be labor-intensive rather than capital-intensive.
Think about why so many people don’t buy the absolute-best top-of-the-line computers or smartphones. You probably don’t. Consider the Cray XT5m supercomputer system, which “starts around $500,000, takes advantage of the hardware and software advances of the Cray XT5 supercomputer, the basis of the petascale system currently in use at the U.S. Department of Energy’s Oak Ridge National Laboratory.”
That’s a heck of a machine, and if you’re doing particle physics, it’s probably nice to have. If all you need to do is check your email and manage a few spreadsheets, then it’s overkill. Just as you wouldn’t expect a firm to buy a Cray XT5m for everyone in the office and just as you probably don’t keep one in the sewing room from which to check email and play Minecraft, firms aren’t going to go for hyper-tech when that tech is hyper-expensive.
Again, firms will choose the lowest-cost way to produce a good in the interest of maximizing profits. When we use legislation like minimum wages and workplace safety rules and other things to increase the price of labor relative to what would obtain in the free market, we nudge firms toward replacing people with machines — as CafeX does, replacing human baristas with mechanical ones.
That gives us the phenomenon in the picture: a mass of people who are either unemployed or who have given up on the labor market, huddled outside a robotic coffee bar.
The same principles also explain why they are without housing. First, building new housing in San Francisco is notoriously difficult. Reason discusses an amusing-if-it-weren’t-so-tragic case in which the owner of a laundromat is being blocked from turning it into an eight-story apartment complex because the laundromat is “historic.”
Making it difficult for people to build new housing reduces the supply of housing, which drives up prices. It also changes the composition of housing: high regulatory costs that make it hard to build any kind of housing will induce substitution away from modest housing and toward luxury housing.
Changes in Relative Prices
Economists call this the Alchian-Allen effect after the economists Armen Alchian and William Allen. Adding a fixed cost to two similar goods will induce substitution toward the higher-quality good because it changes the relative price of that good.
The average quality of oranges in Florida, for example, is lower than the average quality of oranges in Vancouver for this reason. Suppose good oranges have a price of a dollar and bad oranges have a price of 50 cents. This means good oranges cost two bad oranges; a bad orange costs half a good orange. If it costs 50 cents to ship an orange — any orange — from Florida to Vancouver, it changes the relative price. Good oranges are relatively cheaper: with a total cost of $1.50 including shipping compared to $1 for bad oranges, good oranges only cost 1.5 bad oranges. The relative price of bad oranges rises, from half a good orange to 2/3 of a good orange. (The numbers in this example are from an example in Steven Landsburg’s textbook Price Theory and Applications.)
People substitute toward higher-quality oranges and away from lower-quality ones. Before you say, “Wouldn’t people always buy the highest-quality oranges?,” note that there is a price difference. Then look in your own fridge or on your own kitchen counter. You probably don’t have the absolutely highest-quality produce imaginable on hand.
Now, replace good and bad oranges with luxury and modest apartments and replace the fixed cost of shipping with a fixed cost of building. Costly regulations make all housing absolutely more expensive, but they make luxury housing relatively cheaper.
If you’re still not convinced, think about hiring a babysitter for $40 and going on a date. Would you go to Taco Bell? Or would you go somewhere nicer? Adding the price of the babysitter means going to Taco Bell and spending $10 each would cost you $60. Or you could go to a very nice restaurant and spend $40 each for a total of $120.
Without the cost of the babysitter, a trip to the very nice restaurant costs you four trips to Taco Bell. But the trip to the very nice restaurant is cheaper in terms of forgone trips to Taco Bell once you add the cost of the babysitter, which will cost $40 no matter what you do.
As the San Francisco Tenants Union explains, “In San Francisco, most tenants are covered by rent control.” Rent control is a standard example in introductory economics classes of a policy that hurts the people we ostensibly want to help. The Swedish economist Assar Lindbeck has said that “in many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
By holding prices below what the market will bear, rent-control ordinances ensure housing shortages, where, at the controlled price, people want more housing than firms and landlords are willing to provide.
Furthermore, they find themselves in a cat-and-mouse game with regulators because landlords and tenants move toward competition on non-price margins. Quality, to use just one example, falls because of rent control and necessitates, in the eyes of many activists, even more regulation.
The additional regulation raises the cost of providing housing, which reduces the supply of housing, which puts pressure on prices and thus leads to more and more calls for rent control. The outcome is grotesque: all the new construction is high-end luxury housing while the rent-controlled housing deteriorates more quickly.
