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Commentary on The Capital Markets- Category [Editorial]
2017-11-30 23:48 by Karl Denninger
in Editorial , 341 references
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.... a very long piece tomorrow on the outrageous decision in Californicated this evening in which a jury acquitted an illegal invader of all charges, save one, in shooting Kate Steinle.

The jury "bought" the defense argument that the charge was "racist."

But I'm not going to put in the effort because nobody in this nation gives a ****.  The Steinle family will not obtain justice and that's your responsibility, America.

No, I don't think that illegal invader should have been convicted of murder.  Murder requires intent.  I don't know if that was proved; I wasn't on the jury.

But manslaughter was a lesser included charge and does not require intent -- just recklessness.

That shooting was without question reckless.

Second, as an illegal invader it was a federal offense for him to possess a firearm.  He was also a convicted felon, so there's a state and federal crime there too.  Rather than imprison him for possession of a firearm by a felon (state charge, on which he was convicted) or try him on the federal charge of acquiring said weapon (a separate and distinct offense)which the Federal Government could do now (it doesn't matter how you acquire said firearm if you're a prohibited person) they're going to deport him instead.

May I remind you that they deported him before and he came back.  What makes you think he won't do it again?  Why deport him rather than imprison him?

So rather than tell you how I really feel about this, I'm simply going to leave you with these two thoughts:

First, **** you Mr. President, as you have no respect for the Rule of Law or your Just-Us department would try that illegal invader for the federal offense of illegally obtaining a firearm as an illegal invader in federal court and upon conviction toss his ass in federal prison for doing so, or let the state sentence and imprison him on the STATE charge he was convicted of first (possession of a firearm by a felon), try him on the federal charge and then deport him when he has served said sentences.  I remind you that DoucheNozzle Trump has repeatedly criticized Obama for being "soft on federal gun crimes" (such as acquiring guns as a felon); so much for Trump having a sack when it comes to enforcing the law.

You, Mr. President, just destroyed the last bit of respect I had for you.  May you burn in eternal Hell along with Kate's killer; you deserve to join him for your complicity in not trying this jackass in federal court.  I remind you that the Executive is charged with enforcing the law and the President's Oath of Office requires that he do so faithfully.

And second, **** you California.  I respect the decision of the jury but it damn well ought to have consequences, all lawful and enforced by the people of this country.  It won't because we no longer have anyone left in this nation with a sack, but if you think I'll be sorry or enraged and willing to fight if the Norks nuke San Francisco tomorrow morning..... you're wrong.

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2017-11-24 10:50 by Karl Denninger
in Editorial , 1020 references
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There is a basic premise behind reporting .vs. editorializing -- one is allegedly unbiased, although we all have our personal prejudices while the other is labeled opinion (it's found on the opinion page and is disclosed as such.)

Jeff Bezos bought the Washington Post, it is now clear, in order to effect a public lobbying strategy much larger than that which Hastings "organized" and led to a five times increase in his firm's stock price revolving around net neutrality.

That latter event occurred after ISPs, properly recognizing that he was effectively driving semi trucks over the roads built for cars and refusing to pay higher fuel taxes and license plate fees for same, or, if you prefer, opening up a 2" water connection to a 6" main and demanding not to be charged by the gallon, resulting in you having no water pressure, started pushing back and demanding that Netflix cover the outsized costs being imposed on said ISPs to prevent service-quality collapses to everyone, including those who didn't want his service.

In response Hastings got a bunch of left-aligned media to whip the public into a froth and Obama's FCC obliged by handing him tens of billions of dollars literally forced out of non-subscriber's wallets.

Amazon engages in cross-subsidization of its product sales (on which he makes no profit, particularly when fulfillment along with G&A are included) with other sales, particularly in AWS, where he does.  This now includes government sales of AWS which means you're being forced to subsidize Jeff Bezos' destruction of retailers all across the United States at literal gunpoint, along with all the jobs that go when those retailers are forced out of business.

This is illegal under 100+ year old anti-trust law which says that any attempt to monopolize trade is a felony.

Amazon even goes so far as to find products for sale by merchants on their site, identifies the ultimate manufacturer of said products and then attempts to solicit those manufacturers to "sell direct" via Amazon, a classic (and illegal) interference with existing contractual relationships and also illegal as an attempt to monopolize trade practices within a given type of product.  There is a commenting member on this very site who has had Amazon try to do this with a product he had developed and sells.

All of this, of course, requires that Amazon and Jeff Bezos have a nice loud mouthpiece with which to push political ideas -- for his scheme would collapse immediately and disastrously, with the ~300x P/E of the company reverting to about 25x (that's a fall of roughly 92% in stock price) were he forced to stop all that crap and face both investigation and penalties for even a tiny percentage of those actions.

