- The Political Economy Of Fear
The Political Economy Of Fear
Authored by Robert Higgs via The Mises Institute,
[This article was originally published May 16, 2005… but seems ominously prophetic given our current age of rage and unreason.]
[S]ince love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.
– Niccolò Machiavelli, The Prince, 1513
All animals experience fear – human beings, perhaps, most of all. Any animal incapable of fear would have been hard pressed to survive, regardless of its size, speed, or other attributes. Fear alerts us to dangers that threaten our well-being and sometimes our very lives. Sensing fear, we respond by running away, by hiding, or by preparing to ward off the danger.
To disregard fear is to place ourselves in possibly mortal jeopardy. Even the man who acts heroically on the battlefield, if he is honest, admits that he is scared. To tell people not to be afraid is to give them advice that they cannot take. Our evolved physiological makeup disposes us to fear all sorts of actual and potential threats, even those that exist only in our imagination.
The people who have the effrontery to rule us, who call themselves our government, understand this basic fact of human nature. They exploit it, and they cultivate it. Whether they compose a warfare state or a welfare state, they depend on it to secure popular submission, compliance with official dictates, and, on some occasions, affirmative cooperation with the state’s enterprises and adventures. Without popular fear, no government could endure more than twenty-four hours. David Hume taught that all government rests on public opinion, but that opinion, I maintain, is not the bedrock of government. Public opinion itself rests on something deeper: fear.
Hume recognizes that the opinions that support government receive their force from “other principles,” among which he includes fear, but he judges these other principles to be “the secondary, not the original principles of government” ([1777] 1987, 34). He writes: “No man would have any reason to fear the fury of a tyrant, if he had no authority over any but from fear” (ibid., emphasis in original). We may grant Hume’s statement yet maintain that the government’s authority over the great mass of its subjects rests fundamentally on fear. Every ideology that endows government with legitimacy requires and is infused by some kind(s) of fear. This fear need not be fear of the government itself and indeed may be fear of the danger from which the tyrant purports to protect the people.
The Natural History of Fear
Thousands of years ago, when the first governments were fastening themselves on people, they relied primarily on warfare and conquest. As Henry Hazlitt ([1976] 1994) observes,
There may have been somewhere, as a few eighteenth-century philosophers dreamed, a group of peaceful men who got together one evening after work and drew up a Social Contract to form the state. But nobody has been able to find an actual record of it. Practically all the governments whose origins are historically established were the result of conquest—of one tribe by another, one city by another, one people by another. Of course there have been constitutional conventions, but they merely changed the working rules of governments already in being.
Losers who were not slain in the conquest itself had to endure the consequent rape and pillage and in the longer term to acquiesce in the continuing payment of tribute to the insistent rulers—the stationary bandits, as Mancur Olson (2000, 6–9) aptly calls them. Subjugated people, for good reason, feared for their lives. Offered the choice of losing their wealth or losing their lives, they tended to choose the sacrifice of their wealth. Hence arose taxation, variously rendered in goods, services, or money (Nock [1935] 1973, 19–22; Nock relies on and credits the pioneering historical research of Ludwig Gumplowicz and Franz Oppenheimer).
Conquered people, however, naturally resent their imposed government and the taxation and other insults that it foists on them. Such resentful people easily become restive; should a promising opportunity to throw off the oppressor’s dominion present itself, they may seize it. Even if they mount no rebellion or overt resistance, however, they quietly strive to avoid their rulers’ exactions and to sabotage their rulers’ apparatus of government. As Machiavelli observes, the conqueror “who does not manage this matter well, will soon lose whatever he has gained, and while he retains it will find in it endless troubles and annoyances” ([1513] 1992, 5). For the stationary bandits, force alone proves a very costly resource for keeping people in the mood to generate a substantial, steady stream of tribute.
Sooner or later, therefore, every government augments the power of its sword with the power of its priesthood, forging an iron union of throne and altar. In olden times, not uncommonly, the rulers were themselves declared to be gods—the Pharaohs of ancient Egypt made this claim for many centuries. Now the subjects can be brought to fear not only the ruler’s superior force, but also his supernatural powers. Moreover, if people believe in an afterlife, where the pain and sorrows of this life may be sloughed off, the priests hold a privileged position in prescribing the sort of behavior in the here and now that best serves one’s interest in securing a blessed situation in the life to come. Referring to the Catholic Church of his own day, Machiavelli takes note of “the spiritual power which of itself confers so mighty an authority” ([1513] 1992, 7), and he heaps praise on Ferdinand of Aragon, who, “always covering himself with the cloak of religion, … had recourse to what may be called pious cruelty” (59, emphasis in original).
One naturally wonders whether President George W. Bush has taken a page from Ferdinand’s book (see, in particular, Higgs 2003a and, for additional aspects, Higgs 2005b).
Naturally, the warriors and the priests, if not one and the same, almost invariably come to be cooperating parties in the apparatus of rule. In medieval Europe, for example, a baron’s younger brother might look forward to becoming a bishop.
Thus, the warrior element of government puts the people in fear for their lives, and the priestly element puts them in fear for their eternal souls. These two fears compose a powerful compound—sufficient to prop up governments everywhere on earth for several millennia.
Over the ages, governments refined their appeals to popular fears, fostering an ideology that emphasizes the people’s vulnerability to a variety of internal and external dangers from which the governors—of all people!—are said to be their protectors. Government, it is claimed, protects the populace from external attackers and from internal disorder, both of which are portrayed as ever-present threats. Sometimes the government, as if seeking to fortify the mythology with grains of truth, does protect people in this fashion—even the shepherd protects his sheep, but he does so to serve his own interest, not theirs, and when the time comes, he will shear or slaughter them as his interest dictates.
Olson (2000, 9–10) describes in simple terms why the stationary bandit may find it in his interest to invest in public goods (the best examples of which are defense of the realm and “law and order”) that enhance his subjects’ productivity. In brief, the ruler does so when the present value of the expected additional tax revenue he will be able to collect from a more productive population exceeds the current cost of the investment that renders the people more productive. See also the interpretation advanced by Bates (2001, 56–69, 102), who argues that in western Europe the kings entered into deals with the merchants and burghers, trading mercantilist privileges and “liberties” for tax revenue, in order to dominate the chronically warring rural dynasties and thereby to pacify the countryside. Unfortunately, as Bates recognizes, the kings sought this enlarged revenue for the purpose of conducting ever-more-costly wars against other kings and against domestic opponents. Thus, their “pacification” schemes, for the most part, served the purpose of funding their fighting, leaving the net effect on overall societal well-being very much in question. Both Olson and Bates argue along lines similar to those developed by Douglass C. North in a series of books published over the past four decades; see especially North and Thomas 1973, and North 1981 and 1990.
When the government fails to protect the people as promised, it always has a good excuse, often blaming some element of the population–scapegoats such as traders, money lenders, and unpopular ethnic or religious minorities. “[N]o prince,” Machiavelli assures us, “was ever at a loss for plausible reasons to cloak a breach of faith” ([1513] 1992, 46).
The religious grounds for submission to the ruler-gods gradually transmogrified into notions of nationalism and popular duty, culminating eventually in the curious idea that under a democratic system of government, the people themselves are the government, and hence whatever it requires them to do, they are really doing for themselves—as Woodrow Wilson had the cheek to declare when he proclaimed military conscription backed by severe criminal sanctions in 1917, “it is in no sense a conscription of the unwilling: it is, rather, selection from a nation which has volunteered in mass” (qtd. in Palmer 1931, 216–17).
Not long after the democratic dogma had gained a firm foothold, organized coalitions emerged from the mass electorate and joined the elites in looting the public treasury, and, as a consequence, in the late nineteenth century the so-called welfare state began to take shape. From that time forward, people were told that the government can and should protect them from all sorts of workaday threats to their lives, livelihoods, and overall well-being—threats of destitution, hunger, disability, unemployment, illness, lack of income in old age, germs in the water, toxins in the food, and insults to their race, sex, ancestry, creed, and so forth. Nearly everything that the people feared, the government then stood poised to ward off. Thus did the welfare state anchor its rationale in the solid rock of fear. Governments, having exploited popular fears of violence so successfully from time immemorial (promising “national security”), had no difficulty in cementing these new stones (promising “social security”) into their foundations of rule.
The Political Economy of Fear
Fear, like every other “productive” resource, is subject to the laws of production. Thus, it cannot escape the law of diminishing marginal productivity: as successive doses of fear-mongering are added to the government’s “production” process, the incremental public clamor for governmental protection declines. The first time the government cries wolf, the public is frightened; the second time, less so; the third time, still less so. If the government plays the fear card too much, it overloads the public’s sensibilities, and eventually people discount almost entirely the government’s attempts to frighten them further.
Having been warned in the 1970s about catastrophic global cooling (see, for example, The Cooling World 1975), then, soon afterward, about catastrophic global warming, the populace may grow weary of heeding the government’s warnings about the dire consequences of alleged global climate changes—dire unless, of course, the government takes stringent measures to bludgeon the people into doing what “must” be done to avert the predicted disaster.
Recently the former Homeland Security czar Tom Ridge revealed that other government officials had overruled him when he wanted to refrain from raising the color-coded threat level to orange, or “high” risk of terrorist attack, in response to highly unlikely threats. “You have to use that tool of communication very sparingly,” Ridge astutely remarked (qtd. by Hall 2005).
Fear is a depreciating asset. As Machiavelli observes, “the temper of the multitude is fickle, and … while it is easy to persuade them of a thing, it is hard to fix them in that persuasion” ([1513 1992, 14). Unless the foretold threat eventuates, the people come to doubt its substance. The government must make up for the depreciation by investing in the maintenance, modernization, and replacement of its stock of fear capital. For example, during the Cold War, the general sense of fear of the Soviets tended to dissipate unless restored by periodic crises, many of which took the form of officially announced or leaked “gaps” between U.S. and Soviet military capabilities: troop-strength gap, bomber gap, missile gap, antimissile gap, first-strike-missile gap, defense-spending gap, thermonuclear-throw-weight gap, and so forth (Higgs 1994, 301–02).4
One of the most memorable and telling lines in the classic Cold War film Dr. Strangelove occurs as the president and his military bigwigs, facing unavoidable nuclear devastation of the earth, devise a plan to shelter a remnant of Americans for thousands of years in deep mine shafts, and General “Buck” Turgidson, still obsessed with a possible Russian advantage, declares: “Mr. President, we must not allow a mine-shaft gap!”
Lately, a succession of official warnings about possible forms of terrorist attack on the homeland has served the same purpose: keeping the people “vigilant,” which is to say, willing to pour enormous amounts of their money into the government’s bottomless budgetary pits of “defense” and “homeland security” (Higgs 2003b).