Adam Smith famously wrote that “there is a great deal of ruin in a nation.” Does the picture of a huddled mass of homeless people outside a robotic coffee shop suggest the ruins of late-stage capitalism? I think not.
It represents instead the “great deal of ruin” policymakers create when they make policy as if the laws of supply and demand are optional.
- An Interview With The Most Powerful Man On Wall Street
Amid a rising legislative chorus demanding a halt to corporate buybacks (an activity which was illegal until 1982), with Congress realizing that most of the funds released by Trump’s tax cut and offshore tax repatriation were used not for capex or hiring but merely to levitate stock prices, last week Goldman’s chief equity strategist published the most “inspired” defense of buybacks, in which he said that from a portfolio strategy perspective, “the potential restriction on buybacks would likely have five implications for the US equity market: (1) slow EPS growth; (2) boost cash spending on dividends, M&A, and debt paydown; (3) widen trading ranges; (4) reduce demand for shares; and (5) lower company valuations.”
Or, as we summarized it, if Congress were to ban buybacks, it would likely crash the market. Hence Goldman’s increasingly vocal defense of corporate buybacks, which incidentally are the biggest source of stock demand in the past decade.
Then, just a few days later, Goldman – clearly worried that the anti-buyback push is gathering steam in Congress – published yet another research report discussing the “Buyback Realities”, in which it paradoxically tried to mitigate the role buybacks have on price formation and capital misallocation just one week after it explained how banning buybacks would have disastrous consequences for stocks.
Of note, one of the charts in the defensive report had the following informative summary on the history of buybacks, in which Goldman explained that “in the past buybacks were not illegal [ZH: they were illegal prior to 1982] but were typically avoided because US companies feared government charges of market manipulation.” As a result, for decades US companies returned cash to shareholders almost exclusively via dividends, and from 1880 to 1980, the dividend payout ratio averaged 78% of earnings (companies also had the option to repurchase shares via tender offers, in which they would buy a certain amount of shares at a pre-determined price/time, however the price moving impact of such operations was virtually nil).
Then, everything changed in 1982 with the passage of Rule 10b-18, which provided companies a safe harbor against charges of market manipulation when repurchasing their shares.
In short, buybacks were illegal until 1982 for a reason – market manipulation – and then they gradually became mainstream, with stock buybacks and dividends rising to 90% of the cumulative payout ratio of S&P 500 earnings in the 2002-2018 period. The cherry on top: in 2019, Goldman forecasts companies will spend a record $940 billion on buybacks (with $1.1 trillion in buyback announcements) up 16% from the prior record hit in 2018.
Some more staggering context: since the 2008 financial crisis, the S&P 500 companies have repurchased about $5 trillion of their own shares, which represents approximately 20% of the current market capitalization.
So while it remains to be seen if Congress will ban buybacks, one thing is certain: as Goldman’s David Kostin cautioned last week, without company buybacks, demand for shares would fall dramatically, for one simple reason: repurchases have consistently been the largest source of US equity demand. Since 2010, corporate demand for shares has far exceeded demand from all other investor categories combined. Net buybacks for all US equities averaged $420 billion annually during the past nine years. In contrast, during this period, average annual equity demand from households, mutual funds, pension funds, and foreign investors was less than $10 billion for each category – despite the fact these categories collectively own 83% of corporate equities. Buybacks represented the largest source of equity demand in 2018. This is shown in the table below.
Then, overnight, Kostin reiterated this point, saying that “buybacks remain the largest source of net demand for US equities. Other ownership categories have been generally reducing equity exposure, including mutual funds.”
What this means is the following: with buybacks having become the most important marginal buyer of stocks, the one trading desk that dominates the daily flow of buybacks – which amount to just under $3 billion in gross purchases each and every day – has more influence on the overall market than even the NY Fed. And the person who controls that trading desk will be the most powerful person on Wall Street.
Meet Neil Kearns.
Kearns, a name few have ever heard of – certainly not a name on par with Stevie Cohen, Israel Englander, Larry Fink, Lloyd Blankfein, Jamie Dimon, Bill Dudley or any other hedge fund billionaire that is part of the Wall Street folklore – is the head of Goldman Sachs’ corporate trading desk: the desk the executes hundreds of billions in corporate buyback orders for clients all around the world. And with Goldman sporting the largest buyback trading desk on Wall Street, it wouldn’t be a stretch to say that – with the fate of the stock market in the hands of corporate buybacks – Neil is the most powerful man on Wall Street right now.
