Political Purge

"So, here's to the men who did what was considered WRONG, in order to do what they knew was right...what they KNEW was right."
--Benjamin Franklin Gates (National Treasure)

After Donald Trump and his close circle were hit by DOJ search teams, it appears that this administration is widening its nets. Tucker Carlson reports that subpoenas are in the process of being issued on dozens of Trump allies.

This is what a political purge looks like.

Obviously, this is meant to send a message ahead of the upcoming midterm elections, and to those who are considering involvement in the presidential election two years off.

Climate Gravy Train

Strange voices are saying

What did they say?

Things I can't understand

It's too close for comfort

This heat has got right out of hand
--Bananarama

On the back of yesterday's post, another credentialed 'expert' fades the party line on climate change. He argues that any relationship between man and climate change is a spurious one. It is more likely, he suggests, that cyclical activity on the sun's surface is influencing weather patterns on earth.

Meanwhile, climate alarmists seek to ride a 'gravy train' to make money.

Greenpeace Man

"There is a WALL of water coming toward New York City!"
--Radio announcer (The Day After Tomorrow)

Interesting piece on Greenpeace founder who left the organization when it was 'hijacked by the political left' and morphed it into a 'political fundraising organization.'

Great comments particularly on the 'demonization' of carbon dioxide and its influence on climate. This chart should be particularly telling to any reasoning mind:

Also liked his comments on the dynamics of CO2, plant growth, and robust ecologies--something these pages have discussed.

Extremism and Liberty

"Tonight, our country, that which we stand for and all we hold dear, faces a grave and terrible threat. This violent and unparalleled assault on our security will not go undefended...or unpunished. Our enemy is an insidious one, seeking to divide us and destroy the very foundation of our great nation. Tonight, we must remain steadfast. We must remain determined. But most of all, we must remain united."
--Adam Sutler (V for Vendetta)

It's difficult to imagine that this administration doesn't lose more political support each time it opens its mouth. Last night Biden spoke like a geriatrically challenged version of Adam Sutler, declaring that supporters of Donald Trump and the Make America Great Again ideology constitute a "threat to our country."

If one infers that those who voted for Trump in 2020 comprise this group, then it numbers at least 70 million.

The president's press secretary added the e-word. The president, she said, sees this group as "an extreme threat to our democracy."

Moreover, "when you are not with where the majority of Americans are, then, you know, that is extreme. That is an extreme way of thinking."

Setting aside questions involving what precisely in MAGA ideology is inconsistent with the views of the majority of Americans, or, for that matter, whether MAGA ideology itself doesn't actually constitute the majority viewpoint, any American with a modicum of grounding in US history understands that our founding ancestors designed a government that protected the rights of those who not aligned with the whims of majority opinion. 

If the press secretary's definition of extremism is employed, then opinions inconsistent with the majority are to be protected from tyrannical treatment. Government is legally barred from acting against 'extremists'--again defined as those who think differently from the 'majority.' 

My sense is that Americans still understand this founding principle well enough they are are turned off by the caustic 'extremist' claims of leftists.

Irreparably Compromised

"The wheels turn slow around here. Real slow. But they do turn."
--Detective Marie Mitchell (Hard Target)

What would it take to show that there was massive fraud and interference in an election--long after a 'winner' was originally declared. What if this fraud and interference cast serious doubt who really won? Or even worse, that a candidate originally deemed to have lost actually won?

How would the damaged candidate(s) seek and obtain relief?

My sense is that those who perpetrate election fraud are prone to do so boldly, under the assumption that if they can get to the point where the results are declared 'official,' then it will be next to impossible for a damaged candidate to obtain relief in a manner that society views as legitimate.

Not long after the 2020 election, these pages mused about this situation. That we're still musing more than two years later suggests a) that compelling evidence of fraud continues to surface, and b) the spectre of widespread recognition of irreparably compromised election has not been extinguished by the perpetrators.

Leveraged Loans

"The mother of all evils is speculation--leveraged debt."
--Gordon Gekko (Wall Street 2: Money Never Sleeps)

Leveraged loans are loans extended to entities that already have high levels of debt and/or poor credit history. Loans are usually arranged by at least one investment or commercial bank, and are often syndicated to other banks or institutions.

This article estimates the current value of leveraged loans outstanding at $1.4 trillion--nearly double the 2015 market size. I have read elsewhere that leveraged loans have become popular among college endowments and other institutional investors as high yielding alternative investments.

With that high yield, of course, comes higher risk. Leveraged loan borrowers are more prone to default. Indeed, the article also suggests that leveraged loans may be a useful 'canary in the coal mine' this time around as credit market stress builds.

We know that tight monetary policy moves are often lagged in their effects. The leveraged loan market may be a good place to look for manifestations of the Fed's previous actions.

