Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

Social Security to Announce Cost of Living Increase Tomorrow

This article appeared online at TheNewAmerican.com on Wednesday, October 12, 2022:  

Trustees managing the federally mandated “most successful Ponzi Scheme in History” — Social Security — will announce the largest COLA (cost of living adjustment) in history tomorrow. It is expected to be 8.7%, or an increase of about $170 a month for each of the nearly 70 million Americans who are forced to participate in it.

The increase is calculated on the basis of an inflation factor that is alleged to measure the cost of goods and services purchased by working people.

Gary Galles of the Mises Institute backs up his claim that Social Security is “the most successful Ponzi Scheme in History”:

If Social Security and Medicare both involved people voluntarily financing their own benefits, an argument could be made for seniors’ “earned benefits” view.

 

But they have not. They have redistributed tens of trillions of dollars of wealth to themselves from those younger.

 

Social Security and Medicare have transferred those trillions because they have been partial Ponzi schemes.

For proof, he offers as evidence the scheme’s first participant, Ida Mae Fuller:

After Social Security’s creation, those in or near retirement got benefits far exceeding their costs (Ida Mae Fuller, the first Social Security recipient, got 462 times what she and her employer together paid in “contributions”).

 

Those benefits in excess of their taxes paid inherently forced future Americans to pick up the tab for the difference.

 

And the program’s almost unthinkable unfunded liabilities are no less a burden on later generations because earlier generations financed some of their own benefits, or because the government has consistently lied that they have paid their own way.

According to retired Boston University Professor Laurence Kotlikoff, the unfunded liability of Social Security exceeds $200 trillion, thanks to the government’s flawed accounting of the scheme’s deficit.

The news from the trustees is bad enough: the primary “trust fund” — the Old-Age and Survivors Insurance Trust Fund (OASI) — will be depleted in less than 12 years. The present “reserves” — a staggering $2.9 trillion — will have been spent by then, leaving trustees with few options to keep the scheme afloat.

The misnamed “Committee for a Responsible Federal Budget” has come up with 10 ways to keep the flawed system afloat, but they boil down to these:

  1. Raise taxes
  2. Raise the retirement age
  3. Change the COLA calculation

Missing from Thursday’s announcement by the trustees will be the fact that for most recipients, 85 percent of their monthly check will be taxable. That means that a large part of each check will ultimately find its way back into the U.S. Treasury.

And the fact that inflation is currently far ahead of wage growth won’t show up until the trustees’ report next year. At that time, it’s more than likely the $2.9 trillion in “reserves” will have shrunk considerably, shortening the life span of the Ponzi scheme even further.

For those still thinking that each “participant” has his own account that he can count on, the Supreme Court ruled back in 1960 in Flemming v. Nestor that he has no binding contractual right to any of the funds he has paid into it. Which is just as well, as those funds have already been spent to fund the retirement of those currently receiving checks from the scheme.

Chicago’s Rising Crime Continues to Drive Big Companies away

This article appeared online at TheNewAmerican.com on Tuesday, October 11, 2022:  

Even though, officially, Tyson Foods’ surprise announcement last week that it was moving from Chicago to Arkansas had to do with something called “unlocking greater opportunities to share perspectives” among its key people, most observers know the real reason: those key people working in Chicago don’t want to get mugged or carjacked on their way to work.

Said Tyson CEO Donnie King:

Bringing our talented corporate team members and businesses together under one roof unlocks greater opportunities to share perspectives and ideas, while also enabling us to act quickly to solve problems and provide the innovative products and solutions that our customers deserve and value.

Chicago Mayor Lori Lightfoot’s “progressive” policies such as ending cash bail and defunding the Chicago Police Department (CPD) have allowed crime to explode. According to the latest statistics from the CPD, crime surged in both 2021 and thus far in 2022 to heights not seen in decades.

Murders are up 32 percent since 2019 (with 526 murders so far this year), violent crime is up 37 percent, while common low-level theft (property, vehicles, etc.) is up an astonishing 61 percent.

Chicago’s homeless camps and open-air drug markets remind one of San Francisco, which Neighborhood Scout rates as a 4 out of 100 of the safest cities in the nation. Chicago rates a 10.

While King avoided any mention of the real reason for Tyson’s sudden announcement, MacDonald’s CEO Chris Kempinski wasn’t so constrained. His company built a $250 million headquarters in the city in 2018 and isn’t persuaded (yet) that he should move. But he declared in a speech to the Economic Club of Chicago last week,

Everywhere I go, I’m confronted by the same question these days: what’s going on in Chicago?

 

While it may wound our civic pride to hear it, there is a general sense out there that our city is in crisis.

He added,

We have violent crime that’s happening in our restaurants.… We’re seeing homelessness issues in our restaurants. We’re having drug overdoses that are happening in our restaurants.

And, understandably, that’s making it hard for him to recruit top talent to the Windy City:

The truth is, it’s more difficult for me today to convince a promising McDonald’s executive to relocate to Chicago … than it was just a few years ago.

Tyson follows the departure of the city’s richest man, Ken Griffin, and his companies. Griffin owns 80 percent of Citadel LLC, a multinational hedge fund, and all of Citadel Securities, one of the largest market makers in the country. Griffin echoed Kempinski:

If people aren’t safe here, they’re not going to live here. I’ve had multiple colleagues mugged at gunpoint. I’ve had a colleague stabbed on the way to work, countless issues of burglary.

Griffin himself experienced an attempted carjacking, and there continue to be reports of shootings, riots, and looting near some of his employees’ homes.

Tyson also follows Boeing, which has been a corporate resident of Chicago’s Deerfield suburb for three decades, and Caterpillar. Each is moving to safer locales: Arlington, Virginia, and Dallas-Fort Worth, Texas, respectively.

Food retailers Whole Foods and Aldi are reducing their presence in the crime-infested city. Said Aldi, “Our decision [to close at least one of its stores] was based on several factors, including repeated burglaries and declining sales. Out of concern for our employees and customers.… Keeping this store open was no longer a sustainable option.”

Elon Musk Reverses Course, Reinstates Offer to Buy Twitter at $54

This article appeared online at TheNewAmerican.com on Thursday, October 6, 2022:  

Elon Musk is about to turn the Twitter lemon into lemonade. He notified the SEC on Tuesday, just one day before he was scheduled to be deposed by Twitter attorneys in its lawsuit against him, that Musk “intend[s] to proceed to closing of the transaction contemplated by the April 25, 2022, Merger agreement.”

Musk had gotten cold feet, and in June sued to end the purchase agreement. But the global entrepreneur sees his opportunity to turn Twitter into the world’s largest “everything” app.

He’s planning to rename Twitter, calling it “X”:

Buying Twitter is an accelerant to creating X, the everything app….

 

Twitter probably accelerates X by 3 to 5 years.

During Tesla’s annual shareholder meeting in August, he revealed that he has a “grander vision” for the social-media platform:

It’s a pretty, pretty grand vision. Now obviously [the everything app] could be started from scratch, but I think [buying] Twitter would help accelerate that by three to five years.… It’s something I thought would be useful for a long time.

Industry analysts think Musk will likely build the new platform X around the model provided by the Chinese platform WeChat, which currently has more than a billion subscribers. Mostly Chinese, WeChat subscribers can access most of their favorite online services and utilities on a single app, including hold-to-talk voice messaging, social-media interaction, paying bills, placing food orders, video conferencing, video gaming, sharing of photographs and videos, among others.

Musk told Twitter employees in a town hall meeting with them in June that he wanted to grow the platform to a billion users: “If we can recreate [WeChat] with Twitter, we’ll be a great success.”

Assuming that the Delaware court where Musk was due to testify today agrees, the deal could be consummated in the next couple of weeks, if not sooner.

But Twitter is laden with many issues that Musk must first resolve. At the moment. Twitter allows porn videos on its site. That got the company in trouble more than 10 years ago when it was learned that Twitter was unable to keep underage users from accessing them. It now appears that Twitter violated its consent decree with the Federal Trade Commission which, if proved, could result in fines in the billions of dollars.