In its latest “Top of Mind” publication, Goldman sat down with Kearns, this “master of the buyback universe”, to address the size, impact, and outlook for US share repurchases. Since Neil is the man that sees more buyback dollars executed in any year than anyone else, he is just the right man to answer all buyback related questions.
Q: How large is the corporate bid in the stock market?
A: US corporates have been the largest net buyers of US equity for the last decade, repurchasing $5tn+ since the financial crisis. Last year, roughly $1.1 trillion of repurchases were authorized, with about $900 billion actually repurchased. As a share of the overall trading footprint, that’s around 6-7% of average composite volume, which might be viewed as a slightly underwhelming number. But companies repurchase stock under rule 10b-18, a safe harbor enacted by the SEC in 1982 to provide companies an affirmative defense against accusations of stock price manipulation. This rule provides volume, timing and price limitations on how companies buy back stock. Pulling out the non-eligible volume, the trading footprint increases to about 10% on average, and into the teens during market weakness.
Q: What is the major driver of volatility in share repurchases?
A: The largest driver of share repurchase volatility is broader equity market performance. In particular, the corporate bid tends to become more aggressive in a falling market as fundamental investors move to the sidelines. In periods of extreme dislocation, like we witnessed at the end of last year, repurchase activity can temporarily spike by multiples of average levels, as companies take advantage of attractive price points/valuations, and which may ultimately also have a secondary effect of tempering price volatility. That said, companies are cognizant of their trading footprints and generally aim to be less than 10% of trading volume.
Q: How much seasonality is there in share repurchases?
A: There is not a great deal of seasonality. Q1 tends to be the lightest quarter of activity—about 23% of total annual notional— given that companies have the least visibility on what earnings will look like that year. Q2 tends to be a little bit more active at around 24%, while the last two quarters average around 26 to 27%, as companies feel more confident in repurchase levels given greater clarity on earnings strength/cash flow generation in the second half of the year.
Q: We are in the midst of a blackout window for share repurchases, which occurs four times a year around quarterly earnings. Does that mean companies can’t buy stock?
A: No. The other rule relevant to share repurchase programs is 10b5-1. The SEC enacted this rule in 2000 to provide senior executives, who have a desire to sell equity, an affirmative defense to any charge of insider trading, by adopting a written plan to sell at a time when they are not in possession of material non-public information (MNPI). The plan is a written contract between the individual and their broker, and contains very specific instructions on trade dates, sale parameters, etc. Though the plan may extend through a blackout window when the individual possesses MNPI, because it’s ultimately on auto-pilot, the executive is protected. Companies have applied this same safe harbor to buyback programs, enacting plans before the blackout window that will run on auto-pilot during the window. Very little public information is available on 10b5-1s, but an internal analysis of 350 companies suggests that approximately 85% of companies utilize them to continue to purchase stock during closed windows. Companies do tend to be more conservative than in the open window (when they have access to real time information); we observe a notional spend reduction of ~30% during the blackout window.
Q: How do companies judge the success of their stock repurchase programs?
A: From an execution standpoint, most companies judge the success of their program by comparing the average price at which they’ve purchased their shares on any given day, to the volume weighted average price (VWAP)—a daily benchmark that is readily available on Bloomberg. If their purchase price is below VWAP, they’ve “saved” money. Given the billions of dollars spent annually on share buybacks today, senior management and more frequently, corporate boards, have become increasingly focused on execution performance versus the daily benchmark, in some cases adjusting the structure of their program to specifically achieve this. In my view, this narrow focus on daily VWAP has the potential risk of missing more attractive valuation opportunities.
Q: How would you judge investor focus on stock buybacks today?
A: Focus from the buy side community is at an all-time high, with investors frequently questioning whether the very strong corporate bid we’ve observed over the past decade will persist, and looking at this as a potential harbinger of equity market performance. But if investors are looking to share repurchases for market direction, they are probably one or two quarters behind; corporate earnings drive share repurchases—not the other way around.
Q: Do you see any evidence that the corporate bid is diminishing, especially given increased focus in Washington, DC?
