Smokey – The Burning Platform

LUCKY HE DIDN’T DUCK

Here’s a throwback to the good old days. The post about Scott Olson became the most vitriolic, nasty, knockdown, drag em out tussle in TBP history. I think Davos, Smokey and Stuck all left the site when all was said and done. Smokey’s line – “He Should Have Ducked” became the most memorable line in TBP history. The story below shows all’s well that ends well. Olson won a $4.5 million judgement against the Oakland PD and the copfuk got his job back after three years with back pay. Another feel good story.

Oakland officer reinstated with back pay after throwing grenade at unconscious man, bystanders

A brutal cop successfully uses the Nuremburg Defense to get his job back.

Posted on August 8, 2014 by Site Staff in News

OAKLAND, CA — An officer who violently attacked a group of civilians — including an incapacitated man bleeding from a head injury and the people who tried to help him — has been reinstated to the department with back pay for the nearly 3 years of missed work.

$Scott Olsen suffering from a fractured skull after being attacked by Oakland police. (Source: AP/Jay Finneburgh)$

The incident dates back to October 25th, 2011. Citizens were protesting the perceived injustices in their government in what was called an Occupy Oakland rally, which involved day-and-night occupation of the public square. Oakland police initiated an unprovoked attack on peaceful bystanders when an unidentified OPD officer launched a metal tear gas canister directly into a man’s head, causing him to collapse into a pool of blood, and resulting in brain damage.

The incident didn’t end there. The man who had been injured was Iraq veteran Scott Olson; who received swift attention from non-uniformed bystanders. When people had gathered to aid Mr. Olson, another cop, OPD Officer Robert Roche, attacked the crowd by throwing a flashbang grenade only inches from Mr. Olson’s bleeding head. A violent explosion followed, injuring and scattering the first responders. The incident was previously detailed by Police State USA.

Officer Robert Roche was shielded from identification for months following the incident, but was later named as a defendant in Mr. Olson’s lawsuit. Roche is a “Tango Team” (SWAT) operator who had already amassed 3 confirmed kills during his time serving Oakland. His homicides in 2006, 2007, and 2008 had all been deemed “justified” by OPD, although one of them resulted in a $500,000 settlement, according to the San Francisco Bay Area Independent Media Center. The Scott Olson incident resulted in a $4,500,000 settlement.

Officer Roche was placed on paid administrative leave in October 2011. He continued to receive subsidized paychecks until August 2013, when he was officially terminated. By that time he had enjoyed roughly 22 months of paid vacation and zero legal consequences.

Even this nauseatingly shallow level of accountability would prove too much for corrupt police officials to tolerate. Police union officials worked feverishly to reinstate Officer Roche.

In August 2014, it was announced that Officer Robert Roche was rehired and returned to work for OPD. In fact, he will be compensated for the time he missed, even the time during his termination.

Evidently the police union had successfully argued that Officer Roche was terminated unfairly, and was being used as a “scapegoat” for a larger situation that was not his fault. Union officials argued that Roche was just following orders, and should not be punished for attacking innocent civilians.

“Roche is a phenomenal police officer, and he was scapegoated like all the other officers from the Occupy experience,” said police union boss Sgt. Barry Donelan, according to Mercury News.

SF Bay Area IMC provided some additional insight to the situation:

The arbitrator’s decision is not unexpected. In twelve out of the last fifteen personnel arbitrations in which OPD officers challenged their terminations, the officers were successful in getting their jobs back. And the lack of accountability at OPD goes beyond rank and file officers. The arbitrator’s decision was apparently based in part on the fact that Roche had been ordered to deploy gas by then-Captain Paul Figueroa. At the same time, Figueroa authorized the use of “beanbag” impact munitions, on persons who might attempt to throw the teargas devices back at the police. It was inevitable that Scott Olsen and others would be seriously injured or killed, yet Figueroa was not disciplined and has since been promoted to Assistant Chief.

The logical disconnect exhibited here is hard to comprehend. Supposedly, Officer Roche was not at fault because of the orders of his superiors. Yet the superior officer who issued the orders received a big promotion. It seems the union is content with protecting criminals and ensuring police accountability is impossible.

Officer Roche was described as being “enthusiastic” to get back on the streets with a badge and a gun. It has been nearly three years since he has been able to wield power over citizens and he was “excited to get back to work.”

“It really gives you pause that he would be reinstated when you have such a blatant case of police misconduct that is caught on video and publicized all over the world,” said Rachel Lederman, Mr. Olson’s attorney. “It points out that there is still an endemic problem in OPD when it comes to trying to impose any kind of discipline even in a case like this where the evidence is so clear.”

If the members of the officer-friendly news website PoliceOne.com are any indication, cops around the country seem to be overwhelmingly supportive of the decision to reinstate Officer Roche.