And Twitter whistleblower Peiter “Mudge” Zatko, the company’s former head of security, has filed a complaint alleging that the platform is a risk to national security. This is expected to result in investigations by both the FTC and other regulatory agencies.

And there’s the risk that, once X is operating as the “everything app,” those same agencies will likely seize the opportunity to use it to surveil users just as the Chinese communists use WeChat to monitor the activities of its users.

On the positive side, Musk intends to change the platform’s reliance on advertising revenues to a subscription-based service. At $3 a month, a billion subscribers would generate a very handsome return to the investors who have joined Musk in purchasing the platform.

And that would virtually eliminate the influence of large advertisers on the platform and mute attempts by the notoriously liberal employees from disparaging, punishing, or eliminating conversations that they don’t like.

It would also challenge other platforms such as Facebook and Amazon, which currently provide services that X would duplicate.

It’s going to take all of Musk’s time, attention, and talents to right the left-wing ship, but with successes like Tesla and SpaceX behind him, few are betting against him in his quest to provide the world with a public forum for free expression.

Chicago’s Richest Resident Moves to Florida

This article appeared online at TheNewAmerican.com on Thursday, September 15, 2022: 

At first blush this is hardly news. Illinois has high taxes. Florida has no personal income tax. But for Ken Griffin, the billionaire entrepreneur who made his money trading stocks and then started two companies that trade stocks, there’s another reason: crime.

While a student at Harvard, Griffin persuaded school administrators to allow a satellite dish to be installed on the roof of his dormitory so he could receive stock quotes. He turned a few dollars into many, moved to Chicago after graduation, and now sports a net worth of nearly $30 billion.

He owns 80 percent of Citadel LLC, a multinational hedge fund already operating in Miami, and 100 percent of Citadel Securities, one of the largest market makers in the U.S. Approximately one-third of all individual stock transactions that take place in the United States are completed through Citadel Securities.

Citadel employs more than 1,000 people, and they are tired of being attacked on the way to and from work. Said Griffin:

If people aren’t safe here, they’re not going to live here. I’ve had multiple colleagues mugged at gunpoint. I’ve had a colleague stabbed on the way to work, countless issues of burglary.

Griffin himself experienced an attempted carjacking, and there continue to be reports of shootings, riots, and looting near some of his employees’ homes.

In June he announced to his employees that he was moving Citadel Securities to Miami, and then moved himself and his family to the Sunshine State. This follows similar moves, for perhaps similar reasons, by Boeing (which is moving its operations to Arlington, Virginia) and Caterpillar (which is moving its operations to Dallas-Ft. Worth in Texas).

While Illinois Governor J. B. Pritzker is putting the best possible face on Griffin’s departure — “Countless companies are choosing Illinois as their home,” he said — Citadel’s move will cost Chicago and the state billions of future tax dollars, as well as more than $600 million in gifts that Griffin himself has given to local charities and other good works over the past 30 years.

It’s true that Florida has lower taxes than Illinois. According to the Tax Foundation, Florida ranks #4 in its State Business Tax Climate Index, while Illinois lags far behind in the #36 position. That’s because, in every tax category — corporate taxes, individual income taxes, sales taxes, property taxes, and unemployment insurance premiums — Illinois’ burdens are significantly higher that Florida’s.

On a per capita basis, which is the best measure of how those taxes impact the working individual — who ultimately pays all taxes — Florida collected $2,002 on average from each citizen in 2020, while Illinois extracted almost twice as much: $3,534.

But on crime the difference is staggering. In Chicago the violent crime rate, according to Neighborhood Scout, is 9.69 per 1,000 residents. In Miami, it’s 6.00 per 1,000. The chances of becoming a victim of a violent crime in Chicago are one out of every 103 residents; in Florida it’s one out of every 167.

Taken all together then — weather (the average temperature in January in Chicago is 26 degrees; in Miami in January it’s 69 degrees), taxes, and crime — one wonders why Griffin and Citadel stayed so long in such an inhospitable place.

Elon Musk Wins Court Approval to Gain Access to Twitter’s Real Number of Bots

This article appeared online at TheNewAmerican.com on Wednesday, August 17, 2022:  

A court ruled on Monday that Twitter must “collect, review and produce” documents from Twitter’s former consumer-product head Kayvon Beykpour and provide them to Elon Musk.

This is the breakthrough Musk has been seeking, and it could, depending upon what those documents show, be the end of Twitter’s resistance and the beginning of a truly “free speech” platform on social media.

Initially Musk asked the court for permission to quiz 22 Twitter executives about those bots, but the key executive he wanted was Beykpour.

Around the time that Musk formalized his bid to take the social media company private in April, Beykpour was fired. Although the court denied Musk the opportunity to quiz the others, Beykpour is the one Musk most needs to prove that Twitter inflated — and has continually inflated since its beginning — the number of real users the platform enjoys.

Called MDAUs — monetizable daily active users, or real people with money to spend — Twitter claims 238 million of them. Musk thinks a more accurate number is 173 million, a difference of 65 million.

Musk’s attorney, Alex Spiro, can hardly wait: “We look forward to reviewing Beykpour’s communications and will continue to seek information and witnesses until the full truth comes out.”

According to Dan Brahmy, CEO of the Israeli tech company Cyabra, Twitter has understated the number substantially, and the share of fake accounts is 13.7 percent, not the five percent Twitter claims.

If that proves true then Musk will have a decision to make: 1) withdraw his bid to buy the platform, or 2) renegotiate the purchase price down from the original $54 a share and complete the purchase.

As the richest man in the world, Elon Musk doesn’t need to turn a profit, although he wouldn’t turn it down. His primary purpose, according to his own words, is to make Twitter a public free-speech zone for its users, who will pay $3 a month for the privilege of speaking/tweeting their minds without fear of reprisals or being censored or canceled.

Musk had asked his 80 million Twitter followers what to do back in March:

Free speech is essential to a functioning democracy.

 

Do you believe Twitter rigorously adheres to this principle?

More than 70 percent of those who responded said no. Then Musk asked, “Is a new platform needed?” One responded: “Just buy Twitter!”

In his letter to Twitter’s chairman to do just that, Musk reiterated his support for free speech:

I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.

 

However, since making my [initial] investment I now realize the company will neither thrive nor serve this societal imperative in its current form.

 

Twitter needs to be transformed as a private company.

Musk knew that the company was in thrall to commercial interests selling advertising to those MDAUs: “The power to dictate policy [to Twitter] is greatly enhanced if Twitter depends on advertising money to survive.”

Musk also knew that Twitter was almost completely staffed with liberal Democrats. Many acted as self-appointed censors of conservatives, dropping not only Donald Trump from the platform but hundreds of others of like mind, including Georgia Republican Rep. Marjorie Taylor Greene and Dr. Robert Malone, a contributor to mRNA vaccine technology.

As Media Research Center vice president Dan Gainor noted:

From the top to the bottom, these companies [Google and Twitter] are overwhelmingly liberal, overwhelmingly pro-Democrat.

 

At the top, they contribute to Democrat causes. At the bottom, they contribute to Democrat causes in overwhelming numbers.

The trial begins on October 17, just two months away. This should give Twitter plenty of time to not only reveal the true numbers to Musk but also negotiate a better (lower) price so Musk can begin the process of turning Twitter into a free-speech zone. And do so profitably.

Three Latest Polls Show Biden’s Approval Rating Continuing to Sink

This article appeared online at TheNewAmerican.com on Wednesday, July 20, 2022:  

No matter who does the polling or how the questions are posed, Americans are increasingly fed up with the performance of Joe Biden. The latest three polls show his performance dropping from dismal to disastrous in the eyes of American voters.

The results of CNBC’s All-America Survey released on Monday reveal that Biden’s economic and overall job-performance numbers “dipped to the lowest levels of his presidency,” said the survey authors. His economic approval numbers dropped five points since April, lower than even Barack Obama’s worst levels.

More than half told the pollster that they expect the economy, already in trouble, to get worse over the next year, while six out of 10 expect the economy to be in recession by then.

