The Trump Administration’s Real Deregulatory Record

President Donald Trump likes to take credit for record levels of deregulation and resulting gains in economic growth. Among the Trump Administration’s accomplishments listed on the White House web site are “record” reductions in regulatory burdens, and the President has claimed his deregulatory initiatives are saving American families $3,000 per year. But do these claims hold up to scrutiny?

A new report issued from the Penn Program on Regulation at the University of Pennsylvania Law School, Deregulatory Deceptions: Reviewing the Trump Administration’s Claims About Regulatory Reform by Cary Coglianese, Natasha Sarin, and Stuart Shapiro, casts doubt on Trump’s deregulatory boasts.

In an essay published at The Regulatory Review, Coglianese, Sarin and Shapiro summarize their findings:

what has the Trump Administration really accomplished when it comes to regulation?

The answer is much less than the Administration has claimed—and much less than probably most members of the public would surmise. In a report released today, we attempt to match up the claims the Administration has made about its deregulatory accomplishments with what the evidence actually shows. Drawing in part on new data we compiled from over the last four years, we find that virtually every major claim the Trump Administration has made about deregulation is either wrong or exaggerated. The reality is that the Trump Administration has done less deregulating than regulating, and its deregulatory actions have not achieved any demonstrable boost to the economy. . . .

We collected our own data from the underlying records that federal agencies maintain of their regulatory agendas. Since 2017, these agendas have included a designation for whether an agenda item was deregulatory or not. We looked at all the completed actions in this database, putting aside actions completed by withdrawing (but not finalizing) proposed rules as well as those actions taken by independent agencies (which are not even included in the Administration’s own lists).

Our results reveal a portrait of activity completely at odds with the Administration’s deregulatory mantra. We find three new completed actions in these regulatory agendas for every one that is labeled deregulatory. When we look at just economically significant actions, even on assumptions favorable to the Administration, we find only one deregulatory action for every one action labeled as regulatory.

When it comes to what difference this activity has made for the economy, we find again that the Administration’s claims have been unfounded or exaggerated. Vice President Mike Pence has said that “we’ve saved $220 billion in our economy,” while President Trump has asserted that “our historic regulatory relief is providing the average American household an extra $3,100 every single year.” These claims appear to be based on a report issued by the Trump White House’s Council of Economic Advisors (CEA). Even if that report is taken at face value, it does not support the President’s or Vice President’s statements. The economic gains presented in the CEA report were never meant to show any boost that the economy already received or is currently receiving. Rather, the CEA’s numbers purport to estimate what the economy might gain in the future—as much as possibly 10 years down the road.

The study’s authors conclude, “The Trump Administration has been more effective at deceiving the public about its achievements than in actually using deregulation to boost the economy.”

There is no question the Trump Administration has been more resistant to federal regulation than its recent predecessors, and federal agencies have scaled back planned regulatory activities where allowed by law—and that is a key qualification. Much federal regulatory action is compelled by federal statutes, and those same statutes make broad-scale deregulation quite difficult. Yet because the Administration has not pursued legislation, its ability to remake the federal administrative state has been quite limited. Moreover, many attempts to deregulate (or even delay eventual regulation), may yet be overturned in court, meaning that the Trump Administration’s ultimate deregulatory record could be even more meager than it appears today.

Administrative law is not for the feint of hard. Major changes in federal regulations require extensive work in the agency trenches and engagement with the underlying statutory frameworks that authorize, and often compel, federal agency action. With few exceptions, this is work the Trump Administration has been unable or unwilling to do. As a consequence, the Trump Administration’s regulatory record has been far less impressive than advertised, and should provide proponents of deregulation less reason to support the President’s reelection.

 

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The Trump Administration’s Real Deregulatory Record

President Donald Trump likes to take credit for record levels of deregulation and resulting gains in economic growth. Among the Trump Administration’s accomplishments listed on the White House web site are “record” reductions in regulatory burdens, and the President has claimed his deregulatory initiatives are saving American families $3,000 per year. But do these claims hold up to scrutiny?

A new report issued from the Penn Program on Regulation at the University of Pennsylvania Law School, Deregulatory Deceptions: Reviewing the Trump Administration’s Claims About Regulatory Reform by Cary Coglianese, Natasha Sarin, and Stuart Shapiro, casts doubt on Trump’s deregulatory boasts.

In an essay published at The Regulatory Review, Coglianese, Sarin and Shapiro summarize their findings:

what has the Trump Administration really accomplished when it comes to regulation?

The answer is much less than the Administration has claimed—and much less than probably most members of the public would surmise. In a report released today, we attempt to match up the claims the Administration has made about its deregulatory accomplishments with what the evidence actually shows. Drawing in part on new data we compiled from over the last four years, we find that virtually every major claim the Trump Administration has made about deregulation is either wrong or exaggerated. The reality is that the Trump Administration has done less deregulating than regulating, and its deregulatory actions have not achieved any demonstrable boost to the economy. . . .

