I’ve written about disparate impact numerous time over the years, warning that this tactic would begin to be seen more frequently beyond the business world, such as in housing and labor. Thomas Perez and Loretta Lynch are two of its fiercest advocates, and a recent story in the Wall Street Journal suggests that my prediction is coming true.
The idea of “disparate impact” holds that a defendant can be held liable for discrimination for a race-neutral policy that statistically disadvantages a specific minority group even if that negative “impact” was neither foreseen nor intended. The Department of Labor has leveled that charge at a Silicon Valley software firm, Palantir Technologies.
According to the Wall Street Journal, five years ago, the Department of Labor accused Palantir of racial discrimination against Asian-Americans on three occasions, saying “the racial composition of Palantir’s hires for three positions—out of 44 job titles—in 2010 and 2011 didn’t mirror its applicant pool. Palantir hired one Asian and six non-Asian applicants for a quantitative-analysis position out of a pool of 730 “qualified applicants,” 77% of whom were Asian. For a software-engineer position, the company hired 14 non-Asian and 11 Asian applicants out of 1,160 applicants (85% of whom were Asian). The complaint says the odds of this occurring “by chance” are one in 3.4 million.”
But here’s the problem. The Department of Labor, by looking at everything entirely by race, completely ignores (excludes?) the idea that a company hire employees based on skill. Palantir argued this point in response: that the Department of Labor’s “analysis assumes incorrectly that anyone having any ‘domestic education,’ any ‘internship,’ any ‘prior experience,’ and ‘Java skills’ should be considered ‘equally or more qualified’ for the positions.” It adds that the department is “essentially advocating” an “illegal quota system.”
“Palantir notes that a quarter of its workforce and 37% of its product engineering team are of Asian descent. Of the 33 hired by Palantir during 2010 and 2011, 36% were Asian. Two of the four members of Palantir’s senior leadership identify as Asians. And more than half of the managers who oversaw the hiring process are Asian.
If Palantir had selected employees at random, 80% would be Asian. Then Labor might have said it is guilty of discriminating against Latinos and blacks.”
As if the charges weren’t bad enough, the Department of Labor decided to take it further this month after Palantir fought back with its responses. Labor has requested a “an administrative-law judge to cancel Palantir’s federal contracts and force the company to compensate the alleged victims of its discrimination.” Of course, since Palantir did not actually discriminate against anyone, no one has requested compensation. Only in the world of disparate impact analysis did Palantir do anything wrong, and since the Department of Labor does not disclose its methodology of determining disparate impact violations (except for broad statistics), no company can actually know if they are violating this kind of bogus “policy” of the Department of Labor.
It’s this kind of egregious action by the Department of Labor that makes being a business owner in the current climate a very difficult thing.
Ambrose Evans-Pritchard suggests that a recession might be on the horizon again and Fed decisions are critical: “The risk of a US recession next year is rising fast. The Federal Reserve has no margin for error.
Liquidity is suddenly drying up. Early warning indicators from US ‘flow of funds’ data point to an incipent squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.
Yet the Fed is methodically draining money through ‘reverse repos’ regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot.
“We are seeing a serious deterioration on a monthly basis,” said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months.
“We think the US is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now,” he said.
The growth rate of nominal GDP – a pure measure of the economy – has been in an unbroken fall since the start of the year, falling from 4.2pc to 2.5pc. It is close to stall speed, flirting with levels that have invariably led to recessions in the post-War era.
“It is a little scary. When nominal GDP slows like that, you can be sure that financial stress will follow. Monetary policy is too tight and the slightest shock will tip the US into recession,” said Lars Christensen, from Markets and Money Advisory.
If allowed to happen, it will be a deeply frightening experience, rocking the global system to its foundations. The Bank for International Settlements estimates that 60pc of the world economy is locked into the US currency system, and that debts denominated in dollars outside US jurisdiction have ballooned to $9.8 trillion.
The world has never before been so leveraged to dollar borrowing costs. BIS data show that debt ratios in both rich countries and emerging markets are roughly 35 percentage points of GDP higher than they were at the onset of the Lehman crisis.
