Oct 08

Today’s News 8th October 2020

  • Gazprom Blasts $7.6BN Polish Antitrust Fine On NS2 Pipeline As Move To Kill It "By All Means"
    Gazprom Blasts $7.6BN Polish Antitrust Fine On NS2 Pipeline As Move To Kill It “By All Means”

    Tyler Durden

    Thu, 10/08/2020 – 02:45

    Polish authorities have fined Russia’s Gazprom a whopping and unprecedented $7.6 billion (or 6.5 billion euros) for constructing the controversial Nord Stream 2 pipeline to Germany.

    While Poland anti-trust authorities have claimed Nord Stream 2 is fundamentally a politically motivated attempt to punish Polish consumers while increasing European dependence on on Russian imports, Germany has stood by the project even amid the Navalny poisoning affair which has strained its relations with Russia over the past month.

    Poland’s Office of Competition and Consumer Protection decision seeks to legally force the six companies jointly building and financing the project to cancel their contracts, despite the gas pipeline being in its final phase of development. This includes European investors OMV, Wintershall, Engie, Shell and Uniper.

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    NS2 pipeline construction in the Baltic, file image.

    “Carrying out the project is tantamount to breaking the rules of law and of fair competition that will lead to an increased dependence of gas recipients on the internal market on one supplier – Gazprom,” the Polish antitrust office said.

    It charged that if allowed to go live it will result in “serious consequences for Poland’s and the EU’s economy,” by restricting the range of supplies while inevitably increasing gas prices for consumers.

    But no doubt defenders of NS2 also see this as part of Washington’s broader war on the project, which has included past sanctions on executive heads of European companies involved, given recent deepening US military ties to Poland.

    State-owned Gazprom, meanwhile has denounced the “unprecendented fine” as unlawful and unjustified. The fine’s “unprecedented amount evidences the decision to oppose implementation of the Nord Stream 2 project by all means,” the statement said, according to TASS.

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    Gazprom said flatly the project “did not breach anti-monopoly laws of Poland,” while Kremlin spokesperson Dmitry Peskov separately underscored Gazprom would “do everything that is possible” to legally oppose the decision.

    This will include counter-actions to get the Polish decision blocked, while the Kremlin warned this could have a lasting negative impact on Russian-Polish relations. Of recently strained relations with Poland, “Peskov noted that they can hardly be called thriving and it can hardly be assumed that something could spoil them even more,” TASS reported.

  • Armenians Fight Back Against Azerbaijani Advance, Strike Key Oil Pipeline
    Armenians Fight Back Against Azerbaijani Advance, Strike Key Oil Pipeline

    Tyler Durden

    Thu, 10/08/2020 – 02:00

    Submitted by SouthFront,

    Armenian forces launched a missile attack on the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, according to Azerbaijan. The country’s prosecutors said that Armenian forces had carried out the attack, which was prevented by the Azerbaijani military, on the pipeline in Yevlah at around 9 p.m. local time on October 6. The incident was described as a “terrorist act”.

    The BTC pipeline delivers Azeri light crude oil (mainly from the Azeri-Chirag-Guneshli field) through Georgia to Turkey’s Mediterranean port of Ceyhan for export via tankers. Another crucial Azerbaijani energy infrastructure object, which could become a potential target of Armenian attacks is the Trans-Anatolian Natural Gas Pipeline, which connects the giant Shah Deniz gas field with Europe through Georgia and Turkey. The Armenian side denounced the Azerbaijani report as fake news. Both Azerbaijan and Armenia regularly accuse each other of striking civilian and infrastructure objects on their sovereign territory and denounce the opponent’s claims as propaganda and fakes.

    It is interesting to note that just a few hours earlier Vahram Poghosyan, the press secretary of the Nagorno-Karabakh (Artsakh) President, claimed that Armenian forces had delivered powerful missile and rocket strikes on military objects in large Azerbaijani towns destroying multiple pieces of equipment and eliminating the enemy. The Azerbaijani official narrative provides a similar position that Azerbaijani forces are pulverizing Armenian military targets.

    Meanwhile, Azerbaijani Defense Minister Zakir Hasanov threatened Armenia with “using the weapons with great destructive power” to deliver strikes on “the military-strategic infrastructure” of Armenia if it employs its Iskander operational-tactical missile systems against Azerbaijani forces.

    However, it does not seem that the Armenian political leadership is ready to employ all the variety of its means and forces to fight back in the contested Nagorno-Karabakh region. Instead, the government of Nikol Pashinyan is now mostly focused on the diplomatic campaign in Western media in an attempt to convince the so-called international community to help it to keep control over Karabakh. Mr. Pashinyan, who just a few days ago was promising to inflict a military defeat on what he called the Azerbaijani-Turkish terror alliance even declared that Armenia is ready for mutual concessions. Nonetheless, Baku and Ankara do not seem to be ready for a new ceasefire and the resumption of negotiations at the present time.

    On the frontline in the contested Nagorno-Karabakh region itself, the main hot point is the district of Jabrayil. Using the worsening weather conditions (fog and thick clouds), which complicate the work of Azerbaijani combat drones, Armenian forces were able to stabilize the frontline and prevent further gains of the Azerbaijani military in this part of Karabakh. On October 7, Armenia even claimed that a large-scale Azerbaijani attack had been repelled in the area. The Defense Ministry claimed that over 60 dead and multiple equipment pieces were left by Azerbaijan on the battlefield.

    Meanwhile, Armenian forces and cities of the region are still subjected to intense artillery bombardment by the Azerbaijani military. Heavy destruction was inflicted on the city of Stepanakert. As soon as the weather improves, Azerbaijan with help from Turkey will likely resume active drone strikes and launch a new phase of the ground offensive along the contact line.

  • Left Wing Conspiracy Theories Go Mainstream, All Others Banned – Going Down The Rabbit Hole
    Left Wing Conspiracy Theories Go Mainstream, All Others Banned – Going Down The Rabbit Hole

    Tyler Durden

    Wed, 10/07/2020 – 23:40

    Authored by Tom Williams via RightWireReport.com,

    With just a few weeks to go before the 2020 presidential elections, politics are getting thicker than mud. The heavily politicized Coronavirus “pandemic” keeps dominating the news cycle – continuing lockdowns and mask mandates, with its subsequent devastating economic realities. Then came the Black Live Matter protest/riots that have rocked the nation – with the insane idea of defunding and eliminating the police with the lack of law and order largely supported by Democratic local officials. As a backdrop to this is all the ongoing investigations of all the malfeasance done by our politicians. And now an October surprise (perhaps not the only one to come), the diagnosis of President Trump’s COVID-19 infection. This political season has got everyone saying, “we have never seen anything like this before.”

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    All these events have driven many to speculate, and yes, driven many of the conspiracy theories (sometimes parading as truth) we see in the media. Who doesn’t like going down a rabbit hole for a really good juicy story? Part of investigative reporting does involve a bit of speculation (making a hypothesis and then seeking truth to prove or not prove), often called conspiracy theories. One can see the odd things in the news and try to smell “rats” to then expose them. So critical thinking on news events is not necessarily bad. However, one does need to keep a level head to find the truth and not use them to drive a political agenda. So all conspiracy theories are not necessarily false.

    And now the latest left-wing conspiracy theory concerning the diagnosis of President Trump’s COVID-19 infection.

    Left-wing activist Michael Moore has floated a conspiracy theory on his Facebook page that suggested that Donald Trump’s coronavirus diagnosis was fake. Moore justified his skepticism of Trump’s diagnosis by citing the supposed president’s many lies and incorrect statements.

    “There is one absolute truth about Trump: He is a consistent, absolute, unrelenting, fearless, and professional liar. A serial liar. A factually proven liar. How many lies now has the Washington Post proven in these four years? 25,000? A lie at least twice during every waking hour? Think of all the bad people you’ve known in your life. Even the worst ones you couldn’t say that about.,” he wrote.

    Moore then asked, “so why on earth would we believe him today? Has he earned your trust now?” He pondered why Trump would “all of a sudden just start telling the truth.”

    Not to be outdone, MSNBC’s Joy Reid chimed in and gave Moore’s conspiracy theory even more oxygen.

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    This conspiracy was broadcast all over many mainstream media outlets and amplified on social media with no restrictions. Few actually using a little critical thinking to see how utterly ridiculous the claims were. To make this conspiracy theory stick, this would mean both Melania and Donald Trump are liars. Then, count them, 11 diagnosed at the “supposed” superspreader event at the #RoseGardenMassacre would also need to be lying. Then what of all the doctors at the Walter Reed Medical Center and the most likely dozen or so staff? All part of this conspiracy? The idea is absurd. Something like this would be exposed immediately.

    And what of right-wing conspiracy theories? Facebook and Twitter promised to stop encouraging the growth of the “baseless” conspiracy theory QAnon, which fashions President Donald Trump as a secret warrior, against child-trafficking rings run by celebrities and government officials, after it reached an audience of millions on their platforms this year. But the social media companies still are having difficulties to stem the tide of what they deem “dangerous” QAnon material. A review by The Associated Press found that both platforms have vowed to stop “suggesting” QAnon material to users, a powerful way of introducing QAnon to new people. Facebook will ban any ads supporting QAnon and militarized social movements. One sure way to get banned on social media is to say anything supporting “Q” or “QAnon.” It is important to add the distinction that “Q,” or the entity or entities that sign to posts on a “Q Board” are not the same as “QAnons.” “QAnons” are the interpreters of “Q,” which theoretically could be anyone – and can and do say anything.

    So left-wing conspiracy theories go mainstream, and right-wing conspiracy theories get banned.

    But all this being said and we seem to want to go down the rabbit hole. What of this “supposed” superspreader event at the #RoseGardenMassacre? At least 11 people who attended a White House event on Sept. 26 have since tested positive for the coronavirus (see timeline). Eight of them, including the first lady, sat in the first several rows of a nomination ceremony for Judge Amy Coney Barrett in the White House Rose Garden. 

    It does seem rather odd that so many at one time would contract the COVID-19 virus all at the same time, to not even speak of the cluster of infections in the front rows within the gathering at the event. With about 150 people attending the event, the infection rate for the group was over 7%. An alarming and yet dubious natural infection rate. How can this be?

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    Let’s consider other potential superspreader events – Black Lives Matter protests/riots. Sometimes a small group of a few hundred, but many events numbered into the tens of thousands. A nearly estimated 26 million people, although not all are members or part of the organization, participated in the 2020 Black Lives Matter protests in the United States, making Black Lives Matter one of the largest movements in United States history.

    Most likely, there would be someone in each of the events COVID-19 positive. At a 7% infection rate, this would mean that the Black Live Matter events potentially infected nearly 2 million people, not to even speak of the secondary potential infections once the protester/rioter went home. There have only been “supposedly” a total of about 7 million infections in the U.S. This would mean that the Black Live Matter events caused nearly one-third of all COVID-19 infections? Experts say no. So how could there be a 7% infection rate at the #RoseGardenMassacre?

    Are we ready to go down the rabbit hole?