We collected our own data from the underlying records that federal agencies maintain of their regulatory agendas. Since 2017, these agendas have included a designation for whether an agenda item was deregulatory or not. We looked at all the completed actions in this database, putting aside actions completed by withdrawing (but not finalizing) proposed rules as well as those actions taken by independent agencies (which are not even included in the Administration’s own lists).

Our results reveal a portrait of activity completely at odds with the Administration’s deregulatory mantra. We find three new completed actions in these regulatory agendas for every one that is labeled deregulatory. When we look at just economically significant actions, even on assumptions favorable to the Administration, we find only one deregulatory action for every one action labeled as regulatory.

When it comes to what difference this activity has made for the economy, we find again that the Administration’s claims have been unfounded or exaggerated. Vice President Mike Pence has said that “we’ve saved $220 billion in our economy,” while President Trump has asserted that “our historic regulatory relief is providing the average American household an extra $3,100 every single year.” These claims appear to be based on a report issued by the Trump White House’s Council of Economic Advisors (CEA). Even if that report is taken at face value, it does not support the President’s or Vice President’s statements. The economic gains presented in the CEA report were never meant to show any boost that the economy already received or is currently receiving. Rather, the CEA’s numbers purport to estimate what the economy might gain in the future—as much as possibly 10 years down the road.

The study’s authors conclude, “The Trump Administration has been more effective at deceiving the public about its achievements than in actually using deregulation to boost the economy.”

There is no question the Trump Administration has been more resistant to federal regulation than its recent predecessors, and federal agencies have scaled back planned regulatory activities where allowed by law—and that is a key qualification. Much federal regulatory action is compelled by federal statutes, and those same statutes make broad-scale deregulation quite difficult. Yet because the Administration has not pursued legislation, its ability to remake the federal administrative state has been quite limited. Moreover, many attempts to deregulate (or even delay eventual regulation), may yet be overturned in court, meaning that the Trump Administration’s ultimate deregulatory record could be even more meager than it appears today.

Administrative law is not for the feint of hard. Major changes in federal regulations require extensive work in the agency trenches and engagement with the underlying statutory frameworks that authorize, and often compel, federal agency action. With few exceptions, this is work the Trump Administration has been unable or unwilling to do. As a consequence, the Trump Administration’s regulatory record has been far less impressive than advertised, and should provide proponents of deregulation less reason to support the President’s reelection.

 

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Schizophrenic Paradox Emerges In S&P, 30Y Bond Futures

Schizophrenic Paradox Emerges In S&P, 30Y Bond Futures

Tyler Durden

Mon, 11/02/2020 – 11:50

An apparent paradox is emerging in the world of futures positioning.

According to the latest CFTC Commitment of Traders data, after being stuck in a tight range for much of 2020, speculative investors boosted bullish wagers on S&P emini futures to the highest level in almost two years, a that most professional investors saw the potential for the S&P 500 index to bounce back from a two-month slump. As Bloomberg notes, net long positions in S&P 500 e-mini futures in the week to Oct. 27 were the most since January 2019.

Unfortunately, as we have discussed in recently, looking at futures positioning has become nothing but noise devoid of any signal, and nowhere is that clearer than in the recent action in Nasdaq futures, where specs turned record short in late September, only to see their position turn slightly bullish by the end of the month, just as the Nasdaq crashed…

… confirming that even “smart money” investors are nothing more than glorified momentum chasers.

Of course, in a reflexive market, there was an immediate “narrative” validation, with strategists arguing that the S&P 500 can make a run higher from next year, helped by post-election progress on government aid to combat the pandemic’s economic fallout, as well as the introduction of treatments and vaccines. For instance, Bloomberg quotes BTIG LLC chief equity and derivatives strategist Julian Emanuel who wrote in a note that the firm’s base case is “eventual new all-time highs when the correction concludes” possibly in the first quarter of 2021. This incidentally is similar to what JPMorgan admitted over the weekend when it said that the worst the economy gets and the more stringent the lockdowns, the most active the Fed will be and lead to even higher risk prices.

Meanwhile, technical analysts are sounding some notes of caution. Strategists Jason Hunter and Alix Tepper Floman of JPMorgan Chase & Co. said the S&P 500 is revisiting a “cluster of support” surrounding the 3,200 level.

But a bigger warning that those hoping for smooth sailing will be disappointed, comes from the futures market itself, because while investors are now growing increasingly bullish on stocks, they have never been more bearish on 30Y bonds, where for one more week, the combined total of net leveraged fund and speculative futures positions hit a fresh record.