This time China cannot come to the rescue. Beijing has already pushed credit beyond safe limits to almost $30 trillion. Fitch Ratings suspects that bad loans in the Chinese banking system are ten times the official claim.
The current arguments over Brexit would seem irrelevant in such circumstances, both because the City would be drawn into the flames and because the eurozone would face its own a shattering ordeal. Even a hint of coming trauma would detonate a crisis in Italy.
To be clear, the eight-year old US cycle has not yet rolled over definitively. The picture remains fluid, hard to read in a world where key signals have been distorted by central bank repression. The third quarter will almost certainly look a little better.
“We are getting closer and closer to a recession, but we are not quite there yet, looking at our forward-indicators,” said Lakshman Achuthan from the Economic Cycle Research Institute in New York.
“I can understand why people are getting worried. We have been seeing a ‘growth-rate’ cyclical downturn for the last two years. The longer this goes on, the less wiggle room there is,” he said.
“We are sure there will be no recession this year or into the first two months of 2017, but beyond that there are worrying signs. The deterioration of our leading labour market index is very clear,” he said.
Mr Achuthan thinks it is still possible that US growth will pick up again for another short burst – lifted by a global industrial rebound of sorts – before the storm finally hits.
That was broadly my view earlier this year as the global money supply surged and a string of governments seized on Brexit to crank up stimulus, but what is striking is how little traction it has achieved.
The velocity of M1 money in the US has continued to slow, hitting 40-year low of 5.75 over the summer, and markets are only just awakening to the unsettling thought that China’s latest boomlet has already topped out. Beijing is having to hit the brakes again.
Crossborder said new rules for money market funds that came into force this month have complicated the picture, causing the stock of US commercial paper to shrivel by $200bn. Yet there are ways to filter out some of these effects.
The plain fact is that 3-month lending rates in the off-shore ‘eurodollar’ markets in London have tripled since July to 0.93pc, sharply tightening conditions for global finance. Investors may have been too complacent in discounting these gyrations as part of a regulatory hiccup when something more sinister is emerging.
CrossBorder’s liquidity measure for the US is now at levels comparable to the inflection point a few months before the US recessions of 1990 and 2001, and before the recession starting in November 2007 – and a whole year before Lehman Bank collapsed, nota bene.
Albert Edwards from Societe Generale says gross domestic income (GDI) was the most accurate gauge of the economy as the pre-Lehman crisis unfolded, and this measure has been flat for the last two quarters.
“The pronounced weakness of GDI relative to GDP might be an ominous omen, for it may well be indicating that a US recession is already underway – just as it was in 2007,” he said.
It is certainly odd that the Fed should tighten into these conditions. The unemployment rate has risen to 5pc after bottoming at 4.7pc in May, and small business (NFIB) hiring plans have been flashing soft warnings for months.
“The Fed wants to get ahead of the recovery, and unless this is checked, it will lead to recession,” said David Beckworth, a monetary economist at George Mason University.
Prof Beckwith said the US economy is still reeling from the shock of a 20pc rise in dollar’s trade-weighted index since mid-2014. This in turn is squeezing the world’s ‘shadow-dollar’ nexus.
The Fed faces horrible choices, of course. The longer it delays rate rises, the longer it perpetuates the deformed asset-bubble economy that so disfigures modern polities, and the louder the rebukes from Congress.
Critics are quick to note that price pressures are building, or at least appear to be. The Atlanta Fed’s index of 12-month ‘sticky price‘ inflation has reached 2.6pc, higher than nominal GDP growth itself. Call it ‘stagflation’ or the misery mix.
Yet you can pick your inflation measure to tell any story. The Dallas Fed’s trimmed-mean PCE – supposed to eliminate noise – actually peaked in June and has since been slowing on a six-month basis.
And it is – or should be – a cardinal rule of central banking that you never raise rates in response to rising energy costs. Oil spikes are not in themselves inflationary. They are neutral.
The truth is that nobody knows whether this is the start of a sustained reflation cycle, or just the last feeble flicker before America, Europe, and East Asia are swallowed into a deflationary vortex, the frozen circle from which there is no easy exit – ‘lasciate ogni speranza, voi ch’entrate’.
