May 30

Today’s News 30th May 2021

  • Abramson: Critical Race Theory Versus American Exceptionalism
    Abramson: Critical Race Theory Versus American Exceptionalism

    Authored by Bruce Abramson, op-ed via The Epoch Times,

    Over the past few weeks, legislatures, school boards, and parents have risen to challenge critical race theory (CRT) as a divisive ideology that teaches our children to become racists.

    Their objections have brought this once-obscure academic theory to the front pages of newspapers around the country.

    Demonstrators gather in front of Los Alamitos Unified School District Headquarters in protest of critical race theory teachings in Los Alamitos, Calif., on May 11, 2021. (John Fredricks/The Epoch Times)

    They’ve also raised some burning questions: What is CRT? What makes it so objectionable? How can this central pillar of “antiracist” training be racist?

    The answer begins, as so many do these days, with the progressive penchant for the redefining—or rather, deconstruction—of words. “Antiracist” training is racist because progressives have redefined “racism.”

    CRT scholars have been clear and consistent on this matter. The “antiracism” they’re preaching isn’t the “anti-racism” of Martin Luther King Jr. Nor is it opposition to the discriminatory treatment most Americans oppose when speaking against racism. CRT contends that the “systems” defining modern American life are irredeemably racist. It calls for a revolutionary upheaval, laying waste to every existing governmental, legal, economic, cultural, social, communal, and familial institution.

    CRT’s “antiracism” explicitly requires compensatory discrimination against “white people,” rather than equal treatment for all. To further this goal, K–12 CRT programs emphasize and heighten racial identity, segregate students by racial group, discriminate in their treatment of these groups, and teach that racial tension is unavoidable.

    CRT also embodies an absolute and total rejection of American exceptionalism. One consequence of that rejection is that CRT has become a shorthand for the entire constellation of anti-American neo-Marxist theories dominating today’s political left. Whereas Marx cast history as a struggle among economic classes, contemporary Marxists believe that struggles among races and genders to be at least as important. CRT sees the entire American experiment of extolling individual liberty as white supremacism seen through the lens of good public relations.

    Though CRT’s blurring of culture clashes may give its advocates a talking point, it’s hardly one of consequence. Just as Marx missed the incredible adaptivity of capitalism and the benefits it confers upon poor workers, CRT’s loathing of America blinds it to the adaptive and evolutionary role American exceptionalism has played in combating discrimination.

    There was nothing exceptional about the first African slave ships to arrive in the New World in the early 17th century. Slavery had been around throughout recorded history. Every known culture, everywhere in the world, had embraced inequality. Captives taken from conquered cities, warring tribes, or disfavored faiths had long been sold into bondage. People were born into a station in life and expected to behave accordingly. Few even bothered to question such “structural inequalities.” No human society had ever embraced the radical idea that “all men are created equal,” much less tried to put it into practice.

    That is, until July 4, 1776, when a slaveholding plantation owner named Thomas Jefferson declared it to be the foundational creed of a new nation. That foundation was truly exceptional. It sent the young America on a collision course with all of past history. One after another, the time-honored institutions of inequality fell before this revolutionary American ethos.

    Four score and seven years later, Abraham Lincoln reiterated Jefferson’s proposition as part of the fight to end slavery. A century after that, King galvanized the nation to end Jim Crow. Over the next few decades, the United States not only dismantled all legal and most social barriers to black advancement, but also adopted numerous set asides and preferences to promote the full integration of its black citizens into the American dream. In 2009, America inaugurated its first black president.

    Those steps were all exceptional and proper sources of American pride. Yet viewed through the lens of CRT, they merely masked increasingly subtle forms of anti-black racism and white supremacism.

    CRT’s ability to reach such a conclusion reveals just what type of “theory” it is. CRT relies upon the reasoning that has served as the hallmark of conspiracy-theoretic thinking: Evidence—like slavery—tending to support the argument that the United States is racist is taken at face value, while evidence tending to negate it—like the elevation of King to the forefront of this country’s heroes—is inverted into support. To critical race theorists, CRT is self-evidently true. All relevant evidence, no matter what it appears to say, is taken as confirmation.

    CRT is a toxic, racist, anti-American conspiracy theory. At its heart is a denial of the American exceptionalism that has done more than any other ideology to combat inequality and discrimination. CRT has no place in our schools. America’s children should learn that their nation introduced new notions of equality to the world—and dedicated its history to broadening their applicability. They should learn to embrace America’s foundational ideal and take pride in the way it has developed throughout our history.

    True advocates for diversity and inclusion should love no country on earth more than the United States. Our exceptional nation has taught the world that broad equality under the law provides a far better path to stability and prosperity than the perpetual struggle among divided groups ever could. That’s why true opponents of racism oppose CRT—in our schools and elsewhere.

    Tyler Durden
    Sat, 05/29/2021 – 23:30

  • Space Plane Startup Promises Los Angeles To Tokyo In One Hour 
    Space Plane Startup Promises Los Angeles To Tokyo In One Hour 

    Modern transportation is experiencing significant upgrades thanks to transformative technologies. A startup space plane company is promising hypersonic flight worldwide and travel times to anywhere in about an hour. 

    Venus Aerospace is building a passenger aircraft that will revolutionize the world’s transportation sector with hypersonic flight. The company raised $3 million in a March funding round. It plans to build a Mach 12 hypersonic aircraft designed to travel at the edge of space, allowing passengers to go from Los Angeles to Tokyo in one hour.

    Traveling in a space plane is sort of like traveling in a regular plane, except for when the pilot initiates rocket boosters mid-flight that propels it to the edge of space. The aircraft then glides back into the atmosphere and can land at any conventional airport. 

    Two former Virgin Orbit employees started Venus: Sarah Duggleby, a launch engineer, and her husband, Andrew, who manages launch, payload, and propulsion operations.

    “Every few decades humans attempt this,” Andrew Duggleby told Bloomberg, as for now, the dream of high-speed global travel is in reach because of new rocket engine and hypersonic technologies. “This time, it will work.”

    The Dugglebys say their space plan has more efficient engines, wings, landing gear, and jet engines that allow it to take off like a commercial airliner. 

    Jack Fisher, a former NASA astronaut who analyzed Venus’ plans, said the initial blast of acceleration “throws you back in your seat” but soon dissipates because “you get going so fast that you don’t even feel it anymore.”

    Three scale models of the space plane will be tested this summer. The project is expected to take at least a decade of testing before commercialization. 

    If the technology works, Venus will have to decide if the plane is for commercial or military use first. Already, the husband and wife team, with a dozen employees, have secured a research grant from the U.S. Air Force.

    Sassie Duggleby suggests the superfast space plane is for “regular people.”  

    Before hypersonic space planes, we suspect supersonic ones would be commercialized first, at the end of this decade.  

    The Federal Aviation Administration is already issuing new regulations around supersonic travel as multiple startups are working on developing supersonic aircraft.  

    Tyler Durden
    Sat, 05/29/2021 – 23:00

  • Coming Soon: China's Navy Patrolling Off New York?
    Coming Soon: China’s Navy Patrolling Off New York?

    Authored by Gordon Chang via The Gatestone Institute,

    China is scouting for a naval base on the west coast of Africa. In the near future, therefore, Chinese ships could be regularly patrolling off America’s East Coast.

    In recent testimony before the House and Senate Armed Services Committees, General Stephen Townsend, commander of U.S. Africa Command, has been sounding the alarm.

    At the moment, China’s only offshore military base is in Djibouti, on the Horn of Africa. The facility is near some of the world’s busiest shipping routes, including those going through the Suez Canal.

    Townsend believes the People’s Liberation Army Navy is surveying locations on Africa’s west coast, from Mauritania in the north to Namibia in the south.

    “Now they’re casting their gaze to the Atlantic coast and wanting to get such a base there,” the general told the Associated Press.

    Africa is important in its own right.

    “Located at the crossroads of the world, Africa watches over strategic choke points including the Strait of Gibraltar, the Strait of Sicily, the Red Sea, the Bab al Mandeb, and the Mozambique Channel,” General Townsend pointed out in a publicly released 2021 Posture Statement for Congress.

    “The land mass of Africa is larger than the United States, China, India, Japan, and most of Europe combined.”

    The African continent is home to 11 of the 25 fast-growing economies and is the world’s most demographically vital region.

    Chinese planners are not only thinking of the continent, they are also eyeing islands in the Atlantic, specifically Terceira, one of the Azores.

    On that island, part of Portugal, there is a port and, of even greater interest, Air Base No. 4. Better known as Lajes Field, the facility is jointly operated by the U.S. Air Force and its Portuguese counterpart.

    If China controlled the base, the Atlantic would no longer be secure. From the 10,865-foot runway there, Chinese planes could patrol the northern and central portions of the Atlantic and thereby cut air and sea traffic between the U.S. and Europe. Beijing would also be able to deny access to the nearby Mediterranean Sea.

    Pentagon budget cutters have been scaling back activities at Lajes, making it a “ghost base.” As a result, Lajes is ripe for China to take it over.

    Whether China takes over Lajes or not, China’s plans for Africa are clear. As Bradley Bowman of the Foundation for Defense of Democracies told the Washington Times this month, “It’s just a matter of time before you have regular surface and subsurface Chinese naval vessels in the Atlantic.”

    An Atlantic base “would let China make mischief for the United States in its own hemisphere,” James Holmes of the U.S. Naval War College told Gatestone.

    “It could siphon some U.S. forces from the Western Pacific to the Atlantic, easing the pressure on China in the East China Sea, Taiwan Strait, and South China Sea. It would distract and stretch us to Beijing’s benefit.”

    Worse, China could then target the American homeland. Lajes, for instance, is less than 2,300 miles from New York, shorter than the distance between Pearl Harbor and Los Angeles.

