NYT Dec 2019 36.000 call

OPR - OPR Delayed Price. Currency in USD
0.0000 (0.00%)
As of 12:56PM EDT. Market open.
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Previous Close2.4500
Expire Date2019-12-20
Day's Range2.4500 - 2.4500
Contract RangeN/A
Open InterestN/A
  • Business Wire

    The New York Times Company to Webcast Third-Quarter 2019 Earnings Conference Call

    The New York Times Company (NYT) announced today that its third-quarter 2019 earnings conference call will be held on Wednesday, November 6 at 8:00 a.m. E.T. The company’s earnings announcement will be released earlier that morning and will be available on www.nytco.com. Participants can pre-register for the telephone conference at dpregister.com/10135803, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international callers).

  • Bloomberg

    Where Women See Bias, Men See a ‘Pipeline Problem’

    (Bloomberg Opinion) -- Gender parity at work is still decades away, if it ever comes at all. Why? Part of the problem is that men and women look at the same world and see different things.Almost half of men (44%) say women would be “well represented” at their company if just one in 10 senior leaders were female. Only 22% of women agree with that. These findings come from McKinsey and LeanIn.org, via their annual report on women in the workplace, based on a survey of 65,800 people at 329 companies.And this is actually an improvement, says Alexis Krivkovich, a senior partner at McKinsey’s San Francisco office. In previous years, an even larger share of men thought women were well represented in company leadership — even when company-specific data showed that wasn’t true. And men today are more likely to say gender diversity is a “high personal priority” than they were in 2015.Yet to the extent that men are becoming more aware that the gender gap at the top is a problem, they still disagree with women about what’s causing it. Men are most likely to say the trouble is “too few qualified women in the pipeline.”Women point to different causes. Forty percent say women are judged by different standards. (Only 14% of men see it that way.) Nineteen percent of women correctly perceive that junior women are less likely than junior men to get that first promotion into management. (Only 7%  of men see that.) And 32% of women say women lack sponsors to champion their work. (Only 12% of men agree.)This last problem is especially troubling for two reasons: First, the scarcity of sponsors for women has been linked with stalled careers in study after study. And second, the men who responded to McKinsey’s survey themselves revealed a real reluctance to sponsor or mentor junior women. In January 2018, months before the deluge of MeToo stories began with the New York Times’s reporting on Harvey Weinstein, 46% of men said they’d be uncomfortable mentoring a younger female. By March 2019, after the Weinstein revelations, that figure had risen to 60% percent. In fact, they’re now 12 times as likely as they once were to hesitate to have even a one-on-one meeting with a younger female colleague.Think of that: Senior men don’t think women have a problem finding sponsors to help them win plum assignments and promotions, but they themselves admit to balking at spending any one-on-one time with the women they’re responsible for championing. “There’s this urban myth that gosh, somehow in this post-MeToo workplace, women have become dangerous or scary,” says David Smith, an associate professor of sociology at the Naval War College and co-author of “Athena Rising,” a book about men who mentor women. “They might just decide to falsely accuse us of sexual harassment. There’s no evidence to support that. As men we need to push back on each other when we hear that.”And when men refuse to mentor women, those women go without mentors. There aren’t enough senior women to pick up the slack.The result is a workplace in which equally ambitious and, yes, equally qualified women consistently find it tougher to get ahead.Women and men want promotions, ask for promotions, and ask for raises at nearly identical rates; the difference is that men are much more likely to get them. In fact, the gender gap appears with that first promotion into management: Although half of entry-level employees in corporate America are female, for every 100 men who get promoted to first-line management jobs, only 72 women get through.This difference can’t be due to qualifications — these are entry-level employees, just a few years out of college. (The same colleges where female students graduate in higher numbers, and score higher GPAs.) Nor can it be due to family responsibilities; many of these workers don’t have children.  It’s not a pipeline problem. Over and over, women are banging their heads on the glass ceiling, but it seems many men don’t even hear the commotion.Women are twice as likely as men to say that they’ve had to provide extra evidence of their competence — 30% of all women report this, and 40% of black women. Half of women say they’ve been interrupted or spoken over, while only a third of men have. Only 8% of men of all races say colleagues have expressed surprise at their language or other abilities; 26% of black women say it’s happened to them.Our impressions, of course, are shaped by our experiences. One in five women reports being the only woman on her team; for women in senior and technical roles, it’s one in three. Just one in 50 — 50! — men say the same. Among these “only women,” half say they’ve had to prove their competence or have had their expertise questioned. Roughly 70% say they are interrupted, and half say they don’t get credit for their ideas.These slights may seem trivial, but things like getting credit for your ideas or being seen as an expert are what allow successful employees to advance.There are plenty of things companies can do to remedy these problems — actions that also make them better places to work. It’s not hype that more diverse companies perform better, or that venture capital firms with more women get better returns. Well-managed companies care about merit, about fairness, and about promoting the best people. If you’re pulling talent from only half the population, your results just aren’t going to be as good.A reason to feel hopeful: Younger men are much more capable of recognizing bias when they see it. Among people under the age of 30, 41% of women and 17% of men say they’ve heard or seen bias directed at women in the past year. That’s a gap, but not nearly as wide as the one in the 50-60 age group, where 32% of women and just 9% of men say they’ve witnessed bias.That’s why it’s so important for people of all ages to call out bias when they see it. And here’s where men can be especially valuable, because unlike women, they face no penalty for doing so. Another reason younger guys might be expected to help the project of gender equality advance: They’re more likely to be part of a dual-career couple, Krivkovich says, so they have a personal connection to the problem. Smith says it can only help men understand the problem better to hear about it firsthand from a woman they care about: “A lot of times that’s what gets in touch with our sense of fairness and justice.”It might be just what we need to start seeing the world (almost) the same way.To contact the author of this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netTo contact the editor responsible for this story: Mary Duenwald at mduenwald@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Green Carmichael is an editor with Bloomberg Opinion. She was previously managing editor of ideas and commentary at Barron’s, and an executive editor at Harvard Business Review, where she hosted the HBR Ideacast. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    Biohacker Investigation Is Dropped by California Medical Board

    (Bloomberg) -- California regulators have closed an investigation into whether the infamous biohacker Josiah Zayner was practicing medicine without a license.In a letter dated Sept. 25 that Zayner shared with Bloomberg News on Tuesday, the Medical Board of California wrote that it had concluded its investigation and that “no further action is anticipated.”“When I received the letter about being investigated, it was one of the scariest days of my life,” Zayner said. “I’m not committing crime. I am just trying to make science and knowledge accessible.”The California Department of Consumer Affairs told Zayner in May that it had received a “complaint of unlicensed practice of medicine” and requested that he appear for an interview. Zayner, a one-time NASA scientist with a Ph.D. in biophysics, has earned both fame and scrutiny for carrying out daredevil scientific stunts. At a conference, he once shocked the audience by injecting himself with the gene-editing tool Crispr.Anyone can file complaints with California’s medical board, but the agency doesn’t always pursue them. In its letters to Zayner, the board didn’t say who had filed the original complaint. When asked for comment on Tuesday, the board said information on its investigations is confidential.In California, practicing medicine without a license can be a misdemeanor or a felony, with penalties of as much as three years in prison. Zayner, 38, said the threat of incarceration may have a chilling effect on his work.Biohackers like Zayner publicly advocate for the democratization of technologies like genome editing. He’s the chief executive officer of a company that sells inexpensive tools for genetic engineering. At times, he’s given advice to people with serious illnesses about novel research they might explore.In July, California passed legislation intended to discourage do-it-yourself gene editing, and the U.S. Food and Drug Administration has also said it’s illegal to sell such kits intended for use in humans.So far, most biohacking experiments in humans have failed or fizzled, but some proponents have recently signaled a desire to adopt stricter standards for DIY work.“I know it’s not the last time I hear from the government,” Zayner said.To contact the reporter on this story: Kristen V. Brown in San Francisco at kbrown340@bloomberg.netTo contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Mark Schoifet, Timothy AnnettFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • PRESS DIGEST- New York Times business news - Oct 15

    PRESS DIGEST- New York Times business news - Oct 15

    Oct 15 (Reuters) - The following are the top stories on the New York Times business pages. https://nyti.ms/2poMTyY https://nyti.ms/2ML4OrD

  • Does The New York Times Company (NYSE:NYT) Have A Particularly Volatile Share Price?
    Simply Wall St.

