#Obama

What an accolade!!?

For the first time in 17 years, someone other than Hillary Clinton was named the most admired woman in America. The Gallup poll asked 1025 people across America who were the most admired people in the US. For Clinton to win for the last 16 years makes one wonder who Gallup was asking? Heavy concentrations in inner city zones in NY and CA perhaps?

We shouldn’t be surprised. How often have vloggers entered US campuses and filmed students who can identify Kim Kardashian at 100 yards in a picture but can’t identify any US politician outside of the President.

Was Kylie Jenner, the 21-yo cosmetics queen, who has become a self made billionaire not in with a shot of aspiration and admiration?

What about Simone Biles, the rubbery gymnast who blew the competition away at the 2016 Rio Olympics?

Even Serena Williams, despite her tantrums, surely was in to take this award once in the last 16 years for her tennis prowess.

What about Alexandra Ocasio-Cortez? The young 28-yo blitzed the incumbent to steal the primary in NY and then win the mid term with 80% of the vote. She may have absolutely no idea about economics or reality but goes to show that even a “Latina from the Bronx” (as she calls herself) can pull off miracles. A note to Republicans – slagging her off for stupidity is not a winning strategy.

Nikki Haley? Without doubt a hugely impressive UN Ambassador and likely a future POTUS.

It is probably a reflection of the terrible polling of Gallup to have a 16 year consecutive winner. Then again the Obamas are no stranger to receiving awards for things undeserved like the Nobel Peace Prize 9 months into Barack Obama’s first term after achieving nothing remotely notable of mention to world peace. Even afterwards red lines were drawn in invisible ink. I’m

Who could forget Michelle Obama’s hashtag #bringbackourgirls after 300 school girls were enslaved by Boko Haram? America’s foreign policy impotence revealed in one twitter handle.

Melania Trump was never in the running especially after the mainstream media took umbrage at her wearing Timberland boots to Iraq on Christmas.

Congratulations Michelle. Now you can tell all those women you said voted the way their husbands forced them to that you know best and have an award to prove it!

ICE – the facts

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In yesterday’s piece, Child Abuse – the shocking stats, some decided to launch expletive laden criticism on the lack of discourse on the US Immigration & Customs Enforcement’s (ICE) treatment of children at the Mexican border, the inference that CM was turning a blind eye to the beastly Trump administration in reporting the extent of child abuse. First, the politicization of children is abhorrent. Where were the media when these same supposed crimes of removing children from (supposed) parent/guardians was occurring since 2013? Reading through the ICE end of year report of 2017 we let the stats speak for themselves. Forgive the preamble.

Recall the one-sided media coverage of the lifeless body of 3yo Syrian boy Aylan Kurdi on the shores of Turkey. Yet the facts were clear – he had not been in any danger. The family had been safe in Turkey for 3 years. His father was trying to make his way to Germany for dental surgery. Aylan’s parent chose to risk his son with no life jacket to make a hazardous trip on an overcrowded boat to seek selfish opportunism. Is it up to the West to take responsibility for the individual choices of people who are not at risk of war zones? Yet the media still used the image to show how callous we were to allow this.

It was only a few weeks ago that Time magazine posted a photo-shopped image of a crying little girl looking up at POTUS. Despite a tongue-bitten retraction tucked at the bottom of a long article to acknowledge the toddler had not been wrested from her mothers arm by ICE storm troopers, we find out the mother had abducted her with the help of people smugglers while abandoning her husband and 3 other kids.  The picture was used to great effect by the Refugee and Immigrant Center for Education and Legal Services (RAICES) to raise $20mn via crowdfunding! Even after the lie was outed the group still used it to lift the target to $25mn.  US veterans are committing suicide at the rate of 20/day and people are willing to crowdfund an unethical group by 1000s of multiples. Priorities. Or is it that TDS is that extreme?

