Poverty

Albo moves from dumb to dumber

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Oh boy! Here we go again. Adjusting targets to a pointless exercise to an even more irrelevant one, albeit at a massive net cost to all Aussies.
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This is the trend of Australian energy price inflation and manufacturing jobs over the last two decades. Notice anything? A correlation of about 90%. Energy prices go up, manufacturing comes down. We have shed 250,000 manufacturing jobs in the last two decades. Green jobs have not replaced them. Not even 1/10th of the jobs lost as this chart from the ABS shows.
The trend is the same in Denmark, which is an even big renewables user. The correlation is even higher. Denmark has shed 200,000+ jobs following green madness. No green jobs haven’t offset this either.
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Is it a surprise that prices, where more renewable energy is used, are higher than those places that don’t? If it weren’t for the weak $A, these numbers would look even worse.
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Labor leader Anthony Albanese thinks that shifting the focus away from 45% renewable by 2030 to net zero emissions by 2050 is a game-changer. Why can’t these politicians count or look at the experience at home and abroad? What is this obsession to take Australia’s 0.00001345% CO2 contribution to the atmosphere to zero? How many billions more should we spend for absolutely no return? Does he not realise that Australia has the third-highest clean energy spending per capita already? Why all the self-flagellation?

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Our per capita emissions are going down relative to many neighbours. Don’t be fooled by the Europeans either. Biomass (which is as dirty as lignite (brown coal)) gets special dispensation from the EU hacks if a tree is planted for every one burned. So even though the tree that is planted will take at least 50 years to be able to replace what was burnt, fear not, creative stats are ok in Brussels.
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Ahh, but Germany is the country we should all aspire to be, no? Well actually, no. In 2007 Germany forecast that 2020 residential electricity prices would be approximately 16 Eurocents. Today they trade at c.31 Eurocents. Merkel’s policies to phase out all nuke power after the Fukushima disaster. Der Spiegel, a normally left-leaning journal wrote in a two-part series. 

Part 1 – Germany Failure on the Road to a Renewable Future

“But the sweeping idea has become bogged down in the details of German reality. The so-called Energiewende, the shift away from nuclear in favour of renewables, the greatest political project undertaken here since Germany’s reunification, is facing failure. In the eight years since Fukushima, none of Germany’s leaders in Berlin have fully thrown themselves into the project, not least the chancellor. Lawmakers have introduced laws, decrees and guidelines, but there is nobody to coordinate the Energiewende, much less speed it up. And all of them are terrified of resistance from the voters, whenever a wind turbine needs to be erected or a new high-voltage transmission line needs to be laid out.”

Germany’s Federal Court of Auditors is even more forthright about the failures. The shift to renewables, the federal auditors say, has cost at least 160 billion euros in the last five years. Meanwhile, the expenditures “are in extreme disproportion to the results, Federal Court of Auditors President Kay Scheller said last fall, although his assessment went largely unheard in the political arena. Scheller is even concerned that voters could soon lose all faith in the government because of this massive failure.

There is also such an irony when these mad green schemes encounter scourge from animal rights groups. Former Green’s leader Bob Brown knows the feeling,

“The bird of prey [red kite], with its elegantly forked tail, enjoys strict protection in Germany…Red kites are migratory, returning from the south in the spring, but they don’t return reliably every year. The mayor would have been happy if the bird had shown up quickly so its flight patterns could be analyzed and plans for the wind park adjusted accordingly. It would have been expensive, but at least construction of the project could finally get underway.

But if the bird doesn’t return, the project must be suspended. Spies has to wait a minimum of five years to see if the creature has plans for the nest after all. Which means the wind park could finally be built in 2024, fully 12 years after the project got underway.”

Part 2 – German Failure on the Road to a Renewable Future

An additional factor exacerbating the renewables crisis is the fact that two decades after the enactment of the Renewable Energy Sources Act (EEG), 20-year guaranteed feed-in tariffs will begin expiring next year for the first wind, solar and biomass facilities. Some of those who installed solar panels back then — often farmers and homeowners — are still receiving 50 cents for every kilowatt-hour they feed into the grid. Today, larger facilities receive just 5 cents per kilowatt-hour.

The state has redistributed gigantic sums of money, with the EEG directing more than 25 billion euros each year to the operators of renewable energy facilities. But without the subsidies, operating wind turbines and solar parks will hardly be worth it anymore. As is so often the case with such subsidies: They trigger an artificial boom that burns fast and leaves nothing but scorched earth in their wake.