What we do know is that the Fed cannot afford to get this wrong, as it did with such calamitous consequences from March to August 2008, when it talked tough on an inflationary danger that had already peaked and passed, tightening policy into the hurricane.
As we now know – and some warned at the time – the US economy had already buckled. The result of Fed sabre-rattling in those crucial months was the collapse of Fannie Mae, Freddie, Lehman, and the Western banking system.
Stanley Fischer, the Fed’s vice-chairman, conceded in a grim speech this week that the Fed has now run out of ammunition and that this “could therefore lead to longer and deeper recessions when the economy is hit by negative shocks.”
His prescription is to try sneak in a few rate hikes while it is still possible to create a buffer. Market monetarists say this is profoundly ill-advised, and may instead bring about exactly what he fears.
A President Hillary Clinton could and certainly would flood the economy with fiscal stimulus if need be. Yet this takes time. There are few ‘shovel-ready’ projects, and Washington is a fractious place. She may face a hostile House. The monetary crunch would have crystallized long before anything fiscal could be done.
The world will not end if premature tightening pushes the US into recession next year. But why court fate?
The fiscal year for 2016 ran from October 1, 2015 – September 30, 2016. According to the Treasury Department statement of receipts and outlays, the government had:
Receipts came from several sources:
Individual Income Taxes: $1.546 trillion
Social Security and Other Payroll Taxes: $1.115 trillion
Other Taxes and Duties: $306 Billion
Corporate Income Taxes:$300 Billion
Outlays were comprised of several groups:
Social Security $916 Billion
Defense: $595 Billion
Medicare: $595 Billion
Interest on Debt: $241 Billion
Other: $1,507 Billion
You can view the entire report here
“A growing number of people in Obamacare are finding out their health insurance plans will disappear from the program next year, forcing them to find new coverage even as options shrink and prices rise.
At least 1.4 million people in 32 states will lose the Obamacare plan they have now, according to state officials contacted by Bloomberg. That’s largely caused by Aetna Inc., UnitedHealth Group Inc. and some state or regional insurers quitting the law’s markets for individual coverage.
Sign-ups for Obamacare coverage begin next month. Fallout from the quitting insurers has emerged as the latest threat to the law, which is also a major focal point in the U.S. presidential election. While it’s not clear what all the consequences of the departing insurers will be, interviews with regulators and insurance customers suggest that plans will be fewer and more expensive, and may not include the same doctors and hospitals.
It may also mean that instead of growing in 2017, Obamacare could shrink. As of March 31, the law covered 11.1 million people; an Oct. 13 S&P Global Ratings report predicted that enrollment next year will range from an 8 percent decline to a 4 percent gain.”
To see Obamacare enrollment shrink this coming year would be another devastating blow to the already fiscally precarious situation. Enrollment is not nearly what was predicted in 2010 when the law passed — and the program needs — to stay afloat. Obamacare is certain to receive an overhaul next year, but what kind of reform will depend largely on who is in charge of the White House and Congress.
The New York Times has admitted the failures of Obamacare: loss of insurers in many marketplaces, high premium costs, the collapse of many co-ops, overreaching federal mandates, and more. The Times suggests that change is necessary in order to ensure Obamacare’s survival, but seems to endorse even more government participation, not less.
There is a renewed push for a public option. One of the more ridiculous justifications from the article comes from the charge that “private insurance companies could not be trusted to provide reliable coverage or control costs” and that “the shrinking number of health insurers is proof that these warnings were spot on.” To suggest that it is the collapse of many markets is the fault of the insurance companies themselves is absolutely ridiculous.
And another laughable observation on the structural and technical problems of Obamacare: “The subsidies were not generous enough. The penalties for not getting insurance were not stiff enough. And we don’t have enough young healthy people in the exchanges,” essentially blaming everyone else for the failures. The insurance companies didn’t offer cheaper enough plans. The taxpayer didn’t pay enough in penalties/fines/taxes. Too many sick people and too few healthy people enrolled. The solution: offer more government money, paid for by extracting more penalties/fines/taxes for those who chose not to purchase insurance, and spend more money trying to convince more healthy people to buy trust Obamacare and buy into the exchanges. You can’t make this up.
