Author: admin

Authored by Leonard Hyman and William Tilles via OilPrice.com,

This past weekend, Pacific Gas & Electric had to resume electricity blackouts to 930,000 customers affecting upwards of three million people around San Francisco. Meanwhile, two major wildfires, one of which may have been caused by malfunctioning utility equipment, are burning and evacuations are underway. PG&E has informed customers that power in the affected areas may be out for up to one week.

It would not be overstating the case to talk about an air of crisis or panic in the state. Unfortunately, good ideas to resolve difficult, thorny issues seldom arise in troubled circumstances. And California’s Governor Newsom provides us with a ready case in point.

Yesterday Bloomberg News reported that the California Governor was interested in a takeover of PG&E by Warren Buffett’s Berkshire Hathaway Corp. On its face, it sounds logical in several ways.

First, Berkshire already owns utilities serving California, Oregon, Washington, Nevada, Utah. Wyoming and Idaho. PG&E would fit in.

Second, Buffet notoriously has told investors to buy when there is “blood on the streets”, that is, where the investment outlook looks bleak and most investors stay away, fearful of principal risk. Presumably, the governor envisages Berkshire purchasing the PG&E’s equity at a steeply discounted price, replacing a considerable portion of the utility’s outstanding long-term debt and appointing new senior management and a new Board of Directors.

There is one difficulty here in viewing Mr. Buffett as a potential financial white knight riding to California’s rescue. The current crisis is caused by an extensive above-ground high voltage transmission network sparking wildfires in an increasingly arid environment. Stated differently, the world that this transmission system was built for no longer exists.

This is a profound operational problem.

Having Mr. Buffett alter the utility’s capital structure, management and board would not address these issues. The Oracle of Omaha might be amazing, but he can’t reverse the impacts of climate change and the immense operational difficulties it presents for this utility. But it would solve one problem for the Governor.

A crisis of this magnitude requires politicians to at least appear to act on behalf of the public good. A change in utility ownership might deflect criticism away from politicians and regulators and buy some time. But this is like a hot-potato-in-the-lap: it has to be removed immediately regardless of the consequences. Not an ideal environment for sober reflection on difficult infrastructure questions.

What compounds the present political difficulties is the unfortunate legacy of the Enron scandal in California and its political aftermath. The bottom line? Shortly after being elected to a second term Governor Grey Davis lost a recall election and became only the second governor in US history to be removed from office in this fashion. The cause? The calamitous introduction of electricity deregulation in California, complete with price spikes, dodgy energy trading, rolling blackouts and the bankruptcy of PG&E The villain then was Enron and its various schemes (one of which was literally called “Starve Granny”) to manipulate wholesale power prices. Today’s “villain” is an inhospitable climate for conventional high voltage power transmission.

Every politician in California is aware of this history.

We would propose something simple to start. Right now California needs ideas. We propose the Governor constitute a commission of energy experts with two simple mandates: do a quick 30-day assessment and then a lengthier report at the end of twelve months. What the brief assessment would do is something no politician wants to say. That is, there are relatively few steps to ameliorate this situation in the short term.

But there may be a lot to do given longer time frames.

Sober policymaking in the present environment is almost all but impossible. The electric power delivery system has become problematic almost in its entirety. It’s even impacting the state’s electric vehicle industry. Solutions will be neither quick nor cheap. Perhaps naively, we believe that telling unpleasant truths via a commission of energy experts is the best path forward.

Just days after the Fed’s most oversubscribed term repo operation since the peak of the repo crisis in mid-September, coupled with the most overallotted T-Bill POMO as part of “Not QE”, the funding pressures in the interbank market appear to have eased somewhat based on the latest developments in the Fed’s “temporary” liquidity injections, where today’s first term repo saw “only” $47.9BN in dealer demand for the maximum $45 billion in liquidity, making it “just” 1.06x oversubscribed, the least since Oct 17…

… while today’s overnight repo saw $59.5BN in collateral submitted ($50.4BN in TSYs, and $9BN in MBS), more than 50% below the maximum $120BN available on the recently upsized operation.

Meanwhile, today’s “permanent” liquidity injection in the form of the 5th consecutive Bill POMO saw the lowest overallotment since “Not QE” restarted, with just $24.1BN in demand for the $7.5BN in Fed liquidity, the resulting 3.21x oversubscription the lowest yet.

One possible reason why the market may have reassessed its liquifity posture is because as Bloomberg reports, Treasury Secretary Steven Mnuchin is said to be open to easing crisis-era regulations “that have stiffened liquidity rules for big banks to relieve possible cash crunches in short-term funding markets.”