“Outstanding!” chanted several members. “Keep up the good work officer!!!” posted another. “Great news! Welcome back brother,” another said.

But not everyone was so enthusiastic.

“Officer Roche insisted that he was ‘justified because he was following a superior officer’s orders’” wrote pundit William N. Grigg. “The ‘Nuremberg Defense’ prevails. And PoliceOne erupts in cheers.”

To date, Officer Roche has cost taxpayers of Oakland well over $5 million in civil settlements and legal costs — not to mention his salary. The situation provides us with yet another example of the breathtaking difficulty communities face in ridding themselves of violent, homicidal police officers.

RAINBOWS, UNICORNS & KRUGMAN AS PRESIDENT

Smokey and I disagreed on a few things, but he was right about Kyle Bass. Wherever he is, I hope he can watch this video and smile.

Kyle Bass: “The Next 18 Months Will Redefine Economic Orthodoxy For The West”

Submitted by Tyler Durden on 06/18/2013 21:33 -0400

Kyle Bass covers three critical topics in this excellent in-depth interview before turning to a very wide-ranging and interesting Q&A session. The topics he focuses on are Central bank expansion (with a mind-numbing array of awe-full numbers to explain just where the $10 trillion of freshly created money has gone), Japan’s near-term outlook (“the next 18 months in Japan will redefine the economic orthodoxy of the West”), and most importantly since, as he notes, “we are investing in things that are propped up and somewhat made up,” the psychology of negative outcomes. The latter, Bass explains, is one of the most frequently discussed topics at his firm, as he points out that “denial” is extremely popular in the financial markets.

Simply put, Bass explains, we do not want to admit that there is this serious (potentially perilous) outcome that disallows the world to continue on the way it has, and that is why so many people, whether self-preserving or self-dealing, miss all the warning signs and get this wrong – “it’s really important to understand that people do not want to come to the [quantitatively correct but potentially catastrophic] conclusion; and that’s why things are priced the way they are in the marketplace.”

2:40 Bass begins

3:15 Central Bank Expansion

“We’ve essentially printed $10 trillion in the last few years” “The first $5 trillion replaced the lost equity in the leveraged financial system and the second $5 trillion is making its way into deposits and expanding the monetary base” “This is unprecedented… and it’s not going to change.”

The numbers that Bass reels off are incredible…

“What we’ve seen is a massive credit-led boom (+11% CAGR) and that can’t last forever”

11:00 “The next 18 months in Japan will redefine the economic orthodoxy of the West”

“Japan is so far off the bell-curve that no one wants to talk about it”

“if you repeat things enough, everyone will believe them.”

There are three key myths about Japan that Bass shows are simply false but remain repeated for the comfort of the cognitively biased investment community:

The current account allows the country to self-finance its deficit
The Bank of Japan is not monetizing debt
Retail investors will always support the JGB marketplace

From the nation’s own largest institutions forced to sell assets to the crushing demographics, Bass explains – in greater clarity than the soundbite-idiocy we get each night from Abe/Kuroda/Aso etc…

The smartest money is leaving Japan in a hurry already – Q4 2012 was the largest M&A quarter ever for Japanese firms buying foreign entities – Western productive assets – (just as was seen in Mexico before their crisis) as they try to get out of JPY

25:00 The Psychology of negative outcomes

“as an investor and a fiduciary, I get paid not to be an optimist or a pessimist; I get paid to be a realist”

“Denial” is extremely popular in the financial markets.

Simply put, Bass explains, we do not want to admit that there is this serious (potentially perilous) outcome that disallows the world to continue on the way it has. and that is whay so many people, whether self-preserving or self-dealing, miss all the warning signs and get this wrong.

“no one is ever going to tell you something is wrong”

“we have blind faith in the people running our institutions…that they can figure things out. They are a mental crutch to insure and placate depositors and investors that everything is going to be ok”

“we are running a huge economic experiment,” and you can’t control it all since there are too many variables

Once you understand the psychology of the participants, the key is to understand their actions based on that.

“It is the qualitative shift in the market participants’ belief systems that literally flips a switch overnight”

Bass reminds us of Taleb’s work on central planning: “if you suppress volatility long enough, then when the ‘event’ happens it is greater than the sum total of all the suppressed vol over time.”

He warns – these shifts happen so fast that you will never get hedged or out of the way in time…

32:00 Q & A begins

First he discusses the naysayers on a Japanese bear thesis

“I would like to live in a world where it’s all rainbows and unicorns and we can make Krugman the President – but intellectually it’s simply dishonest”

“If you were advising Abe, what would you say?” – “Quit!”

41:00 General China discussion (in the context of the Japanese-China rhetoric)

43:30 Iceland – not as great as some would suggest

“China is building an embassy in Iceland that can fit 500 people in it. Iceland only has a population of 300,000!”