    Considering all the charges of nefarious activities on both sides of the political spectrum and living in a “we have never seen anything like this before” era, is it so absurd to ask the obvious question? After all, look at all the time and resources Democrats spent investigating Trump via the sham Mueller Report and impeachment. Just how far would one go to stop the nomination of Judge Amy Barrett and the re-election of Donald Trump? Given the rather odd high infection rate at the #RoseGardenMassacre, could this indicate nefarious activities? How does one explain this seemingly odd statistic? Who or what was the superspreader?

    Was it the Trump fire dragon speaking breath at the #RoseGardenMassacr event that spread the COVID-19 to so many – especially on the front row? Or was there a nefarious COVID-19 accelerant? We did do a search for this and could find no media folks asking the question. Just how would one do this if they were even considering this type of activity? Was there a superspreader mole planted in the crowd? Or perhaps a low flying mini-drone spraying a fine mist over the crowd. Here are the videos of the event – we could see nothing, but perhaps you can.

    Officials at the White House are racing to contact trace who might have come in contact with President Trump after he was diagnosed with COVID-19. But look here, as the White House staff prepare the Rose Garden ahead of President Trump’s scheduled Supreme Court nomination of Amy Coney Barrett’s announcement on that Saturday. Did anyone check the flowers… 😉

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    For the avoidance of doubt, the Right Wire Report does not make any claims to any conspiracy theories, rather merely pointing out the obvious biases to what mainstream media considers fact or fiction.

  • Pompeo Seeks 'Asian NATO' To Counter China In Talks With Japan, India & Australia
    Pompeo Seeks ‘Asian NATO’ To Counter China In Talks With Japan, India & Australia

    Tyler Durden

    Wed, 10/07/2020 – 23:20

    Amid Secretary of State Mike Pompeo’s trip to Tokyo this week where he’s meeting with representatives from Japan, India, and Australia, he and top State State Department officials are actually floating plans for a NATO-type anti-China alliance in Asia.

    Beijing sees this as ‘shots fired across the bow’ from within the heart of its sphere of influence, given these very nations are so reliant on China for trade.

    “As partners in this Quad, it is more critical now than ever that we collaborate to protect our people and partners from the CCP’s exploitation, corruption and coercion,” Pompeo said Tuesday referring to China’s ruling communists. “We see it in the South and East China Seas, the Mekong, the Himalayas, the Taiwan Strait.”

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    Pompeo in Tokyo, via Reuters

    He later added while speaking to Japan’s Nikkei newspaper:

    “Once we’ve institutionalized what we’re doing – the four of us together – we can begin to build out a true security framework,” Pompeo told the Nikkei, suggesting other countries could be added to that “fabric” at “the appropriate time.”

    The US has already over the past months been shoring up international support for such an “Asian NATO” as it’s being provocatively called:

    China’s growing military prowess and increasingly aggressive foreign policy have revived talk among U.S. and European officials of creating an “Asian NATO” of regional powers to contain communist Beijing’s expansionist ambitions.

    Past efforts for an East Asian security alliance, such as the post-World War II Southeast Asia Treaty Organization (SEATO) to guard against Cold War-era communism, failed to gain lasting traction.

    But such an initiative will no doubt prove much easier said than done, given last year Australia’s number one trade partner where it exported the majority of its goods was China.

    Also the number two destination for Japanese exports is China, while China is also India’s third top customer, according to IMF figures.

    However, US allies in the region do seem to be on board in identifying China’s growing military might and expansionist vision as a global economic powerhouse as a major long term threat.

  • Top Fed Economist Says Another $3.5 Trillion In QE Needed
    Top Fed Economist Says Another $3.5 Trillion In QE Needed

    Tyler Durden

    Wed, 10/07/2020 – 23:00

    Earlier today, in response to Neel Kashkari’s CNBC interview in which the Minneapolis Fed president said “I don’t see any moral hazard here” when asked if the Fed’s massive liquidity injections have blown a bubble…

    … we showed a chart of the Fed’s balance sheet, asking if he sees moral hazard here:

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    And while we doubt Neel would see moral hazard in the chart above, if it hit him on the head, or even after the biggest asset bubble in history funded by $90 trillion in central bank liquidity pops, his odds of a successful observation would increase drastically if the Fed follows the advice of senior Fed economist and deputy director of the bank’s financial stability division, Michael Kiley, who calculated that due to the Fed’s inability to cut interest rates further (spoiler alert: the Fed will eventually go NIRP), unless it unleashes another massive round of QE.

    How much? Well, according to a paper published by Kiley, the Fed will need to monetize deficit, pardon, purchase bonds equal to 30% of GDP, or $6.5 trillion, in order to offset the impact of the zero lower bound. And since the Fed has already purchased a record $3 trillion in bonds since March, that implies another $3.5 trillion in QE is needed.

    And while the Fed’s latest minutes did not hint at any adjustment to the Fed’s current $120BN in monthly bond purchases, the paper will likely be used to bolster the case for increasing the Fed’s bond purchases in coming months, and certainly once there is a more than 10% correction in the market which has emerged as the clear-cut Powell Put.

    But what is scariest is not that the Fed will continue monetizing every single dollar of US debt issuance for the foreseeable future, and perhaps indefinitely which considering the CBO’s latest forecast means a long, long time…

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    … but rather that the Fed no longer even pretends to know what it is doing: as the Fed economist admitted, his findings are based on models developed prior to the Covid-19 outbreak that “may fail to capture how pandemic shocks affect investment and other decisions.” In other words, as even Bloomberg concedes, “economists don’t really know how or whether the pandemic might disrupt the impact they expect from bond purchases on real economic activity.”

    Actually, we take that back: what is by far the scariest is that the US economy is now literally on perpetual life support. As recent events have shown too clearly, unless there is a fresh trillion in either fiscal or monetary stimulus, the economy and stock market would both disintegrate. And as Neel Kashkari said so clearly today in his CNBC interview, the Fed has – and never had – any other strategy of resetting this vicious cycle where ever more and more stimulus is needed just to avoid collapse – or as he put it, the Fed would never “start a forest fire now to avoid a far greater forest fire later.”

    The only thing that Fed does have is doing more of the same debt-buying can-kicking which guarantees with absolute certainty, that the entire financial and socioeconomic system collapses and not because of China, or Russia, or terrorist, but because of a group of clueless hack in the Federal Reserve.  

  • Watch: Russia Conducts Rare Ship-Launched Hypersonic Missile Test On Putin's Birthday
    Watch: Russia Conducts Rare Ship-Launched Hypersonic Missile Test On Putin’s Birthday

    Tyler Durden

    Wed, 10/07/2020 – 22:40

    Russia’s defense ministry (MoD) released video showing a rare ship-launched hypersonic missile test in action on Wednesday, which it said was successful. 

    The hypersonic launch of the Zircon winged missile was conducted from the Admiral Gorshkov frigate in the White Sea, and had reportedly traveled 280 miles after which it hit a mock naval target in the Barents Sea.

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    Via TASS/MoD: Tsirkon hypersonic cruise missile launched from the frigate Admiral Gorshkov during a test in the White Sea Wednesday.

    It further was described as flying at an altitude of 28km with the total flight lasting four-and-a-half minutes at speeds reaching more than Mach 8.

    The Russian Defense Ministry published video of the successful launch, which was described as also marking President Putin’s 68th birthday.

    In public remarks to chief of the general staff Valery Gerasimov, Putin hailed the “great achievement” and successful test of the missile which is expected to enter active service after more near-future tests.

    Watch the new hypersonic missile test below:

    “This is a big event not only for the life of the armed forces but also for all of Russia, for the whole country,” Putin said of the test, which grabbed international headlines.

    Given social distancing coronavirus measures, Putin observed the test remotely from his office.

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    Via Reuters

    Crucially it comes the same week that US and Russian negotiators are discussing the New START nuclear arms reduction treaty in Finland.

    The two major nuclear powers have yet to agree on the conditions for extending what’s widely considered the most significant nuclear arms reduction treaty, set to expire in February 2021 if the two sides don’t agree to renew it. So far ongoing talks between Moscow and Washington have failed to extend it by up to five years, despite pressure to strike an extension by America’s allies.

    After the collapse of the INF treaty as well as Open Skies, there’s been surprising word of “progress” made from these latest talks in Helsinki.

  • VP Debate Post-Mortem: Pence Trounces "Gaffe Machine" Harris
    VP Debate Post-Mortem: Pence Trounces “Gaffe Machine” Harris

    Tyler Durden

    Wed, 10/07/2020 – 22:35

    55-year-old Kamala Harris (22 years the junior of Joe Biden) faced off across a 12-foot void of ‘potentially-deadly-air’ and ‘plexiglass’ against 61-year-old Mike Pence (13 years younger than President Trump) with USA Today’s (and Nancy Pelosi biographer) Susan Page as the ‘moderator’ at the University of Utah in Salt Lake City… all without wearing masks!

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    Ahead of the debate, despite media’s constant crowing about Biden’s double-digit lead in national polls, Trump is slightly outperforming against Biden relative to Hillary in the battleground states…

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    Source: RCP

    Following a similar pattern – but with a notably higher probability of winning in November – relative to his performance against Hillary…

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    *  *  *

    It was not pretty!

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    *  *  *

    Summary (of the nine discussion topics):

    1. COVID Response – Pence won – a body-blow slamming Kamala on vaccines: “stop playing politics with people’s lives.”

    2. Health Of Candidates – Tie – neither candidate answered but if we had to pick, Pence shaded it as Kamala discussed herself.

    3. The Economy – Pence won – the vice-president crushed Harris on Biden taxes (briefly silencing her over Trump tax cut repeal).

    4. Climate Change – Pence won – perhaps surprisingly but Harris was unable to recover from being cornered on her sponsorship of the Green New Deal

    5. China – Pence won – Harris facts all over the place and Pence closed with Biden’s “cheerleading” for China.

    6. Foreign Relations – Tie – both candidates parried each other’s running mate’s performance

    7. The Supreme Court – Pence won – Harris refused to answer the question of packing the court and Pence was frank about being “pro-life.”

    8. Racial Justice – Pence won – again rather stunningly, Pence crushed Harris on misleading quotes and soundbites

    9. Transfer Of Power – Pence won – while Harris went “vote now”, Pence reminded the audience that Harris party spent the last four years trying to overturn the previous election

    Pence dominated Harris as finally, questions were asked and answered and facts were checked!

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    Perhaps President Trump summed the first half best:

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    And WSJ’s Kimberley Strassel, the second half…

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    Harris spoke more (38:48 to Pence’s 35:22) but said less…

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    Moderator Susan Page reminded the audience that attendees were all wearing masks and that she hoped for a better behaved debate.

    An awkward moment as they both walked and didn’t want to sit down first…

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    The first question was about the coronavirus “not being under control.”

    Harris began on the offense, noting that

    “The American people have witnessed what is the greatest failure of any presidential administration in the history of our country,” and adding a line about “sacrificial workers.”

    Harris accused Trump of “covering it up,” and “frankly this administration has forfeited their right to re-election because of this.”

    Harris said the Biden-Harris plan is testing, contact-tracing, and free vaccines.