Who wants to see screaming kids? No-one. Locked in cages? Even less. Separated? Well there is good reason for that. When even the likes of left-leaning HuffPo admitted in December 2014 that 80% of women and girls are sexually assaulted while trying to make it across the border there is a good reason to question the proof of identity of the supposed parents. Even if 90% of parent/children pairs are legit, what of the 10% that aren’t? Do ICE risk it? Australia had an experience of a mother from Nepal (a democracy not at war) who deliberately poured boiling water on her infant to expedite processing on the mainland. Are these the values of people we should provide refuge to? We should not forget that many people make the journey knowing ALL the risks that confront them yet still attempt it despite the warnings.

To emphasize the danger of lax screening,  multiple kids were found dead after being abandoned once across the border as their usefulness as a golden ticket on compassionate grounds was expended. If that isn’t some of the worst forms of child abuse then what is? Moreover these people are hardly the type that decent Americans would want to embrace with open arms!

In Jan 2016 WaPo noted, “The Office of Refugee Resettlement, an agency of the Department of Health and Human Services, failed to do proper background checks of adults who claimed the children…several Guatemalan teens were found in a dilapidated trailer park near Marion, Ohio, where they were being held captive in squalid conditions by traffickers and forced to work“. So slave labour to repay human traffickers? Let’s encourage more to attempt the crossing?

Then ICE has the trouble of finding the parents/guardians (sponsors) already living (often) illegally to collect their unaccompanied children at pre-arranged court hearings. The media went into a frenzy saying that ICE had lost the records. The truth came out in Feb 2016 that,

“The head of ICE’s removal operations, Thomas Homan, told members of the Senate Judiciary Committee that 7,643 immigrants who arrived as children were sent home between the 2012 and 2015 budget years…More than 171,000 children, mostly from Honduras, El Salvador and Guatemala, were arrested at the border during that same time…The number of children caught crossing the border illegally spiked in 2014 [see impacts in NY Times graphic below] and the Obama administration promised that those who were not eligible for protections in the United States would be swiftly sent home… And with an immigration court backlog of more than 474,000 pending cases some cases can take years to move through the court system…

ICE SURGE

…about 40% of immigrants are no shows at court…Finding immigrant children with outstanding deportation orders is also complicated by the fact that they often are no longer at the addresses provided to the government.”We are out looking,” Homan said. “But they are hard to find. A lot of these folks who don’t show up in court, we don’t know where they’re at.”

The pictures of kids in concentration camp style cages were from 2014. Yet don’t let that get put in the way of a narrative to show the nationalist tendencies of the current administration.

While we can express outrage at the treatment of illegal immigrants at the border, the tougher laws have started to resonate with Ana Garcia Carias, wife of Honduran President Juan Orlando Hernandez, who said, “Stay in the country and let’s look for solutions to support you.” She visited the border and said that she didn’t recommend her citizens go to the US undocumented. If a court system has nearly 500,000 backed up in the system, it seems reasonable to push for a zero tolerance policy to end

So let’s examine the ICE data. 

To contextualize what ICE’s enforcement focus includes with respect to removable aliens we find:

(1) have been convicted of any criminal offense;
(2) have been charged with any criminal offense that has not
been resolved;
(3) have committed acts which constitute a chargeable criminal offense;
(4) have engaged in fraud or willful misrepresentation in connection with any official matter before a governmental agency;
(5) have abused any program related to receipt of public benefits;
(6) are subject to a final order of removal but have not complied with their legal obligation to depart the United States; or
(7) in the judgment of an immigration officer, otherwise pose a risk to public safety or national security.

