Daily Archive: January 14, 2018

Jan
14

Norway’s $1.1 Trillion Wealth Fund Goes All-In On Asset Bubbles, Seeks Permission To Invest In Private Equity

Just over a year ago we noted that, after being forced to withdraw at least $15 billion to fund 2017 budget deficits, the $860 billion Norwegian sovereign wealth fund announced that it was going all in on the global equity bubble to try to make up the difference.  The change resulted in 75% of the fund’s capital being allocated to global equities, up from the then current 60%.

The central bank’s board, which oversees the fund, on Thursday recommended an increase in the equity share to 75 percent from 60 percent. That will raise the expected average annual real return to 2.5 percent over 10 years and to 3.5 percent over 30 years, compared with 2.1 percent and 2.6 percent, respectively, under the current setup.

The world’s largest sovereign wealth fund said that it expects an annual return of only 0.25 percent on bonds over the next decade and that the expected “equity risk premium,” or return on stocks over government bonds, will be just 3 percentage points in a cautious estimate.

“In our analyses, this is clearly evident in global data: internationally, growth in firms’ cash flows and equity returns are correlated with growth in the global economy,” Deputy Governor Egil Matsen said in a speech Thursday in Oslo. “Global economic growth in the coming years is expected to be below its historical level. This ‘pessimism’ is partly related to the driving forces behind the low level of the real interest rate.”

Norway 4

Now, as the FT points out, the world’s largest sovereign wealth fund has decided that even equities don’t provide quite enough risk and has appealed to the finance ministry to be allowed to invest in private equity.

To start with, Norway’s $1.1tn oil fund would consider investing in private equity funds or alongside them as part of a gradual approach, Norges Bank Investment Management said on Tuesday in a submission to the country’s finance ministry.

The fund is allowed to invest in listed companies only and buy stakes of less than 10 per cent. According to the advice, it should be given permission to own more than 10 per cent of an unlisted company, as it is allowed to do with unlisted property investments.

“The fund’s size, long-term horizon and limited liquidity needs may make it well-suited to investing in unlisted equity. A broader investment universe may also enable the fund to be invested in different types of company to those that are available in the public equity market,” NBIM said in its advice.

Of course, when you’re fund is so large that you could literally own 1.5% of ever single public stock on the planet, it only makes sense to find more places to stash cash.  But, as Bloomberg points out, there is just one tiny problem with turning to private equity…apparently they’re also sitting on a mountain of $1 trillion in un-invested capital due to a lack of attractive investment opportunities.

Private equity funds are, in turn, facing a struggle to spend all the money they’ve raised, something that threatens to depress returns. Globally, the firms raised a record $453 billion in 2017, boosting the total not yet invested to more than $1 trillion, according to figures compiled by alternative asset data company Preqin Ltd.”

With so much available capital competing for deals, this will only increase the challenge for fund managers looking to deploy capital in 2018,” Preqin said in a press release this month.

Norway2

Conclusion: It’s just a matter of time before Norway goes all-in on BitCoin…

Jan
14

Australia’s Hard Choice Between China And US

Authored by Lachlan Colquhoun via The Strategic Culture Foundation,

Canberra has always deftly balanced between Beijing and Washington but it may soon need to choose one over the other…

 

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Australia has always believed that it doesn’t have to choose between its economic relationship with China and its defense alliance with the United States. But 2018 is already shaping up to be the year of the hard choice.

It would be convenient for Australia if it was able to maintain its balancing act, but a confluence of global factors has stripped away the fiction that it can separate the economic benefits it gets from China and its post-World War II position as one of America’s closest strategic allies.

There is a lot at stake, including potentially Australia’s ongoing prosperity.

China is clearly not happy with Australia’s adherence to the US alliance and if it follows through on veiled threats to boycott Australian exports and limit investment, Canberra’s loyalty to Washington could come at the expense of significant economic pain.

