luni, 4 ianuarie 2016

Seth's Blog : Who is us?



Who is us?

When you build a tribe or a movement, you're asking people to join you.

To become, "one of us."

That means, though, you need to be really clear who 'us' is. Not just who am I joining, but what does it mean to be one of you?

       

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duminică, 3 ianuarie 2016

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Yuan Movements Highlight China's Attempt to Halt 10th Month of Export Contraction; Major Currency War Coming Up?

Posted: 03 Jan 2016 08:42 PM PST

Chinese manufacturers see further deterioration in business conditions, down 10 consecutive months as noted in the latest Caixin China General Manufacturing PMI release.
Operating conditions faced by Chinese goods producers continued to deteriorate in December.

Adjusted for seasonal factors, the Purchasing Managers' Index™, operating conditions in the manufacturing economy registered below the neutral 50.0 value at 48.2 in December, down from 48.6 in the previous month. Business conditions have now worsened in each of the past 10 months. That said, the latest deterioration was modest overall.

Production declined for the seventh time in the past eight months, driven in part by a further fall in total new work. Data suggested that client demand was weak both at home and abroad, with new export business falling for the first time in three months in December. As a result, manufacturers continued to trim their staff numbers and reduce their purchasing activity in line with lower production requirements. Meanwhile, deflationary pressures persisted, as highlighted by further marked declines in both input costs and selling prices.

Manufacturing companies continued to cut their payroll numbers at the end of 2015 and at a moderate rate. According to panelists, lower staff numbers were the result of company downsizing policies and cost-saving initiatives. Fewer employees contributed to an accumulation of outstanding work in December, with the rate of growth quickening to an eight-month high.

December data signaled a further fall in average cost burdens faced by Chinese manufacturers. Moreover, the rate of reduction eased only slightly since November and remained sharp overall. Panelists that reported decreased input costs widely attributed this to lower raw material prices. Manufacturers generally passed on their cost savings to clients in the form of lower selling prices, while some companies mentioned that greater market competition had led them to cut their tariffs
China Manufacturing PMI



Chinese manufacturing has spent far more time in contraction than expansion since mid-2011.

Yuan Devaluation Continues

China is not exactly pleased to see manufacturers struggle and decided to do something about that last August. In a surprise August move, China Joins Currency War With Surprise Devaluation, Biggest One-Day Move on Record.

Back in March, Chinese Premier Li Keqiang told the Financial Times: "We don't want to see further devaluation of the Chinese currency, because we can't rely on devaluing our own currency to boost exports."

That lie bit the dust in August. Not to worry, at the time of the devaluation, China said it was a one-time move.

Yuan-US Dollar Weekly Chart



Somehow that does not have the look and feel of a one-time move. But let's put things in proper perspective.

Yuan-US Dollar Monthly Chart



From August 2005 the yuan rallied from 8.09 per US dollar to 6.05 per US dollar in November of 2013. That's a yuan strengthening of just over 25%.

Since November of 2013, the yuan declined to 6.49 per US dollar. That's a weakening of about 6.8%.

Nonetheless, that move represents quite a reversal for hedge funds and others who believed the Yuan would continue to rally vs. the dollar.

More fundamentally, the reversal means China has joined the beggar-thy-neighbor approach of weakening a currency hoping to gain or at least stabilize exports.

Yuan weakening may also ignite protectionism in Congress. Donald Trump is campaigning on that issue right now.

Major Currency War Coming Up?

Japan, China, the ECB, Sweden, Brazil, and Switzerland have all been involved with direct or indirect attempts to weaken their currencies.

Realistically, it's safe to include the US in that list when the Fed was first country outside of Japan to slash rates to zero.

Mathematically, it's impossible for every country to weaken its currency vs. every other currency. That basic fact hasn't stopped a growing list of countries from trying.

With the end of QE coupled with rate hikes, the US is no longer in the debasement by force camp, but if the US economy weakens, the Fed is likely to do anything.

A huge currency crisis of some nature is undoubtedly coming up. The timing of the crisis and where it starts are both unknown.

Mike "Mish" Shedlock

More Currency Intervention Madness: Sweden Draws Line in Sand with Euro

Posted: 03 Jan 2016 10:11 AM PST

In an irrational attempt to sponsor inflation, the Swedish central bank, Riksbank, slashed interest rates to -0.35% and conducted several rounds of QE.