Biden’s overall job-performance numbers now show a disapproval/approval rating of 57/36, the lowest since CNBC has been tracking them.

CNN’s poll, conducted by SSRS and with results also released on Monday, reported that 62 percent disapprove of Biden’s overall performance, with just 38 percent approving — a favorability rating of -24. Among Democrats, Biden’s approval rating continues to drop as well: In April, they gave him an 86-percent approval rating. It’s now down to 73 percent. And when it comes to managing the economy, Democrats’ support of their man has also dropped, from 71 percent this spring to 62 percent.

Among people of color, the disaster is even worse. Biden’s overall performance among Black adults has dropped six points in two months, while among Hispanic adults it has dropped by nine points. CNN summarized the continuing disaster:

Just 38 percent of Democrats now say things are going well in the country, down from 61 percent this spring. Likewise, there’s been a steep drop among people of color, from 41 percent saying things were going well in the spring to 27 percent now.

The CNN poll also asked its audience about Biden’s (and Vice President Kamala Harris’) “personal favorability”: “A year and a half ago, just before their inauguration, 59% held a favorable opinion of Biden and 51% had a favorable view of Kamala Harris. Now, those figures stand at 36% and 32% respectively.”

The results of a Reuters/Ipsos opinion poll released on Tuesday confirmed the results from CNBC and CNN: Biden’s approval rating fell to 36 percent, “the lowest rating of his 19 months in the White House … [while] 59% of Americans disapprove of Biden’s job performance.” That’s a three-point drop from another Reuters poll taken last week.

Biden is also underwater in 44 out of the 50 states, according to Morning Consult. That’s up from 40 just three months ago. Especially damaging is that, in so-called battleground states — states where Biden allegedly won enough votes to tip the election in 2020 — he is greatly underwater: Arizona (-20 net approval rating), Georgia (-13), Pennsylvania (-19), Ohio (-23), and Wisconsin (-18). Excluding Ohio, the president supposedly won all of those states in the 2020 election.

America’s middle class — the target of the Biden administration’s attack — is suffering. Two thirds report spending less on entertainment, while three out of five are driving less and more than half have cut back on their travel plans this summer.

What’s worse is that these polls were taken before the latest inflation numbers were announced (above nine percent), and before Biden’s obsequious trip to Saudi Arabia (which The Wall Street Journal called “worse than an embarrassment”).

Pollsters tracking the rolling disaster are likely to report even lower approval numbers for Biden in the future as the impact of his anti-middle-class policies takes firmer hold over the intended victims.

Twitter Sues Musk, Asks for “Expedited” Court Date for Trial

This article appeared online at TheNewAmerican.com on Wednesday, July 13, 2022:  

Social networking site Twitter sued Tesla CEO Elon Musk on Tuesday, claiming breach of contract. Musk offered to buy the site in April for $46.5 billion, subject to disclosures about how many advertising “bots” (robots) make up the site’s 200 million-plus users.

Last week Musk reneged on the deal, claiming that Twitter failed to provide him with sufficient proof that those “bots” make up less than five percent of its users, as the company has consistently claimed.

The lawsuit gave this summary:

In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done.

 

Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.

 

Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.

 

This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business.

 

Twitter brings this action to enjoin Musk from further breaches, to compel Musk to fulfill his legal obligations, and to compel consummation of the merger upon satisfaction of the few outstanding conditions.

In covering the developing story yesterday, The New American quoted attorney Matt Levine, who suggested there were only two likely outcomes from such a lawsuit: 1) the Delaware court rules for Twitter, forcing Musk to pay the $1 billion termination fee plus Twitter’s legal fees, or 2) the court forces Musk to go through with the deal, buying the 800 million shares outstanding at $54.20 per share.

At the close of business on Tuesday, Twitter traded at a little over $34 per share.

However, there is a least one other option: that Musk will use Twitter’s lawsuit as a negotiating tool to obtain a lower price.

Here’s the reasoning: Twitter claims it has given Musk all the information he demanded in the purchase agreement concerning those pesky advertising bots. For years the company has reported to the Securities and Exchange Commission (SEC) that they represent “less than five percent” of the 200 million users currently present on the site, along with a disclaimer that that number is only a rough estimate, subject to change.

But, as Musk’s lawyer noted on Friday, Twitter itself is “in material breach of multiple provisions” of the purchase agreement.

Twitter has requested an “expedited” trial date for September:

Expedition is essential to permit Twitter to secure the benefit of its bargain, to address Musk’s continuing breaches, and to protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement.

Part of the discovery process in that trial (if it happens) will finally reveal what percentage those “bots” make up of the Twitter universe. Musk is persuaded that it’s much higher than Twitter claims, perhaps as many as one in every five users.

If that proves to be the case, this opens a Pandora’s box for Twitter. It could be accused of defrauding its advertisers, making false statements to the SEC, and exposing the company’s board of directors to charges they breached their fiduciary duty to protect the interests of the company’s stockholders.

This would exacerbate the company’s declining stock price, putting the present offer by Musk even further out of reach.

Since there are no other suitors interested in purchasing Twitter, the board would be pressed to renegotiate a lower price with Musk.

Is Musk Really Walking Away From Twitter?

This article appeared online at TheNewAmerican.com on Tuesday, July 12, 2022:  

Within days of Elon Musk’s offer to buy up the 800 million plus shares of outstanding Twitter (stock symbol TWTR) at $54 a share in April, the stock rose to $51 a share. This made the deal doable — with Musk’s detailed plan of turning Twitter into a subscription-based business instead of an advertising-based one subject to pressures from advertisers and ridding the company of dead-weight employees, he could see the company growing immensely profitable.

That’s the pitch he made to his investors, who gladly ponied up millions to reduce the amount Musk personally had to invest in the deal.

But then he noticed he was getting pushback from Twitter: Twitter execs weren’t, he said in a filing with the Securities and Exchange Commission on Friday, upholding their part of the bargain, i.e., they weren’t giving him proof that less than five percent of Twitter users were advertising bots.

Musk, in other words, is following an old rule: It’s easier to stay out than to get out.

Twitter execs, on the other hand, said they were complying the best it could, subject to various privacy agreements and laws prohibiting full disclosure of sensitive company information that Musk night be able to use against them in the event the deal fell through.

So TWTR started falling in price. And Musk began getting nervous. As of today, TWTR is selling for $34 a share, down $20 a share from what Musk offered back in April. That means that Wall Street now values Twitter at about $27 billion, a far cry from the $46.5 billion he offered.

Built into the offer was the promise that if he terminated the agreement without cause, he would pay $1 billion. That’s a lot less — very much less — than the billions in value Twitter has declined since April.

Two high-powered merger and acquisition (M&A) law firms are hungry, each salivating over their third of that termination fee. And each is building the case for their client. Musk has grounds to terminate. Twitter claims it has given, and continues to give, Musk everything he is asking for.

Though the world’s wealthiest man — even though his primary asset, Tesla (TSLA), has declined sharply in value as the market itself has declined — Musk remains protective of his capital. It would be a much harder task to bring back a company that’s worth just $27 billion for which he paid $46 billion to profitability, much less to give himself and his investors a significant return.

Matt Levine was an editor of DealBreaker, an investment banker at Goldmans Sachs, and a M&A lawyer at one of those two law firms. He took 13 pages on Bloomberg to explore all the options, and the ins and outs of this proposed purchase, and noted that the real risk is on Twitter.

If Musk is correct — and this will be determined during the discovery part of the trial that both law firms are thirsting for — that Twitter has lied for years about just how many of its users are real people and how many are advertising bots, then Twitter could be fairly accused of defrauding its advertisers. Logic helps: 90 percent of Twitter’s revenues comes from those advertisers’ bots popping up on Twitter. Twitter has said that less than five percent of its users — estimated at more than 200 million — aren’t real people. Logic demands there must be more bots than Twitter claims.

Musk thinks that number is much higher — perhaps as high as one in every five. He just continues to ask Twitter for information that would prove that, and let him off the hook. Twitter can’t, for existential as well as legal reasons.

