Feb 07

Today’s News 7th February 2021

  • When (Or If) Comes The Pushback?
    When (Or If) Comes The Pushback?

    Authored by Victor Davis Hanson via AMGreatness.com,

    The corruption of the Renaissance Church prompted the Reformation, which in turn sparked a Counter Reformation of reformist and more zealous Catholics.  

    The cultural excesses and economic recklessness of the Roaring 20s were followed by the bleak, dour, and impoverished years of the Great Depression. 

    The 1960s counterculture led to Richard Nixon’s landslide victory in 1972, as “carefree hippies” turned into careerist “yuppies.” 

    So social, cultural, economic, and political extremism prompt reactions – and sometimes counterreactions.   

    The Bush-Clinton-Obama continuum of 24 years (from 1993 through 2015) cemented the bipartisan fusion administrative state. Trump and his “Make America Great Again” agenda were its pushback.  

    The counter-reaction to the populism of the Trump reset—or Trump himself—is as of yet unsure.  

    Joe Biden’s tenure may mark a return to business as usual of the Bush-Clinton years. Or more likely, it will accelerate the current hard-left trajectory. 

    Either way, it seems that Biden is intent on provoking just such a pushback by his record number of early and often radical executive orders—a tactic candidate Biden condemned. 

    On almost every issue—open borders, blanket amnesties, canceling the Keystone XL pipeline, promoting the Green New Deal, and hard-left appointees—Biden is touting positions that likely do not earn 50 percent public support. 

    When Biden made a Faustian bargain with his party’s hard-left wing of Bernie Sanders (I-Vt.), Kamala Harris, Elizabeth Warren (D-Mass.), and Alexandria Ocasio-Cortez (D-N.Y.) to win the election, he took on the commitment to absorb some of their agenda and to appoint their ideologues. 

    But he also soon became either unwilling or unable to stand up to them.

    Now they – and the country – are in a revolutionary frenzy.

    • The San Francisco school district has canceled over 40 schools honoring the nation’s best – Washington, Jefferson, and Lincoln – largely on racist grounds that they are dead, mostly white males. 

    • Statues continue to fall. Names change. 

    • The iconic dates, origins, and nature of America itself continue to be attacked to meet leftist demands.

    • And still, it is not enough for the new McCarthyites.

    • Social media are banning tens of thousands.

    • Silicon Valley and Wall Street monopolies go after smaller upstart opponents.  

    • A wrong word destroys a lifelong career.

    • Formerly sane pundits now call for curtailing the First Amendment.

    • Thousands of federal troops blanket a now-militarized Washington, D.C.

    If Trump’s pushback tried to return to traditions ignored during the Obama years, Biden’s reset promises to become far more radical than Obama’s entire eight years. 

    Trump likely lost his second pushback term for two reasons – neither of which had anything to do with his reset agenda.

    First, the sudden 2020 pandemic, quarantine, recession, summer-long demonstrations and riots, and radical changes in voting laws all ensured that 100 million ballots were not cast on Election Day, derailed a booming economy, and finally wore the people out.  

    Second, Trump underestimated the multitrillion-dollar power and furor of Silicon Valley, Wall Street, the media, Hollywood, and the progressive rich. Those forces all coalesced against him and swamped his outspent and outmanned campaign. 

    With 24/7 blanket ads, news coverage, endorsements, and social media messaging, Trump sometimes was easily caricatured as a twittering disrupter. The inert and mute Biden in his basement was reinvented as the sober and judicious Washington “wise man” antidote to Trump’s unpredictability.

    Had Biden continued his moderate campaign veneer, the current left-wing radicalism might not have prompted a counterreaction. 

    Instead, Biden is now unapologetically leading the most radical left-wing movement in the nation’s history. 

    Pundits thought Biden’s prior hints of a single four-year term would make him a weak lame duck.  Instead, the idea of just one term has liberated the 78-year-old Biden. We forget that septuagenarians can be as reckless as 20-year olds. Some old guys can feel their careers only have a few remaining years and might as well go out with a bang—and a legacy. 

    For now, Biden enjoys a congressional majority for the next 24 months. He has no plans to run for reelection. He sees both realities as a liberating blank check to accomplish what the much more heralded rockstar Barack Obama never could. 

    Experts assured voters that Joe Biden would work on a bipartisan consensus and bring back “normality.”

    He would “unite” the country.  

    That will not happen. How ironic that Biden will not just be pushed and pressured by the radicals whom he brought to power, but he may be leading them forward to cement an even harder Left legacy.

    Will there be a reaction to this extremism?  

    The Left is assured that radical changes in voting laws and demography, the fears of COVID-19, the Antifa-Black Lives Matter uprising, and anger at Trump over the January 6 Capitol riot have all permanently changed the electorate – and pushed it far leftward. 

    If they are wrong, they have instead alienated and insulted the American people, and will reap the whirlwind in 2022 of the wind they are now sowing.

    Tyler Durden
    Sat, 02/06/2021 – 23:30

  • Google Reverses Course In Australia – Opens Paid Platform For (Some) Australian News
    Google Reverses Course In Australia – Opens Paid Platform For (Some) Australian News

    The Australian government has possibly obtained a rare, partial victory in its standoff with Google. The US-based tech giant has appeared to reverse course as Australia holds hearings aimed at enacting legislation that would effectively force Google to pay local sources for news it links to and features in its search engine. 

    Google last month threatened to pull its search engine off the continent altogether, with Canberra counter-threatening that they won’t budge. But on Thursday Google made the following official announcement: “To meet growing reader and publisher needs, last year we increased our investment in news partnerships and launched Google News Showcase.”

    The ‘Showcase’ app is the result of the company negotiating to pay some Australian news producers who sign up for the program. It’s an attempt to undercut legislation being proposed to require the company to pay for all such content. It’s not likely to stop the new legislation, however, but Google is offering it as an ‘alternative’. The move shows that the tech giant is arguably feeling the pressure and is looking to compromise.

    Image via Search Engine Roundtable 

    The Google announcement continued, “Today we are happy to announce we are rolling out an initial version of the product to benefit users and publishers in Australia, with a keen focus on leading regional and independent publishers given the importance of local information and the role it plays in people’s everyday lives.”

    “News Showcase is designed to bring value to both publishers and readers by providing a licensing program that pays publishers to curate content for story panels across Google services, and gives readers more insights into the stories that matter,” it said. 

    While the details have yet to be revealed, for example just which publishers will eventually be enabled to join the platform, it’s being reported as a significant compromise which is likely to first reward major national Australian outlets, as Reuters details:

    With the legislation now before a parliamentary inquiry, Friday’s launch of News Showcase in Australia will see it pay seven domestic outlets, including the Canberra Times, to use their content.

    Financial details of the content deals weren’t disclosed, and Canberra Times publisher Australian Community Media didn’t immediately respond to a request for comment.

    The months in the making Australian initiative seeks to ensure companies and content providers are compensated fairly for the value their content generates for Google and parent company Alphabet Inc. at a moment the domestic industry is in crisis, with traditional newspapers and content producers under threat of having to shut down altogether.

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    Last month Australia Prime Minister Scott Morrison hit back in the wake of the threatened Google shutdown in the country, saying, “We don’t respond to threats.” He added at the time: “Let me be clear. Australia makes our rules for things you can do in Australia.”

    It’s commonly estimated that Alphabet Inc. oversees at least 94% of all search traffic in Australia, similar to many other countries globally, at a time it’s coming under increased accusations of using its monopoly power to bully content providers and smaller competitors. 

    Tyler Durden
    Sat, 02/06/2021 – 23:00

  • Twitter Permanently Bans Gateway Pundit For Violating "Civic Integrity Policy"
    Twitter Permanently Bans Gateway Pundit For Violating “Civic Integrity Policy”

    Twitter has permanently suspended the account of Jim Hoft, founder of the popular conservative website The Gateway Pundit, for reportedly violating the social media giant’s “civic integrity policy.”

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    Hoft’s account @gatewaypundit, which had over 375,000 followers, served as the outlet’s primary presence on Twitter. The ban comes one day after TGP posted election night surveillance video of Detroit’s TCF Center of what the outlet reports is a van dropping off “tens of thousands of illegal ballots,” after which “Joe Biden took the lead in Michigan.”

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    According to a spokesperson for Twitter, “The account was permanently suspended for repeated violations of our civic integrity policy,” according to Citizen Free Press.

    Following the ban, The Gateway Pundit said of the surveillance footage that they have “much much more on this incident to report on in the coming days,” as they have yet to release all of it. Hoft posted the following tweet hours before his suspension:

    And while liberal Twitter celebrates Hoft’s banishment – and the founder of pro-censorship organization Sleeping Giants is now calling for their complete demonetization, The Gateway Pundit can still be found on the following platforms:

    Telegram
    Gab
    SafeChat
    MeWe
    Clouthub
    Minds
    Politichatter

    Tyler Durden
    Sat, 02/06/2021 – 22:27

  • Miami Mayor Speaks With Musk About Boring Tunnel Under Brickell Avenue
    Miami Mayor Speaks With Musk About Boring Tunnel Under Brickell Avenue

    Miami Mayor Francis Suarez had a phone call with Elon Musk on Friday about digging a tunnel underneath Brickell Avenue and Biscayne Boulevard to alleviate traffic. 

    Following the phone call, the Miami Herald spoke with Suarez about the Musk-owned Boring Co. building a $30 million tunnel under the Brickell Avenue Bridge. He said the tech billionaire told him the tunnel could be built in six months. 

    “For him, it’s not about the money, it’s about creating a solution, creating something that creates happiness and prosperity to the people,” Suarez said.

    Suarez said the tunnel would only be accessible to electric vehicles because a major cost-savings of the tunnel is the lack of ventilation systems. He said the call lasted about 30 minutes. 

    “I think we have a unique opportunity to create a signature project, not just for Miami, but for the world,” Suarez said in a video statement on his Twitter account. 

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    Musk has also spoken with Gov. Ron DeSantis and Miami-Dade County Mayor Daniella Levine Cava about the project. 

    Suarez said the next step for him is to speak with DeSantis about the idea considering Miami-Dade County transit officials have already considered building a more expensive tunnel under the city. 

    Already, Boring has found success in completing a third of a mile transport tunnel beneath the Las Vegas Convention Center at the cost of $52.5 million. 

    Last week, San Bernardino County Transportation Authority in Southern California approved plans to connect a train station in Rancho Cucamonga, California, to Ontario International Airport with a Boring tunnel.

    … and good luck to Miami officials, who believe Musk can deliver them a tunnel under budget and in six months. Musk has been notorious for overstating promises. 

    We’re still waiting for the million robotaxis Musk promised on the road by 2020. 

    Tyler Durden
    Sat, 02/06/2021 – 22:00

  • How To Protect Your Local Economy From The Great Reset
    How To Protect Your Local Economy From The Great Reset

    Authored by Brandon Smith via Birch Gold Group,

    Over the years, I have written extensively about the concept of economic “decentralization” and localization, but I think these ideas are difficult for some people to visualize without proper motivation. By that I mean, it’s not enough that the current centralized model is destructive and corrupt; it has to start breaking down or show its true totalitarian colors before anyone will do anything to protect themselves.

    Sadly, the majority of people tend to take action only when they have hit rock bottom.

    In recent months the pandemic lockdown situation has provided a sufficient wake up call to many conservatives and moderates. We have seen the financial effects of pandemic restrictions in blue states, with hundreds of thousands of small businesses closing, tax revenues imploding and millions of people relocating to red states just to escape the oppressive environment.

    Luckily, conservative regions have been smart enough to prevent self destruction by staying mostly open. In fact, red states have been vastly outperforming blue states in terms of economic recovery exactly because they refuse to submit to medical tyranny.

    I outlined this dynamic in detail recently in my article Blue State Economies Will Soon Crumble – But Will They Take Red States With Them?

    The data is undeniable: the states and cities that enforce lockdown mandates are dying, the states that ignore mandates are surviving. However, with a Biden presidency there is a high probability that the federal government will now seek to force compliance from all states. In other words, lockdowns will become a national issue rather than a state issue.