It's therefore clear what Bezos motivation was for buying The Washington Post.

But the Post has claimed that "Democracy dies in darkness" as its mantra, and has claimed to be politically neutral.  That, of course, is critical to Bezos' scheme, because if it was to become transparently obvious that his actions were politically motivated not only would he face the wrath of half the country (which disagrees with that political view) it could form a cornerstone of a ruinous legal attack on Amazon and Jeff Bezos personally, since anti-trust violations carry not only corporate penalties but personal liability in prison time.

So here we now have it:

Allegedly unbiased Washington Post reporter Janell Ross spoke at a top-secret meeting of liberal movers and shakers last week, where Democratic donors including billionaire George Soros outlined the future of their progressive agenda.

A Post spokesperson told the Washington Free Beacon that Ross took part of the California event “without notifying her superiors that she would be attending.”


One of the surprising guests was Ross, who used to pass as a somewhat impartial reporter for the prestigious Post. While the paper’s slogan is, “Democracy Dies in Darkness,” she apparently wanted to keep her bosses in the dark about attending the liberal planning session and hanging out with prominent Democratic donors such as Soros.

According to the agenda published by the Beacon, Ross’ panel aimed to help the liberal attendees get “the economic narrative right" and was immediately followed by Sen. Amy Klobuchar (D-Minn.) speaking about on Russian interference in the 2016 election.

Media Research Center Vice President Dan Gainor called it a “classic example” of journalism “openly coordinating with the alt-left” to take down conservatives.

Uh huh.  Sure she spoke (not just "attended"; she was scheduled as and participated as a speaker) without her "superiors" knowing about it.  What is plausible deniability for $100, Alex?

While I have exactly zero belief our government will go after Jeff Bezos, the Washington Post and Amazon on anti-trust grounds, although it damn well should, that doesn't stop you on the right (you know, people called "Republicans") from destroying his "investment" through perfectly-lawful actions.

Never mind all of those other businesses that Amazon and Bezos have harmed or even put into the ditch, yet those owners and their customers continue to make excuses for and even use the subsidizing services of Amazon itself!

On this so-called "Black Friday" what ought to be happening is that Amazon and Bezos ought to be seeing red.

We'll see if anyone gives a damn and makes it so.  I'll take the under on the wager in too-stupid to care and act America including both "Trumpers" and other members of the public who claim to be Republicans, which allegedly make up half the country.

If you support SPEAKER PELOSI, buy from Amazon; she was part of that conference.  If you support GEORGE SOROS, buy from Amazon; he was as well.  Both were headliners at that conference, in fact.

If you support and want a Democrat Majority in the House in 2017, BUY FROM AMAZON.  This, by the way, includes using their profitable service if you're a business customer -- AWS -- because without it Bezos would be out of business already since he could not continue to operate his product-selling operations at a loss.

But if you want none of those things THEN BOYCOTT THOSE ****ERS AND PUT BEZOS OUT OF BUSINESS.

PS: Amazon hasn't had the best price in a couple of years either, so you're getting double-screwed by shopping on their site whether you would like to once again have Speaker Pelosi or not.

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2017-11-24 07:00 by Karl Denninger
in Editorial , 178 references
[Comments enabled]  

Matt Stoller and I, years ago, used to talk a fair bit on policy in the political realm.  We have rather different views that could be reasonably-characterized by some "left:right", but I think are more "socialist:libertarian", when you get down to it.

But that's all well and good, if you can confine your differences to policy and try to hash out how the government can function more-efficiently, which I think everyone can define as provides more benefit than it costs to a larger percentage of the population.

Of course we'll differ on what defines "benefit" and "cost."

The problem is that unlike my perspective on what happened, which hasn't changed very much in quite a long time, Matt's is basically the same perspective both the "right" and "left" hold.  Here's his perspective on where the Democrats went wrong:

It was January 1975, and the Watergate Babies had arrived in Washington looking for blood. The Watergate Babies—as the recently elected Democratic congressmen were known—were young, idealistic liberals who had been swept into office on a promise to clean up government, end the war in Vietnam, and rid the nation’s capital of the kind of corruption and dirty politics the Nixon White House had wrought. Richard Nixon himself had resigned just a few months earlier in August. But the Watergate Babies didn’t just campaign against Nixon; they took on the Democratic establishment, too. Newly elected Representative George Miller of California, then just 29 years old, announced, “We came here to take the Bastille.”