On the other hand, advertisers continue to use Twitter because those bots generate sales. As Levine noted, “Companies advertise on Twitter because it sells products! People use Twitter because other, non-bot people also use Twitter.”

So, it’s perfect for those law firms who are preparing for World War III in the case of Musk v. Twitter, or Twitter v. Musk.

The firm representing Twitter has promised to file suit in a Delaware court later this week claiming Musk has breached the contract.

Levine says there are only two possibilities: The court rules for Twitter, and forces Musk to pay the $1 billion termination fee (plus associated legal fees and court costs) — which he’d be glad to do so, getting out while the getting is good.

Or, the Delaware court forces Musk to buy Twitter at $54 a share.

Musk has an out: He has obtained financing commitments from a number of banks who by now likely want to get out of the deal as badly as Musk. If the deal cannot be consummated, the banks don’t have to provide the loans, and Musk doesn’t have to pay his share of the purchase price either. As Levine noted:

Musk agreed to buy Twitter with $33.5 billion of his own money and $13 billion of debt financing from his banks, and if the banks don’t put up their $13 billion then he doesn’t have to put up his $33.5 billion: in that case, he can pay the $1 billion to walk away….

 

Musk says the deal is off, so his banks walk away, so his financing isn’t available, so he doesn’t have to close the deal and can get away with just paying $1 billion.

Dems “Have Thrown In the Towel” on Bidenflation in Latest Poll

This article appeared online at TheNewAmerican.com on Tuesday, June 21, 2022:  

Pollster TIPP (TechnoMetrica Institute of Policy and Politics) reported on Monday that even Democrats have ceased buying the canard that Vladimir Putin, oil companies, or shipping companies are the underlying cause of inflation. Wrote Terry Jones, an editor with Issues & Insights, which partnered with TIPP:

Most surprising … Democrats have thrown in the towel on Biden’s economic leadership, with 53% blaming Biden’s policies for inflation.

A majority of every other group except those calling themselves “liberals” see Biden and the Democrats’ policies as the root cause of the diminishing purchasing power of their paychecks:

Indeed, of all the major demographic groupings followed by the I&I/TIPP Poll, just one was below 50% overall: self-described “liberals.”

 

All the other groups, including blacks (61%), Hispanics (61%), men (68%), women (61%), along with every income group, every age group, and every education group, all felt Biden’s policies caused the current inflation mess.

TIPP asked the 1,300 people they polled the first week of June a follow up question: “Does excessive government spending … ‘worsen inflation,’, ‘lessen inflation,’ or ‘not sure.’” Nearly 90 percent of Republicans and 70 percent of independents said “excessive government spending” was the root cause, while more than half of Democrats agreed.

This is an astounding result. For years, Keynesian economist Paul Samuelson brainwashed college students into thinking it was a “demand-pull” concoction that was to blame. In his college textbook Economics — the bible taught in introductory economics classes for decades in nearly every major university in the country — Samuelson tried to explain it:

Demand-Pull inflation arises when the aggregate demand increases more than the economy’s potential for productivity which leads to rise in Prices so as to have a new equilibrium with the Aggregate Supply.

Any student who could memorize this for the final exam would pass. Anyone who questioned its falsity — like the little boy declaring that “the emperor is naked!” — would fail.

This writer is a product of that system, and that canard.

Happily, Florida Governor Ron DeSantis, with degrees from both Harvard and Yale, has recovered from the Keynesian myth. On Friday, he gave reporters a lesson in real-world economics:

I think it’s sad to see some of the economic numbers with Bidenflation coming out — 8.6 percent. They tried to say — first, they said it wasn’t going to happen, was transitory and it would basically kind of solve itself.

 

They said it was gonna moderate two months ago and now it’s accelerating, and you have energy, groceries, all the things that really, really matter are just going through the roof … [these] are the results that we’re seeing with this inflation report.

 

Unfortunately, as a result of a lot of bad policy … you don’t declare war on American energy and undercut our energy independence and think that that’s gonna lead to more affordable energy for people….

 

You don’t print trillions and trillions of dollars and think that that’s somehow not gonna be reflected in rising prices and rising inflation.

DeSantis failed to clarify that while Biden has supported big government spending, it is Congress, working with and through the U.S Treasury and the Federal Reserve System, which is also to blame. Instead of Keynesian myths it’s common sense: One cannot increase the amount of currency in circulation without diluting the purchasing power of each unit of that currency.

And it was Republican President Richard Nixon who unleashed the inflation tiger back in 1971 when he unilaterally removed the last tie the dollar had to gold. That tiger will, if the present rate of inflation (eight percent per year, using government figures) continues, reduce the purchasing power of today’s already-weak and weakening dollar to just fifty cents in nine years.

It’s nice to know that Democrats are finally owning up to their part in the destruction of it.

Musk Demands Hard Numbers of Fake Accounts on Twitter, Stock Drops

This article appeared online at TheNewAmerican.com on Tuesday, May 17, 2022:  

A tweet by Elon Musk posted early (1:32 a.m.) Tuesday morning sent Twitter stock (TWTR) below $37 a share. That’s 31 percent below what Musk offered to pay to buy the company and take it private.

Musk posted:

20% fake/spam accounts, while 4 times what Twitter claims, could be “much” higher.

 

My offer was based on Twitter’s SEC [Security and Exchange Commission] filings being accurate.

 

Yesterday, Twitter’s CEO [Parag Agrawal] publicly refused to show proof of < [less than] 5%.

 

The deal cannot move forward until he does.

Agrawal had tweeted the day before that he couldn’t provide the proof, even though in SEC filings the company repeatedly estimated that those fake or sham or false bots constituted less than five percent of the total.

From an advertiser’s perspective, that meant that 95 percent or more of the 217 million “daily active users” (DAUs) were really human eyeballs constituting an enormous target market for his product or service. He was willing to pay for that opportunity.

But upon receiving Agrawal’s claim that “we don’t believe that this specific estimation can be performed.… It’s not even possible to know which accounts are counted as mDAUs [million daily account users] on any given day,” Musk responded, “So how do advertisers know that they’re getting for their money? This is fundamental to the financial health of Twitter.”

It’s also fundamental to Musk, as he is pricing his offer to buy on what Twitter tells the SEC.

That 20 percent number that Musk used is confirmed by market research firm SparkToro, which estimates non-human accounts at 19 percent. Although some of those accounts provide automated news updates, inspirational quotes, and stock-price changes, advertisers aren’t willing to pay extra for them. They want to know the hard number of humans actively tweeting every day.

If Agrawal cannot prove the “less than five percent” claim, then Musk has a decision to make: terminate his offer and pay a $1 billion breakup fee, or negotiate for a lower price.

This puts Agrawal and Twitter in a pickle: If they cannot verify the five-percent number and admit that the real number of non-human Twitter accounts is higher — perhaps much higher — then they will have to deal with lawsuits from advertisers claiming they were misled. There will be lawsuits from shareholders claiming they purchased shares at artificially high prices. Bondholders holding the $5 billion in Twitter debt will claim they were defrauded.

And, of course, there are the SEC and the Federal Trade Commission (FTC), who would likely sue as well.

Added all up, these lawsuits, if successful, could not only bankrupt Twitter, but end the company’s existence altogether.

Musk is aware of all of this, and has little interest in assuming those enormous and essentially unknowable liabilities.

If Agrawal and the board can provide the proof that Musk is demanding — that real humans constitute more than 95 percent of those 217 million accounts — then Musk should be very happy to proceed with the purchase. In which case, buyers of TWTR at under $40 a share will enjoy a nice gain when the purchase is consummated later this year.

Does Decline in Consumer Sentiment Portend a Recession?

This article appeared online at TheNewAmerican.com on Monday, May 16, 2022:  

According to a report released last week by the University of Michigan,

The University of Michigan consumer sentiment for the US fell to 59.1 in May of 2022, the lowest since August of 2011, from 65.2 in April and below market forecasts of 64, as Americans remained concerned over … inflation.

Behind the headline there was little good news:

The current economic conditions index fell to 63.6, the lowest in 13 years while the expectations gauge sank to 56.2 from 62.5….

