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De Omnibus Dubitandum - Lux Veritas

Thursday, December 2, 2021

Can A Progressive Be Convinced By Facts?

The Kyle Rittenhouse trial has given us an unusual opportunity to contrast incontestable facts as shown on many video recordings with an endlessly repeated media narrative that seems to exist in an alternate reality. To my amazement, even after two full weeks of livestreamed trial, most notably featuring videos taken on the night at issue and a witness testifying that he had pointed a gun in Rittenhouse’s face, many on the left cling to the prior narrative of the case as though it contains a greater truth about our justice system and racism in this country and therefore cannot be disputed by facts.

Could they just not have been paying attention? Or alternatively, do they have such a strong sense of emotional conviction that no amount of evidence, rationality, or logic can persuade them that Kyle Rittenhouse deserved the presumption of innocence and a fair trial?

I decided to test these hypotheses by engaging with a Progressive friend of mine when she posted an angry Instagram story in response to the Rittenhouse verdict. She was not the only one in my social media feed to do so, or even an outlier: Among the people most would consider my peers (in age, educational background, and location), the near unanimous opinion, even after the trial and jury verdict, is that Kyle Rittenhouse should spend his life in jail. But she and I have had productive conversations on other subjects in the past, so I thought she was a good target. 

In her post about the verdict she wrote, “I don’t normally use my instagram for political commentary but this is a step too far” along with a series of angry emojis. 

I responded with: “Did you follow the trial?” I wanted my opening comment to come across as innocuous. I was also genuinely curious to know if she had followed the facts of the case.

“No,” she replied quickly, “what did I miss? I heard he was a blubbering idiot.” 

“A lot.” I responded. “I’ll send you an email that I think has an even-handed breakdown of the case.” I then forwarded her this article by Bari Weiss, which I sincerely think does an excellent job contrasting the media’s narrative about what happened with the facts. I also thought that if any journalist could get through to someone on the left, that person had to be Bari Weiss. 

I was wrong. This morning I received this email from my friend in reply [unedited]: 

“Bari Weiss is a racist is all I can garner from this ignorant article. Show me a world in which a black weaponless kid standing on that street corner doesn’t get shot or jail time. When the law only applies white people it’s not the law. F*ck this perspective.”

I was stunned. So I followed up: “Which part is the racist part???” Noting when I did so that the three men shot by Kyle Rittenhouse were all white.

To which she said [unedited]: 

“To write an article that justifies the verdict based on the simple suggestion that the law will set you free when that simply does not apply to black Americans is disgusting to me. This was a highly racially charged news story and has been since it happened and if he was black with the same exact situation he would be in jail - and often it’s for a lot less. Until the system works for everybody - this kind of blanket unwillingness to acknowledge the imbalance in our country disgusts me. The article is racist because she wrote it, I’m not saying he [Rittenhouse] is racist - that isn’t the point.”

To avoid turning this into a literal “she said/she said,” I’ll summarize the rest of our multi-email conversation. In my summary below, I have made a concerted effort to represent her argument as fairly as I possibly can. I found our conversation eye-opening, and a useful insight into the prevailing Progressive view of the Rittenhouse case.

Her opinion: 

The criminal justice system is fundamentally racist and treats black people unfairly. Therefore, in the racially charged context of the Rittenhouse case, it does not matter whether or not self-defense was justified. Rittenhouse should be thrown in jail because that’s what would have happened to a black man in his position. Jurors should make an example of Rittenhouse. White lawmakers will only be motivated to take action on criminal justice reform when they see that actions have consequences that can affect children who look like their own.

My opinion: 

If we believe the justice system is unfair, it doesn’t become more fair by using this case to set a precedent that trial outcomes can be determined based on our desire for emotional satisfaction and revenge. The only way to create a “more equitable” system, is to agree on a set of principles (such as the right to self-defense) and then continually uphold those principles even when it’s politically inconvenient or unappealing to do so. I want to live in a world where, if Kyle Rittenhouse were black, he too would be acquitted because he acted in self-defense. We undermine that future possibility by undermining the very notion that acting in self-defense is a legitimate defense. We reduce the notion of justice to taking an eye for an eye. 

Predictably, my friend and I ended our conversation exactly where we began. After 20 emails back and forth, I finally admitted “we’re not going to get any further on this.” No matter what I said, she could not get past the idea that the criminal justice system can only be made more fair by making an example of Kyle Rittenhouse, even if it would require making the justice system unfair to do so. Her view did not change when I pointed out ending the drug war would do far more to get black men out of prison, nor when I argued that black men would benefit by our upholding the right to self-defense (such as in the recent, barely reported case of Andrew Coffee), nor when I suggested that the unintended consequences of sentencing Rittenhouse could easily be used to justify sending even more black men to jail down the line. 

I left the conversation more discouraged than ever. There seems to be no understanding or awareness among my peers that in pursuit of “equity,” Progressivism is pulling us further and further from something that resembles true equality — that is, a world where we can trust that the same rules will apply to all and people will be treated equally under the law.  

Is there any point engaging with Progressives on these subjects, when no arguments -- even those grounded in protecting the groups they claim to care most about -- seem to move the needle? I’m tempted to throw up my hands and say no, but then I remember that our democracy gives them a voice in how justice is carried out in this country. These views are echoed by leftist politicians with the ability to write or enforce law. A few examples following the trial verdict:

Said Wisconsin Governor Tony Evers: “No verdict will be able to bring back the lives of Anthony Huber and Joseph Rosenbaum, or heal Gaige Grosskreutz’s injuries, just as no verdict can heal the wounds or trauma experienced by Jacob Blake and his family. No ruling today changes our reality in Wisconsin that we have work to do toward equity, accountability, and justice that communities across our state are demanding and deserve.”

Said Wisconsin Representative Gwen Moore, “A system that legitimizes vigilante murder is deeply broken.”

Said NY Mayor Bill DeBlasio:  “Anthony Huber and Joseph Rosenbaum are victims. They should be alive today. The only reason they’re not is because a violent, dangerous man chose to take a gun across state lines and start shooting people. To call this a miscarriage of justice is an understatement.”

If these opinions didn’t have the potential to affect my life, I wouldn’t care so much, try so hard, or be so afraid. 

