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: Free Market

Supreme Court to Take Another Swing at Consumer Financial Protection Bureau

Tuesday, 28 February 2023 15:11
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This article appeared online at TheNewAmerican.com on Tuesday, February 28, 2023:  

Like the Energizer Bunny, Senator Elizabeth Warren’s brainchild, the Consumer Financial Protection Bureau (CFPB), “keeps going and going.” On Monday the Supreme Court announced it will take at the CFPB, this time looking at how it’s being illegally funded by the Federal Reserve.

The CFPB, created by language buried in the Dodd-Frank Act of 2010 in response to the financial crisis of 2008, was designed by Senator Warren to avoid any manner of restraint: It would operate independently of Congress or the president, and would be funded by the Federal Reserve, where the agency’s 1,600 employees are located.

Efforts to rein in the rogue bureau, or abolish it altogether, have failed. It continues to harass any private company of sufficient size to catch its attention: banks, credit unions, securities firms, payday lenders, mortgage-servicing companies, foreclosure-relief services, debt collectors, and others.

It violates the separation of powers doctrine upon which the American Republic is based. It writes its own rules, it enforces its own rules, and punishes those companies which it finds has violated those rules. And, as mentioned above, it gets its funding not from Congress, but from the Federal Reserve.

Sometimes the fines the CFPB levies are in the millions of dollars. In fact, the bureau boasted that it had “extracted nearly $12 billion” in fines and “refunds” from the financial services sector of the U.S. economy in its first six years of operation.

In 2013, the House Financial Services Committee criticized the bureau, citing its lack of transparency and accountability. A lawsuit filed that same year claimed that “CFPB’s structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution.”

In 2016, Judge Brett Kavanaugh, while on the U.S. Court of Appeals for the District of Columbia, wrote:

The director of the CFPB possesses more unilateral authority — that is, authority to take action on one’s own, subject to no check — than any single commissioner or board member in any other independent agency in the U.S. government.

 

The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.

And still the Bunny keeps going and going…

However, in October, the Fifth Circuit Court of Appeals ruled in a lawsuit brought by the Community Financial Services Association of America (CFSAA) on behalf of its many members injured by the agency that its funding mechanism is unconstitutional. The appeal will be heard by the high court this fall, with its ruling expected in June 2024.

Noted Christian Vergonis, the lawyer for the CFSSA:

The CFPB’s self-funding mechanism lacks any contemporary or historical precedent, improperly shields the agency from congressional oversight and accountability, and unconstitutionally strips Congress of its power of the purse under the Appropriations Clause of the Constitution.

The law firm McGlinchy Stafford predicts a substantial disruption if the high court cuts the agency’s funding legs out from underneath it. It could not only end the agency’s operation altogether, but also render inoperative those rules and regulations it imposed while operating illegally. The firm said:

If all regulations that the CFPB has adopted for the last eleven years are thrown out, all that certainty and all those market expectations disappear and [would be] replaced by confusion and uncertainty.

The agency itself said such an outcome would create the proverbial “parade of horribles,” including “undermining any and all rules amended or promulgated by the CFPB, [and would call] into question any enforcement actions it has taken.”

That would be called freedom! The market would adjust quickly, breathing the clean air of liberty from oppression by a rogue agency bent on applying its own rules according to its own agenda without any oversight or limitation.

May the Supreme Court finally seize the opportunity to pull the plug on the CFPB!

Enthusiasm Fading for Electric Vehicles

Monday, 23 January 2023 13:06
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This article appeared online at TheNewAmerican.com on Monday, January 23, 2023:  

The recent announcement that electric vehicle (EV) manufacturer Tesla has cut its prices by between six and 20 percent just to maintain its production goals and market share is the latest manifestation of the fading enthusiasm for electric vehicles.

In essence, the result of government meddling in the private market is now showing up in such moves.

In 2021, for example, auto executives were “very optimistic” about EVs, expecting them to capture as much as 70 percent of the total automotive market by 2030. A year later that optimism had subsided considerably, with those same executives cutting their expectations to 40 percent.

The latest report from international accounting firm KPMG reveals that car dealers expect EVs to capture just over 20 percent of the total automotive market by 2030.