    China could get a base even closer than that. About 90 miles east of Palm Beach, on Grand Bahama Island, a Hong Kong-based business is spending about $3 billion on a deep-water container facility, the Freeport Container Port.

    That port is designed to take advantage of traffic from the recently expanded Panama Canal, but the concern is that the port will become another Hambantota. China in December 2017 took control of the Hambantota port in Sri Lanka, grabbing 70% of the equity and signing a 99-year lease after that project could not repay high-interest loans extended by China. China’s takeover was inevitable because Hambantota was, from an economic point of view, misconceived from the beginning.

    Now there are concerns that Hambantota will eventually become a Chinese naval base. China’s admirals have long eyed Sri Lanka. In both September and October 2014, the Sri Lankan government allowed a Chinese submarine and its tender to dock at the Chinese-funded Colombo International Container Terminal.

    Sri Lanka is perhaps the model for China’s militarization of the Bahamas. In addition to the overly large facility in Freeport, there is a Chinese-funded port on Abaco Island, also part of the Bahamas. The port in Abaco is essentially useless from a commercial point of view and could fall into Beijing’s hands.

    China, therefore, could have two naval bases close to Florida, unless the Biden administration moves fast to block Chinese penetration of the Bahamas.

    As Holmes points out, it would be a mistake to believe that countries in Africa or this hemisphere will not assert their own interests.

    “It’s worth speculating about what response a Chinese presence would elicit from South Atlantic countries, not just ourselves,” he tells this site.

    “Like other regional hegemons, Brazil has proprietary feelings toward regional waters, especially considering how much of Brazilians’ economic hopes depend on the offshore ‘Blue Amazon.’ “

    Holmes, the first holder of the J. C. Wylie Chair of Maritime Strategy at the Naval War College, suggests Brazil could act like India. In the Indian Ocean, India, with big ambitions, can determine outcomes close to its coast. “China,” Holmes says, “can’t automatically bully its way into a dominant position.”

    At the moment, Beijing, deploying trade, investment, and other tools, bullies and intimidates countries in Africa and in Latin America and the Caribbean. America can counter, however, by working closely with capitals on both sides of the Atlantic.

    Yet Washington needs to look beyond countries with ports. South and Central America and the Caribbean are important in their own right, as is Africa.

    At the moment, America is, with trade and investment, strengthening a hostile Chinese regime, which has declared the U.S. to be its enemy. Last year, America’s two-way trade with China totaled $560.1 billion.

    Washington, with incentives and disincentives, should redirect trade toward countries in Africa and the Western hemisphere so that the U.S. can build support for democracy instead of Chinese-style totalitarianism — and permit countries to be less reliant on Chinese cash.

    There is a long way to go to build ties. America’s two-way trade in goods with Africa last year was a paltry $45.8 billion. The figure for US two-way trade in goods and services with Brazil last year was $103.9 billion.

    That brings us back to the Chinese naval bases. Beijing, as evident from statements from its leaders, wants to rule the world. An interim step is controlling the Atlantic, the Caribbean, and the waters off the East Coast of the United States.

    Tyler Durden
    Sat, 05/29/2021 – 22:30

  • Australian Mouse Plague May Last Two Years; Rodents Eye Sydney Invasion 
    Australian Mouse Plague May Last Two Years; Rodents Eye Sydney Invasion 

    Australia’s out-of-control mouse plague is worsening in New South Wales, a southeastern Australian state, as experts warn the fast-spreading rodents could overwhelm the area for two years if urgent extermination action is not taken, according to Daily Mail. 

    Xavier Martin, the New South Wales Farmers (NSW Farmers) vice president, said farmers are abandoning their fields and barns as a biblical wave of mice devour the region’s crop before it can be harvested. He said now is the perfect time to stop the plague. 

    “Farmers are abandoning some paddocks and cannot hold off winter crop sowing a moment longer, and researchers warn that without a concerted baiting effort in the next few weeks, this could easily turn into a two-year plague event.

    “After more than eight months of battling growing mouse numbers, farmers are still waiting for State Government assistance to hit the ground and offer some practical support to our farming community,” Martin said.

    He said the NSW government’s mouse plague aid is “impractical, dysfunctional, and weeks away, which is not helping farmers who need support right now to drive mouse numbers down and break this horrible, unrelenting cycle.” 

    “NSW Farmers has consistently said the simplest, safest, and most timely way for the State Government to assist farmers would be through providing rebates of up to $25,000 per farm business to cover 50 percent of the cost of zinc phosphide bait,” he added.

    Mouse tracking website “MouseAlert” shows the mice are migrating from the countryside into cities. There are concerns the mice are already populating across the Sydney metro area. 

    “Mice are a significant problem in Australia, causing severe economic, social and environmental damage during plagues,” the website states. 

    Videos posted on Twitter show stomach-churning scenes of mice pouring out of grain storage facilities and equipment. 

    https://platform.twitter.com/widgets.js

    https://platform.twitter.com/widgets.js

    https://platform.twitter.com/widgets.js

    Australia suffers from a mouse plague every decade or so. A combination of a bumper crop in NSW and heavy rains resulted in perfect breeding conditions for mice in late 2020. 

    What’s concerning is that migrating mice to city centers could transmit diseases such as hantavirus, leptospirosis, salmonellosis, tularemia, and even the plague.

    NSW has faced everything from drought to brushfires, a pandemic, devastating floods, massive hordes of spiders, and now a biblical wave of mice. 

    Apart from the economic cost of the mouse plague, a public health crisis could be forming as mice swarms appear to be honing in on Sydney. 

    Tyler Durden
    Sat, 05/29/2021 – 22:00

  • Appellate Court Strikes Down Racial And Gender Preferences In Biden's COVID Relief Law
    Appellate Court Strikes Down Racial And Gender Preferences In Biden’s COVID Relief Law

    Authored by Glenn Greenwald vis Substack, (emphasis ours)

    This judicial ruling about the raging debates over group-based benefits vividly highlights the social, political and culture divisions driving U.S. politics…

    A federal appellate court on Thursday invalidated the racial and gender preferences in President Biden’s $1.9 trillion American Rescue Plan Act as unconstitutional. The Cincinnati-based Sixth Circuit of Appeals ruled that provisions of that law, designed to grant preferences to minority-owned small-restaurant owners for COVID relief, violate the 14th Amendment’s guarantee of equal protection under the law:

    No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

    The specific provision struck down was part of the law’s $29 billion Restaurant Revitalization Fund grant program for small, privately owned restaurants struggling to meet payroll and rent due to the COVID crisis. The law, which was passed almost entirely by a party-line vote in March, grants priority status to restaurants that have 51% ownership or more composed of specific racial and ethnic groups as well as women. By effectively relegating struggling businesses owned by white males or ethnicities and nationalities excluded from a priority designation “to the back of the line,” the COVID relief program, ruled the court by a 2-1 decision, ran afoul of core constitutional guarantees.

    The ruling is not only constitutionally significant in its own right but also vividly reflective of broader societal debates over how race and gender categories ought to be treated when set next to class. The parties to this case as well as the judges involved in the ruling themselves highlight the pervasive conflicts created by race and gender preferences.

    The lawsuit was brought by Jake’s Bar and Grill, a restaurant jointly owned by Antonio Vitolo, who is white, and his wife, who is Hispanic. If Vitolo’s wife owned more than 50% of the restaurant, then Jake’s Bar and Grill would be eligible to receive priority treatment for a grant, since her ethnicity qualifies as “socially and economically disadvantaged” under the law. But because she only owns 50% — her white husband owns the other half — the restaurant’s application cannot be considered until the Small Business Administration (SBA) first processes all applications from restaurants entitled to priority status based on race and gender, as well as veteran status.

    The Vitolos’ restaurant, said the court, “has struggled during the pandemic—it closed on weekdays and offered to-go orders on weekends. It lost workers and a considerable amount in sales.” For that reason, they filed their application for a grant under the COVID relief bill on the first day the SBA accepted applications, which was May 1. But under the law, their application could not be considered until the 21-day period reserved for priority businesses elapsed. If all of the allocated grant money were exhausted during that designated 21-day period — as the Vitolos feared — then Jake’s Bar and Grill and other non-minority-owned struggling businesses would receive no relief.

    The Vitolos filed a lawsuit against the SBA administrator asking that the race-and-gender-based scheme be enjoined and that, instead, their application be processed without regard to their race. Though the district court judge rejected the request on a variety of procedural and substantive grounds, the three-judge appellate panel yesterday ruled in their favor.

    The court ordered the government to cease “using these unconstitutional criteria when processing Antonio Vitolo’s application.” The majority expressed the crux of its ruling simply: “This case is about whether the government can allocate limited coronavirus relief funds based on the race and sex of the applicants. We hold that it cannot.”

    The appellate judge who wrote the majority opinion is Amul Thapar. He made history when, in 2008, he became the first-ever South Asian judge appointed to the U.S. federal bench after being selected by then-President George W. Bush. The son of immigrants from India, whose father owns a heating and air-conditioning supply business in Toledo, Ohio, Thapar was elevated to the Sixth Circuit in 2017 after first being considered by President Trump for the Supreme Court vacancy ultimately filled by Justice Neil Gorsuch.

    Sixth Circuit Court of Appeals Judge Amul Thapar authored a ruling invalidating the race and gender preferences in President Biden’s COVID relief bill, May 27, 2021 (photo: Court of Appeals)

    Thapar’s ruling contains multiple indirect references to his own ethnicity and race. Among the components of the racial preference scheme that clearly offended his constitutional sensibilities was the seemingly arbitrary classification calculus — what he called a “scattershot approach” — used to determine which groups do and do not qualify as “socially and economically disadvantaged” under SBA regulations. As Judge Thapar put it:

    [I]ndividuals who trace their ancestry to Pakistan and India qualify for special treatment. But those from Afghanistan, Iran, and Iraq do not. Those from China, Japan, and Hong Kong all qualify. But those from Tunisia, Libya, and Morocco do not.