    Does The New York Times Company (NYSE:NYT) Have A Particularly Volatile Share Price?

    If you're interested in The New York Times Company (NYSE:NYT), then you might want to consider its beta (a measure of...

  • NY Times' (NYT) Advertising Revenues Likely to Remain Soft

    NY Times' (NYT) Advertising Revenues Likely to Remain Soft

    The New York Times Company (NYT) expects digital advertising revenue to fall in the high-single digits during the third quarter.

  • Bloomberg

    The Rise of the Economists

    (Bloomberg Opinion) -- Out of the destruction of the postwar economies, came the rise of the economists. This is the tale that journalist Binyamin Appelbaum, this week's guest on Masters in Business, chronicles in his new book, "The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society."First in the U.S., then around the world, economists created new ideas about deficits, monetary and fiscal policy, trade, government spending and deregulation. Their influence could be seen as well in the rise of corporations that wielded enormous power with very little accountability. Appelbaum gives credit for this to economist Milton Friedman, who he said had a greater influence on 20th-century American life than any economist of his generation.Appelbaum is the lead business and economics writer for the New York Times editorial board. He was part of a team at the Charlotte Observer that in 2007 examined the high rate of housing foreclosures and questionable sales practices during the subprime mortgage crisis. The reporting won a Gerald Loeb award, a George Polk Award and was a finalist for the 2008 Pulitzer Prize in public service. His favorite books are here; a transcript is here.You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google Podcasts, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Next week, we speak with Fran Kinniry,  global head of portfolio construction at Vanguard.To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Tencent Airs NBA Games as Chinese State TV Blackout Persists

    Tencent Airs NBA Games as Chinese State TV Blackout Persists

    (Bloomberg) -- Tencent Holdings Ltd. live-streamed two National Basketball Association games played outside of China Monday, even as the nation’s top broadcaster shuns the league because of a controversy around Hong Kong’s pro-democracy movement.The Chinese social media giant aired a game between the Chicago Bulls and Toronto Raptors and another between Maccabi Tel Aviv and Minnesota Timberwolves, according to its official program. That’s despite the WeChat operator last week freezing broadcasts of two pre-season games played in China: a pair of high-profile match-ups between the Los Angeles Lakers and Brooklyn Nets in Shanghai and Shenzhen last week. China Central Television -- the government’s flagship broadcaster -- announced its boycott around the same time and has so far not resumed televising.A Tencent representative didn’t respond to emailed requests for comment. At stake for the internet giant are billions of dollars in ad and subscription revenue, along with its strategy of becoming a go-to destination for NBA broadcasts online. The social media giant had just inked a $1.5 billion, five-year deal to stream league games online in China. It drew almost half a billion basketball aficionados to its streams last season -- an audience now in jeopardy.Tensions flared after Houston Rockets General Manager Daryl Morey tweeted support for Hong Kong’s protests, which some in China view as a secessionist movement, triggering a backlash from companies and fans. By allowing games in China to go forward last week however, Beijing signaled it may be winding down its harsh response to the tweet, which was deleted but inflamed by NBA Commissioner Adam Silver defending Morey’s right to free speech.There were other signs too: The New York Times reported that editors at state-run news outlets have told reporters to stop emphasizing the NBA issue, fearing it might get overheated.According to Tencent Sports’s app, other pre-season games will only be streamed in text and images. Video-streaming is scheduled to return Oct. 23 as the regular season starts. The company’s shares gained 1.1% alongside other Chinese shares.“We do not comment on the specific commercial decisions of individual businesses,” Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing Monday in Beijing in response to questions about Tencent’s decision. “Exchanges in sports have always played an important role in promoting China-U.S. exchanges and friendship, but like we stated earlier, be it in China or the U.S., mutual respect is a prerequisite for conducting exchange and cooperation.”Read more: Tencent Gets ‘Wakeup Call’ From China’s Assertions of Patriotism(Updates with government’s response in the final paragraph)\--With assistance from Dandan Li and April Ma.To contact the reporters on this story: Jinshan Hong in Hong Kong at jhong214@bloomberg.net;Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Gao Yuan in Beijing at ygao199@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Sam NagarajanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • WeWork Said to Weigh Bailout That Hands Control to SoftBank

    WeWork Said to Weigh Bailout That Hands Control to SoftBank

    (Bloomberg) -- WeWork is considering a bailout that will hand control of the co-working giant to SoftBank Group Corp., according to a person familiar with the matter, one of two main options to rescue the once high-flying startup.The Japanese investment powerhouse controlled by billionaire Masayoshi Son is convinced it can turn around the cash-strapped American company with the right financial controls in place, the person said, asking not to be identified talking about internal deliberations. WeWork’s board and backers however are also weighing another option: JPMorgan Chase & Co. is leading discussions about a $5 billion debt package, Bloomberg has reported.Either rescue package, or some combination of them, would ease a cash crunch that could leave the office-sharing company short of funds as soon as next month. We Co., the parent of WeWork, had been headed toward one of the year’s most hotly anticipated IPOs before prospective investors balked at certain financial metrics and flawed governance, turning the American giant into a cautionary tale of private market exuberance and costing the company’s top executive his job.The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.Son, SoftBank Risk Too Much With WeWork Takeover: Tim CulpanRead more: WeWork Is in Talks for $5 Billion Debt Package With LendersThe Wall Street Journal first reported that SoftBank may be discussing a deal to gain control of WeWork. Representatives for the Japanese company weren’t immediately available for comment Monday, a national holiday.SoftBank is already WeWork’s biggest shareholder but the proposed deal would shore up its control of the startup, the person said, declining to elaborate on when a decision on the competing offers might be reached. The Japanese company is in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork sported in January, two people familiar with those discussions said last week. The New York Times has reported that members of the board would meet Monday to decide on which bailout to select.If the board opts for the SoftBank deal, the Japanese company will be taking on a troubled enterprise at a time it’s struggling to convince the market about its longer-term investment vision. It’s also busy wooing potential investors for a successor to its record-breaking Vision Fund.Read more: SoftBank’s Son Is ‘Embarrassed’ By Record, Impatient to ImproveSon is going through a rocky stretch after repositioning his company from a telecommunications operator into an investment conglomerate, with stakes in scores of startups around the world. He built a personal fortune of about $14 billion with spectacularly successful bets on companies such as Alibaba Group Holding Ltd. But SoftBank’s shares are down about 30% from their peak this year as investors, unnerved by WeWork and Uber Technologies Inc.‘s disappointing debut, grow skittish about startup valuations. In an interview with the Nikkei Business magazine, Son said he is unhappy with how far short his accomplishments to date have fallen of his goals.WeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time, Son said in that interview. But at a private retreat for portfolio companies late last month, he had a different message: get profitable soon. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance. Just days later, SoftBank led the ouster of WeWork’s controversial co-founder Adam Neumann.“WeWork has retained a major Wall Street financial institution to arrange a financing,” a representative for the U.S. company said in a statement on Sunday. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”(Updates with details of SoftBank investments from the sixth paragraph)To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Michelle F. Davis in New York at mdavis194@bloomberg.net;Davide Scigliuzzo in New York at dscigliuzzo2@bloomberg.netTo contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Tom Giles at tgiles5@bloomberg.net, Edwin Chan, Virginia Van NattaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Financial Times

    Giuliani says he is unaware of probe into his Ukraine activities

    Rudy Giuliani, the personal lawyer to US President Donald Trump whose role in the Ukrainegate scandal is under intense scrutiny, on Friday said he was unaware of any investigation into his Ukraine-related activities by prosecutors in New York. The New York Times reported late on Friday that federal prosecutors in Manhattan had opened an investigation into whether Mr Giuliani, a former New York mayor, had violated lobbying-related laws with his efforts to oust the former US ambassador to Ukraine. “I have no such knowledge of Manhattan prosecutors investigating me,” Mr Giuliani told the Financial Times when asked about the New York Times story.