One of their first targets was an old man from Texarkana: a former cotton tenant farmer named Wright Patman who had served in Congress since 1929. He was also the chairman of the U.S. House Committee on Banking and Currency and had been for more than a decade. Antiwar liberal reformers realized that the key to power in Congress was through the committee system; being the chairman of a powerful committee meant having control over the flow of legislation. The problem was: Chairmen were selected based on their length of service. So liberal reformers already in office, buttressed by the Watergate Babies’ votes, demanded that the committee chairmen be picked by a full Democratic-caucus vote instead.

Matt goes on to point out a number of things: First, the the Watergate Babies tossed Mr. Patman, coming to power with an "anti-war" stance.  True.

But let's remember: Yes, Matt is talking about that Mr. Patman.  You know, the guy who's name is on Robinson-Patman, the law that makes illegal price discrimination in the sale of physical goods of like kind and quantity where the intent or outcome tends to injure competition.

So Mr. Patman (who was real old by then) went, and the Watergate Babies came in.  And this, Matt argues, is a so-called "paradox" in that now we have all these monopolistic businesses from health care to Amazon to Facebook to Netflix.  This, it is argued, is because the Democrats "lost their soul" (or maybe they traded it in for campaign contributions.)

Except.... they didn't.

You see, Robinson-Patman is still the law.  It was never repealed.  Neither was Clayton, or Sherman.  You can find all three of them today in the federal law books under 15 USC Chapter 1 and with a few notable exceptions and carve-outs, such as for Baseball, they exist today as they did then in the 1930s, 40s, 50s and 60s.

In other words those Watergate Babies did not alter the legislative landscape.

They simply ignored it.

This is no small matter; indeed, it's the biggest issue on the table today.  I will remind you that in the late '70s and early 80s the big medical industries (drugs, pharmacies, providers and insurance companies) tried to argue that they had gotten an exemption from said law.  In fact, they tried twice, after being sued twice.

They lost both cases at the Supreme Court.

It is not a surprise that after those two decisions medical spending as a percentage of GDP more than tripled.  Nor is it a surprise that starting at this point in time "explanation of benefits" statements looked like an extortion racket.

That's outrageous.  What's even more outrageous is that the State of California, in their Business and Professional Code (the state-level version of the federal CFRs) actually claims that price discrimination is ok with the state and cites the second LOSS at the Supreme Court, which occurred over practices in Arizona, as justification!  I discovered this while doing research a few months ago on a case in California where a man sued over hospital price discrimination, the case went up on appeal and the California Appeals Court cited the BPR code in turning him away.

Let that sink in for a minute: A state crafted a regulation that explicitly declared as public policy systematic violation of a standing Supreme Court decision resulting in the screwing of certain people within the state!  This is exactly identical to a state declaring in its law that notwithstanding the 13th Amendment blacks cannot vote in state and local elections.

What has the Federal Government done about this section of California Law?  Exactly nothing.

It wasn't that long ago that the Federal Government literally rolled the army into states that stuck their middle finger up toward Washington DC in regard to obeying federal laws.

Nor should it be a surprise that we now have companies cost-shifting for the purpose of destroying competitors, other firms operating only because they're tax farms, and still others strong-arming the FCC into forcing non-customers to give them billions worth of unpaid services so they can sell a $40-cost service for $10 -- and they still run a negative cash flow even after doing that!

I would tend to agree with Matt that the problem is in "mindset" except that he knows damn well that's not where the problem is.

The laws were never changed; they were simply ignored and there has been zero enforcement.

This is not just in the health care system and FANG stocks either.  It's against the law to employ illegal immigrants and employers have had an affirmative obligation to collect attestations before hiring in the form of W4s.  Said employers transmit that information with their first payroll tax deduction deposit to the government, which these days occurs on the first pay period.  You cannot evade this; I had to file those reports for every pay period with a detailed list of persons, SSNs and taxes withheld.  Today that happens electronically and instantly, not on paper.

So the government knows in each and every case where paychecks are cut that either (1) the SSN on that form is bogus or (2) it's someone else's (e.g. the other person is retired and collecting benefits, is dead, or is working somewhere else and it is ridiculous improbable that the same person is holding both jobs) -- within days.

If said "employer" is paying people under the table then that's being reported too since a CTR has to go into the government on any cash withdrawal over $10,000 and any structured or set of similar withdrawals that are as little as $2,000.  You can and are supposed to be investigated if it appears you're trying to evade reporting requirements as it is a specific crime to do so.

Never mind that it's a crime to not withhold employment taxes, standing alone.

Yet the law is, once again, ignored even though the government could easily enforce it.

It just chooses not to, exactly as it chooses not to enforce the law relating to monopolies and other anti-competitive behavior.