    For now, Biden is pretending as if reopening is right around the corner, but as I have noted in the past, the Reset agenda will never allow this. A reopening, if it happens at all, will be short and lockdowns will return. We are already seeing a new narrative being introduced to the public involving “COVID mutations”, which are supposedly “more deadly” than the original COVID-19 outbreak. So, there is a brand new and useful threat and the establishment will exploit it as a rationale for more lockdowns and restrictions.

    Beyond the pandemic mandates, there are also numerous Reset agenda policies that will be implemented under the Biden administration, including insane Green New Deal related executive orders and legislation claiming to reduce carbon emissions. What they will really do is annihilate resource production. Millions of jobs will be lost and entire industries will be erased unless conservatives act to stop Biden in his tracks.

    This means doing far more than stalling through political maneuvers. We are going to have to use concrete strategies to retake control of resource management within the states. Pointless globalist carbon policies composed by entities like the UN have no place in American economic planning. A message needs to be sent that they will never be accepted here.

    Time is running out to prepare. Lockdowns will return within a few months and this time they will be federally enforced. Conservatives must be ready to defy these orders if they have any hope of saving their local economies. This is going to take individual efforts to stock necessities and secure their finances, but ultimately wider organization is going to be needed to weather the storm.

    Conservatives must establish coalitions of counties and states, and certain economic measures will have to be applied to insulate from damage. The federal government and Biden will attempt to punish red states for refusing to submit, and we need to be ready for that eventuality.

    Here are some ways that conservative communities can stop the Reset agenda…

    Localization

    On a smaller scale, conservatives can accomplish a lot by simply changing their buying habits. If you do 80% of your retail spending with big box stores and online outlets like Amazon and only 20% at local small businesses, then try to switch that ratio. Spend 80% at local businesses and 20% at corporate outlets. Yes, small businesses tend to cost a little extra, but who do you really want your money going to? Do you want your money filling the pockets of international corporate moguls that are working to destroy your freedoms and undermine your economy? Or, do you want your cash to circulate locally?

    Individuals can also start their own business from home focusing on production of necessities or necessary skill sets. They can establish a small business co-op and encourage the community to buy locally. Often, people just don’t know how many services are available from small businesses in their area, so they automatically go to big box providers. Small businesses must work together to change the dynamic.

    This strategy also extends to local farms. Consumers and grocery stores need to buy more of their produce from farms in the area and less from chains which ship in produce from other countries. There are millions of acres of farmland in the U.S. that do not grow food at all because these farms are paid by the federal government not to. Encouraging local food production is paramount to remaining free from centralized control.

    Organized Refusal To Comply

    The problem with conservatives is that we tend to be so independent that we avoid organization. This is a problem because it leads to self-isolation. During the pandemic lockdowns in blue states, some conservative-owned businesses refused to comply, but they were left mostly to fend for themselves with no aid from the wider community. If more businesses were to ally with each other and protested in tandem, dozens or hundreds of defiant businesses working together would be a lot harder to shut down than just a few.

    By extension, it’s not enough for conservatives to merely argue against the lockdowns and demand businesses stay open, we need to also defend those businesses that take action. We need to support them with our dollars and stand in the way of anyone trying to close them down. They are taking a big risk for us, so we need to be willing to take risks for them.

    Imagine if Biden tried to assert a national lockdown order and more than half the businesses in the country ignored him? What if patrons refused to allow federal agencies to intimidate those businesses? The lockdowns would be nullified, and Biden would have little recourse.

    Establish Barter Networks

    In the event that the U.S. economy breaks down completely, we must create contingencies to prevent total trade disruption. Without trade, populations become desperate because no one has the ability to provide every necessity all the time. People have to be able to barter goods and services in an open market.

    Barter networks are a base fundamental, the universal go-to solution during economic collapse. Every society in modern history has used barter markets to stay afloat during financial crisis and to bypass government economic controls. We must be willing to do the same.

    Conservatives must start organizing barter networks within their communities now. It does not matter if you are trading with a couple of people or hundreds; the process needs to start somewhere.

    Why is this so important? Because there is a very good chance that the federal government will try to fiscally punish any state or county that opposes lockdown measures and Reset policies. This means that the government will first seek to cut off federal funding to red states. In the midst of economic crisis, many regions have become reliant on federal stimulus as a crutch, and this dependency makes them vulnerable to control.

    To truly rebel against the Reset, local economies need to be free from federal oversight or consequences. With barter networks in place along with possible local scrip and alternative currencies, the public will be less fearful of economic retaliation.

    Take Back Management Of Local Resources

    We have already seen attempts by Biden to disrupt production of carbon based energy resources like oil and coal. Frankly, the time is long past due for states and counties to take back control of federal lands. The government has been stifling American production for decades and this has hurt rural communities in particular.

    In my area, the EPA has essentially destroyed the timber harvesting industry through unfair regulations. This has led to federal mismanagement of forests to the point that fire hazard has become a major issue. All the young men in the county used work as lumberjacks to support their families; now they have to leave, or work as wildland firefighters. It’s completely backwards. And this is happening while U.S. lumber prices are skyrocketing.

    Conservative counties and states need to take back land and resource management and allow reasonable production to return. Biden should have no say in whether or not oil wells in North Dakota stay operational, or coal mines in West Virginia stay open, or trees Montana are selectively harvested. As long as the bulk of wealth from the resource production stays within the state where the resources were harvested, I see no downside to this kind of response.

    If the federal government tries to retaliate by cutting off federal funds, it won’t matter because the states will be producing jobs and wealth for themselves independently.

    Immunity From Cancel Culture

    In our current political environment, it is becoming a fact of life that the hard left can and will try to harm people that oppose their ideology. Big tech companies and government are helping them to do this. Now more than ever, conservatives that wish to remain free to voice their views and share facts that are contrary to the leftist narrative must seek protection from cancellation. But how do we do this?

    For one, we can work for ourselves. Being self employed means never having to worry about being fired because of your political opinions. Or, conservatives need to work for conservatives. This means conservative companies need to focus on hiring conservative employees, and if the leftist mob tries to attack an individual, those companies can easily ignore them. Of course, this also means that conservative consumers need to start making a list of conservative companies that have proven themselves to be immune to leftist pressure. We need to support these companies.

    Conservatives should also look into the possibility of campaigns to build more platform alternatives to Big Tech and social media. We need more web service providers that are owned by people who respect free speech rights. We may even need our own internet.

    All of these things are possible, but it takes organization and effort. Conservative communities can become safe havens for civil liberties, but this means we cannot be isolated from each other anymore. We have to be connected by more than our principles, we must also be connected through actions.

    *  *  *

    With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.

    Tyler Durden
    Sat, 02/06/2021 – 21:30

  • Super Bowl LV Ticket Prices Halved Amid Virus Fears 
    Super Bowl LV Ticket Prices Halved Amid Virus Fears 

    Super Bowl LV ticket prices have plunged in the last couple of weeks in the wake of the COVID-19 pandemic.

    As of Friday, TicketIQ’s pricing data shows the average price for a Super Bowl ticket is $5,290, down 55% since the peak on Jan. 24. 

    Compared with the last ten Super Bowls, the average $5,290 per ticket is still superior to any other, besides Super Bowl LIV. 

    • Super Bowl LIV: Kansas City Chiefs vs. San Francisco 49ers (Miami) – $6,621

    • Super Bowl LIII: New England Patriots vs. Los Angeles Rams (Atlanta) – $4,331

    • Super Bowl LII: Philadelphia Eagles vs. New England Patriots (Minneapolis) – $4,788

    • Super Bowl LI: New England Patriots vs. Atlanta Falcons (Houston) – $3,967

    • Super Bowl 50: Carolina Panthers vs. Denver Broncos (Santa Clara) – $4,252

    • Super Bowl XLIV: Seattle Seahawks vs. New England Patriots (Glendale) – $4,222

    • Super Bowl XLVIII: Seattle Seahawks vs. Denver Broncos (New Jersey) – $2,516

    • Super Bowl XLVII: Baltimore Ravens vs. San Francisco 49ers (New Orleans) – $2,524

    • Super Bowl XLVI: New York Giants vs. New England Patriots (Indianapolis) – $3,040

    • Super Bowl XLV: Green Bay Packers vs. Pittsburgh Steelers (Arlington) – $3,074

    StubHub spokesperson Mike Silveira told CBS Sports, “as the event draws closer, we often see prices level off as the market more appropriately sets itself based on demand and inventory.” 

    Some local health experts believe Super Bowl LV could be a super spreader event despite strict virus measures, such as health screenings, temperature checks, mask requirements, and social distancing on stadium grounds. 

    While experts fret over the stadium being a super spreader event, a more significant concern is the parties and gatherings not tied to stadium events at bars, restaurants, and house parties around the country. 

    Tyler Durden
    Sat, 02/06/2021 – 21:00

  • Biden To Reverse Trump's Terror Designation Of Yemen's Houthis
    Biden To Reverse Trump’s Terror Designation Of Yemen’s Houthis

    Authored by Dave DeCamp via AntiWar.com,

    The Biden administration notified Congress that it will remove Yemen’s Houthis from the US government’s list of foreign terrorist organizations, a designation made in the last days of the Trump administration.

    “We have formally notified Congress of the Secretary’s intent to revoke these designations,” a State Department official said in a statement. “Our action is due entirely to the humanitarian consequences of this last-minute designation from the prior administration, which the United Nations and humanitarian organizations have since made clear would accelerate the world’s worst humanitarian crisis.”

    Via AFP

    Due to the US-backed Saudi-led war in Yemen that has been raging since 2015, about 80 percent of Yemenis are reliant on aid, and mass starvation has been ongoing in the country for years. The terror designation means anyone who does business with the Houthis could be targeted by US sanctions.

    It essentially criminalizes the delivery of aid and other goods to Houthi-controlled areas, where most of the population lives.

    After the Trump administration announced the designation, the UN predicted that it would cause a massive famine, the likes of which the world hasn’t seen in “40 years.” The Biden administration initially granted a temporary waiver for people to do business with the Houthis, but the UN said that was not enough and still called for the full reversal of the designation.

    The reversal comes after President Biden announced that he will end US support for Saudi Arabia’s “offensive” operations in Yemen. While it was framed to leave wiggle room for the US to support the Saudis militarily in other ways, the administration seems serious about ending the conflict.

    Biden also announced that he appointed Timothy Lenderking as the US special envoy to Yemen. Lenderking is a veteran diplomat who will work to end the fighting between the Saudis and the Houthis.

    Tyler Durden
    Sat, 02/06/2021 – 20:30

  • Commodities Are Soaring 25%: That's Consistent With Headline Inflation Of Almost 4%
    Commodities Are Soaring 25%: That’s Consistent With Headline Inflation Of Almost 4%

    Crescat’s Tavi Costa points out something remarkable which many may have missed amid the short squeeze and “growth” stock frenzy: oil, that “value” age relic, has had its best YTD performance in 30 years. As Costa puts it “commodities are leading the way and the inflationary thesis keeps building up” (incidentally none of this is lost on those long XOM which is not only the most levered – for better or worse – way to bet on rising oil prices but pays a generous 7%+ dividend while waiting for Warren Buffett to announce that he has amassed a 10% stake).

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    In any case, those following the reflation theme better pay attention, because with crude oil prices joining their commodity cousins in repairing the pandemic damage, inflation rumblings are getting a little louder which means that the day central banks may be forced to tighten financial conditions (perish the thought) is nearing once again.

    Of course, with every major developed economy still printing headline and core inflation below 2%, this is not today’s problem, but there is a reason for that: metrics such as CPI and PCE are politically convenient measures that strip away virtually all basket components whose prices are surging to give central banks leeway to pursue politically acceptable policies of reflating all assets (until the bubble bursts, but by then that will be some other politician’s problem).

    Still, as BMO’s Doug Porter shows, the year-over-year rise in a basket of commodity prices (and they mostly all show a similar pattern) is now a bit above 25%. This is a problem because in the past 20 years, that’s been consistent with headline inflation of just under 4%… or rather, it would be a problem if government headline inflation data actually reflected the reality of prices.

    That said, Porter notes some caveats and cautions that some of the biggest misses (where commodities popped and inflation didn’t) were immediately after recessions. That’s because there is still so much slack in the economy that cost increases don’t get fully passed along. (Note especially 2010/11.)