    The racial divisions and ethnic categories imposed on the citizenry for determining which restaurants are eligible for COVID relief are, in his view, as irrational as they are discriminatory. One hypothetical invoked by Judge Thapar illustrated the precise racial discrimination which, in his view, the Fourteenth Amendment’s Equal Protection guarantee was created to avoid:

    Imagine two childhood friends—one Indian, one Afghan. Both own restaurants, and both have suffered devastating losses during the pandemic. If both apply to the Restaurant Revitalization Fund, the Indian applicant will presumptively receive priority consideration over his Afghan friend. Why? Because of his ethnic heritage. It is indeed “a sordid business” to divide “us up by race.” League of United Latin Am. Citizens v. Perry, 548 U.S. 399, 511 (2006) (opinion of Roberts, C.J.). And the government’s attempt to do so here violates the Constitution.

    Thapar was referencing the fact that under SBA regulations, a person is deemed “socially and economically disadvantaged” if they are “black, Hispanic, or Native American.” They are deemed presumptively disadvantaged as “Asian Pacific Americans” only “if they have origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, the Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru.” Meanwhile, for a person to qualify as “Subcontinent Asian Americans,” they “must have origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands, or Nepal.”

    If a person is in one or more of those groups, they are deemed presumptively disadvantaged — and thus entitled to priority grant allocation — unless “someone comes forward” with “credible evidence to the contrary.” But if someone is not in one of those groups — not just if they are white or male but also from any of the countries excluded from the preferred designations — then they can qualify only if they “prove they have experienced racial or ethnic discrimination or cultural bias by a preponderance of the evidence,” a process filled with lengthy delay and red tape.

    If they fail to demonstrate this to the satisfaction of the SBA, then they must wait, and perhaps never receive relief. As Judge Thapar put it, “the schedule of racial preferences detailed in the government’s regulation—preferences for Pakistanis but not Afghans; Japanese but not Iraqis; Hispanics but not Middle Easterners—is not supported by any record evidence at all.” The law, in his words, is designed for “presumptively sending men from non-favored racial groups (including whites, some Asians, and most Middle Easterners) to the back of the line.”

    Thapar, who was joined in the decision by Reagan-appointed Judge Alan Norris, recognized that racial and gender preferences are sometimes constitutionally permissible under Supreme Court jurisprudence, but only if “the government has a compelling interest” in giving some racial and ethnic groups preferential treatment, and only if the preferences are “narrowly tailored,” whereby “the government must show ‘serious, good faith consideration of workable race-neutral alternatives.’”

    The court ruled the preference scheme in the COVID relief law constitutionally insufficient for multiple reasons. Among them was the lack of a specific nexus between the discrimination suffered by the favored groups and prior government action. Equally significant, said the court, was the existence of numerous race-neutral alternatives to the problems identified by the government that they are trying to fix: namely, that minority-and-female owned businesses have had greater difficulty obtaining credit or prior COVID relief funds. “The government could,” said the court, “grant priority consideration to all business owners who were unable to obtain needed capital or credit during the pandemic,” rather than only those who are from preferred racial groups. Or the state “could simply grant priority consideration to all small business owners who have not yet received coronavirus relief funds” (emphasis added).

    But instead of a targeted effort to assist all American small-restaurant owners who have suffered equally from the pandemic, the law arbitrarily grants priority to some based on racial or gender identity that has no necessary relationship to economic suffering. The law, for instance, favors white women over Middle Eastern men. And it grants priority to ethnic groups that are among the highest earners in the U.S. — including Indian-Americans and specific groups of Asian-Americans — over lower-earning groups including white men and Middle Easterners.

    Group-based income levels in the from 2013-15 U.S. Census Bureau data. Data from subsequent years adheres to these trends.

    The court explained this irrational approach in the context of striking down the law’s gender preference:

    The priority system is designed to fast-track applicants hardest hit by the pandemic. Yet under the Act, all women-owned restaurants are prioritized—even if they are not “economically disadvantaged.” Pub. L. No. 117-2, § 5003(c)(3)(A). So whether a given restaurant did better or worse than a male-owned restaurant next door is of no matter—as long as the restaurant is at least 51% women owned and otherwise meets the statutory criteria, it receives priority status. Because the government made no effort to tailor its priority system, we cannot find that the sex-based distinction is “substantially related” to the objective of helping restaurants disproportionately affected by the pandemic.

    In sum, divvying up Americans by race and gender and determining who, on that basis, is entitled to benefits and who is not, is something that is constitutionally permissible only in the narrowest and most extreme circumstances. In the view of the court, the race and gender preferences embedded in the COVID relief bill for small-restaurant owners did not come anywhere near that requisite justification. “As today’s case shows once again,” concluded the court, quoting a prior Supreme Court ruling, the ‘way to stop discrimination on the basis of race is to stop discriminating on the basis of race.’”

    The dissenting judge, Bernice Donald, is an African-American woman who was first appointed to the federal bench in 1995 by President Bill Clinton, then elevated to the Sixth Circuit in 2011 by President Barack Obama. Her dissenting opinion thoroughly captures the broader political arguments in favor of providing race-and-gender-based preferences.

    “It took nearly 200 years for the Supreme Court to firmly establish that our Constitution permits the government to use race-based classifications to remediate past discrimination,” she wrote, but “only seven days for the majority to undermine that longstanding and enduring principle.” Echoing the argument made by those who advocated for such legislative preferences in the first place, Judge Donald insisted that the purportedly race-blind majority opinion ignores systemic realities about how the United States functions and the damages it imposes on specific groups of people:

    The majority’s conclusion that Plaintiffs are entitled to injunctive relief requires us to make several assumptions. The majority’s reasoning suggests we live in a world in which centuries of intentional discrimination and oppression of racial minorities have been eradicated. The majority’s reasoning suggests we live in a world in which the COVID-19 pandemic did not exacerbate the disparities enabled by those centuries of discrimination. The majority’s reasoning suggests that we live in a world in which Congress passed the Restaurant Revitalization Fund (“RRF”) not to aid the nation’s economic recovery, but to arbitrarily provide special treatment to racial minorities and women.

    She also argued that the evidence is overwhelming that the racial and gender preferences in the law correspond to those most discriminated against by COVID struggles. Citing the legislative process and the judicial hearing, she said “experts offered evidence showing that minority-owned businesses were more vulnerable to economic distress than businesses owned by white entrepreneurs—they were more likely to operate in retail, accommodation, food services, and personal care services industries, which were hardest hit by government shut-down orders and a decrease in foot traffic.” Beyond that, she said, minority-owned businesses were more likely to be in areas with higher rates of COVID-19 infections.”

    Judge Donald seemed to concede that no scheme of racial or gender preferences will perfectly match the realities of the population. Some people who do not suffer as much will receive race-based benefits, while others who suffer more will be denied them. But such schemes, in her view, are nonetheless constitutionally justified given the “broad-based emergency legislation designed to fight business fallout that is uniquely and directly tied to the COVID-19 pandemic.” Given the one-time emergency nature of this grant, she said, “we must avoid hurried judicial decision-making under such circumstances,” and should grant extra deference to the legislature regarding its assessments of how best to help a struggling population.

    Judge Donald’s core argument is that racial and gender preferences, even if imperfectly targeted, are justified to cure widespread racial and gender inequalities.

    “Entrepreneurs of color have had specific difficulty in accessing business capital,” she said, while “banks require more documentation from minority applicants but approve loans less often or for lower amounts” and “minority entrepreneurs had lower familial and household incomes, decreasing access to private capital.”

    But what of the solutions proposed by the majority, which would target people based on need rather than race and gender? Judge Donald conceded that “in normal times, there may be some force to the majority’s position,” but given the need to “act fast,” some imperfections are inevitable. The Congress, she said, is far better positioned than the Court to assess what is best for the nation during an emergency.”

    The undercurrents and conflicts driving this case are highly illustrative of broader cultural debates. Indeed, the case captures the core question driving much politics in the U.S. and the West: is it remedial, or bigoted, to continue to divide people based on race and gender and determine their official rights, benefits and preferences based on their membership in demographic groups rather than the realities of their individual lives?

    Specific states, such as Oregon, have explicitly set aside millions of dollars in COVID relief funds available only to black residents. Such race-based benefits across the nation have prompted similar litigation and have resulted in many of these funds being frozen pending their outcome (a Mexican-American resident of Oregon who sued the state over the state’s black-only relief fund had her case rejected).

    This latest appellate ruling — at least when it comes to COVID relief for small-restaurant owners in the Sixth Circuit (parts of Kentucky, Michigan, Ohio and Tennessee) — resolves that question in favor of individual treatment and against group-based preferences. But that specific decision is likely to be appealed to the full court and perhaps the Supreme Court and, either way, this specific race and gender debate will continue to rage.

    Tyler Durden
    Sat, 05/29/2021 – 21:30

  • Prosecutors Seek To Seize $15 Million Fly Fishing Lodge In "Biggest U.S. Tax Evasion Case Ever"
    Prosecutors Seek To Seize $15 Million Fly Fishing Lodge In “Biggest U.S. Tax Evasion Case Ever”

    Billionaire Robert Brockman was indicted last year on the “biggest U.S. tax-evasion case ever against an individual”. Now, prosecutors are looking to seize his assets, including a $15 million fishing lodge in Colorado and $77.9 million in a Swiss bank account, according to Bloomberg.