What’s more, many of the same champions of Obamacare are not calling for even more drastic, government-centered, expensive alternatives. “On Sept. 15, Senator Jeff Merkley, Democrat of Oregon, introduced a resolution calling for a public option. The measure now has 32 co-sponsors, including the top Senate Democrats: Harry Reid of Nevada, Chuck Schumer of New York and Richard J. Durbin of Illinois.”
The public option could take a couple of different forms. One would be a government sponsored health plan available as an option in every market. The other option would be that a single payer option, championed by Sanders, which would be essentially Medicare for all. Unfortunately, such ideas would only compound the problem, which, as its root, is money.
Any public option would drive up medical costs, and Obamacare now is financially unsustainable. A government sponsored plan “would have an unfair advantage if it both regulates and competes with private plans,” while a single-payer plan would be even more egregiously expensive as it would shoulder the costs for everything.
While completely repealing Obamacare is probably not a viable solution or possibility anymore, other changes such as making insurance portable across state lines, widening the use and availability of health savings account should also be explored, not shunned. Merely throwing more money after bad money will only worsen Obamacare for everyone.
Yet another insurance regulator — this time in Minnesota — is sounding the alarm on the insurance market in their state, specifically describing it as “an emergency situation” with regard to rate increases next year and availability of competitive companies offering plans.
“Department of Commerce Commissioner Mike Rothman said Friday that the five companies offering plans through the state’s exchange or directly to consumers were prepared to leave the market for 2017. He said big rate increases were the tradeoff to convince all but one company to remain for now. Rate increases finalized this week range from a 50 percent average hike for HealthPartners plans to a 67 percent jump on average on UCare.”
We’ve seen the same scenario playing out in many states across the country companies have withdrawn from the marketplace exchange or from the state all together, leaving many citizens with little to no insurance option from which to choose and purchase a plan. Obamacare continues to collapse, leaving everyday taxpayers to bear the burden and cost of the reckless policies that have hurt, rather than help, the American people.
The New York Post had an article the other day regarding the continuous stream of New Yorkers leaving the state. An analysis found that “in 2014, 126,000 tax filers moved out of New York,” more than any other state in the nation. Also significantly, “The Empire State also lost the most “high earners,” who reported making more than $200,000 a year.”
This particular phenomenon has been going on for years, as I have written about in previous articles. But it seems like some people are groups want to downplay the exodus. The executive director of the Fiscal Policy Institute, Ron Deutsch, was sure to point out “that those who earn at least $1 million per year are more likely to stay put.”
It was a curious observation from the The Fiscal Policy Institute (FPI), which purports to be “an independent, nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all New Yorkers.”
Now, let’s stop for a minute. Of course those who earn more than one million a year would be more likely to stay put. They are the ones who can afford to be abused by the government and put up with it because they don’t want to give up their luxuries — the theater, the restaurants, all that New York has to offer. They can afford to stay. That $200,000 threshold? It’s really New York’s middle class, the backbone of the city. Because of the extremely high cost of living, they can’t afford to stay and put up with abuse.
If Texas ever did to their oilmen what New York does to its taxpayers, they’d be run out on a rail.
Did you even notice that whenever the economy issues bad results (a weak jobs report, etc.), the stock market goes UP? Logic would seemingly have it be the opposite. If the economy was weak, one would assume the stock market would respond negatively. But that’s not really the case.
For years, I couldn’t understand it — how stupid could the market be? Why would the market do well? And why is it so important for interest rates to stay low? I think I have figured it out. Low rates are not good for the economy, but they ARE good for the stock market. See, the stock market and economy are not necessarily affected the same way. When rates stay low, investors have to put their money in the stock market because there is no alternative.
Think about it — with non-existent interest rates, you don’t get an return on investment (ROI) anywhere. People have no alternative avenues for investing their money except to put it in the stock market. So even though this economy is performing very sluggishly, the Feds can point to the strong market as evidence that their policies are succeeding, because most people consider the economy and stock market to be fairly synonymous with each other — but they are not.
