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Falling Stock Markets? Blame China.

Mother Jones

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Over at Wonkblog, Ylan Mui writes about the plummeting stock market:

Is this the beginning of “Rate Rage”?

You could be forgiven for thinking so, judging by all the blame that’s been heaped on the Federal Reserve for the selloff in stock markets over the past three days. The blue-chip Dow Jones Industrial Average has plunged 500 points, and the broader Standard & Poor’s 500-stock index erased its gains for the year. Markets Friday morning were already beginning to edge down.

We must read wildly different stuff. I haven’t noticed anyone blaming the Fed for falling stock markets. The headlines have all been like this one in the Wall Street Journal: markets are dropping because investors are afraid that China is about to go belly up. As Mui points out, the Fed’s actions have been widely anticipated, and the timing of the market drop doesn’t really match up with anything new from the Fed anyway. It does match up with investors finally getting nervous after weeks of increasingly bad news from China.

In any case, this is yet another reason the Fed might want to rethink a rate rise later this year. The global economy is not looking especially robust at the moment, with Europe barely growing and China possibly entering a serious slowdown. We don’t really need to add to these problems.

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Falling Stock Markets? Blame China.

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Hobby Drones: Not as Cute and Cuddly As You Think

Mother Jones

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Somebody at the FAA leaked several hundred rogue-drone reports to the Washington Post’s Craig Whitlock:

Before last year, close encounters with rogue drones were unheard of. But as a result of a sales boom, small, largely unregulated remote-control aircraft are clogging U.S. airspace, snarling air traffic and giving the FAA fits.

Pilots have reported a surge in close calls with drones: nearly 700 incidents so far this year, according to FAA statistics, about triple the number recorded for all of 2014. The agency has acknowledged growing concern about the problem and its inability to do much to tame it.

And we saw something similar a few weeks ago, when private drones interfered with firefighting in California.

This is the reason I’m more skeptical about a laissez faire attitude toward drones than many people. Once they’re out there, they’re out there, and all the new regulations in the world won’t put the genie back in the bottle. Conversely, if you regulate them more tightly and ease up slowly as the consequences become clearer, we can avoid things like drones bringing down a 747 about to land at LaGuardia.

Nobody likes the idea of the government getting in the way of cool new technology. I get that. But governments regulate driverless cars for an obvious reason: they’re dangerous. Drones probably ought to be more tightly regulated for the same reason. When one person in 10,000 owned one, they seemed harmless. When one person in a hundred owns one, it suddenly becomes clear that a sky full of hobby drones might not be such a great idea. When the day comes that everyone has one, it will be too late.

This is true of a lot of things. When they’re rare, they seem harmless. And they are! But you need to think about what happens when they get cheap and ubiquitous. In the case of drones, we might not like what we get.

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Hobby Drones: Not as Cute and Cuddly As You Think

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Word of the Day: Trumpery

Mother Jones

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This may be the greatest, classiest entry in any dictionary ever. Yes, it’s real.

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Word of the Day: Trumpery

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This Chart Will Make You Even More Pissed Off About Your Ballooning Student Debt

Mother Jones

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For the tens of thousands of college students who are taking out another year’s worth of debt in preparation for the start of classes, here’s a rage-inducing data point: Many universities spend way more managing their investment portfolios than they do assisting students with tuition.

A New York Times op-ed published Wednesday by Victor Fleischer, a law professor at the University of San Diego, lays out this disparity. Fleischer cited Yale University, which paid its fund managers nearly $743 million in 2014 but gave out just $170 million in scholarships. He also noted that many universities, large and small, public and private, show the same imbalance in spending. “We’ve lost sight of the idea that students, not fund managers, should be the primary beneficiaries of a university’s endowment,” he writes. “The private-equity folks get cash; students take out loans.”

Fleischer provided Mother Jones with more of his data, which is gleaned from tax forms, financial statements, and annual reports. Here’s how the numbers shake out at Harvard, Yale, Stanford, and Princeton. On average, these four wealthy, elite universities spend 70 percent more on managing their investment portfolios than they do on tuition assistance. (Complete scholarship data for 2014 was not available, and some investment management fees are estimated.)

That disparity is even more glaring when you consider the tax benefits fund managers derive from working with universities. Fleischer notes that investors typically pay their fund managers about 20 percent of their investment profits. That money, called carried interest, is taxed at a lower rate for fund managers, who can claim it as capital gains instead of income.

Some universities justify the high management fees by arguing that they ensure top financial performance for their endowments. It’s true that these portfolios have done quite well: Harvard’s endowment is nearly $36 billion, and Yale’s is more than $25 billion, a 50 percent increase since 2009. But, writes Fleischer, a little less endowment hoarding and a little more spending, both on financial aid and other educational goals, would still allow universities’ money to grow generously while eliminating the hefty tuition increases that force students to take on burdensome debt.