    The 80 year old Brockman is being accused of failing to report $2 billion in income and using a foreign company to buy secondary debt in his own software firm at a deep discount. The government says that assets tied to the debt fraud can be forfeited, which includes the fishing lodge on the Frying Pan River. It’s the government’s first attempt at taking his property since he was indicted last October. 

    The 143 acres were used by Brockman as he “spent parts of his summers fly fishing for rainbow and brown trout”. He built the property to avoid the 30 minute drive from Aspen to the Frying Pan River. 

    “If you’re a fisherman, it’s just a wonderful place to live,” John Gierach, the author of “Sex, Death, and Fly-Fishing” told Bloomberg, calling the area “one of Colorado’s best trout streams.” 

    Now, the burden is on the government to show the land was “the product of tainted funds”, Bloomberg reports. Internal Revenue Service special agent Ted Lair said in a court filing that Brockman laundered illicit proceeds through funds managed by Vista Equity Partners.

    That firm is run by Robert Smith, who already agreed to a deal with prosecutors to help deliver Brockman in exchange for avoiding prosecution for his own tax evasion crimes. He’s also paying $139 million in back taxes. Lair noted that Smith was “unaware” of the debt fraud being perpetrated by Brockman. 

    Swiss prosecutors have frozen more than $1 billion held in bank accounts belonging to Brockman. 

    Brockman has pleaded not guilty and denies wrong doing. His lawyers have claimed he has dementia and can’t aid in his defense. Prosecutors, meanwhile, think he “may be faking the illness”, bringing to the court’s attention that Brockman worked at his software company up to and through the date of his indictment. 

    A judge is set to rule on the asset seizure, review expert testimony from medical experts and determine where and when Brockman should stand trial, later this year.

    Tyler Durden
    Sat, 05/29/2021 – 21:00

  • Restricting Freedom Didn't Defeat COVID
    Restricting Freedom Didn’t Defeat COVID

    Authored by John Tamny via The American Institute for Economic Research,

    Let’s travel back in time to March of 2020, when predictions of mass death related to the new coronavirus started to gain currency. One study, conducted by Imperial College’s Neil Ferguson, indicated that U.S. deaths alone would exceed 2 million. 

    The above number is often used, even by conservatives and libertarians, as justification for the initial lockdowns.

    “We knew so little” is the excuse, and with so many deaths expected, can anyone blame local, state, and national politicians for panicking?

    The answer is a resounding yes.  

    To see why, imagine if Ferguson had predicted 30 million American deaths. Imagine the fear among the American people then—which is precisely the point: The more threatening a virus is presumed to be, the more superfluous government force is. Really, who needs to be told to be careful if a failure to take precautions could reasonably result in death? 

    Death predictions aside, the other justification bruited in March of 2020 was that brief lockdowns (two weeks was the number often thrown around) would flatten the hospitalization curve. In this case, the taking of freedom allegedly made sense as a way of protecting hospitals from a massive inflow of sick patients that they wouldn’t have been able to handle, and that would have resulted in a public health catastrophe.

    Such a view similarly vandalizes reason. Think about it. Who needs to be forced to avoid behavior that might result in hospitalization? Better yet, who needs to be forced to avoid behavior that might result in hospitalization at a time when doctors and hospitals would be so short-staffed as to not be able to take care of admitted patients? Translated for those who need it, the dire predictions made over a year ago about the corona-horrors that awaited us don’t justify the lockdowns; rather they should remind the mildly sentient among us of how cruel and pointless they were. The common sense that we are to varying degrees born with, along with our genetic predisposition to survive, dictates that a fear of hospitalization or death would have caused Americans to take virus-avoidance precautions that would have well exceeded any rules foisted on them by politicians. 

    To which some will reply with something along the lines of “Not everyone has common sense. In truth, there are lots of dumb, low-information types out there who would have disregarded all the warnings. Lockdowns weren’t necessary for the wise among us; rather they were essential precisely because there are so many who aren’t wise.”

    Actually, such a response is the best argument of all against lockdowns.  

    Indeed, it cannot be stressed enough that “low information” types are the most crucial people of all during periods of uncertainty. Precisely because they’ll be unaware of, misunderstand, or reject the warnings of the experts, their actions will produce essential information that the rule-followers never could. In not doing what the allegedly wise among us will, low information citizens will, by their contrarian actions, teach us what behavior is most associated with avoidance of sickness and death, and more important, what behavior is associated with it. 

    One-size-fits-all decrees from politicians don’t enhance health outcomes as much as they blind us to the actions (or lack thereof) that would protect us the most—or not. Freedom on its own is a virtue, and it produces crucial information. 

    But wait, some will say, “how elitist to let some people act as Guinea Pigs for the rest of us.” Such a statement is naïve. Heroin and cocaine are illegal, but people still use both. Thank goodness they do. How could we know what threatens us, and what doesn’t, without the rebellious? 

    Still, there’s the question of “elitism.” The lockdowns were the cruelest form of elitism, by far. The implication of the lockdowns was that those who had the temerity to have jobs that were destinations—like restaurants and shops—would have to lose them. The lockdowns destroyed tens of millions of destination jobs, destroyed or severely impaired millions of businesses, not to mention the hundreds of millions around the world who were rushed into starvation, poverty, or both as a consequence of nail-biting politicians in countries like the U.S. that chose to take a break from reality. Talk about elitist actions. The very idea of wrecking the economy as a virus-mitigation strategy will go down in history as one of the most abjectly stupid policy responses the world has ever endured. 

    That’s the case because economic growth is easily the biggest enemy death and disease have ever known, while poverty is easily the biggest killer. Economic growth produces the resources necessary so that doctors and scientists can come up with answers to what needlessly sickens us, or shortens our lives altogether. 

    In the 19th century, a broken femur brought with it a 1 out of 3 chance of death, while those lucky enough to survive the break had only one option: amputation. A child born in the 19th century had as good a chance of dying as living. A broken hip was a death sentence, cancer most certainly was, but most didn’t die of cancer because tuberculosis and pneumonia got them first. 

    So what happened? Why don’t we get sick or die as easily as we used to? The answer is economic growth. Business titans like Johns Hopkins and John D. Rockefeller created enormous wealth, only to direct a lot of it toward medical science. What used to kill us became yesterday’s news. 

    Even though freedom is its own wondrous virtue, even though freedom produces essential information that protects us, and even though free people produce the resources without which diseases kill with sickening rapidity, panicky politicians erased it in 2020 on the supposition that personal and economic desperation was the best solution for a spreading virus. Historians will marvel at the abject stupidity of the political class in 2020.

    Tyler Durden
    Sat, 05/29/2021 – 20:30

  • EPA Orders Shutdown Of St. Croix Refinery After Oil "Rains Down" On The Island
    EPA Orders Shutdown Of St. Croix Refinery After Oil “Rains Down” On The Island

    It was literally raining oil in St. Croix a couple weeks ago – and not in the good “newly discovered oil”-type way most people know from movies and TV.

    The oil falling from the sky was the result of a “flare incident” that took place Limetree Bay refinery; the incident shot oil up into the sky and it was carried west by the wind before raining down on parts of the island, according to CNN. 

    As a result of the incident, the US Environmental Protection Agency ordered an emergency, 60-day shutdown of the plant, citing an “imminent risk” to public health, the report says. The incident sent sulfur dioxide and hydrogen sulfide into the air. 58 year old resident Dyline Thomas said: “The smell was so strong, like sulfur, like rotten eggs.”

    As a result of the “incident”, she said she had an upset stomach, running nose and sore throat. 

    The release of oil has the island reconsidering whether or not its economic future is worth keeping the refinery on the island. While it has provided jobs and revenue for the island’s battered economy, residents are starting to question whether the “price is too high”. 

    Jennifer Valiulis, the executive director of the St. Croix Environmental Association, told CNN: “We are at a crossroads. We have an opportunity to examine what we want our economy to look like, what we want St. Croix to be in a world that’s moving away from fossil fuels as its primary energy source.”

    The island had its first refinery – responsible for helping its citizens raise their quality of life – open in 1966, managed by Hess. The same petroleum refinery paid $5.3 million in fines in 2011 for environmental violations. It then filed for bankruptcy and shut down before being re-opened via a grant issued by the Trump administration. It produces about 200,000 barrels of oil per day. 

    Virginia Clairmont, who runs a nonprofit working to revitalize the town of Frederiksted on the island’s western end, has spoken out about the refinery: “If you talk about it, you’ll be attacked for trying to deprive other people of jobs.”

    Covid-19 also struck a blow to the island, crippling its cruise industry just years after Hurricanes Irma and Maria “devastated” the island. 

    The restart of the plant created 400 full time jobs and will generate about $7 million in annual tax revenue. 

    Local senator Nellie Rivera-O’Reilly pushed for the re-opening of the plant. She told CNN: “As a business owner now, I see the benefits of the refinery, or any employer of that magnitude, remaining viable on the island of St. Croix.” 

    But the EPA received “hundreds of calls and emails” complaining about the plant since it reopened. Tysha Henry, who grew up on St. Croix, said smells from the plant woke her up at night: “It felt like I was going to asphyxiate or something. I will not be going back home as long as this smell is there,” 

    EPA Administrator Michael Regan said of the decision to shut down the plant: “This already overburdened community has suffered through at least four recent incidents that have occurred at the facility, and each had an immediate and significant health impact on people and their property.”

    Speaking about the spill, Rivera-O’Reilly concluded: “These things happen in these types of industries. The thing to do is to make sure we learn and put in place measures to prevent this from happening.”

    Tyler Durden
    Sat, 05/29/2021 – 20:00

  • Could Facebook’s Diem Become FedCoin By Default?
    Could Facebook’s Diem Become FedCoin By Default?