Jackson's Hole

"You're the disease, and I'm the cure."
--Marion Cobretti (Cobra)

The much-awaited Jackson Hole speech from Fed chair Powell is now in the books. Personally, I always chuckle when Fed heads wax about economic problems that always seem to be exogenous, and the Fed's heroic role in taming them.

The topic this time around is, of course, inflation. Powell suggests that the Fed must draw upon 3 lessons learned. One is that the Fed must take on responsibility for delivering low and stable inflation. The obvious question is why should the Fed be responsible for delivering any rate of inflation at all? Moreover, if the Fed is responsible for delivering low inflation, then how did we get to this state of high inflation in the first place?

The second lesson learned related to 'inflation expectations.' Powell asserts that "if the public expects that inflation will remain low and stable over time, then, absent major shocks, it likely will. I found that statement particularly rich. It suggests that a major goal of 'fighting inflation' is persuasion--persuading the public that inflation is low. 

Never mind the decades of easy money compliments of the Fed.

The third lesson is that the Fed must keep at it until the job is done. That is, keep monetary policy restrictive until "inflation is down to the low and stable levels that were the norm until the spring of last year. But monetary policy was extraordinarily 'unrestrictive' for more than a decade before the spring of last year. 

If that prolonged period of easy money didn't unduly elevate the public's inflation expectations, then how will the Fed 'keeping at it' with restrictive monetary policy do the opposite?

Powell once again markets the Fed as the cure rather than the disease it is.

Legitimacy by Association

"Looks like you're running with the cool kids now."
--Meg Harper (Joe Somebody)

Tom DiLorenzo discusses the long train of 'witch doctor' economists that have infiltrated government for generations. What gives these charlatans staying power?

It's primarily about perceived legitimacy that these so-called 'experts' bring to an administration. Fancy degrees and awards bring an air of distinction that wows the masses. By employing the witch doctors, politicians associate themselves with thought leaders. 

Legitimacy by association. And a nice gig for the intellectual class.

Moreover, because those who refuse to think for themselves are prone outsource the brains to others, political partisans can program minds by employing witch doctors ideologically aligned with the partisans' agendas. Blindly following expert advice puts the followers under the thumbs of the politicians.

The antidote to this cronyism? People who think as they seek truth.

Down Year for Institutions

You got me running
Going out of my mind
You got me thinking
That I'm wasting my time
--Electric Light Orchestra

The fiscal year for many institutional funds, e.g., pension funds and higher ed endowments, ends June 30. 2022 was not kind.

Public pension funds were down about 8%.

College endowments did even worse, losing more than 10%.

The worst performance for both since the credit collapse. To be fair, however, this down year follows one of the best years for both groups.

Down years hit pensions particularly hard due to their chronically underfunded nature. Drawdowns reduce fund capacity for meeting short and long term obligations. Making up for lost ground will likely require some combination of raising pension fund contributions, cutting benefits, and/or taking on more risk in hopes of boosting future returns. 

As for the latter option, not sure how much more room fund managers have after years of pushing the risk envelope.

Premie Retirees

"I'm gone. Don't try to find me. You won't. I'm on strike."
--Ellis Wyatt (Atlas Shrugged: Part 1)

This article suggests that the pandemic taught many people, especially young ones, that work doesn't pay. It is better to stay home and goof off rather than to toil one's life away.

Makes sense when the government was sending stimulus checks that paid people to stay home--given axiomatic aversion to labor that steers human behavior. However, it doesn't explain how those young non-workers will continue to not work once the stimmy checks dry up.

That said, it is entirely possible that an older, yet still capable cohort has indeed left the workforce for good as part of the Great Resignation. Many people approaching retirement age became disgusted with restrictive pandemic work policies, such as masking and mandatory vaccinations and hit the silk rather than deal with unpleasantries that conflicted with their principles.

Unlike younger workers, this cohort has a substantial nest egg that can be used to fund unexpected early retirement. Because they are still productive, premature retirees could always step back into the workforce if they change their minds, or if their budgetary situation changes.

Given the still-oppressive regulatory overhang governing many workplaces, however, many of these premies may be gone for good a la John Galt.

In the Dogma House

Carmen Sternwood: What's your name?
Philip Marlowe: Doghouse Reilley
Carmen Sternwood: That's a funny kind of name.
Philip Marlowe: You think so?
--The Big Sleep

Dogma is belief accepted by a group without question or debate. It stands to reason that the higher the preference for collectivism among members of a group, the more likely that dogma will reside within the group.

How to counter such groupthink? One way is to avoid affiliations. As Jefferson understood, belonging to groups tends to cloud judgment.

Outside viewpoints are also useful as they bring fresh perspective. Of course, outsiders are typically unwelcome in collectivist circles as they threat group cohesion.