That doesn’t include the 360,000 German households in energy poverty.

As Australia continues to expand the renewables portion of our power grid, the lessons from the Germans couldn’t be clearer – market distortions and misguided investments only lead to marginal results on the back of massive investment to stop something that can’t be controlled. German taxpayers have been swindled and Aussies are sleepwalking down the same path.

So Albo, the solution is simple. Do the math. Read about Germany’s beta testing of renewables and stop this crusade to prevent something that no matter what target you pick, zero will be the output. Just look at the price of energy relative to core CPI since we went renewables mad in 2000. That chart is not a vote winner.

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The only hot air Albo needs to worry about is that emanating from the Labor Party policy room. Drop all of this group think.

My Homeless are Your Homeless?

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The phrase, “my home is your home” is enshrined in cultural norms. However, is this applicable to the homeless? A lot of articles are circling around the rising crisis in homelessness in America. According to the terrible statistics of the National Alliance to End Homelessness, the overall trend has actually been declining over the last decade. According to the President of Environmental Progress, Michael Shellenberger,

The crisis [in California] is worsening. The number of homeless people in LA increased from 52,765 in 2018 to 58,936. Homelessness increased by 43% and 17% in Alameda County, which includes Oakland, and 17% in San Francisco, respectively. Deaths on the street rose 76% in LA and 75% in Sacramento over the last five years. Murders and rapes involving the homeless increased by 13% and 61% between 2017 and 2018. And 2019 data show that both deaths and homicides are continuing to rise rapidly.

In 2018, the people of California elected Gavin Newsom governor with 62% of the vote and a mandate to take radical action to significantly increase both temporary and permanent housing. He promised 3.5 million new units by 2025, which is 580,000 units per year. And he promised to create a homelessness czar with the power of a cabinet secretary to “focus on prevention, rapid rehousing, mental health and more permanent supportive housing.”

Newsom has not kept his campaign promises and the crisis is worsening. The number of people living outdoors has increased and violence both by and against them has risen by 30% and 37%. In June, the governor let a package of housing reform measures die. In August, he announced would not appoint a homelessness czar. And now the data make clear that less housing will be built this year than in any other year over the last decade.”

While collating statistics on homeless people is a challenge, one has to wonder whether the policies provided by largely Democrat-run states – e.g. California, NY, Washington – to provide ‘free everything’ are creating a marketplace to attract the homeless, hence why numbers in California are swelling while the national total is decreasing.

To flip the argument on its head, sanctuary cities have often spoken about the misguided altruism of their policies with respect to protecting illegal immigrants.

CM wrote back in July,

Remember when Trump said he’d ship illegals to sanctuary cities when Democrats held their resolve over funding border security? Why weren’t sanctuary cities, all publicly open arms about accepting illegal immigrants, instead of baulking at receiving busloads of them? The great irony is that a growing number of illegal immigrants are choosing to move OUT of sanctuary cities. In 2007, 7.7mn (63.1%) lived in the 20 largest sanctuary metros to 6.5mn (60.7%) in 2016 according to Pew. During that time 1.5m illegal immigrants were deported (12.2mn ->10.7mn).”

We can all accept the harsh realities of homelessness and the need to care for them. However, do politicians need to reevaluate how they are dealing with the problem? Solving it is one thing. Creating an environment that attracts caravans of ‘legal citizens’ which might be compounding the problem is another.

Follow the hips, not the lips. The system in California is clearly failing.

The depression we have to have

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In his 1967 presidential address to the American Economic Association, Nobel laureate economist Milton Friedman said, “… we are in danger of assigning to monetary policy a larger role than it can perform, in danger of asking it to accomplish tasks that it cannot achieve, and as a result, in danger of preventing it from making the contribution that it is capable of making.

What we are witnessing today is not capitalism. While socialists around the world scream for equality and point to the evils of capitalism, the real truth is that they are shaking pitchforks at the political class who are experimenting with economic and monetary concoctions that absolutely defy the tenets of free markets. As my learned credit analyst and friend, Jonathan Rochford, rightly points out, central banks have applied “their monetary policy hammer to problems that need a screwdriver.

Never has there been so much manipulation to keep this sinking global ship afloat. Manipulation is the complete antithesis to capitalism.  Yet our leaders and central banks think firing more cheap credit tranquillizers will somehow get us out of this mess. IT. WILL. NOT.