Those misguided efforts failed to produce the desired 2% rate inflation, so the central bank now threatens currency intervention while drawing a line in the sand with the valuation of the Swedish Krona vs. the Euro.

Bloomberg reports Sweden Seen Closer to Krona Intervention to Tame Exchange Rate.
Some of Scandinavia's biggest banks are warning investors not to underestimate the risk that the central bank is preparing to intervene in the currency market.

Nordea and SEB both say the Riksbank won't allow the krona to strengthen beyond 9 against the euro. It traded at 9.187 on Friday. The prediction follows a Dec. 30 warning from the central bank that it's ready to act if persistent krona strength gets in the way of its 2 percent inflation target.

With a benchmark interest rate already at an historic low of minus 0.35 percent and several rounds of bond purchases behind them, policy makers are under pressure to consider other measures to live up to their inflation mandate. Underlying inflation has been below the Riksbank's target since the beginning of 2011 and headline price growth has hovered below zero for much of the past three years.

Though Sweden has resorted to extreme policy measures, its negative rates and quantitative easing have been overshadowed by far more dramatic monetary stimulus programs from the European Central Bank. Against the euro, Sweden's krona has strengthened about 4 percent over the past 12 months.

"If the exchange rate strengthens earlier and more rapidly than forecast, it will be more difficult to push up inflation towards the target," Governor Stefan Ingves said on Dec. 30. "The Riksbank is therefore highly prepared to intervene on the exchange market whenever we deem it necessary." The comments pushed the krona off a nine-month high versus the euro.
Krona vs. Euro Monthly



Since February 2009 the Krona strengthened from a high of 11.788 per Euro to 9.1725 to the Euro. That's an increase of 22%. Swedish shoppers are no doubt pleased to get more for their money but the central bank isn't pleased at all.

Why the panic? The Krona is right where it was between 2004 and 2008 before it weakened dramatically.

Was 2009-2010 Nirvana for Sweden following that weakening?

Failure to Learn

Brazil begged for inflation, got it in spades and now is very unhappy.

Japan tried to hit an inflation target of 2% for decades and failed. In the process, Japan accumulated the highest debt-to-GDP ratio of any advanced country.

Switzerland instituted a currency peg and unleashed massive volatility when it was forced to abandon the peg.

Why does the Riksbank think it will succeed when nearly every currency intervention in history has failed?

The answer is simple. Central bankers are trained, arrogant fools. They believe in all kinds of things the market has proven does not work.

Challenge to Keynesians

The simple fact of the matter is "Inflation Benefits the Wealthy" (At the Expense of Everyone Else) .

Those who disagree can respond to my Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"

Mike "Mish" Shedlock

Core Capital Spending Down 10 Consecutive Months; Soft Rebound in 2016?

Posted: 03 Jan 2016 06:28 AM PST

Core Capital Spending Down Every Month Since January

Year-over-year core capital spending by manufacturers has been in negative territory for the last 10 months. Core capital spending is defined as nondefense capital goods, excluding aircraft.



The current year-over-year decline is about 1.78%. Part of the decline is due to the oil industry collapse. Another part is due to corporations deciding to invest in share buybacks rather than their actual businesses.

Core Capital Spending Since 1994



Big declines in core capital spending occurred in the last two elections, but this dip does not yet measure up. 

Signs of a Soft Rebound?

The Wall Street Journal discusses the 2016 forecast in Will Business Spending and Profits Rebound This Year?



Unconvincing Forecast

The text of the article does not sound as convincing. Here are a few snips.
The Federal Reserve had enough confidence in the economic recovery to raise interest rates in December, but it remains unclear whether global growth will be buoyant enough to reverse weak business investment.

Many big companies are reining in spending. 3M Co. , with thousands of products from Scotch tape to smartphone materials, forecasts capital spending roughly unchanged from 2015. Telecom companies AT&T Inc. and Verizon Communications Inc. both plan to hold capital spending generally level in the coming year. Meanwhile, industrial giants like General Electric Co. and United Technologies Corp. are aggressively cutting costs and seeking to squeeze more savings from suppliers.

Capital expenditures by members of the S&P 500 index fell in the second and third quarters of 2015 from a year earlier, the first time since 2010 that the measure has fallen for two consecutive quarters, according to data from S&P Dow Jones Indices. Another measure of business spending on new equipment—orders for nondefense capital goods, excluding aircraft—was down 3.6% from a year earlier in the first 11 months of 2015, according to data from the U.S. Department of Commerce.