China’s hawkish Global Times newspaper, widely viewed as a mouthpiece for the ruling Communist Party, spared no niceties in an op-ed last week that warned Australia against “interference” in the South China Sea (SCS) territorial disputes.

Australia was “kissing up” to the US and risked “poisoning” its relations with China, which could “adopt strong countermeasures which will seriously impact Australian economic development.” Australia hasn’t taken a position on SCS spats, but has said it favors “freedom of navigation” in the area, echoing the US’ position.

 

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US President Donald Trump with Australia’s Prime Minister Malcolm Turnbull at the ASEAN Summit in Manila, Philippines November 13, 2017. Reuters/Jonathan Ernst

China is Australia’s biggest trading partner, taking around a third of Australia’s exports. The two countries signed a free trade agreement (FTA) which came into effect at the end of 2015 and two-way trade now exceeds US$110 billion a year.

Chinese students comprise 38% of foreign students in Australia and prop up the university sector with their fees, bringing in US$18 billion per year.

The number of Chinese tourists is also booming. In 2005, 4.9% of foreign visitors to Australia were Chinese, a number which had risen to 13% by 2016. Chinese investors are key players in commercial and residential property markets, and are major investors in sectors such as agriculture and mining.

So when Australia congratulates itself on avoiding a recession for the last 30 years, it owes a major vote of thanks to China.

Despite this, Australia’s position on China is often schizophrenic. While the business and financial community continue to see China as Australia’s future, the defense and intelligence establishment in Canberra take a different view.

They see China as manipulating its global networks, including via the Chinese diaspora in Australia, in support of its global ambitions which are at odds with Australia’s traditional alliance with the US.

 

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Ethnic Chinese wave China’s and Australia’s national flags in Canberra, Australia in a file photo. Photo: AFP

From these agencies comes innuendo about Chinese “interference” in Australia, a country which has for years hosted one of the most significant US surveillance facilities at Pine Gap in the Northern Territory.

A recent ban imposed on foreign donations to Australian political parties was squarely aimed at China, and friendships with Chinese donors cost a rising star of the opposition Labor Party, Sam Dasyari, his job in December.

Driven by fear of espionage and cyber-intelligence, successive Australian governments have blocked Chinese telecommunication giant Huawei from participating in the rollout of the country’s National Broadband Network.

In December, Canberra was also poised to kill a deal for Huawei Marine Networks to lay a 4,000-kilometer submarine cable from Sydney to the Solomon Islands.

Even Prime Minister Malcolm Turnbull, who as Communications Minister was expected to overturn the Huawei ban, referred to China as a “frenemy” in comments at a public dinner last year.

Such paranoia about Chinese telecommunication companies does not extend to New Zealand, where Huawei has been a big player in new national infrastructure or in the United Kingdom, where the company is a big player in rolling out 4G wireless networks and fixed rural phone connections.

Meanwhile, Australia has spent more than US$10 billion on weapons and military equipment from the US in the last four years, according to a recent Australian National Audit Office analysis.

With Australia set to spend around US$150 billion on defense in the next decade, with big outlays earmarked to build a next generation navy and air force, that figure can be expected to rise as it further integrates into the US military supply chain with projects like the J-35 Strike Fighter.

American foreign policy, however, is fast changing under US President Donald Trump. As the US appears to shrink from the region, including through its withdrawal from the Trans-Pacific Partnership trade pact, it is creating a vacuum which poses a major dilemma for Australia.

Does Australia fill that vacuum as a local enforcer of the US alliance and forge stronger alliances with other countries such as Japan and South Korea to counterbalance Chinese influence? Or does it accept China’s increased power in the world and recalibrate 70 years of foreign policy accordingly?

The fragmentation of late 20th century geopolitics is reconfiguring the world, and as a mid-ranking nation Australia is yet to find its new place.

Perhaps the only upside to this dilemma is that the US appears to be moving away from any direct confrontation with China in the Pacific as Trump looks to forge alliances against North Korea.

