Trudeau channels the Griswolds

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Remember Chevy Chase in European Vacation attempting to be savvy, cool and fashionable by dressing like the Italians but it going so horribly wrong?  Well Canadian PM Justin Trudeau has tried to instill his sense of being culturally in touch by dressing his family as Indians. Even the Indians think it’s a bit much. Perhaps Indian PM Modi should return the favour and dress like a lumberjack provided he can get his axe through customs on his next visit to Canada. Typical patronizing liberal trying to show us all his grasp on diversity and cultural appropriation. When Trudeau swings through Japan will he wear a samurai outfit resplendent with a chonmage top knot? What an embarrassment!

We thought the cardboard cut outs of himself distributed to Canadian embassies was a joke. This ratchets it multiple levels. Can’t wait for Candice Bergen to shred him over his Indian clothing choices in coming sessions of Canadian parliament.

Did you put on your bulletproof vest sweetheart?

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Is this the next school uniform? As written yesterday, gun violence in US schools has been a problem for decades. Metal detectors have been installed at certain schools since the 1990s. Gun massacres have still occurred. The problem stems from a growing tide of broken homes and kids venting out. The Zero Hour documentary on the Columbine massacre reveals in chilling details how premeditated and well prepared (not to mention preventable) the attack was – propane bombs, pipe bombs, machine guns, pistols and even handgrenades. Perpetrator Eric Harris’s father called up the police on hearing of the shooting fearing his son maybe behind it. The police had received multiple enquiries from concerned parents over death threats Harris had made online to students yet chose to do nothing. Harris and Klebold openly documented their intent in videos and diaries. It is patently clear they wanted revenge for their subjective feelings of having had their esteem crushed by society, especially by more popular class mates. It is clear there were no role models trying to pull them back from the brink.

Still the ‘banning guns will solve it all’ solutions still avoid dealing with the real problem. The psychology of kids lost in a world where they feel outcasts. Feelings of rejection, loss and trodden on self esteem are shown to be time and time again to be a leading factor in kids picking up a weapon and seeking to right perceived wrongs. Many American high school kids drive to school. Can we envisage one deciding to drive a car on campus mowing down students at lunch time? Will banning cars be a solution?

What next? Will parents be decking out kids in bulletproof vests and hoping teachers who are incentived to arm themselves in the class room step up if all hell breaks loose? One wonders whether kids like Harris & Klebold would have been deterred by teachers packing heat. Even worse, SWAT snipers at a distance of 500 meters may not be able to determine at the time who are the ‘bad guys’. Even worse, how terrible it would be for a teacher to be tasked with ‘offing’ a student who he or she teaches in remedial maths class. One would hope the motivation of teachers is to want to educate students to get ahead rather than aim at their head. Or have things got so bad in some schools that such a remedy gets leant a sympathetic ear. Having armed security at schools is less and less a rare occurrence.

In 2015, about 3,000,000 teens ages 12 to 17 had had at least one major depressive episode over the year according to the Department of Health and Human Services. More than 2 million admitted they were experiencing depression in ways that impair daily function. The National Institute of Mental Health reported about 30% of girls and 20% of boys– some 6.3 million teens–have had an anxiety disorder.

A Seattle Children’s Hospital study tracked hashtags people use on Instagram to talk about self-harm. It noted a dramatic increase over the past two years. In 2014 researchers got 1.7 million search results for “#selfharmmm”. By 2015 that number had surged to over 2.4 million.

The American Psychological Association (APA) released a report several years ago during the school year saying that teens report their stress level is higher than levels reported by adults in the past month. Many teens admitted feeling overwhelmed (31%) and depressed or sad (30%) as a result of stress. More than one-third of teens report fatigue or feeling tired (36%).

Sales of antidepressant drugs is expected to be a $17bn industry in the US in 2020, up $3bn from 2015. The National Center of Health Statistics reports the prevalence of teenagers taking such drugs has grown to 13%, in 2015 up from 11% in 2008. 68% of people ages 12 and up said they had been taking their antidepressant for two years or more. A quarter who took antidepressants reported taking them for 10 years or more. Clinical depression affects about 16mn people in the U.S. and is estimated to cost the U.S. about $210 billion a year in productivity loss and health care.