 

Thought For the Day

 

Three Foreign Billionaires Finance the Dem Dark Money Machine

A Swiss human experimenter, a Hungarian Nazi collaborator, and an Iranian tech tycoon walk into Washington D.C.

Tue Nov 23, 2021 Daniel Greenfield

A Swiss human experimenter, a Hungarian Nazi collaborator, and an Iranian tech tycoon walk into Washington D.C. What do you call them? The absentee owners of the Democrat Party.

It’s not a joke. Unfortunately it’s grimly serious.

Politico recently reported that the Sixteen Thirty Fund, the leading dark money machine of the Left, had pumped $410 million into Dem 2020 efforts to defeat Trump and Republicans.

The Sixteen Thirty Fund had raised a record $390 million that year and half the money came from just 4 donors. While the names of the donors are secret, the article did note the names of three major known STF backers: Pierre Omidyar, Hansjörg Wyss, and George Soros.

Aside from their support for leftist causes, the three billionaires have another thing in common.

Hansjörg Wyss, the richest man in Switzerland, may not even be a United States citizen. The article notes that his $135 million in STF dark money donations were "earmarked for non-electoral purposes". .........To Read More.....

Kamala Goes Back to Calling Biden a Racist

November 21, 2021 @ Sultan Knish Blog

Kamala Devi Harris doesn’t know a whole lot, but she knows how to play a race card that the child of wealthy foreign students, the Montreal educated daughter raised by a Brahmin Indian mother, the San Francisco socialite, and Brentwood resident married to a Jewish entertainment industry lawyer, is even less entitled to than its previous career abuser, Barack Hussein Obama.

When Kamala tried to force Biden out of the race and take his black supporters, she accused him of racism for opposing busing. This false claim was backed by her even more preposterous contention that being bused through the segregated Mason-Dixon line of Berkeley was the only reason she ever achieved her current career. Willie Brown could not be reached for comment.

Did Kamala believe her own accusation? When she was being interviewed by Biden’s vice presidential search committee, “She laughed and said, ‘that’s politics.’ She had no remorse.”

Kamala’s cynical race gambit or, more accurately, Biden’s weak and inept reaction to it, temporarily shook up the race, but black voters proved to be more loyal to the Democrat establishment and returned to Biden leaving Kamala with nothing except wasted millions.

As voters turned on her, Kamala responded by accusing them of being sexists and racists.

"Is America ready for that? Are they ready for a woman of color to be President of the United States?" she whined.

They certainly weren't ready for Kamala who polled at 2% among women and 4% among black voters. Black voters backed Biden and torpedoed her presidential path to the White House.

After raising $36 million and dropping out without facing a single primary, Kamala was picked as the number two for a confused old white man. So what were the odds that she would go back to calling him a racist at the first sign of trouble? Much like the story of the scorpion and the frog, or the farmer and the viper, Kamala is a poisonous creature with only one brand of venom.

Kamala’s poll numbers are terrible. They’re so terrible that they’re even worse than Biden’s. And so with tedious predictability, Kamala, who only has her current job because Biden promised to pick a black woman and the other leading alternatives were a Castro supporter and Stacey Abrams, is dragging out the race card for another shopping spree at the victimhood store.

After the Biden administration came to the defense of Secretary of Transportation Pete Buttigieg for going on vacation while the supply chain imploded, Kamala’s people are implying that the administration isn’t defending her the same way because she’s not a white man.

"It's hard to miss the specific energy that the White House brings to defend a white man, knowing that Kamala Harris has spent almost a year taking a lot of the hits that the West Wing didn't want to take themselves," one of her former aides was quoted as telling CNN.

If the Biden administration is so racist, why did it pick Kamala over Buttigieg?

But since accusations of racism trigger the equivalent of Defcon 3 among Democrats, White House press secretary Jen Psaki was rushed out to tweet that Kamala was a “bold leader”.

No one can think of anything that Kamala has led on, boldly or otherwise, except calling other people racists to get her way, and like everything else about her, it’s not remotely original.

But how else is the Biden administration supposed to defend its least popular figure? And in an administration that includes a president who gropes small children, a defense secretary who focused on critical race theory while Afghanistan fell, a transportation secretary who took a two month vacation during a transportation crisis, a windsurfing traitor, a mass murdering version of Klinger, and a health secretary whose only health experience is persecuting journalists who exposed the baby parts ring of his abortion allies, being the most unpopular is an achievement.

Unfortunately it’s also Kamala’s only achievement aside from “making history” by showing up.

Buttigieg was being criticised for not doing his job, but Kamala’s only real job is waiting for Biden to die, become incapacitated, or even less popular than her. Two of those things might happen, but considering that she’s polling at 28%, the third is almost certainly never going to take place.

Every attempt at expanding Kamala’s portfolio and giving her more imaginary jobs, flying her to Asia and France, is a poor attempt to disguise the fact that she’s the equivalent of the greedy niece waiting around for her rich uncle to die and leave her his fortune. And for three years the polls have consistently shown that most Americans don’t want Kamala to be POTUS. Ever.

So Kamala’s political allies are back to blaming sexism and racism for her unpopularity.

But a recent Economist poll showed that 35% of women had a very unfavorable impression of her compared to only 22% with a very favorable view of Kamala. Even black voters, generally lockstep loyal to the Biden administration, rate the old white man at the top better than her.

Kamala’s problem isn’t racism or sexism, her race or gender, it’s herself.

Crying racism and sexism works but only on a very temporary basis. And Kamala and her allies have spent so much time crying wolf that the latest abuse of the race card has gone unnoticed.

Earlier this year, Kamala's fan club or the KHive, was howling that an insufficiently flattering Vogue cover was racist. That nonsense generated media headlines like, "A Tale of Two Covers" (MSNBC), "Kamala Harris Cover Shows Diminishing Powerful Black Women is Still in Fashion" (Washington Post), and "Kamala Harris's 'Vogue' Cover Is The Epitome Of A Racial Microaggression" (Gilbert and Sullivan). But you can only keep on playing the victim for so long.

Kamala's staffers are complaining that they don't have enough resources and need more money even though the FY 2021 budget for the veep's office is $5 million and funds a massive full-time staff of 25 people. How much does Kamala really need to sit around and do nothing?

The revival of the racism accusations are a shot across the bow of the Biden administration.

Al Sharpton publicly announced that he was going to complain to Biden that Kamala was being mistreated, and his hate group would "continue to fight for her to be in a position of power because we want to see her thrive, and I will communicate that to the President."