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US Aircraft carrier USS Kitty Hawk receives fuel from the Royal Australian Navy auxiliary oiler replenishment ship during a joint exercise. Photo: US Navy via AFP

If US-China tensions are heightened, including by allegations that China is not acting genuine in its stated intention to isolate North Korea, it would quickly bring the polarity of Australian policy into sharp focus.

The inconsistencies and contradictions, including in strategic areas, are already apparent. While Huawei is banned from major national infrastructure contracts, its handsets have been approved for use by top defense officials and diplomats, and several thousand have been distributed.

When a Chinese company, Landbridge Group, secured a 99-year lease on the strategic Port of Darwin in 2015, top US defense officials said they were “stunned” by the decision. Critics at the time contended it gave China a “front row seat” to spy on joint US-Australian naval operations.

Australian universities have received government grants to work on collaborative research with Chinese companies on technologies which could have military applications. The University of Adelaide, for example, is working with the Beijing Institute of Aeronautical Materials, a company which is a part of the Aviation Industry Corporation of China.

All of this shows that Australia’s new hardline on China is and will inevitably be compromised by burgeoning economic relations. While the economic threats from China may simply be posturing at a tense juncture, they have called out and exposed the unresolved contradiction at the heart of Australia’s 21st century identity.

Jan
14

Is There Such A Thing As A “Shithole Country”?

Authored by Andrew Korybko via Oriental Review,

The question should be rephrased to whether there’s such a thing as a “shithole” period, and yes, there is, but the stereotypical “Third World” socio-economic and physical conditions that the word often embodies are also widely present in parts of the US.

Another day, another Trump controversy, and this time it’s the Mainstream  Media going bonkers because of the President supposedly referring to some countries as “shitholes” and questioning why the government has allowed so many of their people to immigrate to America. Knowing Trump’s personality and speaking style, it’s believable that he did in fact say this, though what’s less believable is the insincere virtue signaling that’s sprung up all over social media ever since.

Defining A “Shithole”

Some people are predictably slamming Trump as a “racist”, “fascist”, and “white supremacist”, outraged that he would dare use such language when referring to the “Third World” conditions of Haiti and most of Africa and convinced that he was actually exploiting that as an excuse in order to have the “plausibly deniable pretext” for implying that their majority dark-colored populations are “shit”. He wasn’t, but that’s not going to stop agenda-driven individuals and organizations from pretending that that’s what he meant.

What Trump really had in mind was the stereotypically (key word) underdeveloped economic and physical infrastructure in those places, as well as the unstated “backwardness” of their people that he thinks contributes to never-ending violence there. Using the first pair of criteria, the same “shithole” label is also very relevant in objectively describing parts of the US and the broader West as a whole, especially neglected inner-city areas with large minority populations.

The problem is that the idea of “backwardness” is relative, and for as much as Trump and some Americans might think that African-Americans, Haitians, and Africans fit that description, they and others might feel just as strongly that the US in general is a “backwards” place as well, though for totally different reasons. “Shitholes”, whether inside the US or elsewhere, are devastated communities whose problems aren’t easily attributable to one source and are commonly the result of many factors, some of which aren’t the fault of those who were born there into those deplorable conditions.

“Backwardness” Is In The Eye Of The Labeler

“Backwardness”, however, is an entirely subjective comparison made at the individual level and used to generalize other people as well as societies, regions, countries, continents, and even civilizations. Just as some Americans might feel that a different category of their compatriots are “backwards”, so too might non-Americans feel the same about Americans, and whether or not this is “racist” is up to each person to determine on their own. Take for example the US’ well-known racial tensions – some “whites” might think that the “gangsta rap” prevalent in “black” culture is a “backwards” display of social “values”; likewise, some “blacks” might think that flying the Confederate flag is “backwards” behavior stemming from the Civil War period when slavery was still legal.

