Articles speculating about Trump's basis for being re-elected:
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America's survivability. (See 2 below.)
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A concluding rant. (See 3 below.)
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America's survivability. (See 2 below.)
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A concluding rant. (See 3 below.)
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Trump-Russia's Turning, and the Knives Are Out
By Eric Felten
Now that the Russia collusion allegations have evaporated, the long knives are out and President Trump’s antagonists are watching their backs. They have moved from accusing him of treason to pushing revisionist narratives that try to shift the blame for the debunked probe onto others.
This effort is expected to accelerate following Trump’s decision Thursday to empower Attorney General William Barr to declassify CIA, Pentagon, and Director of National Intelligence documents as necessary to access “information or intelligence that relates to the attorney general’s review” of the Russia probe.
In other words, he’s gaining the authority needed to investigate the investigators.
CIA sources immediately objected in the New York Times that assets’ lives would be at risk, stunting Langley’s ability to recruit. Perhaps. But the argument is a bit shopworn, raising the question whether intelligence managers are looking to protect their agents and sources, or aiming to protect themselves.
There are a growing number of indicators that the leading players in the 2016 election drama are turning on one another, making a mad dash for the lifeboats to escape being dragged under with the political Titanic that is Christopher Steele and his dossier. These are many of the same people who had been eager to exploit the dossier, that collection of memos paid for by the Clinton campaign and supposedly sourced from Russia. Once treated like the Rosetta stone of collusion, the Steele documents now seem even to Trump antagonists more like the Howard Hughes diaries.
A "former CIA official” has told Fox News that two of Trump’s most high profile accusers – former Director of National Intelligence James Clapper and former Director of the CIA John Brennan – didn’t want anything to do with Steele’s opus. It was former FBI Director James Comey, the source said, who was pushing to use the dossier in the official Intelligence Community Assessment, issued in the final days of the Obama administration. Having failed at that, thanks to Clapper and Brennan’s diligence (or so the story goes), Comey went rogue and confronted President-elect Trump with the salacious highlights produced by Steele.
Even the peripheral players are doing their best to shift blame. Former FBI General Counsel James Baker – who is under criminal investigation for leaks – recently went on the Skullduggery podcast to assert that he and other bureau officials were “quite worried” that Comey’s meeting with Trump would look like a page out of J. Edgar Hoover’s playbook – invoking the legendary FBI director who stockpiled damaging information to blackmail politicians. Would Comey be wrong to interpret Baker’s comments as an offer to testify against his former boss in exchange for a deal on the leaks investigation?
Comey has no shortage of adversaries, partly because old rivals he thought he had dispatched — such as former Attorney General Loretta Lynch — are back in the mix, and he is possibly sensing his vulnerability. It was in June 2017 testimony before the Senate Intelligence Committee that Comey tossed Lynch under the proverbial bus. Now she’s showing she can climb out from under the motor coach and dust herself off.
In September of 2015, Lynch and Comey were preparing to testify on Capitol Hill and expected to be asked about the Hillary Clinton email probe — code-named the Midyear Exam — which at that point had not been officially acknowledged. “I wanted to know if she [Lynch] would authorize us to confirm we had an investigation,” Comey told lawmakers. “And she said yes, but don't call it that; call it a 'matter.' And I said why would I do that? And [Lynch] said just call it a ‘matter.’” Comey says he reluctantly went along with Lynch’s demand, even though it gave him “a queasy feeling.” He worried “that the attorney general was looking to align the way we talked about our work with the way a political campaign was describing the same activity, which was inaccurate.”
Lynch pushed back against the notion she had twisted Comey’s arm. In April 2018 she told NBC’s Lester Holt that she didn’t remember the meeting the way Comey described it, and that the FBI director had raised no objections.
But now that the questions about officials’ behavior regarding the 2016 candidates has become a fraught topic, those officials are taking stronger stands to defend themselves. Comey continues to leave little wiggle room in his portrayal of the conversation with Lynch. In a December 2018 closed-door congressional interview, Rep. John Ratcliffe (R-Texas) asked him to confirm “the fact that the attorney general had asked you to refer to this investigation as a matter, correct?”
