“What Just Hit Us?” – Bay Area Rattled By Unusual Quake Swarm, Trains Delayed

Following “strained” magma chamber concerns at Yellowstone, Bay Area residents have grown increasingly concerned this week as a swarm of well over 50 earthquakes has struck in recent days…

Culminating in at least 32 quakes in the last 24 hours as large as magnitude 3.6 which struck the East Bay town of Danville around 3pmET today.

“It’s been nuts. It wakes us up every night. We have a little dog, sleeps on the bed with us, and he freaks out all the time,” said Danville resident Christian Sommer.

Bay Area Rapid Transit (BART) trains were impacted by the quakes with trains delayed.

“Looking in that general region, I’m counting 55 quakes just in the last week,” said Amy Vaughan, a geophysicist with the Geological Survey.

8 fault lines run through the bay.

Several more significant temblors then shook up Diablo area businesses at midday – the strongest being a 3.6.

“I was sitting at my desk when the first one hit,” said Danville resident Brenda Hammer. “And I thought something hit the building was my initial reaction. What just hit us?”

There was another swarm of quakes just three days ago on Tuesday.Some in the East Bay are busy retrofitting for a bigger quake.

This swarm comes just a few weeks after a 4.4 quake jolted much of Bay Area awake in January.

Mexican Gun Control Ensures Cartels Outgun The Good Guys

Authored by Ryan McMaken via The Mises Institute,

2017 may have been the worst year for homicide in Mexico since the government began keeping track in the 1990s. 

It’s a safe bet that the homicide rate isn’t coming anywhere near what it was in the years surrounding the revolution 100 years ago. But it may be the worst rate in several decades. 

German news site DW reports: 

The Interior Ministry said authorities across Mexico opened 29,168 murder cases, saying that it put the country’s homicide rate at 20.5 per 100,000 inhabitants.

The highest figure ever recorded in Mexico before last year was in 2011, during the peak of the Mexican government’s war on drugs. That year, authorities recorded 22,409 homicides.

Unfortunately, some observers think the Mexican state is fudging the numbers:

However, experts have cast doubt on the latest figures, saying the homicide rate is likely much higher.

Mexican security analysts Alejandro Hope told AP news agency that the figure is based on the number of murder investigations opened last year, not the number of victims.

Hope added that it also doesn’t take into account that a killing may result in more than one victim. He placed the homicide rate closer to 24 per 100,000 inhabitants.

According to the official stats in recent years, the homicide rate in Mexico hit 22.6 per 100,000 in 2011, and then declined after that. If critics are right, and the current rate is near 24 per 100,000, that would be a new peak.

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By comparison, the homicide rate in the United States was 5.3 per 100,000 in 2016 (the most recent data available) ranging from 1.3 per 100,000 in New Hampshire to 11 per 100,000 in Louisiana. 

Homicide rates vary far more wildly in Mexico, with rates ranging from around 1 per 100,000 in Yucatan state to over 100 per 100,000 in Colima state.

Why Are Rates So High?

Violent crime may be Mexico’s largest problem for its economy, growth, and its standard of living. In recent decades, Mexico has moved beyond single-party political rule. It now has competitive elections in more than name only. It has several metropolitan areas which are — outside of the crime issue — considered good places to do business.  It is increasingly connected to the global economy. The UN ranks it “high” on its Human Development Index. Along with other rapidly modernizing Latin American Countries like Chile, Argentina, Uruguay, and Panama, it would be very wrong to call Mexico a “third world” country. 

So why the persistent violent crime? 

This is one of those issues that has no simple answer. Part of the problem is due to a lack of local control. Some is due to the Drug War — as is the case in the US and other countries. Part is due to demographics

This doesn’t stop some commentators, though, from attempting to assign easy explanations to the problem. 

One such recent trend in polemics is found among gun-control advocates who attempt to blame Mexico’s crime woes on the availability of small arms in the United States. 

Unlike the United States, though, Mexico has relatively strict gun laws. As Vox notes: 

Mexico is one of the few countries that, like the US, guarantees the right to bear arms in its constitution. Still, Mexico maintains some fairly strict gun laws: All guns must be registered through the federal government, carrying a gun requires a license, sales are legally limited to one store in Mexico City, and carrying licenses can be taken away at the federal government’s discretion.

So, like much of Latin America, Mexico is a country with strict gun laws, but high homicide rates. 

So how to explain the problem? 

Well, in the case of Mexico, the answer for gun control activists is to blame the United States: “one way for Mexicans to get around their country’s strict gun laws is to simply walk across the border.” 

