June 13, 2020

America Convulses in Pain, Fed Bails Out the Wealthy

https://wolfstreet.com/2020/06/11/america-convulses-in-pain-fed-bails-out-the-wealthy/

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So there are some huge multi-faceted problems that need to be grappled with, and that need to be resolved, and people are hurting, and they’re frustrated, and they’re angry, and many are unemployed, and others have jobs that don’t pay enough to meet the rising living expenses, and small businesses are on the ropes, and there’s going to be a lot of pain.

And what does the Federal Reserve do?

It printed $2.9 trillion since early March to bail out investors in highly leveraged hedge funds that were imploding, and to bail out investors in highly leveraged mortgage REITs that were imploding, and to bail out asset holders whose stocks were plunging, and speculators in the riskiest concoctions, and investors of all kinds, and to bail out asset holders of any kind – and the wealthier they were, the more they got – to make sure they don’t feel any of the pain.

That’s what the Fed is doing.

So the Fed printed $2.9 trillion since early March. That’s about $22,000 per household. For the bottom half of households, $22,000 would have helped a lot to get through the crisis.

But this money wasn’t spread to them. It was helicopter money for Wall Street. And it went on to multiply. And most of it ended up with a relatively small number of households. And their wealth increased by the trillions of dollars.

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June 13, 2020

The Looming Bank Collapse

The Looming Bank Collapse
The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/?utm_source=pocket-newtab

After months of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there’s another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed. You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse.

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After the housing crisis, subprime CDOs naturally fell out of favor. Demand shifted to a similar—and similarly risky—instrument, one that even has a similar name: the CLO, or collateralized loan obligation. A CLO walks and talks like a CDO, but in place of loans made to home buyers are loans made to businesses—specifically, troubled businesses. CLOs bundle together so-called leveraged loans, the subprime mortgages of the corporate world. These are loans made to companies that have maxed out their borrowing and can no longer sell bonds directly to investors or qualify for a traditional bank loan. There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs.

I was part of the group that structured and sold CDOs and CLOs at Morgan Stanley in the 1990s. The two securities are remarkably alike. Like a CDO, a CLO has multiple layers, which are sold separately. The bottom layer is the riskiest, the top the safest. If just a few of the loans in a CLO default, the bottom layer will suffer a loss and the other layers will remain safe. If the defaults increase, the bottom layer will lose even more, and the pain will start to work its way up the layers. The top layer, however, remains protected: It loses money only after the lower layers have been wiped out.

Unless you work in finance, you probably haven’t heard of CLOs, but according to many estimates, the CLO market is bigger than the subprime-mortgage CDO market was in its heyday. The Bank for International Settlements, which helps central banks pursue financial stability, has estimated the overall size of the CDO market in 2007 at $640 billion; it estimated the overall size of the CLO market in 2018 at $750 billion. More than $130 billion worth of CLOs have been created since then, some even in recent months. Just as easy mortgages fueled economic growth in the 2000s, cheap corporate debt has done so in the past decade, and many companies have binged on it.

Despite their obvious resemblance to the villain of the last crash, CLOs have been praised by Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin for moving the risk of leveraged loans outside the banking system. Like former Fed Chair Alan Greenspan, who downplayed the risks posed by subprime mortgages, Powell and Mnuchin have downplayed any trouble CLOs could pose for banks, arguing that the risk is contained within the CLOs themselves.

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June 13, 2020

Fears grow of an eviction apocalypse

https://www.axios.com/eviction-crisis-coronavirus-351bb693-a04f-4ea1-a27d-dceb5163af14.html

Most states paused evictions when the coronavirus hit — but those holds are expiring at about the same time that more generous unemployment benefits are set to dry up.

Why it matters: The one-two punch could easily exacerbate the housing crisis for Americans already bearing the worst of COVID-19's effects.

One fifth of adults polled in May said they had slight or no confidence they would be able to pay their rent or mortgage due in June, according to a weekly Census survey measuring COVID-19’s impact on Americans.
An Urban Institute analysis of Census data found nearly 25% of black renters deferred or did not pay their rent last month, compared with 14% of white renters.
In Michigan, courts are bracing for "a coming deluge" of as many as 75,000 landlord/tenant filings. (The state's moratorium expired this week.)

The big picture: The pandemic — which forced an economic collapse — is adding new burdens on top of the country's longstanding housing problems.