    Pence’s response was heartfelt and factful as he explained the timeline of airline shutdowns “which Biden called xenophobic.”

    And the vice-president mocked that Biden had “plagiarised” their plan – as it is exactly the same as they have been doing.

    “It looks a little like plagiarism, which Joe Biden knows a little something about.”

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    Pence slams Harris for claiming that the plan “hasn’t worked” was a great misjustice, pinning the decisions on Fauci and Birx.

    Pence framed the plan as the American people fighting and being brave, forcing any counter to appear as Kamala is attacking Americans.

    Harris got frustrated and tilted back at Pence: “I’m speaking”:

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    The moderator went on to discuss the Trump administration following health protocols and the vaccines, with Pence slamming Harris for “politicizing the vaccine” after she said she would not take it if Trump said it was safe:

    “stop playing politics with people’s lives”

    Pence also pointed out the failure of the Obama-Biden plan to cope with the swine flu when 60 million people contracted it (and 2million Americans would have died).

    *  *  *

    The second question was on the health and age of the presidential candidates

    Page asked “Have you had a conversation or reached an agreement on issues of presidential disability considering Trump/Biden’s age?”

    Neither of the candidates responded directly to any questions about the health of their running mates, but Harris  listed off her credentials, and Pence smoothly congratulated Harris on being the first black woman on the ticket.

    Harris claims that Biden has been very transparent and that Trump has done nothing but cover things up. Pence says he respects Biden’s “47 years in public life,” a subtle dig at an opponent the Trump campaign has tried to portray as a Washington insider.

    *  *  *

    Topic three was the economy

    “There couldn’t be a more fundamental difference” between Trump and Biden, according to Harris who said Biden measures the health of the economy based on the average American worker.

    Pence says that Trump is a “job creator,” but he added that “you just heard Harris say on day one Joe Biden’s going to raise your taxes.”

    Pence totally shut Harris down on repealing Trump’s tax cuts.

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    Harris’ response was to try and paint the economic downturn from COVID lockdowns:

    “They rode the coattails of Joe Biden’s success,” Harris says of the economy. “Of course now the economy is a complete disaster, but Donald Trump did that.”

    Harris also tried to pivot to healthcare but Pence punched back that Harris said she would ban fracking and abolish fossil fuels.

    “More taxes, more regulation, banning fracking, abolishing fossil fuel, crushing American energy and economic surrender to China is a prescription for economic decline.”

    *  *  *

    The fourth topic was on climate change.

    Page asked: “Do you believe that man made climate change has made wildfires and hurricanes worse?”

    Pence responded by questioning the cause but not the fact that climates are changing, adding that

    “The US has reduced CO2 more than the countries that are in The Paris Accord.”

    The Paris accord and the Green New Deal “would crush” American energy, Pence says.

    Page noted that Harris cosponsored “The Green New Deal” while Biden flatly rejected that during last week’s debate.

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    Harris said “Joe Biden will not ban fracking.”

    Which is awkward…

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    “We’ve seen a pattern in this administration — they don’t believe in science,” Harris says. “Joe believes in science.”

    Pence cornered Harris once again on the Green New Deal cosponsorship and lack of consistency.

     

    *  *  *

    The fifth discussion topic was on China

    Harris tried to bring up the China trade war – “Lost the trade war with China? Joe Biden never fought it” – and Pence destroyed her with fact bombs about Biden being “a cheerleader for communist China.”

    “You said Trump lost a trade war with China, Joe Biden never fought one”

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    Pence says China has been hurting the U.S. “for decades.”

    “We’re going to hold China accountable for what they did to American with the coronavirus,” Pence says.

    Harris claims that “The Trump administration’s perspective and approach to China has resulted in the loss of American lives, American jobs and America’s standing.”

    Harris went on to claim that Xi was more respected (according to Pew) and China more respected – sadly that’s a lie:

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    Well that’s awkward!

    Pence added that China and the World Health Organization were not straight with the American people.

    Sadly, neither candidate answered the moderator’s question about how to define China: friend, competitor, enemy, or something else, but it’s pretty clear from their track records.

    *  *  *

    Foreign Relations dominated the sixth topic.

    Harris went straight for the Russia, Russia, Russia topic:

    “Donald Trump, the commander-in-chief of the United States of America prefers to take the word of Vladimir Putin than the word of the American intelligence community.”

    Furthermore Harris attempted to bring up the story about Trump’s disane for the military

    Harris says Trump has “betrayed our friends and embraced dictators around the world.”

    She cites Russia, says Trump “prefers to take the word of Vladimir Putin” than the U.S. intelligence community — and says that Trump’s pulling out of the Iran nuclear deal has made the U.S. less safe.

    Pence (as furiously as he gets) punched back:

    “President Trump reveres those who serve in our armed forces.”

    Pence cites Trump’s accomplishments, including defeating ISIS.

    *  *  *

    The seventh topic was The Supreme Court

    “President Trump and I could not be more enthusiastic about seeing Judge Amy Coney Barrett become Justice Amy Coney Barret,” Pence says.

    “We hope she gets a fair hearing.”

    Harris pivoted to Obamacare:

    “The contrast couldn’t be more clear: they’re trying to get rid of the Affordable Care Act. Joe Biden is trying to expand it.”

    Pence pivoted back to abortion and said “I am pro-life and make no apologies for it.”

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    Then Pence cornered Harris with the “pack the court” question?

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    Once again she refused to answer and Pence came out swinging.

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    Then this happened…

    Pence: “Will you and Biden pack the Supreme Court?”

    Harris: “Trump packed the district courts with white people!”

    Moderator: “Thank you, let’s move on.”

    Pence:

    “If you haven’t figured it out yet, the straight answer is they are going to pack the Supreme Court if they somehow win this election.”

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    Trump Jr summed it perfectly:

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    *  *  *

    Racial Justice was the controversial eighth topic

    “There’s no excuse for what happened to George Floyd and justice will be served,” Pence says.

    “Our heart breaks for the loss of any innocent American life,” Pence says of Taylor. “But I trust our justice system.”

    “I will not sit here and be lectured by the vice president on what it means to enforce the laws of this country,” Harris says.

    Pence hit back with comments on Harris’ track record…

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    Harris tried to bring up the Charlottesville comments by Trump again, adding that:

    the idea that America is systemically racist is “a great insult to the men and women who serve in law enforcement.”

    Pence says that Trump “has Jewish grandchildren” and “respects and cherishes all of the people.”

    Harris:

    “Joe Biden and I recognize that implicit bias does exist, Mr. Vice President contrary to what you believe. … I will not be lectured by the vice president on our record in what we have done in terms of law enforcement.”

    The moderator did a great job of controlling Harris as she kept repeating debunked media bites…

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    *  *  *

    Finally, the topic of the Transfer of Power was discussed.

    But Harris decided to shift to an infomercial:

    “here’s what I’d like to say to everybody: vote. Please vote. Vote early.”

    Pence came out swinging by bringing up the facts that the previous campaign spied on his campaign and has spent the last few years trying to overturn the last election:

    “Your party has spent the last three and a half years trying to overturn the results of the last election,” Pence says, bringing up the Mueller investigation and impeachment.

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    *  *  *

    And finally – bravo to Susan Page! A moderator who asked tough questions on both sides, politely stopped the candidates when their time was up and forced them to respond.

    *  *  *

    Oh, and there was a flay that ‘trended’ on Twitter briefly…

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  • Is Seattle Paying Antifa Militants To Write 'F**k Police' On BLM Mural?
    Is Seattle Paying Antifa Militants To Write ‘F**k Police’ On BLM Mural?

    Tyler Durden

    Wed, 10/07/2020 – 22:20

    Authored by Paul Joseph Watson via Summit News,

    The city of Seattle is literally paying Antifa militants to write “f**k police” and “all cops are bastards” (ACAB) on Black Lives Matter murals near the infamous CHOP zone, according to a far-left live streamer.

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    Kitty Shackleford shared clips from the individual’s live stream which went out on Monday, which show the mural tagged with phrases like “abolish capitalism,” “ACAB,” “no good cops in a racist system,” & “abolish ICE”.

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    “The funniest thing about this is… the city of Seattle is paying me to do this, so it’s beautiful, you know what I’m saying,” the live streamer says while laughing.

    He also makes clear that BLM is “coming for” Mayor Jenny Durkan next, despite her literally overseeing financial aid to the agitators.

    The mural is also tagged with the words “100% Antifa,” a reference to the manifesto of Antifa terrorist Michael Reinoehl who murdered Trump supporter Aaron Danielson in cold blood in Portland in late August.

    SDOT announced that it will maintaining the integrity of the mural, which deteriorates much faster than other surfaces, and that the total cost will remain unknown until the project is finished.

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    “Imagine thinking you’re a revolutionary fighting the system when you’re getting paid by the system to take part in said “revolution,” writes Chris Menahan.

    One fears for the future of cities like Seattle given that the controlling authorities, not merely the rioters, are pro-Antifa.

    As we highlighted yesterday, the likely next Mayor of Portland is also a vehement Antifa supporter and recently wore a skirt which championed the legacy of Chairman Mao, the Communist dictator who was responsible for the deaths of around 50 million people.

    *  *  *

    In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Also, I urgently need your financial support here.

  • CA Governor's Office Says To Wear Mask 'In Between Bites' At Restaurants
    CA Governor’s Office Says To Wear Mask ‘In Between Bites’ At Restaurants

    Tyler Durden

    Wed, 10/07/2020 – 22:00

    California Governor Gavin Newsom’s office has taken mask mandates to the next level – telling those eating out at restaurants that they should wear a mask “in between bites” in order to “keep those around you healthy.”

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    So, in addition to socially distancing in outdoor settings at a maximum 25% capacity, those dining out in California will have the pleasure of depositing escaped chewings on the inside of their masks.

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    New York has had the same rule for months, which most people ignore.

    A tweet from the Governor’s office depicts someone unmasking in between bites, as if California residents are too stupid to understand what they’re trying to convey, along with the text “Minimize the number of times you take your mask off.”

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    Do they make N95 oat bags? 

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  • Walmart Turns To Drones
    Walmart Turns To Drones

    Tyler Durden

    Wed, 10/07/2020 – 21:40

    Submitted by MarketCrumbs,

    Amazon and Walmart have been fighting each other for years to become the preferred shopping destination of millions. With the coronavirus pandemic fueling e-commerce spending and speeding up the e-commerce penetration of total retail spend, the two companies continue to innovate at a rapid pace.

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    The latest battle between the two is shaping up to be deliveries using drones. While Amazon won approval from the U.S. Federal Aviation Administration in August to operate its fleet of Prime Air delivery drones, Walmart is signaling through a handful of partnerships that it wants to give drones a shot as well.

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    Over the last month, Walmart has struck three separate deals with drone operators to test delivering various items.

    Walmart announced a pilot program last month with Flytrex, an end-to-end drone delivery company, to deliver select grocery and household essential items to customers in Fayetteville, North Carolina.