Mnuchin said that he had spoken to JPMorgan CEO Jamie Dimon, and other banks about how to avoid liquidity problems such as those observed in September: their answer – in addition to boosting reserves, the Treasury should eliminate liquidity buffers the banks need to hold as precaution for a possible crisis.

“The banks have raised an issue around intra-day liquidity, and that is something that makes sense for regulators to look at,” Mnuchin said in Tel Aviv, on day one of his 11-day trip through the Middle East and India, adding that there may be a way around current regulations that creates more intra-day liquidity without raising risks, according to Mnuchin.

While Mnuchin said he believes the Fed resolved the technical issues that caused the glitch and he doesn’t expect them to happen again, with consensus emerging that the liquidity squeeze was the result of too few reserves (even though the system currently has roughly $1.5 trillion in excess reserves, which apparently are not enough), while issues with regulations are separate.

Specifically, banks point to a strict liquidity requirement instituted after the financial crisis is also a contributing factor, and one meant to keep GSIB, or Global Systematically Important Bank, supported with excess liquidity. As part of the overhaul of financial regulations in the post-Lehman word, financial institutions are meant to hold more cash and cash-like assets as a buffer against times of stress. Systemically important banks – JPMorgan is the largest in the U.S. – face year-end reviews to determine how much more common equity they must carry.

As usual passing the buck and putting the blame for JPM stepping away from the repo market – and catalyzing the Sept 16 repo rate explosion – on regulators, Dimon said his firm had the cash and willingness to calm repo markets when they went haywire in September, but regulations held it back.

Meanwhile, as part of stepping away from the repo market, JPMorgan succeeded in forcing the Fed to restart not only repo operations, but also QE. As a result, the Fed began daily liquidity injections, and even as repo rates have since returned to more normal levels, the Fed has also resumed purchases of Treasuries to bolster bank reserves.

And so as JPMorgan – the bank with the largest US balance sheet – is building its case for eased regulatory requirements, analysts, starting with BofA’s Mark Cabana who first correctly predicted last month’s repo fireworks, are warning that money-market stress is likely to get much worse despite the Fed’s attempts to fix the problem. Conviction is also lacking that the central bank has resolved the issues in the funding markets. “It’s a reasonable question: Have we gone too far in the other direction in requiring the banks to maintain this excess liquidity for intra-day operations?” Mnuchin said.

Which brings up the real reason why JPM is hoping to ease GSIB regulations: as BofA notes, as of Q2 ’19, four of the eight GSIBs were in a higher GSIB surcharge bucket versus 2018 year end.

The fact that there are four US GSIBs running high in their surcharge bucket as of Q2 ’19 stands in stark contrast to the fact that there was only 1 US GSIB that was running high in its target range as of Q2 ’18. This, to BofA’s Mark Cabana, suggests “there will likely be greater year-end funding strains in ’19 vs ’18 regardless of how the Fed manages their reserves.”

It’s also why Jamie Dimon is hoping to fully deregulate the financial system, so that he has no longer has any constraints on what his balance sheet should look like. And if regulators needs a little more “convincing”, JPM is happy to crash the repo market as many times as is necessary.

And while undoing post-crisis GSIB regulations will mean that banks earn more – even if it infuriates Liz Warren to no end – it will also make the financial system once again prone to bank failure, as the big systematically important banks are no longer penalized if they don’t have enough liquidity on their balance sheet. None of that matters to Dimon, however, who has just one mission: to be allowed to do whatever he wants, again. If and when this leads to another global financial crisis, well Jamie will be long retired. Plus the Fed will simply bail out everyone again.

Incidentally, the only hope that the Treasury will prevent this major regulatory overhaul, is Democratic presidential candidate Elizabeth Warren, who last week waded into the debate around last month’s repo turmoil, warning Mnuchin not to use the incident as a rationale for weakening post-crisis regulations. Ironically, just a few days later, that’s precisely what Mnuchin is doing.

Echoing the sentiment of other billionaire traders (though perhaps in not so colorful language), hedge fund manager Paul Tudor Jones is warning that the stock market would tank over the prospect of an Elizabeth Warren presidency.

As Bloomberg reports, Warren, who advocates for a 2% tax on America’s richest families, “Medicare for all” and new regulations on private equity, is stoking fear on Wall Street as she’s gained momentum in a huge field of candidates for the Democratic nomination.