 

To make things even worse, the index of buying conditions for durable goods, such as household appliances, fell to the lowest level since the survey began in 1978….

 

Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation.

Economic prognosticators make a handsome living explaining the continuing drop in consumer sentiment. Topping the list is rising prices, incorrectly but repeatedly called “inflation.” Rising prices is the result of the inflation of the currency and the Federal Reserve is responsible for that.

Regardless, consumers see the impact every day at the grocery store and the gas pump. Every day they see their paychecks purchasing less and less. And they’re mad at Joe Biden, pushing his job approval rate to ever lower lows.

There are plenty of other “causes,” including the Russian invasion of Ukraine, the invasion of illegals across the nation’s southern border, China’s internal lockdowns disrupting the supply chain, and the Fed’s belated response to the rising prices that its policies have created.

The Fed is playing catch up. Initially Fed Chairman Jerome Powell said last fall that the rise in prices was “transitory.” Now, to quench the fire he started, he is raising interest rates under the assumption that a slower economy will force prices down. There is little talk of the Fed reducing the money supply, which is the only permanent solution.

The Fed’s recent 50 basis point (half of a percentage point) rise in the Fed Funds Rate is not only the largest single increase in 22 years, but Powell has promised a similar half-point rise in interest rates at each of the next two meetings of the Fed’s Board of Governors.

The trick is to avoid raising interest rates too far and too fast, forcing a contraction in economic output. Two quarters of negative growth is the classic definition of a recession.

Some are blaming Wall Street, which has given up about a fifth of its value just since the first of the year. More than $7 trillion has evaporated from the stock market so far this year.

Others are saying that the decline on Wall Street is a predictor of a recession six months out.

Still others point to the recent “yield curve inversion,” that moment in time when short-term interest rates rise above long-term interest rates. The history is unhappy: That “inversion” has preceded every recession since 1955 — and giving only one “false positive” during that time — according to the Federal Reserve Bank of San Francisco.

Another good living is made by those predicting just how far Wall Street will drop in the event of a recession. One firm doing just that is DataTrek, which is saying Wall Street could drop another 25 percent before finding a bottom. That would bring the Dow, currently trading at 32,200, down to 24,000. And the S&P 500 Index, currently at 4,000, would decline to 3,000.

One prognosticator with a remarkable record of calling tops and bottoms is Barry Ritholtz. His asset-management firm, Ritholtz Wealth Management LLC, has over $2.7 billion in assets under management. His blog, The Big Picture, generates half a million page views every month, and he is one of the few who saw the coming housing implosion and derivative mess long before his peers.

Today he is taking the long view. He wrote on Friday that there are many competing explanations for the selloff on Wall Street, including “inflation, war, rising Fed Fund rates, [the] end of cheap capital, [the] fall-off in liquidity, [the] impending recession, and political unrest.”

He thinks there is a simpler answer: a reversion to the mean. Wrote Ritholtz:

Over the past decade, we have enjoyed returns of above 14% per year … the past two years gained 20% and 28%….

 

Over longer periods of time, equity markets generate average returns of 8-9%….

 

Perhaps [the decline] is nothing more complex than mean reversion.

For the long haul, Ritholtz remains bullish:

This market could/should have another good 5-7 years in it (assuming random events do not mess it up).

 

That is how I have been seeing this market for a while: it is one part history, one part secular theory, [and] two parts wishful thinking.

Is Bitcoin Collapse a Setback for Global Cryptocurrency Plans?

This article appeared online at TheNewAmerican.com on Friday, May 13, 2022:  

The collapse in the price of digital currencies, particularly Bitcoin, has not only significantly damaged Americans who invested or traded in the currency but its credibility as a tool for governments to control its citizens.

An estimated one in every six Americans has owned, invested, traded, or used a cryptocurrency at least once, taking advantage of its encrypted property: No outside agency, including government, can track its ownership or use.

The collapse has been staggering: In November Bitcoin (stock symbol BTC-USD) peaked at $67,802. It closed on Thursday at $28,315, a breathtaking decline of nearly 60 percent. At the same time, Wall Street’s S&P 500 Index (stock symbol SPX) declined by just 16 percent.

Commentators blame a combination of factors, including inflation, the decline on Wall Street, and the tweet from Elon Musk that Tesla will no longer be accepting Bitcoin to purchase his company’s cars.

One underlying cause, however, enjoyed scant exposure: the announcement by the White House, by executive order, that it was moving ahead with plans to develop a “central bank digital currency” (CBDC) as a tool to replace not only the dollar but the entire commercial banking system. Once in place, the U.S. CBDC would be melded into CBDCs of other central banks around the globe, making private cryptocurrencies not only irrelevant, but illegal.

It’s already happening in China, where the communists have banned Bitcoin while developing their own CBDC.

The Executive Order released by the White House on March 9 is just now resonating among supporters of cryptocurrencies who are seeing the implications. As that EO states explicitly, America “must play a leading role in international engagement and global governance of digital assets.” It orders Federal Reserve Chairman Jerome Powell “to continue its research, development, and assessment efforts for a U.S. CBDC.”

Powell is only too happy to oblige, declaring that a CBDC “could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollars, such as deposits at commercial banks.”

This is a canard of the first order. Once installed, all financial transactions will take place with the new digital currency, making those commercial banks irrelevant. Norbert Michel, writing in Forbes, makes it clear that CBDCs will not “complement” the existing private banking system in the U.S. but will replace it altogether. He wrote:

I believe that the Fed should not launch a CBDC. Ever.

 

And I think Congress should amend the Federal Reserve Act, just to be on the safe side….

 

[Under a CBDC] the federal government, not privately owned commercial banks, would be responsible for issuing deposits [which is] a major problem for anything that resembles a free society….

 

The problem is that there is no limit to the level of control that the government could exert over people if money is purely electronic and provided directly by the government. A CBDC would give federal officials full control over the money going into — and coming out of — every person’s account.

No less a worthy than Warren Buffet and his partner, Charlie Munger, have come out opposed to digital currencies, but only for practical and not political reasons. Buffet told his audience of shareholders in April that bitcoins aren’t a “productive asset,” that they don’t produce anything tangible:

Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything.

 

It’s got a magic to it and people have attached magic to lots of things.

But with the collapse in the price of Bitcoin and its close relatives, the magic is gone, and along with it the excitement the White House is trying to gin up over replacing the dollar with it.

Buffet made clear that he wouldn’t touch a Bitcoin even if one were handed to him:

If you said … for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon. [For] $25 billion I now own 1% of the farmland.

 

[If] you offer me 1% of all the apartment houses in the country and you want another $25 billion, I’ll write you a check. It’s very simple.

 

[But] if you told me you own all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it. Because what would I do with it? I’d have to sell it back to you one way or another.

 

It isn’t going to do anything. The apartments are going to produce rent and the farms are going to produce food.

Buffet’s partner Charlie Munger added:

In my life, I try to avoid things that are stupid and evil and make me look bad … and bitcoin does all three.

 

In the first place, it’s stupid because it’s still likely to go to zero. It’s evil because it undermines the Federal Reserve System….

 

And third, it makes us look foolish compared to the Communist leader in China. He was smart enough to ban bitcoin in China.

Munger is mostly correct (China is moving ahead with its own CBDC). But the losses the free market has inflicted on cryptocurrencies since last November have severely damaged their credibility along the way. That damage is likely to delay significantly any immediate implementation of the totalitarian scheme by the Fed.

Two Federal Agencies Investigating Musk’s Purchase of Twitter Shares

This article appeared online at TheNewAmerican.com on Thursday, May 12, 2022:  

Just when he thought he might escape a federal investigation into his purchase of shares of Twitter, Elon Musk now has two government agencies looking into his initial purchase of shares of the social-media company back in March.

Open Markets Institute (OMI), a George Soros-backed liberal think tank, released a statement in April asking the Federal Communications Commission (FCC), the Department of Justice (DOJ), and the Federal Trade Commission (FTC) to look into Musk’s takeover of Twitter. OMI said “it believes the deal poses a number of immediate and direct threats to American democracy and free speech. Open Markets believes the deal violates existing law, and that the [FCC], the [DOJ], and the [FTC] have ample authority to block it.”