    Still, as the BMO strategist concludes, “barring a fast fall in resource prices, it looks like the days of sub-1% inflation are rapidly drawing to a close.“

    Tyler Durden
    Sat, 02/06/2021 – 20:00

  • "This Is For You, Dad": Interview With An Anonymous GameStop Investor
    “This Is For You, Dad”: Interview With An Anonymous GameStop Investor

    Authored by Matt Taibbi via TK News,

    Thursday, January 21st was a critical day in the story of the video game chain GameStop (ticker name: GME). Retail investors, including many subscribers to a Reddit forum called wallstreetbets, pushed the company’s stock from $6 to $43.03, but experts said playtime was over. It was time for the big shots to clean up.

    According to Citron Research, one of many funds that had bet on the brick-and-mortar store to fail, those investing in GME were “the suckers at this poker game,” and would soon be sorry when the stock went “back to $20 fast.”

    ​

    They were wrong. Instead of amateurs being shoved aside by hedge funds, it was the pros who had their backs broken, as GME soared to $65.05, beginning a steep ascent that would become an international news phenomenon.

    It was the “We’re gonna need a bigger boat” moment for Wall Street. The pros had been sloppy. By late 2020, shares in GameStop were well over 100% short. A sudden rise in value would force shorts to pay exorbitant prices just to get out of the trade. By the afternoon of the 21st, all the “suckers” on Reddit had to do to beat them was nothing, and they did just that, behind the rallying cry “diamond hands,” signifying a determination to hold at all costs.

    Why hold? One of the millions of subscribers to wallstreetbets posted a note, explaining what the trade meant to him:

    This is for you, Dad

    I remember when the housing collapse sent a torpedo through my family. My father’s concrete company collapsed almost overnight. My father lost his home. My uncle lost his home. I remember my brother helping my father count pocket change on our kitchen table. That was all the money he had left in the world. While this was happening in my home, I saw hedge funders literally drinking champagne as they looked down on the Occupy Wall Street protesters. I will never forget that.

    My father never recovered from that blow. He fell deeper and deeper into alcoholism and exists now as a shell of his former self, waiting for death.

    This is all the money I have and I’d rather lose it all than give them what they need to destroy me. Taking money from me won’t hurt me, because I don’t value it at all. I’ll burn it down just to spite them.

    This is for you, Dad.

    The post went viral, scoring over 70,000 upvotes the first day and ending up on the front page of Reddit. The author, who had gone to lengths to keep his identity private, saw his Reddit handle “Space-peanut” inundated with press requests, from podcasts all the way up to the New York Times. Stuart Varney of Fox Business News read his post out loud on live television.

    Meanwhile, on wallstreetbets, Redditor after Redditor responded with similar tales.

    “My mother lost her house that spent 20 years saving for in 2008 while raising me and my sister,” wrote one. “I remember sitting on the curb, trying to keep it together myself at 16 while watching her break down uncontrollably…”

    “My dad is a carpenter and thirty years of work, retirement, and savings was nearly wiped out,” wrote another, adding: “This is for you, Dad.”

    A third letter described a man who, having lost his dairy business after the crash, attempted suicide by shooting himself in the face in the woods. He survived, leaving his son to “carry his blown-apart body to the house,” only to finish the job by throwing himself in front of a train soon after.

    “Space-peanut” watched in awe as stories piled up. The thread soon read like the untold history of America after the 2008 financial crisis:

    The original poster, whom I’ll call SP, was unaccustomed to attention. A one-time military man and father of two, he had no other social media presence and joined Reddit exclusively to comment about stock on wallstreetbets. He was overwhelmed by what he calls “just an endless Rolodex of sad stories,” nearly all referencing the same period after the crash.

    “I think that’s why my post, however terse, hit such a nerve,” he says. “So many people were saying, ‘I have deep pain from this point in time, too.’”

    An acquaintance of a long-ago source of mine, the man reached out this week. Across several conversations, he explained what GameStop meant to him, and why. For a variety of reasons, mainly having to do with his professional situation, he asked to remain anonymous.

    SP is cautious, articulate, and well-read. In our first call, one of the first things he told me was that even growing up, he’d “always wanted to work on a trading desk.” I asked why. The answer was a three-decade story that ran all the way to GameStop. It’s reproduced below, in Q&A form.

    Since 2008, the tendency among mainstream commentators has been to shrug off reverberations from the crash that force their way into news, usually on the grounds that the millions who lost homes, careers, marriages, lifetimes of savings, health, and in thousands of cases, their lives, are not truly poor or “working class,” or are only “relatively low-wealth,” as New York magazine recently put it. In the case of GameStop, there’s been a parade of stories describing investors as dupes, dummies, financial Trumpists, irresponsible gamblers, even crooks, their trade pegged as almost everything but what on some level it surely was and is, an echo of a suppressed national disaster.

    Was GameStop “recreational” investing gone haywire, or a climax to a story building for a generation? Here’s one person’s answer:

    SP: I grew up watching my parents struggle with money. Money was discussed all the time. They fought all the time. The older I got, the more I felt I had to do anything to keep my own kids from going through the same thing.

    My parents worried in different ways. With my mother, I regularly knew how much money was in her checking account because she would stress-yell the amount whenever I asked for anything. It was really difficult for her.

    My dad was the opposite. He wanted you to think he had money, but you were looking around and thinking, “I’m pretty sure we don’t.” Because I don’t have a bed, and my brother is sleeping on a couch. So if you’ve got it, maybe we should use it, I don’t know. So they were different in that regard.

    From the time I was eight and nine, I was spending summers working. When I was with my father he thought it was important for us to do the hardest manual labor possible.

    TK: Was that supposed to be about character-building?

    SP: So my dad thought it was a good idea, but at the same time, I think he needed to go to work. And that was the best place for us to be, because I don’t think he could leave us alone all day. So he was like, “I know what we’ll do. I’ll bring you to work. You can work and then we’ll be together.” (Laughs) That was character-building, yes. I built a lot of character out there. I’d say that much. I had way too much character.

    To this day I know I can outwork people in physical labor simply because my threshold for what is considered difficult is much higher, because I spent summers as a child doing that. I’m not sure where that squares with labor laws, but it happened.

    TK: What kind of work?

    SP: At that time, we were doing field work out where we were from. So you’re doing a lot of leaching, which just is basically watching a big field fill up with water to prepare it for planting. One summer, we were doing that. And then we tore down houses. We were working with other guys who were grown men and didn’t speak English.

    Those guys would do anything to get here and take that job, especially the day laborers. They wake up super early, go to a spot where they know a contractor is going to drive by, and try to pick some of them up for the day. I mean, not an easy existence. So it’s difficult to hear people lambast a specific group of migrant workers. I feel like saying, “Hey, I know I’ve done work with migrant workers and I’ll tell you what, that would be difficult to say, ‘This is what I’m going to do my whole life.’ I’ll tell you that right now.

    TK: What did your mother do?

    SP: After the divorce was over, she moved to a new state, and she spent years starting up a new business, a dining guide in a big city. Put her own money in it. There was a lot of driving, over an hour every morning to get to the city, then appointments all day. She was a single mom at the time, so she had to get back, get the kids, take care of us. But she was doing well. She had advertising contracts lined up and after years of work, was just about ready to launch, when the dot-com bubble burst and she lost it all.

    Almost overnight, the only thing really left of the business was a fax machine in our apartment. Before, companies would be faxing her signed agreements, letters of intent, and so on. All the marketing calls would come back to that number hanging on the fax machine. So basically, anything connected with her company was coming back there.

    For a long time, she would just lay on the couch, locked in depression. The fax would go off from time to time and she wouldn’t react, she would lie there in a daze. Looking back on it, it must have been painful every time that fricking thing rang, a reminder of the thing you failed at. Just imagine, you’re so close to making it, and then an exogenous shock prevents you from achieving the dream you’d set out for yourself.

    She could’ve just let that beat her down forever. But she eventually got her shit together and was like, “Hey, I need to retool myself.” She went back to school, got a master’s degree, started teaching. My dad, on the other hand, didn’t do that. He never got over what happened.

    TK: This was the concrete company?

    SP: Right. In the 2000s, he was a superintendent at a concrete company that was very successful for a time, employed hundreds of people. I worked there, too, when I was 19. Again, there were a lot of migrant laborers doing this work too, guys who were supporting families back in Mexico. And 2008 hit, another financial collapse.

    There was such explosive growth, and all of the sudden, it was gone. My father lost his job, his house, and he just got worse and worse and worse. He’s got heart problems now, he’s on a bunch of medication. I just expect to get the call any day that he’s going to be dead. He’s just circling the drain. He’s been in and out of the hospital. He doesn’t take care of himself.

    One of the people who answered my post on Reddit talked about how he felt the crash basically robbed his father from him. That’s how it was. We used to talk five times a day, man. Talking to my dad was the most reliable thing that I could do. I talked to him and my brother four or five times a day for fifteen, twenty years. And then over the past probably four or five years, it was less and less. I think I went a full year without talking to him. He didn’t know I got married. He hasn’t seen my second daughter.

    I’ll tell you, when you look in the eyes of a grown man who has no options to support his kids, that’s devastating. I decided when I first saw that in him, I would sweat blood to make sure that never happened to my family.

    I put myself through school, going for the cheapest state tuition, and did the same for the MBA program. I was able to take out a loan and I was able to start the program a semester early, while I was still finishing undergrad, so I could economize the cost. And then I went straight through both summers and got it done really quickly, overloading my class schedule because I didn’t want to take out more loans. So I got it done for $25,000, and I was working full-time too, while I was there. Later, I was able to save up enough to get it completely discharged, though in order to do that, I had to have five roommates for four years.

    TK: Why business school, why finance?

    SP: By the time I was getting ready to go to college, my brother had already been in the Marine Corps for a few years and had already done two tours in Iraq, and it was the worst time to be there. He saw a lot of carnage. And he was saying, “You know, if you still want to be in the military, it’s a much better route if you go to college first, from what I’ve seen.” And every single person I’d ever done manual labor jobs with had said, if they could do one thing differently, they would have gone to college. They’d be on the job and put a hand on my shoulder and say, “You don’t want to have to do this when you’re 50.” Like I’m 50, I’m hanging drywall. It’s my company, but it would be nice to not have to do it.

    Anyway, I got into being a Wall Street trader when I was an undergrad. I liked the high energy. I also knew a bunch of people from my home city that grew up to be traders. (Laughs). Some of them were really dumb and some of them didn’t even finish high school, but they knew a guy who was on the floor like (mimics a Chicago accent) “And my boy Tony, he hooked me up with a jawb on the exchange…”

    But they made a lot of money. I thought, “This is ridiculous. I’m more intelligent than that guy.” He could barely do math, but he’s trading options. Still, I liked hanging out with those people. Some of them were not real class acts, but… I liked the idea that it was challenging. I just wanted to study everything I could. I knew I was going to be competing with people that had way better educational pedigrees than I did, and I needed every single edge that I could get just to get myself in the door.

    I got really interested in the question, “what were the things you look for when a company starts going into financial dire straits?” That led me down the path of finding good books that had been written in the past about major bankruptcies and collapses, books like When Genius Failed, Predator’s Ball, and A Colossal Failure of Common Sense. I was studying companies like Long Term Capital Management, which got bailed out in the late nineties.

    At the time, it was just interesting to see how, when people did their homework and took a big risk on some distressed debt, they could make a gigantic payday in one day. And I was like, man, that would be exhilarating. I even saw the original movie Wall Street and I was like, “That’s badass. Even though these guys are criminals, just the idea of being on a trading floor seems really cool.”

    Now I look back at that and think, if I’d become that person, I’d be sitting in the place of some of these hedge funds who do this all day. They go out and find companies that are going to be struggling at a specific date and time, and that’s when they start buying massive put spreads, shorting the piss out of the stock, putting it in the dirt, ensuring it will fail. I look back on it now, and it’s like, “Goddamn, that would have really sucked.” They’re two very different paths I was going down. I’m glad I chose this one.

    TK: What was the other path?

    SP: Look, I originally did all that reading because I was looking for insights on how to make money. But studying firms like Drexel Burnham Lambert, Long Term Capital Management, Lehman Brothers, I learned two other things.