  • With Puppy Parties and Movies, Life Goes on for WeWork Tenants

    With Puppy Parties and Movies, Life Goes on for WeWork Tenants

    (Bloomberg) -- Uptown, “Mean Girls” was looping. Downtown, puppies were frolicking.Across Manhattan and out into Brooklyn, kombucha was flowing.For all the troubles at WeWork – its grandiose plans gone astray, a hoped-for rescue possibly underway -- the mood inside its New York office spaces is surprisingly upbeat.We Co., as the co-working giant is now known, may look like the omnishambles of the unicorn generation of startups. But for now, at least, many of its tenants hardly seem to care. In fact, the reaction from more than 20 people who spoke with Bloomberg this week was a shrug that said, “Not our problem.”The mood was presumably less sanguine at JPMorgan Chase & Co., which on Friday was said to be leading efforts to arrange $5 billion in financing to keep We afloat. Time is short. Without help, We could run out of money by late November.The financing could start to come together as early as next week, but it may take longer for its structure and terms to be finalized, according to people familiar with the matter who asked not to be named because the talks are private.Withdrawn IPOWe was one of the year’s most hotly anticipated initial public offerings before doubts about valuations and transparency ended with the IPO’s withdrawal and the company’s top executive losing his job. The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.Now it will pay considerably more to borrow. One option that’s been floated is raising $3 billion or more of the debt package through the sale of high-yield bonds, some of the people said. Those would likely be priced at a premium to the yield commanded by WeWork’s outstanding bonds, which were issued with a 7.875% coupon and offer a yield of around 10%, some of the people said.SoftBank Group Corp., the largest shareholder in WeWork, is currently in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork had in January, said two people familiar with those discussions.Spokeswomen for JPMorgan and WeWork declined to comment.WeWork’s bonds, which traded above par less than a month ago, have plunged into distressed levels since then, dropping more than 20 cents on the dollar amid mounting concerns about the company’s cash situation before regaining almost half of that decline amid news of the debt talks. Fitch Ratings and S&P Global Ratings have cut WeWork’s credit grade further into junk on liquidity issues.Financial FalloutThe potential financial fallout could be huge. JPMorgan has loans out to the company and its founder, while SoftBank has watched its investment plummet in value. But the implications for New York real estate are worrisome too. We became Manhattan’s biggest office lease holder, with more than 7 million square feet, partly because it was sometimes willing to pay above-market rents.Since We’s brash co-founder, Adam Neumann, abruptly stepped down last month, the company has drastically reversed its growth-at-all-costs strategy. It’s moved to sell Neumann’s luxurious Gulfstream G650 and shed other assets and headcount.The company’s new co-chief executive officers have been moving to slash costs and spin off businesses in the past two weeks in an effort to slow its cash bleed. Analysts had previously estimated that the company would run out of money by the middle of next year.In Manhattan’s financial district, We member Brianna Rowe, who has been there for four years, said the WeWork space was one of the perks of her job working for a nonprofit.“It was just so cool, it was unlike anything I had ever really experienced before,” she said.Blessing, CurseNathan Lee Colkitt, who’s been renting We space for his architectural firm since 2010, said that as long as the place is kept up, he’s happy to stay put. We’s big selling point – flexibility -- has turned out to be a blessing for him, if a curse for WeWork.“The very same thing that made them successful gives you the ability to jump at any month,” Colkitt says. “So that’s sort of ironic or coincidental.”Rarely has so much gone so wrong so fast for a young company in the spotlight. We has raised more than $12 billion since its founding and never turned a nickel of profit. Now, its very future is in doubt. We’s travails are bound to shape investors’ views of other fast-growing startups hoping to go public.From Midtown down to Gramercy Park, WeWork members said that for them, it was business as usual. At offices at 750 Lexington Ave., “Mean Girls,” the Lindsay Lohan comedy, was playing over and over on Oct. 3, known as “Mean Girls Day.” A puppy party broke out at 33 Irving Pl., with happy hour to follow, while the spaces at 880 Third Ave. featured a macaroni-and-cheese bar and massages.For WeWork’s tenants, the financing negotiations and the scramble to cut costs went largely unnoticed or remarked upon.Robert Snow, another We member, summed up the view: “As far as I can tell, it’s the same as it’s always been.”\--With assistance from Natalie Wong and Davide Scigliuzzo.To contact the reporters on this story: Gwen Everett in New York at geverett10@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net;Michelle F. Davis in New York at mdavis194@bloomberg.netTo contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Dan ReichlFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Financial Times

    A selection of the FT’s biggest stories and best reads every Friday

    President Donald Trump created a rare moment of unity between Washington’s Republicans and European governments when he ordered troops to vacate part of Syria ahead of a Turkish assault on America’s Kurdish allies. , the move is backed even by groups normally viscerally opposed to the government.

  • The Case for Higher Taxes at the Very Top

    The Case for Higher Taxes at the Very Top

    (Bloomberg Opinion) -- The New York Times recently released a dramatic infographic showing how much less progressive U.S. tax system have become since 1950. When the animation starts, most taxpayers are paying about 20% of their income in taxes, but the top 1% is paying almost 30%, while the country’s 400 highest earners are paying 70%. During the next 68 years, most brackets see their tax rate rise, while the richest 400 see their rate fall relentlessly. When the animation finishes, the top 400 individuals are paying just over 20% – lower than any other bracket.These numbers are astounding, and they suggest that higher tax rates on the country’s wealthiest individuals are in order. But first, it’s important to understand what it does and doesn’t show.First of all, the graph zooms in on the top brackets – it shows the tax rate at the 90th income percentile, then the 99th, then the 99.99th, and finally the top 400 people. If it had stopped at the 99th percentile, it would have shown roughly constant top tax rates over time; what looks like a dramatic fall in tax progressivity comes entirely from the tiny sliver of earners at the very top of the income scale.Second, the graph doesn’t include transfers – the money that the government pays out. Overall, these have risen. This, along with rising taxes for the upper-middle class, is the main reason why the U.S. fiscal system as a whole has become steadily more progressive since 1950. Most of the country simply isn’t affected very much by what the government does to the 400 highest earners.A final caveat is that the tax rate of top earners is very hard to measure because they earn their income in non-standard ways, and they try very hard to hide it from the tax collectors.But despite all these caveats, it’s clear that tax rates for the richest handful of Americans have gone down a lot since the mid-20th century. And the country is starting to feel increasingly uncomfortable about that fact. The share of Americans who believe that high earners pay too little in taxes has come down a bit over the years, but it’s still a substantial majority:Meanwhile, a number of the country’s wealthiest people, including Bill Gates and Warren Buffett, have called for their own taxes to be raised. Presidential candidate and billionaire Tom Steyer has echoed the call. Facebook founder Mark Zuckerberg has gone even farther, declaring that “no one deserves” the amount of wealth that he and other billionaires have accumulated.So how can top earners be taxed? The first order of business is to raise the capital-gains tax rate. Despite news headlines about overpaid chief executives, the very top earners make most of their income from the financial assets they own. Taxing capital gains is unlikely to hurt business investment, given that the country is awash in savings earning increasingly low returns. Economic research has shown that cuts in dividend tax rates (which work similarly to capital-gains taxes) haven’t boosted growth or investment, so it stands to reason that raising rates wouldn’t hurt.A second step is to repeal President Donald Trump’s new deduction for pass-through business income. This  lets many top earners pay lower taxes by passing their income through an S corporation or other closely held company; it's an important reason tax rates on the wealthiest are falling.A third step is to create more tax brackets. The reason that top income tax rates were so high in the mid-20th century is because there were special brackets for very high earners. In 1920 there were more than 50 federal income-tax brackets, with the rate on income of over $1 million – about $12.8 million in today’s dollars – set at 73%. As of 2019 there are only seven brackets, with the top bracket set at just $500,000. Adding more brackets at the top of the income scale would allow steeper rates to be targeted at very high earners.Taxing the highest earners has a number of benefits. It will raise some government revenue (though perhaps less than most ardent proponents expect). Higher income taxes may prompt wealthy people to shelter their money within corporations as they did in the 1950s, which could raise the declining rate of business investment.And finally, taxing the rich more will increase social cohesion. Obligating the top earners to pay more creates a sense that American society isn’t just every man for himself, but that the most successful are required to give something back to the country that gave the opportunity to succeed. Buffett, Gates, Zuckerberg, Steyer and other extremely wealthy individuals seem to share the general yearning for a society that isn’t so divided into winners and everybody else.(Corrects to indicate that taxes paid by the 400 wealthiest Americans are all taxes, not just federal taxes.)To contact the author of this story: Noah Smith at nsmith150@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    The Rich Really Do Pay Higher Taxes Than You