There are of course uncontestably racist examples that can be mentioned in this vein, but such hatred deserves no place in a respectable analysis and therefore shouldn’t be the subject of any discussion.

As for the larger conception of “backwardness”, some Americans firmly believe that Islam is the epitome of this idea, but some of these very same Muslims think that it’s Americans themselves who live a “backwards” lifestyle due to many examples of their cultural behavior being contradictory to the Prophet Muhammad’s teachings. Americans might retort that the “tribal conditions” of Libya, “Syraq”, Yemen, and Afghanistan play a major role in perpetuating violence there (forgetting their own country’s role in this), but these people could just as easily point to the US’ “identity politics” being responsible for why no one has yet to stop the mostly black-on-black gangland killings in Chicago or other big American cities.

Ghetto graffiti

Moving From “Shithole” To “Shithole”

Accepting that the objective (economic and physical infrastructure) and subjective (“backwardness”) conditions of a “shithole” can be found anywhere in the world, including in the American heartland itself and especially its inner cities & the “Rust Belt”, it’s time to ponder why people move from “shithole” to “shithole”. This phenomenon is interestingly observable not just in relation to people from foreign “shitholes” immigrating to the US, but also in terms of Americans leaving for other “shitholes” inside their own country.

Foreign “Shitholes”:

Haitians and Africans, to use the examples that Trump was originally referring to, depart from their “shitholes” for America because they expect that their intended destination has higher living standards in the economic, physical, and/or social senses. It’s true that the average (keyword) all-around conditions in the US are oftentimes better than in most other places due to its more effectively functioning civil society, which includes its courts and police, though serious abuses still occur in these spheres. Most attractive of all and capable of getting many immigrants to overlook these very real problems is the country’s currency, the dollar.

The possibility of a “petroyuan” poses a latent threat to the dollar’s worldwide dominance, but for now at least the dollar is still king, and that’s why people from “shitholes” all across the world want to work in America. To put it bluntly, they’d rather be paid in dollars than whatever their national currency may be, and that explains why these migrants oftentimes support their families back home through remittances prior to abusing the immigration system to bring them to the US through legalized “chain migration” schemes. It doesn’t matter if their physical and working conditions are worse in America than back home in some cases, what’s seemingly most important to them is that they’re paid in dollars.

American “Shitholes”:

The same cynicism is what drives some Americans to move from one “shithole” to the next in search of what they naively believe could be a “better life” that would allow them to finally live the “American Dream”. People from the “Rust Belt” can’t easily move to the California coast without already having a job lined up because it’s too prohibitively expensive for them to do so, which is why they sometimes spend all of their meager savings and even borrow money from their families to make what they hope would be a life-changing trip for the “better”. Unfortunately, due to their limited means, they oftentimes find themselves trading one “shithole” for another because of their economic inability to climb out of the social gutter that they usually have to inhabit in order to barely make ends meet there.

“Chain migration” is the exception once again because having a family member or close friend in the destination state could help the internal migrant cut down on costs by splitting living expenses with their hosts, thus helping the whole household. Each person could then more quickly save up money and begin planning for their next step in life as they attempt to “climb the ladder of success”, provided of course that they’re willing to sacrifice on their social conditions for the time being in order to make it possible. This could entail living in very cramped conditions inside what are popularly described as “ghettos” (colloquially known as “the hood” in the US), which are usually characterized by the proliferation of drugs, violence, and naturally, the seemingly never-ending consequent cycle of poverty.

Dollar Delirium:

The common thread explaining why many people (whether foreigners or Americans) move around from “shithole” to “shithole” within the US is because they’re infected with “dollar delirium”, or the fallacy that a higher gross income automatically translates to a “better life”. For people coming from the “shitholes” of inner-city Cleveland or the rural villages of the Congo, simply earning more money is assumed to be the secret to “succeeding” in life, overlooking the fact that their desired destination also has higher living expenses that may in some cases leave them with a proportionately lower disposable income than if they just stayed home. This might not bother them so long as their basic needs are taken care of and they still have some money left over to spend on entertainment or save for later, but others might come to regret it if their social expectations aren’t adequately met.