BONDS

As of August 15th, 2019, the sum of negative-yielding debt exceeds $16.4 trillion. That is to say, 30% of outstanding government debt sits in this category. Every single government bond issued by Germany, The Netherlands, Finland and Denmark are now negative-yielding. Germany just announced a 30-yr auction with a zero-interest coupon.

Unfortunately, insurance companies and pension funds are large scale buyers of bonds and negative interest rates don’t exactly serve their purposes. Therefore the hunt for positive yield (that ticks the right credit rating boxes) means the pickings continue to get slimmer.

Put simply to buy a bond with a negative yield, means that the cost of the bond held to maturity is more than the sum of all the coupons due and the receipt of face value combined. It also says clearly that controlling the extent of the loss of one’s money is preferable to sticking to strategies in other asset classes (e.g. property, equities) where TINA (there is no alternative) is the rule of thumb.

CM believes that there is a far bigger issue investors should focus on is the return “of” their money, not the return “on” it.

Rochford continues,

Central banks have hoped that extraordinary monetary policy would kick start economic growth, but they have instead only created asset price growth. In applying their monetary policy hammer to problems that need a screwdriver they have created the preconditions for the next and possibly greater financial crisis. The outworkings of many years of malinvestment are now starting to show with increasing regularity.

Argentina’s heavily oversubscribed issuance of 100-year bonds in 2017 was considered insane by many debt market participants at the time. The crash to below 50% of face value this month and request for maturity extensions is no surprise for a country that has a long rap sheet of sovereign defaults. Greece’s ten-year bond yield below 2% is another example of sovereign debt insanity…

…There have been three regional bank failures in China in the last three months, likely an early warning of the bad debt crisis brewing in China’s banks and debt markets. Europe’s banks aren’t in much better shape, there’s still a cohort of weak banks in Germany, Greece, Italy and Spain that haven’t fixed their problems that first surfaced a decade ago. Deutsche Bank is both fundamentally weak and the world’s most systemically important bank, a highly dangerous combination.”

What about equity markets?

EQUITIES

We only need look at the number record number of IPOs in 2018 where over 80% launched with negative earnings, you know, just like what happened in 2000 when the tech bubble collapsed.

Have people paid attention to the fact that aggregate US after-tax corporate earnings have been FLAT since 2012? That is 7 long years of tracking sideways. Where is this economic miracle that is spoken of?

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The only reason the markets have continued to remain excited is the generous share buyback regimes among many corporates which have flattered earnings per share (EPS). The “E” hasn’t grown. It is just that “S” has fallen. Credit spreads between AAA and BBB rated corporate paper has been so narrow that over 50% of US corporates now have a BBB or worse credit rating. Now credit spreads between top and bottom investment-grade bonds remain ridiculously tight. At some stage, investors will demand an appropriate spread to account for market “risk.”

Axios noted that for 2019, IT companies are again on pace to spend the most on stock buybacks this year, as the total looks set to pass 2018’s $1.085 trillion record total. Pretty easy to keep markets in the clouds with cheap credit fuelling expensive buybacks. Harley-Davidson is another household name which suffers from strategy decay yet deploys more cash to share buybacks instead of revitalising its core franchise. Harley delinquencies are at a 9-yr high.

Companies like GE embarked on a $45bn share buyback program despite a balance sheet which still reveals considerable negative equity. GE was the largest company in the world in 2000 and now trades at 20% of that value almost 20 years later.

Should we ignore Harry Markopolos, who discovered the Bernie Madoff Ponzi scheme, when he points to the problems within GE? GE management can protest all they like but ultimately the company is not winning the argument if the share price is a barometer.

Valuations are at extreme levels. Beyond Meat trades at 100x revenues. Don’t get CM started on Tesla. A largely loss-making third rate automaker which is trading at outlandish premiums. The blind faith put in charge of a CEO that has lost over 100 senior management members.

Bank of America looked at 20 metrics to evaluate current market levels of the S&P500. 17 of them pointed to excess valuations relative to history including one metric that revealed S&P500 being 90% overvalued on a market cap to GDP ratio. Never mind.