The logic proceeds accordingly: The presence of more guns means more homicide. And, although Mexico has strict gun laws, Mexico is unfortunately located close to the United States where guns can be easily purchased. Guns are then introduced into Mexico where they drive a higher homicide rate. 

There are some problems with this logic. Even if we account for all the black-market guns in Mexico, gun totals are still much higher in the US. That is, according to the 2007 Small Arms Survey, it is estimated that there are around 15 million privately-held guns in Mexico, on the high end. Even accounting for an additional increase since 2007, we’re looking at a rate of fewer than 20 guns per 100 people in Mexico. In the United States, on the other hand, that total is around 100 guns per 100 people. 

So, if one is going to pin Mexico’s violence problem on “more guns,” they have to account for why there are more than five times as many guns in the US, with only a small fraction of the homicides. 

Moreover, the statistics allegedly showing that as much as 70 percent or even 90 percent of guns seized in Mexico come from the US is not true. That statistic is based only on seized guns that are also traced by the ATF. How many of all guns seized in Mexico come from the US? According to Stratfor, “almost 90 percent of the guns seized in Mexico in 2008 were not traced back to the United States.” Nor does the Mexican government ask the ATF to trace all guns seized in Mexico. This is because many of those arms can be traced back to the Mexican government itself. 

After all, it’s not as if Latin America has no locally produced firearms. The Small Arms Survey notes: 

Latin America has a long tradition of gun production, with some manufacturers tracing their history back many decades. Brazil has the largest arms industry in the region, followed by Argentina. Firearms are also produced by private or government-owned industries in Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Venezuela. While most of the production is intended to equip the military and law enforcement institutions, some of the production is for private use. Research shows that, “[w]ith the important exceptions of major exporters led by Argentina, Chile, Mexico, and above all Brazil, [Latin America’s] small arms producers tend to be niche manufacturers, serving captive local markets.”

So Mexico contains local arms-producing manufacturers to the point that some are “major exporters” who also produce arms for government institutions. And government stockpiles are a source for black markets as well. 

Even worse, the same government institutions that work to keep firearms out of the hands of peaceful private citizens, are often in league with the cartels. As a recent New York Times article noted about local resistance to cartel-sown chaos, “Townspeople formed militias to eject both the cartel, which effectively controlled much of Michoacán, and the local police, who were seen as complicit.”

In other words, there is often no clear line between law enforcement and the cartels themselves. 

Often, official law enforcement simply can’t be bothered. Things are even worse when, as  one cartel member put it, “soldiers and cops are … really on our side.”

Thus, it shouldn’t exactly be a surprise that many of the guns seized in Mexico are coming from official government sources.

It requires quite a bit of creativity to then take these facts and twist them into a narrative which concludes “too many guns in Texas leads to more Mexican homicide.” If Texan guns are fueling homicide in neighboring jurisdictions, why aren’t US states close to Texas experiencing similar problems? 

New Mexico, after all, is next to Texas. But New Mexico’s homicide rate of 6.7 per 100,000 is a mere fraction of its neighbor to the south — Chihuahua state — where the homicide rate is over 40 per 100,000

Moreover, increases in gun totals over time in the United States have not shown increases in homicides. In fact, the opposite is true. According to statistics from the Bureau of Alcohol, Tobacco, and Firearms, new guns manufactured in the United States, since 2011, have been more than double what they were throughout most of the past thirty years. Total gun production rapidly increased from 2001 to 2013, yet, homicide rates were cut in half from the 1990s to today. Although homicide rates have trended up in the past two years, they remain near 50-year lows. 

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Has Gun Control Helped Mexico?

It’s difficult to see how greater gun restrictions have helped Mexico. In practice, the restrictions discourage ownership by peaceful people while ensuring that cartels and official state agencies are the only armed groups. And both groups are often in league with each other. Ordinary people are then caught defenseless in the crossfire. 

Attempts at blaming Mexican violence on American guns ignores the fact that there are several times more guns in the US, but without the Mexico-like homicide rates. 

Indeed, some American border towns have low homicide rates, even by American standards. The homicide rate in El Paso, Texas, for example, was a very low 2.7 per 100,000 in 2016. Just across the Rio Grande, the city of Juarez is one of the murder capitals of the world. Moreover, 80 percent of El Paso residents are of Hispanic — primarily Mexican — origin, meaning we can’t even resort to a bigoted explanation about how Mexican ethnicity leads to more violence. 

