One Example of the Dystopian Cruelty at the Heart of Trump’s Budget

Katie McDonough

Yesterday 4:47pmFiled to: FOOD ASSISTANCE

The budget proposal the Trump administration released on Monday is a lengthy collection of moral horrors, but one section contains a particularly striking example of what is both new and old about this administration when it comes to policies that punish poor people.
The White House’s Office of Management and Budget has proposed a 30 percent cut to the Supplemental Nutrition Assistance Program—also known as food stamps—over ten years. This would radically overhaul and dismantle SNAP—a longterm Republican policy priority—and would lead to an estimated 4 million people losing their benefits entirely, according to the Center on Budget and Policy Priorities.


But the Trump administration has also come up with something called “100 percent American grown food” meal packages, which would replace traditional benefits that allow people to go to the grocery store and purchase their own food.
From the proposal (emphasis mine):
The Budget proposes a bold new approach to administering SNAP that combines traditional SNAP benefits with nutritious and 100 percent American grown food provided directly to households. Under the proposal, households receiving $90 or more per month in SNAP benefits will receive a portion of their benefits in the form of a USDA Foods package, which would include items such as shelf-stable milk, ready to eat cereals, pasta, peanut butter, beans and canned fruit, vegetables, and meat, poultry or fish.
The remainder of their benefit would go on the SNAP Electronic Benefit Transfer (EBT) card for use at approved grocery retailers. This cost-effective approach will generate significant savings to taxpayers with no loss in food benefits to participants. It will also improve the nutritional value of the benefit provided and reduce the potential for EBT fraud.

This idea checks quite a few rightwing boxes. It functions as a step towards defunding basic social safety net programs while also reinforcing a the fiction that people receiving food assistance are scamming the system and should not be allowed to make their own choices about the food they put on their tables.
It would also radically remake how the program works today.
“The level of disruption this would introduce is extraordinary,” Stacy Dean, the vice president for Food Assistance Policy at the Center on Budget and Policy Priorities, told Splinter. “I don’t think anyone has contemplated this.”

According to Census data and an analysis from the CBPP, SNAP kept around 8.4 million people out of poverty—including about 3.8 million children—in 2014. (Nearly half of all SNAP participants are kids, which is rarely mentioned by Republicans working to dismantle the program.) It is associated with improved health outcomes and helps put money back into local economies as people use their benefits at neighborhood grocery stores.
SNAP works, extraordinarily well, when it is allowed to work. But years of funding cuts—including bipartisan efforts to do so—have meant that recipients are forced to do more with less, reproducing cycles of poverty and hunger.
That is a familiar pattern. The packaged meal program—which would further constrain the meal choices and autonomy of low-income families through a kind of Fresh Direct from hell—is something new entirely. Why? Because this administration is nothing if not innovative in its cruelty.

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How Wall Street’s ‘fear gauge’ is being rigged, according to one whistleblower

By Mark DeCambre, Francine McKenna
One of the most popular measures of volatility is being manipulated, charges one individual who submitted a letter anonymously to the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The letter makes the claim to regulators that fake quotes for the S&P 500 index SPX, +0.26% are skewing levels of the Cboe Volatility Index VIX, -2.50% which reflects bearish and bullish options bets 30-days in the future on the S&P 500 to gauge implied stock-market volatility (see excerpt from the letter below).
The flaw allows trading firms with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital. This market manipulation has led to multiple billions in profits effectively taken away from institutional and retail investors and cashed in by unethical electronic option market makers.
The whistleblower’s claims are consistent with those documented by John Griffin, professor of finance at the University of Texas and Ph.D. candidate Amin Shams in May 2017 in research that says the cost of manipulating less-liquid SPX options would be more than paid for by a successful bet on the direction of the VIX. The paper is consistent with the whistleblower’s conclusion—that manipulators are moving prices of the SPX options by spoofing at settlement—entering quotes for trades that are never executed—to “paint the tape” and, therefore, influence the value of expiring VIX derivatives.
Opinion: How S&P 500 options may be used to manipulate VIX ‘fear gauge’
The VIX has underpinned a number of strategies described as so-called short-volatility, which imploded dramatically last Monday when VIX, also known as Wall Street’s fear gauge, registered its largest percentage change in its history, cratering bets that volatility measures would fall, if not remain muted.

Short volatility products, notably, VelocityShares Daily Inverse VIX Short Term ETN XIV, -0.75% tumbled 90% in after-hours trade Feb. 5 as the Dow Jones Industrial Averaged DJIA, +0.16% plunged 1,175 points, or 4.6%, marking its sharpest point drop in the blue-chip gauge’s 121-year history. Another product, the exchange-traded fund ProShares Short VIX Short-Term Futures ETF SVXY, -0.44% known by its ticker SVXY, also tanked last week.
Credit Suisse, the sponsor, of VelocityShares Daily, or XIV, said it planned to liquidate the product on Feb. 21.
The spectacularly wrongway short bets had become one of the most popular trades on Wall Street because volatility had gone eerily absent for a protracted period, encouraging investors, who were lamenting the narrow trading ranges present during that period of placidity, to make more aggressive wagers to generate richer returns. Those moves also came amid ultralow rates for government bonds, particularly the 10-year Treasury note TMUBMUSD10Y, -0.48%
Jason Zuckerman, attorney at law firm, Zuckerman Law, who is representing the anonymous whistleblower, told MarketWatch that his client is concerned about unfair markets.
“My client is concerned about VIX manipulation that has already caused investors to incur massive losses and is eager to prevent further harm from investors,” Zuckerman said.
The whistleblower would also like the market regulates to play a more active role in preventing further harm to investors including requiring more accurate and comprehensive disclosures about the various risks that are associated with products linked to VIX,” he said.
The letter urges “the SEC and CFTC to promptly investigate the matter before investors suffer additional losses due to this fraud.”
Zuckerman’s whistleblower further charges that the average retail investor isn’t aware of how exchange-traded products like XIV are rebalanced daily and that a “mismatch” in the nature of short-volatility products means “a larger move in spot-volatility in either direction requires excessive buying or selling pressure whenever short volatility assets are dominant.”
Source: Zuckerman Law