More broadly, only 25% of small companies plan capital outlays in the next three to six months, according to a November survey of about 600 firms by the National Federation of Independent Business. That compares with an average of 29% and a high of 41% since the surveys began in 1974.

"Our guys are in maintenance mode," said William Dunkelberg, chief economist for the trade group. "This recovery still stinks."
"This Recovery Still Stinks"

That sentence corresponds with my take.

However, the Journal notes a December tax bill makes permanent the research-and-development tax credit and faster capital-equipment write-offs for small businesses and a highway bill provides $305 billion of federal funding for roads and other transportation projects over five years.

Chad Moutray, chief economist of the National Association of Manufacturers, had this to say: "The tax legislation eliminates annual uncertainty over whether these incentives will be renewed. You can start planning for what you're going to be investing in 2016 and 2017, and that's huge."

Backwards?

It seems to me Moutray has things backwards. Any uncertainty over whether incentives would be removed should have pushed demand forward, not backwards.

If companies thought tax credits would expire, they would have had a tendency to spend in 2015, not 2016.

Is Moutray is just another cheerleader like we see at the National Association of Realtors?

Yet, the Journal quotes Robert Sires, CEO and owner of Bay State Cable Ties LLC, a Crestview, Florida maker of nylon cable who said "I delayed some purchases, not knowing what would happen" with the tax situation.

That statement would make perfect sense if we were talking about new credits for 2106, not extensions to credits expiring in 2016.

Banana Peels

Sires next comment, and also the end of the Wall Street Journal article gets back on track: "Still, customers have been cautious recently, placing smaller orders. Everybody feels like they're standing on a banana peel," said Sires.

All in all, the Journal seems rather unconvinced about the "Soft Rebound" thesis, and I am even more skeptical.

Mike "Mish" Shedlock

Seth's Blog : Software is testing



Software is testing

Writing the first draft of a computer program is easy. It's the testing that separates the professional from a mere hack. Test and then, of course, make it better.

The same thing is true with:

  • Restaurant recipes
  • Essays
  • Web user interface
  • Customer service
  • Management techniques
  • Licensing agreements
  • Strategy
  • Relationships of all kinds

The reason it's so difficult to test and improve is that it requires you to acknowledge that your original plan wasn't perfect. And to have the humility and care to go ahead and fix it.

No fair announcing that you're good at starting things. The world is looking for people who are good at polishing them until they work.

       

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sâmbătă, 2 ianuarie 2016

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Blaming Others: Reflections on "The Big Short"

Posted: 02 Jan 2016 05:50 PM PST

Reflections on "The Big Short"

I have not yet seen "The Big Short" movie. Everyone tells me it was excellent. I intend to see it, but I already know what happened in detail, how, and why.

The Fed has not yet admitted its role, nor have banks, nor have the rating agencies, nor has Congress with its ludicrous affordable housing programs, nor has Bush with the "Ownership Society".

I could go on and on and on. But I left off one key set of people: Individuals blaming everyone else but themselves.

Blaming Others

An article just came my way expressing that same viewpoint. It's a New York Magazine Interview With Michael Burry, Real-Life Market Genius From The Big Short, head of Scion Asset Management.

NY: Were you surprised no one went to jail?
Burry: I am shocked that executives at some of the worst lenders were not punished for what they did. But this is the nature of these things. The ones running the machine did not get punished after the dot-com bubble either.

NY: When I spoke to some of the other real-life characters from The Big Short, I was surprised to hear that they thought that financial reform was pretty effective and that the system was much safer. Michael Lewis disagreed. In your opinion, did the crash result in any positive changes? 
Burry: Unfortunately, not many that I can see. The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic. Too, the crisis, incredibly, made the biggest banks bigger. And it made the Federal Reserve, an unelected body, even more powerful and therefore more relevant. The major reform legislation, Dodd-Frank, was named after two guys bought and sold by special interests, and one of them should be shouldering a good amount of blame for the crisis. Banks were forced, by the government, to save some of the worst lenders in the housing bubble, then the government turned around and pilloried the banks for the crimes of the companies they were forced to acquire. The zero interest-rate policy broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough. And the interest the Federal Reserve pays on the excess reserves of lending institutions broke the money multiplier and handcuffed lending to small and midsized enterprises, where the majority of job creation and upward mobility in wages occurs. Government policies and regulations in the postcrisis era have aided the hollowing-out of middle America far more than anything the private sector has done. These changes even expanded the wealth gap by making asset owners richer at the expense of renters. Maybe there are some positive changes in there, but it seems I fail to see beyond the absurdity.