A: Not currently. Share repurchase authorizations are up approximately 13% yoy, which is remarkable given the surge in buybacks last year. And more broadly, the US economy continues to do reasonably well, the Fed appears to be on pause, and US-China trade negotiations are moving in the right direction. So we have little reason to believe that US corporates will not continue to generate strong free cash flow, which, as I mentioned, has historically been the primary driver of stock repurchases.
- App Store Downloads Drop For The First Time In Years
The synchronized global slowdown has hit Apple’s iOS App Store downloads for the first time in years, according to a new report from Morgan Stanley, first reported by 9to5Mac.
The research note reveals that the App Store saw a 5% drop in app and game downloads in 1Q19 versus the same period in 2018. This is the first time a deterioration in downloads has been observed since the 2015 Chinese stock market turbulence that slowed global growth.
In a series of Twitter posts, CNBC’s Kif Leswing published some of the investment bank’s findings:
“For the first time since at least 1Q15 (as far back as we have the data), the number of quarterly [App Store] downloads declined, falling 5% Y/Y.”
While the decline shows some signs of consumer weakness, the bank noted that App Store revenue is growing and is more closely tied to spend per download, and not just overall download numbers.
“While the decline in downloads is something investors should monitor, it’s not necessarily indicative of consumer app usage trends, since App Store net revenue is correlated more so with spend per download (driven by in-app purchases).”
The note also revealed how the App Store’s Entertainment category has started to slow in recent quarters.
“In the December quarter, Entertainment net revenue growth decelerated … the deceleration could be a direct result of the actions taken by some large entertainment companies that no longer support Apple’s payment platform as a method of payment for new subscribers.”
The majority of app revenue comes from entertainment apps with in-app purchases. Allegedly, the Chinese mobile gaming app market is one of the largest in the world. With a synchronized global slowdown in play for much of the developed and emerging countries, it makes sense why app downloads have recently come under pressure.
Historically, the App Store and the Google Play trend in similar directions, although the Play store has about half the revenues as Apple’s. Therefore, it’s likely that a much broader slowdown of all app marketplaces could be seen in the coming quarters.
Apple’s Tim Cook issued a rare warning at the start of the year, which said, revenues would disappoint.
To make matters worse, Samsung’s preliminary earnings report is showing a 60% collapse in 1Q19 profit compared to last year.
Apple and Samsung are expected to report on April 30th – a day that will surely be disappointing to investors around the world.
The smartphone bubble is deflating.
- Rep. Omar Virtue Signals With "No Ban Act" – Except Obama's Travel Bans Were 16x That Of Trump's
As Democrats prepare to introduce ‘No Ban Act’ legislation to end what they say is President Donald Trump’s racist Muslim ban they should take a moment to read the new Government Accountability Office report issued Thursday. It shows that under President Obama the travel ban rate for security reasons in 2015 was 16 times higher than under Trump in 2017 based on the one year data that was available to GAO.
It also indicates a very significant finding: that the Trump administration’s executive orders not only did not increase its refusal rate -for terrorism and security related reasons- but it was lower for the respective years studied.
“GAO’s analysis indicates that, out of the nearly 2.8 million NIV applications refused in fiscal year 2017, 1,338 applications were refused specifically due to visa entry restrictions implemented per the executive actions,” stated the report.
In fact, the nonimmigrant visa refusal rate rose under Obama’s tenure from about “14 percent in fiscal year 2012 to about 22 percent in fiscal year 2016, and remained about the same in fiscal year 2017; averaging about 18 percent over the time period,” according to the report. “The total number of NIVs issued peaked in fiscal year 2015 at about 10.89 million, before falling in fiscal years 2016 and 2017 to 10.38 million and 9.68 million, respectively.”
For example, in 2015, “CBP data showed that it identified and interdicted over 22,000 high-risk air travelers through these programs” according to the most recent data available at the time of GAO’s report it stated.
ONLY 1,338 VISA APPLICATIONS WERE REFUSED BECAUSE OF THE PRESIDENT TRUMP’S VISA ENTRY RESTRICTIONS FOR PEOPLE FROM CERTAIN COUNTRIES IN 2017 – THESE REFUSALS WERE TERRORISM OR SECURITY RELATED CONCERNS.
Nonimmigrant visa’s are those issued to foreign nationals seeking admission into the United States. Some examples are visas issued to tourists, students and businessmen seeking temporary status.
According to the GAO, “the number of adjudications peaked at about 13.4 million in fiscal year 2016, and decreased by about 880,000 adjudications in fiscal year 2017.”