The economy is still underperforming because of so many terrible policies: over-regulation, increased business fines, higher taxes, Obamacare, Dodd-Frank — these are all major reasons why businesses are struggling, but that doesn’t necessarily affect the stock market; that’s why the stock market doesn’t react the same way when business data is terrible.
Keeping interest rates low is not helping the economy at all — but it does help the stock market, which mask the inherent policy problems. Virtually every part of Hillary’s economic plans are terrible, for the economy, jobs, etc. The economy will never really recover until the systemic problems are fixed.
We’ve all seen the video which raises new questions about the health status of Hillary Clinton. I’ve largely left these questions alone because I try to avoid reckless speculation. However, the video does raise some new questions:
The Hillary press team was largely silent for 90 minutes after the video. Later, it emerged that Hillary was diagnosed with pneumonia on Friday. “But just after 5 p.m., a campaign official said Mrs. Clinton’s physician, Dr. Lisa R. Bardack, had examined the candidate at her home in Chappaqua, and Dr. Bardack said in a statement that Mrs. Clinton was “rehydrated and recovering nicely.”
“Secretary Clinton has been experiencing a cough related to allergies,” Dr. Bardack’s statement said, adding that on Friday morning, after a prolonged cough, Mrs. Clinton was given a diagnosis of pneumonia. “She was put on antibiotics, and advised to rest and modify her schedule,” Dr. Bardack added. “At this morning’s event, she became overheated and dehydrated.”
Now, if she was indeed diagnosed with pnuemonia, why was she subsequently at a fundraiser with Barbra Streisand later that same evening? This is the same incident that Hillary used the now famous term “basket of deplorables” in reference to Trump supporters.
According to reports on the event, “tickets for the gala start at $1,200, with limited availability, and go as high as $250,000. Donors who raise six figures get a meet-and-greet reception with Clinton.”
Does this mean that Clinton engaged in a private meet-and-greet while sick with pneumonia, and didn’t disclose her illness? Was she contagious then? How does one get told to “rest and modify her schedule” and then proceed to a high dollar fundraiser.
At some point during the day on Friday, Clinton also “appeared Friday at a national security briefing.” According to Politico’s description of the meeting published the day prior (Thursday),
“Hillary Clinton will meet with a bipartisan group of former national security officials on Friday, a group that includes ousted former CIA Director David Petraeus and former George W. Bush Homeland Security chief Michael Chertoff.”
According to a tweet by MSNBC captured by The Gateway Pundit that Friday, at 5:13pm in New York, MSNBC urged its followers to “Watch Live: Tune in to @MSNBC to watch Hillary Clinton speak after attending a major national security meeting.”
Watch Live: Tune in to @MSNBC to watch Hillary Clinton speak after attending a major national security meeting. pic.twitter.com/RzX9YRiWs4
— MSNBC (@MSNBC) September 9, 2016
This briefing was post-meeting, and pre-fundraiser. Did she notify any of the distinguished guests at the meeting that she was sick with pneumonia? The press at the briefing? Anyone she may have come in contact with? If not, why not?
She’s either lying about actually having pneumonia or she’s did not disclose a serious, and potentially contagious illness with the hundreds of people with whom she came in contact on Friday: national security folks, press, donors, supporters. Which one is more deplorable?
Data compiled by the Bureau of Labor Statistics show that government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today. CNS news has the highlights:
Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.
The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.
Then, in August 1989, the seasonally-adjusted employment numbers for government exceeded the employment numbers for manufacturing for the first time. That month, manufacturing employed 17,964,000 and government employed 17,989,000.
Manufacturing employment in the United States had peaked a decade before that in June 1979 at 19,553,000
From August 2015 to August 2016 seasonally-adjusted manufacturing employment declined by 37,000–dropping from 12,318,000 last August to 12,281,000 this August.
The 22,213,000 government employees in August, according to the BLS, included 2,790,000 federal employees, 5,120,000 state government employees, and 14,303,000 local government employees.