Finally, there is reason. Applying logic and scientific thinking toward dogmatic principles commonly lays groupthink to waste.

Should it be surprising, then, that leftists increasingly claim reason and critical thinking to be racist and inflammatory?

They need to quell the threat to group cohesion somehow.

Keep Him Out

But you won't get too far
'Cause you got to blame someone
For your own confusion
We're on guard this time
Against your final solution
--Red Rider

Interesting thesis about why leftists, including many on the conservative side, cannot let Trump back in the Oval Office. The primary answer is that it is not Trump, but the tens of millions of 'country class' that he represents. 

The elite cannot afford to have give those rubes, Clinton's 'deplorables,' a voice in the political process. And to keep that from happening, the ruling class will stop at nothing to keep that from happening.

The author suggests that leftists have a string of plans in the queue to keep Trump out of office.

Plan A. Use the Jan 6 show trials to keep Trump from running/winning. By most accounts, however, that isn't working.

Plan B. Indict Trump for 'seditious conspiracy' using the DOJ and other machinery of the deep state. Of course, it will be difficult to convince a large fraction of Americans that any such charges hold a modicum of legitimacy.

Plan C. Declare Trump ineligible to run under the insurrection clause of the 14th Amendment. The legitimacy issue still holds.

Plan D. Simply beat Trump at the ballot box. The trouble is Democrats have no obvious candidate that could compete with Trump head-to-head this time around.

Plan E. Cheat (again) in the election. There is no question that Democrats will do what they can get away with (again) this time around. The issue is, given the heightened public awareness about election process shenanigans, how much they will truly be able to get away with in 2024.

Plan F. Take to the streets and riot. Do this until the 'proper' regime is secured in the White House.

It is easy to see why leftists are husting to grab guns ahead of this cycle.

Social Networks and Political Correctness

"I'll be subtle. I'm good at subtle."
--John Spartan (Demolition Man)

Political correctness can be defined as behavior intended not to upset a particular group in order to advance an agenda. It often manifests in manipulating language. Political correctness is pretense; it is not genuine.

Political correctness is a product of social learning. Observing others. Watching what gets sanctioned. Fitting in.

As such, it should be no surprise that political correctness has increased alongside capacity for social networking.

Imagine a research experiment studying two groups of people. One group is highly plugged into their phones, tablets, and other social networking devices. 

The other group is rarely, if ever, online. 

Which group is likely to exhibit more politically correct behavior?

Undercover Hero?

My beacon's been moved
Under moon and star
Where am I to go
Now that I've gone too far?
--Golden Earring

I enjoy reading Tom Luongo's work. Thought provoking--even when his general premise is wrongheaded. 

In this recent piece, for example, Luongo gives the Fed entirely too much credit, arguing that the central bank is essentially the 'good guy'--battling inflation wrought by irresponsible fiscal policies that sent money to people in boxes during CV19. 

He fails to mention the Fed's long history of bailing out markets (and policymakers) when markets break, or of the central bank's $9 trillion of balance sheet assets purchased with money created at the click of a mouse. Because, as Friedman observed, inflation is always a creature of monetary policy, arguing that the Fed is somehow not the Dr Frankenstein that created our present monster seems a bit naive.

However, Luongo does make an interesting point toward the end of his article. He notes (correctly) that the Davos/World Economic Forum crowd would like to put an end to commercial banking, and put all monetary power in the hands of central banks--perhaps even in a one world central bank with digital currency-producing capacity.

He then suggests that, in the United States (and perhaps elsewhere), the Fed represents the interests of those commercial banks. As such, the Fed is motivated to break the EU-centric Davos/WEF threat to US commercial banks by raising rates, pounding the euro, and perhaps even driving the EU toward dissolution.

There's lots of holes in that argument--including the Fed's 'institutional obligations' both domestic and abroad--but interesting to ponder the 'undercover hero' thesis nonetheless.

Obeying Absurdity

"Private, I know they brainwashed you in boot camp. But sometimes you gotta QUESTION authority!"
--Chief Petty Officer Casey Ryback (Under Seige)

When a reasoning mind reflects on what's gone on, like this nurse has done, it is difficult not to conclude that a large fraction of the population will unquestionably obey authoritarian 'guidance.' 

No matter how absurd.

Zero Coherence

Maybe someday
Saved by zero
I'll be more together
--The Fixx

Earlier today the European Central Bank (ECB) raised its deposit rate 50 basis point to...zero. The ECB's deposit rate had been in negative territory since 2014, meaning that depositors essentially paid to keep their money in the central bank's vault.

This is also the first interest rate increase by the ECB since 2011.

Needless to say, monetary policy in Europe has been off the rails for quite some time.