The Social Solution To All “Shitholes”

Silk Roads:

Not everybody moves because they want to “get rich” or make a “quick buck”, since buying the newest iPhone isn’t as important to some people as having a stable and respectable livelihood for themselves and their families. “Shitholes” don’t typically provide this, or at least not in a way that satisfies most people, which is why they decide to move elsewhere in search of a “better life”. It would be wrong to imagine that immigrants, whether foreigners to the US or Americans within it, are all “greedy”, and the “safest assumption” is that they’re motivated by social push-and-pull factors more so than economic ones.

That said, an obvious solution to migration presents itself in the form of encouraging socio-economic development in migrant-originating areas, which is exactly what China’s One Belt One Road (OBOR) global vision of New Silk Road connectivity and Trump’s infrastructure plan– both of which are conceptually compatible with one another – aspire to do. A comprehensive strategy involving local, state/provincial, and national governments alongside state-owned and private businesses is the only conceivable way forward, but it’ll still take a while to yield results even if the most masterful plan was flawlessly executed, which is in any case unlikely.

Belief System Compromises:

Because this solution will take a long time to implement, if ever, the next best thing is to discuss the details of the infrastructural and metastructural social reasons behind migration. Social infrastructure can be described as schools, healthcare, and welfare benefits, for example, while social metastructure is culture and its related intangibles. Most socially motivated migrants are willing to compromise on social metastructure in order to reap the benefits of its infrastructural counterpart, meaning that they’ll “grin and bear it” if they dislike their new cultural conditions so long as they receive their expected access to certain “hard benefits” such as what they believe to be a better education system and state subsidies.

Considering this, it makes sense why people who hate America’s cultural-political system still migrate there because they’re tacitly compromising on their (sometimes publicly proclaimed) beliefs in exchange for receiving expected economic and social infrastructure “rewards”, and the same goes for Americans migrating to other states or countries. To reference the example mentioned earlier in this analysis, some Muslims think that American culture is “backwards”, but they’re willing to deal with it if the pay and social infrastructural conditions are right.

As for Americans, an “enlightened” liberal might escape from California’s dysfunctional society to seek refuge in the rural “backwaters” of a “red state’s” much more stable one despite their new destination restricting abortion and therefore being “ideologically incompatible” with one of their core beliefs. Another domestic example could be a conservative from “Middle America” moving to the liberal dystopia of New York City in the hopes of finding a better job. As for external manifestations of this “social compromise” in action, elderly Americans who look down upon what they may believe to be the “backwards” people of Latin America might “suck it up” and retire in that region simply because it’s more affordable.

Sacrificing For The Next Generation:

The last “solution” to the world’s “shitholes” is the passive one that’s been employed since time immemorial, and that’s migrants sacrificing their living standards by knowingly accepting that they’ll likely spend the rest of their lives in suboptimal social conditions in order to give their descendants that are born there a “better chance” at “climbing the ladder’ and “succeeding” in ways that their parents weren’t ever able to. This is the quintessential story of most American immigrants throughout history and especially from the late-19th century until the present day, and it also describes why many civilizationally dissimilar migrants are willing to put up with Europe’s different social metastructural standards in spite of this contradicting the strict requirements of their religion.

Another relevancy of this principle is when Americans migrate from their rural “shitholes” to urban ones, or from one “hood” to another in different cities, hoping that their children can seize the socio-economic opportunities there that their parents either weren’t able to or which didn’t exist in their hometowns.