The initial enthusiasm was generated by the belief that somehow EVs would save the planet. Governments got on board with the fraud, allowing massive tax credits to be given to purchasers of them to stimulate demand and hasten the transition.

That demand is now causing consternation, especially in California, where the far-Left interventionist governor and his Democratic sycophants in the state’s Legislature have deemed that 100 percent of vehicles sold in the state by 2035 be electric. The only problem, of course, is that making the demand and providing the supply are separate issues. As Ram Rajagopal, a professor at Stanford University, pointed out, a complete transition to electric vehicles in the state would require at least 15 times more charging stations than the 80,000 that presently exist.

And the demand on the state’s existing energy grid would be highly unlikely to be met. For instance, during a heat wave last September, just days after Governor Gavin Newsom announced that his state was going 100 percent “green” by 2035, the California Independent System Operator (which runs the state’s power grid) asked residents owning EVs to avoiding charging them during peak usage hours.

There are other issues as well. As inflation impacts the cost of building EVs, the so-called “cost advantage” of owning one over the traditional internal-combustion vehicle has narrowed to almost zero. An analysis by The Wall Street Journal in December showed that drivers of Tesla’s Model 3 had to pay the same to drive 100 miles as did the owner of a Honda Civic.

And there are political issues as well. Geopolitical strategist Peter Zeihan wrote:

The lithium comes from one place, and it’s all processed in China. So, just building the alternate processing infrastructure … and by the way, we [would] have to invade Russia too … just to get the materials to do EVs at scale is just laughable for the next decade.

There are reliability issues, too. Consumer Reports noted in its 2022 Annual Auto Reliability survey that just four of the 11 EVs in that survey had “average or better than predicted” reliability.

Plus, there are battery issues — they are expensive to replace. Consumer Affairs reported that “all EV batteries will eventually fail to hold a charge and require replacement.” In its survey of auto mechanics, the company reported that the total cost to replace a battery in a nearly 10-year-old Toyota Prius was $4,489, while the cost to replace the lithium battery in a 2014 Nissan Leaf was an astounding $17,657. A quick check on the price of a used 2014 Nissan Leaf reveals sellers are currently asking around $10,000 or so to get rid of them.

Then there are supply-chain issues. Last February the Felicity Ace — a cargo ship carrying hundreds of EVs — caught fire and sank in 10,000 feet of water off the shores of the Azores, Portugal. As Captain Rahul Khanna, global head of the marine insurance firm Allianze Global Corporate & Specialty (KGCS), noted, a single fire, from whatever cause, could (and did) incinerate an entire ship. In an interview with Autoweek, he said:

There have been quite a few, let’s say, near misses that the industry has seen over the years. And we … recognize the fact that EVs can be problematic, especially when it comes to fire….

 

The problem with EVs is that the lithium-ion batteries can actually propagate the fire. In fact, they can actually encourage a fire if a fire has already started and you have lithium-ion batteries — they can ignite a lot more vigorously as compared to any other cars.

Just last Friday a Norwegian shipping company banned EVs on its ferries, explaining that if an EV catches fire, the fire cannot be extinguished.

The bloom appears to be off the rose for EVs now that the reality of government interference for political reasons is becoming increasingly obvious. The cost of “going green” continues to escalate, and consumers are reacting accordingly.

Rich New Yorkers Fleeing the Big Apple

Wednesday, 14 December 2022 15:19
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This article appeared online at TheNewAmerican.com on Wednesday, December 14, 2022:  

The results of a study by New York City’s Independent Budget Office (IBO) released last week revealed what common-sense economics predicted: High-income earners in New York City are fleeing the Big Apple for lower- or no-income tax states such as Florida and Texas.

It’s common sense, something clearly lacking among progressives in Albany. They raised state taxes by $4 billion last year, making New York the state with the highest tax rate in the country. And just last week those same economic illiterates have launched a campaign for another $40 billion in new taxes on the rich.

Surely they must know that the top one percent of New York City’s taxpayers provide nearly half of the city’s budget. Wouldn’t one think politicians would want to cater to them, make things easier for them, and reduce their tax liabilities to make their state more competitive with low-tax states?

As Walter Wriston, the former chairman and CEO of Citicorp, famously said, “Capital goes where it’s welcome, and stays where it’s well treated.” But Wriston died in 2005, apparently taking with him the last semblance of reason, reality, and economic good sense.