And in reaction, Jones said Monday at the Robin Hood Investors Conference in New York that the S&P 500 Index will drop about 25% if the Democratic senator wins the 2020 election, mostly because of concern over her proposed wealth tax; and, Jones added, the re-election of President Donald Trump would boost the S&P to 3,600.

The infamous trader also warned that economic growth in the U.S. would fall to 1% from estimates of more than 2% this year if Warren was voted in.

However, as bullish as Jones was on Trump’s re-election for markets, the 65-year-old raved about Democratic presidential candidate Buttigieg, saying of the 37-year-old mayor of South Bend, Indiana: “He’s my man.”

“I love Pete, I love Mayor Pete, because I think he would be the best administrator to run this country, and he’s got a compassionate heart,”

Jones, who has given to both Republicans and Democrats in the past, added at the gala.

“I’m not politically active at all. But right now he’s getting me excited.”

Jones’ warnings follow Leon Cooperman’s warning that…

“Right now, the market is assuming Donald Trump is reelected. If it looks like Elizabeth Warren or Bernie Sanders are credible opponents, the market will go down. They won’t open the stock market if Elizabeth Warren is the next president.”

Additionally, Rob Citrone, founder of hedge fund Discovery Capital Management warned that:

“I think if Elizabeth Warren is leading the way into the February primaries, the S&P will be down 10, 15, 20%,” Citrone said at the C4K Investors Conference in Toronto on Wednesday.

“Her policies on regulation, on taxes, on a lot of different things, are substantially different than anything we’ve had in our country before.”

But there is a silver lining to all this fearmongering, perhaps surprising to some who remain brainwashed by the mainstream media’s constant propaganda, Trump’s lead is increasing…

Source: PredictIt

Of course, if Cooperman, Jones, and Vinik listened to fellow billionaire Mike Novogratz, he should “stop worrying so much about Elizabeth Warren.”

“You’re not victims, you’re the richest people in the world,”

“How in God’s name do you feel like a victim?”

After President Trump spent several weeks creating an economic narrative of an imminent trade deal will be signed with China on November 17 at the Asia-Pacific Economic Cooperation (Apec) summit in Santiago, Chile, all to pump the stock market to record highs, there are new headlines from a US Administration official that specify a trade deal might not be signed in the coming weeks. 

• EXCLUSIVE-US-CHINA ‘PHASE ONE’ TRADE AGREEMENT MAY NOT BE SIGNED AT CHILE APEC MEETING IN NOVEMBER, BUT PROGRESS IS BEING MADE -U.S. ADMINISTRATION OFFICIAL
• IF A DEAL IS NOT SIGNED IN CHILE, THAT DOES NOT MEAN US-CHINA TALKS HAVE FALLEN APART, JUST THAT MORE TIME IS NEEDED -U.S. ADMINISTRATION OFFICIAL IF A DEAL IS NOT SIGNED IN CHILE, THAT DOES NOT MEAN US-CHINA TALKS HAVE FALLEN APART, JUST THAT MORE TIME IS NEEDED -U.S. ADMINISTRATION OFFICIAL 

Initial reports of a trade deal possibly falling apart before the Apec meeting slammed E-Mini Dow Futures lower.

Offshore Yuan strengthened to 7.064 level. 

Authored by Mac Slavo via SHTFplan.com,

The results of a new survey are truly disturbing. It was discovered that more than half of Americans want themselves, others, and the media censored by the government. Unfortunately, instead of learning from history, people are actually asking for a repeat of Nazi Germany or the gulags of the Soviet Union.

The First Amendment, which guarantees Americans freedom of speech, should be overhauled to reflect current cultural norms, according to 51 percent of the respondents to a survey published on Wednesday by the Campaign for Free Speech. The campaign is hoping to call attention to the dire state of Americans’ preeminent civil rights with the poll, which breaks down opposition along gender, race, class, and educational lines.

History will continue to repeat until humans learn the lessons of the past.  Censorship is always necessary for tyranny to thrive.

The younger respondents were, the more they supported overhauling the law to restrict speech. However, college graduates were the least likely of all educational groupings to support the restrictions, indicating that the increasingly regulated speech environment at American universities may be backfiring in some cases and producing adults who cherish their rights because they know what it’s like to be deprived of them. –RT

What was also horrifying, is that over half of millennials believe “hate speech” should be against the law, though no definition of “hate speech” was given (and indeed the definition tends to vary given the time and place) during the survey. Most of those who want a ban on such speech consider jail time an appropriate penalty, although female respondents were the least supportive of such draconian sentencing, according to a report by RT.