Does Kamala imagine that’s going to help her? Every time the administration gave her even the smallest degree of responsibility, she managed to blow it. A politician who can mess up a student Q&A and a NASA promotional video has a gift for putting her pumps in her mouth. And, just like during her primary race, instead of admitting that she made a mistake, Kamala and her people start blaming sexism and racism for their last scandal to distract from the next one.

Kamala managed to temporarily reinvent her privileged childhood as a California Jim Crow, now she’s trying to even more implausibly pull off the same pathetic trick inside the White House.

The Biden administration picked her even though she had accused its leading man of racism. Now that Kamala is struggling, she’s gone back to her old bag of tricks and is leaking accusations of racism aimed at the Biden administration. They should have seen it coming.

As the scorpion said to the frog just after it bit him and before they both drowned, "I couldn't help it. It's in my nature."

Daniel Greenfield is a Shillman Journalism Fellow at the David Horowitz Freedom Center. This article previously appeared at the Center's Front Page Magazine.

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Thank you for reading.

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About Daniel Greenfield
Daniel Greenfield is a journalist investigating Islamic terrorism and the Left. He is a Shillman Journalism Fellow at the David Horowitz Freedom Center

Another Good Election Result for Taxpayers

November 18, 2021 by Dan Mitchell @ International Liberty

Immediately after election day in early November, I applauded voters in the (very blue) state of Washington. They wisely expressed their opposition to a plan by state politicians to impose a capital gains tax.

 

And it wasn’t even close. Voters said no by a landslide margin in a state that went heavily for Biden.  Today, we’re going to look at more good news from a statewide initiative.  Voters in Louisiana last Saturday had a chance to vote for some pro-growth tax reform. And, as reported by KPVI, they made a wise choice.


Louisiana voters approved a constitutional amendment that decreases the maximum individual income tax rate from 6% to 4.75% beginning next year. …fifty-four percent of voters agreed to Amendment 2, which affects taxpayers making more than $50,000 and couples making more than $100,000 annually. …The free market Pelican Institute also supported Amendment 2. “For too long Louisiana has been lagging behind our neighbors, but the people of Louisiana voted to start our comeback story by passing amendment 2 to simplify our tax code and lower our income tax rates to the lowest in the Southeast of states that levy the tax,” Pelican Institute CEO Daniel Erspamer said in a statement.

The good news gets even better.

Voters imposed a cap on income tax rates, with a maximum of 4.75 percent.  But the legislature is putting the rate down to 4.25, as noted by the Tax Foundation.

Let’s close by looking at some excerpts from an editorial by the Wall Street Journal.


…voters on Saturday approved a constitutional amendment that will reduce corporate and individual income tax rates while simplifying the code. …The tax reform, approved with 54% of the vote, eliminates the deductibility for federal taxes while reducing the top income tax rate on individuals making more than $50,000 to 4.25% from 6%. Rates will also decline for lower earners. The current five corporate tax brackets would be consolidated into three with the top rate falling to 7.5% from 8%. Most Louisianans will get a small net tax cut, and the implementing legislation includes triggers that would reduce rates more if revenues meet growth goals.

For what it’s worth, allowing state deductibility of federal taxes is almost as misguided as federal deductibility of state and local taxes. So Louisiana voters opted for a win-win situation of lower rates and getting rid of a loophole.

P.S. In a payoff to their wealthy constituents (and to make life easier for profligate governors, state lawmakers, and local officials), Democrats in Congress are pushing to re-create a big deduction for state and local tax payments.

Widespread Manhunt Underway For Three Men, Possibly Aborigines, Who Escaped Australian Involuntary Quarantine Camp – Video

November 30, 2021 | Sundance | 225 Comments

The events here are priceless, and weird, and just, well, nuts.  Last week people were stunned to discover the Chief Premier of Australia’s Northern Territory, Michael Gunner, had triggered an operation using the military to round up Aboriginal tribes and place them into a COVID quarantine facility called Howard Springs.

Premier Gunner became furious at people who questioned his decision and said the native Australians wanted to be in the camp. {Go Deep}  Well, early this morning three men scaled the wall in the Howard Springs quarantine camp and escaped.  Police are right now conducting a widespread manhunt for the escapees, all of whom tested negative for the virus.

The Darwin police are using helicopters, roadblocks and are conducting vehicle searches in order to recapture the men who Michael Gunner said “wanted to be in” the detainment and quarantine facility.  Something ain’t adding up.....Watch

 

Beijing Pressures Countries to Deport Taiwanese Nationals to China, Report Says

 Frank Fang  By Frank Fang December 1, 2021 

TAIPEI, Taiwan—China is pressuring countries to send citizens of Taiwan to mainland China, Madrid-based human rights group Safeguard Defenders said in its latest report.  In doing so, the communist regime is undermining the self-ruled island’s sovereignty, the human rights group wrote in its Nov. 30 report titled “China’s Hunt for Taiwanese Overseas.” The Taiwanese nationals being targeted by the regime to deport or extradite to the mainland are those suspected of having committed crimes outside of Taiwan.........To Read More...

 

The Chinese Financial Sector: On the Brink of Death

Daniel FernandezDaniel Fernández November 30, 2021 @ American Institute for Economic Research
 
 

The Evergrande soap opera is far from over.  In addition to its terrible financial management, it is in a bubble market.

Panic spread again when developer Fantasia Holdings was unable to pay several of its bonds on October 11. That same day, two other developers, Sinic Holdings and Modern Land, indicated that they wouldn’t be able to meet their bond payments due in October. On Friday, October 15, Xinyuan Real Estate, another developer, narrowly avoided a default by reaching an agreement with its creditors at the last minute. The market fears that developer Kaisa Group Holdings will not be able to pay its debt this week. And Evergrande bonds are circulating at an 80 percent discount from their face value—clearly suggesting default risk.

The Chinese real estate bubble is bursting. The key questions now are how will this affect the rest of China’s economy, and how will it affect the Chinese financial system.

Chinese Real Estate Developers: Financial Mismanagement

Let’s begin by looking at the state of Chinese developers that have announced they are having problems paying what they owe.

Not only are Chinese property developers excessively indebted, but the timeline of their debt places them between a rock and a hard place. Chinese real estate developers have managed their debt in the worst possible way: most of their debt must be paid off in less than a year, as seen in figure 1.