Then witness the push for diversity nonsense inside corporate boardrooms. CM has always believed if a board is best suited to be run by all women based on background, skills and experience, then so be it. That is the best outcome for shareholders. However, to artificially set targets to morally preen will mean absolutely nothing if a sharp downturn exposes a soft underbelly of a lack of crisis management skills. Shareholders and retirees won’t be impressed.

It was laughable to hear superannuation funds ganging up on Harvey Norman last week for not having a diverse enough board. Even though Harvey Norman is thumping the competition which focuses too much on ESG/CSR, the shortcomings of our retirement managers are only too evident. Retirees want returns and their super managers should focus on that, rather than try to push companies to meet their ridiculous self-imposed investment restrictions. Retirees won’t be happy when their superannuation balances are decimated because fund managers wanted to appear socially acceptable at cocktail parties.

PROPERTY

It was only last month that Jyske Bank in Denmark started to offer negative interest mortgages. That is the bank pays interest to the mortgage holders. Of course, the bank is able to source credit below that rate to make a profit however net interest margins for the banks get squeezed globally. What next? Will people be able to sign up to a perpetual negative interest mortgage? Shall we expect a Japan-style multi-generational loan?

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The RBA’s latest chart pack shows net interest margins at the lowest levels for two decades. With the Hayne Banking Royal Commission likely to further crimp on lending growth, we are storing up huge pain in property markets despite the hope that August clearing rates signal a bottom in the short term. Yet more suckers lured in at the top of a shaky economy and financial sector.

Of course, central banks will dance to the tune that all is OK. Until it isn’t.

Don’t forget former US Treasury Secretary Hank Paulson, said “our financial institutions are strong” right before plugging $700bn worth of TARP money to save many of them from bankruptcy in 2008.

CM has previously investigated the Big 4 Aussie banks who have equity levels that are chronically low levels. Our major banks have such high exposure to mortgages that a severe downturn could potentially lead to part or whole nationalisation. Of course, between signalling the importance of factoring climate change, APRA assures us the stress tests ensure our financial institutions are safe.

Back in 2007, Sydney house prices were 8x income. In 2017 Demographia stated average housing (excluding apartment) prices were in the 13-14x range. The Australian Bureau of Statistics notes that 80% of people live in houses and 20% in apartments. Only Hong Kong at 19x beats Sydney for dizzy property prices. In 2019, expect that price/income rates remain at unsustainable levels.

In 2018, Australia’s GDP was around A$1.75 trillion. Our total lending by the banks was approximately $2.64 trillion which is 150% of GDP. At the height of the Japanese bubble, total bank lending as a whole only reached 106%. Mortgages alone in Australia are near as makes no difference 100% of GDP. Where there is smoke, there is fire.

At the height of the property bubble frenzy, Japanese real estate related lending comprised around 41.2% (A$2.5 trillion) of all loans outstanding. N.B. Australian bank mortgage loan books have swelled to 64% (A$1.8 trillion) of total loans.

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Sensing the bubble was getting out of control, the Bank of Japan went into a tightening rate cycle (from 2.5% to 6%) to contain it. Unfortunately, it led to an implosion in asset markets, most notably housing. From the peak in 1991/2 prices over the next two decades fell 75-80%. Banks were decimated.

In the following two decades, 181 Japanese banks, trust banks and credit unions went bust and the rest were either injected with public funds, forced into mergers or nationalized. The unravelling of asset prices was swift and sudden but the process to deal with it took decades because banks were reluctant to repossess properties for fear of having to mark the other properties (assets) on their balance sheets to current market values. Paying mere fractions of the loan were enough to justify not calling the debt bad. If banks were forced to reflect the truth of their financial health rather than use accounting trickery to keep the loans valued at the inflated levels the loans were made against they would quickly become insolvent. By the end of the crisis, disposal of non-performing loans (NPLs) among all financial institutions exceeded 90 trillion yen (A$1.1 trillion), or 17% of Japanese GDP at the time.

The lessons are no less disturbing for Australia. As a percentage of total loans outstanding in Australia, mortgages make up 65%. The next is daylight, followed by Norway at around 40%. US banks have cut overall property exposures and Japanese banks are now in the early teens. Post GFC, US banks have ratcheted back mortgage exposure. They have diversified their earnings through investment banking and other areas. That doesn’t let them off the hook mind you.