    (Bloomberg Opinion) -- For Democrats, the Overton window — the range of ideas that are not considered extreme — has shifted markedly to the left in the last few years. It now seems that the window for discourse about economic reality is moving as well. Take the headline on David Leonhardt’s recent New York Times column, summarizing the research of economists Emmanuel Saez and Gabriel Zucman, who are advisers to Elizabeth Warren: “The rich really do pay lower taxes than you.” No, they do not.In a progressive system, people with higher incomes are required to pay a larger share of their income in taxes. This is reasonable and fair because people differ in their ability to earn income and because the labor-market rewards for workers of different skill levels are determined by factors other than ability and effort. Contrary to the narrative that seems to be forming on the political left, the U.S. federal tax code is very progressive. According to the nonpartisan Congressional Budget Office, the lowest-income 20% of households have an average federal tax rate of about 2%. Those in the middle 20% pay 14% of their income in federal taxes. Higher-income households face higher rates. The top 20% pay a 27% federal rate. And the federal tax rate for the top 1% is 33%. These data are for 2016, the most recent year available. This is half of the story. When assessing the progressivity of the U.S. federal system, it makes sense to look at both taxes and the means-tested transfer payments — Medicaid, food stamps and Supplemental Security Income — that those taxes fund.If you subtract these payments from federal taxes paid, the tax rate for the top 20% of households (including the top 1%) is unchanged, as those households don’t receive means-tested benefits. The tax rate for households in the middle 20% drops considerably, from 14% to 9%. And the rate for the bottom 20% of households plummets to minus 70%. Those households receive $49 in transfer payments for every $1 they pay in federal tax.When assessing the total tax burden facing different U.S. households, looking at federal, state and local taxes is instructive. The federal system is more progressive than state and local systems, but combining them — as the Institute on Taxation and Economic Policy has done — doesn’t change the story: the higher your income, the greater your tax burden. Harvard economist and top Obama adviser Jason Furman confirms this by combining federal taxes and transfers with state and local taxes.How to square this with Saez’s and Zucman’s research? There is an active debate among economists about technical questions in income measurement. How much of the income that is not reported on tax returns should be assumed to have been earned by the rich? How to account for unrealized capital gains when determining income? Which income group pays the corporate income tax? How should social insurance programs that transfer income across a person’s life cycle — for example, Social Security and Medicare — be treated? The answers to those questions, and to many others, in large part determine the conclusions about how the tax code treats different groups of households. That applies to any analysis, including mine, above, and to Saez’s and Zucman’s. But the existence of this academic debate shouldn’t obscure the overwhelming consensus among economists that the U.S. tax system is progressive. This consensus holds even when you look within the top 1% of households. The Urban-Brookings Tax Policy Center finds that this group faces the highest tax rate.Saez and Zucman train much of their focus on the 400 wealthiest Americans. This group makes up 0.0003% of households. The New York Times column describing the Saez-Zucman estimates reports that last year this group had a 23% combined federal, state and local tax rate. In fact, the jury is still out on that number, which is based on a forecast of what income might have been last year. (The data for 2018 aren’t in. If you filed for an extension, your taxes for 2018 aren’t due until next week.) Even if it turns out to be correct, it doesn’t follow that the U.S. system is not progressive. Characterizing features of the tax system based on a few hundred individuals is silly. For one, people cycle in and out of the top 400 every year. And there are over 120 million households in the U.S. The tax code can create strange situations for some of them, depending on their circumstances. For example, low-income households that stand to lose Medicaid benefits by increasing their income can face implicit marginal tax rates of close to 100%. It is more reasonable to conclude that those households face a quirk in the tax code than to draw general conclusions about the tax and safety net systems as a whole.None of this is to say that we shouldn’t be concerned if those 400 Americans don’t face the highest tax rates in the U.S. (Though that is not at the top of my list of concerns.) And whether the system is progressive is a separate question from whether policy should further increase the tax burden on the wealthy. The latter is worthy of debate. But that contest of ideas should take place on a playing field of facts. And the fact is that the U.S. tax system is progressive. To contact the author of this story: Michael R. Strain at mstrain4@bloomberg.netTo contact the editor responsible for this story: Katy Roberts at kroberts29@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Why the 'Never Trumpers' Now Love Trump

    Why the 'Never Trumpers' Now Love Trump

    (Bloomberg Opinion) -- Based on the number of articles written about them, two of the great questions of our time are: Why do Republicans stick with Donald Trump? And what happened to all the “Never Trump” people? In recent days, for example, the New York Times has published items about each of them.In polls, the vast majority of Republicans have consistently given Trump their approval for the job he is doing – even as tariffs and the deficit have risen, even as he rages on Twitter, even as evidence of abuse of power has mounted. His support among conservatives has actually increased over time. During the 2016 primaries, my colleagues at National Review ran a cover package in which various conservatives made the case against Trump. Many of the writers are now behind him.Yet none of this should really be all that puzzling.The conservative criticisms of Trump in 2016 fell into four categories. Some on the right thought that nominating Trump meant blowing the election. Some worried that given his history of liberal positions on everything from taxes to abortion, he would not govern as a conservative. Some opposed the positions he was continuing to take on specific issues such as trade, immigration and entitlements. And some felt that his character – his dishonesty, his lack of self-control, his pettiness, his penchant for bigoted statements – made him unfit for office.These arguments were often jumbled together. But events have been a sieve, and two of the criticisms have fallen away. Trump won, and then he governed the way conservative voters wanted on the issues they care most about. He cut taxes, appointed originalist judges to the Supreme Court and federal appeals courts, imposed few new regulations and rolled back some old ones. His administration has done nearly everything opponents of abortion have asked. While he has made some rhetorical feints to the left on guns and health care, he has not followed through. Trump has changed the Republican Party’s view of some issues, no question. But the party has changed his positions on more of them.The issues where Trump has broken with previous Republican leaders, meanwhile, are ones on which Republican voters don’t have deep convictions. Take trade. While some Republican voters are unhappy about the effects of Trump’s tariffs, very few are committed on principle to free trade: They didn’t mind it when President George W. Bush put tariffs on steel, and they didn’t mind it when Trump did either. Spending and entitlements are another example. In his first term Bush increased spending and expanded Medicare, and Republican voters stayed supportive. Trump has merely said he would keep entitlements as they are, and he has even been willing to backtrack on that pledge.Under these circumstances, you would expect the number of Republican figures who remain unreconciled to Trump to dwindle. The ones whose only concerns were that Trump would lose to Clinton and that he would govern as a moderate or a liberal no longer have a reason to oppose him, and therefore don’t. What’s left is a Never Trump remnant made up of three overlapping groups of people: those who place great weight on Trump’s character flaws; those who don’t share the views on guns, taxes and abortion that bind other Republicans to the president; and those who are primarily motivated by their preference for a more interventionist, and less erratic, foreign policy.A number of theories have been put forward for why nearly all Republican voters are in Trump’s corner. Maybe they like his pugnacity. Maybe they share his sense of grievance. Maybe it’s a kind of tribal loyalty. Maybe they’re reacting to political correctness. These explanations are surely true for some people.But they aren’t necessary to account for Trump’s support. You don’t have to tour the diners of Wisconsin to understand why Republicans favor a Republican president who is on their side of the political issues that matter to them. He is an extremely unusual politician in many respects, but he has simply tended to his base in an exaggerated version of what politicians usually do: He’s aligned himself with its priorities. People are naturally going to be sympathetic to someone who is on their side of the big political issues – even to the point, unfortunately, of minimizing bad behavior.You don’t have to like these results. But there’s nothing especially mysterious about them.To contact the author of this story: Ramesh Ponnuru at rponnuru@bloomberg.netTo contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • U.S. Weighs Currency Pact With China as Part of Partial Deal