And the wealthy are getting out before things get worse. Between April 2020 (the start of the Covid-19 pandemic) and June 2021, 337,000 people left New York City for warmer and lower-tax climes. That’s an astonishing three times the number who leave in a typical year.

Arthur Laffer (the creator of the “Laffer Curve”) and Stephen Moore, one of those few “common sense” economists who works at the Heritage Foundation, reported recently the impact of the transition of such large amounts of capital is having on the “move-in” states such as Florida and Texas. They found that those states created more jobs and had faster economic growth. Where capital is treated well, it appears, it goes to work creating additional capital, not only for its owners, but for those who are employed by its owners.

It didn’t have to be this way, as Laffer and Moore point out:

Consider the fiasco of New Jersey [another high tax state]. In the early 1960’s, the state had no income tax and no state sales tax. It was a rapidly growing state, attracting people from everywhere and running budget surpluses.

 

Today, its income and sales taxes are among the highest in the nation … [and] it suffers from perpetual deficits.

It turns out that even after driving away high-income taxpayers, progressives continue to run the government programs they love, creating enormous and increasingly larger budget deficits. This leaves the middle class — those without the means to move — holding the proverbial bag. Progressives seeking to close those budget gaps have only one place left to go: the middle class.

So, raising taxes on the rich is in reality an attack on the middle class. And this is Marxism in action. According to Marxist ideology, capital is the enemy and thus private property should be abolished. History shows that a strong, well-educated, and prosperous middle class is the primary bulwark against tyranny. Damage or destroy the middle class, and Marxists are then free to inflict their regressive “back to the Middle Ages” economic system onto the country.

Perhaps the “progressive” legislators in Albany and elsewhere know exactly what they are doing.

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

Thursday, 06 October 2022 12:20
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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

Thursday, 15 September 2022 13:29
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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

Wednesday, 17 August 2022 13:35
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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.

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

Wednesday, 13 July 2022 15:54
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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?

Tuesday, 12 July 2022 20:42
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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.

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

Tuesday, 17 May 2022 21:09
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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.

Is Bitcoin Collapse a Setback for Global Cryptocurrency Plans?

Friday, 13 May 2022 16:19
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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

Thursday, 12 May 2022 16:30
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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

Tuesday, 26 April 2022 12:52
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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

Monday, 25 April 2022 17:17
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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

Friday, 22 April 2022 14:33
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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

Wednesday, 20 April 2022 17:27
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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

Friday, 15 April 2022 13:06
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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.

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

Wednesday, 30 March 2022 16:43
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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.

Is the U.S. Economy Already in Recession?

Sunday, 24 October 2021 11:12
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This article appeared online at TheNewAmerican.com on Saturday, October 23, 2021: 

Two professors from Dartmouth College think the U.S. economy entered recession in August. One of them, Bruce Blanchflower, served on the Bank of England’s Monetary Policy Committee, lending additional credence to their conclusion:

We show [that] consumer expectations indices from both the Conference Board and the University of Michigan predict economic downturns up to 18 months in advance in the United States….

 

Downward movements in [both of these] consumer expectations [indices] in the last six months suggest the [U.S.] economy entered recession [in August].

The professors reported that any time those indices fall by more than 10 points, they accurately predict a recession in the next year to 18 months. The Conference Board’s consumer expectations index has reported at 25.3-point drop in 2021 while the University of Michigan’s index recorded an 18.4-point drop.

Even worse, those two indices predicted the 2008 global financial crash with numbers that weren’t as alarming: just a 19-point drop in the Conference Board index and a 21-point decline in the University of Michigan’s index.

Other measures of the U.S. economy confirm the professors’ conclusion. U.S Industrial Production (reported by Bloomberg) dropped 1.3 percent from the previous month (August), which itself was revised downward to negative territory.

The production of motor vehicles fell by 7.2 percent in September, following a decrease of 3.2 percent in August. And U.S. Manufacturing (again, hat tip to Bloomberg) dropped by 0.7 percent in September compared to August.

Back in May, Jim Paulsen, chief investment strategist for the Leuthold Group, said the coming recession would be caused by “the overuse and abuse of economic policy” by the Biden administration.