In other words, for the companies to survive, their debt must roll over constantly. This places companies in a position of financial weakness in two areas:

  1. A rise in the interest rate would drastically increase their cost of financing and could quickly bankrupt them.
  2. A drop in the turnover of their assets (that is, a drop in real estate sales) or in their selling price would place companies in a highly compromised liquidity position: incoming cash flows would not be able to cover outgoing flows.

The second point is the more problematic when a bubble bursts, as both asset turnover and selling price plummet. If debts must also be paid off in the short term, we are facing a perfect storm. Developers are forced to sell assets (real estate) on a massive scale to pay off their debt, which in turn causes drastic price drops that worsen the financial positions of these same companies 

Can the Developers Sell Assets to Pay Off Their Short-Term Debt?

How capable are troubled Chinese real estate developers of servicing their short-term debt? One way to approach this question is to analyze how much cash the companies have on hand. As can be seen in figure 2, only Fantasia Holdings has enough cash available to pay off its short-term debts. Evergrande’s position is precarious.  (See chart here. RK)

While this approach is useful, it is incomplete. All companies have current assets that generate an incoming cash flow that can be used to service their debt payments. Obviously, real estate developers’ current assets are mainly houses. These houses can be sold to pay the debt, but Chinese developers face two serious problems in this regard:

  1. They already received down payments from their clients, so part of their incoming cash flow already entered their balance sheet. The sale of real estate would serve, at least in part, to pay off their debt to their clients.
  2. Most of the houses are not finished; they are under construction. Accordingly, only a portion of Chinese real estate developers’ assets are available to pay off their short-term debt.

Keeping these two points in mind, we calculated the capacity of the four troubled Chinese developers to pay off their debt with their available properties (figure 3).

Looking at figures 3 and 4, we can see that Fantasia and Sinic may be in trouble, but at least they are capable of paying off their debt within a year. Modern Land and Evergrande, though, find themselves in a dangerous situation. Their available current assets are clearly insufficient to meet debt disbursements in less than a year.

Are Chinese Real Estate Developers’ Profits Enough to Pay Off Their Debts?

We have seen that some of the troubled developers can pay off their short-term debt and others can’t. If some can pay it off, why don’t they? To answer this question, one must first determine whether the profits of these Chinese developers are sufficient to pay the interest on their debts.

The interest coverage ratio (profit before interest and taxes over the cost of servicing the debt) points to the ability of a company to generate sufficient profits to pay creditors on time. An indicator less than one (meaning the cost of financing is greater than the profit) is often interpreted as a signal of a company’s future insolvency. In this case, the company must continue to borrow or must sell assets just to pay interest. In turn, either the financing costs will continue to rise or profits will fall if assets are sold to pay the interest.

All Chinese developers have seen their interest coverage ratio plummet and are dangerously close to the moment when their profits will not be enough to pay off their debt. Evergrande has already crossed this red line; since 2020, its profits have not been sufficient to pay its cost of financing.

Chinese real estate developers’ extremely low interest coverage ratio gives a clue as to why Fantasia, despite having enough cash to pay practically all of its short-term debt, has decided not to. Fantasia is predicting that it will not be able to meet its future payments and is rationing its available financial resources. It is opting to stop paying now and decide which debtors to prioritize. (See chart here. RK)

A not-insignificant possibility is that the Chinese government would order developers to default on their dollar bonds while continuing to make payments on their yuan bonds. The idea would be to prioritize domestic debtors since many of them are banks and banks in China belong to the state.

At times of financial distress, having assets and liabilities (or income and expenses) denominated in different currencies is a huge disadvantage because of exchange rate risk. Curiously, there is no such risk in this potential situation. China’s developers are conducting their business almost exclusively within China, so they will not be subject to any sanctions or embargoes by foreign governments if they default on their external dollar debt.

Given this circumstance, Fantasia has a good chance of escaping unscathed, while the other companies, which have huge amounts of debt to pay off in yuan, are in more danger, as seen in figure 5.

Defaulting on all its dollar-denominated debt would allow Modern Land to pay off all its debt issued in yuan within a year (Fantasia and Sinic already have enough liquidity to pay off that debt). However, Evergrande’s liquidity position is so critical that the company will not be able to repay its yuan debt even if it completely defaults on its dollar debt.

Containing the Risk of Internal Contagion

The most plausible scenario is selective defaulting on dollar debt to foreign investors. Only Evergrande would also default on its domestic debt, so it might appear that the possible domino effect in China would be contained. The problem is that Evergrande is huge: its liabilities are ten times greater than the combined liabilities of the other three troubled developers, as we can see in figure 6.

The fact that most of the problems are concentrated in one developer does not guarantee that the problem can be solved by the Chinese authorities. Additionally, nothing is preventing more Chinese developers from defaulting in the coming days or weeks.

Even mid-sized Chinese real estate developers, such as the ones analyzed here, are huge when compared with developers in other parts of the world. The largest real estate developer in the US is only 6 percent of the size of Evergrande, as seen in figure 7.

Nomura estimates that Chinese developers have debts totaling $5.2 trillion, almost double China’s international reserves (and greater than the GDP of Japan, the third-largest economy in the world). The composition of Chinese developers’ enormous total debt is presented in figure 8.

Figure 8 gives us an idea of the composition of Chinese developers’ internal and external debt, and we can compare that debt with China’s monetary reserves. Almost all of the banking debt is yuan debt to Chinese banks. “Clients” refers to advances made by Chinese citizens for the purchase of houses, and “other liabilities” mainly consists of debt to suppliers. Even if we consider all bonds as dollar-denominated, the domestic debt of Chinese developers far exceeds China’s monetary reserves (and is almost one-third of China’s GDP).

The Chinese Government’s Options

It is clear that the debt is not manageable, not even in an economy such as China’s that has very high saving rates and large international reserves. But China has a few ways to try to fix this mess.

  1. Construct a massive amount of public works.

Constructing public works would provide a new source of income to Chinese developers. Some of this is already being planned. The figures being discussed are from a ten-year program and amount to 10 trillion yuan, which is approximately $1.55 trillion. This number is chilling (it’s higher than Spain’s GDP). It is almost equal to real estate investment in China in the last twelve months ($1.4 trillion).