    Submitted by Mark Jeftovic, Co-founder and CEO, easyDNA technologies.

    Today’s post is an excerpt from the monthly edition of The Crypto Capitalist Letter. To learn more about TCC and receive a free copy of The Crypto Capitalist Manifesto, join the Bombthrower list here.

    I had a reader ask me about Silvergate Capital. They’re a bank holding company with a lot of exposure to the crypto currency space. I hadn’t yet analyzed them deeply, but I did notice that they recently announced a partnership with Facebook on their DiemUSD stablecoin.

    Diem is Facebook’s rebrand of Libra. Libra was a private crypto currency Facebook proposed to launch which in my mind was a transformative event for nation states and central banks. That was the moment when the establishment elites realized that non-state money had arrived and it posed an existential threat to the status quo.

    They were able to hold off Facebook’s Libra, for awhile. They fought dirty. US Senators sent straight up extortion letters to members of Facebook’s Libra Consortium threatening to investigate them for ostensible ties to child pornography on Facebook’s platform if they went through with the project. They all dropped out.

    My heart didn’t exactly bleed for Facebook, but the incident was instructive. I wrote about it at the time, but I will repeat the salient point here:

    Should a gigantic platform like Facebook successfully launch their own digital currency, a person’s Facebook account will become more important in their day-to-day lives than their nation state issued passport. Especially if we’re entering an era of drastically curtailed travel for plebeians. The battle between the US, France, et al and Facebook over Libra was an early round in the struggle between waning Nation States and ascendent Network States.

    Facebook kept working on their Libra, first under a wallet program called Novi and now as Diem, and Diem USD will be their stablecoin.  One can only surmise that behind the scenes something has shifted so that Facebook thinks they can proceed with launching a new stablecoin.

    This partnership with Silvergate, as well as relocating their Diem Association, which oversees their digital currency projects, from Switzerland back to the United States may be part of that calculus.

    There have been some rumblings that the US is losing the Central Bank Digital Currency race and that one way to jumpstart a program would be to partner with a private entity who is already further down the road with it.

    Who would be uniquely situated to provide a solution in some manner of public-private partnership? Facebook, for one.

    When we think about what Fedcoin could reasonably be expected to do, my guess is:

    • Provide the rails for UBI and other entitlement programs

    • Be fully programmable (an example is Australia’s cashless Centrelink card which will provide welfare benefits that cannot be spent on booze, cigarettes or gambling)

    • Be fully trackable: with everybody walking around with Facebook installed on their smartphone, it’s already baked-in.

    • Ubiquitous: There are more Facebook users in the USA (190 million) than had voted in the last election (161 million).

    Consider this, what everybody knows from all camps (pro fiat, pro Bitcoin, establishment, anti-establishment, et al), is that the days of the petrodollar are numbered. For an excellent summary of how the current petrodollar regime arose and has been enforced over the past 50 years, listen to “From the Petrodollar to a Bitcoin Standard” with Nic Carter and Alex Gladstein on a recent What Bitcoin Did episode hosted by Peter McCormick.

    As pointed out in that episode, the US has a track record of militarily enforcing USD primacy when countries like Iraq or Libya wanted to sell their oil for some other currency than USD.

    What is different between Facebook’s Libra and Facebook’s Diem? Libra was to be backed by a basket of currencies, Diem is a stable coin pegged to USD. US lawmakers moved swiftly to kill Libra in the crib. So far there’s been at least silent assent on Diem.

    It may be that the US policymakers  hope that USD stable coins may be the way for the US to preserve its Exorbitant Privilege and extend its run at the helm of a world reserve currency.

    (But make no mistake: CBDCs will be pathways to dependancy and poverty by design. The antidote to being trapped in a system constructed to preclude wealth and capital formation are crypto-currencies. That’s our focus at The Crypto Capitalist, and you can read the overall thesis here).

    Tyler Durden
    Sat, 05/29/2021 – 19:30

  • China Warns Global Financial Bubble Could Burst
    China Warns Global Financial Bubble Could Burst

    Almost three months after markets stumbled when after China’s top banking regulator said he’s “very worried” about risks emerging from bubbles in global financial markets (and China’s property sector) sparking concerns about further tightening in the world’s second-biggest economy and slamming risk assets, China has done it again and on Saturday Liang Tao, vice chairman of China Banking and Insurance Regulatory Commission, said at the International Finance Forum in Beijing that recent interest rate hikes by emerging economies could lead to a bursting of global financial asset bubbles which have been made even bigger by unprecedented pandemic easing measures by developed countries (i.e., Biden’s trillions). And just in case it wasn’t clear whose fault this is, Tao added that developed countries are sticking with ultra-low rates even as emerging economies raised their borrowing costs, “potentially resulting in the re-pricing of global assets.”

    In short, China is already pre-emptively pointing the finger at the US and western central banks as the parties responsible not only for bursting the biggest asset bubble in history, but for creating it in the first place.

    Liang Tao, Vice Chairman of China Banking and Insurance Regulatory Commission

    Tao’s comments are almost a verbatim repeat of what his boss, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said during a briefing back on March 1 when he said he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector. Again blaming everyone but China, Guo said that bubbles in U.S. and European markets could burst because their rallies are heading in the opposite direction of their underlying economies and will have to face corrections “sooner or later.”

    So what is the solution? None really: instead, the Chinese regulator suggested that all countries should take a page out of China’s totalitarian and centrally-planned playbook and that countries should coordinate financial regulation and improve the monitoring of cross-border fund flows, while emerging markets must prevent risks from large movements of the so-called hot money. He also said that organizations such as the IMF, the World Bank and the WTO should better represent developing countries (but China’s subsidiary known as the World Health Organization?). As if every emerging market has a capital firewall like China which can be shut down at a moment’s notice.

    The official also said China – whose debt has absolutely exploded in the past year – has managed risks from new hidden local government debt, and contained bubble risks in property finance. He also claimed – erroneously – that financial sector leverage has declined, while a disorderly expansion of capital has been corrected. Neither is true…

    … with China’s debt level the highest among major emerging markets…

    … although it is true that China’s credit expansion has slowed down to the point where China’s credit impulse has now turned negative.

    Which means that if anyone is looking for the deflationary catalyst that tips the global financial system into contraction – now that all developed central banks are primed to print metric tons of digital money in order to flood the world with inflation – and crashes the stock market, look no further than China.

    Tyler Durden
    Sat, 05/29/2021 – 19:00

  • Virginia County’s Schools Warned To Revoke Teacher’s Suspension For Declining to Use Students’ Preferred Pronouns
    Virginia County’s Schools Warned To Revoke Teacher’s Suspension For Declining to Use Students’ Preferred Pronouns

    Authored by Mark Tapscott via The Epoch Times (emphasis ours),

    In Virginia, Loudoun County Public Schools officials were warned Friday to revoke their suspension of a teacher for declining to use students’ preferred pronouns or face further legal action.

    Students attend an in-person English class at St. Anthony Catholic High School in Long Beach, California on March 24, 2021. (Patrick T. Fallon/AFP via Getty Images)

    Tanner Cross, who taught at Leesburg Elementary School, was suspended after speaking publicly May 26 during a school board meeting in opposition to the system’s proposed policy that teachers must use the pronouns preferred by students rather than the pronouns consistent with their biological sex.

    Cross was informed May 28 that he was being suspended “pending an investigation of allegation that [he] engaged in conduct that had a disruptive impact on the operations of Leesburg Elementary School.”

    On Friday, Alliance Defending Freedom (ADF) Senior Counsel Tyson Langhofer told school officials in a letter that they must either revoke the suspension and excise all records of it from Cross’s personnel file or he will take further legal action.

    “The First Amendment prohibits retaliation against public employees for speaking on matters of public concern. ‘A  teacher’s  exercise  of his  right  to speak on issues of  public importance  may not furnish  the  basis for his dismissal  from public employment.’ Pickering v. Bd. of Educ. of Twp. High Sch. Dist. 205,391 U.S. 563, 574 (1968),” Langhofer explained in his letter to school officials.

    “Mr. Cross’s expression during public comment time at an open school board   meeting was undoubtedly expression in his private capacity on a matter of public concern. Id. (teachers’ public expression regarding school board actions is protected speech); Janus v. Am. Fed’n of State, Cnty. & Mun. Emps., 138 S. Ct. 2448, 2476 (2018) (listing examples of matters of public concern); see also, Meriwether v.Hartop, 992 F.3d 492, 506-07 (6th Cir. 2021) (teachers’ use of pronouns is protected speech on a matter of public concern),” Langhofer continued.

    “Immediately suspending an employee and launching an investigation for engaging in First Amendment-protected expression, creates an atmosphere of fear and is intended to send a message to Mr. Cross and other teachers that they must toe the line or face the consequences …The First Amendment does not countenance such retaliation.”

    Langhofer added that “we demand that you immediately (1) rescind the suspension, (2) reinstate Mr. Cross so that he can return to class on Tuesday, June 1, (3) remove the suspension letter from his file, and (4) refrain from any future retaliation against protected speech …

    “Absent the complete revocation of this suspension, Mr. Cross will be forced to pursue other legal options to safeguard his rights.”

    A spokesman for the school system could not be reached for comment for this news story.

    While he is suspended, Cross is barred entirely from being on school property or participating in any school activities without obtaining prior permission. He is also required to make himself available to school officials for conversation by telephone or in-person meetings during official business hours.

    Loudoun County is one of the nation’s most affluent counties and has been the focus of serious controversies in its education system as officials here have adopted extensive politically correct policies, educational materials and programs that have sparked major public opposition, including those based on Critical Race Theory (CRT).

    As The Epoch Times has previously reported, Loudoun County parents began to organize in June 2020, asking for the reopening of schools that had been shuttered in response to the CCP (Chinese Communist Party) virus pandemic.