    One is that these guys get bailed out. The second is that they never go to jail, even when they’re dead to rights. I think the two people that got prosecuted first after the financial crisis were the two Bear Stearns hedge fund managers. The implosion of those two hedge funds was the canary in the coal mine, because that was the death knell for the coming crash.

    These two guys had emails back and forth, talking about how fraudulent their products were. Talking about how they’re totally screwing over clients, in writing! And not one of them went to jail. And who did they go after at that time? Bernie Madoff. He was the one person who went to jail. Why did he get prosecuted? Because he stole from the rich!

    TK: They even made a movie about it, starring Robert DeNiro…

    SP: Exactly! How come they didn’t make any movies about these other horrible people that profited off of the destruction of the economy? The people who ran Countrywide, or the people who were working at the ratings agencies, who knew the things they were rating were fraudulent? Even just down at the mortgage origination level. They made tons of money, and not one of those people went to jail.

    Anyway, I didn’t go that route. After I got my MBA, I joined the military.

    TK: Why?

    SP: My brother at the time had already been out of the Marines for a while. He was working for a hedge fund out in California. And his boss was very, very old, in his nineties. I thought, “Man, you can literally die at your desk at 100 years old in finance, but there’s only a short window that you can serve the nation, and once that, once that door closes, it never opens again.” So I joined, went to Officer Candidate School, got in, went to other countries, saw a lot of very, very poor places, which gave me some perspective. Long story short, I ended up working as a software engineer.

    TK: How did you get into online investing? 

    SP: I was still keeping up with all my financial periodicals, because I knew one day I was going to step back into that world. I was able to start making stock picks for myself. The first real investment I made was in Netflix when it was still double digits. I made a brokerage account with my bank and threw some money in there and started going at it.

    The industry was really changing. Robinhood’s slogan is “Democratizing Finance,” but really it’s the computer science industry democratizing finance, because all those tools that used to be proprietary are free now, included in your trading app.

    If you make a TD Ameritrade account, you can run, think or swim. It’s like a mini Bloomberg terminal. You’re not going to get the same richness of data, but you’re going to get a significant amount that you normally wouldn’t ten years ago. And in places like wallstreetbets, I was meeting people who clearly used to or still did work on Wall Street, who would teach you, for free, how to do things like recognize distressed companies, research their debt covenants, look up public data about who was invested in what, and so on.

    There’s one guy, he goes by the name fuzzy blankeet — it’s surreal on wallstreetbets, you discuss such serious topics with such ridiculously named people — who was teaching us how to be distressed debt buyers. These are really intelligent people, just giving away knowledge.

    A lot of the tools we have now, it used to be only people working at the top hedge funds on Wall Street had access to that information. So a lot of the barriers had collapsed. But the system is still skewed, which I started to see more clearly when the pandemic hit.

    TK: How so?

    I remember last March, just as the pandemic was taking hold, I was watching CNBC, and Bill Ackman, the big hedge fund guy, basically saying it’s the end of the American economy. He’s saying, “Shutdown is inevitable,” and calling for everything to be closed except essential services:

    At the time, I was wrapped up in the doom, on the side of, “I don’t think we’re prepared for what’s coming.” Because I was watching the videos coming out of China and thinking, “There are people just passing out. That’s not normal. I think that’s bad.” I saw a video of somebody being welded into his apartment, and I again, I thought, that seems bad. Seeing Ackman on TV, I was like, “I think he’s right.”

    As time went on, though, that moment bothered me. I thought, “That fuck, he’s causing the panic.”

    I guarantee a lot of people were like, “Bill Ackman’s a smart dude. He’s a lot more successful investor than I am, and he says shit’s about to hit the fan. I better start buying some protection. I don’t know, short really volatile, high flying stocks, and maybe buy a lot of put spreads.” But then we all know what happened after that.

    TK: That broadcast was March 18th, so the $2 trillion bailout was announced a week after. The market had been plummeting straight down, but it bounced right back up and kept going.

    SP: It’s the COVID-19 sell-off and pump. It’s what these guys do. It really does feel as though CNBC is a participant in market manipulation for the rich. These hedge fund guys go on air and it’s like they’re trying to spook the herd in the direction of their trades. They tell everyone to get out when they’re short, and once all the meat is all off the bone, they go long, just in time for the recovery. They get to call the top and the bottom of the market. It’s totally fucked.

    The bailout and the pandemic just exposed how there are different sets of rules, not just for different types of investors, but different types of businesses. Your favorite sandwich shop? Closed. If you’ve got 200 of those sandwich shops? Open.

    If you had sufficient capital to lobby whatever your government is, you could get an exemption, but if you were a small-time business owner, you were out of luck, and that just made no sense to me. I was like, “We’re just making this up on the fly.”

    TK: When did you first pay attention to GameStop?

    SP: I remember people posting about the GameStop potential short squeeze last summer. I definitely didn’t catch any of the attention earlier than that, but I didn’t get the trade. I’ll be honest with you. I saw the potential there. I really did, but I was like, there’s just so much going against you on that. And at the same time, the business needs to make money and they’re in debt and they’re not making money.

    But at some point, once this all started, I started to think about it. We’re in a pandemic, and there are all these people who couldn’t work all year. Or they’re small businesses that don’t have the political impact. They’re going to take the loss. And in the middle of all this misery, you have a group of the most cancerous rent-seekers on earth, aligning to destroy this company GameStop, because they decided it shouldn’t exist anymore.

    And it was GameStop! It’s such a visceral symbol for people in my generation. Even for me, in all those bad times growing up, it was always a nice memory just to go to a strip mall, go in the store, check out a game or two. I like GameStop. Everyone remembers going to GameStop. It’s part of what made it such an obvious rallying cry.

    That was it for me. I found myself thinking, I didn’t care if I lost every last dollar doing it, I was going to put it on GameStop, just to see them panic for once. Even if for just one moment they have to think about how they’re going to make their payments for their Manhattan apartments, that’s worth it. They’re playing these games while there are people out there who can’t afford Christmas presents for their kids, can’t afford food. What are these families supposed to do?

    Meanwhile those guys at the hedge funds, they’re not sharing that fear. Why should they? They’re going to get bailed out anyway.

    TK: One criticism of the GME traders is that while there are billion-dollar shorts losing on the other side, there are also big money managers on the long side, essentially using what some call “recreational” day-traders as camouflage. What do you say to that?

    There are definitely some high net worth individuals in wallstreetbets, and they were probably making good money early on, incidentally getting some good research done for free and getting in on some trades early. But there are a lot of small-time investors in there, too. The forum is so big, there’s probably a healthy bell curve of every demographic in there now. To say that the forum is made up of people who are just sitting in the basement, and don’t really have anything to lose, that’s not right. A lot of people may not care about the money not because they have too much, but too little. It may be their stimulus check, and they’re saying, “Well, I don’t have anything anyway. This was my only way to maybe make something, but I’d rather send a message with it.”

    TK: What’s Robinhood’s role?

    SP: Imagine that Wall Street is a big building, Robinhood is basically letting you into the lobby. The barrier to entry to buying and trading and stocks and options with apps like Robinhood really is very low. What we’ve discovered in the last ten days, though, is that the pen they built for us does not scale well. Big shocker!

    It’s ironic, for a brokerage that’s primarily run by software engineers, that they seem never to have thought about the edge case of millions of people transferring in thousands of dollars in one day, and all buying the same security. I don’t think that they really thought about, “Hey, what if this happens?”

    TK: GameStop crested last Thursday, January 28th, when Robinhood and other platforms began restricting trades in GME and other stocks. Robinhood obviously makes its money selling its “order flow” to a major high-frequency trader, Citadel, which was likely also the firm that made capital calls on Robinhood during the GME frenzy.

    A lot of Reddit investors believe Citadel and its billionaire CEO Ken Griffin used those collateral calls to pressure Robinhood into restricting trading in GME. Some press analysts think that explanation is conspiratorial. What’s your take?

    SP: Whether or not they were pressured to kill the rally doesn’t matter. The effect was the same. Robinhood’s restriction killed the rally, a hundred percent. That was the only thing that gave all the firms that had short interests a chance to try to recover. Now, the thing that is really insidious is some retail brokerages that locked out their retail traders, if you had an account with a certain minimum amount of money in it, you could call the customer service line that was reserved for your level of account and they would turn trading back on.

    So two people using the same trading app could have different market access. It’s just like we were talking about before. When the GameStop thing started, the shorts were like, “Hey, let’s just kill this business because it’s a pandemic, they’re going to close anyway, let’s just destroy it.” And then, once we started kicking it in the balls, they changed the game and killed the trade. It was like, “Okay, of course, of course.”

    As for the conspiracy charge, it makes me laugh. JP Morgan Chase last fall settled for $920 million or whatever in a case involving spoofing in the metals markets. Before that, they would have said, there’s no such thing as spoofing! Same with manipulation of LIBOR. Once upon a time, if you accused the banks of manipulating LIBOR, they’d say, “That’s a conspiracy theory.” Then there were settlements and now everyone knows it happened. With these people, it’s always a conspiracy until it isn’t. Once they’re found out, it’s like, “Oh, you caught us. You’re right. It wasn’t a conspiracy. But this other thing, that’s a conspiracy. That’s not happening.”

    TK: What was your reaction to the press coverage of GameStop?

    SP: The majority of the media that I’ve seen on WallStreetBets is just incorrect. The stuff that came out really early was trying to label it as a far right-ish type movement, and they got smacked down really hard on that because that’s the opposite of what happens in there. The forum is not political at all. If you post any political bullshit, that is the fastest way to get banned. There’s literally a rule, “No political bullshit.” Nobody wants to hear it. It’s strictly to talk about trades.

    TK: What’s the future of wallstreetbets?

    SP: I’m fearful of what could happen. The forum is big now. It’s never going to be ignored again. There are two opposing forces. You have big businesses that are going to try to channel this movement to benefit themselves. But at the same time, you’ve got a lot of long-time people who’ve been on there who can sniff out a fraud pretty quickly.

    It’s going to be a cat and mouse game. We already see it happening. The biggest one was in silver. Silver is often used as a way for large owners of silver, like in the SLVETF, to cover losses elsewhere. Last week I saw zero advertisements to buy Gamestop stock. Over the weekend, I saw countless news articles and advertisements all over to buy physical bullion. They’re saying, “Silver is going to get pumped. The Reddit crowd is turning to silver.”

    TK: Yahoo! had “Silver Squeeze: How to join the Reddit Bandwagon.” CNBC had, “Is Silver the Next GameStop?” It was like wallstreetbets went Hollywood.

    SP: I’m like, “I’ve got to call bullshit on this.” Now, if a large institutional owner of an asset was to, I don’t know, take out a bunch of ads and hire some people to post on wallstreetbets and maybe hire some botnets through a cut-out, would that be legal? Sounds like a pump and dump to me, but it also sounds difficult to prove. I’m not saying it’s happened. I’m saying it’s odd, and it’s very possible.

    There’s going to be a constant battle to direct the Sauron-like gaze of this board now. It’s going to be very difficult to get ahead of that, just like it’s difficult to know what the number one meme is for next month.

    TK: Was a message sent in the GameStop story, and if so, what was it?

    You had a leaderless group rise up and use whatever market power they had, whether it was buying a hundred thousand shares, or one. Some very established traders who trade for themselves frequent those boards. And then you had people who saw the message, they saw the Batman symbol and they rallied to that. You know how many messages I saw in the thread, of people just lining up? It meant something to them. They got to buy a fractional share of the hero’s journey.

    But the trade was destroyed. Whether or not that was intentional is not for me to say. All I can say is what happened. Retail brokerages all of a sudden stopped allowing their clients to trade, unless they were of a certain net worth. Banks could do it. Hedge funds could keep doing it. They could still be in the trade. But you and I could not. We could only sell. We could only do the one thing that they would need us to do, to get themselves out of the quagmire. And it wasn’t about price at that point. It was about control of physical shares that would allow you to cover.

    So yeah, a message got sent. But one was also received. They basically said, “We understand the message you’re sending. And here’s the message we’re sending back.”

    But it was worth it.

