The Mother Hubbard Party. Another Rant From Ross.

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Whether Barton Swaim intended it or not he has renamed The Democrat Party and it is now:  The Mother Hubbard Party.

Joe Biden and the Slow Death of Liberalism

Democrats are again choosing a moribund ideology bereft of new ideas. Radicalism beckons.

By Barton Swaim

In nominating Joe Biden, Democrats aren’t choosing a “moderate.” They’re choosing liberalism over revolution. “Joe and I have a very different voting record,” Bernie Sanders said after Super Tuesday. That is demonstrably true. Their records differ in substantial ways. He went on: “Joe and I have a very different vision for the future of this country.” That is not quite right. The idea that Mr. Biden has a “vision for the future” is preposterous. He has a vision for the past, and even that is cloudy.

I don’t criticize him for it. I am a conservative. “Vision,” in my understanding, is for prophets, not statesmen. But Mr. Biden is no conservative. He is a liberal, and liberalism needs vision.

Mr. Sanders is a radical, not a liberal. The liberal worldview seeks a more equitable and open polity by means of piecemeal political reform. The radical outlook envisions a new world, not an incrementally better one. He wants to remake the U.S. economy and banish all forms of inequality.

With Mr. Biden’s ascension and Mr. Sanders’s decision this week to suspend his campaign, Democrats are again choosing liberalism. The important thing to understand about modern American liberalism, though, is that it is a spent force. It is out of ideas. It is visionary, but it no longer sees much of anything. That Mr. Biden has been reduced to protesting the Trump administration’s handling of the coronavirus outbreak, safely tucked away in his basement, nicely symbolizes liberalism’s impotence.

The liberal politician can offer a collection of ideas, but those ideas are old ones repackaged. He can offer a vision, but it is the same vision liberal politicians were offering 20 or 40 years ago. Accepting the 1992 Democratic presidential nomination, Bill Clinton ridiculed President George H.W. Bush’s disdain for “the vision thing.” Mr. Clinton quoted Proverbs 29:18: “Where there is no vision, the people perish.” The goals he enunciated in that speech were more or less the same goals every other Democratic nominee has endorsed since the middle of the 20th century: a fair shot for working Americans, new investments in schools, expansion of access to health care. Mr. Biden could give that speech today and few would suspect him of plagiarism.

The modern American liberal is the product of what’s commonly called liberal democracy—the social and political order obtaining in North America and postwar Europe. Liberal democracies value divided governmental institutions, a regulated market economy, a generous welfare state, personal autonomy and the expansion of political rights to formerly excluded classes. Conservatives and liberals alike are “liberals” in this broader sense, but American liberals believe more fervently than conservatives in the power of governmental means to achieve human betterment, and liberals tend to scorn habit and tradition as impediments to righteous goals.

The goals of today’s liberalism are minor and uninspiring. It has little else to do than tinker with the welfare state, ban things deemed dangerous or unhealthy and oppose conservatives. That has been the case for half a century. American liberalism’s last great triumphs came during the administration of Lyndon B. Johnson: the Civil Rights Act of 1964, the Voting Rights Act of 1965, the Food Stamp Act of 1964 and the Social Security Amendments of 1965, which created Medicaid and Medicare. Since then it has accomplished no original reforms, only refined or expanded old ones.

It’s true that liberals have won two major victories on personal autonomy: abortion rights in 1973 and same-sex marriage in 2015. But both came about as a result of court decisions. Neither could have passed the U.S. Congress.

The best evidence that liberals are out of ideas is that they are busy regressing on the ones they had. An obvious example: Liberals since John Stuart Mill have espoused freedom of speech almost as a matter of religious faith, but one now finds astonishingly few people on the left prepared to defend it in a principled way, and quite a few urging governments and corporations to censor unpopular views. Most liberals no longer see much of a problem with campus speech codes. And liberals often seem to believe that the First Amendment’s guarantee of freedom of speech applies to everything but political speech. Artistic expression, pornography, violent videos, yes; a movie critical of Hillary Clinton—which the government sought to censor in the Citizens United case—no.Or consider the expansion of the franchise. From the Reform Bills in Britain in the 19th century to the suffragette movement in the early 20th century to the civil-rights movement in the 1950s and ’60s, liberals cared passionately about extending full political rights to groups that lacked them. But everybody has the vote now. Stories of large-scale voter intimidation are not credible. Some favor enfranchising felons and aliens, including those in the country illegally, but these causes cannot sustain a political movement.