The infrastructure plan would barely cover 10 percent of Chinese developers’ turnover. It cannot save them.

  1. Save its banking sector.

This second option is possibly the most plausible. China’s authorities have punctured its bubble, and it seems unlikely that they want to save their developers. They likely intend to avoid a financial panic by injecting capital (and liquidity) into the banking system.

This would also pose problems. China’s financial sector is almost four times its GDP, a high figure anywhere in the world and especially high for a country as developed as China. (See chart here. RK)

The combined assets of China’s financial and real estate sectors are greater than the market capitalization of all the companies in the world ($93.7 trillion).

Furthermore, almost 60 percent of nonfinancial credit goes to the real estate sector (although the sector contributes only 30 percent of GDP). In other words, not only is the financial sector huge, but it is highly concentrated in real estate.

The financial sector is enormous, and very much exposed to mortgage and developer loans. A disorderly burst could make it infeasible to salvage the sector. (See chart here. RK)

If a bank bailout is viable, and if it occurs, the currency will likely quickly lose purchasing power, both internally (through inflation) and externally (through depreciation). Another plausible scenario is that the interest on public debt will skyrocket. Whether inflation occurs or the interest rate increases will depend on whether the potential bailout is carried out through fiscal policy (the state recapitalizes entities or creates a bad bank) or monetary policy (the central bank recapitalizes entities or purchases assets). The fiscal policy would cause the interest rate to rise, and the monetary policy would cause inflation.

  1. No bailout.

I consider this option extremely unlikely. Authoritarian regimes tend to rely on economic successes to stay in power, and therefore the Communist Party must try to revive the battered economy by any means possible to survive.

Conclusion

The Chinese banking and real estate sectors are on the brink of death. The government will do everything possible to reorganize the former and to save the latter, but it is very possible that it will be incapable of succeeding.

Reprinted from UFM Market Trends

Daniel Fernández

Daniel Fernandez

Daniel Fernández is the founder of UFM Market Trends and professor of economics at the Francisco Marroquín University.

He holds a PhD in Applied Economics at the Rey Juan Carlos University in Madrid and was also a fellow at the Mises Institute.

He holds a master in Austrian Economics the Rey Juan Carlos University and a master in Applied Economics from the University of Alcalá in Madrid.

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Wednesday, December 1, 2021

Thought For the Day

 
Chicago trying to surpass San Francisco in a race toward lawless anarchy December 1, 2021 Competing to see which one can descend farther into the dystopia of gang rule, with honest citizens held captive to anarchy in the streets, afraid to leave their homes and finding nowhere to buy life’s essentials if they do venture out.
 
LA County forces employees to submit personal info to a China-connected company December 1, 2021 The county says not to worry but the wise employee should worry that, not only is he being forced to vaccinate, but his personal information is no longer his own. 
 
Don't Let Them Scare Your Freedoms Away Paul Krause The West has dealt its cards against itself. 

How the Courts and Bureaucracy Destroy the Constitution Patrick J. Gibbs     The unelected majority sitting in the Supreme Court and the unelected bureaucracy in the executive branch are like a two-headed

Having attacked truckers, California now has a new target December 1, 2021 In its endless pursuit of climate purity and a leftist utopia, California is determined to destroy its economy. 
 
Obama and Fauci are shilling vaccines to children December 1, 2021 There’s something very wrong with the system when politicians pander directly to the little ones. 
 
Shut up and drive your electric car! December 1, 2021 Pete Buttigieg thinks you should slap down that spare $55,000 you have to buy an electric car.
 
 Rand Paul: Fauci Wants ‘Submission’ — ‘Most of His Edicts Are Not Based in Science’ -Tuesday on FNC’s “Fox & Friends,” Sen. Rand Paul (R-KY) addressed National Institute of Allergy and Infectious Diseases director Dr. Anthony Fauci’s pushback of criticism by claiming he represented science. Paul argued that most of Fauci’s edicts amid the coronavirus pandemic have not been “based in science.” He said Fauci was “more about submission.”
 
Malliotakis Demands DOJ Put an End to De Blasio's 'Unlawful Plans' For City - Outgoing Mayor Bill de Blasio said Tuesday New York City will open supervised injection sites for drug users. The Democrat claimed that “after decades of failure,” opening Overdose Prevention Centers is the “smarter approach.”Locations in East Harlem and Washington Heights are among the first to open in the city, based on “health need and depth of program experience”...

Biden Administration Promotes New Land Grab on Farmers

by | Nov 30, 2021 @ America Out Loud

Under former President Barack Obama⏤a regulation was passed called Waters of the United States or WOTUS, also called the Clean Water Rule. Under the misleading guise of protecting water for the people, it stipulated that any land containing water that could eventually run off to a creek, stream, or river that might one day end up in a navigable waterway would fall under the jurisdiction of the Environmental Protection Agency (EPA) and Army Corps of Engineers. It literally placed every puddle on a farmer’s land in jeopardy of having the farmer required to gain permission from those two government entities to make any changes to their land. It was a completely egregious rule that drove the farmers crazy.

Former President Donald Trump ended the Obama WOTUS regulation on September 12, 2019, and published a more sensible replacement rule on April 21, 2020.

As would be expected from the incompetent Biden Administration, they are placing regulations back in force “to restore federal protections for hundreds of thousands of small streams, wetlands, and other waterways,” according to the Des Moines Register. This simply creates yet one more obstacle for our great American farmers to feed us healthily and economically. As if our farmers did not have enough problems already with the regular attacks from the left today.

Senior author Dr. Jay Lehr has worked with farmers for the past 40 years, crisscrossing the nation lecturing about advances in agriculture. He explains how modern technology has changed the face of cultivation so that it’s no longer your grandfather’s farm or even your dad’s. Yet, in today’s world, environmental leftists try to vilify farmers and the land they work on. As young people take over the family farm, we have a new population of the most hardworking folks in the nation. Jay used to joke that farm kids rarely have green hair, which might be changing today, but they certainly have the hardest work ethic to continue to feed our nation.

The U.S. has just over 2 million farms, 97% of which are family-owned, while each of the remaining 3% generates three times the annual sales of the average farm, which is $350,000 before expenses.