    Walmart is also teaming up with Quest Diagnostics and drone services provider DroneUp to test delivering coronavirus tests to people’s homes using drones. Customers would administer the nasal swab test and then send it back to Quest Diagnostics for testing. A trial is underway in north Las Vegas, while a trial in Cheektowaga, New York is expected to begin this month.

    “There’s a lot we can learn from our drone delivery pilots to help determine what roles drones can play in pandemic response, health care delivery and retail,” Walmart said. “We hope drone delivery of self-collection kits will shape contactless testing capabilities on a larger scale and continue to bolster the innovative ways Walmart plans to use drone delivery in the future.”

    Walmart also struck a partnership with drone delivery company Zipline to deliver select health and wellness products in an attempt to go after the quickly-growing prescription management space. Trials using Zipline’s technology will take place near Walmart’s headquarters in Arkansas and are expected to begin early next year.

    “We’ll never stop looking into and learning about what the next best technology is and how we can use it to better serve our customers now and into the future,” Walmart senior vice president of customer product Tom Ward said.

    While Amazon began testing deliveries with drones in 2013, it’s not surprising to see Walmart decide to partner with drone operators instead of running its own fleet. With Walmart’s deep pockets, it wouldn’t be surprising to see Walmart acquire the companies if these trials prove to be successful.

  • Toronto Condo Supply Surges, Listings Skyrocket 215%, While Rental Prices Crash
    Toronto Condo Supply Surges, Listings Skyrocket 215%, While Rental Prices Crash

    Tyler Durden

    Wed, 10/07/2020 – 21:20

    The exodus out of major cities as a result of the pandemic and the civil unrest of months past looks to be very real in Toronto. The city, which was in the midst of a multi-year boom, has now seen massive condo supply hit the market with new listings surging in September.

    The Toronto Regional Real Estate Board and research firm Urbanation Inc. have shown a surge in units for sale and a sharp decline in rents, foreshadowing a gloomy future for the city’s real estate market, according to Bloomberg. The glut comes at the same time the city is seeing a boom in single family homes. 

    Active condo listings in the city hit a record at the end of September and were up 215% – a massive delta from the 5.3% rise in total housing listings across the city. This shows that condo prices are likely to fall on an annual basis. 

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    (Chart: Bloomberg)

    “Demand is just not keeping up with new supply right now,” said Urbanation President Shaun Hildebrand.

    6,480 condos were listed for sale in September, which was up from 5,599 in August and 3,403 the year prior. Prices fell for the second sequential month and are now down 1.8% since May. Rental units are now sitting on the market for 26 days in August, up from 14 days a year prior. The sales to new listings ratio for condos downtown has been below 40% for the past few months. 

    At the same time, values for detached homes “have surged” and rents have seen a “dramatic” decline. The cost of leasing unfurnished units is down 11% year over year, which marks the biggest YOY decline on record.

    Much of the weakness is focused on downtown, where it was spurred by the pandemic halting immigration and people leaving the city center to seek out more living space. This happened at a time when new supply was hitting the market and dramatically increasing inventory. 

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    Hildebrand commented: “The ratio of sales to new listings for condos in downtown Toronto fell to 24% in September, the lowest level since the early 1990s.”

    Simeon Papailias, co-founder of the Real Estate Center, said: “It’s simply because of all the new construction completions and absolutely no new blood of tenants coming in. We’re going to see people move to get cheaper rents.”

    Beth O’Donoghue, a broker at Brad J Lamb Realty, concluded: “It’s crazy slow. So much is on the rental market and it’s inevitably trickling down to the retail market.”

  • The Constitutional Reckoning Of State Lockdown Orders
    The Constitutional Reckoning Of State Lockdown Orders

    Tyler Durden

    Wed, 10/07/2020 – 21:00

    Authored by Ethan Yang via The American Institute for Economic Research,

    On October 3rd NPR reported that the Michigan Supreme Court struck down Governor Gretchen Whitmer’s state of emergency and the powers it granted. NPR writes 

    In a 4-3 majority opinion, the state’s high court said she did not have that authority. “We conclude that the Governor lacked the authority to declare a ‘state of emergency’ or a ‘state of disaster’ under the EMA after April 30, 2020, on the basis of the COVID-19 pandemic. Furthermore, we conclude that the EPGA is in violation of the Constitution of our state because it purports to delegate to the executive branch the legislative powers of state government– including its plenary police powers– and to allow the exercise of such powers indefinitely,” wrote Justice Stephen J. Markman on behalf of the majority.

    Governor Whitmer has been one of the more heavy-handed executive figures during the pandemic. One of her policies went as far as to ban the selling of gardening supplies in stores that were still permitted to stay open.

    More importantly, however, this court ruling was not the first of its kind but the third in a series of legal victories against lockdown orders. The first was a Wisconsin Supreme Court ruling that declared parts of Governor Tony Evers’ stay at home order unconstitutional and the second was by a federal court that struck down Governor Tom Wolf’s policies in Pennsylvania.

    There is no doubt that the governors across the country have gone off the constitutional deep end in response to Covid-19, exercising powers that are not only unprecedented but unproven. These cases, notably in Michigan and Wisconsin, all share some important legal themes that may suggest the beginning of a constitutional reckoning for governors across America.

    The Story in Michigan 

    Back in March, Governor Whitmer declared a state of emergency in response to the pandemic, much like many others across the country. Unlike many other governors, hers was particularly strict and arbitrary. The Mackinac Center Legal Foundation, an organization that represented a number of healthcare firms in a suit against the state write,

    “One of the affected medical practices, Grand Health Partners, operates in the Grand Rapids area. It performs endoscopies and other elective surgeries, many of which were deemed nonessential by executive order. Due to the shutdown, many of their patients were not able to receive treatment and have suffered because of it.”

    This is one of the many unintended consequences that come with policies such as stay at home orders and deeming certain businesses “nonessential.” Interestingly, this had little to do with the Michigan Supreme Court’s ruling. Such claims would be justified under the equal protection clause guaranteed by the 14th Amendment. However, the court decided to take a different route.

    The court ruled that the governor lacked the very authority to continue her state of emergency. The Michigan legislature authorized the governor to declare a state of emergency in March but only until April 30. Governor Whitmer decided to invoke the Emergency Powers of the Governor Act (EPGA) of 1945 as well as the Emergency Management Act of 1976 to grant herself virtually unlimited power. This unilateral and unauthorized exercise of power without legislative oversight was what the court deemed unconstitutional. 

    The court not only struck down the governor’s emergency powers but it also declared the EPGA unconstitutional, albeit with a narrow margin. Record Eagle writes

    “Although the constitutionality of the ’45 law produced a split ruling, the justices unanimously agreed that any orders past April 30 without input from the Legislature were not valid.”

    Such a ruling is an absolutely necessary check on the powers of the executive branch by the judicial branch. The Michigan governor was essentially acting in contempt of the democratically elected legislature which did not grant her the power to continue her policies for as long as she did. Record Eagle writes,

     “Our Constitution matters, and this was a big win for our democratic process,” said Republican House Speaker Lee Chatfield of Emmet County.

    In a footnote to his opinion, Markman offered an optimistic message.

    “Our decision leaves open many avenues for the governor and Legislature to work together to address this challenge and we hope that this will take place,” he said.

    The Case of Wisconsin

    The ruling in Wisconsin was one of if not the first that challenged lockdown orders enacted by state governors. Way back in May, the Milwaukee Journal Sentinel reported that 

    “The Wisconsin Supreme Court has struck down Gov. Tony Evers’ order shutting down daily life to limit the spread of coronavirus — marking the first time a statewide order of its kind has been knocked down by a court of last resort.”

    The court took an angle similar to the Michigan Supreme Court in striking down parts of Wisconsin’s stay at home order because it was made without any legislative oversight. That is that lawmakers in the Wisconsin State Assembly did not grant the governor or his bureaucratic officers the power to enact lockdown policies.

    The Pacific Legal Foundation writes 

    “The Wisconsin Supreme Court’s decision should be seen as a victory for the principle that even in a crisis, the rulemakers must follow the rules. Regardless of how anyone feels about the orders themselves, if the governor and Health Secretary had worked with the legislature as they’re required to—even during crises—they could have crafted a constitutional law that the State Supreme Court likely would have upheld.”

    They also explain that 

    “The Wisconsin Governor issued an order granting Department of Health Services Secretary-designee Andrea Palm nearly limitless power to respond to the crisis without any form of accountability. Even though Palm is not elected by the people and has not yet been confirmed by the state legislature, she was authorized to issue orders to shut down broad swaths of the state’s economy. And Palm’s orders could continue indefinitely without being subjected to public scrutiny. In other words, Palm’s authority violated key safeguards put in place to ensure that rulemakers remain accountable.”

    The governor and his public health officials acted without the democratic consent of the people via their elected representatives in the legislature. Unilateral and quite frankly, rogue, actions such as this are a clear violation of the separation of powers doctrine that the Founders put in place to prevent tyranny. 

    The Case of Pennsylvania 

    AIER has already covered how a federal court held that Pennsylvania’s lockdown orders were unconstitutional in an article by Stacy Rudin. However, it is worth reiterating again because it is certainly an important case that differs from the rulings in Michigan and Wisconsin. Rudin gives some important context when she writes, 

    “Pennsylvania Federal Court in Butler County v. Wolf reviewed the indefinite “emergency” restrictions imposed by the executive branch of Pennsylvania government, declaring limitations on gathering size, “stay-at-home orders,” and mandatory business closures unconstitutional. Refusing to accept the alleged need for a “new normal,” the Court stated that an “independent judiciary [is needed] to serve as a check on the exercise of emergency government power.”

    About time. The Judicial Branch is coming to save us.”

    Pennsylvania implemented many of the lockdown measures that we see in the most draconian states such as stay at home orders and business closures. However, unlike Michigan and Wisconsin, Governor Wolf’s policies were struck down by a federal court, not a state court. Furthermore, the ruling was based not on a separation of powers argument but violations of the 1st and 14th Amendments, making it more of an individual rights case.

    A reporter writes 

    The declaratory judgment says “(1) that the congregate gathering limits imposed by defendants’ mitigation orders violate the right of assembly enshrined in the First Amendment; (2) that the stay-at-home and business closure components of defendants’ orders violate the due process clause of the Fourteenth Amendment; and (3) that the business closure components of defendants’ orders violate the Equal Protection Clause of the Fourteenth Amendment.”

    Another key component to the ruling was the fact that such orders were not narrowly tailored, which is a key criterion for any policy that intends to restrict individual rights. 

    Reason Magazine explains that 

    “The fact that the governor’s orders allow people to visit malls, restaurants, and stores in greater numbers than what the state’s restrictions on gatherings permit showed that the latter were overly broad, (Judge William) Stickman wrote. His opinion also cites comments from Wolf’s chief of staff about how large protests—which the governor attended—didn’t lead to a “super spreader” event as evidence that restrictions on gatherings were overly broad.”

    Such policies have no logical foundation and reek of political favoritism. The court upheld the fact that such practices have no place in America. 