Opportunistic complaints about the Electoral College aside, liberals began long ago to distrust universal suffrage. They are generally happy to entrust unelected and unaccountable bureaucrats and elites, domestic and transnational, with vast authority, and they are content to let federal courts decide almost any question, in defiance of legislation and popular will, provided the decision falls on the liberal side.

Some liberals now openly long for the days when moderately corrupt party bosses decided congressional and presidential nominations. The past three years have produced innumerable books by liberal authors attesting to an ongoing assault on “democracy,” but these books mainly lament democracy’s failure to yield liberal results; they do not defend democratic principles themselves. Other recent works advance unabashedly antidemocratic arguments, such as Jason Brennan’s “Against Democracy” (2016) and David Van Reybrouck’s “Against Elections” (2016).

One may see liberals’ fixation on “diversity and inclusion” as a kind of replacement for universal suffrage. It’s a poor one. The “diverse” people liberals demand to be “included”—racial minorities, gays, people of indeterminate sex—already have full rights and privileges as citizens.

Nor does the modern American liberal believe fully in the greatest of all liberal principles—equality. Affirmative action, political correctness, identity politics—each affirms the belief that some citizens have rights that others don’t.

The point here is not to disparage liberalism. It is to point out that liberalism in America achieved the last of its great aims a half-century ago. Since then, liberal successes have steadily diminished in importance. The Clean Air Act of 1970 and the Clean Water Act of 1972 empowered state and federal governments to alleviate pollution. In 1979 Jimmy Carter signed legislation creating the Education Department, but its function has never been clear. In 1996 Bill Clinton signed a monumental welfare-reform law, but its purpose was to curb liberalism’s excesses, not to further its aims. Then there was the Affordable Care Act of 2010, a nonradical version of a radical idea that managed to make an expensive and confusing system even more expensive and confusing.

Whatever the merits of these laws, none compares, in sheer transformative effect, with the great reforms of the first half of the last century: the Pure Food and Drug Act of 1906, the Tennessee Valley Authority Act of 1933, the Social Security Act of 1935.

It’s not the fault of America’s Democrats that they’ve run out of ideas. Liberal democracies and center-left parties across Europe have reached a similar stasis. But stasis is itself the problem, because liberalism is a restless philosophy. It must always be doing something. To rest, or to express satisfaction with the state of things, is to become conservative. Hence liberals’ tenacious belief that “fascism” still threatens the republic, and that racism still blights it.

The effort of finding new things to do—of identifying societal injustices and formulating workable remedies—meets with vanishing success. Among this year’s Democratic presidential campaigns, the only two significant new ideas—Medicare for All and the Green New Deal—were generated by radical progressives, and even the names of these proposals were adapted from historical antecedents. The only other memorable ideas—reparations for slavery and the wealth tax—were flirtations with racial militancy and Marxian collectivism, respectively. New liberal ideas were nowhere to be found.

That liberals have found climate change such an attractive issue is a sign of this enervation. There is nothing inherently liberal about taxing carbon emitters or subsidizing solar energy, even if it may be humane or necessary. It’s hard to take liberals’ interest in climate seriously, since if they actually believed what they claim about the planet’s coming inundation, they would support the immediate expansion of zero-emission nuclear power. Very few of them do, for reasons that are negligible next to the threat of extinction. Climate change is chiefly something to fulminate against.

It is a measure of liberalism’s lethargy that Democratic primary voters in 2020 have fixated so exclusively on Donald Trump’s badness. Mr. Trump has inspired liberals in a way that nothing else has in many years. But soon he will be gone, and what then?

A sizable portion of the Democratic electorate, especially its younger members, has wearied of this state of affairs. They want something more to do than tinker and emote. Who can blame them? I happen to think Mr. Sanders’s fanciful policies would ruin the economy he assumes would pay for them, but he is surely right to believe that additional tweaking of the health-care and welfare systems will improve little in American life. He offers sweeping programs of action—an all-encompassing vision—rather than four more years of gestures and incremental fixes.

But Democrats aren’t ready for revolution. They appear determined to choose a placeholder candidate, a man who offers no new ideas and talks mainly about the past. Mr. Biden offers the backward-looking vision of an exhausted liberalism.

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It is only a matter of time before Durham hits and will colleges and universities, as we have come to known them, outlast the Coronavirus?