    U.S. Weighs Currency Pact With China as Part of Partial Deal

    (Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions.The currency accord, which the U.S. said had been agreed to earlier this year before trade talks broke down, would be part of what the White House considers to be a first-phase agreement with Beijing. It would be followed by more negotiations on core issues like intellectual property and forced technology transfers, the people said.The internal deliberations come as a team of Chinese negotiators, led by Vice Premier Liu He, arrived in Washington to resume trade talks with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin starting Thursday. It’s the first face-to-face talks between senior officials since July.The offshore yuan rose more than 0.3%, erasing an earlier loss. U.S. stock futures whipsawed Thursday morning in Asia amid uncertainty about the outcome of the negotiations.People familiar with the Chinese delegation’s arrangements said negotiators are currently scheduled to leave on Friday evening, though there could be changes depending on how the talks progress. One person said there may also be a meeting with Trump that day, though again it would depend on how the talks go.The signals heading into the talks have been mixed. President Donald Trump last week approved licenses for some American companies to sell nonsensitive goods to Huawei Technologies Co., the New York Times reported, citing people familiar with the move. While Trump committed to the move after meeting President Xi Jinping in June, no licenses have been issued yet.What Our Economists Say:“An agreement on exchange rates could be a practical, face-saving way for both sides to reach a mini-deal that helps de-escalate trade tensions. In practice, though, it would probably have limited implications on China’s exchange rate policy -- barring an (unlikely) Plaza Accord type of commitment.”\--Chang Shu and David QuRead the full analysis hereThe discussions around an interim deal come as the Trump administration this week further ramped up pressure on Beijing by blacklisting Chinese technology firms over their alleged role in oppression in the far west region of Xinjiang, as well as placed visa bans on officials linked to the mass detention of Muslims. At the same time, a fight over free speech between China and the NBA, triggered by a tweet backing Hong Kong’s protesters, has underscored the heated tensions.The window for such an agreement is closing before the U.S. plans to raise duties to 30% from 25% on about $250 billion of Chinese imports on Oct. 15. Additional duties are set to take effect Dec. 15.A Chinese official said Wednesday the country was still open to reaching a partial trade deal with the U.S. that may include large purchases of American commodities, but added that success was contingent on President Donald Trump halting further tariffs. Showing progress with a currency pact and other matters this week could serve as a reason to delay next week’s tariff hike. Bloomberg News last month reported the White House was discussing plans for an interim deal.Still, Trump this week said he preferred a complete trade agreement with China. “My inclination is to get a big deal. We’ve come this far. But I think that we’ll just have to see what happens. I would much prefer a big deal. And I think that’s what we’re shooting for,” he said.A White House spokesman declined to comment. A Treasury spokesman didn’t respond to a request for comment. China’s Ministry of Commerce did not immediately respond to fax about the high-level talks.Manipulation LabelNo details were made public about the U.S.-China currency pact reached in February that Mnuchin at the time called the “strongest” ever. Broader trade negotiations between the two countries broke down in May after the U.S. accused China of backtracking on its commitments. Then, in August, the Trump administration formally declared China a currency manipulator.According to people familiar with the currency language, the pact largely resembles what the U.S. agreed to in a new trade agreement with Mexico and Canada and also incorporates transparency commitments included in Group of 20 statements.Still, Lighthizer cautioned earlier this year that the currency agreement hinges on the overall enforcement of the trade deal. “There’s no agreement on anything until there’s agreement on everything. But the reality is we have spent a lot of time on currency, and it’ll be enforceable,” he said in congressional testimony on Feb. 27.The U.S. Treasury, which branded China a currency manipulator in August, is expected to publish its next report on the foreign-exchange policies of major trading partners around mid-October. The senior negotiators from the U.S. and China are scheduled to hold talks through Friday, people familiar with the plans said. Liu met with a small group of business executives and separately with International Monetary Fund officials Wednesday afternoon, people familiar with the meetings said.(Adds Treasury report details in second-to-last paragraph.)\--With assistance from Shawn Donnan, Ye Xie, Saleha Mohsin, Livia Yap, Angus Whitley, Miao Han and Steven Yang.To contact the reporter on this story: Jenny Leonard in Washington at jleonard67@bloomberg.netTo contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, ;Daniel Ten Kate at dtenkate@bloomberg.net, Jeffrey Black, Sharon ChenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • U.S. to issue licences for supply of non-sensitive goods to Huawei - NYT

    U.S. to issue licences for supply of non-sensitive goods to Huawei - NYT

    Huawei Technologies Co Ltd [HWT.UL], the world's biggest telecoms gear maker, has been put on a U.S. trade blacklist since May, when trade talks between Washington and Beijing broke down. The United States says the company can spy on customers, which Huawei denies.

  • Bloomberg

    Facebook Can Fight Lies in Political Ads

    (Bloomberg Opinion) -- All over the world, truth is in trouble. What are we going to do about that?Unfortunately, Facebook’s new policy on political advertisements is a step in the wrong direction.(1) By exempting “politicians” from its third-party fact-checking program, designed to reduce the spread of lies and falsehoods in ads, the company is essentially throwing up its hands. With some urgency, it should be seeking new ways to reduce the risk that lies and falsehoods will undermine the democratic process. To its credit, Facebook generally prohibits ads “that include claims debunked by third-party fact checkers.” If you run an ad falsely claiming that your new medicine cures cancer, the company will take it down, at least if the claim has been independently debunked. The policy also extends to “misinformation about vaccines as identified and verified by global health organizations such as the World Health Organization.”Nick Clegg, Facebook’s vice president of global affairs and communications, defended the company’s exemption for politicians, arguing that their speech belongs in an altogether different category and that therefore their ads will not be reviewed for veracity. If a candidate for public office falsely says that his opponent served time for attempted murder, is a drug addict, participated in terrorist activities, or tried to bribe foreign officials – apparently Facebook will do nothing. Clegg explained: “We are champions of free speech and defend it in the face of attempts to restrict it. Censoring or stifling political discourse would be at odds with what we are about.”At the same time, he announced an exception to the exemption for politicians: “previously debunked content.” If President Donald Trump or Senator Bernie Sanders shares content that has been debunked by fact-checkers in the past, that content will not be allowed in advertisements. But if it’s a new falsehood, it will be allowed.In short, Facebook does “not submit speech by politicians to our independent fact-checkers, and we generally allow it on the platform even when it would otherwise breach our normal content rules.”But why, exactly?CNN announced last week that it would not run a Donald Trump 2020 campaign ad that would include a false claim against former Vice President Joe Biden. Any broadcaster, and any social-media platform, is legally entitled to refuse to run ads that contain palpable lies.As a matter of constitutional law, the First Amendment does not apply to private institutions. If CNN, the New York Times, the Wall Street Journal, Facebook or YouTube refuses to run political ads spreading false claims, the Constitution would not stand in the way.The best argument on Facebook’s behalf would point to the exceptional difficulty of adjudicating truth or falsity. It can be hard to distinguish between fact (“my opponent served a jail sentence”) and opinion (“my opponent belongs in jail”). In some cases, factual errors will be both clear and demonstrable. Taken in isolation, they should not be allowed. But if Facebook got in the business of taking down clear and demonstrable errors in political ads, you can see why it might soon find itself regretting it. Politicians of all kinds would soon accuse their opponents of lying about them – and ask Facebook to remove their ads. The company’s decisions would predictably be subject to claims of political bias. Whether those charges were opportunistic or sincere, Facebook might well conclude that it makes more sense to adopt a general rule: allow a free-for-all.  Fair enough. But with the help of social-media platforms, lies and misinformation are instantly spreading to countless people. With algorithms and personalization, those who spread falsehoods are increasingly able to reach receptive audiences and tailor their messages to them. The problem is only going to get worse.That threatens to create a political order in which ordinary citizens cannot know what is true, and in which they end up believing those who are best at fooling them, or who have the most power. (From George Orwell’s “1984”: “The party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”)To address that danger, it is not enough for Facebook to rely on abstractions about the importance of freedom of speech.Instead, it might, for example, consider enlisting the law of defamation, and treat clearly defamatory statements, directed at one politician against another, as beyond the pale. It might build on its own practice in creating an independent oversight board, giving such a body a degree of authority to take down demonstrable falsehoods. Following the practice in some nations, it might refuse to air political ads in the period immediately preceding an election.It is easy to understand Facebook’s reluctance to operate as an Orwellian Ministry of Truth. But 1984 is one thing; 2019 is another. Against their wishes, Facebook and other social-media platforms are contributing to a situation that diminishes the power of truth in democratic debate every day. That endangers democracy itself. The question remains: What are we going to do about it?(1) Disclosure: I have served as an occasional adviser to Facebook, though not with respect to the issue discussed in this column.To contact the author of this story: Cass R. Sunstein at csunstein1@bloomberg.netTo contact the editor responsible for this story: Katy Roberts at kroberts29@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Cass R. Sunstein is a Bloomberg Opinion columnist. He is the author of “The Cost-Benefit Revolution” and a co-author of “Nudge: Improving Decisions About Health, Wealth and Happiness.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    The Repo Market Is More Than Mere Plumbing