    Key Takeaways

    This country was built on fundamental rights and doctrines that were specifically crafted to prevent domestic tyranny, whether it be from the rule of the few or the mob. It may not be such hyperbole anymore to claim that governors across the United States have acted like tyrants. 

    In Michigan and Wisconsin, we have seen the affirmation of the separation of powers doctrine, which is an elementary school civics concept that forms the very foundation of a free society. There are three branches of government: the legislative, the executive, and the judicial. The legislative branch is a democratically elected and representative body that has the sole authority to write laws. The governor and the executive branch bureaucracy derive their powers from the legislative and their duty is to execute the mandate given to them by the legislature, not make up its own rules. Such a process may be cumbersome but in the end, it protects our liberty and ensures that the power wielded by government is accountable to the people. The governor is not representative of the people, just 50.1% of the vote. 

    Although we have seen the affirmation of these important constitutional rights and doctrines in these three states, it is clear that across the country there is much work to be done. What governors and mayors are getting away with violating the basic rights of their citizens? Has every executive officer acted with the powers granted to them by the legislature or are they acting as tyrants? Hopefully, these three rulings are just the first of many in what could become a constitutional landslide of justice.

    Covid-19 will come and go as all pandemics do. However, if we do not resolve the fundamental questions that have arisen regarding our liberties and the power of government, they will haunt this republic till its final days, if you can even call it one at this point.

  • Watch Live: Pence-Harris Vice-Presidential Debate
    Watch Live: Pence-Harris Vice-Presidential Debate

    Tyler Durden

    Wed, 10/07/2020 – 20:45

    Socially-distanced 12 feet apart and seated behind 7 foot high plexiglass barriers (presumably to stop them spitting at one another), Vice-President Mike Pence and Senator Kamala Harris will square off mano-a-womano in tonight’s vice-presidential debate of this 2020 election circus campaign.

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    The stakes couldn’t be much higher for Mike Pence heading into his first (and luckily for many, only) face-off with Kamala Harris as the Biden-Harris ticket continues to expand their lead in the national polls. Although, while many mainstream media types proclaim Biden’s “unassailable” lead, we do have one ‘awkward’ chart to share before Trump-Pence are written off into the annals of history. They are performing considerably better than they did against the “guaranteed and deserved winner” Hillary Clinton…

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    The pattern is certainly very similar – but what will the outcome be this time?

    After the Trump-Biden dumpster-fire – with both candidates and the moderator repeatedly interrupting one another – tonight’s debate between Pence and Harris is far less likely to devolve into cacophony.

    Instead, it seems more likely Pence will highlight two extremely unflattering aspects of Kamala Harris: her prickliness and her radicalism.

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    And, as RealClearPolitics’ Susan Crabtree notes Harris will focus on attacking the vice president’s nice-guy reputation, pointing to Pence’s previous opposition to same-sex marriage and related issues impacting the LGBTQ Americans. The issue of LGBTQ rights could come up after Supreme Court Justices Clarence Thomas and Samuel Alito issued a broadside against the high court’s same-sex marriage decision on Monday when the court declined to hear a case brought by a former Kentucky county clerk who refused to issue a marriage license for same-sex couples.

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    By now, Pence is used to playing good cop to Trump’s bad one. As a former radio talk show host, he knows how to serve up disciplined sound bites aimed at a target audience. But, as RealClearPolitics’ Susan Crabtree notes, no one expects Harris to make it easy for him or to pull her punches after her record of fierce attacks against Biden and other opponents in the Democratic primary debates.

     

    And while the world and their pet rabbit is confident that this debate will not show the kind of moderator bias that Chris Wallace did, we suspect that may not be true…

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    Sigh!

    Watch Live (Due to start at 2100ET):

    And for those who – like us – will need a drink to get through this – here is some guidance from Jane Recker at Washingtonian.com:

    Grab a fifth (or a keg) and play along (responsibly)…

    Drink When Pence:

    • Talks about how he’s a Christian. Drink twice if he explicitly describes himself as “A Christian, conservative, and Republican, in that order.”

    • Mentions “Mother.” As in his wife, not his actual mother.

    • Shakes his head while Harris criticizes Trump

    • Brings up how Biden and Harris fought in the primary debates

    • Emphasizes the need to “restore American values”

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    Drink When Harris:

    • Mentions how close she was with Beau Biden

    • Criticizes Pence on his record as head of the coronavirus task force

    • Says “nobody is above the law”

    • Grills Pence on Trump’s response to his own Covid diagnosis

    • Says we need to end systemic racism but fails to explain how

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    Drink When Either

    • Says “the United States of America”

    • Precedes talking about their home state with “the great state of”

    • Describes their running mate’s health as “excellent,” “fantastic,” or likewise

    • Interrupts the other (advanced version, please drink responsibly)

    • Directly insults the other (advanced version, please drink responsibly)

    Chug for five seconds if:

    • Pence looks visibly uncomfortable trying to defend a Trump position

    • Harris waters down a position so much you’re unsure of what her platform is

    Click here to download a printable PDF of the Washingtonian VP Debate Drinking Game.

  • Goldman Finds The Pandemic Recession Was Actually Not That Bad
    Goldman Finds The Pandemic Recession Was Actually Not That Bad

    Tyler Durden

    Wed, 10/07/2020 – 20:35

    In a note which we are confident will go swimmingly with millions of Americans who lost their jobs in the past six months, Goldman’s economics team writes that “scarring effect” from the pandemic recession has been “surprisingly limited” and the “damage has so far been much less than initially feared” in what is likely the most upbeat take on the current economy and one wonders if it involved any research outside of Tribeca.

    After saying tthat the early weeks of the virus shock the Goldman economists “began to closely track measures of long-term damage to businesses and the labor force” with many businesses facing near-total collapses in revenue and 25 million jobs lost in little over a month, “the threat of deep scarring effects loomed over the US economy.”  Instead, things have been far better than expected.

    Looking at the business sector first, Jan Hatzius and team write that the “scarring effects on the business sector remain surprisingly limited” as commercial bankruptcy filings have run below the pre-pandemic trend, most business closures during the worst months of the pandemic have proved temporary, and new business formation has surged recently.

    A similar cheerful conclusion emerges when Goldman looks at the labor force, with the Goldman economists writing that “scarring effects on the labor force have also been less severe than feared” , as unemployment has fallen sharply, “and most of the remaining job losers are either still on temporary layoff or are in industries that should largely recover with a vaccine.”  In addition, Goldman observes, “labor demand has rebounded much more quickly than last cycle, reducing the risk of widespread long-term unemployment.”

    Ludicrous? Insane? Hilarious? Perhaps all three, yet here are some of the data Goldman used to reach its arguably offensive to tens of millions of Americans conclusion:

    The left side of Exhibit 1 shows that total commercial bankruptcy filings reported by the American Bankruptcy Institute have actually run below the pre-pandemic trend. While a recent San Francisco Fed report noted with alarm that Chapter 11 bankruptcies are running at the fastest pace since 2013, this largely reflects recent changes to the bankruptcy code and it has been more than offset by declines in other commercial bankruptcy filings.

    The right side of Exhibit 1 shows that Bloomberg’s count of bankruptcies at large companies did briefly spike to a level that approached the financial crisis peak.  But as our credit strategists have shown, the majority of these were firms already on a path to default before the pandemic, not otherwise healthy businesses needlessly sunk by an unprecedented shock.

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    In other words, Goldman contends that while there was a spike in defaults, it was largely among those companies that were already levered to the hilt and would have filed anyway. The covid crisis merely accelerated their demise, which come to thing of it, is what the covid virus is also doing with most of the elderly people it affects and who die not so much from the virus as due to other underlying, chronic or acute conditions, whose impact is merely accentuated to the point of lethality by covid.

    What about Goldman’s optimistic take on the labor market?

    Here the economists argue that the silver lining of the employment collapse was the very high share of temporary layoffs shown in Exhibit 3, historically something which they say is “a reliable signal of rapid recovery” even as those permanently laid off is an dangerously high number, the highest since 2013, Goldman’s spin notwithstanding.

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    To elucidate their point, Goldman next claims that just five months later, the number of newly unemployed workers since the virus shock has indeed declined dramatically, and about half still report that they are on temporary layoff.  While not all of these workers will return to their old positions, this nevertheless points to further outsized job gains in coming months.

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    Here Bank of America disagrees, and lays out three cyclical forces today that spell out far greater pain for the labor force than GOldman is willing to admit, to wit:

    • History repeats: skill mismatch yet again. Given the lack of demand for services-travel, entertainment, etc.-there will likely end up being discouraged workers in this sector. The skills are not easily transferrable to other sectors-particularly on the goods side of the economy where demand has been resilient.
    • Disengagement from the labor force due to health or childcare: the threat of the virus has left many people with extremely difficult decisions to make. Some may decide that the risk of falling sick with COVID in their workplace is too significant and thus will voluntarily leave the workforce, particularly for those who are close to retirement. Parents also struggle with child-care issues-it may be hard for parents to fully return to work until they are able to feel confident that their children can return to prior educational arrangements or daycare. This could make it difficult to have two working parents-the burden tends to be disproportionally on women. As long as the virus remains a threat, there will be a portion of the workforce on the sidelines.
    • Reengagment in the labor force because of the “telepresence revolution”: over the medium-term, the shift toward greater virtual / remote working could be a positive for the LFPR. According to the BLS’s Time-Use Survey, about 8% of the workforce worked from home at least one day a week prior to COVID. According to research from the Atlanta Fed in which the authors compared the Time-Use Survey results to current survey analysis, they find that the share of working days from home is set to triple after the pandemic. Similarly, the BofA Global Research data analytics team surveyed the companies across the research coverage for their latest expectations on the timing for return to the office – the results show that only 80% of employees will be expected to be fully back in the office by the end of 2021.

    While Goldman acknowledges this, saying that “not all workers who lost jobs in virus-sensitive industries will return to them when a vaccine becomes available, and many layoffs are likely to prove permanent” but then adds that “workers who have to switch jobs or even occupations already face much better prospects for re-employment than after previous recessions.”

    So it’s all good, see? Well, maybe not: even Goldman had to concede that long-term unemployment rose in September and is likely to rise somewhat further in the October jobs report as more workers who lost their jobs in the first month of the pandemic cross the half-year mark. But even here Goldman finds a silver lining, and writes that “the rapid recovery of labor demand and faster pace of labor reallocation is a striking contrast with past recessions that should help most workers avoid the very long unemployment spells seen last cycle.”

    In short, there is virtually nothing about the devastation endured by businesses and workers that Goldman’s well-trained economists can’t spin into a positive outcome, and as they summarize “scarring effects on businesses and the labor force have so far proven much less severe than initially feared.”

    This, they conclude, “bodes well for the economy’s medium-term recovery prospects and is one more reason for Goldman’s above-consensus 2021 growth forecast.” What about the withdrawal of fiscal support which has forced Americans to draw down drastically on their savings which were boosted by the massive fiscal stimulus…

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    … and to resume paying down credit card debt for the first time in months?

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    Surely at least that has to be positive? Well, as Hatzius agrees, it does raise some risks over the next few months, but then the chief economist counters that “we expect a vaccine and further fiscal support next year—including another round of small business funding, even in a divided government scenario—to limit the long-term damage and keep the economy on track for a much more rapid than usual recovery.”