State Department Stats
From the time period above, the State Department denied roughly 18 percent of adjudicated applications “of which more than 90 percent were because the applicant did not qualify for the visa sought” and only “0.05 percent were due to terrorism and security-related concerns.”
The report noted that previous successful and attempted terrorist attacks against the United States raised questions about the U.S. vetting system. One example listed in the report was the December 2015, terrorist attack in San Bernardino, California, which led to the deaths of 14 people with dozens more injured. One of the attackers was admitted into the United States under a nonimmigrant visa, stated the report.
Lack of Vetting
President Trump issued his executive travel ban in 2017 based on the apparent lack of vetting and what some security analysts described as an “open gateway” for applicants from nations affiliated with terrorist organizations.
“Trump’s ban was not targeting Muslims it was using common sense to keep dangerous persons from entering the country through the visa system based on factual evidence of past attempted attacks and ones that we couldn’t stop,” said a DHS official, who was not authorized to speak to the media.
“The failure was that system tied the hands of adjudicators in many cases – they just didn’t have all the information necessary to appropriately vet those entering the United States,” the DHS official added. “For nations like Syria, Libya and Yemen it’s almost impossible to know the intentions of those being vetted because those nations are not stable or have well functioning governments.”
The report noted that an August 2018, analysis of State data “indicates that relatively few applicants— approximately 0.05 percent—were refused for terrorism and other security-related reasons from fiscal years 2012 through 2017.”
It also shows that in 2017, under President Trump there was not a significant increase in refusals because State Department “data indicate that 1,256 refusals (or 0.05 percent) were based on terrorism and other security-related concerns, of which 357 refusals were specifically for terrorism-related reasons.”
From 2012 To 2017 Most NIVS Were Denied For Reasons Other Than Security or Terrorism
State data indicate that more than 90 percent of NIVs refused each year from fiscal years 2012 through 2017 were based on the consular officers’ determination that the applicants were ineligible nonimmigrants—in other words, the consular officers believed that the applicant was an intending immigrant seeking to stay permanently in the United States, which would generally violate NIV conditions, or that the applicant otherwise failed to demonstrate eligibility for the particular visa he or she was seeking. For example, an applicant applying for a student visa could be refused as an ineligible nonimmigrant for failure to demonstrate possession of sufficient funds to cover his or her educational expenses, as required.
Under former President Obama the numbers were much higher. For example, “in fiscal year 2015 DHS’s predeparture programs stopped 22,000 high-risk travelers from entering the country.”
<!–[if IE 9]><![endif]–>
The Numbers and and Ilhan Omar’s “No Ban Act”
The numbers are important. Why? Because some Democrats, led by Minnesota Rep. Ilhan Omar, have introduced “The No Ban Act,” which directly targets the Trump administration’s travel ban policy. The policy prevents persons from nations such as Iran, Libya, Syria, Yemen and Somalia from entering the country. The reason being, is that the majority of these nations do not have a functioning government capable of documenting or clearing those traveling to the United States and concern that some of these countries are safe-havens for terrorist organizations, as listed by the State Department.
Last year, Trump’s third executive travel ban order was upheld in a 5-4 ruling by the Supreme Court.
Chief Justice John Roberts, who authored the majority opinion, noted that the president was within his authority to impose the ban. Trump based the ban on extensive national security concerns regarding travelers from these nations.
Roberts opinion noted it was not the court’s place to pass judgment on Trump’s previous comments during the campaign regarding immigrants.
Justice Sonia Sotomayor, wrote the dissenting opinion, and said Trump’s comments targeting Muslims should have been the reason to strike down his travel ban.
Omar’s bill, however, will face a steep battle in Congress and the Senate. It would effectively end Trump’s policies to limit entry from these unstable and mostly ungoverned nations. It would also limit the government ability to conduct extreme vetting of immigrants who attempt to comet to the U.S. from countries designated as a threat because of ties to terrorism.
Here’s what Omar had to say:
“The Muslim ban is a moral stain on our country’s history,” Omar said.
“Proud to have joined my colleagues in introducing the #NoBanAct yesterday to put an end to this discriminatory ban,” Omar said on Twitter.
Omar could not be immediately reached for comment.