This same factor helps to explain the drumbeat of fears pounded out by the mass media: besides serving their own interests in capturing an audience, they buy insurance against government punishment by playing along with whatever program of fear-mongering the government is conducting currently. Anyone who watches, say, CNN’s Headline News programs can attest that a day seldom passes without some new announcement of a previously unsuspected Terrible Threat—I call it the danger du jour.
By keeping the population in a state of artificially heightened apprehension, the government-cum-media prepares the ground for planting specific measures of taxation, regulation, surveillance, reporting, and other invasions of the people’s wealth, privacy, and freedoms. Left alone for a while, relieved of this ceaseless bombardment of warnings, people would soon come to understand that hardly any of the announced threats has any substance and that they can manage their own affairs quite well without the security-related regimentation and tax-extortion the government seeks to justify.
Large parts of the government and the “private” sector participate in the production and distribution of fear. (Beware: many of the people in the ostensibly private sector are in reality some sort of mercenary living ultimately at taxpayer expense. True government employment is much greater than officially reported [Light 1999; Higgs 2005a] .) Defense contractors, of course, have long devoted themselves to stoking fears of enemies big and small around the globe who allegedly seek to crush our way of life at the earliest opportunity. Boeing’s often-shown TV spots, for example, assure us that the company is contributing mightily to protecting “our freedom.” If you believe that, I have a shiny hunk of useless Cold War hardware to sell you. The news and entertainment media enthusiastically jump on the bandwagon of foreign-menace alarmism—anything to get the public’s attention.
Consultants of every size and shape clamber onboard, too, facilitating the distribution of billions of dollars to politically favored suppliers of phoney-baloney “studies” that give rise to thick reports, the bulk of which is nothing but worthless filler restating the problem and speculating about how one might conceivably go about discovering workable solutions. All such reports agree, however, that a crisis looms and that more such studies must be made in preparation for dealing with it. Hence a kind of Say’s Law of the political economy of crisis: supply (of government-funded studies) creates its own demand (for government-funded studies).
Truth be known, governments commission studies when they are content with the status quo but desire to write hefty checks to political favorites, cronies, and old associates who now purport to be “consultants.” At the same time, in this way, the government demonstrates to the public that it is “doing something” to avert impending crisis X.
At every point, opportunists latch onto existing fears and strive to invent new ones to feather their own nests. Thus, public-school teachers and administrators agree that the nation faces an “education crisis.” Police departments and temperance crusaders insist that the nation faces a generalized “drug crisis” or at times a specific drug crisis, such as “an epidemic of crack cocaine use.” Public-health interests foster fears of “epidemics” that in reality consist not of the spread of contagious pathogens but of the lack of personal control and self-responsibility, such as the “epidemic of obesity” or the “epidemic of juvenile homicides.” By means of this tactic, a host of personal peccadilloes has been medicalized and consigned to the “therapeutic state” (Nolan 1998, Szasz 2001, Higgs 1999).
In this way, people’s fears that their children may become drug addicts or gun down a classmate become grist for the government’s mill—a mill that may grind slowly, but at least it does so at immense expense, with each dollar falling into some fortunate recipient’s pocket (a psychiatrist, a social worker, a public-health nurse, a drug-court judge; the list is almost endless). In this way and countless others, private parties become complicit in sustaining a vast government apparatus fueled by fear.
Fear Works Best in Wartime
Even absolute monarchs can get bored. The exercise of great power may become tedious and burdensome—underlings are always disturbing your serenity with questions about details; victims are always appealing for clemency, pardons, or exemptions from your rules. In wartime, however, rulers come alive. Nothing equals war as an opportunity for greatness and public acclaim, as all such leaders understand (Higgs 1997). Condemned to spend their time in high office during peacetime, they are necessarily condemned to go down in history as mediocrities at best.
Upon the outbreak of war, however, the exhilaration of the hour spreads through the entire governing apparatus. Army officers who had languished for years at the rank of captain may now anticipate becoming colonels. Bureau heads who had supervised a hundred subordinates with a budget of $1 million may look forward to overseeing a thousand with a budget of $20 million. Powerful new control agencies must be created and staffed. New facilities must be built, furnished, and operated. Politicians who had found themselves frozen in partisan gridlock can now expect that the torrent of money gushing from the public treasury will grease the wheels for putting together humongous legislative deals undreamt of in the past. Everywhere the government turns its gaze, the scene is flush with energy, power, and money. For those whose hands direct the machinery of a government at war, life has never been better.
Small wonder that John T. Flynn (1948), in writing about the teeming bureaucrats during World War II, titled his chapter “The Happiest Years of Their Lives”:
Even before the war, the country had become a bureaucrat’s paradise. But with the launching of the war effort the bureaus proliferated and the bureaucrats swarmed over the land like a plague of locusts. … The place [Washington, D.C.] swarmed with little professors fresh from their $2,500-a-year jobs now stimulated by five, six and seven-thousand-dollar salaries and whole big chunks of the American economy resting in their laps. (310, 315)
Sudden bureaucratic dilation on such a scale can happen only when the nation goes to war and the public relaxes its resistance to the government’s exactions. Legislators know that they can now get away with taxing people at hugely elevated rates, rationing goods, allocating raw materials, transportation services, and credit, authorizing gargantuan borrowing, drafting men, and generally exercising vastly more power than they exercised before the war.
Although people may groan and complain about the specific actions the bureaucrats take in implementing the wartime mobilization, few dare to resist overtly or even to criticize publicly the overall mobilization or the government’s entry into the war—by doing so they would expose themselves not only to legal and extralegal government retribution but also to the rebuke and ostracism of their friends, neighbors, and business associates. As the conversation stopper went during World War II, “Don’t you know there’s a war on?” (Lingeman 1970).
Because during wartime the public fears for the nation’s welfare, perhaps even for its very survival, people surrender wealth, privacy, and liberties to the government far more readily than they otherwise would. Government and its private contractors therefore have a field day. Opportunists galore join the party, each claiming to be performing some “essential war service,” no matter how remote their affairs may be from contributing directly to the military program. Using popular fear to justify its predations, the government lays claim to great expanses of the economy and the society. Government taxation, borrowing, expenditure, and direct controls dilate, while individual rights shrivel into insignificance. Of what importance is one little person when the entire nation is in peril?
Finally, of course, every war ends, but each leaves legacies that persist, sometimes permanently. In the United States, the War between the States and both world wars left a multitude of such legacies (Hummel 1996, Higgs 1987, 2004). Likewise, as Corey Robin (2004, 25) writes, “one day, the war on terrorism will come to an end. All wars do. And when it does, we will find ourselves still living in fear: not of terrorism or radical Islam, but of the domestic rulers that fear has left behind.” Among other things, we will find that “various security agencies operating in the interest of national security have leveraged their coercive power in ways that target dissenters posing no conceivable threat of terrorism” (189). Not by accident, “the FBI has targeted the antiwar movement in the United States for especially close scrutiny” (189).
Such targeting is scarcely a surprise, because war is, in Randolph Bourne’s classic phrase, “the health of the state,” and the FBI is a core agency in protecting and enhancing the U.S. government’s health. Over the years, the FBI has also done much to promote fear among the American populace, most notoriously perhaps in its COINTELPRO operations during the 1960s, but in plenty of others ways, too (Linfield 1990, 59–60, 71, 99–102, 123–28, 134–39). Nor has it worked alone in these endeavors. From top to bottom, the government wants us to be afraid, needs us to be afraid, invests greatly in making us afraid.
Conclusion
Were we ever to stop being afraid of the government itself and to cast off the phoney fears it has fostered, the government would shrivel and die, and the host would disappear for the tens of millions of parasites in the United States—not to speak of the vast number of others in the rest of the world–who now feed directly and indirectly off the public’s wealth and energies. On that glorious day, everyone who had been living at public expense would have to get an honest job, and the rest of us, recognizing government as the false god it has always been, could set about assuaging our remaining fears in more productive and morally defensible ways.
Tyler Durden
Sun, 04/18/2021 – 00:00 - Watch: Sikorsky's S-97 Raider Performs Impressive First Flight Demo
Watch: Sikorsky's S-97 Raider Performs Impressive First Flight Demo
For the first time, the Sikorsky S-97 Raider flew multiple flight demonstrations this week for service leaders and soldiers at the company’s test center at Redstone Arsenal in Huntsville, Alabama.
Defense giant Lockheed Martin, who owns Sikorsky, released a press release on Thursday detailing the demonstrations on Tuesday and Thursday.
“The events offered a glimpse at Sikorsky, a Lockheed Martin company’s bid for the Future Attack Reconnaissance Aircraft (FARA) program, part of the U.S. Army’s Future Vertical Lift (FVL) effort to revolutionize its aircraft fleet,” the press release said.
The Sikorsky S-97 Raider is based on its X2 coaxial-rotor technology, making it a fast and agile aircraft, well suited for the modern battlefield. The new FVL is expected to fill a capability gap left by the retirement of the Bell OH-58 Kiowa helicopter.
“Since the first Black Hawk took to the skies in the 1970s, to when our teams broke helicopter speed records with X2 Technology in 2010, we have been working with our Army partners to develop and deliver low-risk, transformational, affordable and sustainable aircraft to support the warfighters’ missions,” said Sikorsky President Paul Lemmo, who was at the demonstrations.
Lemmo continued: “This is the first of what we believe will be many times our X2 Future Vertical Lift aircraft will fly at Redstone.”
Sikorsky test pilots Christiaan Corry and Bill Fell piloted the S-97 at both demonstrations, highlighting the aircraft’s new capabilities.
“Flying RAIDER continues to amaze me,” said Corry, a former U.S. Marine with more than 4,500 flight hours in 25 different types of aircraft, including numerous helicopters.
“The combination of the coaxial rotors and the propulsor are really the enablers for this transformational technology. As we demonstrated today, in low-speed flight we are as capable as a conventional helicopter, but when we engage the prop, we are able to operate in a whole new way – it’s much more like flying an airplane,” he said.
In 2018, the Army selected two FARA candidates. Sikorsky is currently in the running with the S-97 Raider and Bell’s V-280 Valor tiltrotor.
FARA aircraft are expected to replace the military’s aging fleet of helicopters in the coming years as part of a vast modernization effort to counter China and Russia.
Watch the S-97 Raider demonstrations below:
Tyler Durden
Sat, 04/17/2021 – 23:30 - Canadian Cops Refuse To Enforce Ontario's New 'Police State' COVID-Lockdown Laws
Canadian Cops Refuse To Enforce Ontario's New 'Police State' COVID-Lockdown Laws
Authored by Thomas Lifson via AmericanThinker.com,
A new police state has been established just north of the states of Minnesota, Michigan, Ohio, Pennsylvania, and New York. The Province of Ontario is home to over 38% of the population of Canada and is 55% bigger in area than the State of Texas, and it is now acting like a nightmarish police state.
Solicitor General Jones (Twitter video screen grab).
CTV News reports:
The Ontario government is giving police temporary powers to enforce its stay-at-home order and allowing them to stop individuals and vehicles and ask their reasons for leaving their homes.