Is this honestly seen as the best way to tackle a mental health crisis? Just dope up teenagers and hope they are comfortably numb so as to not want to do harm to themselves or others? It was shown that Harris had switched antidepressants which could have fueled not quelled his homicidal and suicidal tendencies. This isn’t about guns. It is about ignoring the elephant in the room – stressed out kids with no mentors or role models to coax them out of their problems.

In some respects, schools are only making it worse by pandering to safe spaces and enforcing trigger warnings. Instead of dealing with the psychological problems at source and proactively targeting attention starved kids growing up in broken homes by counselling them in ways to build self esteem and how to get on in the “real” world, the problem will only fester because irrational feelings of hopelessness will get reinforced by ignoring the real issue.

Tranquilizing people with mental issues by molly-coddling them is also the mantra in the world of identity politics. By muzzling people from speaking truths we only build barriers around effective solutions. That regulations around hurting people’s feelings are increasingly being enforced, is it any wonder we are growing a generation of victims who can pin the blame on irrelevant and unrelated things? Healing comes through listening and understanding by open and transparent dialogue. Not by banning it.

Will an hypothetical ban on guns prevent the growing trend of kids growing up in single-parent households (and all of the psychological data which shows clear evidence of a higher rate of delinquency in children) from committing  such terrible acts of violence because they have no access to firearms? Feelings of desperation will only lead them to find other ways of seeking their distorted view of attaining inner peace. More kids will die and at the end the exact same problems will manifest themselves again – what lead to the act? At least in this case, Parkland, Florida shooter Nikolas Cruz survived. Perhaps we will learn much more about the psychological timeline of him if the press can wake up for 5 minutes and stop trying to link the act purely to white supremacy because it fits a narrative.

Security measures in US schools – shocking stats

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Let’s get one thing clear. Whether victims of shootings are kindergarten kids, school students, work colleagues or old age pensioners, the sheer act of it points to an increasingly sick element of society. To take innocent lives because of one’s own sense of subjective injustice can’t be justified. That’s hardly an earth shattering revelation. However what is actually going on at schools when it comes to securing students safety? The stats are mind boggling.

A 2017 study by the National Center for Education Statistics (NCES) reported the following,

In the 2013–14 school year, 93 percent of public schools reported that they controlled access to school buildings by locking or monitoring doors during school hours. Other safety and security measures reported by public schools included the use of security cameras to monitor the school (75 percent), a requirement that faculty and staff wear badges or picture IDs (68 percent), and the enforcement of a strict dress code (58 percent). In addition, 24 percent of public schools reported the use of random dog sniffs to check for drugs, 20 percent required that students wear uniforms, 9 percent required students to wear badges or picture IDs, and 4 percent used random metal detector checks.

Breaking down some of the categories in the chart 5.5% of primary schools use sniffer dogs to check for drugs!! Over half of high schools have random drug searches. 9% of high schools have metal detectors. How did it get to this? Is taking such preventive action having an impact?

In 1994, the federal government began requiring schools to introduce safety programs in an attempt to crack down on violence on school grounds. Many schools introduced metal detectors to check for guns, knives and other weapons. The year after the measures were introduced, violent deaths on high school campuses across the United States halved.

Then in 1999, the Columbine High School shooting reset the bar on violence inside the schoolyard. Armed with shot guns, machine guns, pistols and pipe bombs two students, Eric Harris and Dylan Klebold, murdered 12 students and one teacher before committing suicide. Listening to interviews of those who survived, the answer was the same – the two were regarded as outcasts. It was later shown that they were on anti-depressant medication and had committed multiple felonies. An excellent documentary done by Zero Hour chronologically runs through their mindset

In May 2002, the Secret Service published a report that examined 37 U.S. school shootings showing strikingly similar signals. The findings were:

1) Incidents of targeted violence at school were rarely sudden, impulsive acts. Prior to most incidents, other people knew about the attacker’s idea and/or plan to attack.

2) Most attackers did not threaten their targets directly prior to advancing the attack.
There is no accurate or useful profile of students who engaged in targeted school violence.

3) Most attackers engaged in some behavior prior to the incident that caused others concern or indicated a need for help.

4) Most attackers had difficulty coping with significant losses or personal failures. Many had considered or attempted suicide.

5) Many attackers felt bullied, persecuted, or injured by others prior to the attack.

6) Most attackers had access to and had used weapons prior to the attack.