Fleischer proposes that when Congress moves to reauthorize the Higher Education Act this term, lawmakers should require universities with assets greater than $100 million to spend 8 percent of their endowment each year. Even doing that, universities would likely continue to get exponentially richer. As he notes, the average endowment has grown 9.2 percent annually for the past 20 years (after accounting for 4 percent annual spending), a more than respectable rate of return.

Elite schools do offer need-blind admission and some of the best financial aid for low-income students. But for many students, tuition increases still mean more loans: On paper, many middle-class students often don’t qualify for large scholarships, but their families also can’t afford more than $50,000 in annual tuition. More generous allocation of endowments could help to roll back that trend while also funding more teaching and research. As Fleischer writes in the Times, “Only fund managers would be worse off.”

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This Chart Will Make You Even More Pissed Off About Your Ballooning Student Debt

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Obamacare Is Facing Yet Another Legal Challenge

Mother Jones

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Do you remember John Boehner’s House lawsuit against President Obama over some details of Obamacare? When it was finally unveiled, it turned out it had two parts. The first challenged a delay in implementing the employer mandate. That was a big meh. Even if the suit prevailed, it would be meaningless by the time it finished its trip through the court system.

But the second part was a surprise. It challenged the outlay of $175 billion as part of the Cost Sharing Reduction program, which pays out money to insurance companies and lowers premiums, primarily for the poor. Obama claims that CSR is like Medicare or Social Security: a mandatory payment that doesn’t require yearly authorizations. Congress claims it does, and went to court to fight its case. So how is that going? David Savage of the LA Times gives us an update:

In May, U.S. District Judge Rosemary Collyer voiced exasperation when a Justice Department lawyer tried to explain why the Obama administration was entitled to spend the money without the approval of Congress. Why is that “not an insult to the Constitution?” Collyer asked.

But the more formidable barrier now facing the lawsuit is a procedural rule. Judges have repeatedly said lawmakers do not have standing to re-fight political battles in court….But in late June, the high court gave the House lawsuit an apparent boost when it ruled the Arizona Legislature had standing to sue in federal court to defend its power to draw election districts….Ginsburg in a footnote said the court was not deciding “the question of whether Congress has standing to bring a suit against the president.” But administration supporters acknowledge the high court’s opinion in the Arizona case increases the odds the suit will survive.

….Washington attorney Walter Dellinger, a former Clinton administration lawyer, believes the courts will not finally rule on the House lawsuit. “There has never been a lawsuit by a president against Congress or by Congress against the president over how to interpret a statute,” he said.

If the courts open the door to such claims, lawmakers in the future will opt to sue whenever they lose a political battle, Dellinger said. “You’d see immediate litigation every time a law was passed,” he said.

In other words, this is starting to look an awful lot like King v. Burwell: a case that initially seemed like an absurd Hail Mary by conservatives, but that eventually started to look more formidable. In the end, King still lost, but not before plenty of liberals lost a lot of sleep over it.

I think that’s still the most likely outcome here. Allowing Congress to sue the president would be a huge reversal for the Supreme Court, and it’s not clear that even the conservatives on the court want to open up that can of worms.

But there’s more to this. If the Supreme Court rules that Congress has no standing to sue, but it looks like they might treat the case sympathetically on the merits, conservatives merely have to find someone who does have standing to sue. That probably won’t be too hard. It may take years, but one way or another, this might end up being yet another legal thorn in the side of Obamacare.

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Obamacare Is Facing Yet Another Legal Challenge

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Trumpmentum Has Been Losing Steam Ever Since the Debate

Mother Jones

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I hopped over to RealClear Politics this morning to take a look at their latest poll averages, and it shows something interesting: Donald Trump may have hit his ceiling. On August 5, he hit a peak at 24.3 percent. He then plateaued for a few days and has been falling ever since. He now stands at 22.0 percent.

Not all poll averages show the same thing. I also took a look at Pollster, and they show Trump’s climb starting to slow down, but not quite peaking yet. Even there, though, it looks like Trump is going to hit a ceiling soon.

At the risk of making a hard prediction that will soon look foolish, it looks to me like Trump has peaked at about 25 percent. Even among the Republican base, his blustery showmanship only gets him so far.

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Trumpmentum Has Been Losing Steam Ever Since the Debate

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Thomas Friedman: The world is hot

Thomas Friedman: The world is hot

By on 19 Aug 2015commentsShare

In his New York Times column on Wednesday, Thomas Friedman began with a bet:

Here’s my bet about the future of Sunni, Shiite, Arab, Turkish, Kurdish and Israeli relations: If they don’t end their long-running conflicts, Mother Nature is going to destroy them all long before they destroy one another.