Solicitor General Sylvia Jones made the announcement Friday afternoon as part of the new measures introduced by Premier Doug Ford’s government to stop the further spread of COVID-19.
“We have made the deliberate decision to temporarily enhance police officers’ authority for the duration of the stay-at-home order. Moving forward, police will have the authority to require any individual who is not in a place of residence to first provide the purpose for not being at home and provide their home address,” Jones said.
“Police will also have the authority to stop a vehicle to inquire about an individual’s reason for leaving their residence.”
So much for freedom of movement or assembly. Unless the police deem your presence outside your
prison cellhome essential, you could be in for trouble.Those who will not comply will be issued a ticket, Jones said. The province has not provided further details on possible fines, but she said under the Emergency Management and Civil Protection Act, penalties for non-compliance are set at a minimum of $750.
I find the excerpts from the news conference announcing these changes deeply troubling, just looking at the faces and listening to the tone of these authoritarians as they try to justify their seizure of power over the details of ordinary life. George Orwell would recognize them:
🔥Ontario, Canada is now officially a police state🔥 pic.twitter.com/cBP8kCTG16
— 🍁🇨🇦CanAditude🇨🇦🍁 (@CanAditude) April 16, 2021
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Ontarian police and local authorities are not necessarily enthusiastic about exercising these new powers to detain citizens and examine their motives for daring to leave home:
A spokesperson for the Toronto Police Service said they are reviewing the new orders.
“Prior to any change in our enforcement strategy, we will notify the public on how we plan to implement the new provincial orders,” spokesperson Allison Sparkes said.
Several police services have said Friday that they will not be randomly stopping people. They include Waterloo Regional Police, Peterborough Police, Guelph Police, London Police and Ottawa Police.
Toronto Mayor John Tory expressed his concerns over the new police powers, saying in a tweet that he will review the regulations carefully and will discuss them with the medical officer of health and the police chief.
Mississauga Mayor Bonnie Crombie also said stopping people arbitrarily “is not how we get control of the virus.” She added that she will speak to the chief of Peel police and public health to look at how it will be enforced.
False! Our members will NOT be conducting random vehicle or individual stops for the sole purpose of enforcing the EMCPA. Sorry @SylviaJonesMPP & @fordnation that will not be happening in Peel. Don’t make cops the bad guys here! https://t.co/IsgKNbKVP5
— Adrian Woolley (@PRPA_Prez) April 17, 2021
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It sounds as if the provincial authorities are drawing their inspiration from China’s early response with drastic lockdowns. At least so far, they are not discussing welding doors shut to trap people inside. They might also consider the disaster across their own border in Michigan, where Governor Gretchen Whitmer’s drastic lockdown regulations have led to one of if not the worst problems with COVID in the United States, while free states like Texas and Florida do much better.
I’d be a lot more impressed if, instead of trying tom keep people indoors, where the virus spreads far more readily than outdoors, they focused in early therapeutic intervention in cases of COVID, using ivermectin or hydroxychloroquine, both widely used and relatively benign pharmaceuticals, that inhibit reproduction of the virus and often have been shown to slow and even stop the effects.
Tyler Durden
Sat, 04/17/2021 – 23:00 - "Fentanyl Is Here:" Las Vegas Suffers 200% Surge In Overdose Deaths
"Fentanyl Is Here:" Las Vegas Suffers 200% Surge In Overdose Deaths
America has been engulfed with a drug problem for decades, but the situation is quickly deteriorating as the largest inbound fentanyl traffic into the country was recently reported. Not surprising, but Las Vegas has been the latest metro area to suffer an “alarming” surge in overdose deaths.
According to Las Vegas Sun, fentanyl killed 219 people in the Las Vegas Valley in 2020, a stunning 200% increase from the prior year.
During the 2015-18 opioid crisis that ravaged many metros across the US, Clark County, Nevada, the area that houses Las Vegas, recorded annual reductions in opioid overdoses and deaths.
Since then, Mexican fentanyl has flooded the town, and overdoses/deaths have soared.
“We said fentanyl was coming,” Metro Police Capt. John Pelletier told reporters Thursday. “Fentanyl is here.”
Reporters questioned Pelletier about how the drug crisis is going so far (on a year-to-date basis), he answered: “not good.”
“Clark County fentanyl deaths are on par with the “alarming” 30% increase in total overdose deaths in 2020, when 768 people succumbed to them, compared with 591 in 2019,” Pelletier said, adding that 31 people were killed in the county in August, an average of about one per day.
Last week, Metro Police announced the creation of the Overdose Response Team, a task force comprised of local police and federal agencies. The task force would pursue murder charges for dealers accused of killing clients with drugs.
Another issue in Las Vegas and across Clark County is counterfeit pills that look identical to prescription medications are cut with fentanyl and have been responsible for overdoses and deaths.
The rise in fentanyl use across Clark County coincided with multiple things, such as a socio-economic implosion of Vegas during lockdowns, where tens of thousands of people lost their jobs. At the same time, Mexican drug cartels were pumping record amounts of the drug into the US – some describe this as a ‘perfect storm.’
“This emergency, this situation, does not discriminate,” Pelletier said. “It does not care how old you are; it does not care where you live.”
… and Pelletier is correct. The drug crisis has dramatically worsened since the pandemic began, with many streets in various metro areas have transformed into a “zombie apocalypse.”
Right now, Mexican drug cartels are pumping US streets with fentanyl, and the Biden administration doesn’t seem too worried about doing anything to stop this from happening with their relaxed border policies.
Vegas and the surrounding county are the next victims of the fentanyl crisis. Those partying in Vegas, be careful what party drugs you ingest. It could very well be cut with fentanyl.
Tyler Durden
Sat, 04/17/2021 – 22:30 - The Plutocrats Of Wall Street And Silicon Valley Are Scamming America
The Plutocrats Of Wall Street And Silicon Valley Are Scamming America
Authored by Ryan McMaken via The Mises Institute,
In recent years, it seems that the nation’s CEOs and billionaires are increasingly willing to drop the pretense that they are politically neutral entrepreneurs who simply want to go about their business.
Last week, for example, more than a hundred CEOs met to plot ways to punish the people of Georgia by “stopping investments in states” that pass laws unapproved by the billionaire class.
This comes in the wake of a decision by Major League Baseball—a collection of billionaire-owned sports teams—to punish residents of Georgia for the fact a tiny number of politicians there passed legislation designed to lessen voter fraud. In retaliation, MLB decided to move the league’s all-star game so as to deny the residents of Atlanta the economic benefits of hosting the game.
This comes only a few years after Apple CEO Tim Cook led a corporate campaign to boycott Indiana after Cook and Marc Benioff (the CEO of Salesforce) demanded the people of Indiana be punished. This was because the Indiana legislature passed a law which some billionaires decided was insufficiently pro-LGBT.
These examples, however, constitute only a small and relatively innocuous part of the political scheming and lobbying in which powerful CEOs, billionaires, and investors routinely engage.
Certainly, wealthy CEOs are happy to throw their weight around in pursuit of social policies they like. But while the CEOs’ calls for boycotts and retribution against entire populations of various states makes for good headlines and talk radio, the billionaire class inflicts far more damage on ordinary Americans through other means.
It is not unusual to find large corporate interests like big banks, Silicon Valley firms, and Wall Street investors calling for a wide variety of policies which transfer wealth from the general public to the well-lined pockets of the monied classes. These can include monetary policies that benefit the wealthiest Americans, as well as tax policies and regulations that favor large well-established firms at the expense of everyone else.
Unfortunately, this is nothing new, and it has always been the case that well-heeled pressure groups attempt to turn their financial resources into political power.
Free Markets vs. the Plutocracy
The potential danger of this situation was not lost on the classical liberals (i.e., the libertarians) of generations past, who opposed “the privileged” among the wealthy who sought to exercise political power.
Specifically, it was the Jeffersonians, the Jacksonians, and other advocates of free markets and laissez-faire who attacked these monied groups under a variety of names. Names like “stock jobbers,” the “new aristocracy,” the “scrip nobility,” and “the plutocracy” have all been employed to draw attention to a wealthy elite which manipulates Congress and the central bank in schemes of economic exploitation.
The Classical Liberals and Economic Exploitation
This language of “exploitation” might strike some readers as odd. Unfortunately, a certain naïve view of social classes has become popular among some conservatives and libertarians who think that that the concept of “class warfare” was invented by the Marxists. Moreover, some even insist that the wealthy classes pose no threat to political or market institutions, and that the wealthy seek only to mind their own business.
But, as historian Ralph Raico has explained, the idea of exploitation of one class by another was, in fact, pioneered by the classical liberals. It was these liberals who well understood that the power of the state could be harnessed by one group for the purposes of extracting resources from another group. Left to itself, of course, the marketplace does not foster exploitation, as market activities are voluntary. Once the state is involved, however, the coercive power of the regime changes the equation. The key to success in exploiting others lays in harnessing the power of the state to carry out the exploiters’ schemes. The wealthy have never been immune to this temptation.
We find these views in an early form in America in the thinking of the Jeffersonian theorist John Taylor of Caroline. Taylor decried the urban investor class that sought to manipulate the new nation’s financial policies to serve this rising plutocracy’s own ends. Taylor, according to Raico,
was outraged by what he saw as the betrayal of the principles of the American Revolution by a new aristocracy based on “separate legal interests,” the bankers privileged to issue paper money as legal tender and the beneficiaries of “public improvements” and protective tariffs. American society has been divided into the privileged and the unprivileged by this “substantial revival of the feudal system.”
The threat of this new “aristocracy” had certainly not lessened by the 1830s, when the Jacksonian William Leggett pointed out that the US had attained its own homegrown exploiter class to rival the haughty ruling classes of the Old World. Referring to the ostentatious palaces erected by the wealthy elites of Genoa, Leggett asked,
Is there no parallel for it in our own [country]? Have we not, in this very city, our “Street of the Palaces,” adorned with structures as superb as those of Genoa in exterior magnificence, and containing within them vaster treasures of wealth? Have we not, too, our privileged orders? Our scrip nobility?1 Aristocrats, clothed with special immunities, who control, indirectly, but certainly, the political power of the state, monopolise the most copious sources of pecuniary profit, and wring the very crust from the hard hand of toil? Have we not, in short, like the wretched serfs of Europe, our lordly masters, “Who make us slaves, and tell us ‘tis their charter?”
For Leggett, the answer to all of this, of course, was yes. To see this new class of plutocrats, Leggett observed, one need only “walk through Wall-street.” Leggett went on to suggests that if anyone “asks concerning the political power” of these Wall Street elites,
he will ascertain that three‐fourths of the legislators of the state are of their own order, and deeply interested in preserving and extending the privileges they enjoy. If he investigates the sources of their prodigious wealth, he will discover that it is extorted, under various delusive names, and by a deceptive process, from the pockets of the unprivileged and unprotected poor. These are the masters in this land of freedom. These are our aristocracy, our scrip nobility, our privileged order of charter‐mongers and money‐changers!