“That is correct.” Comey said.
Not so, says Lynch. On Dec. 19, 2018, she appeared before a closed-door session of the House Judiciary Committee and the House Committee on Government Reform and Oversight. She was being questioned by Republican staff attorney Zach Somers. He asked “whether you ever instructed Director Comey to call the Midyear Exam investigation a matter?” She said his testimony was the first she had any indication “that he had that impression of our conversation.”
That answer was a little ambiguous, so Somers asked Lynch directly: “So you do not believe you ever instructed him to call it a matter?”
“I did not,” said Lynch. “I have never instructed a witness as to what to say specifically. Never have, never will.” Under penalty of lying to Congress, the former AG declared, “I didn't direct anyone to use specific phraseology.”
Before leaping to the conclusion that Lynch is calling Comey a liar, we need to keep reading the transcript of Lynch’s testimony, which ends up being far less definitive than it first appears. As is so often the case with lawyers’ lawlerly responses, the assertion turns on specific words. Lynch said she didn’t “instruct” or “direct” anyone to use any “specific” language. Instead, she testified, she had told Comey that she personally referred to the Hillary affair as a “matter” or “issue” and “that was the suggestion that I made to him.”
Could it be this is the shape of investigations — sorry, matters — to come? The spectacle of former power players parsing verbs at one another? It may seem a sound defensive strategy now, but it will grow harder to craft phraseology subtle enough to slip out of trouble. Legalistic sparring becomes increasingly difficult as the number of those being put under oath proliferates, and as the number of investigations mount. The game theory concept known as the “Prisoner’s dilemma” is confounding enough when there are two players having to figure out whether to trust one another or sell each other out. Make it multi-person, game theorists point out, and the difficulty for the players grows exponentially.
Making the game even more difficult is how much of the play is being done under cover. When so much of the frenzied blame-shifting is right out in the open, who knows how much whet work with the long knives is going on in the shadows? “If Brennan and Comey and Clapper are doing this publicly,” one Senate staffer says, private-sector dossier-peddlers “[Sidney] Blumenthal, [Cody] Shearer and [Glenn] Simpson are doing it privately.”
There’s no overstating institutional animosities and how likely they are to affect efforts to find out the full story of what happened in the 2016 election. The Department of Justice, the FBI, the State Department and various intelligence agencies are supposed to cooperate, working together to amplify their efforts through coordination. Instead, they often end up at odds, competing for the praise and resources that come with successes and laying off on others the blame that attends mistakes and failures.
“The FBI and DoJ are ruthless to each other, petty to one another,” one congressional staffer marvels.
FBI investigator Peter Strzok provides a vivid example of the attitudes at play. In texts to his lover, FBI lawyer Lisa Page, he makes declarations such as “I hate DoJ.” Half an hour later he sends another text that includes “And I hate DoJ.” Elsewhere in the texts, the people of “main justice” are called “political dicks.” In the same spirit Strzok declares “DoJ are putzes, man.” Later he tells Page, “Don’t trust DoJ” and declares, “God I hate them.” Page describes DoJ as the “no brigade.” She writes, “I just feel like throttling DOJ.”
Connoisseurs of the knife fights between Justice and the bureau keep an eye out not only for what gets reported in the press, but where it gets reported. “The Department of Justice has good relations with, and tends to leak to, the Washington Post,” says a longtime Capitol Hill staffer. “The FBI leaks to the New York Times.”
He points to the competing narratives about then-Deputy Attorney General Rod Rosenstein’s supposed offer to wear a wire and record conversations with the president. The story broke in the New York Times last September and portrayed then-Acting FBI Director Andrew McCabe as the level-headed professional pushing back against Rosenstein’s fevered fantasies, which included not only the suggestion of secretly recording Trump, but the idea of invoking the 25th Amendment to have him removed from office. “The extreme suggestions show Mr. Rosenstein’s state of mind in the disorienting days that followed Mr. Comey’s dismissal,” the Times wrote. “Mr. Rosenstein appeared conflicted, regretful and emotional, according to people who spoke with him at the time.” In other words, if there were dubious decisions being made by federal law enforcement officials, it wasn’t just Rosenstein’s fault, according to the Times; it was because the deputy AG was losing his marbles.