So, why should it be outlandish to conclude that Mexican gun control might be an important factor? After all, on the southern side of the border, guns are reserved for cartels and often-corrupt police officials. Has this situation increased the quality of life of average Mexicans? It’s hard to see how. 

Iran Threatens To Abandon Nuclear Deal If Western Banks Don’t Start Doing Business

Iran says it will withdraw from the 2015 nuclear deal if big banks continue to avoid doing business with the Islamic republic, deputy foreign minister Abbas Araghchi said on Thursday, speaking from London. 

The Islamic Republic agreed to restrict its nuclear program in exchange for the removal of crippling sanctions by the United States, Britain, China, France, Germany and Russia. 

Following the deal, however, major banks have continued to avoid doing business with Iran for fear of violating remaining U.S. sanctions – which Iran says has hampered their efforts to rebuild foreign trade and attract investment.

Most of it is because of this atmosphere of uncertainty which President Trump has created around JCPOA, which prevents all big companies and banks to work with Iran, it’s a fact, and it’s a violation lead by the United States. –Abbas Araghchi

Compounding Iran’s woes are comments from President Trump, who told Europeans on January 12 that they must “fix the terrible flaws of the Iran nuclear deal” or he would re-impose the sanctions lifted by the Obama administration as part of the pact. Trump set a May 12 deadline to review fresh “waivers” on U.S. sanctions. 

The May 12 deadline represents an opportunity for Trump to pull the U.S. out of another international deal. He has already abandoned the Paris climate accord and the Trans-Pacific Partnership, a 12-nation trade deal. He wants to renegotiate the North American Free Trade Agreement, a 24-year-old trade pact with Canada and Mexico. USA Today

Trump sees three major defects in the deal; its failure to address Iran’s ballistic missile program, the terms by which inspectors are allowed to visit suspected Iranian nuclear enrichment sites, and “sunset” clauses on Iran’s nuclear program which expire after 10 years. 

Araghchi contends that Trump’s interpretation of the sunset clause is incorrect, and that Trump’s continued trash-talking is in violation of the deal itself;

“There is no sunset clause in the JCPOA. Although the U.S. administration and Trump are talking about sunset clause and that JCPOA is just for 10 years, that is not true,” he said.

You know, every time President Trump makes a public statement against JCPOA saying it’s a bad deal, it’s the worst deal ever, I am going to fix it, I am going to change it, all these statements, public statements are a violation of the deal. Violation of the letter of the deal, not a sprit, the letter. If you just see paragraph 28 it clearly says that all JCPOA participants should refrain from anything which undermines successful implementation of JCPOA, including in their public statements of silly officials.

The foreign minister said that if Iran does not receive the deal’s much touted economic benefits soon, it will likely pull out of the deal before the May 12 deadline. 

“If the same policy of confusion and uncertainties about the (deal) continues, if companies and banks are not working with Iran, we cannot remain in a deal that has no benefit for us,” Araqchi told an audience at the London-based think tank Chatham House. “That’s a fact.”

What of the nuclear program?

When asked what Iran would do if the nuclear deal is scuttled, Araghchi replied:

Well if there is no deal anymore obviously there is no restrictions in our nuclear program anymore,” adding “Iran would still be a member of NPT (non-proliferation treaty) still committed to its obligations and still, you know, obliged not to go for nuclear weapons, this is our policy. And in that sense there is no sense of clause in the JCPOA, it’s like actually perception that Americans are spreading on others but this is absolutely wrong. Iran’s commitment not to ever seek or acquire or produce nuclear weapons is permanent.”

“I don’t think to add a new crisis over the non, over the proliferation of nuclear weapons would be beneficial for anybody, in the region and outside the region.”

 

How Armed Teachers At Schools Could Work

Via Valuewalk.com,

Permitting a small percentage of school teachers with concealed carry weapon [CCW] permits to continue to carry concealed handguns and/or concealed non-lethal defensive sprays such as Mace, OC, CS, etc. at school might be worth at least trying out as a means of reducing school shooting tragedies, especially since other popular proposals may not be effective and/or garner enough support for adoption, suggests public interest law professor John Banzhaf, who offers some suggestions for effectuating such policies.

For example, he says, it should not be necessary for a large percentage of the teachers to participate, and especially not to require any who are not willing to assume the responsibility to do so, if the identity of the small percentage of teachers who regularly carry concealed weapons is kept secret.

If teachers carry weapons openly, or if students are allowed to know which teachers carry concealed weapons, any current or former student planning a shooting rampage might be able to target, work around, or neutralize (e.g., use a chain to lock them in a classrooms) those teachers known to be armed.