According to the Federal Reserve Bank of Atlanta, Paulsen is spot on. Its GDPNow model — a real-time measure of the health of the U.S. economy — was above seven percent in May. By August the model had dropped to 6.1 percent; by the middle of September it declined further to 3.7 percent.

Today GDPNow is reporting U.S. economic growth at just 0.5 percent.

Its next report is due on Wednesday.

Wall Street is also looking ahead to a flatlined economy. Although the popular averages are setting records, they only measure a part of the stock market. The Russell 2000, instead, has remained flat since March.

The political ramifications of such a sharp decline in U.S. productivity can scarcely be overestimated: the midterm elections will turn on “pocketbook” issues, as they always have. With gas prices at the pump jumping, with grocery stores increasingly showing empty shelves, with employment falling far below expectations, and with logjams at ports in California being blamed on the lack of truck drivers, it appears that the Dartmouth professors called it correctly. Not only that, but the precipitous fall from grace by the present occupant of the White House, as measured by recent polls, appears to spell disaster for the Democrats in November.

Pro Basketball Player: Government Threatening Our Freedom

Wednesday, 06 October 2021 13:02
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This article appeared online at TheNewAmerican.com on Wednesday, October 6, 2021:  

Jonathan Isaac, starting forward for the Orlando Magic professional basketball team, appeared Monday night on “Fox News at Night,” hosted by Shannon Bream. He has recently gotten attention over his decisions not to wear a BLM shirt or kneel during the National Anthem.

But his decision not to get vaccinated has caused the mainstream media to focus on him once again.

When Bream asked him about his stance, his response was reasonable, well-balanced, and winsome:

I believe what I’m saying is rational…. We live in the land of the free and the home of the brave and [I] have the opportunity and the platform to say what it is that [I] feel is right.

 

I’m taking that right to do so, not just for me, but for all of those people who feel like they don’t have a voice.

His stance is reasonable: Individuals have the right to make their own decisions about what goes into their bodies. And government is threatening that right through mandates, while the media is hounding the unvaccinated by suggesting they are selfish — even (in some cases) “terrorists.”  Former NBA star Kareem Abdul-Jabbar promoted the lie that the unvaccinated are threatening the vaccinated. He suggests that Isaac and others who are refusing to get the jab are putting his teammates and their opponents at a greater risk of infection.

The fact that this is illogical — that those vaccinated allegedly have greater protection from the virus than do those unvaccinated — isn’t considered. MSN calls it a “debate” where there isn’t one, or shouldn’t be. In the land of the free, a citizen is free to determine whether or not the vaccine makes sense to him or her personally, based upon the best information available. Government shouldn’t be involved in the decision-making process at all, even in providing the information needed. That should all be provided by the free market.

But government has overstepped its bounds and is not only providing continuous and often contradictory advice, but is now, through the Oval Office, issuing executive orders and mandates that people must be vaccinated — that government knows best, and personal freedom of choice is expendable in face of the “crisis.”

Isaac told Bream:

I believe that we’re entering a period of time where the government is setting a precedent that in light of any emergency, your personal autonomy, your religious freedom, and your freedom as a whole becomes negotiable.

Isaac added:

I would just say [to those deciding not to be vaccinated and being pressured and hounded and abused as a result], stay encouraged. It may feel like hopelessness but there are people who are out there [who] are trying their best to hold the line.

 

And I believe that we’re going to see a great revival through this as well, as people begin to [open] their eyes.

One of those “holding the line” is Julius Ruechel, a Canadian libertarian writer who encourages his readers to stand firm in the face of such government threats. In July he wrote “The Emperor Has No Clothes: Finding the Courage to Break the Spell,” followed by his more recent “A Glimmer of Hope: Crisis Brewing in the Ranks as More Police Officers Stand up to say “NO” – Tyranny Collapses if Enough People Refuse to Participate.”

He makes the case in his first article that people are cowed into silence through the threat of peer pressure and the risk of being ridiculed for taking a stance that goes against the government position. He wrote:

The Ash Conformity Experiments of the 1950s showed how powerful peer pressure is. No one wants to stand up against the herd. Standing alone is psychologically painful.

 

That is why, in Hans Christian Andersen’s folktale, it was the innocent voice of a little boy and not the self-righteous adult townsfolk who broke the spell about the emperor’s new clothes.