To demonstrate that it hasn't suddenly been transformed into an institution with coherence, the ECB unleashed a blizzard of acronym-heavy programs, such as Transmissions Protection Mechanisms (TPI), designed to selectively buy bonds of struggling EU countries (e.g., Italy) to keep sovereign debt from imploding.

Thus, we have a central bank raising interest rates while continuing easy money policy using a quantitative easing (QE) transmission mechanism.

The ECB truly makes the Fed look smart.

Handshake Contagion

When it almost seemed too much
I see your face and sense of grace
And feel the magic of your touch
--Thompson Twins

When it is time to 'offer each other a sign of peace' at mass, the new normal has become waves, good old fashioned peace signs, or other non-contact gestures. Certainly no handshakes.

Every now and then, however, people can't resist doing what is natural.

Today, the two people in front of me both offered their hands, which I gladly shook. A person behind me saw our handshakes and got in on the action as well. Genuine smiles all around too.

It felt good to defy the nonsensical and to do instead what humans were made to do. 

True contagion.

Institutional Confidence

Oh, but I gotta think twice
Before I give my heart away
And I know all the game that you play
--George Michael

New Gallup poll indicates confidence in many US institutions continues to decline.

Outside of small business and the military, the percentage of people expressing considerable confidence is below 50% and, in many cases, in the teens moving toward single digits.

Some institutions, including the presidency, are down more than 10 percentage points in a year.

While these results might concern members of those institutions, they are unlikely to surprise the average person on the street.

Roe Overturned

Always searching for the real thing
Living like it's far away
Just leave all the madness in yesterday
You're holding the key
When you believe it
--Michael McDonald

Yesterday the United States Supreme Court, in the case of Dobbs v Jackson Women's Health Org, overturned the controversial 1973 high court opinion of Roe v Wade--that abortion was a constitutional right. The 6-3 decision was split along party lines, although, as usual, the political animal Chief Justice John Roberts, while concurring in judgment, argued for a compromise that would have prohibited a clean break from Roe.

Dobbs is a worthy read. The institutional challenge facing the court was how to reverse a longstanding albeit controversial and politically charged precedent. The solution, of course, is to stick to the law--something that the Roe court failed to do. 

The primary opinion authored by Justice Alito and supplemented by Justices Thomas and Kavanaugh demonstrates how to go about righting a past judicial wrong. The court first reviews the standards by which 'liberty' as referenced in the Fourteenth Amendment protects particular rights. The central conclusion of this analysis is that the Constitution makes no express reference to the right to obtain an abortion. 

Next, the court considers whether abortion can be construed as an essential component of 'ordered liberty' as reflected by its grounding in the nation's history. The judicial term commonly associated with this analysis is 'substantive due process.' A review of pre-American common law as well as American law all the way up to Roe clearly does not protect a right to abortion. In fact, the law generally specified abortion as a criminal act--often on the level of a felony or manslaughter.

Finally, the court considers the stare decisis issues associated with overturning a legal precedent--particularly a big one like Roe. The court applies several tests: the nature of the previous error, the quality of reasoning, the workability of rules resulting from the previous judgment, effects on other areas of the law, and interests that relied upon the previous decision. It also considered the dissent's claim that overturning Roe would create considerable political consequences and damage the court's legitimacy (Chief Justice Roberts seems particularly sensitive to these types of arguments). The central conclusion: stare decisis does not prevent righting wrongs, no matter how controversial the reversal might be.

In overturning Roe, the court does not make abortion illegal. Instead, it returns the decision to the various states. There, the citizens and their elected representatives must decide to what extent abortion should be permitted, regulated, or prohibited.

As Justice Thomas suggested in his concurring opinion, Dobbs might serve as a template for re-considering other previous high court decisions of questionable legal quality.

War Fatigue

Armchair warriors often fail
And we've been poisoned by these fairy tales
--Don Henley

Governments wanting to engage in war with foreign entities must win consent of the citizenry to do so. If they view the war as illegitimate, the people have capacity to shut the war down via several avenues, including voting officials out of office, withholding funds for military resources, or even overthrowing the regime prosecuting illegitimate war.

Consequently, governments must convince people that their war is just. They must do so at the outset of the conflict, and then continue to do so. Because war requires ongoing sacrifice in order to fund the war effort, it is possible that enthusiasm for war will wane as people increasingly regret what they must forfeit as conflict drags on.

It appears that support for US involvement in the Ukraine conflict is already waning. Surveys suggest that the American public is increasingly wary of US efforts to harm Russia in manners that hurt the domestic economy.

That, of course, is precisely what sanctions do. Any effort to restrict production and trade with entities abroad damages standard of living at home.

As more Americans realize that sanctions are not unilateral, this administration loses its public grant of legitimacy for engaging the country in war.