But if students are simply warned – with appropriate signs or otherwise – that some teachers carry concealed weapons, but are not sure which ones or how many there are, a potential shooter would face a significant risk of having his plans thwarted, and not be able to take any effective countermeasures.

Many proponents of arming teachers have suggested that the major impact of such plans would come from armed teachers actually stopping an attack which is already underway by shooting the offender. But, suggests Banzhaf, allowing a small unidentified minority of willing teachers to carry concealed weapons might provide sufficient deterrence that many shootings would be prevented, rather than simply ended more quickly once they begin.

Indeed, Banzhaf suggests that while many potential school shooters may be prepared die “heroically” at the hands of police, potential shooters may see little glory or honor in being shot down by old Mrs. Grundy who teaches 9th grade History, or by one of the other teachers.

To minimize risks to all concerned, teachers armed with concealed handgun probably should be required to use bullets – such as the Glaser round – which cannot ricochet, and which are very unlikely to penetrate walls. This will go a long way towards eliminating possible harm to innocent bystanders.

To provide even further safety, teachers probably should be required not only to pass whatever tests are required generally to obtain a CCW permit, but also whatever specialized training, review, and practice the school feels is necessary and appropriate to have a gun on school grounds, and to be prepared to use it responsible if there is an active shooter.

If there are a large number of teachers unable or unwilling to take on this added responsibility by carrying a concealed handgun – in a manner very similar to commercial airplane pilots whose primarily responsibility is flying an airplane, not protecting against terrorists – a school may wish to permit if not encourage some teachers to carry concealed defensive spray (Mace-like) products.

This alternative may well appeal to some who are opposed to the use of lethal force, would never want the awesome responsibility of taking a life (even of a shooter), are afraid that a gun could be taken from them and used to kill them or other innocents, or have similar concerns.

Defensive irritant sprays are generally regarded as non-lethal, and any person – including the teacher discharging the spray, or a nearby student who might be affected – will be at most briefly sickened, but will almost certainly survive without any lasting injuries.

While most would agree that even a small, light, and easily concealed handgun is many times more likely to stop a student shooter, a highly irritating chemical able to stop a grizzly and capable of being sprayed 20 or more feet is far more effective than attacking an armed shooter with chairs, backpacks, or even computer cables as some have suggested.

Another major advantage of defensive sprays over handguns is that they are much smaller, lighter, and easier to carry on a daily basis to one’s teaching position, thereby encouraging teachers to get into the habit of doing so. Even small handguns are heavier and are often harder to conceal, especially when wearing certain dresses or other form fitting clothing.

Banzhaf suggests that this proposal could provide a compromise that many sides in the current controversy might be willing to try. It is obviously less extreme than arming all or even most of the teachers, or having a significant number walking around with visible guns.

The latter would likely be distracting to most students, be seen as inappropriate and as sending the wrong message by many, and objectionable on many other grounds. But permitting those teachers who already have permits, and who therefore are likely to carry weapons at many other times, to do so also at school seems less offensive, and is almost certainly more effective than doing nothing and/or adopting some of the other proposed methods of deterring school shootings.

Stationing a armed guard at entrances to schools would be very expensive. Moreover, a determined student killer could then simply shoot the guard first, and then continue his murderous rampage secure in the knowledge that he will enjoy a gun-free target-rich environment.

While some other prophylactic proposals – e.g., further restrictions on gun sales, and/or improvements in the background-checking process – may yield a small amount of additional reduction in school shootings, the effect may be limited because at least some school shooters are able to acquire their weapons legally, and might well be able to do so even if some current proposals are adopted.

Moreover, the Supreme Court has ruled that the right to own and carry a firearm is entitled to some measure of constitutional protection so that – for example – trying to prevent 18-20 year old adults from purchasing firearms might face constitutional objections, and well as raise public policy concerns for some.

Likewise, says Banzhaf, simply trying to identify all teens who have a mental illness or defect which might become serious enough to lead them to shoot others might itself not be feasible, much less providing sufficient treatment, supervision, etc. to insure that it will not occur. After all, he notes, authorities cannot reliably identify teens who are members of criminal gangs which kill people, much less single out lonely teens who just might do so in the future.

Certainly, argues Banzhaf, no single prophylactic plan or proposal will be itself end the apparently-growing problem of school shootings, but it certainly makes sense to at least consider those which are in the nature of a compromise between major factions, and therefore have a chance of being adopted.