The Times story was followed shortly thereafter by a Washington Post take on the same events, a version significantly more friendly to Rosenstein. According to “attendees at the meeting,” it was McCabe who was pushing boundaries, advocating an “investigation into the president,” the Post wrote. In this account, “Rosenstein responded [to McCabe] with what one person described as a sarcastic comment along the line of: ‘What do you want to do, Andy, wire the president?’” The Post story attributed to a “Justice Department official who met frequently with both McCabe and Rosenstein” that “in the months that followed, Rosenstein never broached either subject — the 25th Amendment or a possible wiretap involving the president.”
You don’t have to be a champion contestant on that peculiar Washington game show -- "Guess the Source!" -- to have a sense of which side of the street was providing what information to which newspaper.
Given the Times's sources in and around the FBI, there is particular significance when the Times writes a revisionist history of the bureau’s activities involving the 2016 election. At the end of 2017 the paper had done its best to write the dossier out of the creation myth of the Russia investigation. The Times had maintained, in an April 2017 article, that it was Carter Page’s ill-advised commencement speech in Moscow in the summer of 2016 that had sparked the FBI’s concerns the Trump campaign was colluding with Russia. This line came from the dossier, which had alleged that Page had secret meetings with billionaire oligarchs during his Moscow stay. But after the dossier started to be exposed as the partisan document it was, a new reason emerged to justify the launching of a counterintelligence probe into team Trump — that George Papadopoulos had supposedly mentioned, over drinks with an Australian diplomat, that Russia had dirt on Hillary Clinton.
That alternate origin story remained largely unchanged until early this month, when the Times rewrote its narrative, clearly with the help of FBI sources. The new narrative included the revelation that the bureau had sent a “government investigator” to London under the false name “Azra Turk.” Her undercover mission was to flirt with Papadopoulos and pump him for information about Trump and the Russians. The Times helpfully (from the FBI’s point of view) portrayed this as evidence of the “level of alarm” investigators had about Trump and Russia.
The article was a classic example of a fundamental Washington PR technique, that of “getting ahead of the story.” Knowing the Azra Turk business is being looked over by Justice Department Inspector General Michael Horowitz, sources in, or formerly of, the bureau went to friendly reporters and fed them information that could put the events in the least unflattering light possible. Note, however, that the bureau players — who normally wring their hands about the national security damage done by the release of unredacted information — aren’t above leaking details of covert ops if that’s what it takes to soften a blow.
As things unravel further, they’re likely to get nastier. In part that’s because the FBI doesn’t just hate the Department of Justice. If the Page-Strzok texts are any indication, the bureau doesn’t much like the State Department either. “DOJ is a wild pain in the ass,” Strzok texts Page. “Not as bad as State, but still.” Faced with sending some documents about the Hillary email investigation to Foggy Bottom, Page texts, “I’m not giving State an advance warning. F them.” Strzok responds, “And yes, totally. F State. No heads up.”
They not only sneered at their colleagues across the street (Justice and the FBI are housed on opposite sides of Pennsylvania Avenue), their feelings toward their bureau co-workers ranged from diffidence to detestation.
Consider the infamous text from Strzok to Page: “Just went to a southern Virginia Wal-Mart,” Strzok wrote. “I could SMELL the Trump support.”
Lost in the noisy outrage over the Trumpy odors insult has been Page’s reply: “Yep, out to lunch with Sally” Moyer, Page texted. “We both hate everyone and everything.”
“Do you hate everyone and everything?” Republican staff attorney Arthur Baker asked Moyer — a unit chief in the FBI’s Office of General Counsel. The question came in an October 2018 closed-door interview with the House Judiciary Committee and the House Committee on Government Reform and Oversight.