One error that market participants have pointed out is that Zuckerman and his client in the letter refer to the CME Group Inc., at one point rather than the Cboe Global Markets Inc., which oversees the VIX product.
“This letter is replete with inaccurate statements, misconceptions and factual errors, including a fundamental misunderstanding of the relationship between the VIX Index, VIX futures and volatility exchange traded products, among other things,” a Cboe spokeswoman said in a statement.
Messages to the SEC and the CFTC weren’t immediately returned.
The whistleblower claim also comes amid heightened regulatory scrutiny around short-VIX products, including former CFTC Commissioner Bart Chilton, who told MarketWatch that warnings about products like XIV should be written in “big, bold 24-point font and in red letters.”
A CBOE press release said that Feb. 5-Feb. 9 was the busiest week in the exchange’s history with a record weekly high of 48.29 million contracts traded. However, shares of CBOE, which merged with merged with Bats Global Markets last year, lost 20% last week when after the market mayhem cast doubt on whether these products would remain viable choices for traders.
CBOE executives are confident its VIX product will continue to do well in all market conditions. On its earnings call, John Deters, CBOE’s chief strategy officer, told analysts, “It’s really an exceptional event when the level of VIX increases and doubles in a matter of just a handful of days. That’s occurred, and now we’re at a point where — and professionals know this — we’re at a point where the short VIX strategy tends to work quite well.”
CBOE Chairman and CEO Edward Tilly refuted concerns about the impact of the problems at some exchange-traded products and added that the exchange saw record trading volume in VIX futures and options in 2017. “The activity we see from issuers of XIV and SVXY is less than 5% of all VIX futures trading, representing average daily volume of about 12,000 contracts,” Trilly said. Non-institutional holders of these ETPs were approximately 21% of total holdings in the last reported period, he said, with the remainder consisting of “sophisticated institutional users who employ inverse VIX ETPs as part of a diverse mix of trading and investing strategies.”

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Sealing the border redux: American universities are losing international students

Dick Startz
Wednesday, February 7, 2018
Brown Center Chalkboard

One year ago, I wrote on these pages: “If new border controls prevent the entry of foreign students, or simply makes them feel unwelcome so they go elsewhere, American jobs and American students pay the price.” I regret to report that we have now started down that path.
First, the fact: College enrollment of international students is down for the first time in a long time. The drop is large, but not overwhelming—at least not yet. We’ve seen a one-year decrease of about 30,000 students, which isn’t massive. However, Department of Education



In the short run, losing international students is bad for what some might think of as a pretty crass reason: International students subsidize American kids because nonresidents pay higher tuition and receive less financial aid. This is especially true at public universities. For example, at the University of California—which is the world’s largest research university system—Californians pay about $14,000 in tuition and fees. International students pay more like $41,000—that’s roughly triple. And about a third of tuition is turned around and spent on financial aid, but almost none of that goes to international students. So the effective price difference is even bigger than list price would indicate.

The immediate effect of losing foreign students falls very unevenly across institutions. Unsurprisingly, international enrollments continue to climb at some universities (typically elite or flagship public universities), while international enrollments plummet at others (typically smaller, less prestigious institutions). The resulting budget cuts at the latter often hit in the areas that are already under the most financial stress, not necessarily the areas which attract the most international students. The

New York Times writes, “At Wright State University in Ohio, the French horn and tuba professors are out. … At Kansas State, Italian classes are going the way of the Roman Empire.”
The immediate budget impact is bad, but I worry also about a longer-run, more serious problem. Bringing international students to the United States has two valuable way-down-the-road outcomes. One easy-to-see benefit is that we get to cream skim, keeping some of the best students in the United States. Just as an example, many tech-entrepreneurs came to the U.S. this way. Losing international students will harm the domestic economy in the long run

A harder-to-see benefit is that many international students who return home do so with an appreciation for what America is really like. I believe that to know us is to love us. And it’s not just a matter of affection; surprisingly large numbers of foreign government officials have American degrees. Just as an economics example, the governors of the central banks of Europe, England, Israel, Argentina, India, and Mexico all have American degrees. Though the governors of the central banks of China and Russia don’t have American degrees, each did spend a year studying at an American university. Though the benefits from these educational exports are difficult to quantify, presumably some diplomatic goodwill in foreign governments across the globe is a result.
International college students bring us economic benefits today and political benefits in the future. I really hope that, a year from now, I’m not sharing with you that things have gotten worse.

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