    To this all one can say is wow: and while we certainly would urge the Goldman economists to read something like “A devastating experience:’ Temporary layoffs just became permanent for millions of American workers, and “Ex-Bankruptcy Judge Says Worse Is Yet To Come“, we have two questions: just why did Goldman publish such a puff piece – what does it stand to gain by gutting its reputation for at least pretend-objective analysis – and question number two: has anyone on the Goldman economics team actually stepped one foot outside their academic tri-state ivory tower in the past year?

  • "It’s A Civil War": Decade Of Covenant-Lite Deals Leads To Leveraged Loan "Panic"
    “It’s A Civil War”: Decade Of Covenant-Lite Deals Leads To Leveraged Loan “Panic”

    Tyler Durden

    Wed, 10/07/2020 – 20:06

    It was a little over two years ago that we last looked at the “covenant lite” insanity sweeping the loan market for the past decade, where as a result of a buying frenzy among yield-starved investors, corporations had managed to get away with selling “secured” debt that was anything but secured, and offered only the slimmest – if any – protections to investors. In fact, by early 2018, the amount of covenant-lite loans hit an unprecedented 75%…

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    … which meant that Moody’s Loan Covenant Quality Indicator (LCQI) dropped to its record-worst level in the first quarter of 2018.

    “While the rate of deterioration in covenant quality has slowed, protections remain distressingly weak on average,” said  Derek Gluckman, Moody’s VP-Senior Covenant Officer. “Investors should remain wary given the risks presented by most loan documents and the likelihood that any steadying of covenant protections is temporary.”

    But it wasn’t just the sheer volume of cov-lite outstandings that mattered: an analysis by LCD looked at the debt cushion of outstanding loans – the amount of debt in a borrower’s capital structure that is subordinated to the senior loan – and found that most cov-lite deals have little or no debt cushion beneath them. Consider that by mid-2018, an all time high 23% of all cov-lite loans did not have any debt, such as a mezzanine tranche, high yield bond, or other, below the cov-lite facility. That number was up from 18% in 2013 and from just 10% at the end of 2007, shortly before the financial crisis.

    This is also why we explicitly warned that “the lack of a debt cushion significantly lessens what an investor will recover on a loan, if that credit defaults” and left readers with the following:

    In other words, during the next default cycle, whenever the business cycle finally turns, loan investors not only will have virtually no “secured” protection, but are now the de facto equity tranche in numerous deals, or said otherwise, for the first time in history, loan investors are looking at 0 recoveries in default.

    Well, fast forward to today when the chickens from the covenant-lite euphoria of the past decade have come home… for the slaughter.

    In a transaction which has terminally tilted the “landscape in favor of distressed borrowers and pitted creditors against each other” a $120 million loan to cash-strapped restaurant supplier TriMark USA has “not only unilaterally placed the new lenders above everyone else in the repayment pecking order, but it also stripped some of the older creditors of safeguards they had written into the contracts to protect their investments” according to Bloomberg, which notes that when word of the deal spearheaded by Howard Marks and his distressed debt giant, Oaktree, first hit the market in mid-September, “it sparked a panic“, prompting investors to puke the old loan so fast it cratered 20 cents in days, an unheard of move in the world of secured finance where underlying assets never reprice so fast, even in bankruptcy.

    Of course, for those who had been following the degradation of creditor protections and the ascent of cov-lite deals over the past decade, what just took place is hardly a surprise: as investors bargained away most of their legal rights in hopes of getting a modest allocation in the latest “high yielding” note, they now find themselves with virtually no protection for their investments just as the pandemic is causing a wave of corporate bankruptcies across the country.

    And just to underscore that “anything goes” in the brave new world of leveraged (and unsecured) loans, the presence of Marks – who had long been seen as one of the more staid voices in a distressed-debt world full of pugnacious vultures – served to upend the market only further and spark fears about what is coming next as tens of billions of other “secured” loans are about to see their investors crammed down or otherwise wiped out, just as we warned in 2018.

    “It’s a civil war between lenders, and we’re going to see more of this,” said Thomas Majewski, managing partner and founder at Eagle Point Credit Management. “Nearly every company restructuring debt is looking at these possibilities.”

    So what exactly happened?

    The TriMark transaction, which according to Bloomberg was similar to another loan that surf-clothing maker Boardriders entered recently, followed in the “priming” footsteps of a divisive financing by Serta Simmons Bedding earlier this year. The mattress maker got $200 million of fresh capital from existing lenders including Eaton Vance Corp. and Invesco Ltd. Those lenders jumped to the top of the capital stack meaning they would be repaid first if the company defaulted, pushing Serta Simmons’ other lenders further back, in a process known as priming.

    There’s nothing new about priming – in fact it happens all the time in bankruptcy when a company issues what is known as a “priming DIP” – but the way lenders did it in the Serta Simmons deal resulted in litigation. The new investor group led by Eaton Vance and Invesco didn’t give all other lenders the right to participate in the new loan, a move that is allowed by many deals’ documents, but hadn’t really been done before. Lenders who were left out, including Apollo Global Management, sued the company but a state court let the deal go ahead, ushering in a new precedent in the market where existing “secured” creditors hiding behind the thin defense of non-existent covenants, realize they are in fact, unsecured.

    “Serta did open the floodgates in that regard,” said Tim Sullivan, an analyst at Xtract Research, “because it showed how provisions which are very common in agreements today can be used to incur priming debt.”

    Of course, creditors have only themselves to fault: nobody put a gun to their heads in 2010-2018 when they signed the dotted line on yet another high-yielding loan that offered no covenant protection. Yet they just had to do it. Well, now that the catastrophic event that nobody thought could possibly happen happened, and as investors pore through their covenant term sheets, they finally realize why all those warnings over the past decade hit home.

    The catalyst for this realization, of course, is the covid crisis, as a result of which countless companies in the U.S. are going broke as the pandemic saps their revenues. Fitch Ratings projects 7% to 8% of leveraged loans will default by the end of 2021, compared with 1.8% in 2019, a cataclysmic event for the $1.2 trillion loan market. Making matters worse, after years of the loan market growing rapidly, failing corporations that issued debt and pledged assets now have less in the way of income or assets to fork over to creditors, which is making fights among all parties more acrimonious.

    It also means that those investors with fresh capital can trample over the gullible ones who received a couple of years of interest payments and are now facing near complete losses on principal.

    In the case of Boardriders, Oaktree was one of the equity owners: as Bloomberg details, the company negotiated a $135 million financing including a $45 million loan that has priority over all others. The debt came from Boardriders’ bigger lenders, a group that included Brigade Capital Management, Canyon Capital and MidOcean Credit Partners, according to people with knowledge of the situation.

    The $45 million loan, which is effectively a pre-petition DIP, ranks ahead of all investors that didn’t participate in the new financing. Just as a secured bankruptcy loan does. The minority lenders that were primed argue that was unfair because they weren’t given a chance to participate in the deal, the people said. Good luck to them: meanwhile, the new loan which is secured by all the assets, is trading around 100 cents on the dollar; the old loan that was primed? About a third of that, or around 35 cents.

    The situation was similar for TriMark. The company saw its revenue falling and hired advisers to help it consider its options. It ultimately picked a transaction to raise $120 million from lenders including Oaktree and Ares Management Corp. The group of existing lenders also included Blackstone’s credit arm GSO Capital Partners, Sculptor Capital Management, and BlackRock. Their new loan is trading around face value, about 40 cents on the dollar higher than the loan that was primed. TriMark is owned by Centerbridge, which is about to get a big fat doughnut on its investment.

    So how did the new investors prime existing lenders? In both Boardriders and TriMark, minority lenders had covenants including limits on future company borrowings removed, while the debt amortization schedule was slowed down.

    According to Etract’s Sullivan, the additional step of removing covenants is highly unusual in the loan world and is a big loss for investors. On the other hand, such covenant stripping would never had been possible if the loans were not covenant-lite to begin with. 

    “It’s gone beyond Serta — now it’s worse. By stripping it down to the ultra bare bones, all that leaves you with is just a promise to pay,” he said.

    It also means that the entire $1.2 trillion universe of secured loans – because by definition first and second-lien bank debt is secured by company assets and has first dibs on them in case of default – is effectively no longer secured.

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    To be sure the primed lenders are fighting back, and some companies are deciding not to embrace these transactions (they can of course do that, but one way or another a priming loan will come, the only difference is that if it is in bankruptcy, it is called a DIP Loan). Meanwhile, covenant lite deals have resulted in even more ingenious instances of asset stripping. In May debtholders rebelled against Elliott Management and Siris Capital Group, the owners of global travel reservation company Travelport, after those two firms tried to move assets out of the reach of creditors. And when Oaktree proposed a priming transaction for PSAV, the borrower elected to raise new capital through a loan that was in the same class as the existing facility.

    “Priming transactions such as those executed by Serta and Boardriders are still the exception and the priming play is not the ‘new normal,’” said Judah Gross, a director at Fitch Ratings. “That being said, the higher degree of frequency with which such deals get done may indicate that priming transactions are not as taboo as once assumed.”

    He is right, and the real kicker will take place some time in 2021 if there is no new fiscal stimulus, and a default wave washes over the leveraged loan market: only then will our warning from 2018 become clear – years of issuance of loans that were “secured” only in name, has ensured that recoveries for these unsecured creditors will be the lowest in history; in fact depending on the severity of the coming double dip, it is likely that “secured” lenders are looking at the unthinkable – a total wipeout on principal.

  • White House Security Official Reportedly Caught COVID-19 Weeks Ago, Is 'Gravely Ill'
    White House Security Official Reportedly Caught COVID-19 Weeks Ago, Is ‘Gravely Ill’

    Tyler Durden

    Wed, 10/07/2020 – 20:04

    Bloomberg just published a scoop that could upend the discussion around the White House outbreak, with barely an hour left before the start of Wednesday’s one-and-only VP debate.

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    White House security official Crede Bailey is reportedly gravely ill with the coronavirus, and has been hospitalized since September. The White House has not disclosed Bailey’s condition, but he became sick before the Sept. 26 Rose Garden event to honor Amy Coney Barrett.

    Bailey is in charge of the White House security office, which handles credentialing for access to the White House and works closely with the Secret Service.

    Though he has kept a low profile for almost the entirety of his career, Bailey was swept up in the controversy last year over security clearances granted to Trump’s daughter, Ivanka Trump, and son-in-law Jared Kushner. Though the Hill reported at the time that Bailey privately testified to the House Oversight Committee that he hadn’t been pressured by others at the White House to grant clearances.

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    Details are scarce, but the implication thus far is clear: The White House outbreak may have started even before Barrett’s nomination event, which would suggest that the White House declaration that Trump’s illness is ‘untraceable’ is actually an attempt to cover up this fact.

    Thought for all we know, Bailey’s sickness could be totally unrelated to his work at the White House, and it may have been contained.

