- Before you mouth off at your next city council meeting…
- Death in seven seconds — a cautionary tale of a small-business owner
- Shutting down school buses: The “mother of all financial bubbles” is back
- Lock in that March rate hike: There’s still more evidence of inflation
- Will Apple leave America? Cracking iPhones to solve “car accident cases”… the real price of food in Canada… and more!
Our lead item today has a little bit of everything — small business, precious metals, the right to keep and bear arms. Things that matter to Americans, or should. Things that matter to many of our readers, for sure.
It also has power-tripping lawmen in a city of 120,000… and a dead man whose family has been denied any redress.
Rewind to late 2012: The Abilene, Texas, city council considers an ordinance requiring pawnshops to hold all their purchases of precious metals for 12 days before reselling.
The idea was cooked up by the police department; the rationale is that detectives would have more time to track down stolen property.
Marcus Cass and Charles Camp have a problem with that. They own the Abilene Gold Exchange. Remember, this is late 2012. Gold has been climbing down from its September 2011 highs for more than a year, and in volatile fashion. Twelve days could be the difference between a modest profit or a sizeable loss. Cass testifies in opposition before the city council.
Days later, police start poking around the computer database where pawn shops are supposed to report recent purchases within 48 hours; they find nothing uploaded from Abilene Gold Exchange for the past three weeks. They launch an investigation and get a search warrant.
If it were 40 years ago, the cops would simply show up in uniform, present the warrant and conduct their search. In fact, that’s what the detective in charge of this case wanted to do.
But it’s not 40 years ago, when SWAT teams nationwide carried out an average eight raids a day. Nowadays, they’re deployed an average 137 times a day, according to Peter Kraska from Eastern Kentucky University.
The cops who were present during the city council hearing tell the detective Cass’ testimony was “anti-police.” They point out Cass and Camp are often armed. (How many pawnshop owners aren’t?) They say Camp had a 30-year-old conviction for pot possession. (Clearly a menace to the community.)
So on Dec. 13, 2012, the cops get “tac’ed out” and enter the Abilene Gold Exchange with guns drawn.
What we’re about to describe takes place in the space of seven seconds.
The first cop who enters is in uniform. Charles Camp is in front of the store. He raises his hands and cooperates. Behind the first cop is another in street clothes and a black bulletproof vest. He’s got a badge on the side of his belt, but that’s the only evidence he’s police. Two more officers sweep in, with bulletproof vests marked “POLICE” on the front.
Marcus Cass, meanwhile, is in the back office. Hearing activity in front, he starts to come out. The officer in street clothes and a badge on his belt heads toward the office, gun drawn and extended in front of him.
The gun is the first thing Cass sees in the doorway; he draws his own weapon. Then he sees a gunman in black in black body armor and dark sunglasses; given the angle, he does not see the gunman’s badge.
The officer fires first. Fires twice. Before he can get off a shot, Cass drops his gun and slumps to the floor. He dies.
“So to ensure ‘officer safety,’ these cops employed tactics that have a very low margin for error, and that unless executed flawlessly would risk making them appear to their suspects as if they were armed robbers,” writes Radley Balko at his Washington Post blog “The Watch.”
Cass’ widow, children and mom sued the City of Abilene, the police chief and the officer who shot Cass dead. On Wednesday, a federal appeals court dismissed the case.
Going by the letter of the law, the decision appears mostly sound; Mr. Balko’s blogpost pulls apart a lot of nuance to the case our 5 Mins. don’t allow for. But as he sums up, “It’s the law that’s the problem.”
Even the judges, in a footnote, rapped the city’s lawyers for insisting there was nothing unwise about the raid — “which suggests,” says the court’s opinion, “that nothing will be done to prevent a repetition of this tragedy the next time APD needs to inspect the records of a business whose owners are known to be armed.”
Just remember, an average 137 SWAT raids a day nationwide. They can’t all be inner-city drug dens…
Elsewhere in these United States, we see a resurgence of a theme we began covering in this space nearly five years ago.
“When the ‘mother of all financial bubbles’ starts to burst, you’ll feel it on the local level first,” said our executive publisher Addison Wiggin. Government services you take for granted like trash pickup would become spotty or nonexistent — even as you were afflicted with “new taxes and weird fees.”
Which brings us to the front page of yesterday’s Tulsa World: “Tulsa Public Schools is considering shortening the school week to four days and eliminating transportation for everyone except special education students as possible scenarios to deal with anticipated budget cuts next year.”
The collapse of oil prices has blown a $1.3 billion hole in Oklahoma’s state budget — about 20% of last year’s spending. State aid to public schools will likely be cut. Tulsa school superintendent Deborah Gist reckons she’ll have to find at least $7 million to cut to make up her district’s shortfall, and maybe as much as $20 million.
In a memo, she said a four-day school week would save only $1.4 million. Mothballing the school buses would go further, about $8 million.
Of course, the superintendent’s threat might be just that — a threat.
Whenever budget cuts loom in local government, essential services are put on the chopping block long before anything else is considered. We’ve never been to Tulsa, but we’re pretty sure most of the schools aren’t in walking distance of kids’ homes. Naturally, parents will be up in arms.
Meanwhile, we see the Oklahoma Teachers Retirement System is only 63% funded.