Oh by the way the same is true when it comes to sexual harassment and assault within the government.  But there it did in fact get even more egregious in that Congress exempted itself from its members having to pay any sort of financial penalty -- ever, along with imposing gag clauses on both claimants and the process.  And again, let me remind you that the vote in Congress was unanimous for this "law".

Matt's willful and intentional refusal to address this is where he goes of the rails and so does everyone else.  We can have disagreements on policy but laws are not suggestions that are subject to being ignored whenever the political winds blow a certain way, and enforced when they blow a different way.  Rather, they're laws and if they're bad there's a way to change them -- which leaves a nice trail on who voted for what and what changes were made, along with, usually, a record of the debate on said points and merits.

What Matt and everyone else in the political sphere critically needs to understand is that willfully and intentionally ignoring the law to screw some people for the benefit of others is why we have such an "inequality" problem.  It's why so many of our jobs are taken by illegal invaders.  It's why so many more are offshored.  It's why so many women are harassed and even assaulted yet cannot find justice, especially if a Congressperson or President (cough-Clinton-cough-cough!) does it.  It's why 20% of our uranium assets were sold to a bribing Russian firm that gave a hell of a lot of money to Clinton's "foundation" -- exactly when they did that is subject to some dispute, but that the FBI knew about it before the deal was done is not.  It's why retail jobs are disappearing across the land and Jeff Bezos laughs his ass off at cross-subsidization that he himself trumpets along with the entire mainstream business media as yet another firm being "Amazoned" when that behavior was outlawed over 100 years ago.  It why you can't get a price for an operation at the hospital that is actually binding and if you don't kowtow to their extortion game with "insurance" you get billed at 3, 5 or 10x the price -- which again, is illegal.

I'm willing to bet that roughly a quarter of what we call "GDP" is in fact stolen via these practices -- and both parties know it.

The true ugliness that can come from all of this, however, lies in a far deeper place.

You see if Joe Big-Company CEO doesn't have to follow the law because nobody will arrest him despite flagrantly breaking same then what's left when it comes to civil society?

Not a lot.

For now there's been a "peace" of sorts.  The poor get food stamps, Section 8 housing and Medicaid, along with plenty of opiates.  That probably has something to do with them remaining peaceful -- they're stoned.

For how long does that last?  What happens when some number of those who have been screwed blind for decades decide to spend their lives obtaining justice that the government's "law enforcement" apparatus refuses to provide?  Do you really think that application of justice will come with indictments, trials and juries?

Or will it come by torches, pitchforks, baseball bats, boiled rope and a nearly lamp-post -- facts, trials and due process be damned?

None of the people doing the screwing in the private sector, and damn few of them in the government sector, have any realistic "security posture" that will survive the first 30 seconds of that, should public opinion turn ugly.

This, above all else, is why the rule of law is important.

It gives the common man a peaceful means of redress without which he may eventually decide that he will never obtain via peaceful means within due process of law -- and everyone, including you and he, dies exactly once.

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2017-11-22 13:48 by Karl Denninger
in Editorial , 623 references
[Comments enabled]  

I often write on the plethora of US-based frauds and scams, both political and business-oriented.

Fraud is the most-profitable business model today, and has been for close to two decades.  It is why I'm out of the business world and will not re-enter it.  It is why despite having what I believe is a ground-breaking home automation, security and control application that runs on $35 computers (which means there's a hell of an opportunity to bundle the software with those and sell 'em hella-cheap, undercutting all the other guys plus having a nice installation business to go with it) I am only willing to do so on a "buy it all and you do it" basis.

Companies like Amazon exist with the sort of "valuation" they have only because of these schemes and scams.  Cost-shifting (otherwise known as cross-subsidization) for the purpose of destroying competitors is a felony and has been for over 100 years (15 USC Chapter 1) whether you succeed or not.  That is, the very attempt is a criminal act.  Yet despite continual evidence in the form of quarterly filings that document the company does not make money (on an all-cost-in basis) on their product sales along with near-daily professions of the "next" company being "Amazoned" (that is, put out of business or severely harmed by this practice) in the major business media on television and in print, along with open cheering on of such conduct by same not one single indictment has ever issued.

Facebook, it appears from my work, to be deliberately detecting the use of ad blockers and then gaming their software so as to just meet the so-called "deliverable" standard for ads to people who have blocked them.  That is, since I have a blocker on my desktop I would not normally generate any revenue for Facebook from advertisers.  But I have observed, in a 100% repeatable manner, that a "display" ad will remain visible until the minimum pixel count and time is met (1 second, etc) and then disappear and a video ad will do so for 2 seconds with 100% pixels -- and then likewise disappear.  In other words the company is billing the advertisers for content they know damn well I blocked and never see.  What do you call billing someone for something they don't get on purpose, because that's what it looks like to me. Oh, and how many billions have been taken from advertisers this way?  Nobody but Zuckerpig knows but I bet it's not a small number.