    (Bloomberg Opinion) -- The repo market is often described as the “plumbing” of the financial system, especially when it starts to look clogged and in need of the kind of flushing that only the Federal Reserve can provide. It’s an effective metaphor, just not an accurate one.The history of repo shows that it’s far from the stable system of financial pipes and more like a series of end-runs designed to circumvent government regulations and restrictions. Its latest woes may well be another installment in a decades-long story of regulatory arbitrage.The standard definition of a repo, or repurchase agreement, is a sale of securities from a borrower to a creditor, with an agreement to repurchase them at a set date in the future for a specified price. It’s akin to a loan, in that the repurchase price covers the original amount and a little more – a kind of “interest” payment.If the borrower fails to buy back the security, then the creditor can sell the security to satisfy the outstanding debt. A repo, then, is a bit like pawning a Treasury bond for cash. It’s the same principle – up to a point. Unlike pawned jewelry, the bonds held by the creditor aren’t held on a shelf until the repurchase date comes due; they can be sold or used to settle other repo agreements.Repurchase agreements remained exceedingly rare until World War I, when Congress passed a tax on financial instruments to defray the costs of the conflict. The levy hit banks hard: Every time a bank borrowed money from the Fed, it had to pay a tax.What to do? The Fed, eager to ensure the health of the banking sector, concluded that it could “loan” money to member banks using repos. It would buy bonds from banks, and the banks would buy them back, paying a little fee for the privilege. And while the Fed couldn’t lend money to non-member banks, it set up repos with these banks, too.At first glance it looks like a plumbing job connecting the Fed to banks for the sake of smoother operations. But it was, in point of fact, an end run around Congress and its ill-considered tax. The whole thing was pretty clever, if a bit underhanded -- prop up the demand for bonds when the government began borrowing at a staggering clip. Once the war was over, this particular set of plumbing was left to rust.As the Great Depression reached its depth, the financial system was struggling with new rules and regulations issued during the New Deal. It would be only a matter of time until repo’s triumphant return.Many reformers argued that banks during the 1920s had been reckless in their competition for deposit funds, offering interest rates that they could not realistically pay. In 1933, the Fed stepped in, issuing Regulation Q – a prohibition against banks paying interest on demand deposits.Problem solved? Well, not really. As the U.S. pulled out of deflation in the 1950s, interest rates began rising. This left many corporations and municipalities – all of which had to maintain significant amounts of cash to handle payrolls and other expenses – in a difficult position. If they deposited their cash, they earned nothing, thanks to Regulation Q.Then someone realized – it’s not clear who – that repos supplied a solution. As early as 1956, the New York Times detailed the new practice, noting that larger corporations had effectively become pawn shops, buying up bonds from dealers for a day or more, then selling them back.“The parties to these transactions,” the Times dryly noted, “seem to be taking unusual steps to heed the injunction of Polonius to be neither a borrower nor a lender.” But the real reason for this innovation, the paper made clear, was to circumvent the interest-rate ceiling on deposits.The Times noted other advantages as well. Repo agreements were “made with a minimum of red tape.” They enabled the corporations who lent the money to make more than they could have if they actually collected interest on governments bonds. At the same time, the dealers who pawned their bonds for cash got a better deal than if they borrowed money from banks. In circumventing Regulation Q, everyone was a winner.In the following twenty years, repos took off, particularly once inflation began spiraling out of control. After 1969, outstanding repos totaled a mere $4.9 billion. A decade later, they had ballooned nearly tenfold, to $45 billion. Each time interest rates went up, repos became more and more popular.Fed economist Kenneth Garbade, who has written on the history of repos, attributes some of the shift to other factors: significant growth in the quantity of U.S. Treasury debt, as well as growing volatility in medium- and long-term interest rates. The computerization of corporate finances, enabling an exact, up-to-the-minute accounting of cash flows, also spurred their growth.By 1979, the Wall Street Journal sang the praises of repos, joining a growing chorus of proponents. It quoted an executive at a heavy equipment manufacturer who noted: “At these interest rates, I’d be crazy to leave my money in a [non-interest] checking account.”Those same checking accounts, the Journal noted, had an additional drawback: They were subject to reserve requirements prescribed by Regulation Q. “Money gleaned through repurchase agreements,” the paper reported, “doesn’t need to be held in the nonearning reserves, provided that that collateral used is government or federal agency securities.”Eventually, plenty of other non-financial institutions joined the party: school districts eager to make a quick buck off their surplus cash, for example. At the same time, the market grew more complex, with broker dealers pioneering the special collateral reverse repo. This enabled dealers to hedge, borrowing securities that could be delivered against short sales.These feats of regulatory arbitrage began to end badly in the early 1980s. Several bankruptcies of broker dealers involved in repos made it clear that the financial system was in uncharted territory. The repo market was exposing its participants, particularly creditors, to unforeseen risks.Worse, the legal system had fallen well behind the market. What should happen to repos in the event of a bankruptcy petition? Should they be subject to the “automatic stay” that suspended all pre-petition claims? If so, this might easily trigger a liquidity crisis, as repos went into lockdown pending settlement of the bankrupt firm. This almost happened when Drysdale Government Securities failed in 1982.A decade after the financial crisis, it appears that the repo market is at it again. Many smart observers are blaming the recent turmoil on Dodd-Frank and the Basel III capital accords. They force banks to set aside huge amounts of cash as reserves and deprive the repo market of liquidity, the argument goes. This allows the banks to claim that they would love to lend in the repo market, but – sorry! – their hands are tied.Perhaps. But the history of this shape-shifting market suggests the opposite conclusion – that the repo market has been used to evade those very same regulations, and that we’re now seeing the first tremors of the experiment.Time will tell, but keep one thing in mind: The repo market isn’t a boring piece of plumbing. It’s a ever-evolving system of cutting-edge financial innovation and regulatory evasion. Ignore it at your peril.To contact the author of this story: Stephen Mihm at smihm1@bloomberg.netTo contact the editor responsible for this story: Mike Nizza at mnizza3@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Stephen Mihm, an associate professor of history at the University of Georgia, is a contributor to Bloomberg Opinion.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    What’s Lost When a Local Newspaper Withers