There was nothing about that in the superintendent’s memo. Priorities…
To the markets… which are once again “digesting” gains racked up after we went to virtual press the day before.
At last check, the S&P 500 rests at 1,955 — a level last seen the first week of January. If you’ve been reading attentively, you know that’s higher than the 1,945 level Jonas Elmerraji of our trading desk has been watching.
“Yesterday’s breakout,” he says by way of update, “looks like a valid upside signal for the S&P 500 in the intermediate term.”
The hot money entering stocks is leaving Treasuries and gold. The 10-year Treasury yield sits a hair below 1.77%. Gold’s been knocked back to $1,217.
At the risk of repeating ourselves, the Federal Reserve really is closer to getting the inflation it wants.
The Commerce Department is out this morning with its “core PCE” reading — the Fed’s favorite measure of inflation.
A core PCE reading of 2% is what the Fed aims for. The number spent most of 2015 bumping around the 1.3% level. It started picking up in October… and zoomed up last month to 1.7%.
The core PCE figure affirms the numbers from the consumer price index last week: Energy prices might be low, but health care, housing and apparel are picking up.
The number also affirms Jim Rickards’ outlier outlook — that the Fed will raise its benchmark fed funds rate next month.
Adding fuel to the rate hike fire — an upward revision in the Commerce Department’s estimate of fourth-quarter GDP.
It’s still anemic — an annualized 1.0% — but it’s better than the first guess of 0.7%. The bump up is attributed to businesses adding inventory. Which is fine if consumers wind up buying that inventory, but we won’t know that until after the Fed meeting next month. Heh…
There was absolutely nothing of note that happened on the first day of the G-20 summit in Shanghai.
Guess Treasury Secretary Jacob Lew was right when he said there’d be no crisis measures taken since he didn’t see evidence of any crisis.
Anyway, didn’t want you to think we’d forgotten about it…
For the record — postage rates are coming down.
In January 2014, Congress authorized a 4.3% surcharge on a host of postage rates. But that authorization is set to expire on April 10. The result, according to the trade publication The NonProfit Times, is only the third rate reduction in U.S. Postal Service history.
Among other effects, the price of a first-class stamp will fall from 49 cents to 47. Hope you didn’t buy any Forever stamps in the last two years…
“Apple can’t stay here,” writes a reader — weighing in on the showdown between Apple and the FBI.
“Apple is in a lose-lose situation. If they go and create a backdoor like the government wants, then they will lose a ton of business. On the other hand, if they don’t, it will probably mean jail time for the CEO and several high-ranking officers of the company. It’s kind of like sitting down to a card game where everyone else is cheating except for you.
“Apple should recognize the situation and simply use the time that they have fighting it in court to make preparations to leave the country and put its headquarters somewhere else. I don’t imagine that too many countries will be willing to turn down a multibillion-dollar company moving to it and will do whatever they can to make the transition as seamless a possible.”
The 5: We’d missed it, but back on Feb. 9 — a week before word got out that the feds were leaning on Apple over the San Bernardino case — FBI chief James Comey said an interesting thing about encryption in general.
“I’d say this problem we call going dark,” he said, “the growing use of encryption, both to lock devices when they sit there and to cover communications as they move over fiber-optic cables, is actually overwhelmingly affecting law enforcement. Because it affects cops and prosecutors and sheriffs and detectives trying to make murder cases, car accident cases, kidnapping cases, drug cases. It has an impact on our national security work, but overwhelmingly, this is a problem that local law enforcement sees.”
Sums up the privacy writer Marcy Wheeler: “Even before he served Apple here, Comey made it clear this was about law enforcement, not terrorism cases, his cynical invocation of the San Bernardino victims notwithstanding. And not just law enforcement: ‘car accidents.’”
“I admit we have noticed the effect of the falling loonie on food prices this winter, but $30 for a loaf of bread?” writes a Canadian reader.
[We figured this might come up after an American reader made passing mention of soaring Canadian food prices in yesterday’s mailbag…]
“Get real. Even in a specialized artisanal bakery, I’d be hard-pressed to spend more than about $8 for some life-changing super-multi-vita-grain thing, compact though it might be. I’m sure you can pay more than that that in New York.”
“Just an FYI,” says another Canadian reader, “the freshly baked French loaf I bought yesterday cost me C99 cents, same price as it was a year ago.
“Recently went to the U.S. and I could not believe the prices there. American beer now more than double what I pay for my favorite brew in Canada. Pretty well every item in the stores costs more than I would pay in Canada. All is not as it seems. (And bread does not cost $10/loaf, except maybe for specialty organic in the high-end delis.)”
The 5: As long as you brought it up, please settle once and for all the burning question we’ve had here at The 5 since mid-2013: Is the Molson sold in Canada really different from the Molson sold in the States?
Have a good weekend,
The 5 Min. Forecast
P.S. Recently, the world’s largest banks have been hurrying to meet with one of the most secretive and connected government men in the world…
He’s been on speed dial for eight presidents since 1969.
HSBC — the largest bank in Europe — was reported to have met this man, and even American Express is quietly tapping him.
What are all these financial firms trying to extract from this man? It turns out Jim Rickards may have the answer…
>> Click here now. We believe the urgent answers are all right here.
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