Plutocrats or Private Entrepreneurs?
On the other hand, the great libertarian sociologist William Graham Sumner was careful to note that not all wealthy people are plutocrats. “[W]e must make some important distinctions,” Sumner writes. “Plutocracy ought to be carefully distinguished from ‘the power of capital’…. A great capitalist is no more necessarily a plutocrat than a great general is a tyrant.” In other words, the plutocrats are not simply the factory owners who are on the receiving end of Marxist claims that all capitalists necessarily exploit their workers.
Rather, according to Sumner, the plutocrat is something very specific. Modern plutocrats “buy their way through elections and legislatures, in the confidence of being able to get powers which will recoup them for all the outlay and yield an ample surplus besides.”
That is, plutocrats are political operatives who employ the power of the state to accomplish political and financial ends. Moreover, the plutocrat
is a man who, having the possession of capital, and having the power of it at his disposal, uses it, not industrially, but politically; instead of employing laborers, he enlists lobbyists. Instead of applying capital to land, he operates upon the market by legislation, by artificial monopoly, by legislative privileges; he creates jobs, and erects combinations, which are half political and half industrial …
Today’s Plutocracy
So, who are the plutocrats of today?
Certainly, this group includes those who seek to blackmail state legislatures with boycotts and pressure tactics. But we find plutocrats using more subtle tactics as well.
For example, Amazon corporation now supports raising the minimum wage. This may seem like some great populist and magnanimous move on Amazon’s part. But it is just what we’ve come to expect from plutocrats. In fact, Amazon’s senior managers know that it can endure paying a higher wage than can Amazon’s smaller and less capitalized competition. Smaller operations have fewer financing options to weather a cash flow crunch and are thus more financially fragile. Basically, Amazon is likely to support a wide variety of government regulations, because government regulations are anticompetitive. Amazon, of course, being the dominant firm, is motivated to crush the competition through state action. This is partly why Jeff Bezos came out in favor of a hike in the corporate tax. He’s just hoping to stay on top, and while a tax hike is unfortunate for him, it’s even worse for the competition that Bezos hopes to destroy through his political lobbying.
We see similar forces at work when plutocrats like Mark Zuckerberg call for more regulation of social media companies. Zuckerberg is speaking as head of the industry’s largest, most capital rich, and most dominant firm. Now that he’s on top, he’s fine with more regulation, which will hurt small competitors most. (Social media companies, of course, are also happy to buy favors from the regime by deleting user comments and punishing users who annoy regime operatives.)2
But perhaps the most subtle form of exploitation practiced by the plutocrats occurs through the central bank, and this is why the Jeffersonians and Jacksons focused so much on the role of the central bank throughout the nineteenth century. Leggett, after all, is known for calling for “the separation of bank and state.”
The advantages offered to plutocrats through central banks have been similar for more than two centuries, but in today’s world these advantages can be seen in the fact that central banks are now in the business of pushing up stock prices for the benefit of Wall Street and large public companies. Thanks to the “Greenspan put,” for example, the Federal Reserve has now for three decades been in the business of propping up stock prices. Now, we barely even notice when stock prices soar upward even during periods when millions of workers are laid off and national production collapses. “Stock prices must always go up” is essentially now federal policy. This in itself further helps explain why the plutocrats so often come out in support of higher taxes and a bigger regulatory state. As David Stockman observed, people like Bezos and the Wall Street and Silicon Valley elite:
have been made so insanely rich by the Fed’s egregious stock market inflation that they no longer care if their businesses are inconvenienced or even deeply harmed by schemes like the Biden [tax hikes]; and, worse still, have no idea about how real, sustainable wealth is generated or that free market prosperity is not at all a sure thing when the state becomes an unhinged wrecker of honest money, fiscal rectitude and financial discipline.
Why worry too much about taxes or regulation when you know you’ll be bailed out by the Fed? Stockman continues:
By and large these new titans are not geniuses. They are bubble riders who were in the right place at the right time. And after years of the Fed’s massive inflation of financial asset prices they have become totally corrupted—politically, intellectually and otherwise.
In all likelihood, they don’t even know how they got rich. But since they are rich, they conclude they must be very smart, and therefore they’re now entitled to run the country; to punish people who live in red states, and run lesser business owners into the ground using the power of the state.
The nation’s billionaires and megacorps benefit from central banking schemes in other ways as well. Ultralow interest rate policies mean an endless tsunami of cheap debt. Nonetheless, the focus has remained on lending to the lowest-risk firms, which means there’s far less financing available to smaller start-ups and other riskier enterprises. Low rates also mean financially conservative small-time investors can only earn very small returns on their investments. Generally, it’s only the wealthy who can indulge in high-risk yield chasing, which further enriches the wealthy as others stagnate. The end result is more liquidity for the plutocrats while the newcomers fight over scraps.
The Fed now buys corporate debt, and for more than a decade has been buying up assets in order to prop up what would have been the ailing portfolios of the nation’s megabanks and investment firms. The Fed’s monetary inflation leads to immense amounts of asset inflation not only in stocks, but in housing prices as well. This impoverishes first-time home buyers and renters, but benefits those who are already wealthy—and own lots of these assets.
It’s all part of a well-established scam that the laissez-faire liberals identified long ago. The plutocrats hope to keep it going forever.
Tyler Durden
Sat, 04/17/2021 – 22:00 - Taco Bell Opens "Digital-Only" Location In Times Square That Serves Alcohol
Taco Bell Opens "Digital-Only" Location In Times Square That Serves Alcohol
Restaurants continue to change their processes to improve the customer experience in a virus pandemic. Under the guise of social distancing, Taco Bell has opened a “digital-only” fast-food shop in Times Square that customers can only order food online or through automated kiosks.
These modern features of digital-only ordering and pick-up will minimize customer to employee interaction. The digital-only front-end of the eatery allows for more convenient pick-up.
“Built with the energy and on-the-go vibrance of the city in mind, the newest restaurant embraces technology in a whole new way to serve the demands of New Yorkers,” Taco Bell said in a press release.
The simplified design will keep employees in the backend of the fast-food joint occupied with fulfilling orders. The disbandment of cash registers at the new Taco Bell Cantina in Times Square will require fewer employees to run operations.
The restaurants have a smaller footprint than a traditional Taco Bell and offer more modern and upscale designs and alcohol. So far, 20 Cantinas across New York’s five boroughs are already open (though the only digital-only one is in Times Square).
Other restaurant chains, like Chipotle Mexican Grill and Starbucks, have been opening digital-only ordering and pick-up. The focus is not just to minimize human labor but also to increase pick-up orders forced by the virus pandemic. The first digital location Taco Bell opened was in London in 2020.
The automated concept could be standard at all Taco Bells by the end of this decade as restaurants pivot towards automation and artificial intelligence, which will displace workers, leading to a surge in technological unemployment.
Yum Brands, which owns KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide, except in China, will likely expand automation and artificial intelligence in all its stores over this decade.
What’s frightening is when Yum begins to use robot chefs to automate the backend of the restaurant – essentially eliminating human food preppers. Already, KFC is testing what it calls the “restaurant of the future,” where automation and artificial intelligence dominates the front and back end.
Big corporations are preparing to replace low-skill and low-paid workers with all sorts of new technology through 2030, displacing millions of them. Many of these restaurants will be entirely contactless.
All of this suggests technological unemployment is set to skyrocket in the coming years. So then what to do with all the displaced workers? Nothing like starting a war can help dig the economy out of the rut that it’s currently in and resolve the unemployment situation.
Tyler Durden
Sat, 04/17/2021 – 21:30 - Black Lives Matter Activist Charged With Anti-Asian Hate Crime
Black Lives Matter Activist Charged With Anti-Asian Hate Crime
Authored by Paul Joseph Watson via Summit News,
A Black Lives Matter activist was arrested in Seattle for allegedly committing two separate hate crimes against Asian people, once again contradicting the media narrative that Donald Trump’s rhetoric on coronavirus was primarily to blame for the hate crime wave.
Pamela Cole, who is Asian, told KIRO 7 News about her experience on March 16 during which she and her young children were subjected to a frightening and abusive attack by a man who later turned out to be 51-year-old BLM protester Christopher Hamner.
Hamner had posted multiple photos of himself attending BLM protests and was also involved in the Seattle CHOP encampment that was populated by Antifa and BLM demonstrators.
“The moment he made eye contact with me he stopped, opens his door and he’s screaming, ‘F— you, you Asian b—-. F— you!’ and I was in complete shock. Are you talking to me?” Cole said.
Cole said she felt like her family were “sitting ducks” as Hamner then proceeded to get out of his vehicle while demanding they get out too.
“I just felt so defenseless and so helpless. And you know as a mom, all we want to do is take care of our kids and protect them,” Cole said.
Cole said that even after the light changed and she was able to drive away, Hamner continued to throw objects at her car and track where she was heading. She was eventually able to pull over and call the police.
“Hamner is accused of committing a similar hate crime two days later, when he cut off two Asian women in a vehicle. The vehicle had a dashboard camera, which enabled authorities to identify Hamner,” reports the Hill, adding that Hamner again charged at the vehicle and threw objects.
After being charged, Hamner pleaded not guilty to hate crimes and his bail has been set at $10,000 dollars.
The two incidents once again expose how the media’s attempt to pin a wave of anti-Asian hate crimes on “white supremacy” by saying they were incited by Donald Trump’s anti-Chinese COVID 19 rhetoric has completely failed.
Though black people comprise 13% of the pop.
They committed 27.5% of all violent crimes against Asian Americans in 2018
While whites comprise 62% of the pop. the commit 24% of crimes against Asians
But please tell me how white supremacy is the issue https://t.co/3Zdn12vTfb
— MOSTLY PEACEFUL ELIJAH (@ElijahSchaffer) March 19, 2021
https://platform.twitter.com/widgets.js
In virtually every major recent incident where Asians were targeted by violent criminals in hate crime attacks, the perpetrators turn out to be African-American men.
Crime stats also show white people are underrepresented per capita in attacks against Asians.
As the Washington Examiner highlights, citing FBI statistics, whereas whites comprise 62% of the population, they committed 24% of crimes against Asians in 2018.
In comparison, blacks, who comprise 13% of the population, committed 27.5% of all violent crimes against Asian Americans in 2018.
The media’s fake narrative that “white supremacy” is to blame for the hate crime spree in now inciting violent attacks against white people.
37-year-old Michael Sangbong Rhee attacked a woman he believed was white by holding her at gunpoint and trying to rape her.
According to authorities, the attack was “in retaliation for the rise in hate crimes against Asian people.”