    Bloomberg broke the news shortly after President Trump declared that Regeneron’s experimental therapeutic was “a cure”. Though it was only one of several medications he took, with the others including Gilead’s remdesivir and the steroid dexamethasone. Though Bailey probably doesn’t see the virus as “a blessing” like Trump said.

  • Cultural Revolution: Woke Totalitarians Have Taken Over Campus
    Cultural Revolution: Woke Totalitarians Have Taken Over Campus

    Tyler Durden

    Wed, 10/07/2020 – 19:40

    Authored by John Staddon via Campus Reform,

    Podcaster Dave Rubin has the custom of going “off the grid” for a month each summer, to gain some perspective on changes.  As a scientist who has been retired from the lab for more than ten years, I feel in a similar position vis-à-vis the state of academic science.  To this campus Rip-van-Winkle, things now look very different. 

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    I didn’t notice much until the current anti-racism crisis, when I found that academe, as a place for free exchange of ideas, had become almost unrecognizable.  Higher education has begun a transformation along the same lines as the 1966 Maoist “Cultural Revolution” in China. Like the cultural revolution, the energized identity-politics movement presents itself as a cleansing force.  Pure Maoism was being corrupted by covert capitalist sympathizers. They had to be rooted out. 

    In U.S. academe, the problem was similar. The “party faithful” took for granted the permanence of “White privilege” and “systemic racism” which, for many, was also their livelihood. But then, in the decades following the civil rights acts, things got better. Measurable indices of racism seemed to be improving:  People of color were well represented on city councils, police forces, and state and national legislatures; Black faces were on many magazine covers and in ads for prestigious products; interracial marriages increased; Black entertainers and even opinion leaders were beloved. A Black president was elected and re-elected.  A survey showed a steady decline in objective measures of racism up until 2014. What’s not to like?

    Plenty, as it turned out.  The “woke” party saw its anti-racist cause going down to…anti-racism!  They have fought back, with some success. A survey published in 2017 showed that from 2014 onward people increasingly agreed that “more needs to be done” to achieve racial equality. This tendency was exaggerated in academe. From being relatively content with the state of race relations, administration, faculty, and students have become increasingly doctrinaire in their stance against racism. Unable to point to objective measures of increasing racism, they have turned their attention to something much harder to refute: systemic (aka institutional, structural) racism. 

    Systemic racism in higher education, a petition

    One bit of evidence for this is a currently circulating petition/op-ed that, Science (one of the two leading general-science journals) has apparently agreed to publish about combating systemic racism in STEM.  You can read Systemic Racism in Higher Education here but I will just discuss a few of its key assumptions. 

    Quoting from the petition:

    Everyone in academia must acknowledge the role that universities—faculty, staff, and students—play in perpetuating structural racism by subjecting students of color to unwelcoming academic cultures…The misuse of standardized tests, like the GRE, excludes students who could have otherwise succeeded. [emphases added]

    Structural (aka systemic, institutional) racism is not defined. The words could be replaced by evil spirits without loss of meaning. The idea seems like a way of deflecting attention from identifiable causes of racial disparities. Careful examination of a specific context (such as police brutality) can usually point to measurable causes with no need to invoke an abstraction.  Nevertheless, we all must acknowledge that the GRE, like any predictive test, is not perfect: it fails some good people and passes a small number of weak ones. But the study cited in the petition seems to fault the STEM-related GRE more because women and minorities do worse on it than men than because it is an imperfect predictor of success in graduate school.  

    What does the petition mean by “unwelcoming academic cultures”? There are two obvious possibilities: racism, pure and simple, and a problem with the type and level of academic discussion compared with the environment to which some students are accustomed. 

    The evidence for any kind of overt racism in academe is negligible and if it emerged would surely lead to strong correctives. What remains is just that the disciplines of STEM are difficult, possibly too difficult for students who have been admitted with weaker-than-average qualifications.  Human beings are not equally good at everything. Mathematics, particularly, separates the wheat from the chaff in dramatic fashion.  Some people (your humble correspondent, for example) just can’t handle tough math.  If this is the “unwelcoming academic culture” some students will either drop out or – and this is the pressure now – will clamor for a simpler curriculum. If such changes are made, the results will likely be disastrous for the quality of science education.

    Reducing structural racism in higher education will require evidence-based, institution-wide approaches that focus on achieving equity in student learning. If we abandon the perception of “fixed” student ability, more BIPOC students will succeed.

    The petition assumes that essentially any student is capable of succeeding. But at what? Not at everything.  People are not equal; not everyone can master quaternions.  The petition assumes that ineradicable individual differences — “fixed” student ability — do not exist, which is simply false.  By all means, give the best education you can. But do not expect to educate everybody, especially in tough STEM subjects. People are not all equally able. An educational system aimed at this kind of “equity” is likely instead to end in mediocrity. 

    [These changes] will require making tenure dependent not only on excellence in research, teaching, and service, but also meaningful contributions to promote equity and inclusion…. Every scientist should commit to reporting unfair practices…All faculty should examine their courses for performance disparities based on ethnicity and gender…  

    Ready to submit? It is apparently not sufficient to teach well and do excellent research, faculty must also commit to eliminating disparities, disparities which are as likely to be the result of differences in interest and talent as inadequate teaching. Faculty are to scrutinize their grade distributions to see that BIPOC do not fall behind. What if they do? The temptation to adjust evaluation so as to eliminate disparities will be strong — will teachers act racist, but in a good way! They may be “reported” if they don’t! This is totalitarianism. not science.  There’s more, but you get the idea. 

    If these efforts to eliminate disparities in everything, to match racial proportions in STEM to those in society, if they succeed, it will be a cultural revolution indeed. Science is already in trouble; a successful effort to make it conform to political ends will destroy academic freedom and wreck the nation’s science base.   

    *  *  *

    John Staddon is Distinguished Professor Emeritus of Psychology and Neuroscience

  • Kissinger Warns: China-US Must Agree To "Limits" On Making Threats Or Risk War
    Kissinger Warns: China-US Must Agree To “Limits” On Making Threats Or Risk War

    Tyler Durden

    Wed, 10/07/2020 – 19:20

    Two major and relatable statements have been issued Wednesday on the question of US ties with Taiwan and China’s growing anger and increasingly bellicose rhetoric in response.

    First, the notoriously hawkish editor-in-chief of China’s state-owned news tabloid the Global Times issued a threat, saying China should “fully prepare itself for war” with Taiwan in the event it restores diplomatic relations with the United States. 

    Hu Xijin wrote in his latest opinion piece that “We must no longer hold any more illusions. The only way forward is for the mainland to fully prepare itself for war and to give Taiwan secessionist forces a decisive punishment at any time.”

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    AFP/Getty Images: China’s President Xi Jinping & former US Secretary of State Henry Kissinger at the Nov.2019 New Economy Forum at the Great Hall of the People in Beijing.

    The GT editor added that “As the secessionist forces’ arrogance continues to swell, the historical turning point is getting closer.” The secessionist forces he was specifically denouncing is the Taiwanese Kuomintang Party, or KMT, who he described as having “woken up on the wrong side of the bed. They have gone downhill and become vulgar.” 

    And the latest actions of its legislators is what he finds most alarming, according to his description: 

    The Kuomintang (KMT) group in Taiwan’s “Legislative Yuan” proposed two bills, asking the island’s authorities to request US assistance in resisting the Communist Party of China and to resume diplomatic ties with the US. The move is widely believed to checkmate the Democratic Progressive Party (DPP) and put the DPP in a difficult position. 

    Xijin was also responding amid US Secretary of State Mike Pompeo’s continued tour of Asia, where in Tokyo Tuesday he tried to shore up support for something akin to an ‘Asian NATO’ to counter growing Chinese influence, specifically among China trade partners Japan, Australia, and India.

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    Pompeo also bluntly told Nikkei Asian Review in response to a question on defending Taiwan from the mainland:

    “We’ve only come to recognize that appeasement’s not the answer,” he said. “If one bends the knee each time the Chinese Communist Party takes action around the world, one will find themselves having to bend the knee with great frequency.”

    Meanwhile, addressing the growing bellicose rhetoric for months coming out of Washington and Beijing, also given semi-regular military tensions in the South China Sea, but especially as competing defensive drills escalate around Taiwan and the Strait, ex-Secretary of State and famous veteran diplomat Henry Kissinger called for the United States and China to “agree on limits” when it comes to making threats.

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    During a roundtable discussion (done remotely) of the Economic Club of New York, Kissinger said such limits were urgently needed to avoid a situation similar to before World War I, when the world inadvertently tumbled toward war largely through unchecked threat-making, rivalries and alliances. 

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    Many have feared US tensions with China are on such an edge on multiple fronts, also through allies in the region, that war could easily erupt based on what in normal times might be seen as a small encounter or incident.

    When we previously heard from the former US secretary of state on the last couple of occasions, he was warning that a permanent conflict between Washington And Beijing would be unwinnable and lead to “catastrophic outcome”…

    “It’s no longer possible to think that one side can dominate the other… it will be worse than the world wars that ruined European civilisation,” said Kissinger.

    And after that in early April, just as the pandemic was devastating the US, he called on US leaders to protect citizens from disease while starting the urgent work of planning for a new epoch.

    The surreal atmosphere of the Covid-19 pandemic calls to mind how I felt as a young man in the 84th Infantry Division during the Battle of the Bulge. Now, as in late 1944, there is a sense of inchoate danger, aimed not at any particular person, but striking randomly and with devastation.

    The 96-year-old noted that there is an important difference between that faraway time and ours: “American endurance then was fortified by an ultimate national purpose. Now, in a divided country, efficient and farsighted government is necessary to overcome obstacles unprecedented in magnitude and global scope,” he had previously explained ominously. 

    “Sustaining the public trust is crucial to social solidarity, to the relation of societies with each other, and to international peace and stability,” he said.

    It appears he was referencing this prior theme in his newest Economic Club of New York comments in emphasizing “We need dialogue… I applied that principle very much to Europe, where I grew up.”

  • Despite "Craving For Normalcy", Here Are Nine Reasons Why Trump May Still Win
    Despite “Craving For Normalcy”, Here Are Nine Reasons Why Trump May Still Win

    Tyler Durden

    Wed, 10/07/2020 – 19:00

    Authored by Niall Ferguson, op-ed via Bloomberg.com,

    A Craving for Normalcy Spells the End of a Populist Presidency

    “America’s present need,” the candidate declared, “is not heroics, but healing; not nostrums, but normalcy… My best judgment of America’s need is to steady down, to get squarely on our feet, to make sure of the right path. Let’s get out of the fevered delirium.”

    The candidate was the Republican Warren G. Harding and the date was May 14, 1920. Six months later, Harding won a landslide victory over the Democratic nominee, James M. Cox, winning 60% of the popular vote and 404 Electoral College votes.

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    A return to normalcy: It’s an appealing prospect today, too, amid an ongoing pandemic, in the wake of an unprecedented economic shock, and after four years of political disruption. A century ago, to be sure, Americans had come through worse: the 1918-19 Spanish influenza, which killed around 675,000 people (the equivalent of 2.2 million today), and World War I.