7) In many cases, other students were involved in some capacity.

8) Despite prompt law enforcement responses, most shooting incidents were stopped by means other than law enforcement intervention.

Trump’s suggestion of arming teachers seems ludicrous to outsiders. To have holstered teachers (boils down to a question of how many would want to ‘carry’ in the classroom) or armed sentries in front of schools hardly sends the right messages about teaching respect. Then again with the ever growing surge of kids growing up in single parent households (currently 40% of white households and 70% of black households) in the US the psychological studies point to an increase in dysfunctionality in kids because of a lack a stable guardian to keep them on the rails.

Banning guns or enforcing gun free zones won’t prevent future massacres. Will America need 100% of schools to have airport style security with pat downs, ion scanners and prison style walls to prevent would be perpetrators breaking in? Maybe they will if families keep breaking down and disgruntled delinquent teenagers feel they need to vent.

Yet come between some Americans and the 2nd Amendment and all manner of excuses to justify ownership surfaces. As an Australian, my country is often highlighted as a success story of mandatory gun confiscation after the Port Arthur massacre in 1996.

Yes Australia hasn’t seen a massacre since yet there was never a big problem in the first place. 661,000 firearms were removed from circulation. Or 1 gun for every 33 people. In the US it is c.1 gun for every person in circulation. Even if a third of households have them we are looking at 1 gun per 3 people in the US.

The Aussie government offered $500/gun average. If Trump ran the same programme (albeit 21 years later) and taking into account inflation then conservatively at $1,000 a gun he would be looking at a cost of $320bn. To put that in perspective the annual US military budget is around $680bn. So a combined spend of $1 trillion.

Yet as tragic as the Florida shooting is, mainstream and social media has turned this into a cesspit of vile abuse and misinformation.

Whether it be the conspiracy theories of high school student David Hogg being a CNN planted child actor, Trump’s hand written  notes or kids threatening to march on Washington the whole tragedy is turning into a debacle. While we should be mourning the deaths of 17 innocent students at the hands of a lunatic, the media seems more focused on Trump bashing and posting memes of Republicans in the pockets of the NRA.

If guns in schools have been an issue since the 1990s, we have had ample numbers of administrations who could have acted but didn’t. If the 14 gun massacres that occurred under the Obama Administration when the Democrats had control of the House and Senate  resulted in no action being taken why the song and dance by Democrats today? Sounds like political point scoring at its worst.

This isn’t or at least shouldn’t be a partisan issue. This is an issue of a breakdown in social values. By allowing single parent households to simply and easily marry the state through generous subsidies, parental responsibility is being thrown out the window. To be fair automatic weapons are hardly a requirement for a civilian population but let’s deal with the real issues behind why so many students are being massacred rather than just the method of how they commit the atrocities.

Banning guns seems so simple to cure the problem but as the stats above make clear, the solution is far more complex than armed teachers, rent-a-cops at school gates and metal detectors. Parents need to start taking far more responsibility and the media needs to start focusing on keeping it real.

It is disturbing to turn a tragedy into yet another excuse to crank up Trump Derangement Syndrome. He may have handled the messaging poorly (as he does with most issues) but let’s look at the history. Almost 20 years have gone by since Columbine High and despite countless repeat events, where has the same level of outrage been? Exactly. Nowhere. Tragedies should never be used for political gain. Where is the dignity for the dead? Perhaps we can just boil the whole behaviour surrounding the awful event as merely “moving with the times”. It is the term we seem to hear for every other excuse to shut down sensible debate.

Ultimately it is for Americans to decide to vote for parties that will change laws for the greater good. The rest of the world can shake their head and waggle the finger at America’s gun laws but perhaps they should focus on how good they’ve got it at home by comparison.

New Fed Chairman to trigger historic stock market crash in 2018 – ZH

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ZeroHedge writes that the new Fed Chair will trigger an historic stock market crash in 2018. Glad to have loaded up on put options in recent weeks. Perhaps the cheapest priced products in an asset bubble everywhere world. Some shorter dated put options priced as little as 2c in the dollar. Risk is definitely not being priced for fear. Maybe why Blackstone has built up $22bn of short positions in recent months.

AfD is 2nd most popular party in latest Bild poll

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The left leaning Bild newspaper published a poll showing the anti-immigrant AfD as the second most popular party in Germany with 16% (+2) The socialist SPD polled an awful 15.5% (-5), it’s worst post war performance. The Greens also polled well.

