The Market Ticker
Commentary on The Capital Markets
2015-01-22 06:45 by Karl Denninger
in States , 213 references
 

Time to stick it up:

School districts in Illinois are telling parents that a new law may require school officials to demand the social media passwords of students if they are suspected in cyberbullying cases or are otherwise suspected of breaking school rules.

Good luck *******s -- here would be my answer were I the parent of such a kid:

smiley

If the school believes they have an enforceable demand for same they can go get a warrant and serve it on the provider (e.g. Facebook) in question.  Neither I or my kid need give them anything; they can get whatever they want via proper judicial process.

Until that time?

smiley

Any questions?

Ps: To all you school admins - I suggest reading 42 USC 1983. You have a very nice house and I'd like to make it a trashy rental.

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Really?  We pay for this with public funds?

At a remote research center on the Nebraska plains, scientists are using surgery and breeding techniques to re-engineer the farm animal to fit the needs of the 21st-century meat industry. The potential benefits are huge: animals that produce more offspring, yield more meat and cost less to raise.

There are, however, some complications.

Yeah, like tampering with the genetics and hormone levels of animals is not expected to produce Dr. Mengele style results?  Of course it does and will!

Little known outside the world of big agriculture, the center has one overarching mission: helping producers of beef, pork and lamb turn a higher profit as diets shift toward poultry, fish and produce.

No matter how many monsters you create -- and then torture -- in the process?

And by the way, not all of these "changes" are of benefit to anything other than someone's wallet.  For example there is utterly nothing wrong with fat content in meat; indeed, it's good.  The lipid hypothesis, which underlays the claims of fat being bad for you in the diet, has been disproved.  It was never proved in the first instance and like so much so-called "science" when it comes to diet (and for that matter anything else the government sponsors) the data was diddled and selectively chosen to fit a pre-desired outcome.

“We’re just as concerned about the humane treatment of animals as anyone else,” said Sherrill E. Echternkamp, a scientist who retired from the center in 2013. Still, he added: “It’s not a perfect world. We are trying to feed a population that is expanding very rapidly, to nine billion by 2050, and if we are going to feed that population, there are some trade-offs.”

Right -- because exponential growth at all cost is all that matters.  It is all that matters to central bankers, to regular bankers and to politicians.  Without it the lie of gain without cost is exposed and that means many careers and money-funneling operations go "poof" in the night.

Never mind this:

“Experimental surgery is being performed in some (not all) cases by untrained, unskilled and unsupervised staff,” Mr. Downey wrote. “This has resulted in the suffering of animals and in some cases the subsequent death of animals.”

You can't perform experimental surgery on your own cat without being charged with animal cruelty!  But this "center" doesn't even bother hiring them -- they have one staff veterinarian.

This is the problem, in general, with government -- it exempts itself from the very rules (and laws) it demands everyone else follow.  This allows the most-horrifying treatment to be doled out to whatever -- or whomever -- it chooses.

And we, the people, are the reason it happens -- we permit this sort of special exemption even though it inevitably blows back on us and nails us in some way.

You may think that how this pig or that lamb died isn't all that important, and maybe you're right.  But your refusal to insist on the law being evenly applied without such special exemptions has led to you spending five to ten times what you should be for routine medical care.  It has led to the outrageously-fraudulent claims of the agricultural industry and government regarding the soundness of a grain-and-carbohydrate based diet, the ridiculous and intentionally-misleading claims of "light" food manufacturers (if you remove fat from a food you must replace it with something and that something is inevitably higher in carbohydrate, usually sugar in some form) and more.

The consequence of this has in fact been a grand "experiment" of sorts on you, with millions of Americans suffering from morbid obesity and its related diseases, including diabetes, the amputation of extremities, dialysis and death.

You may think these don't tie together but you're wrong -- they do -- and all of them occurred because the very laws you're supposed to abide are exempted, or the malefactors involved evade prosecution due to either "special exemption" or simple willful blindness.

Are you ready to wake up yet America or would you like your turn on the dialysis machine and foot amputation table?

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This is utterly idiotic.

A terrorist group’s call for new attacks on U.S. airliners, an online “recipe” for detection-proof bombs and recent events in France and elsewhere have prompted federal authorities to order random searches of travelers and carry-on bags at U.S. airports.