"There was a supply and affordability problem before, and the opportunity for it to get a lot worse presents itself, unless there's really good support coming from the federal, state and local level," Paula Cino of the National Multifamily Housing Council, a trade group for the apartment industry, tells Axios.

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June 8, 2020

Millions Of Americans Skip Payments As Tidal Wave Of Defaults And Evictions Looms

https://www.npr.org/2020/06/03/867856602/millions-of-americans-skipping-payments-as-tidal-wave-of-defaults-and-evictions-?utm_source=pocket-newtab

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But looking ahead, advocates say people could run into big trouble because the terms of these hardship programs can be all over the map.

"Credit cards, auto loans, installment loans, there are no federal guidelines," says Aracely Panameño, a director at the nonprofit Center for Responsible Lending.

She says when it comes time to make up for all those skipped payments, there are federal rules for repayment plans for home mortgages but not for many other types of loans. So she says lawmakers need to protect people. Otherwise, she says, lenders could make demands beyond what people can afford. "You must have a capacity to catch up with your payments in an affordable way," Panameño says.

Chi Chi Wu with the National Consumer Law Center agrees. Without better protections, when it comes time to make up for the missed payments, "there's going to be a lot of people who could experience massive credit reporting harm," says Wu, an attorney focusing on consumer credit issues.

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June 2, 2020

Texas police trap protesters marching across Dallas bridge

https://www.rawstory.com/2020/06/texas-police-trap-protesters-marching-across-dallas-bridge/

On Monday, officers of the Dallas Police Department trapped a crowd of protesters marching across the Margaret Hunt Hill Bridge, containing them with smoke.

According to witnesses, the police ordered the protesters to lie on the ground, and then began to make arrests.

The protesters marching westbound on the Margaret Hunt Hill Bridge has been stopped by law enforcement. Officers deployed smoke to deter the marchers from crossing over to the eastbound side of the bridge. @ChiefHallDPD @CityOfDallas

— Dallas Police Dept (@DallasPD) June 2, 2020



Protesters are now lying down on the lanes of the Margaret Hunt Hill bridge in Dallas. Dallas PD is using smoke to prevent marchers from getting to the other side of the bridge.

It's is past curfew in this area. pic.twitter.com/0KRoGMVKJ6

— Ryan Wood (@RyanWoodDFW) June 2, 2020

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May 31, 2020

'Rioting cops' attacking protesters is a sign police departments are 'rotten to the core'

https://www.rawstory.com/2020/05/rioting-cops-attacking-protesters-is-a-sign-police-departments-are-rotten-to-the-core-columnist/

In a brutally frank column for the Daily Beast, Kali Hollway writes that the response by police across the country to street protests over the killing of George Floyd by four Minneapolis cops is nothing less than a “police riot” that may be beyond law enforcement reform efforts.

With cable networks showing their own reporters being arrested and fired upon by police, and social media loaded with videos of police arbitrarily attacking people on the street, the columnist claimed we have a major problem that reaches deep into law enforcement.

“Minnesota law enforcement’s latest spate of terror started with the murder of George Floyd and has continued unabated, with cops firing rubber bullets and tear gas—in the midst of a respiratory pandemic—at peaceful protesters. They’re far from alone. Officers have launched attacks against demonstrators in cities all over the country, Omaha, San Francisco, Portland, Columbus, Dallas, New York and Denver among them,” she wrote before adding, “Cops are rioting all over this country right now, again using militarized police violence to retaliate against people for daring to decry militarized police violence, and then suggesting the response is how the violence all began. These brutalities by police in recent weeks—the Floyd lynching, the murder of Breona Taylor, the Tony McDade killing, and now the rubber bullets, teargas, batons, fists and vehicular assaults—are both inhumane and familiar. “

Noting that “Not every cop is Derek Chauvin, the former Minneapolis police officer who casually and fatally applied his weight for nine minutes to George Floyd’s throat,” the columnist wrote, “In fact, most cops are actually Tou Thao, Chauvin’s literal partner in the crime of lynching Floyd—officers who either look the other way or stand watch. The former and the latter are both bad cops. The whole policing system is the problem.”

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May 31, 2020

Trump postpones G-7 meeting again, plans to invite four more countries

Source: Politico

President Donald Trump announced Saturday he is postponing the G-7 summit until September and plans to invite four additional non-member nations including Russia.