Agriculture generated $374 billion in revenue in 2018. Animal feed is 25% of that from corn, soybeans, barley, oats, and sorghum. 40% of all the corn grown in the U.S., primarily in Illinois, Indiana, Iowa, Missouri, and Nebraska, goes into producing ethanol which serves only to increase the cost of gasoline while reducing our vehicles’ mileages. The powerful farm lobby, coupled with widespread mistaken ideas of the need to reduce carbon dioxide emissions, keep requirements of ethanol in our gas in place.

America exported $143 billion in agriculture products in 2018. Worldwide we use 3.83 million acres to feed 7.3 billion people and, in complete contradiction to the doom and gloom forecasts of anti-farm activists, the ratio of food acres to people fed continues to decline.

Agriculture broadcaster, journalist, and rancher Trent Loos travels the country teaching people the wonderful truths about agriculture to combat the lies of the left. He recently completed a 100-day journey across the U.S. lecturing city folks about agriculture. He was met by large crowds happy to learn that farmers continue to be the best environmentalists and stewards of our land.

Loos explains how very sustainable modern American agriculture really is. Yet, its biggest challenges will always be the weather, which can help produce a bumper crop or literally destroy one. It is for that reason the United States Department of Agriculture (USDA), established on May 15, 1862, by President Abraham Lincoln, stands ready to help in bad times to keep food prices at reasonable levels. The USDA assists with loans, technical support, and some subsidies. Lincoln was right when, in his final message to Congress, he called USDA “The People’s Department.” Through their work on food, agriculture, economic development, science, natural resource conservation, and other issues, USDA has impacted the lives of generations of Americans.

But things are changing, and not for the better. As usual, bureaucrats in Washington D.C. persist in writing unnecessary and restrictive regulations like the one that says if there is a puddle on a farm that could overflow into a navigable waterway, the Environmental Protection Agency has jurisdiction over that land.

Trent Loos will be a guest on our show, The Other Side of the Story airing Saturday and Sunday, December 4 and 5, at both 11 am and 8 pm EST. He believes that the greatest challenge to agriculture today is that individuals who never get their hands dirty define sustainability from a cubicle in D.C. with a pen and paper.

These agriculture bureaucrats have no clue that a farmer must not only grow his crops regardless of weather, but they have to market it in a floating arena of prices, futures, puts, and calls, understanding at all times when, as the song The Gambler goes, they should “hold them, fold them or walk away.” It is remarkable that, with all the variables the American farmer must juggle to stay in business, they have been able to maintain our cost of food in the range of 10% of the average American family’s budget. Biden’s new WOTUS rule just makes life harder for these wonderful people and so must be rejected.

Note: The EPA writes on its website: “The agencies are taking comment on this proposed rule for 60 days beginning on the date it is published in the Federal Register. For more information on submitting a written comment on the proposal or to register for the virtual public hearings on the proposed rule, see www.epa.gov/wotus.”

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Dr. Jay Lehr is a Senior Policy Analyst with the International Climate Science Coalition and former Science Director of The Heartland Institute. He is an internationally renowned scientist, author, and speaker who has testified before Congress on dozens of occasions on environmental issues and consulted with nearly every agency of the national government and many foreign countries. After graduating from Princeton University at the age of 20 with a degree in Geological Engineering, he received the nation’s first Ph.D. in Groundwater Hydrology from the University of Arizona. He later became executive director of the National Association of Groundwater Scientists and Engineers.

Tom Harris is Executive Director of the Ottawa, Canada-based International Climate Science Coalition, and a policy advisor to The Heartland Institute. He has 40 years experience as a mechanical engineer/project manager, science and technology communications professional, technical trainer, and S&T advisor to a former Opposition Senior Environment Critic in Canada’s Parliament.

When The Costs Hit Home, Nobody Will Give Up Fossil Fuels

November 19, 2021 @ Manhattan Contrarian 

As noted in my post this past Sunday, no amount of fake happy talk in the so-called “Glasgow Climate Pact” can obscure the obvious fact that nobody agreed to anything. To read the text of the “pact,” everybody claims to think that this whole “decarbonization” thing to “save the planet” is real. We’re all going to do something really, really significant, but it will be next year, or maybe the year after that. And meanwhile, nobody has made any remotely serious effort to cost this thing out. Are we talking about a ten percent increase in the cost of energy for this decarbonization project, or will it be a doubling, or maybe a tripling — or maybe even a multiplication by ten?

With tens of trillions of dollars at stake in the world economy, let alone the majority of humanity at risk of energy poverty, you would think that we would be far down the road toward detailed engineering studies of what the decarbonized energy world will look like and exactly how much it will cost. But it is exactly the opposite. Everywhere — or at least everywhere in the Western countries — government functionaries with degrees in English or Political Science (or maybe Gender Studies) issue edicts that carbon emissions will be reduced “50% by 2030” or “90% by 2050,” without any knowledge or understanding of how that may be accomplished.

So, as the costs of attempting to “transition” away from fossil fuels start to hit home, will anybody actually go through with the project? I think that the chance of that is about zero. China and India show how it works. To judge by their actions (rather than their words), they have long since figured out that solar and wind energy can’t succeed in running a modern economy, so they mouth empty platitudes to placate the Western zealots, make unenforceable promises that only come due after everyone is dead, and forge ahead with massive development of coal power. And even more telling are recent developments in Western jurisdictions. When the first hint arrives that fossil fuel restrictions are going to impose cost increases large enough for meaningful numbers of voters to notice, even the bluest of blue U.S. states take about three minutes to abandon their “decarbonization” promises.

For the latest from India, check out this piece from Reuters today headlined “India's Jindal plans to start building Botswana coal mine in 2022.” Recall first that at the just-ended COP26 in Glasgow, India supposedly “pledged” to achieve “net zero” carbon emissions by 2070. You would not be wrong to infer that the year 2070 was selected to be safely after all current world leaders are long since at least retired, and most likely dead. Today’s Reuters piece, on the other hand, gives the here and now:

India's Jindal Steel & Power Limited . . . will start building a coal mine in Botswana's southeastern Mmamabula coalfields in 2022, aiming to supply the export market and a planned coal power plant, a company official said. The Indian industrial giant aims for the mine to produce 4.5 million tonnes of coal per year.

It’s a big project, but a tiny part of the proven coal resources of the African country of Botswana:

Despite the global shift from coal, Botswana is pushing ahead with developing its estimated 212 billion tonnes of coal resources.

To put this in context, the U.S. currently produces well less than 1 billion tons of coal per year.