FCC commissioner Brendan Carr rejected the request:

The FCC has no authority to block Elon Musk’s purchase of Twitter, and to suggest otherwise is absurd.… We will not entertain these types of frivolous argument[s].

In an interview with Fox News on Tuesday, Carr supported Musk’s purchase:

I’m hopeful that Elon Musk is going to bend Twitter’s content moderation toward a greater embrace of free speech.

No such support was forthcoming from the other two agencies. Instead, the FTC and the Securities and Exchange Commission (SEC) each have launched their own investigations into Musk’s initial purchases of shares that were later followed by his offer to buy the entire company.

According to the Wall Street Journal, Musk violated an SEC rule requiring a timely disclosure of more than five percent of the company’s outstanding shares. He had until March 24 to file that disclosure.

He didn’t file it until April 4.

Daniel Taylor, an accounting professor at the University of Pennsylvania, thinks the SEC has a strong case against Musk but doubts that they will pursue it:

The case is easy. It’s straightforward.

But whether they’re going to pick that battle with Elon is another question.

Musk got sideways with the SEC earlier when he Tweeted that he had arranged enough financing to take Tesla private. The SEC fined him $20 million and requires him not to Tweet about Tesla without first getting his attorney’s approval. Musk says the SEC pressured him into pleading guilty, threatening to bombard him and his company with endless lawsuits unless he complied.

Jill Fisch, a securities and law professor at the University of Pennsylvania’s Law School, said that it’s unlikely the SEC would attempt to derail the agreement at this late date. The board has already endorsed and approved the purchase, and the SEC lacks the power to stop such “take-private” transactions, according to Fisch.

Aron Solomon, the chief legal analyst for Esquire Digital, a lead-generating company for attorneys, agrees: “There is no way that the SEC, the DOJ, or any other similarly-situated body will even consider laying a finger on this deal.” It is simply “too big to fail,” said Solomon, adding that intervention “at this point would [hurt] the existing shareholders whose shares Musk is acquiring.”

The Federal Trade Commission is also investigating Musk for failing to file certain reports to various anti-trust agencies that he was taking a substantial stake in Twitter. Those rules don’t apply to passive investors, but when Musk filed that he was seeking to take over the company, the rules kicked in.

Musk’s Plans for Twitter: Cut Board Salaries, Make Algorithm Open-source

This article appeared online at TheNewAmerican.com on Tuesday, April 26, 2022:  

In his announcement on Twitter that he was taking the company private, Elon Musk revealed his plans:

Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.

 

I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.

 

Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.

The first thing Musk will do, once the transaction has been completed, is to cut the board members’ salaries to zero. He warned them in this Tweet just days earlier:

Board salary will be $0 if my bid succeeds, so that’s $3M/year saved right there.

The transaction will take months to close, thanks for the need to gain approval from regulatory agencies and the shareholders.

But not from the board. After reflecting on Musk’s original offer, and the legal consequences if it moved ahead with its “poison pill” strategy, it folded like a Hohner accordion. The board was suddenly unanimous in approving Musk’s original offer. Wrote board chairman Bret Tayler:

The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing.

 

The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.

Musk had boxed them in, using his own Twitter account to accomplish his purpose. On April 14, he reminded them of their fiduciary responsibilities:

If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty.

 

The liability they would thereby assume would be titanic in scale….

 

Taking Twitter private at $54.20 [per share] should be up to the shareholders, not the board.

Those shareholders have seen their Twitter stock holdings drop from $80 per share in February 2021 to just over $30 a share a year later. The $54 bid will likely persuade the vast majority of them to agree to Musk’s buyout offer.

Regulatory approval will take longer, but the purchase is scheduled to close before the end of the year.

That will allow disaffected Twitter employees to find other work. They would chafe under Musk’s new open-algorithm policy where users can see exactly where they stand.

Musk is likely to uncover secrets being hidden successfully from shareholders, regulators, and the public until now. A techie named Sundance, writing at The Last Refuge, speculated as to what one of those secrets might be:

I share this perspective having spent thousands of hours in the past several years deep in the weeds of tech operating systems, communication platforms, and the issue of simultaneous users. What Twitter represents, and what Musk is attempting, is not what most would think.

 

In the big picture of tech platforms, Twitter, as an operating model, is a massive high-user commenting system.

 

Twitter is not a platform built around a website; Twitter is a platform for comments and discussion that operates in the sphere of social media. As a consequence, the technology and data processing required to operate the platform does not have an economy of scale.

 

There is no business model where Twitter is financially viable to operate…. UNLESS the tech architecture under the platform was subsidized.

 

In my opinion, there is only one technological system and entity that could possibly underwrite the cost of Twitter to operate. That entity is the United States Government.

If Sundance is correct, then Musk may uncover the greatest secret of all: The U.S. government has infiltrated Twitter, and used it to punish a sitting president of the United States by permanently removing him from the platform.

Judicial Watch’s Tom Fitton agrees that Musk is likely to uncover many such secrets: “Twitter has been lying to shareholders, regulators, and Congress, about its censorship abuses. [It’s no wonder] the [board had] a keen interest in keeping Elon Musk from further exposing this fraud.”

So does Matt Vespa. Writing for Townhall, Vespa noted:

[Musk] did a flank march and outmaneuvered the Left who for years enjoyed censoring and banning conservatives with impunity. We all knew these Silicon Valley types were left-wing and biased. It entered a new and disturbing phase during the 2016 and 2020 elections.

 

Twitter literally censored The New York Post from reporting on the Hunter Biden laptop. They intervened to help Joe Biden win the election.

Hopefully Musk means what he says about the importance of free speech and that, once in control, he’ll fumigate Twitter and turn it into a legitimate public forum where free speech is enjoyed and encouraged on issues of the day.

Trump’s Media Platform “Truth Social” Moves to Rumble

This article appeared online at TheNewAmerican.com on Monday, April 25, 2022:  

The online video-hosting platform Rumble, currently enjoying 44 million visitors every month, is about to get much, much larger. On Friday, the company announced that

Truth Social, the social media platform created by the Trump Media & Technology Group (TMTG), has successfully migrated … to Rumble’s cloud infrastructure. This migration will enable the Truth Social platform to scale significantly on a new and cancel-culture-free cloud platform.

“Scale significantly” is the operative phrase. Prior to being unceremoniously booted from Twitter following the faux Capitol “insurrection” in January 2021, Donald Trump had nearly 90 million followers.

In October Trump formally announced the creation of TMTG, named former California Congressman Devin Nunes to head it up, and initially launched in February using hosting service Mastodon.

So many of Trump’s followers stampeded onto the platform that more than a million were wait-listed while the system underwent its beta testing.

Naturally, the anti-Trump media chortled about the “failure” of Trump’s launch. Chris Cillizza of CNN predicted that it was doomed to fail. Noah Berlatsky of The Independent said that if it were successful Trump’s new platform would be a potential “threat to democracy.” The Forward expressed concerns that antisemitism would pervade the platform, while The New York Times expressed “skepticism” about whether Trump’s platform would be able to compete with other rival social media services like Gettr, Parler, and Gab.

And Wikipedia reported that “some commentators pointed out the similarity with the name of the newspaper Pravda (‘Truth’ in English), a notorious propaganda outlet in the Soviet Union.”

On the other hand, Rumble’s founder and CEO Chris Pavlovski was happy to welcome his newest and largest customer:

We are excited to partner with one of the fastest-growing social media companies on the internet. Providing top-notch cloud infrastructure is essential, and Truth Social users will start to see the fruits of our labors immediately.

More than a million of those wait-listed until the end of the testing period have already been added to the new platform, according to Nunes, who added:

[On Thursday], Truth Social and Rumble took a major stride toward rescuing the internet from the grip of the Big Tech tyrants. Our teams have worked tirelessly to realize this great endeavor.

 

Rumble’s cloud infrastructure is second to none and will be the backbone for the restoration of free speech online for ages to come.