An administrative arrest of a criminal alien is the arrest of an alien with a known criminal conviction. The figures as follows:

  • 2015: 101,800
  • 2016:  94,750
  • 2017: 105,736

Here are some of the reasons of arrest (both criminal convictions and charges) for 2017:

  • Driving under the influence : 80,547
  • Dangerous drugs: 76,503
  • Immigration violation:  62,517
  • Assault: 48,454
  • Larceny: 20,356
  • Burglary: 12,836
  • Fraud: 12,398
  • Illegal weapon possession: 11,173
  • Sex offences: 6,664
  • Stolen Vehicles: 6,174
  • Forgery: 5,210
  • Homicide: 1,886
  • Kidnapping: 2,027
  • Prostitution racketeering: 1,572

An initial book-in is the first book-in to an ICE detention facility to begin a new detention stay. This population includes aliens initially arrested by Customs & Border Protection (CBP) and transferred to ICE for removal. Once again the combined bookings are as follows

  • 2015: 307,342
  • 2016: 352,882
  • 2017: 323,591

The decrease in ICE’s overall removal numbers from FY2016 to FY2017 was primarily due to the decline in border apprehensions in 2017. Many fewer aliens were apprehended at the border in FY2017 than in FY2016—possibly reflecting an increased deterrent effect from ICE’s stronger interior enforcement efforts (which is exactly what they wish to achieve).

  • 2015: 235,413
  • 2016: 240,255
  • 2017: 226,119

In FY2017, ICE Enforcement and Removal Operations (ERO) conducted 143,470 overall administrative arrests, which is the highest number of administrative arrests over the past three fiscal years. Of these arrests, 92% had a criminal conviction, a pending criminal charge, were an ICE fugitive or were processed with a reinstated final order.

If one views even the short term trend of ICE operations one can see that the extent of the problem is not just a Trump issue. From even before Obama’s time, border related issues have been a festering problem. The press can beat him and his supporters senseless but it would seem he is merely fulfilling election promises. With almost half a million still to be processed in the courts, is there any sense in clogging the legal system with even more to process. Even after the repeal of legislation that prevents parent-child separations, no credit is given by his detractors despite the fact this was enacted well before he took office. Where was the press outrage during the Obama era when all the same sort of ‘abuse’ was going on? Nowhere.

People trafficking is as deplorable an occupation as can be imagined yet the idea of  publicizing open borders fuels their industry as shown in the lead up to 2014. The ultimate irony is now Frau Merkel has instituted border camps of her own as the results of her misguided altruism led to countless human traffickers to benefit from her come one, come all policies.

In summary, Rasmussen Reports notes that most Americans do not want to abolish ICE. The polling firm noted,

“only 25% of Likely U.S. Voters favor getting rid of ICE whose duties include border control. Fifty-five percent (55%) are opposed…Sixty-nine percent (69%) of Republicans and 53% of voters not affiliated with either major political party oppose getting rid of ICE. Democrats agree by a narrower 44% to 36% margin.”

AS CM always says, if people don’t like the laws, then move to change them.

Does Trump have a right to brag about unemployment?

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The Trump vs Obama camps are lighting up over who was responsible for the drop unemployment rates. Looking at the long term decline one could argue that Obama was a key part of the decline and the incremental drops in the rate are Trumps. Here are the raw figures.

In Jan 2009, according to the Bureau of Labor Statistics, Obama had 115.818m people full time employed. In December of 2012 that number was 115.791m. (-270,000). There were 8.046m and 7.943m part time jobs over the same period. Minus 103,000. At the end of his 8 years, there were 124.3m FT jobs and 5.554m PT jobs. All told his FT workforce went up 8.48mn and PT fell 2.492m. So gross employment increased 5.98m.

Trump started at 124.3mn FT and as of May 2018 there are 128.657m FT jobs and 4.948m PT jobs. So he’s increased FT 4.347m and cost PT 606k. Net increase of 3.741mn jobs. So even if you ran the narrative that Obama’s second term was enough to put the “Great Recession to bed”, Trump has achieved 63% of Obama’s employment legacy in only 30% of his first term as president.

The number of people working two or more jobs surged to over 8mn (a record) under BHO as did food stamps (doubled to c.48m before coming down to 43m by his term end). SNAP stands at 40m now. 3mn fewer.