NY: How do you think all of this affected people's perception of the System, in general?
Burry: The postcrisis perception, at least in the media, appears to be one of Americans being held down by Wall Street, by big companies in the private sector, and by the wealthy. Capitalism is on trial. I see it a little differently. If a lender offers me free money, I do not have to take it. And if I take it, I better understand all the terms, because there is no such thing as free money. That is just basic personal responsibility and common sense. The enablers for this crisis were varied, and it starts not with the bank but with decisions by individuals to borrow to finance a better life, and that is one very loaded decision. Yet so few took responsibility for having any part in it, and the reason is simple: All these people found others to blame, and to that extent, an unhelpful narrative was created. Whether it's the one percent or hedge funds or Wall Street, I do not think society is well served by failing to encourage every last American to look within. This crisis truly took a village, and most of the villagers themselves are not without some personal responsibility for the circumstances in which they found themselves. We should be teaching our kids to be better citizens through personal responsibility, not by the example of blame.

NY: Where do we stand now, economically?
Burry: Well, we are right back at it: trying to stimulate growth through easy money. It hasn't worked, but it's the only tool the Fed's got. Meanwhile, the Fed's policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington. It seems the world is headed toward negative real interest rates on a global scale. This is toxic. Interest rates are used to price risk, and so in the current environment, the risk-pricing mechanism is broken. That is not healthy for an economy. We are building up terrific stresses in the system, and any fault lines there will certainly harm the outlook.
 
Glass-Steagall Scapegoat

I have seen so many people blaming mortgage companies, big banks, and especially the repeal of the Glass-Steagall act. All three were peripheral agents, at best.

Actually, I do not think the repeal of the Glass-Steagall act had anything to do with the crisis at all.

I commented on the Glass-Steagall Fallacy on January 21, 2010.
Merits of Glass-Steagall

The idea that Glass-Steagall would have done much, if anything to prevent this crisis is potty. Goldman Sachs, Bear Stearns, and Lehman would all have done what they did. Wells Fargo would have kept its pool of option arms, and the rest of the banks would have followed their lend to securitize model and the regional banks would still be losing their asses on silly commercial real estate deals.

That said, I am in favor of these initiatives for the simple reason they help prevent fraud. Many of the large institutions hand out advice and trade against it. Goldman Sachs is accused of front-running trades. Their disclosure documents even allow it.
Paul Volcker on Glass-Steagall

Unconvinced? Then please consider Please consider Volcker's Quest To Reinstate Glass-Steagall.
The loudest argument to bring back Glass-Steagall usually goes something like this: Depository institutions (commercial banks) need to be very safe and stable. If you allow investment banks to take big risks with those deposits, bad things can happen.

Now let's take a step back. What are these risky securities we're talking about? They're bonds backed by real estate -- originated by commercial banks. So really, it was the commercial banks that took the crazy risks that almost broke the economy. If there was never securitization, and the same subprime loans were made, then we'd have very, very sick depository institutions, but investment banks would have been largely unscathed.

Of course, there was securitization, and that was done by the investment banks. Where might Glass-Steagall have helped here? Well, it wouldn't have. Securitization existed before the Act was repealed, and it would exist if it's brought back. Commercial banks can still sell mortgages into giant pools for investment banks to make securities out of, with or without the mortgage originators and bankers living under the same umbrella. Commercial banks also still would have retained lots of their mortgage exposure, and still been quite sick. Just ask Countrywide.
Fed the Key Enabler

Few mention the Fed as the key enabler. Even fewer see the role of individual people all rushing like mad to get into housing "before it's too late".

Those hurt in the crisis all tend to point a finger at someone else. Too few admit personal responsibility.

That said, bailing out the banks was criminal. So were lies by the bank executives. So was the role of the rating agencies. But who is responsible for making the rating agencies the beasts they are?

Those who do not know the answer will be surprised: The answer is the SEC.

I wrote about the rating agency mess before the crisis, September 28, 2007 to be precise. If you have not yet done so, please consider Time To Break Up The Credit Rating Cartel.