“Some days,” Moyer deadpanned.
The questioner was nonplussed: “But you don't hate everyone and everything all the time?”
“Not all the time, no.”
Moyer may have been indulging in a little gallows humor, but aggravation with the job and co-workers at the FBI — hate for everyone and everything all the time — seems to be commonplace in the bureau. Page calls various colleagues everything from “an ASTOUNDING douche” to “a petulant baby.”
Given the paramount heights to which both Strzok and Page had risen within the FBI, it’s unlikely they were outliers among the bureau’s management class. Their casual contempt for co-workers and for the departments of Justice and State can’t be attitudes far out of step with those of their seventh-floor colleagues. Sticking it to State and Justice and even (perhaps especially) the fellow down the hall: If that was the culture of the FBI’s leadership when the investigators were riding high and enjoying the power that came from collaborating with State and Justice in the pursuit of a president, just imagine how they are likely to behave toward one another now that they have become the pursued rather than the pursuers.
Even in the best of times, departments and agencies such as Justice, State and the FBI find themselves in back-stabbing bureaucratic battles of all against all. Imagine how those Hobbesian bureaucrats, whether current or former, are likely to behave when the outcomes being fought over have profoundly personal ramifications. One recalls the moment in “It’s a Wonderful Life” when the upstanding George Bailey (James Stewart) is sinking in frantic desperation: “Do you realize what this means?!” he shouts at doddering Uncle Billy, who’s lost the bank deposit. “It means bankruptcy and scandal and prison. That’s what it means.” With shocking savagery, Bailey throws the old man down in his chair and declares, “One of us is going to jail, and it’s not going to be me!"
This article originally appeared at RealClearInvestigations.
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2)The End of Legitimacy and
the Collapse of Democracy
2)The End of Legitimacy and
the Collapse of Democracy
What else have we been experiencing?
ByAbraham H. Miler
Ironically,it is Hillary Clinton who has not accepted the election results. She has crisscrossed the speakers’ circuit telling eager listeners that the Russians stole the election from her. Similarly, Stacey Abrams, who ran unsuccessfully for the Georgia gubernatorial post, has attributed her loss to electoral suppression. These themes have been both sustained and embellished by the current flock of Democrat presidential candidates, notwithstanding the absence of evidence. Even in the wake of the Mueller report, Democrat strategist Donna Brazile said that Russia caused Trump to win the election.
We now know that the Mueller investigation was based on an unverified FISA warrant paid for by the Hillary Clinton campaign through a cutout. Even the initially vaunted Mueller report now seems to be full of inaccuracies with the bias running in one direction. Exculpatory material of Trump’s lawyer John Dowd’s transcript has been deleted to imply wrongdoing. The full transcript compared by Internet sleuths tells a different story.
All empires and great societies come to an end. Ours will be no exception. The fissures of collapse are already in evidence.
Nothing is as valuable to any political system as its legitimacy. Regimes mired in corruption and inefficiency stumble on for centuries if the masses believe in them. Divine right of kings sustained the French royalty despite their palpable incompetence. The Russian czar was known as “the little father” despite serfdom persisting in Russia long after the industrial revolution transformed the West.
Nothing is as valuable to any political system as its legitimacy. Regimes mired in corruption and inefficiency stumble on for centuries if the masses believe in them. Divine right of kings sustained the French royalty despite their palpable incompetence. The Russian czar was known as “the little father” despite serfdom persisting in Russia long after the industrial revolution transformed the West.
Ironically,it is Hillary Clinton who has not accepted the election results. She has crisscrossed the speakers’ circuit telling eager listeners that the Russians stole the election from her. Similarly, Stacey Abrams, who ran unsuccessfully for the Georgia gubernatorial post, has attributed her loss to electoral suppression. These themes have been both sustained and embellished by the current flock of Democrat presidential candidates, notwithstanding the absence of evidence. Even in the wake of the Mueller report, Democrat strategist Donna Brazile said that Russia caused Trump to win the election.