Sacrificing for the next generation doesn’t “solve” the problem of “shitholes” – it ignores them – though sometimes there are “activists” who try to change things for the better in their own “shitholes” or the ones that they just moved into, but their freedom of action is severely constrained by the laws of their host society. Muslim migrants wanting to impose sharia in their new European neighborhoods or build mosques there are increasingly finding it more difficult to do so, but they still have it comparatively better than a Syrian Christian refugee that somehow ends up in a Gulf Kingdom and wants to hold public church services or build their own house of worship there.

In America, social and workplace activism is the most common form of struggle for people who have been born and raised in “shitholes” or internally migrated to them, and while they have a greater chance of succeeding with their cause inside the US than “shithole”-inhabiting people elsewhere in the world, it’s becoming increasingly more difficult by the year for them to do so.

A homeless in New York City

The Myth Of “Equality”

Theoretically and in terms of “international law”, all countries and cultures are “equal” to one another as seen from the eyes of the UN and its related UNESCO body, though in reality many people have their own personal preferences and accordingly believe that some countries and cultures are “better” than others. Someone indoctrinated with “American Exceptionalism” might truly think that the US is the “best” place on earth by all measures, while some Muslims might think that their own societies are the “best” to live in for cultural-religious reasons. Each of these two might have nothing but disdain for the other, but that’s their personal right, in fact, whether one agrees with it or not. It’s up to each individual to judge on their own whether this or any of its manifestations constitute “racism”, though it must be noted that there are indeed some undeniable examples of racism that should always be condemned.

That said, screaming “racism”, “fascism”, and “supremacism” just because someone has an individual opinion – no matter how disrespectful and offensive, though given that it doesn’t objectively conform to any of those three aforementioned terrible terms – is hypocritical because one can be certain that the person casting the stones also has their own “hierarchical” views on something or another, even if they’re more “politely” expressed. The Haitians and Africans that Trump so derogatorily described as coming from “shitholes” might think that some parts of their home region are “better” than others, just as they apparently think the US is the “best” because they’ll willing to leave their homelands to migrate there. The same can be said for Americans who favor one place of living within their own country over another, for whatever given reason, whether it’s the “shithole” that they moved to or their new place of living after escaping from a “shithole”.

Mixed Motivations For Migration

It’s crucial to understand that those who migrate from one “shithole” to another don’t always believe that everything in their place of residence is the “best”, but might be willing to “compromise” on certain aspects of it either due to “dollar delirium” or because they intend to sacrifice for the next generation. For example, it’s entirely natural for immigrants to retain their native culture and values inside their homes while trying to publicly assimilate and integrate into their host societies at large, such as some Arabs do when migrating to the West or some Westerners do when moving outside of their civilizational sphere (or even within it, with Poles being a perfect example). The complexity of the millennia-long phenomenon of migration means that there’s no simple explanation for why people decide to move away from their place of birth, with each instance being unique and usually motivated by multiple factors.

Concluding Thoughts

At the end of the day, using the word “shithole” to describe somewhere is a crass way of making objective points about economic & physical infrastructure and socially subjective ones about “backwardness”, but nevertheless is the right of every individual to use according to their taste so long as they’re not promoting actual racism or any of its related toxic ideologies such as fascism or supremacism. It’s not just Trump and “whites” in America who use this term, but other people across the world employ it or whatever the local analogue is in their language when making similar types of comparisons, and even in the absence of actual words, internal value judgements about other countries and cultures are still being formulated. It’s natural for people to have their own personal hierarchy of national-cultural preferences no matter how “politically incorrect” it may be to openly admit in some societies, meaning that the concept of the “shithole” is here to stay whether one likes it or not.

Jan
14

These Are The 10 Companies That Dominate the Global Arms Trade

The world puts $1.69 trillion towards military expenditures per year, and about $375 billion of that goes towards buying arms specifically.

Whether it is guns, tanks, jets, missiles, or ships that are on your shopping list, in the international arms community, as Visual Capitalist’s Jeff Desjardin notes, there is a supplier for any weapon your country desires.