And now we get another example of it with Uber.  Uber intentionally concealed, including with a bribe, a security breach that disclosed essentially all of their customer and driver data -- email addresses, phone numbers and for drivers, their Driver License numbers.

Note that Equifax had a similar breach which they also concealed and nobody went to jail for that either.

Next up is Google.  Their Android operating system "pushed" a change early this year that started uploading cell site data on your location even if you have location turned off.  The company got caught, admitted it, and claimed it was to "improve push-notifications."  That's a damnable lie since there are no cell carriers in the US that allow you to target data streams at specific cell towers.  Google also claims it never did and won't keep said data.  Do you believe them after they lied to you about your location tracking being "off" (when you shut it off) and nobody went to jail for the first lie?  Neither do I.

Never mind that Netflix has seen their stock go from $40 to nearly $200 in the time "net neutrality" has been imposed on the US.  May I remind you that the company has operated on a net negative cash flow basis for years and continues to on an ever-escalating basis today?  Why do they get away with it?  Because if you don't buy Netflix' service you are forced to pay part of your next door neighbor's bill, that's why.

That's all of the "FANG" stocks, incidentally.  Every one of them should be out of business and their executives in prison instead of being "Wall Street Darlings."




Tesla?  Same deal.  Every car is sold at a loss yet the company steals billions from the US Federal Government and exists in a world where it has never made a profit only on the premise that it will continue to be able to steal.  Nobody in their right mind would "invest" or "loan" a company money that has never demonstrated it can sell a single product at a profit, ever, nor that it has any ability to do so in the future -- unless it can steal.

Of course we also have Congress which has paid out millions of your money to cover up sexual harassment and even assault by members of Congress.  Passed during the middle of the Clinton years and right after he was diddling Monica with a cigar by unanimous vote it remains on the books today.  Myriad members of Congress on both sides of the aisle have used it to hide harassment and assault allegations against staff members.  I note that there has not been one Congressperson who has introduced a repeal of said legislation nor has the President demanded it be repealed or he will not sign a single bill until it is.  Remember that two Republican Presidents and two Democrat Presidents have each held the White House during and since this was signed, so don't start about how this was a "Republican" or "Democrat" bill, never mind the zero opposing votes from either party when it was originally passed.

Finally, the grand-daddy of it all is the medical scam.  Tell me again about that one, which steals from every household a middle-class house payment every single month.  May I again remind you that the health firms have twice tried to claim their conduct was exempt from anti-trust and lost both times at the US Supreme Court?

Will I be "thankful" today?


I am instead praying for an asteroid strike on every single one of these jackass firms' executives and board members along with every member of Congress and every member of the Executive that has sat idly by while you've been robbed for the last 30+ years.

**** giving thanks -- with a rusty chainsaw -- until this **** stops.

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2017-11-22 09:40 by Karl Denninger
in Editorial , 638 references
[Comments enabled]  

The screamfest has re-commenced.

I'd write a whole post on this, but I have already.

So here's the piece I submitted to the FCC during the comment period back in 2014, which I have unlocked from its "expired" status.

Go read it.

People like Hastings and Bezos have extracted billions of dollars from consumers who do not want their services by getting the government to shove a gun up their noses, picking their pocket.  While you may say "but I want and buy Netflix" the fact is that there are many such firms, there are and will be more every day, and the odds of you buying all of them are zero.

You may be perfectly happy with forcing your neighbor to subsidize your Netflix subscription. Do you feel the same way when your neighbor forces you to subsidize his baseball, football or Hulu subscription?  What happens when the "next new thing" is some 4k-def virtual reality application you think is stupid but the kid next door loves and your internet service goes up in price by 20% so the ISP can build out the capacity necessary for him to have it?

The facts are that Netflix is a cash furnace; it has, for several years, run negative cash flow and will continue to into the foreseeable future.  Wall Street allows this and Hastings has made billions doing so because the company steals a decent part of its operating expense from people who don't buy the service under government mandate.  Amazon's "Prime Video" doesn't break out its financial picture but it's odds on that it operates exactly the same way and Bezos has thus also made billions by likewise stealing from non-users, and so will Disney's upcoming "over the top" offering.

The problem with endorsing theft when it benefits you is that once you've done that it will very-reliably be used against you.

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