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Japanese banks have 90%+ funding from domestic deposits. Australia is around 60-70%. Our banks need to go shopping in global markets to get access to capital. Conditions for that can change on a dime. External shocks can see funding costs hit nose bleed levels which are passed onto consumers. When you see the press get into a frenzy over banks passing on more than the rate rises doled out by the RBA, they aren’t just being greedy – a large part is absorbing these higher wholesale funding costs.

Central banks need a mea culpa moment. We need to move away from manipulating interest rates to muddle through. It isn’t working. At all.

Rochford rightly points out,

Coming off the addiction to monetary policy is going to be painful, but it is the only sustainable course. It is likely that normalising monetary policy will result in a global recession, but this must be accepted as an unavoidable outcome given the disastrous policies of the past. Excessive monetary and fiscal stimulus has pulled consumption forward, the process of unwinding that obviously requires a level of consumption to be pushed backwards.”

Rochford is being conservative (no doubt due to his polite demeanour) in his assessment of a global recession. It is likely that this downturn will make the GFC of 2008 look like a picnic. CM thinks depression is the more apt term. 1929 not 2008. Central banks are rapidly losing what little confidence remains. If the RBA think QE will be a policy option, there is plenty of beta testing to show that it doesn’t work in the long run.

It is time to have the recession/depression we had to have to get the markets to clear. It will be excruciatingly painful but until we face facts, all the manipulation in the world will fail to keep capitalism from doing its job in the end. The longer we wait the worse it will get.

“It’s not what you don’t know that gets you into trouble…..it is what you know to be sure that just ain’t so! – Mark Twain.

Buhahahahaha

In 1999, CM was told by the pro-EV lobby that electric cars would be 10% or the market by 2010. In 2019 EVs are struggling to nudge 1.3%. If EV’s have managed to achieve much more than 10-12% by 2035 it will be a miracle.

10 reasons it will be highly unlikely:

1) Australia sold just over 1.15m cars in 2018. In 2008, SUVs comprised 19% of total sales. Today 43%. So much for the unbridled panic about catastrophic climate change if consumption patterns are a guide.

2) Australian fuel excise generates 5% of total tax revenue. It is forecast to grow from $19bn today to $24bn by 2021. If government plans to subsidize then it’ll likely to add to the deficit, especially if it lobs $5,000 per car subsidies on 577,000 cars (50% of 2018 unit sales in Australia).

CM has always argued that governments will eventually realize that moving to full EV policy will mean losing juicy ‘fuel excise’. Point 16 on page 19 for those interested.

Cash strapped Illinois has proposed the introduction of a $1,000 annual registration fee (up from $17.50) to account for the fact EVs don’t pay such fuel taxes. Note Illinois has the lowest investment grade among any other American state and has to allocate 40% of its budget just to pay outstanding bills. It is also home to one of the largest state pension unfunded deficits per capita in the country.

3) cash for clunkers? If the idea is to phase out fossil fueled powered cars, surely the resale/trade in values will plummet to such a degree that trading it on a new EV makes no sense at all. False economy trade where fossil fuel owners will hold onto existing cars for longer.

4) Global EV production is 2.1m units. Looking at existing production plans by 2030, it is likely to be around 12mn tops on a conservative basis. Australia would need want 5% of world EV supply when were only 1.2% of global car sales. Many auto makers are committed to selling 50% of EV capacity into China. So Shorten will be fighting for the remaining pie. No car makers will export 10% of all EV production to Australia without substantial incentives to do so.

Don’t forget Alexandria Ocasio-Cortez also intends to get every fossil fueled powered car off the road in a decade. The US has 270 million registered vehicles, the overwhelming majority being petrol powered. The US sells 16-17mn cars a year (sadly slowing). Therefore in the US, 16 years would be required to achieve that target.

5) Ethics of EVs. To save the planet, the majority of cobalt to go into making the batteries comes from African mines which use child slave laborers. There is a moral scruple to keep a virtue signaling activist awake at night!

Not to worry, Glencore has just announced last week it is closing its cobalt capacity in DR Congo which will flip the market from surplus to deficit (at 1.2% global market share). Oops.

6) EV makers aren’t happy. In Europe there are over 200 cities with EV programs but none are alike. In the quest to outdo each other on the virtue signaling front, car makers are struggling to meet such diverse requirements meaning roll outs will be slow because there is no movement to standardize.

7) EV suppliers aren’t convinced. Because of the above, many EV suppliers are reluctant to go too hard in committing to new capacity because global car markets are slowing in China, US, Europe and Australia. High fixed cost businesses hate slowdowns. Writing down the existing capacity would be punitive to say the least. New capacity takes a minimum of 2 years to come on line from conception.