Courtesy of: Visual Capitalist

 

ARMS DEALERS, BY SALES

Today’s chart organizes the world’s top arms companies by sales, location, and arms as a percentage of sales:

https://www.zerohedge.com/sites/default/files/inline-images/20180114_arms.png

Note: Airbus considers itself a European company. It’s registered in the Netherlands, and its main HQ is in France.

The above data comes courtesy of the Stockholm International Peace Research Institute (SIPRI), which tracks arms deals and companies extensively.

USA, USA!

While it is common knowledge that the United States plays a big role in the global arms trade, the numbers are still quite astounding.

Of the top ten companies by sales, firms based in the U.S. make up seven of them. That includes the clear #1, Lockheed Martin, which had $40.8 billion in arms-related sales in 2016, as well as the remaining constituents of the top three: Boeing and Raytheon.

Further, on SIPRI’s wider top 100 list, a good proxy for total arms sales globally, U.S. defense companies accounted for a whopping 58% of total global arms sales. That adds up to $217.2 billion in 2016, a 4.0% rise over the previous year.

ROUNDING OUT THE TOP 10

Only three companies make the top 10 leaderboard from outside of the United States.

That group includes Airbus, the massive European commercial airline manufacturer that gets 17% of its sales from arms-related deals, as well as BAE Systems (U.K.) and Leonardo (Italy).

As a final caveat, it’s worth mentioning that SIPRI notes that some Chinese companies would likely make its Top 100 list as well – but for now, the list excludes Chinese companies as the available data is not comparable or accurate.

Jan
14

Customs And Border Protection Clarifies: You Have No Rights While Traveling

Submitted by Sovereign Man

The government is like a poorly trained dog. If you let one bad behavior go, it just escalates until they bite.

The government has been searching electronics like cell phones and laptops at the border since early in the Bush administration. But because the 9/11 attacks were fresh, and because the practice was not widespread, it went largely unnoticed.

Fast forward to fiscal year 2015 and the Customs and Border Protection searched 8,503 airline passengers’ electronic devices. In FY 2016 they searched 19,033. And in FY 2017 CBP searched the devices of 30,200 travelers.

The CBP obtained no warrants for these searches. Many people searched were foreign travelers to the U.S. but last year over 6,000 were American citizens.

In response to growing complaints Customs and Border Protection revised their policy. Last week they issued a new directive. But in some ways, it is worse.

For starters, their guidance claims the authority to search a traveler’s electronic devices “with or without suspicion.”

The guidance now claims passengers are “obligated” to turn over their devices as well as passcodes for examination. If they fail to do so, agents can seize the device.

That is all considered a “basic search.” Agents must have suspicion in order to conduct an “advanced search.” This includes copying information from devices, or analyzing them with other equipment.

Finally, CBP agents can not “intentionally” search information stored on the cloud, versus on the device’s hard drive.

What this means:

It actually adds insult to injury that the new guidance starts: “CBP will protect the rights of individuals against unreasonable search and seizure and ensure privacy protection while accomplishing its enforcement mission.”

Nothing could be further from the truth. This is clearly a violation of the Fourth Amendment protections against unreasonable search and seizure. This violates the privacy of everyone searched.

Then they demand you forgo your Fifth Amendment rights against self incrimination. If you refuse to give out your password, they further violate the Fourth Amendment by seizing your device.

CBP agents are human. There is no inherent reason that they can be trusted with information like passwords. There is no reason why passengers should have to trust that their copied information will actually be destroyed according to CBP policy.

There is no legal justification to threaten the contacts and sensitive information that journalists might be transporting. This further adds First Amendment concerns to this intrusive policy. It could easily be used to chill free speech and freedom of the press.

Luckily there is a lawsuit in the works challenging this policy, but a ruling cannot happen quick enough.

In the meantime, prepare carefully for international travel. You may even want to travel only with “burner” devices; meaning you don’t mind if they are confiscated for refusing an unconstitutional search.

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