We now know that the Mueller investigation was based on an unverified FISA warrant paid for by the Hillary Clinton campaign through a cutout. Even the initially vaunted Mueller report now seems to be full of inaccuracies with the bias running in one direction. Exculpatory material of Trump’s lawyer John Dowd’s transcript has been deleted to imply wrongdoing. The full transcript compared by Internet sleuths tells a different story.
Paul Manafort’s Ukrainian oligarch, with supposed ties to Russian intelligence, is actually an intelligence source for the U.S. Department of State, a mischaracterization perpetuated in the Mueller report.
The intelligence community appears vulnerable to accusations of fomenting a failed coup.
Democrats continue to refuse to accept the results of the 2016 election while Republicans believe there is an illegitimate deep state that is more harmful to the democratic process than the Russians could ever become.
No one is above the law both sides claim, but illegal aliens — crushing our border with asylum claims that fail the test under international law — seem to be beyond the law, as are those already here.
How a post-industrial society will absorb millions of barely literate people is not part of the public debate. To ask the question of the benefit these people bring to America, when they will be sucking on the ever-expanding teat of the welfare system, is to be called, racist.
In our secular society, politics has become the substitute for faith and political zealotry has replaced religious zealotry. Opponents no longer have a difference of opinion but are a form of demon to be exorcised from civil society.
The public square has shifted to the Internet. The technology billionaires have become czars of determining what is acceptable speech, and the Congress seems as powerless to control them as it does the crisis at the border.
Meanwhile the national debt grows, sustained by historic low interest rates that will inevitably lead to the next round of inflation. College tuition rises far beyond any other commodity in society and the quality of the education has become inversely related to the rising costs. Colleges no longer teach students how to think, for independence of thought might lead them to a difference of opinion with the propagandists masquerading as teachers. In the world of safe spaces and thought crimes, the First Amendment is murdered at the campus gate.
College professors, who in another era fought loyalty oaths tooth and claw, now succumb to writing a statement lauding diversity and their commitment to it as a condition of employment, retention and promotion. They do so without so much as whimper. Thought control, however, is still thought control.
College student debt now exceeds consumer debt and colleges, originally designed to educate the top 7.5 to 15% of the college-age population, now reach down far below that. In the meantime, colleges have become propaganda mills generating useless degrees that provide no skills for the work force and a host of attitudes — such as the need to avoid controversy — that are counterproductive in a competitive economic environment.
For many, having acquired no useful economic skills, there is no way to get rid of the albatross of student debt. Some have left America as the only expedient means to do so.
American education is the envy of the world, your alma mater will tell you at fund-raising time. This is true only in the engineer and scientific fields. The liberal arts and pseudo sciences are only envied by commissars who might salivate over how we have managed to control thought will disingenuously praising the First Amendment, as the apparatchiks at the University of Illinois have managed to do in their press releases justifying their recent assault on free speech.
Can this society survive? We should remember that economic crashes are the oxygen of mass movements. Times of crisis mobilize the political periphery, the outsiders, the politically alienated whose brand of politics has little to do with the mainstream. The increasing debt burden of this society portends such a crash.
In the Origins of Totalitarianism, the political philosopher Hannah Arendt reminds us that both Hitler and Stalin mobilized “masses not classes.” By that she meant that when societies implode in economic disaster, class-based identities crumble. The society becomes ripe for mass mobilization by an adventurer who will mold the masses with new identities. Whether Napoleon Bonaparte, Stalin, Mussolini, Hitler, or Peron, the script is remarkably the same.
So why did America not respond to such mobilization during the Great Depression? Legitimacy! The very factor that is being eroded through our internecine political conflicts that eat away at both our First Amendment rights and our acquiescence to the will of the people in electing candidates some refuse to accept.
Abraham H. Miller is an emeritus professor of political science and a distinguished fellow with the Haym Salomon Center.