30 million people claim disability and welfare in the US. The Social Security Administration (SSA) highlighted that back pain and musculoskeletal problems are 33.8% of claims for disabled workers, followed by mental illness at 19.2% in 2013. This compares to 8.3% and 9.6% respectively in 1961. Half of claims in the 1960s came from heart attack/stroke and ‘other’ categories which made up only 17% of the 2013 figure.

Yet the truth is that if Americans wanted more of Obama’s successful policies, Hillary was Obama 2.0. No change in policies. Sensible to keep if they wanted the status quo. Ironic that 19 out of 25 states that voted for Trump had poverty levels exceeding the national average. Which means that had the “marry the state” policies of the Obama admin resonated with the poor it would have been a coronation for Hillary. This is a perfect example as to why a hollowed out middle America want to live the American dream rather than queue up for more welfare. God Bless America?

 

The irony of the Ivanka bashing was that it was an Obama era policy

Never let the facts get in the way of a narrative. Liberals were incensed over the treatment of kids on the border which led to Samantha Bee calling Ivanka Trump a “feckless c*nt” for not doing anything about it. What so many on the left have failed to grasp is that the policy mess they’re seeing was introduced by the Obama administration in 2013. Pictures of how kids were being locked in cages like animals at the border were circulating this week when they were taken in 2014.

Mainstream media reports had surfaced that federal agencies had lost 1,500 kids. 80% of illegal immigrant parents were skipping court appearances to get their kids over the last 5 years for fear they’d be deported so they moved from the addresses they provided to make it difficult to track them.

So the irony is the outrage over Ivanka’s supposed insensitivity was based on an Obama era policy. Will the left acknowledge their identity politics hero ended up funneling unaccompanied kids via human traffickers? That innocent kids were abandoned on the border to die after they were used to get into America. Even the Washington Post reported at this but alas no liberal outrage. It only matters to play the man not the ball.

What happens when you poke a Russian bear?

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As written earlier in the week, regardless of one’s views on the righteousness of any attack on Syria, Putin is being faced for the first time in a long time, a leader of a foreign nation (nations as it turns out) prepared to stand up to him. Obama fled the Syria battlefield after being given a two hour window when Russia first went to the aid of Assad. If that wasn’t the ultimate sign of a bully in the Kremlin it is hard to think of what is. While sanctions may have bitten to a degree post Ukraine and the shooting down of a Malaysian Airlines flight, Syria is essentially a testing ground for Putin to weigh up Western (specifically Trump’s) resolve. If we look at Russia’s response post the Syrian strike,

The worst apprehensions have come true. Our warnings have been left unheard…A pre-designed scenario is being implemented. Again, we are being threatened. We warned that such actions will not be left without consequences…All responsibility for them rests with Washington, London and Paris…Insulting the President of Russia is unacceptable and inadmissible.

Kind of says it all really – Russia hasn’t been insulted. Putin has. He must have a glass jaw  like Trump! Two bullies flexing muscle. In a show down Should Putin wish to pick a direct conventional fight against 3 nuclear powers (explicitly mentioned), he knows that ‘mutually assured destruction’ is the very last option in the drawer and next to no chance of being selected despite all of the media beat up. On a conventional basis, Putin wins more battles by stirring up the hornet’s nests in other regions. Lending more support to Iran, Lebanon and Yemen. Destabilize Saudi Arabia and antagonize Israel.

CM wrote,

It is worth nothing that Syria is Rosoboronexport’s (Russia’s military export wing) 2nd largest customer after Iran. Putin is sick of having the West try to remove his clients. Assad is key to Russia’s foothold in the Middle East. With an essentially pro-Iran Iraqi government and Syria as well as Hezbollah Putin has a geopolitical doormat from the troubled separatist states to Russia’s south to Lebanon.

Some arguments have been made about the risks of the American, French or UK strikes killing Russian troops or civilians on the ground in Syria handing Russia free will to attack its enemies. Scroll back to November 2015 when the Turkish Air Force shot down a Russian Su-24 fighter it claimed entered its airspace. Two Russian pilots were killed in the shooting and subsequent rescue. The Russians were incensed but President Erdogan is still in power and Ankara isn’t flailing after seeing its capitol turned into smoldering rubble.