Yet another country growing tired of politicians from incumbent major parties who are failing to deliver to their constituents.

Regardless of what one’s views are on Merkel’s misguided altruism, it seems fewer people support it at home. Call it racist, bigoted it worse but the fact more people are prepared to back the party that answers their sense of frustration speaks volumes of underlying mood. Either that or the CDU is doing a terrible job selling its message. What does one expect when the media and police are muzzled?

Across the border Poland and Hungary are linking hands in a sign of solidarity to reject the EU’s forced migration quotas. On April 8 Hungarians vote on whether they want Orban’s Fidesz party to stay in power. It looks a formality. The question is by what margin? When 98.4% who voted in the Hungarian referendum several years back to reject forced migration, this seems an election issue which opposition parties stand no chance of getting up if they support it.

Should we trust ratings agencies on US state credit?

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The Financial Crisis Inquiry Commission concluded in 2011 that “the global financial crisis could not have happened without the ‘Big Three’ agencies – Moody’s, Standard & Poor’s and Fitch which allowed the ongoing trading of bad debt which they gave their highest ratings to despite over three trillion dollars of mortgage loans to homebuyers with bad credit and undocumented incomes.” The table above tabulates the deterioration in US corporate credit ratings since 2006. The ratings agencies have applied their trade far more diligently.

As written earlier in the week, US state public pensions are running into horrific headwinds. Unfunded pension liabilities are running at over double the level of 2008. With asset bubbles in stocks, bonds and property it is hard to see how plugging the gap (running at over 2x (California is 6x) the total tax take of individual states) in the event of a market correction is remotely realistic. However taking a look at the progression of US states’ credit ratings one would think that there is nothing to worry about. Even during GFC, very few states took a hit. See below.

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Looking at the trends of many states since 2000, many have run surpluses so the credit ratings do not appear extreme. It is interesting to flip through the charts of each state and see the trajectory of revenue collection. A mixed bag is putting it lightly. Whether the rebuild after Hurricane Katrina in 2005, since 2008 revenue collection in Louisiana has drifted.

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Looking through S&P’s own research at the end of last year it included an obvious reference.

U.S. state and local governments can use pension obligation bonds (POBs) to address the unfunded portion of their pension liabilities. In certain cases, POBs can be an affordable tool to lower unfunded pension liabilities. But along with the issuance of POBs comes risk. The circumstances that surround an issuance of POBs, as well as the new debt itself, could have implications for the issuer’s creditworthiness. S&P Global Ratings views POB issuance in environments of fiscal distress or as a mechanism for short-term budget relief as a negative credit factor.”

Perhaps the agencies have learnt a painful lesson and trying to stay as close to being behind the curve as possible. It doesn’t seem like public pensions are being factored at levels other than their actuarial values. Marked-to-market values would undoubtedly impact these credit ratings.

As mentioned in the previous piece on public pensions, a state like Alaska has public pension unfunded liabilities equal to $145,000 per household, treble the 2008 figure. It is 3.5x annual tax collections. The state’s per capita operating budget of $13,728 per person is way above the national average of $6,826 per person. Alaska relies on oil taxes to finance most of its operating budget, so a sudden drop in oil prices caused tax revenues to sharply decline. The EIA’s outlook doesn’t look promising in restoring those fortunes in any scenario. So S&P may have cut Alaska two places from AAA in 2015 to AA in 2017.

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While pension liabilities aren’t all due at once, the last 8 years have shown how quickly they can fester. It wasn’t so long ago that several Rhode Island public pension funds reluctantly agreed to a 40% haircut, later retirement ages and higher contributions with a larger component shifted from defined benefits to defined contributions raising the risk of market forces exerting negative outcomes on the pension fund.

In 2017, despite a ‘robust’ economy, 22 states faced revenue shortfalls. More states faced mid-year revenue shortfalls in the last fiscal year than in any year since 2010, according to the National Association of State Budget Officers.

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Pew Charitable Trust (PCT) notes in FY2015 federal dollars as a share of state revenue increased in a majority of states (29). Health care grants have been the main driver of this. FY2015 was the 3rd highest percentage of federal grants to states since 1961.