The Muslim ban is a moral stain on our country’s history. Proud to have joined my colleagues in introducing the #NoBanAct yesterday to put an end to this discriminatory ban. https://t.co/fV9jXYRwiQ
— Ilhan Omar (@IlhanMN) April 11, 2019
https://platform.twitter.com/widgets.js
* * *
GAO FOUND
-
About 2.8 million nonimmigrant visa applications were refused in fiscal year 2017—over 90% of which were because the applicant di 0.05% of applications were refused for security-related concerns
-
1,338 visa applications were refused because of the President’s visa entry restrictions for people from certain countries.
-
In fiscal year 2015 DHS’s predeparture programs stopped 22,000 high-risk travelers from entering the country
FROM THE GAO
In August 2018, GAO reported that the total number of nonimmigrant visa (NIV) applications that Department of State (State) consular officers adjudicated annually increased from fiscal years 2012 through 2016, but decreased in fiscal year 2017 (the most recent data available at the time of GAO’s report).
GAO’S ANALYSIS INDICATES THAT, OUT OF THE NEARLY 2.8 MILLION NIV APPLICATIONS REFUSED IN FISCAL YEAR 2017, 1,338 APPLICATIONS WERE REFUSED SPECIFICALLY DUE TO VISA ENTRY RESTRICTIONS IMPLEMENTED PER THE EXECUTIVE ACTIONS.
NIVs are issued to foreign nationals, such as tourists, business visitors, and students, seeking temporary admission into the United States. The number of adjudications peaked at about 13.4 million in fiscal year 2016, and decreased by about 880,000 adjudications in fiscal year 2017. State refused about 18 percent of adjudicated applications during this time period, of which more than 90 percent were because the applicant did not qualify for the visa sought and 0.05 percent were due to terrorism and security-related concerns. In 2017, two executive orders and a proclamation issued by the President required, among other actions, visa entry restrictions for nationals of certain listed countries of concern. GAO’s analysis indicates that, out of the nearly 2.8 million NIV applications refused in fiscal year 2017, 1,338 applications were refused specifically due to visa entry restrictions implemented per the executive actions.
Nonimmigrant Visa Adjudications, Fiscal Years 2012 through 2017
In January 2017, GAO reported that the Department of Homeland Security’s (DHS) U.S. Customs and Border Protection (CBP) operates predeparture programs to help identify and interdict high-risk travelers before they board U.S.- bound flights. CBP officers inspect all U.S.-bound travelers on those flights that are precleared at the 15 Preclearance locations at foreign airports—which serve as U.S. ports of entry—and, if deemed inadmissible, a traveler will not be permitted to board the aircraft. CBP also operates nine Immigration Advisory Program and two Joint Security Program locations, as well as three Regional Carrier Liaison Groups, through which CBP may recommend that air carriers not permit identified high-risk travelers to board U.S.-bound flights.
CBP Data High Risk
CBP data showed that it identified and interdicted over 22,000 high-risk air travelers through these programs in fiscal year 2015 (the most recent data available at the time of GAO’s report). While CBP tracked some data, such as the number of travelers deemed inadmissible, it had not fully evaluated the overall effectiveness of these programs. GAO recommended that CBP develop a system of performance measures and baselines to better position CBP to assess program performance. As of December 2018, CBP set preliminary performance targets for fiscal year 2019, and plans to set targets for future fiscal years by October 31, 2019. GAO will continue to review CBP’s actions to address this recommendation.
Why GAO Did This Study
Previous attempted and successful terrorist attacks against the United States have raised questions about the security of the U.S. government’s screening and vetting processes for NIVs. State manages the visa adjudication process. DHS seeks to identify and interdict travelers who are potential security threats to the United States, such as foreign fighters and potential terrorists, human traffickers, drug smugglers and otherwise inadmissible persons, at the earliest possible point in time. DHS also has certain responsibilities for strengthening the security of the visa process. In 2017, the President issued executive actions directing agencies to improve visa screening and vetting, and establishing nationality-based visa entry restrictions, which the Supreme Court upheld in June 2018.
This statement addresses (1) data and information on NIV adjudications and (2) CBP programs aimed at preventing high-risk travelers from boarding U.S.-bound flights. This statement is based on prior products GAO issued in January 2017 and August 2018, along with selected updates conducted in December 2018 to obtain information from DHS on actions it has taken to address a prior GAO recommendation.
What GAO Recommends
GAO previously recommended that CBP evaluate the effectiveness of its predeparture programs. DHS agreed with GAO’s recommendation and CBP has actions under way to address it.