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Tyler Durden
Sat, 04/17/2021 – 21:00 - Trader Fueled Lavish Lifestyle Running Singapore's "Largest Ever Suspected Investment Fraud"
Trader Fueled Lavish Lifestyle Running Singapore's "Largest Ever Suspected Investment Fraud"
Stop us if you’ve heard this one before: a young, up and coming “wunderkind” trader was living a lavish lifestyle on the back of a massive fraud.
Can’t be possible, you say? Enter 33 year old Ng Yu Zhi, living in a three-story villa in Singapore, driving a $5 million supercar. The only problem? He had raised at least $740 million from investors for commodity trades that didn’t exist, Bloomberg reported this week.
He was charged last month with four counts of fraud. It’s being called one of Singapore’s “largest-ever suspected investment frauds”. Court proceedings this week revealed that he was able to raise the money by touting quarterly gains of 15% to investors. It would have made him one of the most successful traders in the world, had it of been true.
The fraud was centered around his companies Envy Asset Management and Envy Global Trading. Of more than S$1 billion he had invested in his companies, S$300 million had been transferred to his personal account and S$200 million remains “unaccounted for”. Investors had received payments of S$700 million but are still owed S$1 billion, the report says.
In riding the broader “green” tailwind that has blown tons of hot money into global markets, Ng had purported to invest in nickel, a key ingredient in electric vehicle batteries. Specifically, per Bloomberg:
Ng was involved in deceiving investors into buying supposed forward contracts that were purportedly with French lender BNP Paribas SA, but those contracts didn’t exist, according to the charge sheets. BNP had no account or trading history with Ng, Envy Asset Management or Envy Global Trading, a person familiar with the matter said. A BNP spokesperson declined to comment.
Song Seng Wun, an economist at CIMB Private Banking, thinks more instances of “suspect behavior” will be revealed, thanks to investors feeling like they need to “reach” for returns in an era of low rates. Thanks, Central Banks.
Song said: “This won’t be the last case and that’s the sad reality.”
Shim Wai Han, an investor in Ng with their company Envysion Wealth Management Pte., said: “Our objective now is just one thing. To get back the money for investors and for ourselves.” Shim said she was “working on this together with MAS (The Monetary Authority of Singapore) to help investors.”
Ng has been released on S$1.5 million bail for the time being and is being monitored by an electronic ankle bracelet. He had become “an increasingly visible figure in Singapore’s philanthropic, supercar and corporate communities” over the last couple of years, Bloomberg noted.
He received an award in August 2020 for his philanthropy and a Pagani Huayra supercar was seized as part of his assets after being charged. The car is valued around $5 million.
Tyler Durden
Sat, 04/17/2021 – 20:30 - If You Don't See Any Risk, Ask Who Will "Buy The Dip" In A Freefall?
If You Don't See Any Risk, Ask Who Will "Buy The Dip" In A Freefall?
Authored by Charles Hugh Smith via OfTwoMinds blog,
Nobody thinks a euphoric rally could ever go bidless, but as Greenspan belatedly admitted, liquidity is not guaranteed.
The current market melt-up is taken as nearly risk-free because the Fed has our back, i.e. the Federal Reserve will intervene long before any market decline does any damage.
It’s assumed the Fed or its proxies, i.e. the Plunge Protection Team, will be the buyer in any freefall sell-off: no matter how many punters are selling, the PPT will keep buying with its presumably unlimited billions.
If this looks risk-free, ask who else will be “buying the dip” in a freefall? Former Fed Chair Alan Greenspan answered this question in his post-2008 crash essay Never Saw It Coming: Why the Financial Crisis Took Economists By Surprise (Dec. 2013 Foreign Affairs):
“They (financial firms) failed to recognize that market liquidity is largely a function of the degree of investors’ risk aversion, the most dominant animal spirit that drives financial markets. But when fear-induced market retrenchment set in, that liquidity disappeared overnight, as buyers pulled back. In fact, in many markets, at the height of the crisis of 2008, bids virtually disappeared.”
For the uninitiated, bids are the price offered to buyers of stocks and ETFs and the ask is the price offered to sellers. When bids virtually disappear, this means buyers have vanished: everyone willing to buy on the way down (known as catching the falling knife) has already bought and been crushed with losses, and so there’s nobody left (and no trading bots, either) to buy.
When buyers vanish, the market goes bidless, meaning when you enter your “sell” order at a specific price (limit order), there’s nobody willing to buy your shares at the current price. The shares remains yours all the way down.
If you decide to just get out at any price and place a market order (sell at whatever the bid is offered), your $100 per share stock might sell for $5 a share. This is known as a flash crash, and astute punters have observed that these are becoming more common.
When markets go bidless, the predictable order flow of low-volume days goes out the window. On a typical low volume day (and all days are low volume recently), the spread between bid and ask is modest in heavily traded issues and sellers can be confident their sell order will execute in a few seconds. In a freefall sell-off, sell orders pile up and the bid plummets to levels that were considered “impossible” in low-volume days.
What Greenspan didn’t discuss is the trading bots that do most of the trading have been programmed to be risk averse. In a real sell-off, why catch the falling knife by hitting the bid on the way down? That’s a guaranteed way to either lose money or ending up a bagholder.
Humans have a default setting for risk aversion: it’s called panic. Once the euphoric comnfidence that the Fed will never allow the market to fall by more than a few percentage points is broken, it’s not replaced by rational risk assessment; it’s replaced by full-blown just-get-me-out panic.
The Plunge Protection Team works just fine on low-volume days, but it fails when a tsunami of selling washes away the bid. Though few seemed to notice, massive selling volume begets more selling as the bots’ risk aversion kicks in.
Ironically, the mass migration of retail punters into the market has introduced a heightened potential for panic selling. The wild swings in Gamestock (GME) earlier in the year were a sneak preview of what can happen as panicked newbies enter market sell orders.
Euphoric punters forget that many of the players are leveraged, meaning that they’re using borrowed money (margin debt) to buy more stocks. Should the market drop instead of rebounding, their account will fall below minimum requirements and they will have to add cash or sell stocks. When buy the dip fails, those with margin calls add to the selling.
Other limits can manifest in cryptocurrency trading. When most trades are buys, few notice the fine print on exchange sell orders in crypto wallets and exchanges. Prices may be guaranteed for a limited time (for example, 10 minutes), and there may not be an option for limit orders. If the order doesn’t execute before the time limit expires, then the order to sell executes at whatever bid is offered.
There’s also no guarantee that your sell order will execute in a timely manner. A reader recently sent me a screenshot of an exchange of a top 100 (by market cap) cryptocurrency for Bitcoin that took almost 2 hours to execute. (The reader passed on using the Lightning Network after reading the disclosures.)
Exchanges may limit the number of coins per exchange. In other words, the implicit assumption that punters can unload their entire position at the current bid may prove unfounded in heavy sell volume days.
The point here is bottlenecks can emerge in heavy sell volume days that traders did not anticipate. The possibility that markets, brokerage platforms and exchanges could break and simply cease to function isn’t on anyone’s radar, despite various bits of evidence that a breakdown isn’t as farfetched as punters currently assume.
Ten minutes is more than enough time for supreme, euphoric confidence to crumble into panic, and trading bots can pull their buy orders in 10 milliseconds.
This is why the big players distribute their shares to overly confident retail punters over many weeks. Big players know there is no way they can dump their entire position without crushing the bid, so they sell in bits and pieces all the way up the euphoric melt-up.
The issue isn’t just the price you get when you sell–it’s being able to get out of your position at all. A strange phenomenon occurs in freefall sell-offs: the exit door (i.e. the liquidity that allows you to liquidate your entire position at the current bid) suddenly shrinks from a barndoor to a mouse-sized hole in the baseboard.
Nobody thinks a euphoric rally could ever go bidless, but as Greenspan belatedly admitted, liquidity is not guaranteed. In a real tsunami of trading-bot selling, the Plunge Protection Team’s card table is no match for the sea of selling.
Risk aversion can go from zero to 200 faster than overconfident punters believe possible.
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Tyler Durden
Sat, 04/17/2021 – 20:00 - Record 33% Of Young Americans Living With Parents
Record 33% Of Young Americans Living With Parents
The number of adults aged 18-34 living at home with their parents continues to accelerate to levels not seen in decades, according to Goldman Sachs, citing US Census Bureau data which found that just over 33% have returned to the nest.
And while real estate in major markets is booming, the percentage of young adults in the ‘boomerang generation’ – who leave the nest only to return years later – has taken a dive, as unemployment and punishing (self-inflicted) student debt has forced many younger Americans out of the housing market.
Last July, Pew Research reported that a majority of 18-29 year-olds, 52%, were living in their parents’ home – and spans young adults across the board; men, women, all races and ethnic groups, and in every geographical region, according to the study. Note that the percentage Pew reported is undoubtedly higher due to the lower cutoff in age for the range (29 vs. 34).
“In a very short space of time, we are now at levels last seen during the Great Depression,” said Pew senior researcher, Richard Fry.
That said, even before the pandemic, young adults were increasingly dependent upon their parents for financial support. According to Pew, around 60% of children between the ages of 18-29 received at least some financial help in the past year, primarily to cover expenses such as tuition, rent, groceries or bills.
Tyler Durden
Sat, 04/17/2021 – 19:30 - The Next Economic Crisis – Will Your Wealth Survive?
The Next Economic Crisis – Will Your Wealth Survive?
Authored by Bruce Wilds via Advancing Time blog,
The greatest wealth transfer in history has already begun and the next crisis will only accelerate the process.
As the printing presses continue cranking out more and more money, looking forward to a time when the markets pause or another economic crisis consumes the world is an issue we all should think about. How much wealth will escape the next large financial reset is very important because it will set the bar that determines the rate of inflation or deflation in coming years. If you believe we did not solve many of our financial problems after 2008 but merely masked them with a huge amount of newly printed money you are likely to embrace this concept.
The Shell Game Of Wealth Transfer
Much like a shell game where wealth is transferred about, in our modern society wealth is always on the move. Wealth and how things are valued is far from constant, it is fungible and constantly changing. While we may try to deny it, wealth is in a constant state of flux and constantly moving. Wealth comes in many forms, it can be held in the form of paper, promises, or as something more tangible and real such as property or goods.
Some items such as a tool hold “utility value” and its value may be based on how much work it can perform or the revenue it can produce. Replacement cost, supply and demand, and factors such as whether something can spoil or might grow obsolete over time also help determine its value as a place wealth can be safely stored. The term, safely stored in this case also includes placing it out of the reach of governments’ ability to tax it or make it illegal to own.
Defining wealth is one thing but it is important to actually delve into its nature to truly understand just how elusive it can be. Wealth is defined as the abundance of valuable resources or valuable material possessions. An individual, community, region, or country that possesses an abundance of such possessions or resources to the benefit of the common good is known as wealthy. This means it might be preferable to live as a poor person in a very rich and wealthy society versus a rich person in a poor and wretched place. This notion underlines the idea wealth is also relevant and measured by how it compares to that of others.