Rumble, founded by Pavlovski in 2013, has enjoyed enormous success on its own. It currently hosts Alex Jones of InfoWars, Newsmax, One America News Network (OANN), and Reuters.

Trump’s TMTG has a massive $1.25 billion to ensure the new platform’s success. And, according to Nunes, “engagement” on the new platform is already ramping up:

We have opened the new Rumble cloud. Yesterday … early in the morning … it went off flawlessly….

 

You’ve got half of America [who] should be concerned about being canceled by those crazy woke companies.

With Elon Musk’s pending takeover of Twitter, one of those “woke” companies, it is not clear just how many of Trump’s former followers will migrate over to Rumble. Musk has promised to turn Twitter into a “free speech” subscription platform in order to eliminate corporate influence over its platform’s conversations.

As House Republican Marjorie Taylor Greene — who had her personal Twitter account permanently suspended last month — said after setting up her account on Truth Social: “Options are always good for consumers.”

And likely to be good for Donald Trump, as well, as he continues to tantalize his followers with increasing intimations about running for a second term in 2024.

Musk Obtains Financing to Buy Twitter; Next Move Is Up To the Board

This article appeared online at TheNewAmerican.com on Friday, April 22, 2022:  

In amending his original filing with the Securities and Exchange Commission (SEC) on Thursday Elon Musk in effect said: I’ve got the money. What are you going to do? I’m waiting.

The amended filing served notice on the board that his plan to purchase the company and take it private (he plans to make it “the platform for free speech around the globe”) is serious. He is putting up $21 billion of his own money that, when added to commitment letters from Morgan Stanley, Bank of America, and some European banks, totals $46.5 billion. This is more than enough to buy up every single outstanding share of Twitter (currently trading at $49 a share) and pay off all of Twitter’s bonded indebtedness.

He also warned the board, through his filing, that he is still considering going directly to those shareholders — doing an end run around the board — if it fails to accept his offer.

From the filing:

The Reporting Person [Musk] is exploring whether to commence a tender offer to acquire all of the outstanding share of Common Stock … at a price of $54.20 per share, net to the seller in cash … but [he] has not determined whether to do so at this time.

 

 

He also put the board on notice that he “may engage in discussions with the Board and/or members of [Twitter’s] management team, including … the Proposal, potential business combinations and strategic alternatives … the strategy of [the board] and other matters.” In other words, Musk in essence is saying: I’m not going away; If you fail to deal seriously with me, I have other options; I intend to buy your company and take it private; you have my phone number.

The final warning from the filing was this: “[Musk] reserves the right to change his plans at any time … in light of his ongoing evaluation of numerous factors, including … the relative attractiveness of alternative business and investment opportunities.”

In other words, the clock is ticking. Musk is in a buying mood but that won’t last forever.

If the board fails to respond, or worse, rejects Musk’s original offer altogether and continues to impose its “poison pill” strategy, each member could expose himself or herself to litigation for failing to act as a fiduciary. As an attorney watching the situation closely said: “The directors have to act in a way that’s in the best interests [of shareholders and] not in the way that allows them to keep control of the corporation.”

The only thing missing from Musk’s updated filing is a drop-dead date. Musk is holding all the cards. It’s time for the board to man up and call, or fold.

Musk Reveals “Plan B” for Twitter: Buy Out Shareholders Directly

This article appeared online at TheNewAmerican.com on Wednesday, April 20, 2022:  

When Elon Musk learned of the “poison pill” being adopted by Twitter’s board of directors in an attempt to thwart his bid to take the company private, he tantalized his followers by suggesting he had a “Plan B” in mind.

On April 16 he revealed his plan by tweeting: “Love Me Tender,” the hit song by Elvis Presley in 1956. Plan B: go directly to the shareholders and make them an offer they can’t refuse. That would be, in Wall Street vernacular, a “tender” offer.

If successful, he would circumvent the board and its “poison pill” strategy, fire the board and replace them with his own people, buy out the rest of the shareholders, take the company private, and turn it into a “free speech” entity by charging subscribers a minimal monthly fee. He would stop selling ads, removing corporate influence. And, if his past successes with Tesla and SpaceX are any indication, he would make his investors even richer.

The bidding at the moment is this: The company’s market capitalization (its present share price multiplied by the number of shares outstanding) is $37 billion, not the $43 billion popular commentators keep repeating.

Musk would put up another $10 to $15 billion of his own money (he already has more than $3 billion invested in Twitter shares). If his tender offer is successful, all he needs is for somewhat less than half of the present shareholders to accept his offer. That would require about $19 billion, so Musk might need a little help.

He already has a line of credit at Morgan Stanley, and a slew of private investors who have enjoyed success in investing in Musk’s other ventures.

Musk needs to hurry. It will take time for the board to implement its “poison pill” strategy. The next board meeting is scheduled for May 25. He would like nothing better than to ride the public’s current fascination with his latest move into that board meeting, announce that they are all fired and that he will be putting his own people in place, that the “poison pill” strategy is dead, and that he is taking the company private, selling the company’s San Francisco headquarters building, offering Twitter employees a buy-out option, implementing a subscription model at $3 a month for those subscribers who want to continue to use the service, thus ending all corporate advertising (and influence).

His Plan B, when officially announced within the next few days, puts the board in a difficult position. Collectively, the 13 board members — excluding Twitter co-founder Jack Dorsey, who is leaving — own less than 0.3 percent of the stock. If they proceed with the “poison pill” strategy, they would likely be violating their fiduciary duty to the company’s other shareholders. As Adam Candeub, a law professor at Michigan State University, put it, “[Twitter’s board of directors] have to act in a way that’s in [the shareholders’] best interests, not in the way that allows them to keep control of the corporation.”

So, Musk’s Plan B could be a head-fake, forcing the board to accept his initial offer. Shareholders would pocket a nice gain (Musk is offering $54 a share for the company’s stock, which is currently selling at $46 a share).

In any event, expect the unexpected, which is Musk’s style. The New American will keep its readers informed.

Obstacles Mounting Against Musk’s Takeover Bid for Twitter

This article appeared online at TheNewAmerican.com on Friday, April 15, 2022:  

In covering Musk’s bid to take Twitter private, The New American suggested he might run into trouble. In the last 24 hours, trouble exceeding expectations has arrived.

First, the board spent all day Thursday considering Musk’s bid to take the company private, with Musk offering to buy existing shares at $54 a share. At the time, shares were selling at about $45. But rumors surfaced following the meeting that the board isn’t happy, calling it a “hostile takeover,” and considering putting in place a “shareholder rights plan,” aka a “poison pill.”

A poison pill is a strategy that makes it more difficult, and more expensive, for Musk to complete the acquisition.

Second, although Musk is the world’s richest man, most of his wealth is in shares of Tesla, and much of that he is already using as collateral for loans to fund other ventures, such as SpaceX. That raises the question of how he would find the $40+ billion he would need to buy Twitter.

Third, some of the company’s largest shareholders aren’t likely to go along with Musk’s bid. Saudi Arabian Prince Al Waleed bin Tatal Al Saud bought five percent of Twitter back in 2015 and tweeted:

I don’t believe that the proposed offer by Elon Musk ($54.20) comes close to the intrinsic value of Twitter given its growth prospects. Being one of the largest and long-term shareholders of Twitter … I reject this offer.

Mutual fund company Vanguard Group just announced that it recently increased its holdings of Twitter and they now own more than Musk, at more than 10 percent of the company. Vanguard has a history of siding with management when it is threatened with a hostile or adverse takeover attempt.ncern:

Twitter, like other social media platforms, suspends accounts for violating content standards, including on violence, hate speech, or harmful information. Its suspension of Donald Trump angered the former president’s followers….

 

By saying [that] Twitter is not living up to its potential to be a “platform for free speech,” [Musk] seems to be saying he would scale back content moderation.

“Content moderation” is code for censorship.

Twitter employees aren’t happy either, with some Tweeting their unhappiness that a “transphobe” could buy their company.

Wall Street isn’t bullish either. Initially Twitter stock rose on Thursday morning, only to fall back to below its opening price at the close.