Or consider Japan. With oil prices currently spiking, you might think that a Westernized country like Japan would welcome the cost increases as a convenient means to incentivize the people to use less of the stuff. But the price increases have been large enough for the people to notice, and when that happens the politicians pull up short of forcing the people to become pooer. According to Japan Times on November 17, the Japanese government is putting together plans to provide subsidies to oil wholesalers to keep retail prices from going any higher:

The government plans to provide subsidies to oil wholesalers if domestic gasoline prices surpass certain levels, industry minister Koichi Hagiuda said Tuesday. The financial assistance is aimed at encouraging oil distributors to limit their wholesale prices in order to prevent an excessive rise in retail gasoline prices amid crude oil price surges. The aid program has no precedent in Japan, according to government officials.

But perhaps most notable is what has happened in recent days in some of the bluest of blue U.S. jurisdictions. In 2010, some twelve Northeast states, plus the District of Columbia, entered into a kind of agreement to agree to form something called the “Transportation and Climate Initiative.” The language of the official document was all about “reducing greenhouse gas emissions”; but in practice this was from the get-go intended as a cap-and-trade scheme, which would use a restricted and decreasing supply of permits to gradually force up the price of transportation fuels (mostly gasoline), and thereby force the people to use less of them. The signatories to the initial document included all of the New England and Mid-Atlantic states.

The Boston Herald has a piece yesterday (November 18) summarizing the TCI program and its current status. First, as to the intent of the program and how it would work:

TCI would have capped carbon emissions by forcing fuel companies that exceeded limits to buy additional permits and invest those proceeds into green transportation and climate-resilient infrastructure. It aimed to reduce vehicle emissions by 26% by 2032.

Well, gasoline prices are now up about 50% since President Biden took office in January 2021. Perhaps you might think that the TCI states would be unable to contain their excitement, and would be plowing ahead to raise prices still further and force a rapid decline in consumption. But actually the opposite is occurring. First of all, only a handful out of the twelve original states plus DC moved forward to join the compact:

Initially, 12 states plus the District of Columbia were in talks to enter the agreement, but just Massachusetts, Connecticut, Rhode Island and D.C. eventually signed a memorandum of understanding by December 2020.

And now, with gas prices rapidly rising, what politician wants to be seen as forcing them up still higher? So even the few deep-blue states that had joined TCI are now heading for the exits. The Herald reports that Connecticut pulled out of the compact on Tuesday (November 16); and yesterday (November 18) Massachusetts followed:

Gov. Charlie Baker has pulled the plug on a regional climate initiative that would have capped tailpipe emissions and was projected to hike gas prices at a time of record inflation, admitting the multi state-deal is “no longer the best solution.” He backs out of the Transportation and Climate Initiative just days after Connecticut did.

A Massachusetts group called Mass Fiscal Alliance calls it correctly:

“TCI is a regressive gas tax scheme that would have hurt (the) middle class and the working poor the most. It’s such wonderful news to see that Massachusetts families will not be forced to endure the economic hardship TCI would have imposed upon them,” said [Mass Fiscal Alliance] spokesperson, Paul Diego Craney.

Meanwhile, New York moves ahead with its ignorant bureaucrats issuing edicts for the end to fossil fuels a few years out. At this point the voters remain almost entirely unaware of what is coming. But when the costs start to hit home, will we actually stay the course? No, we won’t. It will be fun watching the process unfold.


Worker Unions Endorsed Biden, Members Got Screwed

November 18, 2021 @ Sultan Knish Blog

When Joe Biden ran for office, he told the members of the United Steelworkers that he would keep President Trump's steel tariffs on Europe in place. The tariffs, which protect the jobs of American steelworkers, were one of the few Trump policies that Biden kept after taking office.

Even most government insiders thought the tariffs would stay in place because they created American jobs in key battleground states like Ohio and Pennsylvania. Abandoning them would risk not just the White House, but Democrat House and Senate losses in 2022 and 2024.

United Steelworkers endorsed Biden and he promised them that he would keep the tariffs in place right until he jetted off to Europe in Air Force One, with its presidential suite and gym, and then toured Rome in an 85-vehicle motorcade to discuss the "environmental crisis".

Biden’s foreign policy priorities haven’t been focused on American security or jobs. After turning over Afghanistan to Al Qaeda for September 11, he decided to do to American steel jobs what he had done to Afghanistan by cutting a deal to partially lift President Trump’s steel tariffs.

The Biden administration’s environmentalist and tax hike priorities required making some concessions to the Europeans in exchange for agreeing to a minimum corporate tax of 15% (which Biden believes will make it easier to hike America’s corporate tax rates) and massive reductions in functional energy like coal and oil in exchange for non-functional green energy.

The steelworkers of Ohio and Pennsylvania, already on the hit list of Biden’s Big Green donors, were the sacrifice that “Middle Class Joe” made so his San Francisco donors can get even richer trading in carbon credits while salivating at the prospect of turning the entire American economy into a corrupt scheme for taxing and trading the imaginary “carbon” commodity.

To save the planet. Before flying off to their seaside coastal mansions.

United Steelworkers is now stuck trying to sell the latest Biden betrayal to its members as a very good thing by repeating the White House talking points of an alliance with Europe against Chinese steel. That promise, like the tariff promise, will turn out to be just as much of a sham.

Steelworkers could have taken a cue from the miners who have been lied to by Democrats.

The United Mine Workers of America had actually endorsed John Kerry, who went on to wage an environmentalist war on coal, because he had promised to protect coal jobs.

Kerry, now Biden's Climate Czar, tried to recently gaslight coal miners by falsely claiming that, "Workers have been fed a false narrative, no surprise, over the last few years they’ve been fed the notion that somehow dealing with climate is coming at their expense, no it’s not."

Then he suggested that coal miners get jobs installing solar panels.

“Secretary Kerry trying to equate the job of an electrician in a coal mine who makes $110,000 to a solar tech, who might make $35,000 to $40,000, is not a good analogy for our state," Senator Shelley Moore Capito of West Virginia pointed out.

Kerry’s current priority is trying to convince the Biden administration to surrender everything to China in exchange for asking the Commies to use less coal. Which they’re buying from us.

China is now the second largest market for American coal. Biden and Kerry are bribing the Chinese to stop buying our coal. Has any other government hated its own country this much?