“You have a roach motel of a country; the New York Times and Krugman saying it’s “The Model”; but they still haven’t addressed the problem of their debt.”

46:35 Do you worry about the US?

“I quit worrying about them because it’s just a waste of time – I always leave DC demoralized”

“The central bank is the great enabler of congressional profligacy”

48:00 How does the small investor play the Japanese market – Bass responds that they can’t and shouldn’t. Shorting JGB futures means high carry costs and negative convexity

And our favorites question!!

49:00 Why can’t the Central Bank just buy all the JGBs and then forgive them?

A speechless Bass responds…

52:00 Bank VaR and under-capitalization

Well worth an hour of your time before the FOMC tomorrow…

http://youtu.be/gJfvLADP3HE

SMOKEY CAN KISS MY FAT ASS

I wonder if Smokey is still hunkered down in his bunker waiting for that imminent terrorist attack. He needs to emerge from his bunker so he can kiss my fat ass. Mike Shedlock details the ongoing crash in China. Their stock market keeps falling, their exports are falling, and their real estate market is imploding. I call that a crash. I dare that cur to show his face back on TBP and take his beating like a man. My advice to him if he rears his ugly mug is to duck.

Real Estate Crash in China Underway: Foreign Funding Down 80%, Land Sales Down 57%, Starts Down 27%; Expect Chinese GDP to Plunge

Inquiring minds are reading an excellent report China Real Estate Unravels by Patrick Chovanec, a professor at Tsinghua University’s School of Economics and Management in Beijing, China.

The report confirms many of the things I said would happen in regards to the Chinese real estate bubble and GDP.

Here are a few items of note.

Developers, burdened by 70% leverage ratios and loans threatening to come due, rushed to complete projects already in their pipeline, to put those units onto the market and raise cash.

That rush to complete inflated real estate investments, allegedly up 23.5% in the first quarter. Other statistics from the report tell the real story.

Year-on-year sales in Q1, for all real estate, was down 14.6%.
Residential property sales were down 17.5%
Office sales were down -10.2%
Sales in January-February were a disaster, falling 20.9% overall, compared to the first two months of 2011, -24.7% for residential.
Total amount of floor space “for sale” was up 35.5%, compared to the same date last year
Floor space of residential units “for sale” grew 47.4%.
At the end of 2011, total floor space “under construction” was roughly 4.6 times the floor space sold
A year and a half worth of excess inventory is hidden somewhere in the pipeline
New starts in April fell 14.6% year-on-year and 27.0% month-on-month, for property as a whole
Housing starts fell -14.4% year-on-year and -23.4% month-on-month
Office starts fell -21.0% year-on-year in April, and -45.1% compared to March
Retail property starts fell -18.7% year-on-year, and -36.8% compared to March
Land sale revenues in April (RMB 27 billion) were down -54.7% compared to April last year
Foreign funding for property development was down -91.4% in March and -80.8% in April, compared to the same months last year.

Clearly a crash is underway. The above stats also show the soft-landing thesis is written on toilet paper.

GDP Analysis

I like the analysis by Chovanec on GDP implications and the highly-overrated “soft landing” theory.

The “resilient” growth in real estate investment that seemed to promise a “soft landing” is not very resilient at all. It’s more like the last gasp of a market that’s running out of steam. Once the surge in completions plays out, the declining number of new starts will become the pipeline, and growth in property investment will flatten or go negative.
Property investment accounts for roughly a quarter of gross Fixed Asset Investment (FAI), and net FAI accounts for over half of China’s GDP growth. As I noted in January, in a back-of-the-envelope thought exercise, if property investment plateaus (growth falls to zero), it could shave as much as 2.6 percentage points off of real GDP growth. If it fell 10% (in real, not nominal terms) it could bring GDP growth down to 5.3%.
At the time I first saw this dynamic in the data, when the Q1 numbers came out, I figured it would take several months to begin playing out. But the April numbers suggest it is already happening.

Chovanec notes if real estate investment drops by 10%, GDP will come in at 5.3%. What if real estate investment falls by 20% or 25%? Moreover, why shouldn’t it?

Nails in the Hard Landing Coffin?

One of the sillier stories making the rounds earlier last month was China currency move nails hard landing risk coffin

I responded at the time with …

The longer China puts off rebalancing its economy, the bigger the crash later on. Moreover, widening the band on its currency is a needed part of that rebalancing, and does not preclude in any way a huge slowdown in growth.
The structural imbalances in China are large and for now, still growing. However, huge cracks have appeared in real estate, and changes are coming up with a regime change. Finally, peak oil alone makes many of the growth estimates we have seen for China outright impossible.

The real estate crash has arrived. The GDP crash will follow. For details, please see 12 Predictions by Michael Pettis on China; Non-Food Commodity Prices Will Collapse Over Next Three to Four Years; Nails in the Hard Landing Coffin?

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com