Random searches?  You have zero, statistically, odds of catching the one bomb with random searches.

Never mind that there are a hell of a lot more places you can use a bomb than an airliner and many of them would be far more damaging to our economy (the entire point of this sort of terrorism) than bombing a plane in flight.

Consider the impact of such a bomb at a sporting event, busy shopping mall or even the local supermarket.

Remember that the key weapon terrorists have is fear.  Further, this fear is irrational; you are far more likely to be hit by lightning getting your mail than to be blown up by a terrorist, no matter where he does his dirty deed.  But terrorist attacks get a hell of a lot more press than car accidents (even really big ones like the monster pile-up in Western Michigan these last few days) and lightning strikes, say much less all the other mundane (and far more likely ways) for you to find out with certainty whether God exists and, if so, exactly which one it is.

The problem with these so-called "enhanced measures" is that by simple mathematical extrapolation they're pointless since statistically you are extremely unlikely to find the device if the "bad guys" have figured out how to build one that isn't detectable via our "normal and every-person" security measures.

I would much rather spend government resources on targeted investigation -- but even that is going to go nowhere as long as we have porous borders and refuse to deal with the fact that I outlined in my Ticker on secular .vs. religious governments.

Make no mistake -- dealing with the latter is hard, politically.

It's also necessary, unless you want to submit or die.

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One look and my first reaction to the balance sheet was "Holy sheeeit."

Ignore for a minute the fact that it appears the company has something like $9 billion in obligations for streaming content delivery (but not on the balance sheet!) against assets that are less.  People will play that down, after all everyone borrows more than they have and can make, right, and it's perfectly ok to have contingent liabilities for things you are doing that aren't on the sheet, right?

No, no, here's the problem -- 19% domestic paid customer growth against 23% revenue increase.  That's the price increase, but it's also a strong indication that they're pretty-much out of gas here in terms of the exponential growth curve.

International is up a lot more (73%) but the company lost more money, with marketing more than doubling (102%) and cost of revenues (direct costs) up 58%.  In other words net expenses rose 67% -- with revenue rising 75%.

Ok, that's a "positive trend" I suppose, but.... lots of red ink in there internationally.

But the real nasty is in the non-GAAP free cash flow -- it's nearly ten times as negative in 2014 what it was in 2013.

What's even more interesting is that their financing costs went from positive $64 million last quarter of 2013 to negative $51 million this quarter; a swing of more than 110 million the wrong way, and on a 12 month consolidated basis it's over $200 million sucked out of the company, or more than half nominal net income!

Further the firm says it's going to issue more debt.  Sure, why not!  After all, with rates (very near) zero and everyone believing the band will continue to play on, may as well sell some more bonds to more suckers, er, investors.

I wouldn't touch this thing at roughly 90x earnings; as a spec play at 20x sure, but at 90x?

Not a snowball's chance in hell.

PS: IBM's report was terrible -- and arguably more-so -- as well.

Watch out folks -- financial engineering looks great right up until it doesn't, and there's a hell of a lot of it going on here.

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I don't like this sort of horsecrap.

The federal budget deficit slid to $483 billion in fiscal year 2014, down from $680 billion in 2013 and more than $1 trillion each of the prior four years. Higher tax revenue, economic growth and caps on government spending all contributed to the shrinking budget gap.

It did?

09/30/2013 11,976,279,236,073.83 4,761,904,290,623.49 16,738,183,526,697.32

On 9/30/2013 there was $16,738 billion in federal debt.

09/30/2014 12,784,971,238,978.02 5,039,100,141,755.80 17,824,071,380,733.82

On 9/30/2014, the end of last fiscal year, there was $17,824 billion of federal debt.

The net increase is $1,086 billion, or $1.086 trillion dollars, not $483 billion.

Why the discrepancy?  Because as in the Clinton years the government has been stealing the "excess" from Social Security and Medicare tax receipts and claiming that is a "deficit reduction" -- despite the fact that the obligation generated from those programs was not reduced by that same $603 billion!

And oh by the way, that's not all of it.  Even excluding Social Security and Medicare theft the net gain in federal borrowing (that is, the actual deficit) was $809 billion or 67% more than claimed.

In other words this is a scam and the claim of "reduced deficits" is a damned lie.

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