-
- Ecuador Hacked After Julian Assange Arrest
Two days after the Thursday arrest of Julian Assange at Ecuador’s London embassy, several government websites were hacked; including Ecuador’s official website, the Central Bank of Ecuador, the Ministry of the Interior and the Ecuadorian Assembly in the UK, according to Gateway Pundit‘s Cassandra Fairbanks, who was in London last week and documented the run-up to Assange’s arrest.
Looks like at least one Ecuadorian government subdomain has been hijacked. https://t.co/Ivl897ACQF pic.twitter.com/piwFjuRwIJ
— Jacob Riggs (@Riggsbit) April 13, 2019
Concurrent with the breach, a hacking group operating under the name “AL1NE3737” released a database containing the full names and passwords for what appear to be 728 Ecuadorian government employees.
I believe I’ve just found another database dropped with the full names and bcrypt hashed passwords for what appear to be 728 Ecuadorian gov employees alongside 5 admin credentials, one password of which is MD5 hashed (lol). Not sure exactly where these were sourced from yet.
— Jacob Riggs (@Riggsbit) April 13, 2019
Furthermore, Ecuador’s sites were hit with Denial of Service (DoS) attacks. According to DefCon Lab.
Among those involved in these attacks stand out from the groups / hacker DeathLaw , 5UB5, Cyb3r C0nven Security and Al1ne ( Pryzraky ).
DoS actions has consistently been against the Ecuadorian government targets, the country that gave Julian Assange to the UK police.” –DefCon Lab
…
The hacker Al1ne ( Pryzraky ) performed page defacements against and released a list of vulnerable targets related to the government of Ecuador
- Agrocalidad – The Agency of Regulation and Control Fito and Zoosanitario: http://www.agrocalidad.gob.ec/
- Metropolitan Transit Agency: http://www.amt.gob.ec/
- Instituto Geográfico Militar – Ecuador: http://www.igm.gob.ec/
As noted by Fairbanks, “The cyber attack was reminiscent of 2010’s “Operation Avenge Assange” which was launched by the broader “Operation Payback” effort. The movement lead to hacktivists hitting companies such as PayPal, PostFinance, Mastercard, Visa, and others who had blocked services to WikiLeaks with a distributed denial-of-service (DDOS) attack. This is when a website is flooded with fake traffic until it crashes and goes offline.”
Following Assange’s Thursday arrest, more than 70 MPs and peers signed a letter urging the UK home secretary to ensure that the WikiLeaks founder is extradited to Sweden if Swedish authorities request it.
Sweden is considering whether to open a previously-dropped investigation into allegations of rape and sexual assault against Assange.
The United States, meanwhile, wants to try Assange for the largest-ever leak of government secrets in 2010. On Thursday, the Justice Department hit him with an indictment that claims the WikiLeaks founder helped former US Army intelligence analyst crack DoD password using Linux.
“The indictment alleges that in March 2010, Assange engaged in a conspiracy with Chelsea Manning, a former intelligence analyst in the U.S. Army, to assist Manning in cracking a password stored on U.S. Department of Defense computers connected to the Secret Internet Protocol Network (SIPRNet), a U.S. government network used for classified documents and communications,” reads a DOJ press release.
Materials Manning released included videos of various US airstrikes in Iraq and Afghanistan, as well as the “Iraq War Logs” and “Afghan War Diary.”
Assange faces five years in prison if convicted in the Manning case.
- China, Russia "Spread Disorder" And "Corruption" In Latin America: Pompeo
Speaking Friday in Chile upon the start of his three-day South American tour, Secretary of State Mike Pompeo called out China and Russia for spreading “disorder” in Latin America through failing investment projects that only fuel corruption and undermine democracy, especially in places like Venezuela.
According to Bloomberg, Pompeo specifically listed a failing dam project in Ecuador, police advisory programs in Nicaragua, and Chinese loans to the Maduro government, which goes further back to Chavez.
Pompeo with Chilean President Sebastian Pinera, via Reuters Pompeo asserted Chinese loans in Latin America “often injects corrosive capital into the economic bloodstream, giving life to corruption, and eroding good governance.” Both Beijing and Moscow have ultimately spread their economic tentacles into the region to “spread disorder,” he added.
In what appears an effort to sustain momentum toward pressuring regime change in Caracas, America’s highest diplomat met Chilean President Sebastian Pinera earlier Friday, and will hit Paraguay, Peru next, and finally on Sunday will travel to a Colombian town on the border with Venezuela.