Here We Are Again

Here we are again, back in one hell of a bubble that almost no one sees. Most of those who do see the bubbles are still content to play the greater fool's game in belief they can get out on time.

Mathematically it's impossible for the masses to escape bubbles.

When the next downturn hits, everyone will cry out for the Fed to do something. The Fed already did: It enabled bubbles in 2000, 2007, and now.

People like bubbles, until they pop, then they blame everyone but themselves for participating in them.

Mike "Mish" Shedlock

Even-Handed Beheadings in Saudi Arabia; Friends Must Be Friends

Posted: 02 Jan 2016 12:00 PM PST

Saudi Arabia executed 47 people today in the biggest mass execution since 1980. Those executed include Sheikh Nimr al-Nimr, a prominent Shi'ite Muslim cleric.

Some were beheaded, others shot. Don't worry, there's nothing to be concerned about, the executions were "even-handed".

Please consider Saudi Arabia Executes Prominent Shia Cleric Nimr al-Nimr.
The execution on Saturday morning of Sheikh Nimr al-Nimr, a staunch opponent of the ruling Al Saudi family, has further stirred sectarian tensions in the Gulf and triggered threats from regional rival Iran.

The Iranian foreign ministry accused Saudi Arabia of supporting terrorist movements and extremists abroad while confronting domestic critics with oppression and execution. "The Saudi government will pay a high price for following these policies," the Iranian foreign ministry said.

One activist said that 45 of those executed were al-Qaeda members and sympathisers, with the other two being Shia.

Many of the charges related to terrorist attacks that took place during the al-Qaeda insurgency that was put down a decade ago.

Shia activists have denied that Sheikh Nimr was involved in violent resistance, but many Saudis argue that his incitement against the government was tantamount to terrorism and often defend his death sentence.

The activist said the government probably executed Shia dissidents at the same time as al-Qaeda sympathisers to back its claim to be taking an even-handed approach in its crackdown down on terrorism. The Shia minority in the oil-rich eastern province has for years complained of discrimination.

The Saudi Press Agency report, citing the Koran, said: "The recompense of those who wage war against Allah and His Messenger and do mischief in the land is only that they shall be killed or crucified or their hands and their feet be cut off from opposite sides, or be exiled from the land."
"Even-Handed" Defined

Sheikh Nimr al-Nimr's crime was speaking out against the government.

In order to get rid of al-Nimr, Saudi Arabia had to get rid of 46 others, mostly Al Qaeda or alleged Al Qaeda sympathizers. 

As further proof of even-handedness, al-Nimr was not crucified for his alleged "mischief in the land."

We would not want to crucify people for mischief would we? Beheadings are far more appropriate.

Iran Warns of High Price to Pay

The Telegraph reports Saudi 'will pay high price' for execution of top Shia cleric, warns Iran.
Saudi Arabia executed prominent Shia Muslim cleric Sheikh Nimr al-Nimr on Saturday, stirring a chorus of condemnation and sectarian anger across the region.

Nimr was a talismanic figure in protests that broke out in 2011 in the Sunni-ruled kingdom's east, where the Shia minority complains of marginalisation. His arrest in July 2012 sparked days of protest.

Hundreds of Shias marched through Nimr's home district of Qatif in protest at the execution, eyewitnesses told Reuters news agency, chanting "down with the Al Saud" in reference to the Saudi ruling family.

Describing the executions as acts of "mercy" to prisoners who might have committed crimes on their release, Saudi Arabia's leading cleric, Grand Mufti Sheikh Abdulaziz Al Sheikh, said they were carried out in line with Islamic law and the need to safeguard the kingdom's security.
Acts of Mercy

There you have it. Not only were the executions "even handed", they were also "acts of mercy".

Global Response

Iran: Iran's foreign ministry spokesman accused Riyadh of hypocrisy. "The Saudi government supports terrorist movements and extremists, but confronts domestic critics with oppression and execution," said Hossein Jaber Ansari.

Lebanon: Lebanon's Supreme Islamic Shia Council called the execution a "grave mistake"

Iraq: Iraqi Prime Minister Haider al-Abadi said it would have repercussions on regional security.

Germany: A German foreign ministry official said Nimr's execution strengthened "existing concerns about increasing tensions and deepening rifts in the region".