The president, speaking to reporters aboard an Air Force One flight back to Washington from Kennedy Space Center, said he plans to expand the annual meeting of the world's most economically advanced nations to include Australia, India, Russia and South Korea, according to a pool report.

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Read more: https://www.politico.com/news/2020/05/30/trump-postpone-g-7-meeting-291032

May 27, 2020

Anti-Lockdown Protesters Now Calling for Dems to Die

https://www.thedailybeast.com/anti-lockdown-protesters-now-calling-for-dems-to-die

As the head of Cowboys for Trump, Couy Griffin has led pro-Trump horse rides through Washington, D.C., and posed for a photo in the White House with Donald Trump. He’s a superfan of the president and on May 17, he made the case that Democrats should die.

“I’ve come to a place where I’ve come to a conclusion where the only good Democrat is a dead Democrat,” Griffin said to cheers at a rally at a New Mexico church. He was there to defy a public safety order pertaining to the coronavirus.

Griffin, a county commissioner in the state, hastily added that he only meant Democrats who were dead in “the political sense”—an effort at cleanup he repeated in an interview with The Daily Beast on Tuesday.

“I could’ve chosen a different verbiage, you know. I guess I need to be more careful when I choose the words that I speak,” Griffin said. “But you know, it’s just so hypocritical of the left how they’re blowing this up, like I’m some hate-speech murderer.”

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May 27, 2020

Fintan O'Toole on America the "pitiful," corrupted by Trump's malignant spectacle

https://www.salon.com/2020/05/26/fintan-otoole-on-america-the-pitiful-corrupted-by-trumps-malignant-spectacle/

Chauncey Devega's interview of Fintan O'Toole. Excellent read.

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You have written a great deal about the connections between sadism and politics. What does that relationship look like in practice?

Historian Timothy Snyder uses the language of "sado-populism" to describe this phenomenon. Some examples: Southern whites, who may have been dirt-poor, were given license to inflict pain on black people who were below them in American society. In the Irish context, which is where I'm from, one of the driving factors behind the Northern Ireland conflict was that the ordinary working-class Protestants, who were paid very poorly by UK standards, could feel superior to Catholics. That sense of hierarchy and permission is what Donald Trump plays upon.

Trump's base of support is immovable as long as he can license their contempt for other people. They are not going to betray him. Trump has given his supporters permission to show contempt for other people and they experience that permission as "liberation." Many of them have always wanted to permission to show their contempt, bigotry, racism and the like. When Trump talks about "political correctness" that is what he means.

In Trump's supporters' minds, "political correctness" is stopping them from expressing what they believe to be their superiority over other people, categorized on the basis of their race or gender or their sexual orientation or their foreignness or whatever else it may be. In their minds, Trump's attack on political correctness "allows me to be who I am. Trump is allowing me to express the obvious truth that I am superior to those people." For many of Trump's white supporters, and some others, that is an enormous type of compensation.

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May 26, 2020

Real estate firms and landlords using loophole to rake in $$$$ in Covid-19 federal aid.

https://www.rawstory.com/2020/05/real-estate-firms-and-landlords-using-loophole-to-rake-in-millions-in-covid-19-federal-aid-wsj/

According to a report at the Wall Street Journal, landlords and real estate firms are reaping millions in federal coronavirus aid — that should have been off-limits to them — by using a legal loophole.

The report notes that the Paycheck Protection Program, approved by Congress and signed by Donald Trump, was designed to support small companies and assist them with keeping workers employed during the coronavirus pandemic. However, so-called “passive businesses that collect rent and businesses that profit primarily off of price speculation” were excluded as well as companies that primarily develop or lease real estate.”

“Because most real-estate firms are private, tracking the number of aid recipients or the total amount of funds the industry has received is next to impossible, say real-estate attorneys and accountants,” the Journal reports. “But they are aware of at least dozens of property companies that have received in aggregate tens of millions of dollars or more because of a legal loophole that allows them to apply through related business units, such as management companies or construction companies.”

As the report explains, “This means Small Business Administration (SBA) funds could flow to property investors, something that was never intended. Representatives of the real-estate industry have said that even passive real-estate owners employ essential workers and should be eligible for the government funds like any other business.” One such firm, Time Equities Inc, which controls over 30 million square feet of real estate was the recipient of $3.6 million in federal PPP loans, according to Francis Greenburger, the company’s chief executive.

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