Don’t Be Naive, They Do Not Care
Returning to the subject of various kinds of wealth, today Bitcoin and other crypto-currencies and other “digital assets” designed to work as a medium of exchange also fall into the category of wealth. They have joined pensions, annuities, and even investments in stocks and such as a store of wealth. Many assets fall into the area of paper promises that are often recorded somewhere far from sight or as a digital entry on a computer. These intangible stores of wealth based on faith have grown at a massive rate during the last several decades and were relatively minor players until recently. Currencies, also known as fiat money, are also just IOUs or paper promises. The idea of a currency free-society in my mind tends to break the bonds that link us to wealth but that is for another post.
In the past I have written several pieces about subjects such as, writing off the rising amount of bad debt, how debt is like a mirage moving into the distance, how bad debt is resolved, and how precarious the vessels where we store our wealth can be, however, the crux of this article centers around what will or might be left after stress or war pushes the global economy to the brink or into total collapse. A great deal will depend on how such an event unfolds, this means what kind or type of value and wealth is the first to vanish.
Be Skeptical, Be Cautious, Get Smart!
I will be the first to admit the answer is unknown, still in this “exercise of the mind,” I am asking you to consider and think about such a scenario. The ugly truth is that there are many places your wealth could vanish into and multitudes of ways it could seep away. Remember, wealth zips across borders at the click of a button and just because you deposit it with a local institution does not mean it stays in your community.
We witnessed how wealth could be “transferred away” decades ago during the savings and loan crisis when huge beautiful buildings were constructed in certain areas from wealth transferred in from other parts of the country. Needless to say when the dust settled the big winners were the areas with the new buildings and not those forced to pay for them when the loans used to build them went into default.
Today some market watchers claim that the stock market is being held at lofty levels while the smart money is rushing to the exits. Today tens of trillions of dollars are sitting in offshore banking accounts in places such as the Cayman Islands. Today government and businesses are borrowing hundreds of billions of dollars each year by issuing bonds some that will not return investor’s money for decades. Today homes, apartments, and buildings are being built, some poorly constructed, with loans guaranteed more or less by the American people. Today America’s national debt stands at over 28 trillion dollars and is rising. Today currencies such as the euro and yen are even more fundamentally flawed than the dollar. I could do this a bit longer but I suspect I’ve made the point.
We have all heard about how the Caymans have become a popular tax haven among the American elite and large multinational corporations. This is because there is no corporate or income tax on money earned outside of its territory. This has made the Caymans especially popular among hedge fund managers. I hate to blow a hole in the idea that you can safely tuck their money away in an offshore banking account, the reality is, we have no idea where all the money deposited in the Cayman Islands really is. Banks do not just sit on deposits and keep them safe, they loan them out.
We must never forget the world is full of crooks, evil politicians, greedy bankers, and that we have judicial systems that make true justice a rare commodity. Returning to the focus of this article, the thing that is important is what or how much wealth survives an economic crisis and in what form. That is because when that wealth comes out of hibernation it will soak up all the tangible assets on the planet. This will be the determining factor of whether we face inflation, deflation, or some crazy mix of the two. Remember it is the nature of those in charge to throw the masses under the bus when things go sideways.
The average person is foolish and silly if they expect to be protected when the next financial crisis hits. Those counting on a stimulus check for survival will someday most likely find it will not buy them diddly-squat. The shelves will be empty or the value of what they receive will simply not be enough. The economic landscape we face following such an event will without a doubt be shaped and depend on what wealth survives and how much vanishes following a tsunami of defaults and /or a monetization of debt where government debt disappears and inflation takes its place. A word to the wise should be sufficient and cause any person prudent or interested in protecting their wealth to consider the many ways wealth can vanish and that it can without a doubt happen to you.
Tyler Durden
Sat, 04/17/2021 – 19:00 - Apollo Joins Exodus To Florida As New York Tax Hike Drives Out Wealthy
Apollo Joins Exodus To Florida As New York Tax Hike Drives Out Wealthy
The authors of a Bloomberg report claiming the trend of financial services firms moving from New York to Florida was rapidly starting to reverse couldn’t have been more wrong. Barely two weeks after the New York State legislature passed a state budget that saddled the wealthiest New Yorkers with an effective tax rate north of 50%, the highest in the nation…
…more financial firms and their wealthiest employees are bidding the Big Apple adieu. Earlier this week, Bloomberg reported that Guggenheim’s Scott Minerd was preparing to move to Miami as the firm moves to dedicate more resources to South Florida.
And now, Bloomberg has followed that earlier report up with another high-profile departure: Apollo Global Management, newly free of its founder Leon Black, was considering opening additional offices in South Florida, specifically in Miami and West Palm Beach, as well as elsewhere in the US and Europe. The decision to “expand” its physical presence its the result of a survey of employees about where they would prefer to work as part of a strategy to attract a broader talent pool, a spokesperson for the firm told Bloomberg.
Apollo, which has 1,729 employees worldwide, is just the latest financial services firm to commit to a more open ended “open working” plan as workers in the US start their journey back to the office. This contrasts with Goldman and JPM, which are already summoning front-office workers and analysts back to the office (now that we all know how Goldman CEO David Solomon feels about working from home).
As far as moving to Florida, Goldman is reportedly polling employees to figure out which workers in various front-office investment-banking and capital markets positions might be willing to relocate to Miami.
Hedge fund titan Steven Cohen is reportedly looking to move his new firm, Point72 Asset Management, to Florida despite his recent purchase of the New York Mets (he also recently took a massive hit on the sale of a New York condo). Elliott Management, and even the mighty Citadel, are looking to Florida as well.
While Apollo said it has no plans to pull back from New York, even Bloomberg acknowledged that the newfound flexibility brought on by remote work is making low-tax locales like Florida and Texas more appealing. Under the new $212 billion state budget, the top tax rate on wealthy Americans would temporarily increase to 9.65% from 8.82% for single filers earning more than $1.1 million. Income between $5 million and $25 million would be taxed at 10.3% and for more than $25 million it would be 10.9%. The new rates would expire in 2027. And with New York City residents also paying city taxes, the combined top rate for the highest earners would be between 13.5% and 14.8%, surpassing the 13.3% rate in California, currently the highest in the nation, as we reported previously.
Lump in Federal Taxes and the increases would mean that the richest New Yorkers would be hit with a combined marginal rate of 51.8% — higher than levels in some European countries.
Tyler Durden
Sat, 04/17/2021 – 18:30 - "I Object…" – Is This The Start Of The Turn Against 'Woke Tyranny'?
"I Object…" – Is This The Start Of The Turn Against 'Woke Tyranny'?
Authored by Andrea Widburg via AmericanThinker.com,
For three days, I’ve had sitting on my virtual spindle a post that Bari Weiss, formerly of the New York Times, posted on her Substack page. It’s entitled “I Refuse to Stand by while My Students Are Indoctrinated.”
The author isn’t Weiss but is, instead, Paul Rossi, a math teacher at Grace Church High School in Manhattan (annual tuition: $57,330).
On Friday, Weiss added another open letter, this from Andrew Gutmann, a parent who had just pulled his daughter out of Brearley, another expensive private school (annual tuition: $54,000).
Both are horrifying exposés of, and attacks against, the woke culture saturating these institutions.
Both letters are long and don’t yield easily to a brief summary. I’ll quote a few select paragraphs from each, but you must read them to get the full flavor of the Maoist madness at these institutions.
Paul Rossi, the teacher, writes that Grace Church is focused on “‘antiracism’ training and pedagogy that I believe is deeply harmful to [my students] and to any person who seeks to nurture the virtues of curiosity, empathy and understanding.”
Rossi perfectly describes the self-hatred, mental repression, cognitive dissonance, and pure racism this training inculcates into young minds:
My school, like so many others, induces students via shame and sophistry to identify primarily with their race before their individual identities are fully formed. Students are pressured to conform their opinions to those broadly associated with their race and gender and to minimize or dismiss individual experiences that don’t match those assumptions. The morally compromised status of “oppressor” is assigned to one group of students based on their immutable characteristics. In the meantime, dependency, resentment and moral superiority are cultivated in students considered “oppressed.”
Rossi describes how, during a segregated “whites only” student and faculty Zoom meeting, he spoke out, inspiring the students to speak out, too. This was a bad thing.
I was informed by the head of the high school that my philosophical challenges had caused “harm” to students, given that these topics were “life and death matters, about people’s flesh and blood and bone.” I was reprimanded for “acting like an independent agent of a set of principles or ideas or beliefs.” And I was told that by doing so, I failed to serve the “greater good and the higher truth.”
He further informed me that I had created “dissonance for vulnerable and unformed thinkers” and “neurological disturbance in students’ beings and systems.” The school’s director of studies added that my remarks could even constitute harassment.
Rossi was then denounced over the school announcement system. There’s more. Read it all, because it’s important.
The letter that Andrew Gutmann sent to fellow parents after he pulled his daughter out of Brearley is, if anything, even more horrifying:
It cannot be stated strongly enough that Brearley’s obsession with race must stop. It should be abundantly clear to any thinking parent that Brearley has completely lost its way. The administration and the Board of Trustees have displayed a cowardly and appalling lack of leadership by appeasing an anti-intellectual, illiberal mob, and then allowing the school to be captured by that same mob.
To give context to his scathing attack on the school, Gutmann describes actual systemic racism as things such as the real Jim Crow, Jewish genocide, and the Democrats’ decision in 1942 to lock up all their Japanese-American citizens. And then he’s off:
I object to a definition of systemic racism, apparently supported by Brearley, that any educational, professional, or societal outcome where Blacks are underrepresented is prima facie evidence of the aforementioned systemic racism, or of white supremacy and oppression.
…
I object to the idea that Blacks are unable to succeed in this country without aid from government or from whites.
…
I object to mandatory anti-racism training for parents, especially when presented by the rent-seeking charlatans of Pollyanna.
…
I object to Brearley’s vacuous, inappropriate, and fanatical use of words such as “equity,” “diversity” and “inclusiveness.”
…
l object to Brearley’s advocacy for groups and movements such as Black Lives Matter, a Marxist, anti family, heterophobic, anti-Asian and anti-Semitic organization that neither speaks for the majority of the Black community in this country, nor in any way, shape or form, represents their best interests.
As with Rossi’s letter, there’s more, much more, including all the material I snipped out. And as with Rossi’s letter, you must read the whole thing.
A couple of years ago, ensconced in a Senate chamber in which almost half of the senators and all the national media agreed with him, and lying about violating Senate rules, Sen. Cory Booker made the ridiculous claim that he was having his “I am Spartacus moment.”
In fact, what we’re seeing from Rossi and Gutmann, in the belly of the beast that is true-blue New York, should be the start of a true Spartacus moment. We must join together to defeat the racist Critical Race Theory and other maddened toxins oozing from leftists.