We may not know the stakes, but it is a provocative wager nonetheless. I like to imagine Friedman, steeped in cigar smoke, sitting around a poker table with Netanyahu, Erdoğan, half a dozen sheikhs, and Julia Roberts. Julia is there because when I hear “Mother Nature,” I cannot but hear her intone, “I have been here for eons”:

This is Julia at her fiercest. But I digress. Friedman was writing on the relationships between climate and state fragility in the Middle East. It is a story of extreme drought, the politicization of air-conditioning, and revolutionary sparks. He concludes with a call for cooperation:

All the people in this region are playing with fire. While they’re fighting over who is caliph, who is the rightful heir to the Prophet Muhammad from the seventh century — Sunnis or Shiites — and to whom God really gave the holy land, Mother Nature is not sitting idle. She doesn’t do politics — only physics, biology and chemistry. And if they add up the wrong way, she will take them all down.

The only “ism” that will save them is not Shiism or Islamism but “environmentalism” — understanding that there is no Shiite air or Sunni water, there is just “the commons,” their shared ecosystems, and unless they cooperate to manage and preserve them (and we all address climate change), vast eco-devastation awaits them all.

In a move that should shock few, Friedman glosses over some salient points here. Climate change and political fragility are intersectional, but they don’t have the same solutions. You can’t convert from Shiism to environmentalism. (They’re also not mutually exclusive.) Moreover, it’s the Islamic State that’s bulldozing the Middle East, not “all the people in this region.” Preaching the promise of “shared ecosystems” in a world of Daesh is naive. The lack of distinction here also ignores the fact that most people in the Middle East are just trying to live their lives, not actively fighting over who is caliph.

Luckily, on the climate front, the world recently came one step closer to the cooperation hinted at in Friedman’s throwaway parenthetical: “and we all address climate change.” On Tuesday, a group of leading academics released the first Islamic Declaration on Global Climate Change, a call to the world’s 1.6 billion Muslims and Muslim countries to “increase their efforts and adopt the pro-active approach needed to halt and hopefully eventually reverse the damage being wrought” on the environment.

The declaration calls for an “equitable and binding” climate agreement in Paris this December, financial support for developing countries, preferably a 1.5 C target, and commitment to a zero-emissions strategy as soon as feasibly possible. And while it’s safe to say that the declaration was not signed by members of ISIS, this type of call for cooperation — from within the Muslim community — is already fostering the kind of environmental dialogue that Friedman asserts is absent.

The body of research linking climate and conflict is formidable and growing — as Friedman is well aware — and the triggers and threat multipliers that tie together drought, rising temperatures, and political unrest are very real. Something as abstract as climate change is made more tangible when viewed through the lens of political conflict, but that lens doesn’t get you any closer to solutions. And it certainly doesn’t get you any closer to pacifying the political and religious woes of the Middle East.

Friedman is right about Mother Nature, though: She is not sitting idle. As Julia Roberts once said, “I have fed species greater than you, and I have starved species greater than you.”

Source:
The World’s Hot Spot

, The New York Times.

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A Grist Special Series

Oceans 15


This chef built her reputation on seafood. How’s she feeling about the ocean now?Seattle chef Renee Erickson weighs in on the world’s changing waters, and how they might change her menu.


How do you study an underwater volcano? Build an underwater laboratoryJohn Delaney is taking the internet underwater, and bringing the deep ocean to the public.


How much plastic is in our oceans? Ask the woman trying to clean it upCarolynn Box, environmental program director of 5 Gyres, talks about what it’s like to sail across the ocean, pulling up plastic in the middle of nowhere.


How catching big waves helped turn this pro surfer into a conservationistRamon Navarro first came to the sea with his fisherman rather, found his own place on it as a surfer, and now fights to protect the coastline he loves.


What seafood is OK to eat, anyway? Ask an expertWhen it comes to sustainable seafood, you could say director of Seafood Watch Jennifer Dianto Kemmerly is the ultimate arbiter of taste.

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Thomas Friedman: The world is hot

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Trump’s "Go-To" National Security Adviser Says He’s Never Talked Policy With Trump

Mother Jones

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When Donald Trump, the reality show tycoon turned GOP front-runner, appeared on Meet the Press this past Sunday, host Chuck Todd asked him, “Who do you talk to for military advice right now?” At first, Trump had no direct answer. He replied, “Well, I watch the shows. I mean, I really see a lot of great—you know, when you watch your show and all of the other shows and you have the generals and you have certain people that you like.” Todd pressed him: “But is there a go-to for you?” Trump said he had two or three “go-to” advisers. He named John Bolton, one of the most hawkish neoconservatives, and retired Army Col. Jack Jacobs, who is a military analyst for MSNBC and NBC News. “Col. Jack Jacobs is a good guy,” Trump said. “And I see him on occasion.”