    Tyler Durden
    Sat, 02/06/2021 – 19:46

  • Raskin: Trump's Decision Not To Testify May Be Cited As Evidence Of His Guilt
    Raskin: Trump’s Decision Not To Testify May Be Cited As Evidence Of His Guilt

    Authored by Jonathan Turley,

    Over the last four years, we have seen an alarming trend of law professors and legal experts discarding constitutional and due process commitments to support theories for the prosecution or impeachment of Donald Trump or his family.  Legal experts who long defended criminal defense rights have suddenly become advocates of the most sweeping interpretations of criminal or constitutional provisions while discarding basic due process  and fairness concerns.   Even theories that have been clearly rejected by the Supreme Court have been claimed to be valid in columns. No principle seems inviolate when it stands in the way of a Trump prosecution.

    Yet, the statement of House manager Rep. Jamie Raskin, D-Md., this week was breathtaking.

    A former law professor, Raskin declared that the decision of Trump not to testify in the Senate could be cited or used by House managers as an inference of his guilt — a statement that contradicts not just our constitutional principles but centuries of legal writing.

    Presidents have historically not testified at impeachment trials.  One reason is that, until now, only sitting presidents have been impeached and presidents balked at the prospect of being examined as head of the Executive Branch by the Legislative Branch. Moreover, it was likely viewed as undignified and frankly too risky.  Indeed, most defense attorneys routinely discourage their clients from testifying in actual criminal cases because the risks outweigh any benefits. Finally, Trump is arguing that this trial is unconstitutional and thus he would be even less likely to depart from tradition and appear as a witness.

    Despite the historical precedent for presidents not testifying, Raskin made an extraordinary and chilling declaration on behalf of the House of Representatives.  He wrote in a letter to Trump that:

    “If you decline this invitation, we reserve any and all rights, including the right to establish at trial that your refusal to testify supports a strong adverse inference regarding your actions (and inaction) on January 6, 2021.”

    Raskin justified his position by noting that Trump “denied many factual allegations set forth in the article of impeachment.” Thus, he insisted Trump needed to testify or his silence is evidence of guilt. Under this theory, any response other than conceding the allegations would trigger this response and allow the House to use the silence of the accused as an inference of guilt.

    The statement conflicts with one of the most precious and revered principles in American law that a refusal to testify should not be used against an accused party.

    The statement also highlighted the fact that the House has done nothing to lock in testimony of those who could shed light on Trump’s intent.  After using a “snap impeachment,” the House let weeks pass without any effort to call any of the roughly dozen witnesses who could testify on Trump’s statements and conduct in the White House. Many of those witnesses have already given public interviews.

    Of course, the relative passivity of the House simply shows a lack of effort to actually win this case.  The Raskin statement is far more disturbing. The Fifth Amendment embodies this touchstone of American law in declaring that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself.”  It was a rejection of the type of abuses associated with the infamous Star Chamber in Great Britain. As the Supreme Court declared in 1964, it is the embodiment of “many of our fundamental values and most noble aspirations.”  Murphy v. Waterfront Commission, 378 U.S. 52, 55 (1964).

    Central to this right is the added protection that the silence of an accused cannot be used against him in the way suggested by Raskin. There was a time when members of Congress not only respected this rule but fought to amplify it. For example, in 1878, Congress was enacting a law that addressed testimonial rights but expressly stated that the failure of an accused to request to testify “shall not create any presumption against him.”

    The Supreme Court has been adamant that the type of inference sought by Raskin is abhorrent and abusive in courts of law. In Griffin v. California, 380 U.S. 609 (1964), the Court reviewed a California rule of evidence which permitted adverse comment on a defendant’s failure to testify.  The California rule sounded strikingly like Raskin’s position and mandated that a defendant’s “failure to explain or to deny by his testimony any evidence or facts in the case against him may be commented upon by the court and by counsel, and may be considered by the court or the jury.”  The Court rejected such references or reliance by prosecutors as unconstitutional.

    Later in Carter v. Kentucky, the Supreme Court held that “the privilege to remain silent is of a very different order of importance . ..from the ‘mere etiquette of trials and …the formalities and minutiae of procedure.’” It goes to the most fundamental principles of justice in our legal system.

    In the past, when such concerns have been raised, members and pundits have reached for the “anything goes” theory of impeachment. Such principles are dismissed as relevant in the purely “political” process of impeachment. I have long rejected this view. This is not a political exercise. It is a constitutional exercise. These senators do not take the take to act as politicians but to act as constitutional actors in compliance with the standards and procedures laid out for impeachments. It would make this process a mockery if, in claiming to uphold constitutional values, members like Raskin destroy the very foundations of constitutional rights.

    Yet, Harvard Professor Laurence Tribe (who has routinely favored any interpretation that disfavors Trump) declared Raskin correct promising to use a decision not to testify as evidence of guilt: “If Mr. Trump declines the chance to clear his name by showing up and explaining under oath why his conduct on January 6 didn’t make him responsible for the lethal insurrection that day, it’ll be on him. He can’t have it both ways.” No, it is on us. The House cannot have it both ways in declaring that it is upholding constitutional values while gutting them.

    It is true that this is not a criminal trial. It is a constitutional trial. As such, the Senate should try an accused according to our highest traditions and values.  That includes respecting the right to remain silent and not to have “inferences” drawn from the fact that (like prior presidents) Trump will not be present at the trial or give testimony.

    This is not the first time that reason has been left a stranger in our age of rage. There appears no price too great to pay to impeach or prosecute Trump. Now, the House is arguing against one of the very touchstones of our constitutional system and legal experts are silent.  If everything is now politics, this trial is little more than a raw partisanship cloaked in constitutional pretense.

    Tyler Durden
    Sat, 02/06/2021 – 19:30

  • 115 Inmates Spark Fires In Downtown St. Louis Jail Over COVID Concerns 
    115 Inmates Spark Fires In Downtown St. Louis Jail Over COVID Concerns 

    More than 100 hundred inmates overpowered correction officers at the City Justice Center in downtown St. Louis early Saturday morning. They gained control of one section of the jail for hours. 

    About 115 detainees commandeered the fourth floor of the jail around 0230 ET, sparking fires, smashing windows, clogging toilets, and flooding floors, according to the St. Louis Post-Dispatch. It was the third disturbance at the prison in recent months.

    Law enforcement officers regained control of the jail around 1030 ET, Jacob Long, spokesman for Mayor Lyda Krewson, told the St. Louis Post-Dispatch, adding that all inmates are back in custody. 

    Jimmie Edwards, the city’s Department of Public Safety director, told reporters that one corrections office was injured and taken to a local hospital after a melee with inmates. 

    Edwards said there’s been an ongoing issue with the prison’s locks. Though he didn’t mention if the faulty locks were the trigger of today’s chaos. 

    Long said 115 detainees on the fourth-floor set fires, smashed windows, flooded floors, and clogged toilets. Around 0630 ET, inmates shattered windows to the building’s exterior – many of them could be seen with orange and yellow jumpsuits holding signs. 

    More scenes of the chaos. 

    Doyle Murphy, an editor of local newspaper Riverfront Times, captured video of the prisoners throwing items out broken windows in front of the jail. He said, “Inmates at St. Louis Justice Center have taken over at least part of the jail. There have been protests over COVID-19 dangers inside. Not sure if this is part of that.” 

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    Long said the situation was a “very dangerous disturbance” but has since been resolved. At the time of the riot, there were 633 people in custody at the jail. 

    The Marshall Project examines COVID-19 infections in state and federal prisons in a separate report. Between Nov. 10 and Dec. 22, there was a noticeable rise in infections at jails. 

    This is the third riot at the facility in a matter of months as inmates “had expressed concern about unsafe conditions amid the coronavirus pandemic,” said St. Louis Post-Dispatch.

    Tyler Durden
    Sat, 02/06/2021 – 19:00

  • Goldman: Does Valuation Still Matter?
    Goldman: Does Valuation Still Matter?

    One week ago, when traders were still enthralled by the ongoing marketwide short squeeze, which started off as an isolated reddit attempt to (successfully) punish GME shorts such as Melvin Capital, and which cascaded into a widespread liquidation of most popular names as a wave of VaR shocks hit countless hedge funds which had no choice but to rapidly degross and puke their most popular, liquid and profitable positions as their shorts spiked unleashing industrywide margin calls and leading to the biggest alpha drawdown in history…

    … we summarized recent events in a simple and succinct fashion: “What it all boils down to: the market has been broken since 2009, but broken in moderation and everyone is happy, the rich get richer, etc. But if someone (WSB, whoever) take this breakage to its absurd extreme (where stock prices no longer reflect anything), everything breaks”

    https://platform.twitter.com/widgets.js

    And for a few seconds… everything did break, and only the rapid intervention of regulators/DTCC forcing Robinhood to effectively shutdown trading is what gave the system on full tilt the critical time it needed to take a breath force a reset and reverse the momentum.

    Now, in a post-mortem to recent events, Goldman – which last week warned that if the squeeze isn’t halted, the consequences for market could be dire – wrote a somewhat lengthier take on what happened but its conclusion is similar: the price formation mechanism – and the fundamental investing process itself – broke when millions of retail investors (and a handful of very wily hedge fund investors) plowed into a the most shorted stocks, leading to an unprecedented disconnect between price and value.

    It certainly explains why Goldman’s David Kostin starts off with what may well be the best quote to describe recent events:

    More than a century ago and written in a completely different context, Oscar Wilde, the Irish playwright, penned a perfect description of the social psychology underpinning a short squeeze. In Lady Windermere’s Fan, one character asks, “What is a cynic?” The friend responds, “A man who knows the price of everything, and the value of nothing.” The dialogue continues, and the original inquirer states, “And a sentimentalist is a man who sees an absurd value in everything, and doesn’t know the market price of a single thing.”

    Needless to say, a lot of cynics and sentimentalists were unleashed in the past two weeks.

    As Kostin recaps recent events, “every financial market participant knows the recent sequence of events. An extraordinarily high short interest position in a few small cap stocks, most prominently GameStop (GME), was stampeded by a group of social media inspired retail investors. A flurry of odd-lot cash orders and out-of-the-money call options supercharged the stock price and forced short-covering at higher and higher share prices. The situation was compounded because the retail buy orders were placed with broker-dealers which suspended processing trade orders in order to meet the minimum capital requirements of the Depository Trust & Clearing Corp (DTCC). This sequence of events happened within just a few days and caused an epic short squeeze. Billions of dollars were made and lost as share prices rocketed higher and then collapsed within the span of a week.”

    But so what: it’s not like this was the first time something like this happened: after all back in Sept 2008 when the world was crashing, a similar short squeeze made Volkswagen the world’s most valuable company… if only for a few hours.

    Well, it appears this time was different because unlike back then, the current squeeze happened in a context where virtually everyone was forced to reassess the core principle and tenets of capital markets, or as Kostin poetically puts it:

    The market implications of the stock price swings are both very significant and completely inconsequential.

    Expounding on this claim, the Goldman chief market strategist says that “those two assessments are not in conflict.” Laying out the case first for why the marketwide short squeeze was a tempest in a teapot, to use the parlance of Jamie Dimon, Kostin says that while what happened was although certainly dramatic, “the wild price action of a few small-cap stocks was dwarfed by the rest of the companies in the market both in terms of scale of business activity and equity capitalization. Corporate fundamentals have been much stronger than expected. During the past month, upward estimate revisions for full-year 2021 EPS have occurred across all 11 sectors. Last week, S&P 500 fell by 3.6% from a then-record high. This week, it rebounded to establish a new high and is up 3% YTD.”

    Ok fine, but good luck telling Melvin Capital (or Ken Griffin, or Steve Cohen for that matter) that what happened was “completely inconsequential.” They are more likely to focus on the “yes but” part of Kostin’s assessment, namely that… 

    The disorderly sequence of events has implications for market structure and oversight. The House Financial Services Committee has scheduled hearings on February 18th to explore recent market volatility in a session titled: “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.” Topics likely to be addressed include payment for order flow, capitalization of broker-dealers, rejection of customer trade orders, trade settlement, mechanics of price-vs. liquidity-driven short-covering, and the gamification of retail investing.

    Going back to the actual squeeze, Goldman writes that several aspects of the trading in GME shares are worth noting.