Durham's On the Way--Is Brennan the Chief Culprit?Emmett Tyrrell, Am. Spectato

Higher Education Today Resembles a Ponzi SchemeHeather Mac Donald, City Journal

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Decoupling will not come easily:

The Long Hard Road to Decoupling From China 

Andrew Michta, The American Interest

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Another Rant from Ross:

Right on que there were Nancy and Chuck stopping the clean additional funding for the small business loan program, but instead creating more spending bills loaded with garbage, and short changing the small business loan program by a mere $125 Billion. And they had the audacity to accuse McConnell of a political stunt. They have a long menu of things that have absolutely nothing to do with the virus, or the economy, that they did not get into that last bill, even though the last one was stuffed with around $180 billion of wasteful spending on migrants, NPR, money for NASA, and all sorts of left wing favorite causes. Don’t be fooled by “aid to states and cities” That is code for bailing out the Dem govs and mayors who way over spent and now don’t have the revenue to cover their excessive union contracts, pensions, and other wasteful spending. They want you to bailout these people.  Hopefully McConnell and Meadows will say no. When the Dems stopped a simple clean bill to add $250 Billion to the payroll program, they once again how disgraceful they are. They could not even bring themselves to do what is needed and right in an emergency.

Now, as forecast, the Pelosi extra $600 a week in unemployment is leading to substantially higher unemployment than otherwise would be the case. It may lead to millions more unemployed, and at your taxpayer expense. Another Pelosi Schumer special. A lot of workers are realizing they are far better off collecting unemployment than working for $12 ,or so,  per hour, which is a number that is a living wage in many parts of the country. If Trump lets Nancy get anymore of what she demands, the country will go broke soon.

The PPP loan Program has already taken apps for almost 600,000 loans through over 4,000 banks. Billions has already been funded. No wonder the system is slow to fund. The Fed has stepped in to fund the loans where a bank needs that funding. That will help a lot. Businesses are frustrated, but there has never been demand for anything to this magnitude. Plus banks want to loan to customers they loaned to before to meet know your customer rules. Bankers by nature are rule oriented and not action oriented, so things take longer on top of the flood of apps, and a not functional SBA computer system.  Treasury now allows banks to use their own docs to close to speed things along. The community banks which are close to their small business customers are much better on this program.  The big banks do not have the relationships so they go thru a more time consuming know your customer process and only want to loan to those who already have a loan with them. There is a big liability issue for banks to try to avoid all the fraud that will happen in this program, and so it is far easier for a community bank locally to know who is a real borrower, and who is not. It is frustrating for everyone on all sides.

The big banks have not been rushing to close PPP loans because they are afraid what will happen when the program comes to forgiveness. They were badly treated by Obama Holder with giant fines, and they fear if Biden wins and Warren is back at CFPB or Treasury, they will again be fined because papers are not perfect, there was fraud by borrowers, or whatever she might dream up. We believe that is why they are reluctant to rush ahead without a clear freedom from liability passed by Congress. This is the same reason Jamie Dimon hates making home loans. The big banks are vulnerable to a Biden administration with Warren in a key role as Biden has said she would be. She is very dangerous to the financial markets and thus to borrowers she claims to represent. It is likely the Fed will buy a lot of the PPP paper from the banks to solve this. Just imagine -how are the banks supposed to audit each of millions of loans to see if the borrower really paid his employees and rent, or if he used it for himself. There is no way, so they will forgive all of these loans in the end. That is why the community banks know their local borrowers and can monitor this easily so they have made the loans.

The Fed will be buying CMBS and other paper at current yields which are very high for lower grade paper. Once the markets start to normalize, the yields will go down the paper will be priced higher. When they buy residential mortgages that have very low rates they will try to sell it when general rates are higher, meaning the paper is worth less –(as rates rise market value of outstanding bonds goes down.). They could lose a lot of money on resale. We are left to wonder, when all this is over, the Fed might own $10 Trillion of all kinds of paper. They could not get out of the $4 trillion from QE, so they might own the much larger amount forever.  We don’t yet know the ramifications of that. You can be sure it is not ideal. I am not sure anybody knows what things look like in the financial markets long term as a result of all this government borrowing and Fed involvement, but I am sure it is not good, and we will pay a big price one day down the road.  