And it isn’t just the free speech of their fellow Americans that some people want to be censored.  They also want what is essentially, state-owned media.  In fact, 57 % of respondents support government action against “newspapers and TV stations that publish content that is biased, inflammatory, or false,” with nearly half of those agreeing such offenses should carry a jail sentence.  That means the government will get to decide the official narrative, and those who have evidence otherwise or dare to speculate against the government would be kidnapped and forced to spend time in jail.

The media is not particularly well-liked in 2019, with the average American trusting the press less even than lawyers and members of Congress, and people over 65 years-old were the only group in which the majority opposed punitive government regulation. But using the government to force the media to parrot the official narrative will only result in absolute brainwashing without any resemblance of the free-thinking that made society great left.  A majority of Americans want the government to decide what the truth is and then punish those who disagree.

Buckle up; because 2020 is going to be a bumpy ride.  As far as basic human rights go, expect to start feeling enslaved in the very near future.

The Trump administration has taken California’s migrant sanctuary law to the Supreme Court, asking it to strike down statutes which prohibit state and local law enforcement from cooperating with federal immigration authorities, according to the Daily Caller.

Ironically, according to the Caller‘s Kevin Daley, the dispute over the California Values Act (SB54) is “ideologically scrambled,” as the conservative Trump administration is relying on a liberal Supreme Court precedent to argue for expansive federal power, while liberal California is using the principles of federalism to defend its law.

The Trump administration is relying on a liberal Supreme Court decision to make its case, in keeping with the ideological role-reversals that permeate the dispute. In Arizona v. U.S., a left-leaning five-justice majority invalidated much of an Arizona law that involved state officials with immigration enforcement. Arizona said its law merely supplemented federal immigration rules. The high court struck much of it down anyway, saying federal immigration rules take precedence over — or “preempt” — state ones. –Daily Caller

“The federal government has plenary and exclusive power over immigration, naturalization and deportation,” reads the government’s petition. “The supremacy of the national power in this area is made clear by the Constitution, was pointed out by the authors of The Federalist in 1787, and has been given continuous recognition by this Court.”

In April, the 9th US Circuit Court of Appeals upheld the law using a states rights doctrine. Under the 10th Amendment anti-commandeering rule, the federal government can’t force states to enforce federal policies – which is exactly what SB54 prevents.

“SB 54 may well frustrate the federal government’s immigration enforcement efforts,” wrote Judge Milan Smith in the unanimous panel ruling. “However, whatever the wisdom of the underlying policy adopted by California, that frustration is permissible, because California has the right, pursuant to the anti-commandeering rule, to refrain from assisting with federal efforts.”

Three provisions of SB 54 are at stake in the case. The law bars state officials from: sharing information about a person’s release from custody with immigration agents; sharing personal information like physical descriptions or employment history; and transferring individuals to immigration authorities without a court warrant. The law does not apply to certain violent criminals. –Daily Caller

So far in 2019, U.S. Immigration and Customs Enforcement (ICE) have issued approximately 58,000 immigration detainers in California. And without the cooperation of the state, feds are forced to stake out state jails to await the release of non-citizens – then make public arrests.

“The practical consequences of California’s obstruction are not theoretical; as a result of SB 54, criminal aliens have evaded the detention and removal that Congress prescribed, and have instead returned to the civilian population, where they are disproportionately likely to commit additional crimes,” reads the government’s petition.

California may respond to the government’s petition by November 22, while a rebuttal from the Trump administration would likely follow in early December.

The case is No. 19-532 U.S. v. California.

Authored by Michael Snyder via The Economic Collapse blog,

It seems like the Democrats have been trying to figure out a way to remove Donald Trump from office forever.  Trump was under investigation even before he won the election, and it has literally been a miracle that his presidency has been able to survive for as long as it has.  But now the Democrats think that they have finally got him.  A parade of witnesses has come forward testifying that Trump pressured the president of Ukraine to investigate Joe Biden and his son, and that Trump withheld key military aid from Ukraine as leverage.  Nancy Pelosi, Adam Schiff and other top Democrats believe that this constitutes an “abuse of power”, and that this “abuse of power” qualifies as a “high crime or misdemeanor”. 

Other than Fox News, the mainstream media is solidly behind the Democrats on this, and we have seen a shift in public opinion polls in favor of impeachment.  Many conservatives continue to doubt that an impeachment trial will actually happen, but Nancy Pelosi would have never let things get this far if she didn’t know for sure that she has the votes that she needs to impeach Trump in the House.  At this point, it appears extremely likely that Trump will be impeached, and that will set up a historic trial in the U.S. Senate.