    (Bloomberg Opinion) -- Peter Barbey’s great-grandfather John started the Reading Glove and Mitten Manufacturing Co. 120 years ago. Known today as the VF Corp., it owns outdoorsy brands like Timberland and North Face. In its last fiscal year, VF reported nearly $14 billion in revenue and $1.5 billion in net income. Its market cap hovers around $35 billion. The Barbeys, who still own around 20 percent of the company, are very rich.Barbey, 62, went to the University of Arizona. He met his wife, Pam, there. They planted roots in Phoenix, where he invested in commercial real estate while also running the city’s most beloved independent bookstore, Houle Books. But in 2011, Peter and Pam moved to Reading, Pennsylvania, to take charge of another property that had been in the Barbey, DuPont and Flippin families for over a century: the Reading Eagle. With a Sunday circulation over 70,000, a team of sports writers as good as any in Pennsylvania, and a news staff that took seriously its watchdog role, the Eagle was one of the best medium-sized newspapers in the state, if not the country.When I asked Barbey recently how he felt about leaving behind his life in Arizona to become president of the Eagle, he shrugged. “I’d been on the board since 2000,” he said. “I knew the company well. And I felt it was my duty to my family’s legacy, and to this community, to take this on.”Eight years later, the Barbey, DuPont and Flippin families no longer own the Reading Eagle. In May, the paper was sold to MediaNews Group Inc., the newspaper company owned by the hedge fund Alden Global Capital LLC, which has a well-deserved reputation for asset stripping and layoffs. Barbey cared deeply about the Eagle; he sold it with great reluctance, helpless to reverse the paper’s economic decline.You sometimes hear journalists saying that if only their paper’s owner had beefed up the staff, had given reporters more time to do better stories, had made the paper indispensable to its community, maybe the economic decline of the paper could have been averted. What is instructive — and discouraging — about the Reading Eagle is that is exactly what Barbey did. He bet that good journalism could keep the Eagle solvent. And he bet wrong.“It was like playing a game of chess where you just run out of moves,” said Barbey when I met him recently in New York.By the time Barbey became the chief executive of the Reading Eagle Co. (2) in 2011, it was far from the immensely profitable paper it had once been. Classified ads were long gone, done in by Craigslist and its imitators. But local grocery stores, drugstores and car dealerships were still advertisers. Circulation was declining, but not disastrously so. And though the Eagle was losing money, the losses were small.A few years earlier, the company had bought a new press capable of printing magazines as well as a newspaper. One of Barbey’s first moves was to start a publication about rural Berks County that subscribers received as a weekly insert. (He also started a regional business magazine.) It quickly became popular. Small advertisers flocked to it. “It made good money,” Barbey recalls. “Better than the internet.”He also began beefing up the news staff. He hired an investigative reporter, Ford Turner, from the Patriot-News in Harrisburg, and set him loose. Turner wrote a series of hard-hitting investigative stories. The Eagle covered the opioid crisis, which had hit Berks County hard. And he gave the editors the go-ahead to hire a dozen or more young, ambitious journalists. “Peter believed very strongly that he could make print work,” said Garry Lenton, who joined the Eagle in 2012, and became the editor in 2018.For a while, it seemed as though he was making print work. Although the decline in circulation and advertising revenue never completely stopped, it slowed considerably. The company became cash-flow-positive for the first time in years. Morale among the news staff was high, as reporters realized that their boss was counting on the Eagle’s journalism to pull the paper through. “The newsroom was doing it,” Barbey told me. “We felt we were really competing.”Yet it all started to fall apart in 2016. Barbey can’t explain why that was when his formula stopped working; he just knows it was.  Quarterly circulation declines accelerated. And as circulation declined, so did the Eagle’s ad revenue. In 2017 the grocery stores stopped printing inserts in the Eagle and switched to direct mail.  The drugstores stopped advertising, as did the car dealers. Painfully, many of the small advertisers that had once flocked to the Berks County magazine left as well. “It was one blow to the solar plexus after another,” says Lenton.Lenton was then running the Eagle’s digital side. He recalls going to the salesperson who solicited ads for the magazine. “The man said, ‘I don’t know what’s going on. I can’t figure out this market anymore.’”But it wasn’t that hard to figure out. Both the Eagle’s subscribers and its advertisers were gravitating to the internet, especially Facebook. Using Facebook, advertisers could target Reading consumers for a fraction of what an ad cost in the Eagle. Subscribers, realizing that they could get all the Reading news they needed via Facebook, stopped paying $180 a year for the newspaper.Here was the worst part. Even though the Eagle had a paywall, many readers were still able to access its articles via the internet without paying the newspaper a penny. And there wasn’t a thing Barbey could do about it.For this, he blames the Digital Millennium Copyright Act of 1998, which exempts platforms like Google and Facebook from direct copyright infringement. The result is that readers can create their own newspaper, using, say, their Facebook newsfeed, without ever paying a newspaper for its content.“When they passed the Digital Millennium Copyright Act, why didn’t they think this would happen?” Barbey asked.Barbey’s job changed from trying to grow his operation to trying to staunch the bleeding. The business staff was reduced though layoffs. Barbey protected the newsroom, though when journalists left or retired they weren’t replaced. The Eagle pushed hard to generate digital subscriptions. But with the cost to subscribers a mere $7 a month, digital subscriptions didn’t make much of a dent. Between 2016 and 2018, ad revenue dropped from $17 million to $12.6 million, while the company’s losses went from less than $1 million to $4 million.Finally, in May 2018, the Eagle eliminated 13 newsroom positions. The Eagle still had more than 60 journalists, but the handwriting was on the wall. “I started getting invoices from the wire services that were 30 or 60 days late, and they were threatening to cut us off,” says Lenton, who took over as editor in 2018. “I would have to go to the accounting department and tell them they really had to pay this one.”The Eagle had one last moment of glory: It was named the 2018 Newspaper of the Year by the Pennsylvania NewsMedia Association. But in March 2019,  a year after those first newsroom layoffs, the Reading Eagle Co. filed for bankruptcy. In the bankruptcy filing, the company said that the only way it could stem the losses would be to make large cuts in the newsroom, which “cannot bear millions more in cuts.”Although a number of companies kicked the Eagle’s tires, Alden Global soon emerged as the only serious bidder. The hedge fund owns other papers in Pennsylvania and can consolidate business-side functions. And, of course, Alden Global is never going to sweat layoffs the way Barbey did — ruthless cost-cutting is at the heart of its business model.As our interview was coming to a close, I asked Barbey what lesson he drew from his experience running the Eagle. Without hesitation, he replied, “You can’t write your way out of this.” A big national paper like the New York Times might be able to revive its fortunes by going all-in on digital, but that won’t work for a mid-sized paper like the Eagle. You can’t make enough money from digital subscriptions or ads to turn a profit. And paywall or no paywall, the Eagle’s content was too easy to find online.Although Alden Global laid off 81 employees soon after it bought the Eagle, both Barbey and Lenton say that the hedge fund has not hollowed out the newsroom. The Eagle, they say, is still putting out a good paper every day.But as they also both now know, putting out a good paper just isn’t enough anymore. On Monday, the top of the Eagle’s homepage featured six stories. This was one of them: “Phone lines are down at Reading Eagle offices.”(Corrects Reading Eagle ownership structure in second and fourth paragraphs. Corrects name of reporter Ford Turner in ninth paragraph.)(1) In addition to the newspaper, the Reading Eagle Co. owned a radio station, an events company and a commercial printing company.To contact the author of this story: Joe Nocera at jnocera3@bloomberg.netTo contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Can We Talk Ourselves Into a Recession or Bubbles?

    Can We Talk Ourselves Into a Recession or Bubbles?

    (Bloomberg Opinion) -- Can we talk ourselves into a stock-market bubble? A recession? Why would the story of an economic theory drawn on a cocktail napkin have so much more resonance than all the reams of research that have debunked it? These are some of the questions pondered by Nobel economist Robert Shiller, professor of economics at Yale University, and this week's guest on Masters in Business.Shiller in his latest book, “Narrative Economics: How Stories Go Viral and Drive Major Economic Events,” delves into why some stories go viral and others do not and how the stories we tell ourselves influence our beliefs, markets and economic events. Shiller explains, for instance, how Google Trends can be used to predict economic changes, helping us spot when the public’s rising economic concerns are identifiable before a recession officially begins.He is perhaps best known for the numerous market and economic measures, including the CAPE (cyclically adjusted price-to-earnings) ratio and the Case-Shiller Housing Index. His 1981 paper, “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends?” was an early exploration of behavioral finance, challenging the concept that markets are perfectly efficient and individuals are driven by rationality. He has been the co-organizer of National Bureau of Economic Research workshops on behavioral finance with fellow Nobelist Richard Thaler since 1991. Shiller won the Nobel 2013 for his empirical analysis of asset prices. Readers can take Shiller’s free course on Financial Markets on Coursera.His favorite books are here; a transcript of our talk is here.You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google Podcasts, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Next week, we speak with Binyamin Appelbaum, lead business and economics writer for the New York Times’ Editorial Board, and author of "The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society."To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    In Harvard’s Magical Admissions Process, Nobody Gets Hurt