Berkshire Owns $100 Billion In T-Bills: More Than China And The UK

A few months ago, we pointed out that Warren Buffett, the so-called “Oracle of Omaha” said during the 100-year anniversary celebration of Forbes magazine that the “Dow will be over a million” over the next 100 years and “that is not a ridiculous forecast”.

Of course, the second part of that statement was promptly ignored by the financial media, which churned out “shock and awe” headlines like “Warren Buffett Says The Dow Is Going Over One Million.”

Without context, this might appear to be an incredibly bullish call. But Dow one million 100 years from now would actually represent a deceleration in the Dow’s CAGR to 3.9% pre-tax, or closer to just 3% post-tax returns per year (assuming tax rates don’t trend toward 100% during the intervening period). A more optimistic prediction (at least based on past performance) would be for the Dow to hit 140,000,000 in 100 years.

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Well, we received another update on Buffett’s long-term thinking on Friday when the Wall Street Journal reported that Berkshire Hathaway is holding more than $100 billion in cash or cash-equivalents – i.e. Treasury bills – on its balance sheet.

The company is doing this at great expense to shareholders (referring to the opportunity cost that comes with avoiding higher-yielding assets) and Buffett – who is expected to release his widely read annual shareholder letter this weekend – has vowed to find a better place to park this cash. Because of this conservatism, Berkshire is now one of the largest holders of Treasury debt.

However, Buffett has been promising to find a home for the cash for a few years now – which makes one wonder whether this is part of a deliberate strategy…

Berkshire has used its mounting cash pile to become one of the world’s largest owners of U.S. Treasury bills after struggling to find big companies to buy in recent years.

It held $109 billion in cash as of Sept. 30, up from $86 billion at the end of 2016 and more than double what it had at the end of 2006. Nearly all of that was invested in short-term bills, according to Mr. Buffett.

Berkshire has an outsize presence in the $2 trillion market for Treasury bills, a type of government debt that matures in a year or less. It held more bills around the end of the third quarter than large countries such as China and the U.K. It also had more at that time than the $13.5 billion held collectively by a group of 23 primary bond dealers that are obligated to underwrite U.S. government debt sales.

Berkshire’s holdings are big enough that when bond dealers need bills for a specific date, they will come to Berkshire and arrange a trade, Mr. Buffett said.

“We’re the ones they call. We’ve got the best inventory,” Mr. Buffett said in a 2017 interview with The Wall Street Journal. “That’s a new sideline for us here.”

“There’s no way I can come back here three years from now and tell you that we hold $150 billion or so in cash or more, and we think we’re doing something brilliant by doing it,” he said at Berkshire’s annual meeting last May. “I would say that history is on our side, but it would be more fun if the phone would ring.”

Berkshire’s cash holdings swelled by $3.3 billion last week when Phillips 66 bought back 35 million shares.

This massive inventory of T-Bills, which is a sizable portion of all outstanding short-dated debt, may be causing some of the recently noted distortions in the bond market, where short-term funding costs have risen rapidly in the form of the Libor-OIS spread, which has jumped to the highest level in over a year.

Buffett has famously resisted handing out dividends to investors – but has said Berkshire would begin buying back stock if shares ever fall below 120% of book value. Both classes of Berkshire stock were trading at 165% on Thursday. 

“He’s aware that [Berkshire’s cash] is not earning a high rate of return for shareholders,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business and a Berkshire shareholder. “Paying out a special cash dividend, a one-time dividend at the discretion of management, makes some sense.”

Berkshire earns revenue from holding and trading its Treasury bills, but the profit is minimal relative to its overall business operations. Berkshire’s head trader, Mark Millard, opted not to speak with WSJ.

Buffett

WSJ also pointed out that other corporations with large cash piles prefer to hold higher-yielding assets like corporate bonds. But Buffett prefers to hold Treasury bills because they offer more liquidity during a downturn. Berkshire typically buys about $4 billion in Treasury bills every Monday at government auctions, or less than 4% of what the Treasury is selling, Mr. Buffett said on CNBC in January. He joked: “We’re very careful about how many we bid for.”

Buffett’s probity famously allowed Berkshire to throw a life line (and secure desperation deals that proved to be extremely lucrative over the following years) to Bank of America, Goldman Sachs and General Electric.

But with so much cash on hand, Buffett would have wide latitude to take advantage of the next downturn, potentially positioning Berkshire – which hasn’t bought a company since 2015 when it closed on Precision Castparts, its largest deal ever – to buy whatever’s on its wish list at a substantial discount.

Could this really be Buffett hinting that, though he feels compelled to maintain his optimistic rhetoric in public, he’s in reality bracing for the next crash?

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