    First, from a positioning perspective, for more than a year the short interest in GME exceeded 100% of the float of the company, and it reached 140% in January, a “situation which is highly unusual” because during the last 10 years, Goldman has found only 15 instances when the short interest outstanding exceeded 100% of a company’s float, and as the bank explains, perhaps for the cheap seats, “extremely elevated short interest is a pre-condition if a major short squeeze is going to occur” (we wonder if Goldman, or WSB for that matter, has ever looked at the short interest in the XRT ETF)

    Second, and going back to the quote above, Kostin notes that “the acerbic lines from Wilde’s 1892 play perfectly capture the situation: The entire episode was all about price, and nothing about valuation” as “social media commentary typically referenced price action with lofty targets sometimes illustrated with rocket ship emojis. We almost never read a comment about valuation because the rally implied an astronomical P/E multiple.” Great point David – now maybe you can extrapolate a little beyond what you just said, and tell your clients some more about how the trillions in liquidity sloshing around market have made price and valuations so disonnected even you are forced to only showing the hilariously wrong Fed model as the only justification to keep buying stonks so they can hit your year-end price target of 4,300. Yeah, didn’t think so…

    Still, that didn’t stop the Goldman strategist from decomposing Oscar Wilde’s quote into its components as they applied to GME:

    • The price of everything. GME shares traded at an average price of $13.50 during 2018. The stock then fell sharply and between mid-2019 and mid-2020 (a period stretching from well before through the bottom of the Covidcrisis) the stock traded sideways at $5 per share. A 4Q rally pushed the shares to $19 at year-end. The explosion in stock price since the start of 2021 has been breathtaking. On Jan 13th the stock hit $30, rose to $40 the next day, and had jumped to $65 by Jan 22. The progression during the five days from Jan 25 to Jan 29 was epic: $77, $148, $348, $193, and the stock ended the month at $325, up 1,600% since the start of the year. However, this week the shares have plunged by 80% to $64.

    • The value of nothing. Long before the pandemic, revenues for GME fell by 22% from 2018 to 2019 followed by an additional 20% drop last year. The plunge in earnings has been even more dramatic. In 2019 –pre-pandemic –EPS fell by 92%. In 2020, GME posted a loss (-$2.18) and analysts expect a loss in 2021 (-$0.17). Consensus projects GME will return to profitability in 2022. However, the forecast EPS in 2022 (+$1.35) is only half the realized EPS in 2018 (+$2.70) back when the shares traded at an average price of $13.50 (low of $11; high of $17) (see Exhibit 3).

    Next, the Goldman chief strategist stubbornly keeps trying to make the point that what happened was an aberration of efficient markets and a “completely inconsequential” impossibility from a fundamental standpoint, as if anyone would even dream of arguing that GME would ever trade above $500 on its own merits…

    The absurdity of the January spike in GME share price becomes readily apparent when viewed through the lens of implied valuation. The implied P/E on projected 2022 EPS two years into the future soared from 14x at year-end 2020 to more than 250x at the peak on Jan 27, before retreating to the current P/E of 42x. For context, the shares of Tesla (TSLA), a stock that has both skeptics and cheerleaders around its valuation, but is widely viewed to have strong growth prospects –consensus forecasts a doubling in sales and a quadrupling of EPS between 2020 and 2022 –trades at 140x expected 2022 EPS following its stunning 780% rise last year (just half the percentage gain in GME shares in January 2021). The more mundane S&P 500 index trades at 20x our 2022E EPS of $196.

    … without even for a second stopping to consider that it was the Federal Reserve that made this peak absurdity possible. Why? Because in a market where virtually all valuations are in their 100% percentile…

    … and where the thread between price and value is barely present across most “serious” companies which are trading at 100x or even 1000x of future earnings and revenues, all the GME daytrading public did was to sever any pretense of linkages between fundamentals and prices and as a result, quickly took prices to their absurd extreme which in the case of GME meant $513.12 per share early in the morning of Thursday, January 28…

    Tyler Durden
    Sat, 02/06/2021 – 18:30

  • Democratic Bill To Target Social Media Giants Over Failure To Police Threats
    Democratic Bill To Target Social Media Giants Over Failure To Police Threats

    Democratic Sen. Mark Warner (VA) is set to introduce a bill which would make it easier for social media users to sue tech giants for failing to police posts, photos and videos which threaten abuse, discrimination, harassment, the loss of life or other irreparable harm, according to the Washington Post.

    Warner’s bill is the latest attack on Section 230, a decades-old federal rule which shields social media companies from liability over what their users post as long as they don’t act as publishers – an angle Republican lawmakers have used to claim no longer applies due to editorial discrimination and censorship of conservatives.

    Democrats, meanwhile, say Section 230 allows tech companies to skirt responsibility for policing hate speech, election disinformation and other ‘dangerous content’ according to the report.

    Yet, while Republicans seek to strip tech giants of their Section 230 protections, Warner’s bill maintains its core provisions – and would instead open an “easier legal pathway” for users to sue over failures to police content that they claim caused personal harm.

    “How can we continue to give this get-out-of-jail card to these platforms that constantly do nothing to address the foreseeable, obvious and repeated misuse of their products and services to cause harm? That was kind of our operating premise,” said Warner.

    Ultimately, it would be up to a judge to decide the merits of these claims; the bill mostly opens the door for Web users to argue their cases without running as much risk of having them dismissed early. Facebook, Google, Twitter and other social media sites stand to lose these highly coveted federal protections under Warner’s bill only in the case of abusive paid content, such as online advertisements, that seek to defraud or scam customers.

    “You shouldn’t get immunity from this advertising content that’s providing you revenue,” said Warner, who is introducing the measure along with Democratic Sens. Amy Klobuchar (Minn.) and Mazie Hirono (Hawaii). –Washington Post

    Warner’s bill comes after a mob of mostly Trump-supporters ‘stormed’ the US Capitol on Jan. 6 to protest the counting of the Electoral College votes for Joe Biden – many of whom coordinated over social media. And as WaPo frames it, the ordeal raises questions “about the extent to which Facebook, Google and Twitter, and a vast web of lesser-known forums, are properly policing their sites and services.”

    “I’m going to be very interested to see how the industry reacts to this,” said Warner in an interview this week previewing his bill. “It’s going to be where the rubber hits the road. Are they going to pay lip service to reform?”

    The incident has injected fresh urgency into familiar calls to rethink Section 230, which intensified last year amid a flood of proposals from Democrats and Republicans seeking to overhaul or repeal the law. In response, the country’s largest technology companies have sought to tread carefully: Facebook CEO Mark Zuckerberg and his fellow executives have signaled an openness to changing Section 230, but the companies have not endorsed the most sweeping proposals that would hold them accountable for their missteps.

    …

    In seeking to sketch out his proposal, Warner said its passage could have wide-ranging effects: It could allow the survivors in the Rohingya genocide in Myanmar to sue Facebook, for example, because the social network had been slow to take down content that stoked ethnic tensions. –Washington Post

    “If there are going to be victims of platform-enabled human rights violations,” said Warner, adding “that should not be thrown out of court.”

    According to David Brody, a senior fellow for privacy and technology at the Lawyers’ Committee for Civil Rights Under Law, “This bill would make irresponsible big tech companies accountable for the digital pollution they knowingly and willfully produce, while continuing to protect free speech online.”

    Tyler Durden
    Sat, 02/06/2021 – 18:00

  • Mike Rowe: Americans Are Realizing "The Price Of Safety Is Devastating"
    Mike Rowe: Americans Are Realizing “The Price Of Safety Is Devastating”

    More than a year after the coronavirus arrived in the United States, American are “starting to understand the importance of balance again,” Mike Rowe told “The Story” Friday.

    Fox News’ Michael Quinlan reports on the ‘Dirty Jobs’ host’s reality check for all Americans:

    “Several months ago, New York Gov. Andrew Cuomo said no measure, no matter how draconian, could be deemed unwise if it saves but a single life,” the “Six Degrees with Mike Rowe” host told Martha MacCallum.

    “I got a lot of flak when he said that, because I said, ‘That is a safety-first way of thinking’, and deep down we’re not a safety-first society.”

    “Now we’re starting to see the price of safety is devastating,” Rowe added. 

    “What is happening right now in the energy industry is really the thing that I think we ought to be focused on, because there feels to me, and feels to a lot of people I talk to on a day-to-day basis, like a concerted effort to wage a kind of war against energy. It’s not a war we can win, especially with regard to fossil fuels and all of the jobs that are wrapped up in that industry. I don’t mean to sound like an apologist, but I know of no greater investor in alternative energy than the fossil fuel industry.” 

    MacCallum brought the discussion back to the issue of safety, saying, “We’re a country that was built on risk-taking. We want to take wise risks, we don’t want to be reckless, but that element of being strong and fighting through is something that I think is such an American value.

    “Risk is the only four-letter word that matters,” Rowe agreed.

     “It impacts and informs every decision we make, from driving a car to walking around without a mask or wearing one mask or two masks.”

    “We’re starting to see,” Rowe concluded, “if you elevate the business of staying alive to the very, very top of all things, then the only thing you’ll ever do is stay alive. You won’t go anywhere. You won’t try anything or build anything.”

    Watch the entire interview below:

    https://video.foxnews.com/v/embed.js?id=6229577751001&w=466&h=263Watch the latest video at foxnews.com

    Tyler Durden
    Sat, 02/06/2021 – 17:30

  • Russia's "Sputnik V" COVID Vaccine A Surprise Global Hit
    Russia’s “Sputnik V” COVID Vaccine A Surprise Global Hit

    Bloomberg, one of the most implicitly pro-western media outlets in existence, has finally admitted, after months of promoting skepticism, that Russian COVID-19 vaccine trail data published by The Lancet shows that the Kremlin might have a surprise international success. Just days after NYT columnist Thomas Friedman accused President Putin of trusting “what comes out of the ground more than the stuff that might come out of his people’s heads,” Bloomberg reports that 20 countries, including key markets like India and Brazil, are already lining up to buy the vaccine.

    Source: Bloomberg

    With an efficacy rate above 90%, Russia’s vaccine, developed by the country’s Gamelaya Institute with support from Russia’s sovereign wealth fund, has been found to be more effective than China’s, which is why several countries – including EU member Hungary, are lining up to buy it.

    At least 20 countries have approved the inoculation for use, including European Union member-state Hungary, while key markets such as Brazil and India are close to authorizing it. Now Russia is setting its sights on the prized EU market as the bloc struggles with its vaccination program amid supply shortages.

    In the global battle to defeat a pandemic that’s claimed 2.3MM lives in little more than a year, the race to obtain vaccines has assumed geopolitical significance as governments seek to emerge from the huge social and economic damage caused by lockdowns imposed to limit the spread of the virus. That’s giving Russia an edge as one of a handful of countries where scientists have produced an effective defense.

    The story quoted the head of the Russian sovereign wealth fund which financed the vaccine project.

    “This is a watershed moment for us,” Kirill Dmitriev, chief executive officer of the state-run Russian Direct Investment Fund, which backed Sputnik V’s development and is in charge of its international roll-out, said in an interview.

    Regardless of the success of the vaccine, Bloomberg adds it won’t do much to change Putin’s reputation in the West.

    Sputnik’s success won’t change hostility toward Putin among Western governments, though it could strengthen Russia’s geopolitical clout in regions such as Latin America, according to Oksana Antonenko, a director at Control Risks consultancy.

    “With this vaccine, it’s proven itself capable of producing something new that’s in demand around the world,” she said.

    Production constraints are the biggest challenge facing all manufacturers as global demand far outpaces supply. Russia, pledging free shots for its 146 million population, began output last year and the vaccine is currently being manufactured in countries including India, South Korea and Brazil.

    Yet, despite Russia’s supervillain status with the US and Europe, frustration with Putin’s tactics has never stopped the EU from buying Russian energy products.

    Why should it stop them from buying the vaccine?

    Tyler Durden
    Sat, 02/06/2021 – 17:00

  • Trump Jr.: "Here's What Comes Next for Our Amazing Movement"
    Trump Jr.: “Here’s What Comes Next for Our Amazing Movement”

    Authored by Mimi Nguyen Ly via The Epoch Times,

    Donald Trump Jr.., the son of former President Donald Trump, said that efforts from the former president and his team to advance the interests of the United States are continuing. He characterized such efforts as “a movement of the people … against the elite.”