Tyler Durden
Sat, 04/17/2021 – 18:00 - CNN Can't Stop Losing: Viewership Down By Half Since Biden Took Office, 60% In Key Demo
CNN Can't Stop Losing: Viewership Down By Half Since Biden Took Office, 60% In Key Demo
While CNN may no longer be torturing people in airports, voluntary viewership has fallen over 50% in multiple categories since President Biden took office, according to Fox News.
Who knew that their best move during the 2020 election would have been to help Trump win, instead of helping Biden.
In the first three weeks of 2021, the network averaged 2.2 million viewers – only to plummet to just one million viewers – a decline of 54%. Among the key advertising demographic of adults age 25-54, ratings are down 60%. From December 28 through Inauguration day, viewership went from 617,000 viewers in that demographic to just 244,000 since Biden took office.
CNN’s liberal primetime hosts Anderson Cooper, Chris Cuomo and Don Lemon haven’t been able to keep their audiences under the new administration, either.
CNN averaged 3.1 million viewers from 8-11 p.m. from Dec. 28 through Inauguration Day but only 1.4 million since for a whopping 55-percent decline. Over the same time period, CNN’s primetime lineup lost 63 percent of its viewers among the crucial demo. –Fox News
CNN also fared worse than liberal competitor MSNBC, which lost ‘only’ 34% of its total-day viewers, and 30% of primetime viewers under Biden. Fox News points out, of course, that their viewership has remained mostly flat – as declines remained in the single digits.
When asked if he was worried about the ratings disaster, CNN host Don Lemon told the New York Times’ podcaster “Sway”:
“No. I’m not worried about it … Trump was a horrible person. And he was terrible for the country. And it is better for all — for the world that he is no longer the President of the United States,” adding “So if that means that cable news ratings go down? Aww. So I’m not really that concerned about it. I would prefer that my ratings go down and Trump not be in office than my ratings be sky-high and him be there. That’s the honest truth.”
And when a CNN anchor ends anything with “That’s the honest truth,” it’s exactly the opposite.
CNN the new clown news network! pic.twitter.com/zVvh3KB2Ja
— LeAnn F Sellers 🇺🇸❣🇺🇸 (@LeAnnFSellers1) April 15, 2021
Tyler Durden
Sat, 04/17/2021 – 17:35 - Edward Snowden NFT Sells For $5.4 Million In Ethereum
Edward Snowden NFT Sells For $5.4 Million In Ethereum
Authored by Jeff Benson via Decrypt.co,
An NFT artwork created by Edward Snowden has sold for $5.4 million in Ethereum.
“Stay Free” portrays the NSA whistleblower and exiled American with hand on chin like a modern Rodin statue.
Look closer, however, and you’ll find the image has been formed from the pages of a US appeals court decision that the Patriot Act did not permit mass collection and surveillance of Americans’ phone records by the National Security Agency.
A reminder that the symbolism of @Snowden minting his first NFT goes far beyond the price tag.
The decentralized technologies powering this auction will fundamentally reshape our world — precisely to curb the abuse of power @Snowden spoke out against.https://t.co/ofNi1nSwzZ
— kayvon🪐 (@saturnial) April 16, 2021
https://platform.twitter.com/widgets.js
While the ACLU won that case, Snowden remains persona non grata in the US for his role in making the NSA’s surveillance program public. In 2013, while the computer analyst was contracting for the security agency, he began leaking classified documents to the press. Shortly after being charged with espionage, Snowden flew to Russia, where he was granted asylum, then residency.
Snowden sold the artwork on Foundation, a community-driven NFT marketplace where the Overly Attached Girlfriend NFT sold for 200 ETH and a Nyan Cat animation earned 300.
Those amounts seem relatively paltry to the 2,224 ETH spent on Stay Free, Snowden’s first NFT.
NFTs are unique digital tokens that often come in the form of artwork, trading cards, or other collectibles. There is only one edition of “Stay Free,” meaning the auction winner, @PleasrDAO (fans of digital artist pplpleasr, who also sells lucrative NFTs), has the only copy of the work.
FIVE POINT FIVE MILLION from @PleasrDAO. It feels like the whole staff of @FreedomOfPress is watching live, and we’ve never seen anything like this. This is more than a spectacle — this is drama. All eyes turn to the dark horse. https://t.co/GOcrOiraXS
— Edward Snowden (@Snowden) April 16, 2021
https://platform.twitter.com/widgets.js
According to Snowden, the proceeds will go to Freedom of the Press Foundation, a non-profit established in 2012 that develops open source communication and encryption tools as well as tracks press freedom. As the foundation’s president, Snowden serves on the board alongside John Cusack, journalist Glenn Greenwald, and Daniel Ellsberg, the Vietnam-era reporter best known for shuttling the Pentagon Papers to the New York Times.
Tyler Durden
Sat, 04/17/2021 – 17:10 - Psaki Dodges Questions On Biden "Weakness" Over Initiating Putin Summit
Psaki Dodges Questions On Biden "Weakness" Over Initiating Putin Summit
On Friday White House press secretary Jen Psaki was pressed on why President Biden appeared to initiate a summit with Russian President Vladimir Putin, yet without setting conditions, which is widely being viewed as a “weakness”. This is also given as we and many others have pointed out that it effectively cuts out Kiev, leaving Ukraine’s fate to be considered by the two superpowers at the table. For Putin, it appears that “saber-rattling” over Ukraine in the form of the troop build-up in Crimea and along the border has forced Biden’s hand, effectively making Washington have to deal directly with Putin, precisely what the Kremlin has wanted all along.
She was asked at the daily briefing by a reporter: “Why would you announce a summit intention without a commitment? … A high-level meeting of this sort is often a point of leverage with the world leader… why aren’t there conditions?” Psaki fumbled through a response while avoiding the question head-on…
Psaki then rambled on about “consequences”…
Biden was ”clear that there would be consequences for the actions, whether it was the hacking of SolarWinds or other problematic behavior by Russian leadership,” Psaki said in reference to Thursday’s Russia sanctions rollout.
”And the president offered that … to send the message that we will have disagreement, we’re not going to hold back on that. But our objective is to have a predictable and stable relationship,” she added.
In follow-up to her apparent avoidance of the main issue the reporter mused that if Putin actually rejects the summit offer, ”wouldn’t that indicated some weakness on the part of the American administration here?”
”I think the president’s view is that Russia is on the outside of the global community in many respects at this point in time,” Psaki replied.
So again she didn’t actually answer the question.
“It’s the G7, not the G8 … We’ve put sanctions in place in order to send a clear message that there should be consequences for the actions. The Europeans have also done that. What the president is offering is a bridge back. And so certainly he believes it’s in their interest to take him up on that offer.”
How Putin’s “Saber-Rattling” Forced A Biden Summit, Bypassing Kiev To Decide Ukraine’s Fate https://t.co/95A4thiMNU
— zerohedge (@zerohedge) April 17, 2021
To review, here’s what FT had to say
Here’s more from FT on the whole question:
If Vladimir Putin’s decision to deploy tens of thousands of troops to Ukraine’s border in the past few weeks was driven primarily by a desire to get the west’s attention, he did not have to wait too long for his reward.
Hours after his defense minister on Tuesday admitted Russia had mobilised two armies and three paratroop divisions to positions close to the conflict-wracked frontier, US President Joe Biden phoned the Kremlin with an offer of a bilateral summit: a long sought-after prize for Putin who craves a seat at the world’s highest negotiating table.
…Those 50,000 extra soldiers, scores of tanks and other heavy weaponry spooked Kyiv and other European powers, and sparked a hurried response from Nato and the US amid fears over a potential outbreak of fighting between the two countries.
Consider too… what if this were Trump?
Tyler Durden
Sat, 04/17/2021 – 16:45 - Woke Capital Is Destined To Become A Relic
Woke Capital Is Destined To Become A Relic
Authored by Peter Earle via The American Institute for Economic Research,
In a market economy, consumers vote with their dollars. The survival and growth of a business depends pivotally upon how effectively they convince customers to buy their products over those of their competitors. But recently, consumers seem to expect a new product in addition to what they were already purchasing from firms: corporate consciousness. In particular, a decidedly left-leaning consciousness.
But it’s not entirely accurate to claim that consumers have compelled businesses to “get with the times;” more precisely, the sensibilities of the public, have mostly through the media and polling, bled into corporate board rooms. Big businesses have in turn doled out value statements; some are praised, others pilloried. It’s a chicken-or-egg case: did the consumer demand woke capital, or has the corporatist, desperate to maintain market share and boost public perception of their firm, made woke capital the law of the American economy?
A New Twist on an Old Saw
In reality, woke capital is nothing new – though it has undergone many transformations and changes of name over the years. On the individual level, early industrialists like Andrew Carnegie and John D. Rockefeller engaged in corporate philanthropy, donating large shares of their fortunes to charity. In the 1940s, businesses themselves started supporting charitable causes.
The idea of corporate social responsibility entered the mainstream in the 1970s when the Committee for Economic Development pushed the “social contract” model, stating that businesses function as a result of public “consent,” thus leading to an obligation to serve societal needs. (This also ties to the rise and spread of stakeholder theories, which today no MBA program would dare omit.) That same model outlined three duties of businesses: providing jobs and economic growth, fair and honest treatment of workers and customers, and improving the conditions of the surrounding community.
The present ascendance of woke capital, then, has been less of a rise and more of a continuation––a twist, really––on existing tendencies. The contemporary culture war has only served as a catalyst. A 2020 Spectator piece reads,
As the Democratic party and cultural elites have lurched left on cultural issues, corporate America has lurched along with them. America’s ‘reckoning with racial injustice’ in the past three months was enthusiastically endorsed by major corporations, often even as their physical outlets were plundered by the ‘mostly peaceful’ activists on the street….As capital aligns with the cultural left, it is now extracting its concessions.
It wouldn’t be so unpalatable if it weren’t rife with hypocrisy. This, ultimately, is the cardinal sin of woke capital: lofty moral standards, selectively applied. In one of the earlier discussions of the woke capital phenomenon, which appeared in The New York Times back in 2018, columnist Ross Douthat pointed out the folly in Apple’s value statements:
It’s worth noting, for instance, how Tim Cook’s willingness to play the social justice warrior when the target is a few random Indiana restaurants that might not want to host hypothetical same-sex weddings does not extend to reconsidering Apple’s relationship with the many countries around the world where human rights are rather more in jeopardy than they are in the American Midwest.
Douthat’s concerns proved prescient as the turmoil of last summer––largely centered on the deaths of George Floyd and Breonna Taylor and the ensuing Black Lives Matter protests––came to a head. In 2020, no less than two-thirds of S&P 500 companies released statements of solidarity with the movement; a smaller share, 36 percent, contributed funds to racial justice organizations.