And Musk himself expressed some doubts that the deal would go through. Speaking at a TED conference later on Thursday, Musk demurred: “I am not sure that I will actually be able to acquire [Twitter].”

This is not to say that the deal is stillborn. As Adam Candeub, a law professor at Michigan State University, told The Epoch Times:

Twitter is owned by its shareholders, and the directors have to act in a way that’s in their best interests, not in the way that allows them to keep control of the corporation.

 

If they turn down a very favorable price, there will be dereliction of their legal duty, and there could be lots of legal consequences.

Bidenflation? No! Putinflation? No! Fedinflation? Yes!

This article appeared online at TheNewAmerican.com on Tuesday, April 12, 2022:  

Anticipating the worst inflation numbers in four decades, White House Press Secretary Jan Psaki tried not only to get ahead of it but to deflect from its root cause. On Monday, the day before the Bureau of Labor Statistics (BLS) announced that, year-over-year, inflation rose by 8.5 percent, she stated:

Because of the actions [that] were taken to address the “Putin Price Hike,” we are in a better place than we were last month, but we expect March … CPI headline inflation to be extraordinarily elevated due to “Putin’s Price Hike.”

In March she said there was a “consensus” among economists that the coming report “was caused by the building of Putin’s troops at Ukraine’s border.”

On the other hand, Spencer Brown, writing for Townhall, called the surge “Bidenflation,” indicating that policies enacted during the present administration’s first term were largely, if not totally, responsible.

However, Inflation predates both Psaki and Brown by decades. Wrote Milton Friedman in 1992 in Money Mischief: Episodes in Monetary History, “Inflation is always and everywhere a monetary phenomenon.”

Friedman explained:

Inflation is always and everywhere, a monetary phenomenon. It’s always and everywhere, a result of too much money, of a more rapid increase in the quantity of money than in output.

 

Moreover, in the modern era, the important next step is to recognize that today, governments control the quantity of money. So that as a result, inflation in the United States is made in Washington and nowhere else.

Friedman puts the blame where it belongs:

If you listen to people in Washington and talk, they will tell you that inflation is produced by greedy businessmen or it’s produced by grasping unions or it’s produced by spendthrift consumers, or maybe, it’s those terrible Arab Sheikhs who are producing it.

 

Now, of course, businessmen are greedy. Who of us isn’t? Trade unions are grasping. Who of us isn’t? And there’s no doubt that the consumer is a spendthrift. At least every man knows that about his wife.

 

But none of them produce inflation for the very simple reason that neither the businessman, nor the trade union, nor the housewife has a printing press in their basement on which they can turn out those green pieces of paper we call money.

Former Federal Reserve Chairman Alan Greenspan told the unvarnished truth about inflation and its consequences in his article “Gold and Economic Freedom,” published in 1967:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold….

 

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

 

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth.

 

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Inflation is part of the attack on the foundations of the American Republic. Wrote Robert Welch in his monumental presentation that later became The Blue Book of the John Birch Society in 1958:

Here are the Communists’ aims for the United States:

 

(1) Greatly expanded government spending, for missiles, for so-called defense generally, for foreign aid, for every conceivable means of getting rid of ever larger sums of American money – as wastefully as possible.

 

(2) Higher and then much higher taxes.

 

(3) An increasingly unbalanced budget, despite the higher taxes….

 

(4) Wild inflation of our currency, leading rapidly towards its ultimate repudiation.

 

(5) Government controls of prices, wages, and materials, supposedly to combat inflation.

 

(6) Greatly increased socialistic controls over every operation of our economy and every activity of our daily lives.

 

This is to be accompanied, naturally and automatically, by a correspondingly huge increase in the size of our bureaucracy, and in both the cost and reach of our domestic government.

 

(7) Far more centralization of power in Washington, and the practical elimination of our state lines….

 

(8) The steady advance of Federal aid to and control over our educational system, leading to complete federalization of our public education.

 

(9) A constant hammering into the American consciousness of the horror of “modern warfare, ” the beauties and the absolute necessity of “peace” — peace always on Communist terms, of course.

 

And (10) the consequent willingness of the American people to allow the steps of appeasement by our government which amount to a piecemeal surrender of the rest of the free world and of the United States itself to the [communist] tyranny.

As Representative Byron Donalds (R-Fla.) expressed it, “Inflation is taxation.” But it is much more than that. It is a tool used to impoverish the middle class, reducing its ability to resist the onslaught of tyranny.

And it all starts with the Fed.

ADP Jobs Report: U.S. Economy Almost Back to Pre-pandemic Levels

This article appeared online at TheNewAmerican.com on Wednesday, March 30, 2022:  

Despite the enormous headwinds placed on the U.S. economy by the present administration, the latest jobs report from ADP (often an accurate precursor to the government’s jobs report to be released on Friday) reveals, the economy has almost completely recovered from the pandemic-inspired recession.

The private group, using information from its enormous database of 460,000 employers covering nearly 26 million workers, said on Wednesday that the U.S. economy added 456,100 jobs in March (including franchise jobs).

Said Nela Richardson, ADP’s chief economist:

Job growth was broad-based across [all] sectors in March, contributing to the nearly 1.5 million jobs added for the first quarter in 2022.

 

Businesses are hiring, specifically among the service providers which had the most ground to make up due to early pandemic losses.

Specifically, small businesses (employing fewer than 50 people) added 90,000 jobs last month, while medium-sized businesses (fewer than 500 workers) added 188,000 jobs. Large businesses (more than 500 workers) added 177,000 jobs.

By industry the news was equally good. Goods producers — natural resources/mining, construction, and manufacturing — added 79,000 jobs. The services sector — professional and businesses services, education, leisure and hospitality, and other services — added 377,000 new jobs in March.

ADP’s numbers confirm what the St. Louis Federal Reserve reports. In February 2020, just before the pandemic restrictions kicked in, more than 164,500,000 people were working. Two months later, at the nadir, just 156,358,000 were working. Put another way, Covid cost the U.S. economy more than 8,142,000 jobs.

Eighteen months later (December 2021), 162,300,000 people were working. Since then, the U.S. economy has added another 1,700,000 jobs. And government economists are expecting the report from the Bureau of Labor Statistics (BLS) to confirm today’s report from ADP.

At that rate — 500,000 new jobs a month — the U.S. economy will have fully recovered from the Covid-inspired and government-mandated shutdown by June, perhaps even sooner.

Other indicators are showing just how robust — and resilient — the U.S. economy really is. Corporate profits rose in 2021 by an astonishing 25%, the largest gain since 1976. The economy itself grew by 5.7% in 2021, while GDP growth (gross domestic product) in the fourth quarter of 2021 rose 6.9% on an annual basis.

Fewer than a third of economic forecasters are predicting a recession in 2022, and the consensus among them — called the “Blue Chip consensus” — forecasts the economy to continue to grow modestly into the rest of the year, with some suggesting another three-percent growth in the economy by the end of the year.

Considering the various headwinds placed on the economy by the present administration, these numbers are remarkable. Most are familiar with the present administration’s attack on fossil fuels and its out-of-control spending showing up as price increases at the gas pump and the grocery store. And those concerns are showing up in the polls.

But beneath the surface the recovery is taking place, especially in the once-quiet oil fields. And opportunities are beginning to show up for the country’s greatest investor: Warren Buffett. The founder of Berkshire Hathaway (the eighth-largest public company in the world), Buffett has been biding his time, waiting for promising opportunities to arise out of the Covid-inspired wreckage.

On Monday his company announced its purchase (Buffett doesn’t buy stocks; he buys companies) of Alleghany Corporation, a Nebraska-based insurance conglomerate, for $11.6 billion. What’s telling is this: Buffett paid a premium of 16% above what Wall Street thought the company was worth, indicating his enthusiasm for his latest acquisition to add nicely to his company’s (and his investors’) already significant bottom line in the future.

Friday’s report from the BLS should confirm not only ADP’s results announced today, but also Buffett’s confidence in the future growth of the overall economy in the months and years to come.

Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2021 Bob Adelmann