    A century ago, there was no incumbent to defeat, as Woodrow Wilson – having been struck down by the flu during the 1919 Paris peace negotiations and then by a severe stroke – was judged by his party to be unfit to run. (It remains to be seen if President Donald Trump’s admission to hospital for Covid-19 presages a premature exit for him.) But the parallel with today is still striking. In the so-called Red Scare of 1919-20, the country had been swept by strikes, protests and race riots. A severe recession had begun in January 1920. By November, what most Americans craved was indeed normalcy.

    I have been thinking a lot about the election of 1920 in trying to predict that of 2020. Four years ago, chastened and educated by the experience of Brexit, I felt that Trump had at least an even chance of winning the presidency. Recall that in the week before the Nov. 8, 2016, the left-wing Daily Kos website put Hillary Clinton’s chances of winning the presidency at nearly 90%. According to The Upshot in the New York Times, the number was 85%. Betfair said 79%. Nate Silver said 65%.

    So what do I think now, when even the ultra-cautious Silver puts Joe Biden’s chance of beating Trump at around 80%? Spoiler: I always said the half-life of populism was short.

    Donald Trump is a classic populist, who offered disgruntled voters a heady cocktail of protectionism, nativism, easy money, isolationism and anti-elitism. Comparisons with European fascists between the World Wars always struck me as wide of the mark. Historically, it has generally been hard for mercurial figures such as Trump to win the highest political office, at least in the northern hemisphere. (I never bought former White House adviser Steve Bannon’s analogy between Trump and Andrew Jackson.) From Georges Boulanger to William Jennings Bryan to Huey Long, the history of populism is mostly of near misses — which was part of the reason most pundits assumed Trump would be a near miss four years ago.

    When populists do get elected, they almost never deliver all they have promised to their supporters, and are often exposed as even more corrupt than the people they ran against. South America has a lot of experience in this regard, from Juan Peron in Argentina to Hugo Chavez in Venezuela. Latin American populists get re-elected not because they deliver higher living standards to their supporters (they may do so in the short run, but it always ends in some kind of financial crisis). They get re-elected by repressing their opponents and, when necessary, changing the constitution — a regional pastime. 

    To read the mainstream press, you would be forgiven for thinking something similar is about to happen in the U.S. According to Barton Gellman in the Atlantic, there is going to be voter suppression, voter intimidation, a declaration of emergency, the bypassing of election results in battleground states, and finally martial law. Trump’s going to steal the election somehow — and it may even be constitutional if he does, Fareed Zakaria has argued. Only a Biden landslide can save the Republic from violence and a constitutional crisis. Forget Hitler and Mussolini; now Trump is Richard III.

    It must be said that Trump did everything possible to validate these narratives in last Tuesday night’s debate, short of opening with “Now is the winter of our discontent.” But, as Biden likes to say, “Come on, man.” Trump may have the instincts of a caudillo, but this isn’t Venezuela. 

    The debate would have mattered only if Biden had looked unmistakably senile. He didn’t. Instead, Trump came across as an insufferable bully. Even my ex-cop friends Mike and Gerry — who backed Trump in 2016 and were infallible guides to that year’s politics — felt their man had been too aggressive. And now it turns out that Trump was mocking Biden for wearing a mask, when he himself was probably already infected with Covid-19. (Not just mocking him, but yelling at him indoors from just six feet away. We won’t be sure for roughly a week that Trump didn’t infect Biden.)

    Far from being in peril, I would guess, the Constitution is about to do what it was designed to do: Having successfully constrained a demagogic president throughout his term, in the usual ways — courts striking down executive orders, Supreme Court appointees acting independently, midterms handing the House to the Democrats — it is going to allow voters to eject him from the White House and install in his place dear, old Joe Normal.

    For any of the “end of the Republic” scenarios to happen, this election needs to be close – close enough for the results in multiple states to be challengeable. But I struggle to see how this could come about.

    If Jimmy Carter couldn’t get a second term after the small recession of January to July 1980, and if George H.W. Bush couldn’t get one after the comparably minor recession of July 1990 to March 1991, how on earth can Donald Trump get a second term after the disaster that has befallen the U.S. this year? Who gets re-elected after a pandemic that has killed more than 200,000 Americans and a recession that sent unemployment up to 14.7% in April, compared with peaks under Carter and the elder Bush of 7.8%? Trump’s latest jobs report has unemployment at 7.9%.

    Even with the recovery that’s occurred since the lockdown low-point back in the spring, the U.S. economy is still on course to shrink by 3.8% this year, according to the Organization of Economic Cooperation and Development. The only example I know of a democratic leader getting re-elected under such economic conditions is Angela Merkel in 2009.

    Now let’s look at the polls, where Biden leads Trump by an average of around 7 percentage points. The remarkable thing here is the consistency of Biden’s lead: Over more than a year he has never been less than four points ahead. We’ve seen nothing like this in our lifetimes — in most presidential elections since 1968, the polls have bounced around, sometimes wildly. 

    Moreover, Biden’s lead right now is not just bigger than Clinton’s four years ago at this stage in the race; it is also bigger than Barack Obama’s 32 days out in both 2008 and 2012. If the news on the pandemic and the economy is bad between now and election day, Trump could end up where John McCain did, seven points behind. Or, if the news improves, he could somehow claw his way back, as Mitt Romney did in 2012, and still lose. What I struggle to imagine is Trump getting close enough to rerun the George W. Bush-Al Gore standoff of Florida 2000 in multiple states.

    Remember what happened in the final phase of the 2016 campaign. First, a relentless stream of negative news about Clinton throughout October ate away at her lead. Second, state polls seriously underestimated Trump’s support in Michigan, Pennsylvania and Wisconsin. Finally, third-party candidates took 6% of the vote in 2016. Maybe there’s a secret stash of toxic opposition research waiting to be unleashed against Biden this month, but I doubt it.

    Instead, what we’re getting is a relentless stream of negative news flow about Trump, not the least of which is the New York Times expose of how insanely little income tax the guy has been paying. (As my friend Mike told me last week, “I heard a couple of blue-collar workers today, cops and firemen, talking about the Times story about him not paying any taxes … it was the first time I ever heard anything negative about Trump from this base.”)

    And that’s not the only bad news for Trump. He’s only one of nearly 300,000 Americans who tested positive for Covid-19 last week. The hospitals in Wisconsin are filling up with new Covid-19 cases. And Covid-19 is the main reason Trump is struggling with older voters, a key demographic for him four years ago.

    Trump clearly wanted to announce a successful vaccine before the election. That seems less and less likely. Jared Kushner wanted the economy to be “rocking” by now. But the refusal of the pandemic to “go away, like a miracle” is clearly having some adverse effects on the economy, preventing mobility from returning to normal in the most affected states, and slowing the recovery of the labor market. Finally, the finances of the Trump campaign appear to be in disarray (though being outspent did not stop him winning four years ago).

    Even if you allow for polling errors as bad as 2016’s in the key states, Trump is going to struggle to get above 240 Electoral College votes, 30 shy of victory. For all these reasons, I am inclined to think he is going to be a one-term president, and that the election result won’t be close enough for full-scale GOP lawfare to save him.

    What am I missing? What could make me wish I’d stuck to my contrarian position of four years ago?

    After all, only last December another populist, Boris Johnson, won a much bigger victory in the U.K. general election than almost anyone (including me) expected, sweeping a bunch of traditionally Labour-voting working class constituencies in the north of England. Could there be an equivalent surprise in this year’s U.S. election?

    Leaving aside the potential Covid-19 impacts on the candidates’ health, I can think of nine reasons why the polls might be even more wrong than last time.

    First, a striking 11.7% of Republicans say they would not report their true opinions about their preferred presidential candidate on telephone polls, while 10.5% of independents also fall into the “shy voter” category.

    Second, the law-and-order issue really matters to those shy voters. (It also gave Trump his best debate moments.) Polls give us a sample of voters’ stated preferences. Revealed preferences are in many ways more reliable. According to Small Arms Analytics, gun sales in August 2020 were 58% higher than in August 2019, continuing a surge of purchases (especially of handguns) since the spring. In 2016, gun ownership was very closely correlated with voting for Trump.   

    Third, the resumption of the so-called culture wars this summer was a godsend for Trump. Judging by Tucker Carlson’s ratings — not only on cable but also on YouTube — there are at least five million Americans who share his skepticism about the Black Lives Matter movement, to say nothing of “critical race theory.” 

    Fourth, check out whose Facebook posts have been getting shared the most this year. On the day of the first presidential debate, five of the top 10 posts were by conservative firebrand Ben Shapiro, not an unusual occurrence this year.

    Fifth, the third vacancy on the Supreme Court in as many years was another stroke of luck for Trump. Conservative voters care more about the makeup of the court than liberals, so Amy Coney Barrett was a near-perfect pick to boost Republican turnout.

    Sixth, Hispanic voters seem unenthused about Biden and indeed about voting generally. That matters in Florida, obviously, but there are 11 other states where Hispanics are more than 10% of eligible voters, including Arizona and Texas.

    Seventh, Republicans are winning the voter-registration game in key states, notably Pennsylvania and Wisconsin.

    Eighth, as a significant percentage of mail-in ballots tend to be rejected because of errors, Trump should benefit from the higher proportion of Democratic voters intending to vote that way.

    Finally, don’t underrate the economy. A third-quarter bounce as big as the one projected by the Atlanta Fed’s GDPNow would give Trump a second term if you simply plug the number into the wonderfully parsimonious model devised many years ago by Yale’s Ray Fair to predict U.S. elections with economic variables. 

    Usually, if you can think of nine reasons why a hypothesis might be wrong, it’s probably wrong. And yet, even when I add all these variables together, I still don’t think Trump can salvage the situation. There is a lot of overlap, after all: Most gun purchasers probably owned at least one firearm already, and they may be the same people watching Tucker Carlson, liking Ben Shapiro and rooting for the confirmation of Justice ACB. In terms of new votes in swing states, and therefore Electoral College votes, my nine reasons to be doubtful may sum to zilch.

    The probability of a repeat of 2016, when the votes of fewer than 40,000 people got Trump over the line in Michigan, Pennsylvania and Wisconsin, is simply too low. The probability of another 2000 or another 1876 (when the results in four states were contested) is also low. The probability of a contingent election — when no presidential or vice-presidential candidate receives an absolute majority of Electoral College delegates — is even lower: We haven’t seen one involving the presidency since 1824. None of these scenarios is remotely as probable as a victory for the “normalcy” candidate who has been out in front every single month of this annus horribilis.

    The irony is that if a Biden victory is accompanied by a Democratic majority in the Senate, then it could suddenly be the turn of Republicans to cry “Republic is in peril,” as projects such as packing the Supreme Court, getting rid of the filibuster in the Senate, and giving statehood to the District of Columbia and Puerto Rico (i.e., packing the Senate) will suddenly seem feasible to the progressives.

    But that’s the trouble with voting for normalcy. Remember, Americans did just that – overwhelmingly – a hundred years ago. What they got was the Roaring Twenties, followed by the Great Depression, followed by World War II.

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