Pompeo and Piñera also generally discussed the U.S.-China trade war and Beijing’s “Belt and Road” initiative, with Pompeo suggesting he was optimistic about solving the tariff war with China. But the focus remained finding a US-desired outcome to the Venezuela crisis.
According to Bloomberg:
As part of the broader pressure campaign on Maduro, Pompeo said the U.S. has revoked visas for 718 people and sanctioned over 150 individuals and entities. On Friday, the U.S. sanctioned four companies it says transport much of the 50,000 barrels of oil that Venezuela provides to Cuba each day.
Late last month Pompeo had even more directly addressed Moscow, calling on Russia to “cease its unconstructive behavior” after it deployed a small troop contingency to Caracas to service existing military equipment contracts. Notably, Venezuela also has Russia’s S-300 air defense missile system, which over the past month have been reported deployed to a key airbase south of the capital of Caracas.
And in February Pompeo claimed in an interview with Fox News that “Hezbollah has active cells in Venezuela” — an assertion that has seemed to disappear from the spotlight of late.
China, for its part, has proactively offered to help Venezuela with its failing power grid, after a series of devastating mass outages over the past month has resulted in “medieval” conditions amidst an already collapsing infrastructure. Beijing also recently denied it has deployed troops to Venezuela after media reports a week ago cited online photos which appeared to show a Chinese military transport plane deployed to Caracas.
- A War Has Broken Out In The VIX Complex
Back in January 2018, just weeks ahead of the infamous VIXtermination event on Feb. 5 2018 that wiped out virtually all inverse VIX ETPs in seconds, we predicted that such an event was imminent as a result of a sharp spike in the total outstanding Vega across the entire levered and inverse volatility derivative space, which had reached an all time high. Since then, while the VIX ETP market had been relatively quiet as a result of last year’s fireworks which wiped out countless retail investors and other vol sellers, another VIX “event” is coming, and it will be the result of a silent war being waged between retail and institutional investors.
As we noted two weeks ago, JPMorgan’s Bram Kaplan recently pointed out that after a year of relative quiet, the net exposure among VIX ETPs recently spiked to their largest net long position in 1.5 years, tilted long by ~$150Mn vega, which is just shy of the record vega exposure hit in early 2018 and which precipitated the VIX ETP implosion. However, unlike 2018, this time the trade is in the other direction as investors piled into long and levered VIX ETPs beginning in February, as soon as the VIX index fell below 16, to as JPM suggests. “position for/speculate on the next volatility spike.”
However, when it comes to asset flows in 2019 – which has seen the S&P rise back to all time highs even as equity investors have been pulling money from equity funds week after week – here too the situation is not nearly as simple.
Commenting on the latest VIX flows, Deutsche Bank’s Parag Thatte reiterates JPMorgan’s point, observing that long VIX ETPs have seen significant inflows totaling $2bn YTD, as retail investors hedge equity gains. This record inflow into VIX ETPs, amounting to $2 billion in notional, is shown on the chart below.
Yet while retail investors, which traditionally prefer ETPs to hedge exposure, have been loading up on crash bets, institutional investors which traditionally prefer the greater liquidity of the futures market, are taking the other side of the volatility trade and as the latest CFTC commitment of traders report shows, the speculative net short position in VIX futures is approaching a record,
If one believes institutions, one look at the chart above confirms that not only is market complacency greater than its was either ahead of the Q4 mini bear market and February 2018 Volmageddon, but it is just shy of a record.
And so the question emerges: who is right – retail investors, who are not only pulling billions from equity funds but have pushed their crash bets to all time highs via VIX ETPs, or institutions, who oddly are on the other end of the spectrum, and not are complacent to an almost record degree, but in their pursuit of yield and carry trades have pushed the net VIX futs short position to unprecedented levels. And while conventional wisdom would say that institutions, i.e., the smart money is always right, for the 9th year in a row, hedge funds and their peers are underperforming the market (with macro funds getting demolished once again).
So who will be right – retail or institutions. Since both positions are at or near record levels, the answer should emerge in the very near future.
Digest powered by RSS Digest
Saving...![<!–[if IE 9]><![endif]–>](https://i0.wp.com/www.zerohedge.com/s3/files/inline-images/pompeo%20in%20chile.jpg?ssl=1){kind=link}