The Fed continues to step in with more programs to underpin almost every industry. They are the only thing saving the economy. There needs to  be some limits, but so long as Congress acts so irresponsibly, the Fed is all we have. Normally this flood of cash from the Fed would create rampant inflation, but not under these circumstances. The Fed is backstopping munis with a $500 billion loan program for cities and towns, (which is why the $250 billion new bill does not need $150 billion more for these same jurisdictions), mid-size businesses can borrow from $1 million to $25 million with P&I deferred and accrued for one year at 2%-4%, and with the sponsoring bank holding 5% of the loan-a classic A-B structure,  and almost anyone else who needs it since Congress is acting so irresponsibly. They are even going to buy junk bond ETFs. That is an extraordinary move. Treasury backstops the Fed with limited loss guarantees to the Fed. This time the Fed is out way ahead of any liquidity crunch in the capital markets.  Far better than in 2008. It is due to the Fed and Treasury that we may actually have a good recovery. They are doing things nobody would ever imagine. It strikes me that Mnuchin is deeply involved as these are a deal makers sorts of actions. The $350 billion payroll program for small business seems to be doing things much better as well over $100 billion has already been funded, so a lot of banks have figured it out, but some still can’t get it together.

It is way too early to be sure we are off the bottom, but I do think so, and have been all equities throughout. The market has charged higher so fast that it does not seem sustainable at this level to me. There are going to be days where the market drops again, and possibly by a lot, simply because there are so many unknowns right now that any forecast is just a dart board toss. Now all the investors who panicked and rushed out in March, are rushing back in, the shorts are covering, the algos are piling in, and then it feeds on itself. Where we go from here is unclear.  The S&P is already at 2800 which is where a sophisticated group thought it would be at year end. I never thought the market was rational so where from here is uncertain. Maybe a lot higher when things reopen, but there are a lot of bad things still might happen as we work through this, so it is very uncertain. There is supposedly $1.4 trillion of retail investor cash now on the sidelines because they panicked and bailed exactly when they should have done the opposite. While there will be some more big down days, and bad news, if you are not invested here, you will miss a great opportunity long term. My comment two weeks ago, come May 1 you will be sorry you did not get back in back then in late March. When a lot of that money does flood back into the market will really rally further, but nobody knows when that will be. Very likely too late. Some will come back in early May when the economy starts to reopen and cases continue to decline in a meaningful way in most cities. By then you will have missed the real opportunity if you invest for the long term.

The administration and the Fed are doing everything to make things work, but Pelosi and her squad are ruining the opportunity for a robust recovery. There are still a lot of risks in the bond market, especially  in any fund that has CMBS.  Servicers will make some modifications, maybe lower the rate for a period, or go interest only, or let the landlord use cap ex reserves, but at some point all of that runs out and if the rent Is not collected from a lot of tenants, or if the hotel remains only partly occupied, the loan will remain in default and eventual foreclosure possibly. There are a lot of losses to yet be seen for bondholders. We are barely at the start of the default process. Workouts like these take time and this time it will take longer than before due to the massive number of defaults coming to your favorite bond fund. There is simply no way right now to price all of the sub tranches in any CMBS pool. The super senior and senior tranches will be OK.  It depends on which tranches the fund owns as to how they fare. CMBS workouts and new loans when they return, years from now, will have interest only in cases of workouts not new loans, lower leverage (owner add equity), recourse if a bank loan, and no cash out mortgages. These terms will also apply to bank loans from here on. Wall St traders and bankers are a very creative lot, and so they will figure out how to issue CMBS again one day.  For Wall St, everything is a matter of price and perceived return on investment vs risk, or how to skim big fees off the top. There is a price at which anything will trade. The capital markets are beginning to normalize at the higher investment grade levels. CMBS will probably get a lot worse in May when there will be a wave of increased defaults.

As to investment banking  deals, there were many in the pipeline, and some will go ahead at some point at a different valuation. The bankers will be busy with workouts, rescue capital, debt restructuring, and arranging the desperation sales of failing companies. Mortgage bankers will suddenly be transformed into workout specialists. The issue will be the landlords, especially in hotels, will likely act in many cases as they did in 2009, which is to take the position that the lender needs to give in, and they are not at fault so they should not concede anything.  What I witnessed in 2009 period was a lot of lying by owners and outright misrepresentation even under oath in court. There are so many properties that are in deep trouble that unless a landlord is willing to be realistic and cooperative, it will take years and tens of thousands of legal and advisory fees to work out.  Much better to go to the lender now and make a deal before the lender gets buried in  ugly fights with other borrowers. It is a lot easier to deal with a bank than a servicer.  The bank has a client relationship, and a loan on its books, and regulatory issues with loans in default which hit their capital reserves. They prefer to do a deal quickly, and not take a capital reserve.