    However, it was the remote learning the district put in place that allowed parents to learn more about what their children are being taught, which raised some red flags.

    “We’re seeing what our kids are learning and our goal changes from opening schools to ‘Oh my gosh. What are we sending our children back to?’” one parent, who asked to remain anonymous because of concern about reprisals, told The Epoch Times.

    “Basically, they’re categorizing children by race to determine the quality of education each will have, which is absolutely unacceptable,” she added. She said her children won’t be returning to that school.

    Loudoun County Public Schools spokesman Wayde Byard denied that the schools are determining the quality, level, or resources for education based on skin color.

    “Our goal is to ensure equity based on this definition as outlined by the Virginia Department of Education: Education Equity is achieved when we eliminate the predictability of student outcomes based on race, gender, zip code, ability, socioeconomic status or languages spoken at home,” he told The Epoch Times via email.

    With reporting by Petr Svab

    Tyler Durden
    Sat, 05/29/2021 – 18:30

  • Missouri Man Sentenced For Role In Largest "Organic Food" Fraud In American History
    Missouri Man Sentenced For Role In Largest “Organic Food” Fraud In American History

    A north Missouri businessman who was involved in the largest organic fraud scheme in American history has been sentenced to probation and fined. According to KTTN, federal prosecutors in Cedar Rapids, Iowa, sentenced Steven Whiteside of Chilicothe to three years probation and a fine of 45-thousand dollars.

    Two other Northwest Missouri men were sentenced to federal prison for their roles in the 142-million dollar grain fraud scheme, which federal prosecutors describe as the “Field of Schemes.”

    Steven Whiteside of Chillicothe pleaded guilty in December to signing a document that allowed Randy Constant to sell conventionally raised grain as certified organic and receive a higher premium.

    Federal prosecutors say Whiteside received $177-thousand for grain that Constant resold to animal feed producers. They had asked for a one-year term in prison for Whiteside. His defense attorney argued he received a lesser sentence for having a clean record and having family obligations.

    Constant, also of Chillicothe, killed himself in 2019, three days after being sentenced to 10 years in federal prison for wire fraud. Four other farmers, one from Missouri and three from Nebraska, received prison sentences for their role in the long-running scheme.

    Back in December, the DOJ said that Constant admitted the fraudulent scheme involved at least $142,433,475 in grain sales, and the vast majority of those sales were fraudulent. From 2010 to 2017, Constant misled customers into thinking they were buying certified organic grain when the grain he was selling was not organic. Constant admitted falsely telling customers the grain he sold was grown on his certified organic fields in Nebraska and Missouri when the grain was not organic either because he purchased the grain from other growers, the certified organic fields were sprayed with unauthorized chemicals, or organic grain was mixed with non-organic grain. As part of the plea, Constant also agreed to forfeit $128,190,128 in proceeds from the fraudulent scheme.

    Constant’s grain was mostly used as animal feed, primarily for chickens and cattle. That livestock was then sold as organic meat or products from the livestock were sold as organic products. Because of Constant’s fraud, most of the livestock that was fed his grain was not organic, causing millions of consumers to purchase what they thought was organic meat for a premium price across the country.

    It is unclear how much of the billions in exorbitantly expensive “organic” food sold every year by the likes of Whole Foods and other overpriced outlets, is just plain, ordinary, off-the-shelf “inorganic” produce with a “ceritifed” sticker slapped on it to part the gullible with their money.

    Tyler Durden
    Sat, 05/29/2021 – 18:00

  • Do We Really Want To Return To "Normal" If "Normal" Is Destroying The Planet?
    Do We Really Want To Return To “Normal” If “Normal” Is Destroying The Planet?

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    Change the incentives, and the outcomes change.

    Ecologist Howard Odum provided a profound insight into human expansion, stagnation and collapse. He argued that humans are wired to maximize power output (i.e., consumption) rather than maximize efficiency.

    In other words, humans are wired to strip the tree of every ripe fruit and throw a party, have more children and use the surplus food to feed an army of conquest. Efficient use of resources is simply not part of what I term Wetware 1.0, the set of tools that was selected and optimized over the past 200,000 years for small hunter-gatherer tribes roaming an apparently near-infinite world.

    We’ve squandered the surpluses enabled by hydrocarbons to maximize energy output (consumption) rather than achieve efficiency. 

    That is finally coming around to haunt the entire “infinite growth on a finite planet” status quo.

    Here’s the happy story being promoted by the status quo: we can keep overconsuming / wasting resources on a vast scale by electrifying everything that is currently powered by hydrocarbons: The Electrification of Everything: What You Need to Know.

    There are a great many problems with this fantasy. One is that per Odum, humanity doesn’t replace hydrocarbons with wind-solar, it consumes all the alt-energy being added, too. Adding energy just increases consumption.

    Another is that the quantity of scarce minerals and resources needed to replace hydrocarbons with so-called renewable energy is so vast that it’s unrealistic.

    As I’ve noted many times, per analyst/educator Nate Hagens, “renewables” are actually ‘replaceables’, as solar panels and wind turbines wear out and need to be replaced every 20-25 years, if not sooner.

    The scale of energy consumption is so vast and the percentage supplied by solar and wind is so insignificant. Most charts lump solar and wind with hydropower and biofuels (wood), but wind and solar provide at best 3% of global energy, after all the tens of billions of dollars that have been invested.

    To provide the majority of global energy consumption, we’d need to increase solar-wind 20-fold, from 3% to 60%. The problem, as Tim Watkins explains, is the Earth doesn’t have enough scarce minerals to build this monstrous global system, and then replace it every 20-25 years: Are you still buying this?

    “Net-zero carbon dioxide by 2050 would require the deployment of ~1500 wind turbines (2.5 MW) over ~300 square miles, every day starting tomorrow and continuing to 2050.”

    “Challenges of using ‘green energy’ to power electric cars: If wind farms are chosen to generate the power for the projected two billion cars at UK average usage, this requires the equivalent of a further years’ worth of total global copper supply and 10 years’ worth of global neodymium and dysprosium production to build the windfarms.”

    “To replace all UK-based vehicles today with electric vehicles, assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018.”

    Every kilogram of these scarce minerals must be mined, transported and processed with hydrocarbons.

    The problem with wind and solar is intermittency: modern industrial economies require steady electrical power 24/7 or they fail. Wind and solar generate power intermittently, meaning they can’t generate a steady supply 24/7 nor can they generate electricity when consumers want to use it.

    So the intermittency problem becomes a storage problem: how can we store surplus electricity in quantities large enough to power our vast consumption when the wind dies and the sun goes down?

    There are no cheap, easy answers to storage, and ideas such as converting it all to hydrogen are not realistic due to cost and safety issues. There isn’t enough lithium and other scarce minerals to build batteries for 2 billion vehicles and storage for every electrical grid on Earth. (And note that lithium batteries have very limited lifespans and need to be replaced every decade, if not sooner. Very few batteries are recycled, so recycling billions of batteries is also a fantasy.)

    As Gail Tverberg observes in her recent post, How the World’s Energy Problem Has Been Hidden:

    “So-called renewable fuels tend to be very damaging to the environment in ways other than CO2 emissions. This point is made very well in the new book Bright Green Lies: How the Environmental Movement Lost Its Way and What We Can Do About It by Derrick Jensen, Lierre Keith and Max Wilbert. It makes the point that renewable fuels are not an attempt to save the environment. Instead, they are trying to save our current industrial civilization using approaches that tend to destroy the environment. Cutting down forests, even if new trees are planted in their place, is especially detrimental. Alice Friedemann, in her new book, Life after Fossil Fuels: A Reality Check on Alternative Fuels, points out the high cost of these alternatives and their dependence on fossil fuel energy.”

    Many people I respect see thorium nuclear reactors as the answer, but like all the other proposals to replace the staggeringly large consumption fueled by hydrocarbons with some other source, it’s not as easy in the real world as it is conceptually.

    India has reserves of thorium and has an ambitious plan to build thorium reactors. But the thorium nuclear fuel cycle is extremely non-trivial, and despite billions of rupees invested, India has yet to complete a single large-scale thorium reactor–and neither has any other nation. There are seven research reactors scattered around the world, but no actual power plants. India’s Ambitious Nuclear Power Plan–And What’s Getting in Its Way:

    “With the commercialization and enhanced use of renewable energy technologies, the per unit cost of electricity produced from renewables has gone down significantly. The cost of solar power in India right now is Rs 2.62 per unit, almost half of the per unit cost of electricity being produced by the recently operational Kudankulam nuclear power plant (Rs 4.10 per unit).”

    The problem is we’ve based our entire global economy on maximizing consumption, not efficiency, so that waste = growth = maximizing profits.

    Consider this chart of energy consumption, and the chart of energy efficiency, which reflects the appalling inefficiency of our consumption.

    Given that we incentivize profits earned from increasing waste (i.e. “growth”), this shouldn’t surprise us.

    As Tim Morgan has explained, our entire financial system presumes that money-finance is the master system that controls everything in the real world, when in fact the financial system is an overlay on the energy system. In essence, the entire financial system is nothing but abstract claims on energy that unlike energy can be endlessly multiplied.

    Claims (currency and debt) can be created out of thin air, but energy systems cannot be created out of thin air.

    The answer isn’t to attempt to replace a disastrously inefficient and wasteful system with replaceable energy sources–a delusional fantasy. The answer is to set aside our Wetware 1.0 programming to maximize energy output and consumption in favor of maximizing energy efficiency and conservation.

    There are a number of ways this transition could be made. For example, rather than tax human labor, we could tax the consumption of non-renewable resources.