S&P 500 ESG Index (5 yrs)
(Source: Bloomberg Finance, LP)
Nike and The Washington Post, among other employers, gave workers Juneteenth off as a paid holiday. Companies participated in #BlackOutTuesday, posting just a black square to their social media accounts. Managers assigned left-wing political texts to employees. JPMorgan Chase CEO Jamie Dimon dropped by a Chase branch to take a knee with staff in support of racial justice protests (and, it seems, could not resist taking advantage of the photo opportunity).
The immediate aftermath of these actions was characterized by confusion and skepticism alike. Black employees of many companies that had sprung into activist action found the messaging inconsistent with their personal experiences, speaking to poor racial climates and difficulty in climbing the career ladder. Nearly one year later, investor groups are still pressuring banks and industry giants to support shareholder resolutions that will hold them to proof of progress measures. Though Fairness & Accuracy in Reporting (FAIR) disagrees with the premise of “woke capital,” it nonetheless concedes that “many corporate overtures to diversity, racial justice and progress are marketing gimmicks that don’t actually address structural economic inequality, and, at worst, are meant to distract from any kind of class reckoning.”
Stunts and Missteps
One such blunder came in the form of the McCann ad agency’s Black Lives Matter blunder. In early June, the firm asked artist Shantell Martin to paint a BLM mural on the storefront of McCann’s client Microsoft. The email specifically requested that Martin finish the piece within a few days, “while the protests are still relevant.” Martin teamed up with other black artists who had been approached by McCann, eviscerating the agency in a letter that decried the disingenuity of activism with an expiration date.
With all that in mind, it must be said that not every business simply postures for the sake of posturing. In the early days of corporate social responsibility, Milton Hershey of The Hershey Company built far more than just production facilities in Hershey, Pennsylvania; he built civic centers and cultural institutions that continue to support the community to this day. And in the woke capital era, plenty of organizations have taken up the helm of well-intentioned, effective societal change. Chobani, a leading Greek yogurt brand, has made tangible steps toward social responsibility––from actively seeking to hire refugees to investing in social entrepreneurs in order to encourage innovating for the greater good, Chobani’s impact statements are far more than just platitudes.
Yet these examples are, in many ways, the exceptions rather than the rule. Far-reaching social and political turmoil has prompted businesses to feel as though they must comment on current issues, but that talk has hardly translated into any meaningful change. Social change is expensive––and woke capital is difficult to back––and as such, few businesses have put their money where their mouth is. That voluntary, cooperative commercial engagement is a center of gravity for civilization itself has not occurred to them, or doesn’t make for a flashy enough campaign.
SunSuper Socially Conscious Balanced Fund (AU)
(Source: Bloomberg Finance, LP)
Economic Calculation with Woke Capital
An issue with decidedly larger implications is whether or to what extent corporate management decisions made along political lines will impact potential uses of capital. Ludwig von Mises, in his writings about economic calculation, noted that private property in the means of production, and subsequently money prices established for those capital goods,
provide…a guide amid the bewildering throng of economic possibilities. [They] enable us to extend judgement of value which apply directly only to consumption goods––or at best to production goods of the lowest order––to all goods of higher orders. Without it, all production by lengthy and roundabout processes would be so many steps in the dark.
A large number of economically significant firms deciding to sell important assets, engage in select transactions, or limit their investments exclusively to projects managed by and firms owned by minority citizens or women may seem innocuous. And in some cases, it likely is. But to the extent that such transactions are appreciable and done in ways which preempt or confound market processes (which is to say, if they are done at prices which do not reflect the actual subjective valuation of market participants at a point in time) they will likely result in less rational allocations and overall losses of efficiency in the economy at large.
Fad or Principle?
Though consumers seem on balance to prefer activist firms, companies largely miss the mark. A 2018 survey covering 35 countries showed that 64 percent of consumers would gladly reward firms engaged in activism of some type––proving that corporate consciousness has become an essential part of many companies’ bottom lines. However, a 2020 opinion poll conducted by Gallup in the United States indicated that public confidence in big business was laughably low. Only 19 percent of respondents reported having a “great deal” or “quite a lot” of trust in large firms. Sentiments have been tepid for decades now, with confidence lingering around the 20 percent mark since the early 2000s. And the leftward shift of business has especially alienated Republicans, with their satisfaction with big business falling to 31 percent––a 26-point decline since 2020.
Whether corporate America’s commitment to woke capital will last remains to be seen, but one questions who truly prefers this state of affairs. Companies feel obligated to offer value statements to their customers, despite often having records of conduct contrary to the socially acceptable view; consumers sense the game being played and accordingly, chafe. Structural changes, most of which involve more opportunities and less state interference, are desirable and attainable, and the lack of genuineness here suggests unsustainability. Rather than a sign of the times, the embracing of woke capital may simply come to be a relic of the times.
Tyler Durden
Sat, 04/17/2021 – 16:20 - Iconic Retail Investor "Roaring Kitty" Doubles Down On Gamestop, Now Owns 200,000 Shares
Iconic Retail Investor "Roaring Kitty" Doubles Down On Gamestop, Now Owns 200,000 Shares
You won’t find Roaring Kitty Capital, LP in any Goldman Sachs salestrader’s rolodex but to the millions of WallStreetBets daytrading fanatics, the name Roaring Kitty is far more popular than Bridgewater, Citadel, or Millennium.
And for good reason: Keith Gill, the person behind the moniker “Roaring Kitty” and “DeepFuckingValue“, who launched a historic short squeeze across multiple asset classes in January, destroying Melvin Capital (which needed a bailout from both Ken Griffin and Steve Cohen) and several other heavily bearish hedge funds, showed ordinary investors that virtually anyone can become a millionaire with lots of hard work and preparation… before eventually ending up in Congress explaining to Maxine Waters just how a relative nobody managed to outsmart people who run billions thanks to his now iconic investment in Gamestop.
Another reason why “Roaring Kitty” has earned the respect of his peers is that unlike so many traders who make a buck on a trade and move on, Gill has demonstrated true diamond hands, and not only that but he is now literally doubling down on the company that brought him stardom and riches by exercising his call options and buying even more shares.
“DeepFuckingValue” posted a screenshot of his portfolio showing that he has exercised 500 GameStop call options expiring Friday at a strike price of $12, giving him 50,000 more shares of a stock that closed at $154.69 on Friday, but will likely blast off on Monday once the Reddit animal spirits are reignited.
There’s more: in addition to exercising his options, Gill also bought another 50,000 shares of the video-game retailer, doubling his holdings to 200,000 shares from 100,000 at the beginning of the month. His total investment in GameStop is now worth more than $30 million, giving him a profit of nearly $20 million. Bloomberg reached out to Gill’s mother, Elaine Gill at his childhood home in Massachusetts, who confirmed the Reddit screenshots were posted by her son.
Despite having earned the praise and admiration of most of his peers for executing what many have said has been the most astute short squeeze since Volkswagen, there were haters too and roughly around the time Gill was explaining to Maxine Waters how investing works, he was hit with a lawsuit that accused him of misrepresenting himself as an amateur investor. The suit alleged that he was actually a licensed securities professional who manipulated the market for profit, which he denied.
To be sure, it wasn’t just Gill: some argue that the true mastermind behind the Gamestop squeeze was not Roaring Kitty at all but hedge fund Senvest which started buying GME shares all the way back in September – roughly around the time the post “The REAL Greatest Short Burn of the Century” appeared on Reddit and which made over $700 million on its GME position which has given it the top position in the HSBC hedge fund ranking for the third month in a row
Meanwhile, on Friday GameStop CEO George Sherman who is expected to leave, sold almost $12 million in shares. The company is looking for a new CEO as part of a shake-up spurred by activist investor and Chewy.com co-founder Ryan Cohen, Bloomberg notes.
While shares of GameStop are up 721% YTD, though they are less than half of the peak level in January. However, now that Roaring Kitty has shown his Reddit peers that he is not only in it for the long run but doubling down, expect another squeeze on Monday as the latest generation of shorts which have entered the stock in recent weeks, is steamrolled, and as Reddit excitement in GME which had fizzled in recent weeks…
… explodes afresh.
And speaking of Chewy, we remind readers that the reason why the stock rose as high as the mid-$400s in February is not only the presence of Chewy founder Ryan Cohen, but that as the September Reddit write up noted, “if GME was trading at the same P/S multiple as $CHWY, the share price would be $420.”
In short, GME may be about to double all over again.
Which begs another question: is the daytrading, gamma-squeeze mania that shook markets in late January, about to send GME – and the whole batch of most shorted names – soaring higher all over again?
Tyler Durden
Sat, 04/17/2021 – 15:54 - Software Glitch Transforms Some Mustang Mach-Es Into "Electric Bricks"
Software Glitch Transforms Some Mustang Mach-Es Into "Electric Bricks"
Just as Morgan Stanely released a new Autos & Shared Mobility research report a couple of months ago explaining how Tesla is losing market share to the Ford Mustang Mach-E. It appears Ford has run into a significant software hiccup for some of its Mach-Es, transforming them into “electric bricks.”
Some Mach-E owners reported the 12-volt battery inside their vehicle has discharged after charging the main battery pack, preventing the car from turning on, essentially transforming it into an electric brick.
According to a new service bulletin posted by the Michigan automaker on the National Highway Traffic Safety Administration (NHTSA) website, Ford has addressed the problem.
“Some 2021 Mustang Mach-E vehicles built on or before 3-Feb-2021 may exhibit the 12-volt battery becoming discharged while the vehicle is plugged in during the high voltage charging process. This may be due to the parameters in the powertrain control module (PCM). To correct the condition, follow the Service Procedure to reprogram various modules starting with the PCM,” the bulletin read.
Here is the complete technical service bulletin:
The dying 12-volt batteries were first reported by The Verge, as furious Ford owners recently began populating on online forums about the issue. Some readers must be asking: Why do electric cars have separate 12-volt batteries from the main battery pack?
The answer is simple:
The battery that supplies power to the electric motors is extremely high voltage, and the 12-volt battery powers the vehicle’s low-voltage parts. When the 12-volt battery discharges, the car can’t be started.
In a statement provided to The Verge, Ford said owners must bring their Mach-Es to a dealer for the fix. So there are no over-the-air updates like a Tesla.
“We are aware that a small number of Mustang Mach-E owners have had their 12V battery reach a low voltage condition. We proactively worked with early owners experiencing this issue to identify the root cause and a fix. In the rare instances where this still occurs, customers can now contact their local EV-certified Ford dealer to have the matter resolved.”
Ford revealed to The Verge the problem would be fixable via wireless update “later this year.” The automaker also said Mach-Es after Feb. 3 do not exhibit this problem.
Ford wouldn’t specify how many of its Mach-Es are affected by the software glitch, but nearly 7,000 have been delivered in the first three months of the year.
With Ford quickly selling Mach-E’s, the software glitch comes at an inopportune time as it battles Tesla for EV US market share.
Tyler Durden
Sat, 04/17/2021 – 15:30
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