This argument that the Russians weren’t given advance warnings of the attack is ridiculous. Had the Russian defence forces been on proper alert (they most definitely weren’t passed out behind their radar screens after a vodka binge) they would have detected the missile launches. Wind back to the 59 missile launch earlier last year against Syrian chemical facilities. We didn’t hear a peep from Putin. Why now? Of course he is incensed over the booting of diplomats on the nerve agent scandal but this is a showdown of ego.

Think of the long geopolitical chess board here. Should Trump have backed down on Putin’s threats, wouldn’t China’s Xi feel equally empowered to annex Taiwan by telling POTUS that he risks ‘grave reprisals if he meddles with Chinese sovereign territory’?

For all the initial snubbing of Trump by Macron on his historic election win in France, there is no way he would have gone in alone to attack a chemical facility without the guarantee of the military might of America. It is unlikely Theresa May would have done it either. So for all of the ‘unhinged’ lunatic rhetoric bandied about by the media, foreign nations don’t gamble their own sovereignty lightly, especially over something like Syria.

General Mattis has said they plan no further strikes at this stage. Does Putin order his forces to sink a US destroyer in the Mediterranean which launched those missiles? Highly unlikely. He does have the best weapon available to do that (the ‘Sunburn’) but sending US naval vessels to the bottom of the sea on a strategic strike would seem a big response to a targeted hit.

Let there be no mistake. There is a new sheriff in town. Russia has a bloody nose it didn’t think it would find itself. Putin miscalculated that Trump isn’t all Twitter-fueled bluster. Uncertainty in foreign leaders is always a risk for enemies. Trump has shown Putin he won’t be bullied like his predecessor.

Putin doesn’t want a hot war with America. The best way to strike at the US is like the last 6 decades. Undermine her at every opportunity. Supply her enemies. As mentioned before, if the Russians didn’t think it worth hitting back at Turkey for deliberately targeting its fighters, it is unlikely that Putin, no matter how ‘insulted’ he might feel will take a strike not aimed at Russians as a pretext to pick a fight with Trump. Putin has worked out the US president’s measure. He miscalculated. He won’t make that mistake twice.

For the media, running all the scare campaign stories is not only highly irresponsible (as it did over Yemen’s attacks on Saudi Arabia) but proving the lack of depth of analysis. They can beat Trump over the head all they wish but should note the actions of Macron and May following him into the region as a tacit approval of the US leader. Was he the madman they portrayed him as in the first place they would have stayed well out of it.

Watch for Putin’s response (unlikely but will threaten it will come when the evil Americans least expect) and think deeply about why it is important that the real despots (Putin, Xi, KJ-U, Erdogan) around the world no longer have the ability to exercise free will in knowledge that the worst they face is a slap on the wrist from the UN.

Sounds more like grounds for congratulation than censure. 

Chapter 11 bankruptcy filing trends in the US surging

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The Chapter 11 bankruptcy trends in the US have been picking up in the last 4 years. While well off the highs of the months and years of the GFC and years following it, the absolute numbers of filings has exceeded the levels leading up to the crisis in 2007/8.

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Here we put 2006/7/8 alongside 2016/17/18. The average monthly bankruptcy filings were around 355 in 2006 moving to 429 in 2007 and then 718 in 2008. If we looked at the data in the 12 months prior to the quarter leading into Lehman’s collapse, bankruptcies averaged 463/month. The ultimate carnage peaked out at 1,049 in 2009 (1,377 in Apr 2009). For 2016, 2017 and 2018 (annualized) we get 454, 480 and 521 respectively.

Chap 11 Comp.png

Bankruptcy filings tend to be seasonal and often show peaks in April when tax season coincides with businesses.