    UnTax–Taxing Away Climate Change:

    “Yet the reason for this inertia is simple: the price we pay for fossil fuels, and most other non-renewable resources, is far too low, because we don’t pay for their creation which took hundreds of millions of years, but only for their extraction. To make matters worse, more than 90% of all taxes are paid on labor in most countries, which discourages employment and forces automation into every part of the economy.

    This mix-up, a by-product of the industrial revolution, leads to pollution, greenhouse gas emissions, waste production and the unnecessary use of automation, which damages our ecosystems and at the same time deprives future generations of their right to access those scarce resources.”

    Do we really want to return to the “normal” of waste = growth = maximizing profit if this “normal” is destroying the planet?

    Cutting consumption is anathema in the current mindset of waste = growth = maximizing profit, but the Pareto Distribution suggests we could cut consumption by 80% and still retain 80% of the essentials for a good life such as clean water, healthy food, basic shelter, etc.

    As I posted in Musings #9, consider this short film of Market Street in downtown San Francisco shot a few days before the catastrophic earthquake and fire of 1906. A trip down Market Street before the fire (Library of Congress).

    Life was pretty good in 1906 San Francisco and many other cities. Now look at the energy consumption around 1900: it was around 15 TWh compared to today’s 160 TWh, roughly 10% of current consumption. And the engines and machines of 1906 were by today’s standards extremely inefficient. Adjust for increases in population and efficiency and it’s clear lower-consumption life is not necessarily a return to living in caves.

    Do we really want to return to “normal” if “normal” is destroying the planet?

    Waste is everywhere in our way of life because waste is profitable in the current arrangement. What would happen if waste was taxed at very high rates and efficiency was the sole means of maximizing profits?

    Charlie Munger (head of Berkshire Hathaway) famously said: “Show me the incentive and I will show you the outcome.” That’s how humans operate: we respond to the incentives presented, even if they destroy the planet.

    Change the incentives, and the outcomes change. What if efficiencies and conservation earned the biggest rewards and human labor was freed from taxation? The outcomes would improve very dramatically–and that’s just the start.

    *  *  *

    If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

    *  *  *

    My recent books:

    A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

    Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

    Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

    The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

    Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

    Tyler Durden
    Sat, 05/29/2021 – 17:30

  • China Successfully Launches Cargo Rocket With Supplies For New Space Station
    China Successfully Launches Cargo Rocket With Supplies For New Space Station

    China launched an automated cargo rocket hauling supplies for the country’s new space station late Saturday from the tropical island of Hainan in the South China Sea. 

    A Long March-7 Y3 rocket carrying the Tianzhou-2 cargo spacecraft blasted off at 8:55 pm local time from the Wenchang Satellite Launch Center, state-run media Global Times reported. 

    https://platform.twitter.com/widgets.js

    The Tianzhou spacecraft is tasked with refueling the Tianhe space station core cabin for maintenance in orbit and also provides living necessities for future crewed missions at the space station. 

    The Chinese space agency expects 11 launches through the end of this year to deliver two more modules for the Tiangong Space Station, additional supplies, and a three-member crew. Today’s launch marks the second within a month. 

    Apart from launch and eventual docking at the new space station, the rocket itself is set to fall back to Earth in an uncontrolled manner. Well, that’s at least what happened earlier this month after the launch. There was no statement from Beijing about reentry plans for the rocket. 

    Beijing isn’t part of the International Space Station (ISS), primarily due to the U.S. The ISS has been in low Earth orbit for a little more than 22 years and could reach its lifespan by the end of this decade. Russia has already announced it would be withdrawing from the ISS to build its own. 

    Tyler Durden
    Sat, 05/29/2021 – 17:00

  • Where Will The Next Deflationary Shock Come From?
    Where Will The Next Deflationary Shock Come From?

    Authored by Louis-Vincent Gave via Evergreen Gavekal blog,

    “Whenever I hear numbers like this, I look back to my childhood growing up in Hungary, where…[the] value of money meant nothing. I’m very worried this is an unstoppable situation because the longer the Fed waits, the more they will have to raise rates. So, we’re basically painting ourselves into a box, and I don’t see how we’re going to get out of it.”

    – Thomas Peterffy, chairman and founder of Interactive

    The 1986 oil price crash, to an extent, fired the starting gun on 30 years of global deflation. As commodity prices collapsed, so did the Soviet Union, giving the West a deflationary peace dividend. By the early 1990s, Japan’s real estate and equity market busts threatened its banks. The rollout of the North American Free Trade Area and the 1995 “tequila crisis” helped make Mexico a competitive manufacturing hub. Soon after, the 1997-98 Asian crisis made producing abroad even cheaper, while China’s 2001 entry into the World Trade Organization greatly simplified outsourcing. In 2008, the US mortgage bust spurred China to build more infrastructure, unleashing 500mn more workers into the global economy. Europe’s 2011-13 crisis caused another deflationary hit, while the US’s shale energy boom stopped oil and gas prices rising.

    So today, as inflation expectations move toward generational highs, a relevant question is: where might the next deflationary shock come from?

    Europe.

     If vaccine rollouts let Europeans vacation freely this summer, it is unlikely to spur deflationary forces. The effect should be steeper eurozone yield curves, outperformance by financials and a firmer euro. Yet, if Europeans are told to stay home, another deflationary eurozone crisis could still ensue. Citizens deprived of a vacation may register their protest at the ballot box or, more likely, on the streets. For this reason, the odds are high that Europe re-opens, just as last year’s large fiscal stimulus gets rolled out. We should thus assume that—for now at least—Europe will not be a deflationary black hole.

    Commodities.

    With Europeans set to hit the beach and Americans looking to crank up the vehicle miles, energy prices should stay well bid. And as about a third of the cost of producing commodities is attributable to energy, the broader complex is unlikely to provide any kind of deflationary shock in the near future.

    The US dollar.

    As big projects in emerging economies are mostly funded in US dollars, any strengthening of the unit reduces their growth and depresses commodity prices. So, could a rising dollar unleash deflationary forces? For now, the US currency is making lower highs and lower lows, in spite of higher yields. This is perhaps not surprising, as the Federal Reserve has promised to add US$120bn of fresh dollars to the global system each month. Given such generosity, the threat of a US dollar short squeeze has now greatly receded. Hence, the dollar seems unlikely to be a deflationary force in the near future.

    The renminbi.

    With so much production capacity centered in China, the renminbi’s value is vital for manufacturers. When it is weak, few Western industrial firms can compete with China but when strong, foreign producers can expand margins and/or compete on price. Whether viewed on a three-year, five-year or 10-year basis, the renminbi has been the world’s best-performing major currency on a total return basis, which shows that, structurally, there is little appetite in Beijing for a devaluation. Moreover, as China’s trade surplus hits new highs and the authorities there tighten both fiscal and monetary policies, there seems little reason, cyclically, for this to happen.

    US real estate. 

    Homes are getting expensive, with median prices relative to incomes near the highs seen in 2006-07. The difference now is low supply as the stock of existing homes available for sale is at an all time low. Add into the mix the soaring cost of skilled labor and surging prices for building materials and it is hard to see why US real estate prices should crater anytime soon.

    Putting it all together, in the coming few years those “usual suspects” that previously unleashed deflation are now more likely to raise the inflationary temperature. Hence, if deflationary forces are going to carry the day, there will need to be impressive productivity gains. Somewhere in the system, someone will have to produce a whole lot more, with a whole lot less. But is this likely given the following trends that have been covered in recent Gavekal reports?

    1. Globalization rollback: productivity gains from outsourced production are under threat as its true social costs have become more apparent.

    2. Semiconductor shortage: robots have been touted as replacements for low-end labor everywhere, but as car factories are shuttered for want of chips one has to wonder where robot-makers will find the semiconductors they need to build the robots that will then build the cars.

    3. Labor markets: workers across Western economies are being incentivized to stay home and, unsurprisingly, wages are now starting to rise. Indeed, 2020 saw the first meaningful US recession in which wage growth barely fell.

    This leaves us in the situation of seeing the price of everything from meat, corn, gasoline and lumber to shipping rates rise without a clear countervailing deflationary force. In an environment of rising government intervention, expanded public hand-outs, higher corporate taxes and more protectionism (and that is just the US!), it is possible that a surge in productivity provides an offset to the growing inflationary wind. But like an Elizabeth Taylor marriage, this seems to represent the triumph of hope over experience.

    Tyler Durden
    Sat, 05/29/2021 – 16:30

  • After Grade-Rigging Scandal, Baltimore City Schools No Longer Holding Back Failing Students
    After Grade-Rigging Scandal, Baltimore City Schools No Longer Holding Back Failing Students

    A new grading policy, put forth by the Baltimore City School Board, Tuesday, will allow students who are struggling and failing classes to move up to the next grade level due to the virus pandemic, according to local news Fox 45. 

    Instead of holding back students, Baltimore City Public School System’s (BCPSS) new grading policy will push up struggling students who failed classes during the pandemic and have their educational status tested during the fall semester to determine what skills they missed during virtual learning classes. 

    Chief Academic Officer Joan Dabrowski said the new policy is intended to “avoid the punitive approach of failing students.” 

    “This is not about a failure, but it is about unfinished learning and giving multiple opportunities, multiple onramps for young people to complete that … learning,” BCPSS CEO Sonja Santelises said.

    High school students will have their failing grades swapped out for a “No Credit,” and for lower schools, a “Fail” will be replaced with “Not Completed.” 

    About 78,000 students are enrolled across the metro area. More than 65% of students in secondary schools and 50% of Elementary Schools failed at least one class.

    Fox 45’s investigative arm, “Project Baltimore,” has spent several years investigating BCPSS corrupt school system. Grade-rigging has been well known before the pandemic, but now it’s out in the open. At least now, school officials can deflect their failures on the pandemic. 