8) The grid! In the UK, National Grid stated that to hit the UK targets for EVs by 2030, an entirely new 8GW nuclear plant would be required to meet the demands of EV charging. Australia can barely meet its energy needs with the current policies and doubling down on the same failed renewables strategy that has already proved to fall well short of current demand ex any EVs added to the grid.

9) in 1999 automotive experts hailed that EVs would make up 10% of all vehicle sales by 2010. In 2019 EVs make up around 2.5%. So 9 extra years and 75% below the target. The capacity isn’t there much less consumers aren’t fully convinced as range anxiety is a big problem.

10) charging infrastructure is woefully inadequate. Await another taxpayer dollar waste-fest. Think NBN Mark II on rolling EV chargers out nationwide. The question then becomes one of fast charger units which cost 5x more than slower systems. If the base-load power capacity is already at breaking point across many states (Vic & SA the worst) throwing more EVs onto a grid will compound the problem and drive prices up and potentially force rationing although people look to Norway.

Norway is a poor example to benchmark against. It is 5% of our land mass, 1/5th our population and new car sales around 12% of Australia. According to BITRE, Australia has 877,561km of road network which is 9x larger than Norway.

Norway has around 8,000 chargers countrywide. Installation of fast chargers runs around A$60,000 per unit on top of the $100,000 preparation of each station for the high load 480V transformer setup to cope with the increased loads.

Norway state enterprise, Enova, said it would install fast chargers every 50km of 7,500km worth of main road/highway.

Australia has 234,820km of highways/main roads. Fast chargers at every 50km like the Norwegians would require a minimum of 4,700 charging stations across Australia. Norway commits to a minimum of 2 fast chargers and 2 standard chargers per station.

The problem is our plan for 570,000 cars per annum is 10x the number of EVs sold in Norway, requiring 10x the infrastructure.

While it is safe to assume that Norway’s stock of electric cars grows, our cumulative sales on achieving plan would require far greater numbers. So let’s do the maths (note this doesn’t take into account the infrastructure issues of rural areas):

14,700 stations x $100,000 per station to = $1,470,000,000

4,700 stations x 20 fast chargers @ A$60,000 = $5,640,000,000 (rural)

4,700 stations x 20 slow chargers @ A$9,000 = $846,000,000 (rural)

10,000 stations x 5 fast chargers @ A$60,000 = $3,000,000,000 (urban)

570,000 home charging stations @ $5,500 per set = $3,135,000,000 (this is just for 2035)

Grand Total: A$14,091,000,000

The Democrats & MSM still don’t get it

Of course the Democrats have been wailing “racism” with respect to this tweet. What the Dems and the mainstream media keep forgetting is that all they do is give Trump free exposure. The intended message relating to his racism, bigotry, white supremacy etc etc is diluted. CM has said for the longest time that the best way to defeat Trump is to give him zero airplay over such nonsense. Sadly TDS prevents rational thought and encourages hysteria.

AOC, best remember that victory loves preparation

Poor old AOC sought to hammer former ICE Director Thomas Homan but he pointed out facts and made her look rather wanting…she is really becoming a liability for the Dems.

If she doesn’t like the laws she is in a great place to change them.

Beasts at the border?

A lot of negative noise has been made about the actions of the Customs & Border Protection (CBP) employees in the US. Notably, the arrest statistics across the entire staff of 59,178 totalled 254 people. Only 2 people were arrested for sexual misconduct. Two-thirds of the crimes that led to the arrest of CBP staff were alcohol or DV related. The Annual Report published in 2018 notes that the trend fell marginally.

The CBP Standards of Conduct state that in order to fulfill its mission, CBP and its employees must sustain the trust and confidence of the public they serve. As such, any violation of law by a CBP employee is inconsistent with and contrary to the Agency’s law enforcement mission. CBP’s Standards of Conduct specify that certain conduct, on and off-duty, may subject an employee to disciplinary action. These standards serve as notice to all CBP employees of the Agency’s expectations for employee conduct wherever and whenever they are.

Rep Jerry Nadler is calling for CBP officials to face ‘child abuse’ sanctions. Substantiated ‘crimes involving children leading to arrest numbered only 6. Six too many one might say but hardly a sign of widespread child abuse. 