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By state we can see which states got the heftiest federal grants. Most states with higher federal shares expanded their Medicaid programs under Obamacare (ACA) and got their first full year of grants under the expanded program in FY2015.

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PCT also wrote “At the close of fiscal year 2017, total balances in states’ general fund budgets—including rainy day funds—could run government operations for a median of 29.3 days, still less than the median of 41.3 days in fiscal 2007…North Dakota recorded the largest drop in the number of days’ worth of expenses held in reserves after drawing down almost its entire savings to cover a budget gap caused by low oil prices. It held just 5.4 days’ worth of expenditures in its rainy day fund at the end of fiscal 2017 compared with 69.4 days in the preceding year… 11 states anticipate withdrawing from rainy day funds under budget plans enacted for fiscal 2018

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Looking at the revenue trends of certain states, the level of collection has been either flat or on the wane since 2010 for around 26 states. As an aside, 23 of them voted for Trump in the 2016 presidential election. The three that didn’t were Maine, NJ and Illinois.

Optically US states seem to be able to justify the credit ratings above. Debt levels aren’t high for most. Average state debt is around 4% of annual income. Deficits do not seem out of control. However marking-to-market the extent of public pension unfunded liabilities makes current debt levels look mere rounding errors.

Considering stock, bond and property bubbles are cruising at unsustainably high levels, any market routs will only make the current state of unfunded liabilities blow out to even worse levels. The knock on effects for pensioners such as those taking a 40% haircut in Rhode Island at this stage in the cycle can only feasibly brace themselves for further declines. This is a ticking time bomb. More states will need to address the public pension crisis.

A national government shelling out c.$500bn in interest payments on its own debt in a rising rate environment coupled with a central bank paring back its balance sheet limits the options on the table. Moral hazard is back on the table folks. Is it any wonder that Blackstone has increased its short positions to $22 billion?

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Motorcycle theft

Motorcycle theft in the UK is becoming an increasingly bad problem. As this video shows, thieves will steal in the middle of the day. Here are some of the stats by one of the local insurers, Bennett’s.

In 2016, powered two wheeler (PTW) theft rose by 16%. 27,217 machines of all kinds were reported stolen (that’s 523 a week!) and only two out of five were recovered. 25 years ago, scooters accounted for less than 1% of all two wheeled theft; today over half of all the bikes stolen are scooters and mopeds. In London alone, where 4776 larger machines were taken, an increase of 620% meant 6165 mopeds and scooter owners lost their transport.”

The explanation for all this is really quite simple; the interest in motorcycling is huge all over the world, and wherever there’s constant demand – in this case for used machines and spare parts – organised crime is never far behind. At the moment, it’s a battle that the government and police have every intention of winning as soon as possible…However, these new gangs aren’t unique to the UK, and are common in most cities of the world at this time. Many of the continental gangs use stolen scooters and motorcycles as the new currency for buying and selling drugs, and the fear is that this may be the case in the UK. Violence as displayed on YouTube and CCTV footage indicates many gang members themselves may be drug users. Because of this, the police caution against heroism, but do appreciate all the information on these gangs that they can get.

Take a look at this shameless attack on a dealer during operating hours. One can see how thieves would need to be “meth’d“ up to do something so brazen. Good to see the dealers win the battle but the police will back down on any chase of motorcycle thieves if they remove their helmets because of fear of causing death or injury to the criminal. Most bike owners who had their pride and joy stolen would most likely relish broken limbs of the perpetrators.

The UK’s 41 ports handle 9000 container movements every day, and are expected to load at least 12 stolen cars and motorcycles bound for Africa, India, South America, Asia and Europe. The police are likely to check one in every 200, whose manifests will often simply state ‘household goods’ or ‘spare parts’. In just one container, on just one day, in just one port, police found 12 stolen machines worth £70,000, its contents listed as ‘spare vehicle parts”

Affordable tracking devices have become hugely successful in recovering many machines this year, the most popular of which are claiming over a 90% recovery rate. Ironically though, thieves are now using their own cheap tracking devices to find their prey that they fix to a machine and track to its home without spooking owners. If they steal the bike they can use the device again.”

Ironic that the criminals are using technology that is meant to deter theft by leading one to the owner’s home to make a cleaner ‘get away’.

Doesn’t look like the battle to lower theft in the UK can be won without the police being able to dish out far harsher penalties to the criminals. Whistling in the wind won’t stop this.