In his more recent article, Ruechel expresses his hope that recent pushback by police officers in Canada and healthcare workers in the United States is perhaps the beginning of the end for these government mandates: “Momentum is building. Courage begets courage. Something big is brewing.”

Orlando Magic basketball player Jonathan Isaac may not know Julius Ruechel. But they are kindred spirits in the freedom fight against government tyranny. Both recognize the need for citizens not only to become informed and then exercise their personal responsibility, but to also take a stand when challenged by the powers-that-be who would encroach on and abrogate and override those rights.

Massachusetts’ Anti-gun Threats Force Departure of Smith & Wesson

Saturday, 02 October 2021 06:53
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This article appeared online at TheNewAmerican.com on Friday, October 1, 2021:  

“An Act to Stop Mass Shootings,” a bill co-authored by anti-gun Massachusetts State Representatives Frank Moran and Marjorie Decker, and supported by anti-gun Representative Bud Williams, was the last straw. In the news release issued by Smith & Wesson on Thursday, the gunmaker that has been based in Springfield, Massachusetts, for nearly 170 years said it was left “with no other alternative” but to move its headquarters and part of its manufacturing facilities out of the state.

Said Mark Smith, S&W’s president and CEO:

This has been an extremely difficult and emotional decision for us, but after an exhaustive and thorough analysis, for the continued health and strength of our iconic company, we feel that we have been left with no other alternative.

Anti-gun bills “would,” said Smith, “prevent Smith & Wesson from manufacturing firearms that are legal in almost every state in America, and that are safely used by tens of millions of law-abiding citizens every day.”

Those bills, which are likely to be passed by the anti-gun Massachusetts legislature, would ban the manufacture of the firearms that made up more than 60 percent of the company’s gross revenue last year. They would preclude the company, and many of the 24 other gunmakers presently located in the state, from manufacturing so-called assault weapons and high-capacity magazines. The state already forbids its citizens to purchase, sell, or possess such items. The bills would be an extension of the state’s anti-gun mentality, applying it to gunmakers as well.

S&W’s move, scheduled for the summer of 2023, will end some 550 jobs in and around Springfield. The company will also close operations in Connecticut and Missouri as part of the move.

Said Smith:

We are deeply saddened by the impact that this difficult decision will have on so many of our dedicated employees, but in order to preserve future jobs and for the viability of our business in the long run, we are left with no choice but to relocate these functions to a state that does not propose burdensome restrictions on our company.

Many gun-friendly locales bid for the opportunity to host the gunmaker’s new headquarters, but the winner was Maryville, Tennessee. Key factors included, said the company:

Support for the 2nd Amendment;

Business friendly environment;

Quality of life for employees;

Cost of living and affordability;

Access to higher education institutions;

Availability of qualified labor for its operations and headquarter functions; and

Favorable location for efficiency of distribution.

It helped that, back in 2019, the Blount County Commission passed a resolution declaring the county, where Maryville is located, a “2nd Amendment Sanctuary.” The governor is equally supportive of the move.

Said Smith on Thursday:

The strong support we have received from the state of Tennessee and the entire leadership of Blount County throughout the process, combined with the quality of life, outdoor lifestyle, and low cost of living in the Greater Knoxville area has left no doubt that Tennessee is the ideal location for Smith & Wesson’s new headquarters.

Steve Troy, the founder and head of gunmaker Troy Industries, also located in Springfield, Massachusetts, agrees. Back in May, in response to threats from groups such as Stop Handgun Violence to pressure Massachusetts legislators to ban the making of firearms, he announced he was moving his operations to Tennessee.

His move was the first olive out of the bottle. With S&W’s announcement, many of the other two-dozen gun makers in the Bay State may be encouraged to make similar moves. At present, the gun industry supports nearly 8,000 jobs in Massachusetts.

State Representative Bud Williams, the Democrat who represents Springfield, doesn’t care. He remarked, “It’s unfortunate that [Smith & Wesson has] taken that position. I guess it’s in response to the ban on making assault weapons.”

Once passed, Massachusetts will join California, New York, and New Jersey in banning the manufacture of firearms. Those states are also suffering an exodus of businesses and citizens tired of oppressive government and who are finding much more friendly locales.

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