However the %-age spike in bankruptcies in 2008 ahead of Lehman’s downfall was 46%. In the latest recorded month from the American Bankruptcy Institute (ABI) was 81%. This March 2018 spike is the second highest since the GFC hit. April figures will be interesting if we get another lift on that figure. Not even seasonality can explain away the differences. The trends seem clear.

Thinking logically, we are at the end of the generous credit cycle. Interest rates are heading north thanks to a less accommodating Fed. Naturally ‘weaker’ companies will have more trouble in refinancing under such environments. The lowering of corporate taxes would seem to be a boon, but with loss making businesses it becomes harder to exercise tax loss carry forwards.

We’ve already started to see GFC levels of credit card delinquency at the sub-prime end of town. Sub-prime auto loan makers seeking bankruptcy protection have surged too.

Fitch, which rates auto-loan ABS said the 60+ day delinquency rate of subprime auto loans has now risen to 5.8%, up from 5.2% a year ago, and up from 3.8% in February 2014 to the highest rate since Oct 1996, exceeding even GFC levels.

growing number of car loans in the US are being pushed further down the repayment line as much as 84 months. In the new car market the percentage of 73-84-month loans is 33.8%, triple the level of 2009. Even 10% of 2010 model year bangers are being bought on 84 month term loans. The US ended 2016 with c.$1.2 trillion in outstanding auto loan debt, up 9%YoY and 13% above the pre-crisis peak in 2005.

The irony here is that sub-prime auto loan makers expanded lending because new technology allowed these companies to to remotely shut down and repossess vehicles of owners who were late on payments. That game only lasts so long before it forms its own Ponzi scheme.

Throw skittish financial markets, geopolitical instability and the mother of all refinancings coming the US Treasury’s way it is not to hard to see bankruptcies pick up from here.

$8.4 trillion of the $21 trillion in US debt matures in 4 years. What could possibly go wrong?

E0F20948-4A5A-48F1-B8AF-06FA92EBAC7AWith a US Fed openly stating it is looking to prune its bloated balance sheet by around $2 trillion, it seems that $8.4 trillion of that debt held by the public matures within the next 4 years according to the US Treasury. To that end, debt maturing in the next 10 years totals $12.233 trillion. It needs to be ‘rolled over’. The national debt pile has jumped $1 trillion in the last 6 months. After the GFC and an overly accommodative central bank, the Treasury took advantage of this free money. Under President Obama, the debt doubled. That’s right, debt in his 8 years equaled that of the previous 43 administrations combined. Most of it was short term meaning the mop up operation starts earlier.

While there is little doubt this $8.4 trillion will be recycled, the question is at what price. With rising rates and a Fed back-pedaling one would expect the interest bill can only lift. At the moment the US federal government pays around $457 billion p.a. in interest alone. Average interest rates rose for the first time since 2006. Were average rates to climb back to 2007 levels then the interest bill alone would surpass $1 trillion.

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This global aversion to tightening belts continues. Many US corporations have taken the same approach to their balance sheets as the government as pointed out in the previous example on GE. Lever up and be damned with the credit rating as the spreads have been almost irrelevant to higher rated paper. It has been a financially credible decision to lower WACC and increase ROE provided one didn’t lose control and overdose on free money. However the relatively short duration on corporate debt is facing a similar refinancing cliff as the US government.

All this cumulative debt needing refinancing while credit ratings are on average the worst they’ve ever been in a rising interest rate environment coupled with a bubble in bonds while a growing number of these levered consumer and industrial stocks have negative equity. What could possibly go wrong?

Do we see the Fed reverse its decision and embark on more QE? Indeed to do such a thing would tank the dollar and send the yen back towards the 70s to the US$. Interesting times ahead. Throw on the $7 trillion shortfall in state public pension liabilities and watch the fire from the other side of the river. Finally some university think tank has come out saying that wiping out the $1.5 trillion in student debt would be ‘stimulatory’ to the economy adding 1.5 million jobs. What a world we live in when we get to walk away from responsibility and accountability.