On Tuesday, House impeachment investigators will hear testimony from Lt. Col. Alexander Vindman, and according to a draft of his opening statement he plans to tell them that he notified his superiors twice regarding his concerns that military aid to Ukraine was being withheld in order to pressure the Ukrainians to investigate the Bidens…

The White House’s top expert on Ukraine twice notified superiors about concerns that the president and those working for him were linking foreign aid to Ukraine with investigations that would help President Donald Trump politically, a push that he said could undermine U.S. national security, according to an opening statement obtained by USA TODAY.

The testimony of Lt. Col. Alexander Vindman before the House Foreign Affairs, Intelligence and Oversight committees Tuesday will mark the first time lawmakers investigating the impeachment inquiry will hear from someone who listened to Trump’s July 25 call with Ukrainian President Volodymyr Zelensky — the call at the center of the impeachment investigation that included a Trump’s request that Ukraine investigate former Vice President Joe Biden.

This is likely to be bombshell testimony, but the American public won’t get a chance to hear from Vindman firsthand because the Democrats made a critical strategic mistake.

At the outset of this process, the Democrats decided to keep the proceedings shielded from the American public.  This has opened them up to tremendous criticism from Republicans, and it has resulted in them missing opportunity after opportunity to move public opinion more dramatically.

For the past month, the Democrats have looked like they are trying to hide what they are doing, and the process has been deeply unfair to President Trump.

Finally realizing that they have massively screwed up, the Democrats now plan to hold a vote in the House later this week that will make the next phase of the impeachment inquiry more open to the public.  In a letter to her fellow Democrats in the House, Nancy Pelosi explained why this move is being made at this time.  The following is an excerpt from her letter…

This week, we will bring a resolution to the Floor that affirms the ongoing, existing investigation that is currently being conducted by our committees as part of this impeachment inquiry, including all requests for documents, subpoenas for records and testimony, and any other investigative steps previously taken or to be taken as part of this investigation. This resolution establishes the procedure for hearings that are open to the American people, authorizes the disclosure of deposition transcripts, outlines procedures to transfer evidence to the Judiciary Committee as it considers potential articles of impeachment, and sets forth due process rights for the President and his Counsel.

‘We are taking this step to eliminate any doubt as to whether the Trump Administration may withhold documents, prevent witness testimony, disregard duly authorized subpoenas, or continue obstructing the House of Representatives.

If the Democrats are going to be successful, they need to get somewhere around 60 percent of all Americans on their side, because it is at that level where certain Republicans in the U.S. Senate would feel comfortable betraying Trump.

In order to do that, the Democrats desperately need to get these proceedings on television, and this resolution will finally authorize that.

But will this be a case of too little, too late?

We shall see.

Ultimately, the Democrats never should have gone down this road, and even if everything they are alleging is true there is nothing that Trump has done that represents a “high crime or misdemeanor”.

And with Republicans in control of the U.S. Senate, you would think that Trump should be feeling quite safe.

Unfortunately, so far only seven Republicans have publicly stated that they have ruled out removing Trump from office, and most Republican Senators are purposely refusing to take any sort of a public stand.  Here are a few examples…

• Sen. James Risch (R-Idaho): “I’m a juror and I’m comfortable not speaking.”

• Sen. Lamar Alexander (R-Tenn.): “I’d be a juror, so I have no comment.”

• Sen. Tim Scott (R-S.C.): “I don’t need a strategy for impeachment because I may be a juror someday.”

• Sen. Susan Collins (R-Maine): “I am very likely to be a juror so to make a predetermined decision on whether or not to convict a president of the United States does not fulfill one’s constitutional responsibilities.”

So much for loyalty.  President Trump recently endorsed Senator Risch, and this is how he is repaying Trump?

If the Republicans in the Senate came together and released a public statement in which they pledged not to remove Trump from office, that would immediately suck all the life out of the impeachment process.

But they are not going to do that.  In fact, there are persistent rumors that quite a few Republican Senators are ready to stab Trump in the back.

Whether you support Donald Trump or not, the truth is that every American should be deeply alarmed by what is happening in Washington right now.  In 1835, Alexis de Tocqueville warned us that this might happen someday: “A decline of public morals in the United States will probably be marked by the abuse of the power of impeachment as a means of crushing political adversaries or ejecting them from office.”

The scenario that he warned about is playing out right in front of us, and if Donald Trump is removed from office it is going to cause irreparable damage to our system of government.