Private equity funds now have an estimated $1.4 trillion of dry powder.  That seems a way high estimate to me, but even if it is high, they have a lot of capital to buy busted companies, or make rescue capital loans which are sometimes really loan to own. They are ready to pounce.  After 2008, some of the smaller and midsized funds were reduced to being finders and brokers for institutional investors who have their money in separate accounts for the fund to find them deals for a fee. The funds in these cases act like they are a fund, but they really are now more the role of broker, advisor for the real money, then they take an asset management fee.  That is why we can never really know how much real capital is potentially available to invest in these deals in addition to what is actually in a fund, or callable by a fund .

Calabri, the guy who runs Fannie and Freddie, is doing as predicted.  He is refusing to provide any liquidity for the servicers who are laying out tens of millions to pay debt service on the mortgages that are now not paying which is estimated to be in excess of 25% of all agency backed home mortgages. That number will get worse thank you Nancy. The small servicers can’t handle this as they are required to pay for 90 days. The Fed can and might step in with credit facilities for the servicers. Nancy and Calabri have made mayhem in the agency backed mortgage markets for no good reason. Mnuchin will have to step in and fix this with the Fed. CMBS remains the real risk area.  If you are in a fund with a lot of agency CMBS, the fund is guaranteed to get its principal on maturity, but not guaranteed interest. The agency bonds will not likely recapture full value before maturity because the interest portion is not being paid.

The oil market remains a mess. OPEC tentatively agree do 10 million barrels cut, but most oil experts think this is nowhere near enough. The US press ridiculed Trump when he said there would be a 10 million barrel cut or more. So much for the press again. He said the US would not be party to a deal, and again he was attacked by the press. The US is not a party to the deal. There will be major cuts as soon as the Mexicans come back to reality. The President of Mexico is stupid, and very far left, so unclear when that happens.

I have zero sources nor evidence of the following, but just my guess based on all I read. A researcher at the lab got bitten or scratched by an infected bat, or somehow got infected by a bat he was working on. He then went to the market down the street to buy something for dinner, and infected the woman running that stall. She got sick, and based on one report, went to the hospital emergency room where she got some meds and went back to work in the market stall anyway selling food to others. And off we  went to pandemic. This is at least a plausible scenario. I have no idea if it is correct, but makes sense.

Ben Carson has made very clear there is nothing new about how blacks suffer more health problems than whites. They simply do not take care of themselves as well through diet and exercise and healthcare. So now the politicians and especially the Dems are going to make this an issue and try to blame Trump for what has been a problem Obama Biden did nothing about. Had it not been for the higher death rate of blacks now, nothing would have been done. It is a more a culture issue, not a money issue that gets solved by some new Dem spending  program you will see come from Pelosi. .

For months I have been saying wait for the Durham report on the conspiracy to push Trump out of office. Barr just gave an interview where he said  it is the worst thing in American history and people will go to jail. I suspect it will now take until August or September to complete, but this is going to blow up the Dems just before the election. I expect it goes into the Obama White House, FBI, and Brennan as the puppet master. Expect the Dems and press to restart attacks on Barr as soon as the virus clears off the top of news. They know what is coming and they are desperate to stop and discredit Barr. The press will really look stupid and discredited once it all comes out.

Bernie did not exactly drop out. He said he intends to still collect delegates so he can push the platform to the far left. His supporters will not vote for Joe unless he goes far left. Once the party goes left they lose the moderates. Bernie is the disaster the Dems were hoping to avoid. They will have to pander to his crazy ideas, and that will just allow Republicans to use his radical ideas to regain control of the House. Add on Harris as VP, and stumbling, bumbling Joe, and the Dems are in real trouble. By November the virus will be under control, the economy will be reopened, workers will have gotten 100% of wages while laid off plus their $3400 per family, plus other breaks like no foreclosure, lower rates on loans, etc, and they will be back to work in many companies, the death rate will be far lower than predicted, and Trump will say his leadership got us through with far less damage than predicted. It does not matter if that is true or not, the perception will be true. Thanks to Bernie, he wins big.

I always thought Fauci was a great man, but now that I know why,  he was born in Brooklyn, so I am now certain of it. I wish I could find out if we were in Kindergarten together. Being born in Brooklyn is a special privilege. Because the Brooklyn Dodgers never won, it taught us to never lose hope and to always look forward with confidence- “wait until next year” was what we were taught from a very young age.    

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