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3) Part II of economic report from Moodys Conference
Oil has a major impact on cap ex. As oil prices rise, cap ex increases. Direct correlation. Oil explains almost all of the cap ex increase in 2018. Public expenditure on infrastructure has another big impact on cap ex. For all the talk about Washington providing infrastructure spending, the reality is states and cities simply use federal dollars to replace local dollars for the same projects they were going to do in the first place, so the real increase in projects is not great. That is part of why Obama’s shovel ready stimulus had no impact. Direct grants to depressed areas has a real impact. User fees instead of bond issues are much more effective long term because fees do not create new debt. National fuel tax is highly unlikely to happen and if it does it makes barely a dent in what is needed.
Government debt via bond issues or spending tends to crowd out private debt issuance over time. The best way to stimulate overall investment, therefore, is to lower government debt. GDP will increase.
Over the past ten years GDP has increased at 2.2% annually on average and is now $20 trillion
U1- is a more accurate measure of real unemployment as it eliminates incarcerated, drug users, and others not in the labor pool. It is now 1.6% and is the longest growth of employment in US history. The ADP jobs number is only based on large companies processed by ADP so it is limited in scope. The BLS number is across the whole economy so is the more accurate number. The ADP number is a trend indicator not the actual jobs number. Wages and jobs have grown far less on Wall St the past 10 years than the rest of the economy. That business has changed materially. All the political rhetoric about Wall St is nonsense today. People can still make fortunes there, but it is nothing like it was in 2005-2008.
Multifamily- vacancy has moved up nationally from 4.1% to 4.8%, which is still good, and rents continue to rise. Vacancy of 5% is considered equilibrium. In NYC development got well ahead of the demand and rents are down again. The most common renter age is 27-28 and so multi has another 5-10 years of good run left due to the millennials. Office- vacancy is 16.6% and not declining Rent growth is nominal. Office investment is not very attractive except if you want bond returns which office provides if there are top tenants on long leases. Many large investors are moving away from these bond like returns because they do not provide any upside to an institutional investor. We Work is now the largest tenant in New York and London. Regional Malls- vacancy 9.3% and neighborhood centers are 10.2%, the same as it has been since 2012. Retail is getting crushed by online. Self storage runs 86.4% occupancy nationwide but very good locations run 95% and self storage has almost no defaults, and rents are rising by .9% for climate controlled space.-less defaults than any other product type. Shadow lenders now make up 54% of all real estate lending- and generally offer much looser terms than regulated banks.
Inequality- An increasing swath of the country is in decline due to aging. The good areas of the country are doing much better. In the US population growth is barely above flat line, and baby boomers are a big demographic drag on the economy. There are material increases in suicide and opioid use with the biggest increases in small towns and rural areas that are in decline. The west has the most population growth, Northeast is flat, South inland is in decline as are major areas of the Midwest. The main reasons for declines is nobody is moving to these areas and no new business is going there. Existing residents do not generally leave and age in place because they cannot afford to move to larger cities. 1885 counties are in decline with 86 million people. There is a widening gap between these areas and cities with only 310 counties in a winning situation. The largest metro areas are growing the fastest. In decline- Pittsburgh, Detroit, Rochester, Toledo, Youngstown as examples. All of this explains inequality and it is not going to change no matter what any of the politicians claim. There is no viable investment that will happen to turn the trend around. The working age population is declining in 80% of counties, and then aging creates stress on these counties. There is as a result declining economies, more non-working prime age men due to lack of education. Manufacturing has closed down and is a declining share of the economy. Education matters. The more education the more mobility. High school education has a 58% labor participation rate while college educated is 72%. The more college educated people in an area, the better the area functions, the more productive it is and more new business start-ups. An increase in population of college grads by 1% pulls up wages by 2%. Only 9 areas of the country account for 50% of all H-1 visas which are the talented immigrants. This further accelerates the concentration of educated people in major cities and tech areas.