There’s just one problem with Trump citing Jacobs as a national security adviser: Jacobs says he has never talked to Trump about military policy.

“He may have said the first person who came to mind,” Jacobs tells Mother Jones. “I know him. But I’m not a consultant. I’m not certain if he has a national security group of people. I don’t know if he does or if he doesn’t. If he does, I’m not one of them.”

Jacobs, who received a Medal of Honor (and two Silver Stars, three Bronze Stars, and two Purple Hearts) for his service in Vietnam, notes that he has attended numerous charity events where Trump was present. “I’ve seen him at a number of functions,” he says. But Jacobs adds that he has had no discussions with Trump about national security affairs—at those events or anywhere else.

Jacobs says he assumes Trump has watched his appearances on television. But does Jacobs see his on-air comments reflected in what Trump has been saying as a candidate? “I talk about a wide variety of things on television,” Jacobs remarks. “Who knows what anybody absorbs? But I’m delighted to hear that he’s a fan of MSNBC.”

The Trump campaign did not immediately respond to an inquiry about why Trump cited Jacobs as a military policy adviser.

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Trump’s "Go-To" National Security Adviser Says He’s Never Talked Policy With Trump

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Was Ted Cruz a Big Winner or a Big Loser From the GOP Debate?

Mother Jones

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We now have a second poll showing who gained and who lost from the first GOP debate. It’s from CNN/ORC, and its results are similar to yesterday’s Fox News poll with two significant exceptions.

First, Donald Trump gained significantly in the CNN poll instead holding steady. However, this may be just an artifact of the date of the comparison poll: July 30 for Fox and July 22 for CNN. They both have Trump at about the same absolute level currently.

The other big difference is Ted Cruz. Fox had him up four points after the debate; CNN has him down two points. Since they both had him starting at 6 percent, that’s a pretty substantial difference. Aside from the normal statistical vagaries of polls like this, I can’t think of a reason for it.

Anyway, it’s still early days. This stuff is entertaining, but probably doesn’t mean a whole lot.

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Was Ted Cruz a Big Winner or a Big Loser From the GOP Debate?

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First Amendment Law is Facing Some Very Big Changes

Mother Jones

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Adam Liptak says that Reed v. Town of Gilbert is the sleeper Supreme Court case of the past year. It unanimously struck down an ordinance that discriminated against signs announcing church service times, but only three justices ruled on the basis of existing law. The other six signed an opinion that went further, ruling that many other speech regulations are now subject to “strict scrutiny.” How far will this go?

Strict scrutiny requires the government to prove that the challenged law is “narrowly tailored to serve compelling state interests.” You can stare at those words as long as you like, but here is what you need to know: Strict scrutiny, like a Civil War stomach wound, is generally fatal.

“When a court applies strict scrutiny in determining whether a law is consistent with the First Amendment,” said Mr. Abrams, who has represented The New York Times, “only the rarest statute survives the examination.”

Laws based on the content of speech, the Supreme Court has long held, must face such scrutiny. The key move in Justice Thomas’s opinion was the vast expansion of what counts as content-based. The court used to say laws were content-based if they were adopted to suppress speech with which the government disagreed.

Justice Thomas took a different approach. Any law that singles out a topic for regulation, he said, discriminates based on content and is therefore presumptively unconstitutional.

Securities regulation is a topic. Drug labeling is a topic. Consumer protection is a topic.

This is obviously not news to people who follow this stuff carefully, but it was news to me. Apparently the reach of Reed is pretty spectacular: three laws have been struck down by lower courts in just the past two months based on the reasoning in the case. Any law that treats, say, medical records or political robocalls or commercial speech differently from any other kind of speech is in danger—and there are a lot of laws like this.

They say that hard cases make bad law. But Reed was an easy case. It failed “the laugh test” said Elena Kagan. And yet, it seems likely to have provided an excuse for an astonishingly broad change in how speech is regulated. So far it’s stayed mostly under the radar, but eventually something bigger than panhandling or ballot selfies will get struck down, and suddenly everyone will notice what happened. What then?

Professor Robert Post said the majority opinion, read literally, would so destabilize First Amendment law that courts might have to start looking for alternative approaches. Perhaps courts will rethink what counts as speech, he said, or perhaps they will water down the potency of strict scrutiny.

“One or the other will have to give,” he said, “or else the scope of Reed’s application would have to be limited.”

Stay tuned.

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First Amendment Law is Facing Some Very Big Changes

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