    In a video on Trump Jr.’s social media accounts, headlined “here’s what comes next for our amazing movement,” he told supporters, “Just want to make sure everyone knows, guys, we are not done yet.”

    https://telegram.org/js/telegram-widget.js?14

    Trump Jr. then shared a recent video clip that showed his father walking off the golf course while saying, “We haven’t finished yet.”

    “He’s actually accurate,” Trump Jr. said of his father’s remarks.

    “The reality is this movement isn’t over. All of the blood, sweat, and tears that you guys have all put into this thing is very much still alive and well. You see that. I mean, this is really a movement of the people, a movement against the establishment, a movement against the elite.”

    He continued:

    “A lot of those things have been brewing for quite some time. And that’s why for me I’m still standing engaged and we’re going to get in there and fight to elect people who really represent the people—people like you who have gone through so much.”

    Trump Jr. said that the former president is still “going to be in that fight.”

    “I know he’s still going to keep going. I know we’re up against a lot, we always have been,” Trump Jr. said, later adding that is father is “going to be in there making sure that we have people who truly represent what America is all about.”

    The former president’s son moved on to speak about how fact checkers on social media appear to be biased against conservatives while lenient toward “the other side.” Drawing from his personal experience, he said that his content is fact checked “even if there’s even a little bit” of irregularity.

    “When I look at things that I put up on my social media that are totally objective or that are satire, one or the other, that [social media content] gets fact checked so that they can use that to knock my platform, to prevent me from getting any kind of reach,” he said. “I see that stuff on a daily basis, I don’t see that on the other side. I don’t see Joe Biden getting fact checked when he said he’s not going to ban fracking, when he bans fracking.”

    He added, “If there’s even a little bit of ambiguity they get the benefit of the doubt, whereas if there’s even a little bit, a modicum, something like I said, subjective, who’s to know what the fact checker’s thinking, but certainly I know what I’m thinking and I can come up with a parameter that makes everything correct but the fact checkers can say that it falls outside of those lines.

    “Joe Biden, not one tweet—as many incorrect ones that they’ve put out—has been fact checked. It’s truly sick,” Trump Jr. expressed.

    He alleged that the Biden administration appeared to have a “China first, America last policy,” accusing the new administration of “crushing jobs” amid the CCP (Chinese Communist Party) virus pandemic.

    “The nonsense never seems to end, but neither will our fight, neither will our resolve, neither will our will to go on. We’re going to keep pushing for the American people and make sure our kids grow up in a country that we all recognize and love,” he said.

    Trump recently opened an “Office of the Former President” that seeks to advance the interests of the United States and carry on the agenda of his administration.

    President Donald Trump boards Air Force One at Valley International Airport after visiting the U.S.-Mexico border wall, in Harlingen, Texas, on Jan. 12, 2021. (Reuters/Carlos Barria)

    Jason Miller, a campaign adviser, said in January that Trump would be involved in the 2022 midterms with the immediate focus being to help Republicans win back both chambers of Congress.

    When Trump left Washington for Florida on Jan. 20, he told supporters that he and his team would “be back in some form.”

    “We love you. We will be back in some form,” he said at the time. “I will always fight for you. I will always be watching. I will be listening.”

    Trump on Friday appeared to have made his first social media post since leaving the White House. The post showed a letter from Trump’s lawyers to Rep. Jamie Raskin (D-Md.), the House of Representatives’ lead impeachment manager, saying that they reject attempts to have Trump testify in his upcoming impeachment trial.

    House Democrats impeached Trump on a single charge that alleges that he incited a mob that breached the Capitol on Jan. 6. The Democrats were joined by 10 Republicans.

    This is the first time in U.S. history that a president has been impeached twice. It is also the first time a former president faces an impeachment trial after leaving office. In a trial memorandum, Trump attorneys denied the allegations and challenged the constitutionality of trying Trump after he had left office.

    Tyler Durden
    Sat, 02/06/2021 – 16:30

  • Americans Ditch Citizenship In Record Numbers Amid Pandemic 
    Americans Ditch Citizenship In Record Numbers Amid Pandemic 

    Americans urgently rushed to their embassies to renounce their citizenship last year amid the virus pandemic, social unrest, economic crash, and political firestorms.

    Americans Overseas said a record 6,705 Americans gave up their citizenship in 2020, a 260% increase from 2019 when 2,577 renounced their citizenship. 

    Even with consulates closed in the early part of the year because of the virus pandemic, renunciations still managed to nearly triple over the prior year. Before 2020, the highest year on record was 5,411 cases in 2016, ahead of former President Trump winning the 2016 presidential elections. 

    Americans Overseas estimates some 9 million Americans are living abroad. Every three months, the IRS publishes a log of who gave up their citizenship. 

    “This number possibly would have been higher if U.S. Embassies worldwide had not been closed for large parts of the year due to COVID-19 regulations. If this trend continues, 2021 renunciation numbers will be record-breaking,” said Americans Overseas.

    Americans Overseas said, “stimulus checks of $1,200 + $600 are also being used towards the cost of renouncing” citizenship. 

    There has been a growing trend of U.S. citizens expatriating since the pandemic began. We first outlined this disturbing trend in August of last year. 

    The International Tax Blog posted annual expatriations from 1998 to 2020, showing the dramatic rise over the last decade.

    From 2010 to 2020, the quarterly expatriations show a more in-depth view of when the virus pandemic began that triggered an increase in expatriations.

    Once U.S. embassies open full-time, Americans Overseas expects the number of people renouncing their citizenship will continue to hit records. 

    Tyler Durden
    Sat, 02/06/2021 – 16:00

  • Fed Efforts To Stem Rises In Yields Are Back On The Table
    Fed Efforts To Stem Rises In Yields Are Back On The Table

    By Variant Perception

    At the end of last year we discussed the likelihood of the US debt-limit exemption not being extended past the 31st of July as a force that would drive bond yields lower towards the Spring. The Treasury’s account at the Fed, now a considerable $1.6 trillion, would have to be drawn down, and the resulting fall in average maturity of Treasury debt held by the public would put pressure on longer-term bond yields and the yield curve, potentially fuelled by short covering of positions.

    However, we stated the caveat was if the Democrats were able to also win the Senate, something they unexpectedly managed to do. The higher volume of fiscal stimulus now anticipated has helped drive yields higher, and the yield curve steeper in 2021.

    The risk for this year is for yields to continue rising and the curve to continue steepening, which raises the likelihood that in the coming months the Fed begins to discuss the possibility of increasing the weighted-average maturity (WAM) of QE purchases, or resurrect the possibility of yield curve control (YCC).

    Treasuries are not as overbought as they were last year, but they are still above “fair value”, and an overshoot to being oversold is conceivable.

    The rise in yields since October has been driven by term premium (the residual of nominal yields and long-term Fed rate expectations), given rate expectations are pinned for several years due to Fed forward guidance.

    Term premium has been driven ever lower and into negative territory in the years after the GFC. Yet now with rising inflation risks – both cyclical and structural – term premium has been rising to compensate bond holders for this extra risk, with term premium now close to being positive again for the first time since 2018.

    There has been a regime shift in market behavior, starting in September. Until then, ever easier global monetary policy – as captured by the rise in negative-yielding debt outstanding – coincided with falling term premium.

    Since September, however, term premium has kept rising despite the amount of negative yielding debt outstanding remaining stable. Bond holders are sensing rising inflation risks, with term premium increasing to compensate them.

    The rise in yields driven by term premium has attendant risks for equity markets that have become dependent on ever falling term premium and yields.

    The equity risk premium (ERP) is about 3% but, adjusted for term premium, it is closer to 2.25%.

    Furthermore, in the post-GFC world, equities have become vulnerable to progressively lower levels of yields and the curve.

    The chart below shows that most local peaks in the yield curve have happened just before or around local tops in the S&P. The 2s10s yield curve only had to hit 135bps in late 2017 to precipitate the 11% correction in early 2018.

    If yields keep rising and the yield curve keeps steepening, then the Fed will likely emphasize the possibility of an extension to WAM or, if that fails to have a sufficient impact, resurrect talk of yield curve control.

    Last year the Fed discussed the possibility of yield curve control at several FOMC meetings. In June it was discussed, with Jay Powell commenting after the meeting, “whether [yield curve control] would usefully complement our main tools remains an open question.”

    But the Fed has few options to hand if it wants to stem a rise in longer-term yields driven by rising inflation risks, which may unseat the equity market and feed negatively into the real economy. Rates are at zero, and forward guidance is already very strong.

    Direct action on longer-term yields is more likely if yields keep rising. An increase to WAM is likely to be what the Fed tries first. If this is ineffective then yield curve control is firmly back on the agenda.

    Tyler Durden
    Sat, 02/06/2021 – 15:30

  • "Mind-Boggling Liquidity": Nobody Is Paying Attention To The $1.1 Trillion Flood About To Hit Markets
    “Mind-Boggling Liquidity”: Nobody Is Paying Attention To The $1.1 Trillion Flood About To Hit Markets

    Amid the ongoing Reddit short squeeze drama which had traders glued to their trading terminals for much of the past two weeks, quite a few may have missed the biggest news of the past week which was the publication of the Treasury’s latest Borrowing forecast, according to which the US expects to borrow just $275BN in the current quarter, down a whopping 75%, or $853 billion, from its November 2020 projection of $1.127 trillion.

    The reason for this plunge in funding needs is because the Treasury now expects that it simply won’t need to borrow as much debt as the end-of-March cash balance held in the Treasury General Account (TGA, which is simply the Treasury’s cash balance held at the Fed) would plunge to just $800 billion, down a record $929BN from $1.729 trillion at Dec 31, 2020 (as an aside, the reason why the cash was so high as year end is because the Treasury never got around to actually disbursing the latest stimulus package in December, and it’s also why as the Treasury said “the decrease in privately-held net marketable borrowing is primarily driven by a higher beginning-of-January cash balance as a result of lower-than-assumed expenditures.”)

    In other words, had Trump used up roughly $1 trillion in cash the Treasury had previously budgeted for spending on fiscal stimulus, there would be no surprises today, and instead of the cash balance dropping to $800BN in this quarter, it would have done so last quarter (we discussed this last November in “The 2021 Liquidity Supernova: Step Aside Fed – US Treasury Will Unleash $1.3 Trillion In Liquidity“). Instead, the Treasury now expects the decline in the cash balance this quarter – which is being spent to fund last December’s fiscal stimulus – to be the main driver of funding needs.

    It doesn’t end there, because one quarter later, the Treasury expects to borrow just $95BN  – the lowest in two years quarters – and finish the June quarter with a cash balance of only $500BN, a reduction of $300BN for the quarter, the lowest in six quarters and less than 30% of the average cash balance at the end of the latest three quarters ($1.74BN).

    Looking beyond that, we have to go back to an analysis we put together back in November, which cited calculations from Morgan Stanley, according to which unless the debt ceiling deadline – which this year falls on Aug 1, 2021 – is extended well in advance, starting on this date, the US Treasury will not be able to issue any additional debt above and beyond what it needs to cover existing debt obligations. However, what few may be aware of, is that there is a clause written into the law that prohibits the TGA from rising above levels prior to the debt ceiling deadline, which was in 2019.

    This means that based on the 2019 debt ceiling, the Treasury cash will need to fall even more, down to just $200 billion by August 1, and as the chart from MS below shows, depending on the upcoming political fight over the debt ceiling, it could end up being quite a mess.

    Said otherwise, the market is about to see a flood of $800BN in extra liquidity over the next 6 weeks, and a total of $1.1 trillion in the next 10 weeks, and then potentially another $300 billion in the subsequent two months. With the TGA cash currently at just under $1.6 trillion, it means that the US Treasury may unlock as much as $1.4 trillion in liquidity over the next 6 months, nearly double the liquidity coming from the Fed over the same time period which will be $720 billion ($120BN x 6 months)!

    This, not too put it lightly, is a huge deal with major market implications (and is why three months ago we said to “buy everything ahead of an unprecedented dollar devaluation orgy” simply based on this analysis).