We can see the total number of formal disciplinary warnings and sanctions against staff as follows over the past 3 years.

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Note that under Trump, an 18% increase in drug testing of CBP employees (13% of the total were tested in 2017) led to a fall in positive responses to narcotics in 2017 over 2016.

A total of 12 people, or 0.02% of CBP staff, tested positive in 2017 to illicit substances.

Looking at allegations made against CBP staff, 3,806 of the 7,239 claims made were dismissed as unsubstantiated in 2017. This is down from 3,828 out of 7,740 in 2016. There were 8,253 claims in 2015. in 2017, 1,279 employees required counselling. 1,074 received written warnings. So the idea that CBP employees are merely Nazis bullying people with no consequences, it couldn’t be further from the truth. Statistically, the quarterly reported nature of the data suggest very little seasonality with respect to punishment – i.e. it is consistent.

Breaking it down by department within the CBP, 4% of the 20,954 US Border Patrol (USBP) staff were disciplined, 3% of the 29,321 Office of Field Operations (OFO) employees were cracked over the knuckles. These represented 90% of all disciplinary actions in CBP.

The highest number of CBP OFO sanctions in 2017 vs 2016 caused in the Laredo Field Office (441 -> 378), followed by the San Diego Field Office (398->408) and Tucson Field Office (328 -> 200). These figures were out of a total of 3,129 sanctions issued.

The highest number of CBP USBP sanctions in 2017 vs 2016 were caused in the Tucson Sector (809->701), followed by the Rio Grande Sector (704->568) and the El Paso Sector (317->332). These figures were out of a total of 3,168 sanctions issued.

Each year, CBP receives and reviews hundreds of allegations pertaining to use of force incidents. Authorized employees may use objectively reasonable force only when it is necessary to carry out their law enforcement duties. When these cases involve excessive force or civil rights abuse allegations, and prosecution is declined by the U.S. Attorney’s Office or the local prosecutor, the matter is then subject to an administrative investigation to determine if an employee’s actions, although not unlawful, violated Agency policy or procedure.

In FY 2015, CBP implemented a new process for reporting, tracking, and investigating use of force incidents. Under this new process, use of force cases are evaluated to determine whether the amount or type of force used was excessive or outside of Agency policy. CBP’s National Use of Force Review Board (NUFRB) reviews all lethal use of force incidents, including the use of firearms and uses of force that result in serious injury or death. The Local Use of Force Review Board reviews all less than lethal use of force incidents not addressed by the NUFRB. If there is a determination that an employee’s use of force was outside of Agency policy, the case returns to HRM for potential disciplinary action.

The remaining cases involving alleged use of force that are not handled through the NUFRB or Local Use of Force Review Boards, including allegations of excessive force, are referred to OPR or component management for review and consideration of disciplinary action.

In conclusion, CBP noted,

All CBP employees are guided by these principles of the public trust both on and off-duty. Those who breach it are held accountable for their actions.

Although the number of CBP employees arrested for misconduct on or off-duty declined for the second year in a row, the number of employees arrested continues to be a concern. CBP is addressing employee arrests through its ongoing efforts promoting education and resilience services to employees and their families, reducing the use of administrative leave or indefinite suspension when employees are subject to a criminal proceeding, and by ensuring appropriate discipline is applied.

CBP will continue to increase its transparency efforts with annual discipline overviews, publication of National Use of Force Board results, and through public engagement on our policies and operations. Finally, CBP’s internal complaints and discipline systems will remain focused on systemic improvements to reduce case investigation and administrative processing timelines and increase consistency in handling misconduct allegations and more timely arrive at discipline case decisions.”

Judge for yourself. Things are not exactly rosy, but the idea that border forces are unhinged and unaccounted is simply unfounded. To that end, steps taken to improve the situation are not limited to the following:

Improving Use of Force instruction for law enforcement personnel by extending basic training of new recruits to include a 35% increase in less lethal and 58% increase in use of force judgement/firearms related training; Adding mandatory live and computer-assisted scenario based Use of Force training for all.

Continuing release of information to the public immediately following use of force incidents and publishing monthly use of force statistics on CBP.gov

Implementing CBP’s Policy on Zero Tolerance of Sexual Abuse and Assault

We await the FY2018 figures due shortly to see whether the Trump administration has added a layer of Nazi stormtrooper to the data. CM guesses the statistics will prove otherwise.