UK: From Guardian: Liberal Democrat leader, Tim Farron, responded to news of the executions by describing capital punishment as abhorrent, and called on the prime minister to do more to pressure foreign governments into abolishing the death penalty. Britain's shadow foreign secretary, Hilary Benn, described the execution as "profoundly wrong". However, "prime minister David Cameron insists UK must have close ties with Saudi Arabia".

Bahrain: Striking image from one of the protests in Bahrain. The banner reads "to hell with you".



Protester holds a banner saying "to hell with you" as she takes part in a protest against the execution of Saudi Shia cleric Nimr al-Nimr by Saudi authorities, in the village of Sanabis. Photograph: Hamad I Mohammed/Reuters

US Response

In the US, there was deafening silence from president Obama as well as our state department. And why not? After all, those executions were "even-handed acts of mercy" by our Saudi friends. What else can possibly be said?

When your friends sponsor terrorism and execute their own citizens simply for being dissidents, you just have to look away. Friends must be friends, otherwise they aren't friends. And in the drive for perpetual war, Saudi Arabia is the biggest friend we have.

Mike "Mish" Shedlock

Seth's Blog : When to charge by the hour



When to charge by the hour

Most professionals ought to charge by the project, because it's a project the customer wants, not an hour.

Surgery, for example. I don't want it to last a long time, I just want it to work. Same with a logo or website design.

Or house painting. The client is buying a painted house, not your time.

One exception: If the time is precisely what I'm buying, then charging by the time is the project. Freudian therapy, say, or a back massage.

Another exception: If the client has the ability to change the spec, again and again, and the hassle of requoting a project cost is just too high for both parties. A logo design, for example, probably starts with project pricing, but if the client keeps sending you back for revisions, at some point, they're buying your time, aren't they?

       

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vineri, 1 ianuarie 2016

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Millions of Foreign Visitors Overstay Visas: Precisely How many? No One Seems to Know; Does Obama Care?

Posted: 01 Jan 2016 03:01 PM PST

In the wake of terrorist activity in Europe and mass shootings in San Bernardino, Calif., that left 14 people dead and 22 wounded, some may be wondering: Are we tracking those in the US on Visas, and if so, how?

The answer, despite Federal laws that require tracking visa entrants, is the U.S. Doesn't Know How Many Foreign Visitors Overstay Visas.
The question from the congressman to the Obama administration official was straightforward enough: How many foreign visitors overstay their visas every year?

The reply was simple too, but not in a satisfying way. "We don't know," the official said.

The testy exchange during a recent congressional hearing between Representative Mark Meadows, Republican of North Carolina, and Alan Bersin, the assistant secretary for international affairs at the Department of Homeland Security, highlights what some law enforcement officials call a critical weakness in the United States foreign visa program.

Nearly 20 years ago, Congress passed a law requiring the federal government to develop a system to track people who overstayed their visas. After the attacks of Sept. 11, 2001, an entry and exit tracking system was seen as a vital national security and counterterrorism tool, and the 9/11 Commission recommended that the Department of Homeland Security complete a system "as soon as possible." Two of the 9/11 hijackers, Satam al-Suqami and Nawaf al-Hazmi, had overstayed their visas.

Since then, the federal government has spent millions of dollars on the effort, yet officials can only roughly estimate the number of people in the United States illegally after overstaying visas.

One widely cited statistic, from a 1997 report by the Immigration and Naturalization Service, puts the number of people who overstay their visas at 40 percent — which now would mean about 4.4 million of the estimated 11 million undocumented residents in the United States. Numerous lawmakers, including the Republican presidential candidates Marco Rubio and Ted Cruz, have used that figure when trying to describe the scope of the problem. But even that number has never been conclusively substantiated.

Federal agencies have not provided a new report to Congress on overstays since 1994, despite the congressional mandate.

In early 2013, Janet Napolitano, then the secretary of Homeland Security, testified before Congress that the agency planned to issue a report on overstay rates by December 2013. The agency did not follow through because officials said they did not have confidence in the quality of the data. Mr. Bersin said last month that the report would be issued in the next six months.

In 2004, lawmakers passed legislation that required Homeland Security officials to accelerate their efforts to create an automated biometric entry and exit data system.

Congress repeated its demand for a biometric exit system in 2007 and set a deadline for 2009. But the deadline passed, with the department putting into place only a handful of pilot programs.