Only two cites are in recession now and both are in IL. One is Bloomington where the auto plant closed. There are no signs of recession anywhere else than these tow IL cities. The South and West have the best job growth. The concentration of tech in Silicon Valley, NYC, and Seattle has made those places very strong economically, but also very dependent on the few ultra- high income tax payers who can and do leave. That is why NY has a $2 billion shortfall and why CA is at high risk if a few of the mega wealthy leave. Many of these companies stay despite the taxes and regulations because that is where the other top tech people are and where they are all neighbors exchanging deals and knowledge. That is the only reason why CA has not gone bankrupt despite its best efforts to chase out these people with high taxes. Sand Hill Rd is the epicenter of tech venture capital, in a few buildings next to each other, and if it moves, it could all fall apart for CA. That is unlikely for a long time.
The US financial system is very strong now. Corporate debt as % of GDP is now 58% which is too high. There is a risk of defaults of company debt in a bad recession although it is mitigated by a lot of debt is locked at very low rates. Leveraged loans, loans generally on buyout companies, that are on top of regular debt. Super high leverage. They are a real default risk But they do not carry a serious risk to the banking nor economic system the way sub-prime did.
Quantitative easing has pushed down the ten year yield much more than would be the case were there no quantitative easing. The Fed owns some of this paper instead of the market. Therefore, the inversion risk is less than would otherwise be the case. Until there is inversion of the three month and the ten year there is not a recession warning. We are only in month one now.
Net interest margin for banks is in the regular band of variation of 100 basis points. Narrowing seems not to impact very large \banks much since they have many sources of capital from which to make loans and it is low cost. Smaller banks however, are getting hurt as rates decline and they cannot get the spread they need to cover their costs. Their main source of lendable funding is deposits. As a result, since large banks constitute a large majority of lending, it is not clear that the yield curve really matters all that much anymore.
Foreigners are the biggest holders of US Treasury debt. They have begun to cut back for their own liquidity needs. China and Japan are the main holders. It is very unlikely that China will try to dump Treasuries since they would lose money.
Libor is the index rate for $400 trillion of loans worldwide. There was a big push to go to a real transaction based system after the Libor scandal. SIBOR, basically a secured with T bills, overnight funding rate, was to be the replacement and is based on real repo transactions. Libor is not based on real transactions, but is estimates unsecured by T bills. Regulators are working on devising some type of Libor based on real repo or overnight lending contracts. They are not there yet. Libor may never be replaced. It is not yet clear. However, the repo market always has a spike at month end as institutions need to clean up positions at month end. So most bankers want to stick with Libor, and there is still 99% of transactions done in Libor. It appears SIBOR will not catch on and some modified Libor might be the index used. Libor and SIBOR are overnight rates and what is needed is a term rate index.
Emerging markets and Latin America are seeing far fewer devaluations, and so a little less risk. The real risk in emerging markets is political risk. We see that in Venezuela, Puerto Rico, Argentina and Brazil. It is now believed that there is far less risk generally of a major downturn caused by financial markets than 10 years ago.
That concludes my report. These are the opinions of Moody Analytics. I agree with most, but not every thought they have. Mark Zandi thinks the recession starts in June, 2020, but several on his staff say that date keeps moving out. My view in talking to Mark is, it is to a very small degree tainted by his dislike for Trump, and his hope to see him lose the election, but I know he does really believe the recession will begin in 2020, and he has solid data to support his view. It is not at all just a political view. He does give several caveats, and admits it is a very soft forecast right now. There are simply too many unknowns right now- China being the main one.
All of the election models run by Moody and other non-partisan modelers, say Trump wins in 2020. The Moody models were accurate the past three presidential elections. The models all say, in the voting booth it is the economy, stupid, as Carville said.
I need to correct wrong data I provided a week ago. There are 241 coal fired power plants. Not 15. Someone provided me with bad data. However, coal plants are being shut down very rapidly in the US and will mostly be gone in 10 years or so. Since 2010, 250 coal fired plants have closed and since Trump was elected 50 have closed. In 2015 coal accounted for 33% of power and now it is less than 27%. Trump has not slowed the closing of these plants despite the press. The US is rapidly switching from coal while other major countries are building them. There will be few coal fired plants in operation in ten years.
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