    (Bloomberg Opinion) -- If parts of Judge Allison Burroughs’s decision in the Harvard affirmative-action case don’t seem to make sense, it’s not entirely her fault. She was bound by the Supreme Court’s precedents on the subject, and the justices have been refining absurdity ever since they took up the issue in 1978.The question this time was whether Harvard was unlawfully discriminating against Asian-American applicants. Harvard “testified that race, when considered in admissions, can only help, not hurt, a student’s chances of getting in” – as the New York Times reported with a straight face. Judge Burroughs bought it, writing that race “is never viewed as a negative attribute” by Harvard’s admissions department.Think about that for a moment. Logically, if a particular racial or ethnic background is a plus, then another background must be a “minus.” Harvard has a finite number of places to offer. Putting a thumb on the scales for certain racial minorities means putting a thumb on the scales against everyone else.Burroughs’s tortured reasoning traces back to that 1978 case, University of California v. Bakke. As complex as some of the issues surrounding affirmative action can be, the legal question at that time should have been easy. The Civil Rights Act of 1964 says, “No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.”It doesn’t say “unless that person is white or Asian-American,” or “except to remedy the lingering effects of past discrimination,” or “but universities can engineer the racial makeup of their campus if they think there are educational benefits to it.”Justice Lewis Powell nonetheless decided for the court that the law permits the use of race as a “plus” to attain racial diversity so long as it is not “decisive.” His argument went like this: The Civil Rights Act was an attempt by Congress to implement the Fourteenth Amendment’s guarantee that all persons get equal protection of the law; the meaning of that guarantee is for the court to determine; therefore the act permitted whatever the court thought it should.The courts have struggled ever since to wrest some sense from the ruling. Following Powell, Burroughs wrote that Harvard was in the clear because it treated race as “an important consideration” that “never becomes the defining feature” of an applicant. One problem: If being black or Hispanic or Native American is a plus for the admissions office, it has to be decisive in some cases. If it is never decisive, it isn’t really a plus.It is a testament to the contrived nature of the Supreme Court’s rulings that toward the end of her opinion, Burroughs drops the pretense: “Race-conscious admissions will always penalize to some extent the groups that are not being advantaged by the process, but this is justified by the compelling interest in diversity and all the benefits that flow from a diverse college population.” Besides, she adds, the burden on Asian-Americans, the focus of the lawsuit, is light. This line, though, creates another unacknowledged problem: The burden on Asian-Americans is too small to give them a legal injury, but absolutely vital to maintaining the benefits of a racially engineered student body?Even some fans of affirmative action have criticized the reasoning of the decision. New York University School of Law professor Melissa Murray laments that it rested on the asserted educational benefits of racial diversity rather than the need to remedy past discrimination. But changing rationales in that way would not only flout the Supreme Court’s precedents, but require colleges to change their admissions practices. If remedying past discrimination in our country is the point of race-conscious admissions, admitting nonwhites from abroad, or with recent roots in the U.S., won’t help that cause.The better course is an unlikely one: The Supreme Court should take the Harvard case on appeal and use it to re-affirm the actual words of America’s landmark civil-rights law.To contact the author of this story: Ramesh Ponnuru at rponnuru@bloomberg.netTo contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bloomberg

    Microsoft Says Iran Tried Hack of U.S. Presidential Campaign

    (Bloomberg) -- An Iranian-government linked group of computer hackers tried to infiltrate email accounts of a U.S. presidential campaign, current and former U.S. officials and journalists, among others, Microsoft Corp. said.Four accounts, though none connected to the unnamed presidential campaign or the current and former U.S. government officials, were “compromised” by the group, called Phosphorus, Tom Burt, Microsoft’s vice president for customer security & trust, said Friday in a blog post.The attacks took place “in a 30-day period between August and September,” Burt said in the post. Phosphorous made “more than 2,700 attempts to identify consumer email accounts belonging to specific Microsoft customers and then attack 241 of those accounts,” he said. “The targeted accounts are associated with a U.S. presidential campaign, current and former U.S. government officials, journalists covering global politics and prominent Iranians living outside Iran.”Microsoft’s announcement comes as the presidential campaign heats up amid concerns the 2020 election faces the same dangers as the Russian hacking and social-media effort in 2016.“While the attacks we’re disclosing today were not technically sophisticated, they attempted to use a significant amount of personal information both to identify the accounts belonging to their intended targets and in a few cases to attempt attacks,” Burt said in the post. “This effort suggests Phosphorous is highly motivated and willing to invest significant time and resources engaging in research and other means of information gathering.”Reuters and the New York Times reported that President Donald Trump’s re-election campaign was targeted in an attack by Iranian hackers, citing people familiar with the issue. “We have no indication that any of our campaign infrastructure was targeted,” Tim Murtaugh, the Trump campaign communications director, said in a statement to Bloomberg.Cyber-attacks during the 2016 election included the targeting of personal email. It’s unclear if the “consumer email accounts,” highlighted by Microsoft are personal or official campaign accounts that would be considered part of a campaign’s infrastructure.Spokesmen for the campaigns of Democratic presidential candidates Joe Biden and Bernie Sanders declined to comment. The campaign of Democrat Kamala Harris has “no indication” it was the organization referenced by Microsoft, Ian Sams, a campaign spokesman, said. Other major presidential campaigns couldn’t immediately be reached for comment.The Democratic National Committee received an alert about the cyber-attack from Microsoft and warned the campaigns of its presidential candidates, according to an email obtained by Bloomberg News. “As always, please be sure everyone in the organization has completed the DNC Device and Account Security Checklist and that your organization is incorporating our top 10 list for running an effective security program,” the committee wrote in its email.The campaigns were asked to tell the DNC if they “have seen any trace of this actor” so the committee could track investigations into the hack.The Phosphorous group has previously targeted dissidents, activists, the defense industry, journalists and government employees in the U.S. and Middle East, according to Microsoft. The company announced in March it had taken successful court action against Phosphorous and seized 99 websites from the hackers, preventing them from using the pages for cyber-operations.Cybersecurity company FireEye Inc. has seen a spike in Phosphorous activity in the U.S. and Middle East since the summer, said John Hultquist, the company’s director of intelligence and analysis.“While we suspect that a lot of this activity is about collecting intelligence, Iran has a history of carrying out destructive attacks,” Hultquist said. Phosphorous, known by FireEye as APT 35, is “one of a handful of Iranian actors that we’ve seen actively carrying out large scale, noisy intrusion attempts,” which have taken place in countries including the U.S., Israel, the United Arab Emirates, and Saudi Arabia, he said.In July, Microsoft announced it had countered almost 10,000 hacks globally stemming from state-sponsored attacks in the previous 12 months. The effort included hundreds of attacks on democracy-focused groups, particularly non-governmental organizations and think tanks, which were mostly based in the U.S., the company said.Later that month, the Senate Intelligence Committee reported that Russia engaged in “extensive” efforts to manipulate elections systems throughout the U.S. from 2014 through “at least 2017.” And a Trump administration official said in June that Russia, China, and Iran are already trying to manipulate U.S. public opinion before 2020.(Updates with comments from Trump campaign in the sixth paragraph.)\--With assistance from Dina Bass, Tyler Pager, Sahil Kapur and Emma Kinery.To contact the reporter on this story: Alyza Sebenius in Washington at asebenius@bloomberg.netTo contact the editors responsible for this story: Andrew Martin at amartin146@bloomberg.net, Andrew Pollack, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Ken Griffin’s $125 Million Gift Gets His Name on Chicago Museum

    (Bloomberg) -- Ken Griffin has buildings, wings and exhibitions named after him in Palm Beach, New York and Chicago. The billionaire hedge fund manager’s latest gift of $125 million will put his name on an entire museum.The Museum of Science & Industry in Chicago will become the Kenneth C. Griffin Museum of Science & Industry after a board vote Thursday accepting what it calls the largest single gift in its history. The donation is the Citadel chief executive officer’s biggest ever to a museum.The gift “helps ensure that MSI remains a vital resource for science learning in the 21st century,” museum CEO David Mosena said in a statement. “Our mission has always been to inspire the inventive genius in everyone.”Opened in 1933 in a building originally constructed for the 1893 World’s Columbian Exposition, the museum is host to the only German submarine on display in the U.S. and one of the world’s largest pinball machines. Its expenses were $53.5 million in 2018, with about a fifth going to education programs such as classroom field trips, teacher training and after-school clubs.Griffin, 50, first visited the museum as a child, descending into its “working” coal mine. He said his other favorite exhibit is the U-505 submarine captured by the U.S. Navy during World War II.While not a member of the Chicago museum’s board, he’s on the governing body of the Whitney Museum of American Art, whose lobby bears his name, as does a wing at New York’s Museum of Modern Art and a hall at the Art Institute of Chicago.Griffin briefly quit Whitney’s board in July, according to the New York Times, in protest after Vice Chairman Warren Kanders was driven out following months of demonstrations by activists opposed to his company’s sale of law enforcement and military supplies, including tear gas.Griffin’s gift to the Science & Industry Museum -- which is currently undergoing a renovation -- will secure its long-term future and help create the Pixel Studio, a digital gallery and performance space, according to the statement.Chris Crane, CEO of Exelon Corp., is chairman and Citadel Securities CEO Peng Zhao is a member. The museum’s current fundraising campaign has raised more than $300 million including Griffin’s gift.Griffin is the world’s 148th-richest person with a net worth of $9.9 billion, according to the Bloomberg Billionaires Index. He’s given more than $900 million to philanthropy, including a $150 million gift to Harvard University.To contact the reporter on this story: Amanda Gordon in New York at agordon01@bloomberg.netTo contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill, Peter EichenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.