The United Mine Workers of America didn’t even bother with a presidential endorsement. After Hillary Clinton announced that she would kill coal miner jobs, the UMWA threw in the towel. In the last election, most UMWA members voted Trump. The same was true of the steelworkers.

Biden not only lied to the steelworkers, and waged war on coal miners, he lied and betrayed those American miners who were hoping that there would be some future for mining jobs.

During the campaign, miners were "privately" told by the Biden campaign that his administration would encourage domestic mining of rare earth metals.

The Biden pitch was that his environmental strategy would require lots of rare earth metals for solar panels and electric cars, and that would actually boost rare earth mining in America.

It was a familiar twist on the scam that was sold to the steelworkers.

Big Green lobbies have repeatedly sold the same lie that "investing" in their energy scams would create jobs. The only place it ever creates jobs is in China and among the venture capitalists of San Francisco. Not to mention the EPA bureaucrats tasked with dragging out environmental reviews for years so nothing gets built who then turn around and get six figure jobs as environmental consultants to "help" businesses get things built.

There's no room for American workers in this dirty green racket.

After the worthless "private" assurances, once in office the Biden administration announced that it would be relying on foreign rare earth metals. Middle Class Joe’s betrayal of miners and the country had devastating consequences as China used the Taliban to secure Afghanistan’s rare earth mines even as a chip shortage wreaked havoc on the global supply chain.

Biden’s betrayal of miners also increased the prices of cars, laptops, and smartphones. Printer prices shot up 20%. And yet very few Biden voters understand that their own politician decisions are why they have to pay more for consumer electronics.

But the one thing you can count on from Democrat unions is that they will put the party first and their members last. And no matter how much their Democrat bosses humiliate them and spit in their faces, they’ll line up to ask for more while selling out their members one more time.

Democrats used to spout their love for the working class, now they have nothing but contempt for them. The dying breed of politicians who still know how to talk to working unions like Biden are nothing but puppets dancing for the amusement of their New York and SF donor bosses.

Biden betrayed steelworkers and miners. He’ll betray all workers and unions the same way. Even municipal unions, usually the pets of the Dems because of their role in taking the money from the contracts negotiated with their politicians and funneling it right back to them, were forced to swallow vaccine mandates and the firing of their members. And even the most combative radical unions like SEIU, usually willing to shut down everything, swallowed, and told their members to shut up and thank the union for its representation.

Over the spring, the United Mine Workers of America held a press conference cheering on Biden's plan to kill coal jobs and asking for money to "retrain" its members for new jobs.

Like shining Biden's shoes with green shoe polish.

“It’s not fair to take somebody’s job away from them and push them into another career,” a union member complained. “I love my job. I wouldn’t trade it for anything in this world. And I hope coal is continued to be mined for years after I’m gone.”

UMWA members are mad as hell about it. If only they had a union to represent them.

Daniel Greenfield is a Shillman Journalism Fellow at the David Horowitz Freedom Center. This article previously appeared at the Center's Front Page Magazine.

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Thank you for reading.

Will Excessive Government Spending Cause another European Debt Crisis?

November 17, 2021 by Dan Mitchell @ International Liberty

I’ve periodically warned the European nations such as France, Italy, Greece, and Spain almost surely are doomed to suffer a fiscal crisis. This is because governments in Europe didn’t respond to the 2010 crisis by actually solving the problem of excessive spending.

Instead, I pointed out about five years ago that they have allowed the spending burden to rise, as measured by outlays as a share of economic output. Well, things have since gone even further in the wrong direction, exacerbated by long-run factors such as demographic decline and short-run factors such as the coronavirus pandemic.

So what’s the net result?

Writing for the Hill, Desmond Lachman of the American Enterprise Institute is concerned about the possibility of a new round of fiscal chaos in Europe.

In 2010, the Eurozone experienced a sovereign debt crisis that shook the world economy. Today…, it appears that the Eurozone could be well on the way to another such debt crisis. It is not only that the public finances of several key countries in the Eurozone periphery are considerably worse than they were on the eve of the 2010 sovereign debt crisis. It is also that inflation has risen to a level that will make it difficult for the European Central Bank (ECB) to continue to keep the Eurozone periphery governments afloat by a continuation of bond purchases on the massive scale that it has been doing to date. …

Over the past 18 months, in response to the pandemic and with a view to stimulating the European economy, the ECB increased the size of its balance sheet by more than $4 trillion. …The fly in the ointment for countries such as Italy and Spain is that they cannot expect that the ECB will continue to buy their bonds on a large scale forever. …

Another reason to fear an early end to the ECB’s massive bond-buying program is the strong resistance to such bond buying by the Eurozone’s northern member countries in general and by Germany in particular. These countries view the ECB’s bond-buying activities as a move to a fiscal union through the backdoor.

Excellent points, particularly with regard to the malignant role of the European Central Bank, which has created the conditions for a much bigger crisis by enabling bigger government and more debt.

If you want to understand how much worse the debt problem is today, here’s a chart based on OECD data for European nations (with the U.S. and Japan added for purposes of comparison.

Keep in mind, of course, that the debt is basically a symptom of the real problem of excessive spending.  Though debt becomes its own problem when investors no longer trust a government’s ability to pay bondholders.

P.S. Notice Switzerland’s good numbers, which is an argument for that nation’s spending cap.

P.P.S. The problem in Europe is too much government spending, not the euro currency.

P.P.P.S. Eurobonds will make things worse in the long run.

P.P.P.P.S. It is possible to reduce large debt burdens, so long as governments simply restrain spending.

P.P.P.P.P.S. Here’s some comedy (and more comedy) about Europe’s fiscal mess.

 

This Unlawful Mandate is Now Blocked in All 50 States: Biden's Vaccine Mandate Suffers Another Blow in Ruling for Montana

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“BIG news for Montana,” Daines wrote on Twitter. “Joe Biden’s overreaching vaccine mandate threatens Montana hospitals, Montana healthcare workers and Montanans seeking access to essential care. We must keep up this fight.”   Governor Daines was responding to an announcement from the Attorney General of Montana, Austin Knudsen.  “Great news for Montana healthcare workers: A federal judge just granted our request for an injunction on the CMS vaccine #mandate. This unlawful mandate is now blocked in all 50 states.”  The news was reported by Montana Department of Justice.............To Read More....