Since then, the department has continued to struggle to meet this requirement. A 2013 report by the Government Accountability Office said the Department of Homeland Security had more than one million "unmatched" arrival records, meaning that those records could not be checked against other information showing that the individuals had left the country, but again the department could not offer a precise number.

Despite the call by some lawmakers for an exit system, airports and the airline industry have balked because it would cost airlines $3 billion, according to a 2013 Homeland Security estimate. The Department of Homeland Security issued regulations in 2008 requiring airports to collect biometric exit information, but carriers have largely ignored the regulation, and there have been no sanctions.
Questions Abound

  • What will the US do if someone doesn't leave who is supposed to? Ignore the problem hoping it goes away? Issue alerts? Round up the illegals and deport them?
  • What about the presumed 4.4 million already here on expired visas?  
  • Is the US prepared for a Trump-like deportation proposal?
  • Is the US comfortable with an Obama-like welcome with no background checks?

Uncomfortable Questions

The above questions are uncomfortable, but must be asked.

Unless there is a comprehensive and workable overall plan, a biometric program will not do much in and of itself but add to expenses and increase delays.

This visa issue further compounds the issue of illegal aliens. Hillary prefers to label the illegals "undocumented".

Those here with expired visas were documented, and they entered the US legally. Both groups are now here illegally, so let's not mince words. The term "illegal" applies in both cases.

Political correctness aside, those who wish to differentiate might consider the phrase "illegal, undocumented alien" as the most accurate description for those who entered the US illegally, with no documents.

Popularity of Trump

Part of the popularity of Donald Trump is that he at least has some semblance of plan. That he doesn't care who his plan offends likely helps his campaign. Whether or not the plan is truly workable doesn't matter for now.

The primary alternative seems to be blanket amnesty for those already here combined with no background checks on refugees coming in.

Is there a middle ground somewhere? or not?

Mike "Mish" Shedlock

California Referendum Would Force Politicians to Wear Logos of Donors

Posted: 01 Jan 2016 10:59 AM PST

In California, citizens can propose a referendum on anything if they gather enough signatures.

John Cox, a wealthy attorney who made a fortune in real estate, is tired of politicians who are bought and owned by corporate interests.

He is putting up $1 million to gather signatures for a referendum that would Force Politicians to Wear Donor Logos.
A wealthy Republican wants to require unprecedented transparency in California by forcing state politicians to plaster their suits and dresses with the logos of their top 10 donors -- and voters fed up with those politicians may actually get the chance to vote on the idea in November.

The unusual dress code is offered in a proposed ballot initiative that backers say likely will be cleared for signature collection within the next week or two. Then, 365,880 valid signatures will have to be submitted for a spot on the ballot.

Initiative sponsor John Cox, an attorney who owes his fortune to real estate, says he doesn't foresee a challenge in the threshold, which is relatively low due to poor 2014 voter turnout. Cox says he expects a boost from popular anti-establishment sentiment reflected in the presidential race.

Cox says he's seeking the endorsements of GOP presidential front-runner Donald Trump and Democratic candidate Sen. Bernie Sanders, both of whom have rallied passionate supporters in part by denouncing their rivals as indentured servants to corporations and other wealthy donors.

"It's going to be immensely popular," Cox says. "We have a system under which people who want something from government fund the campaigns of the people who make those decisions. In any other solar system that would be considered corrupt."

"It actually would raise some fascinating issues if it were to be applied," says George Washington University law professor Jonathan Turley. "Politicians could challenge the law as applied in how the determination is made of the top donors when most money may come from individuals," he says, as "lobbyists often donate as individuals rather than as representatives of their companies or clients."

Timothy Zick, a law professor at the College of William and Mary, is more skeptical of the initiative's ability to survive a legal challenge. The idea, he says, "strikes me as a textbook case of invalid compulsory speech."

But Cox says he can't imagine who would want to have their name on any such lawsuit, and says that finding donor information online is too arduous.
Cut out the Middleman

I have commented on more than one occasion about waste inherent in the current system.

Since lobbyists write virtually every piece of legislation, my sarcastic proposal was to cut out the middlemen by directly electing lobbyists. At least we would have some bit of honesty.

Cox's referendum would accomplish nearly the same thing.

Truth in Lending Extension

Although Fed members are appointed, not elected, how about JP Morgan, Citigroup, Bank of America, and National Association of Realtors (NAR) logos on Janet Yellen and Ben Bernanke?

Mike "Mish" Shedlock

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