    First, recall that one of the early (and completely false) reasons cited for the Sept 2019 repo crash, was the modest spike in Treasury cash balances around that time, which also resulted in substantial reserve drain among banks (mostly JPMorgan) which were desperate for more QE. As a result, we almost immediately got “NOT QE” (which, of course, was absolutely QE) and hundreds of billions of reserves were injected into the system by the Fed but not before markets had to tumble to spur the Federal Reserve into acting.

    Well, what is happening now is just the opposite and many, many times bigger, as almost one trillion reserves are about to be injected into the system as cash is drained from the Treasury’s account at the Fed. As we said on Monday, “as Treasury cash balances plunge, banks will see their reserve levels soar by roughly $900 billion this quarter, a move that will lead to significant risk asset upside if previous instances of reserves growth are any indication.”

    Second, there are major implications for the rates market where the recent flood of bill issuance is set to hit a brick wall: as we said on MOnday, the plunge in short-term debt (Bill) issuance – since there will no longer be an urgent need to keep cash balances in the $1+ trillion range – will compress short-term spreads (effective FF through 3M) to zero – or even negative – as there is suddenly a flood of liquidity which could prompt the Fed to engage the fixed-rate borrowing facility or even nudging the IOER higher. Indeed, on Friday we saw just this move as the 2Y TSY dropped to the lowest yield on record.

    Those looking for more details can read our November preview of this event (“The 2021 Liquidity Supernova: Step Aside Fed – US Treasury Will Unleash $1.3 Trillion In Liquidity“), or read the below explanation from Larry McDonald, author of The Bear Traps Report, who last week put together an exhaustive summary of the implications of the TGA plunge.

    Again What is the TGA? The US Treasury’s General Account

    The TGA is the mechanism through which Treasury makes payments. It’s the checking account through which the government makes all its payments. This checking account is located at the Federal Reserve Bank of New York. It’s where tax payments are deposited and where funds from Treasury debt auctions are collected. So when the TGA changes, that affects deposits at the Federal Reserve. Ultimately, monetary policy, and Quantitative Easing, is conducted through the TGA. It’s important. Of course, last year the TGA grew. It moved up from its usual range of $300 million/$500 million to, since May, well over $1 trillion. The thought had been that $1 trillion would be released into the economy to stimulate it prior to the November election. Didn’t happen. Congress stalled.

    Go Big or Go Home?

    Enter “Go Big or Go Home” Yellen. What’s she gonna do now? There will be another Covid relief bill of some kind. She’ll be the one cutting the checks through the TGA. This will release money out of the TGA and that means there will be a lot more money in the system. Yellen has $1 trillion burning a hole through her pocket. Additionally, QE is pumping money in at $120 billion clips a month. The combo of a near $1 trillion check and $120 billion monthly QE is the monetary equivalent of eating a banana split after downing an Italian hero sandwich. The market will be stuffed with reserves.

    The money will in part be put into the short end of the curve (already anticipated as we can see in super low LIBOR recently, and low T-Bill yields etc.). Some of the tidal wave of money will find its way into stocks and commodities. Some will find its way to higher prices for goods and services. This is the mirror opposite of 2018/2019 when traders fretted that treasury issuance would overwhelm their desks. This led to higher rates and a higher dollar… The 2019 events drama reached its September 2019 climax when the Fed was forced to introduce QE light. What an embarrassment, after pounding the table for 2 years on the wonders of committed balance sheet REDUCTION, up to $50B a month in Q1 2019, they reversed 2x. First in January 2019 by stopping the expansion, THEN again in September 2019 by restarting QE. Reflation assets (EM, global cyclicals ripped higher from Sept to the start of Covid risk in Feb 2020). Both times the beast inside the market reversed the academics at the Fed. Traders > educators in this case.

    So now there will be mind-boggling liquidity, no vig in the front end, and a weaker dollar to boot. Nothing is guaranteed when it comes to fiat currencies, but fiat currencies are in a race to the bottom. Given the upcoming drawdown of the $1 trillion in the TGA , it’s a race the US is likely to win.

    Recap with more Complexity, Digging Deeper

    One of the questions hanging over asset markets going into 2021 was what would happen to the TGA account. The TGA is the Treasury’s General Account which is how the Treasury makes payments. As we saw last year, the TGA was built up to levels much higher than they traditionally get to. In the past, the level of the TGA has traditionally been between $300-500 billion. Currently, and pretty much since May of last year, the TGA has been over $1 trillion, which is well above its historical norm.

    Going back to Q3 of 2020 there was a lot of speculation that the previous administration would use the massive levels of TGA to get more stimulus into the economy before the elections in November. However, that never really transpired and more covid relief was not passed by congress until after the election.

    This setup the question for Secretary Yellen in terms of how she would manage the TGA, especially into the likelihood of another covid relief bill. The market has gotten its answer as Yellen and the Treasury plan to draw down the TGA balance back to more historical levels. The consequences of this are simple, a lot more reserves in the system. The combination of Fed QE running at $120 billion a month and around a trillion-dollar drawdown in the TGA level means that the levels of reserves in the system will be massive.

    The combination of less short term issuance and massive QE will continue to put pressure on front end yields. This has been seen in very low LIBOR settings, low T-bill yields, and a lower setting in the effective fed funds rate. This pressure on the front end will continue to come especially in light of less front end issuance as the Treasury draws down their TGA balance.

    The market in the first quarter of this year is basically setting up for the inverse of 2018/2019, where funding markets have begun to get stretched. The story in 2018/19 was that Treasury issuance would overwhelm the market and lead to this crowding out of assets as dealers had to move funding to take down treasuries. Now, the problem is flipped. There are so many reserves in the system already from the Fed’s QE, and now it is going to get another increase via the TGA. So if 2018/19 was the story of issuance crowding out the market and putting pressure on funding markets which led to a higher dollar, this rendition could lead to the opposite.

    With that said, we think the correlation between net issuance and asset prices is a bit overstated. Yes, there will be a ton of liquidity on the back of these moves from Treasury, but in terms of marginal drivers, it will matter most in funding markets and the front end of the treasury curve. The other part of this is, this UST funding announcement doesn’t include the impact of whatever $1.9tln will come from the White House and congress.

    Overall: the story is that reserves are everywhere and more are coming. In theory, over the near term, we are setting up for an inverse of 2018/19, which means front-end yields, funding markets etc. will be flushed and liquidity in the system will be at very high levels.

    So while the bullish case is clearly there – after all a $1.1 trillion reserve injection all but assures higher risk prices, the only question is by how much, some – such as JPM’s Nick Panigirtzoglou – have taken on a more hedged position, even though even the JPM admits that a $800BN spike in reserves in just two months would be a major market event…

    • The US Treasury signaled this week a strong intention to reduce its Treasury General Account (TGA) balance at the Fed, from its current level of close to $1.6tr to $500bn by mid-2021.
    • Such a sharp decline would mechanically bolster the liquidity in the US banking system, i.e. the amount of reserves, by $1.1tr by mid year

    … noting that “a halving in the TGA in just under two months would be a significant decline, in particular given the slow conversion of PPP loans to grants thus far with just over $100bn converted between October and mid-January.”

    Yet within this broader tidal wave in reserves, Panigirtzoglou believes that the immediate impact will be relatively modest, and explains why below, first focusing on his view of narrow vs broad liquidity “plumbing” dynamics in the market (which differ substantially from those of repo god Zoltan Pozsar so take them with a giant grain of salt)…

    What are the implications for liquidity from a prospective large reduction in the TGA balance over the coming months? We argued before that liquidity should be split into two different components: 1) narrow or banking sector liquidity, which is created by the injection of excess reserves into the banking system; and 2) broader liquidity or money supply, which is the amount of cash or deposits held by the non-bank sectors of the economy such as households, non-financial corporations and financial intermediaries such as asset managers, pension funds and insurance companies. This broad liquidity is in turn primarily a function of QE related purchases by central banks and bank lending to the real economy by commercial banks. In general, these two components of liquidity are interrelated but are not necessarily mechanically linked and are thus distinct. For example, QE bond purchases, by injecting reserves into the banking system, increase narrow liquidity, but they do not necessarily increase broad money supply. Bond purchases can result in an increase in money supply either directly, e.g. if the central bank buys bonds from a non-bank entity such as a pension fund, this automatically expands the assets (reserves) and liabilities (deposits) of the banking system; or indirectly, when central banks’ quantitative measures induce higher bank lending in the economy.

    … and then expands this analytics framework to how $1.1 trillion in reserves will impact assets:

    A sharp decline in the TGA balance and the resulted $1.1tr increase in the stock of reserves in the US banking system would bolster banking sector liquidity i.e. narrow liquidity but will have no direct implications for broad liquidity, i.e. the cash balances of non-bank investors as captured by money supply. This is because a decline in the TGA balance would have no overall impact on the size of commercial bank’s balance sheet as it would effectively replace government debt with reserves in commercial bank’s asset side and TGA balances with reserves in the Fed’s liability side. These reserves or narrow liquidity reflect the amount of reserves commercial banks have with central banks in excess of what they would need to meet usual liquidity needs. Given that the banking system cannot get rid of reserves in aggregate, these zero yielding reserves become the “hot potato” that banks try to pass to other each until the relative pricing across money market instruments is adjusted enough to remove the incentive for banks to get rid of these reserves. In other words, narrow liquidity tends to reverberate within the money market space and suppress yields at the front end of the yield curve with little implication for the longer end of the yield curve or other asset classes such as equities.

    Needless to say, we completely disagree here and merely bring up the historical record: the Sept 2019 repo crash first spiked a violent market correction and only then did the Fed conceded to inject more liquidity. It stands to reason that the equity response now will be the opposite as we are now facing a mirror image of the liquidity picture in 2019. In any case, going back to the JPM quant:

    But even with the money market space, given the US banking system is already flooded with $3.2tr of reserves, well above a neutral level which we envisage at below $2tr, an additional $1.1tr of reserves would not make much difference in the current conjuncture. Indeed, after the sharp increase in reserves during 1H20, volatility in Fed funds – IOER spreads and SOFR – IOER spreads have already significantly reduced (Figure 2). The additional injection is likely to put some downward pressure on these rates to grind toward the zero lower bound of the Feds funds target range, supporting somewhat demand for shorter-dated Treasuries as banks seek some yield and duration. However, our projections for the global bond supply-demand balance in 2021 already incorporated only a relatively modest deterioration in G4 commercial bank demand from last year’s record levels.

    Summarizing JPM’s view, we find it surprisingly restrained in its optimistic assessment…

    In all, we see little impact from a prospective TGA balance reduction on broad liquidity and thus on other asset classes outside money markets or the front end of the UST yield curve. And the actual path of the TGA decline may differ from the Treasury’s forecasts not least as they do not potential additional fiscal stimulus into the projection.

    … then again it comes from the same JPM analyst who has been desperately trying to talk down bitcoin for the past 4 months, most recently just two weeks ago. Well, with bitcoin hitting $41,000 this morning and all other cryptos at all time highs, not only have those who listened to Panigirtzoglou worse off, but maybe Nick has become the “big JPM fade”. In any case, we are confident that it is only a matter of time before his Croatian colleague, the permabullish Marko Kolanovic takes the other side of the euphoria trade from Panigirtzoglou… as would we by the way.

    In any case, with $1.1 trillion about to hit the market, perhaps now is not the time for nuance and instead a more shotgun approach is appropriate, which is why we like Larry McDonald’s take as it cuts to the chase, and more importantly, is correct:

    The combo of a near $1 trillion check and $120 billion monthly QE is the monetary equivalent of eating a banana split after downing an Italian hero sandwich. The market will be stuffed with reserves.

    Of this we are certain. What does remain an open question is at what S&P level – 4,000? 4,500? moar? – will the Fed finally realize what it and the Treasury have done, and intervene by warning markets that it is about to pull its pedal off the gas, especially with a chorus of dovish, establishment progressive economists such as Larry Summers and Olivier Blanchard now warning that a $1.9 trillion stimulus could overheat the economy (yes, democrats warning of such a thing as too much stimulus – now we’ve seen it all). In fact, the next big risk is increasingly shaping up as a hawkish reversal by the Fed some time around July/August, when the Treasury cash balance tumbles to $200BN or so and when the S&P is in the the low to mid-4000s…

    Tyler Durden
    Sat, 02/06/2021 – 15:04

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