    Earlier this year, we pointed out how a high school student who almost graduated near the top half of his class failed almost every class. There have been attendance issues, such as attendance at high schools dropping to a 13-year low. More than a dozen schools have zero students proficient in math. 

    BCPSS officials no longer have to be covert about grade rigging as they can openly blame the pandemic. 

    Tyler Durden
    Sat, 05/29/2021 – 16:00

  • Brandeis Dean Declares "Yes, All White People Are Racists"
    Brandeis Dean Declares “Yes, All White People Are Racists”

    Authored by Jonathan Turley,

    Last year, we discussed the controversy over the acting Northwestern Law Dean declaring publicly to “I am James Speta and I am a racist.”

    He was followed by Emily Mullin, executive director of major gifts, who announced, “I am a racist and a gatekeeper of white supremacy. I will work to be better.” 

    The public confessions reflect the view that all white people are racist due to their race and privilege — a view contested by some as itself a form of racial intolerance or bias.

    Now one of Brandeis’ Assistant Deans, Kate Slater, has triggered a similar controversy after declaring “all white people are racists.”

    Slater is the Assistant Dean of Student Affairs in the Graduate School of Arts and Sciences.

    Slater defines herself as an “anti-racism scholar” who is seeks to “facilitate an understanding of race and racism through honest and frank conversations.”  In her discussion of “critical race theory,” she does not exclude herself from being a racist and insists that she does not hate white people, just “whiteness.” Such statements rankle many. It is doubtful that Brandeis would tolerate an academic saying that she does not hate black people, just “blackness.” 

    Slater defines her role as helping “White people conceptualize what sustained anti-racism can look like with the ultimate goal in mind: liberation from oppression for Black people and people of color.” Ironically, this is an effort to get “white folx” not to fear critical race theory which clearly did not work with a number of conservative sites:

    I have a different take on this controversy from some who have denounced Slater as engaging in simply another form of “race baiting.” I agree with Slater that we should be debating this issue. This is a view among many academics and should be respected as a good-faith understanding of the source of racism.

    The problem is that critical race theorists and advocates often insist that we must have a dialogue on race but it tends to be more of a diatribe. For an academic to voice opposing views on such issues is to risk investigation, re-training, or even termination, as we have discussed in past cases. The only dialogue allowed in these sessions tends to be the willingness to accept the underlying premises rather than alternative viewpoints.  Indeed, most sessions are treated as “trainings” to address “whiteness:” and “white privilege” rather than debating if this view is itself racially intolerant.  The same is true at corporations like Lockheed where top executives were sent into mandatory training to address “white male culture” and “white male privilege.”

    Slater says that she seeks “an understanding of race and racism through honest and frank conversations” but it is clearly a discussion premised on the assumption of all white people being racist and “whiteness” being hateful. It is designed to be more therapeutic and transformative for white people than a real debate of the assumptions and stereotypes underlying this aspect of critical race theory.

    It is a loss in my view and inhibits true evolution of viewpoints and assumptions. I accept that I many be blind or insensitive to racial bias or privilege, but I have serious concerns over the bias shown in some of these lectures and supporting material.

    Colleges and universities were once places where controversial subjects could be debated in a passionate but civil exchange.  Assumptions were challenged and data reviewed. That is not happening on many of the issues that face us today. Certain subjects are treated as off-limits. We have been discussing the targeting of professors who voice dissenting opinions about the Black Lives Matter movement, police shootings, or aspects of the protests around the country from the University of Chicago to Cornell to Harvard to other schools. Students have also been sanctioned for criticism BLM and anti-police views at various colleges. Even a high school principal was fired for stating that “all lives matter.”

    I obviously follow a robust view of free speech that is out of vogue today. I have no problem with extreme views being voiced on campus so long as schools allow countervailing views also to be voiced. For that reason, I have defended faculty who have made similarly disturbing comments “detonating white people,” denouncing police, calling for Republicans to suffer,  strangling police officers, celebrating the death of conservatives, calling for the killing of Trump supporters, supporting the murder of conservative protesters and other outrageous statements. We previously wrote about academic freedom issues at University of Rhode Island due to its Director of Graduate Studies of History Erik Loomis, who has defended the murder of a conservative protester and said that he saw “nothing wrong” with such acts of violence.

    We cannot make true progress unless we are able to speak openly and freely on such subjects. Many disagree with the views of academics like Slater but few faculty members are willing to raise such disagreements openly on campus. To do so is to risk being labeled as an example of reactionary white privilege and hostility. Without such freedom to challenge underlying assumptions or viewpoints, these sessions will be viewed as indoctrinations rather than real discussions of race in society. That will serve to silence many but convince few.

    Tyler Durden
    Sat, 05/29/2021 – 15:30

  • US Set For Epic Labor Market Experiment: Red States Vs Blue States
    US Set For Epic Labor Market Experiment: Red States Vs Blue States

    According to JPMorgan’s Daniel Silver, as of this moment some 23 – all republican – states have announced at least some form of early reduction in pandemic-related unemployment insurance benefits ahead of the September expiration at the federal level. These programs, he suggests, are likely limiting labor supply, generating a potential economic argument for ending these programs early.

    A glance at the following chart – which shows the number of US job opening vs the number of Americans who remain on some form of Pandemic unemployment benefit, would suggest that Silver is right.

    So, while the left are desperately gaslighting that this is a skills or geographic mismatch, the chart above makes it clear that paying people to stay home is not good for growth (or social stability).

    Which is why 23 (Republican) states have listened to their business owners and started to cut those benefits. In fact, as Mike Shedlock notes, that means around 3.5 million Americans will come off Pandemic emergency benefits in the next few weeks.

    And since Democrats will likely not end UI benefits any time soon – or ever, if they could –  this sets up the US economy to become an epic real-time economic experiment, one where everyone can keep track of the unemployment across in Red states (most of which have ended their UI benefits), and blue states where claims will keep potential workers at home, pressuring unemployment rates.

    As noted above, all of the 23 states announcing early-UI benefit terminations have Republican governors and as is clear from the charts below, many of these states have tighter labor markets and stronger earnings growth (naturally, not all).

    So the trade off appears to be one of political pandering vs practical economics – lower unemployment rates in Red states even as the hoped for tradeoff – higher wage growth – is largely missing, with average hourly earnings in red states also slightly higher on average.

    By way of early confirmation of our thesis that government handouts are repressing the recovery by encouraging people not to work, according to an analysis published this week by job site Indeed, job searches jumped by 5% the day each state announced its intent to pull out of the federal programs.

    In May, job search activity on Indeed increased, relative to the national trend, in states that announced they would end federal UI benefits prematurely.

    We will be closely watching the unemployment rates of the red and blue states going forward as a real-time test of whether paying people to stay home (something not even the USSR did) is indeed the best way forward for Americans… or if it will create an idiocracy.

    Tyler Durden
    Sat, 05/29/2021 – 15:00

  • The USD Is Weak, And What That Could Mean For The Rest Of 2021
    The USD Is Weak, And What That Could Mean For The Rest Of 2021

    Authored by Bryce Coward via Knowledge Leaders Capital blog,

    The US dollar is on the verge of breaking down to the lowest level since 2014.

    This is not all that surprising. After all, the US money supply continues to grow at a rapid pace relative to other countries and quantitative easing is likely to continue at full pace through the end of 2021. Meanwhile, other countries like the UK, Canada and others are already telegraphing rate hikes. Not only that, but the US budget deficit as a percent of GDP – which has a tight correlation with the level of the US dollar index – is set to explode through 2022 and beyond. The ballooning budget deficit suggests a level of 70 or 80 on the US dollar index over the coming years would not be out of the realm of possibilities. That would equate to a further decline of 11% to 22% from here.

    If the US dollar drops below the 90 “line in the sand” and starts on a path toward 80 in the back half of 2021, that would have fairly large ramifications for stocks.

    In this post we’ll briefly highlight one.

    For the last 15 years or so one of the most persistent trends in the equity market was the relative outperformance of US technology companies vs basic materials companies. The red line in the chart below shows the relative performance of materials vs tech. Since 2005 the red line has gone nowhere but down – meaning tech was outperforming materials – until recently. The blue line in the chart is the US dollar index, inverted. As tech was outperforming materials, the US dollar index was going up most of the time…until recently. The tight correlation between the US dollar index and tech/materials relative performance suggests further weakness in the US dollar will be accompanies by a rather large and important rotation out of tech and into materials. For passive investors this is tricky and risky because the tech+ sector accounts for more than 40% of the S&P 500.

    There’s also a fundamental case to be made for such a rotation. The relative valuation level of materials companies vs tech companies is well below average. The next two charts display the price/earnings ratio and price/book value ratio, respectively, for materials vs tech companies. The green line shows the average relative valuation since 2006.

    Valuations must always be put in the context of earnings growth. Tech stocks are supposed to be the high growth engines of the market, so they should, in theory, receive a higher valuation than other lower growth companies. However, the relative growth between materials and tech companies is normalizing and is currently above the historic average. This doesn’t mean that materials companies will grow faster than tech companies (even though that could certainly happen), just that growth rate difference between the two groups is shrinking.

    In sum, we have poor trends in the US dollar that are being driven by fundamental factors of money supply growth and budget deficits. These factors could push the US dollar down to 70 or 80 in the coming years, which would have substantial effects on financial markets. One of those effects could be to see a continued rotation out of tech and into materials, which is a trend supported not only by a weak US dollar but also changing valuation and fundamental trends between the two sectors. That kind of rotation is likely to be more difficult for passive investors than active ones given the rather large weighting of tech and tech-like companies in the major indexes.

    Tyler Durden
    Sat, 05/29/2021 – 14:30

Digest powered by RSS Digest