This is, in not so many words, paradoxical if not outright schizophrenic because if the bond futures are right, and 30Y yields explode higher validating the bearish bias, this would crash stocks as there is no way tech names which are a derivative of duration and thrive only in a period of deflation, will survive such a yield spike unscathed.

In short, it is impossible for both Emini and 30Y futures traders to be right at the same time, and in a time when the Fed has taken over the bond market and relegated the bond ‘smart money’ to idiot status, it will be interesting to see just who is right.

via ZeroHedge News https://ift.tt/38377SY Tyler Durden

“Non-Scalable” Fence Built Around White House, 250 Soldiers On Standby To Handle Election Night Chaos

“Non-Scalable” Fence Built Around White House, 250 Soldiers On Standby To Handle Election Night Chaos

Tyler Durden

Mon, 11/02/2020 – 11:30

President Trump is bracing for a surge of post-election day unrest in the US by building a “non-scalable” barrier surrounding the White House complex, according to CNN.

“The White House on lockdown: A federal law enforcement source tells NBC that beginning tomorrow, crews will build a ‘non-scalable’ fence to secure the WH complex, Ellipse and Lafayette Square,” said NBC White House correspondent Geoff Bennett.

The network reported that the temporary fence surrounding the White House would be similar to the barrier erected to create a perimeter surrounding the White House, similar to the barrier erected in the aftermath.

The fence will be erected on Monday around the Ellipse and Lafayette Square on 15th Street and Constitution Avenue NW.

A study released in mid-October has warned that five states, Pennsylvania, Georgia, Michigan, Wisconsin and Oregon, are at risk.

In addition to the fence, 250 national guardsmen will be on standby to assist local police.

The White House isn’t alone: Businesses from Midtown Manhattan to Portland are boarding up their shops for fear of another wave of unrest.

via ZeroHedge News https://ift.tt/3kRKdld Tyler Durden

Why Electing Biden (or Trump) Won’t Settle Anything for Long

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You’re kidding yourself if you think our long, national, electoral nightmare will be over on Nov. 3—and not just because it might take days or even weeks before we know who won.

If Donald Trump wins, anti-immigration, anti-abortion, and protectionist Republicans will continue pushing their largely unpopular agenda in Washington. If Joe Biden wins, then anti-capitalist, anti-school choice, and pro-regulation progressives will rush to pass legislation similarly out of sync with America’s more centrist electorate.

But whoever wins, there’s a good chance that power will flow to the other side in 2022 or 2024. That’s because we’re living in an era of “unstable majorities,” according to Stanford political scientist Morris P. Fiorina. Since the Reagan era, Republicans and Democrats have sorted almost completely into ideologically conservative and liberal groups, raising the stakes of each election even as fewer people identify with either major party. For the past 20 years, control of Congress and the White House has jumped back and forth between increasingly extreme wings of both parties.

The incoming majority rushes to implement its highly ideological agenda, overreaches, and gets bounced in the next election or two, says Fiorina. That’s what happened to the Democrats and Barack Obama in 2008. They won the White House and both houses of Congress in a landslide, only to surrender control of the House and Senate in 2010. Trump won in 2016 but the GOP promptly lost the House two years later.

Fiorina doubts that whoever wins the presidency and control of Congress will be able to enact an agenda that satisfies a large enough majority of Americans to keep power for more than a few years. “I don’t think we’re on the verge of civil war,” he tells Nick Gillespie. “The fever swamps of our newsrooms and social media are just not reflective of the mood out there in general but there are big problems and no one seems to have a good idea of how to get a handle on them.”

Written and Narrated by Nick Gillespie. Edited by John Osterhoudt. Feature Image by Lex Villena.

Music: “Believe” by Maya Pacziga; “Free Radicals” by Stanley Gurvich; “Discovery” by Kevin Graham

Photos: Ivy Ceballo/ZUMA Press/Newscom; Everett Collection/Newscom; Adam Schultz/ZUMA Press/Newscom; Dominick Sokotoff/Sipa USA/Newscom; Ron Sachs/Pool via CNP/SplashNews/Newscom; Joel Gillman/Flickr/Creative Commons; Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0; NATO North Atlantic Treaty Organization/Flickr/Creative Commons; Gina M Randazzo/ZUMA Press/Newscom; Luis Santana/ZUMA Press/Newscom; Michael Nigro/ZUMA Press/Newscom; Mindy Schauer/ZUMA Press/Newscom; Mindy Schauer/ZUMA Press/Newscom; Jay Janner/TNS/Newscom; JASON REED/REUTERS/Newscom; John Rudoff/Sipa USA/Newscom; Erica Price/Sipa USA/Newscom; Michael Nigro/Pacific Press/Newscom; Anthony Behar/Sipa USA/Newscom; Anthony Behar/Sipa USA/Newscom; Niyi Fote/ZUMA Press/Newscom; Richard B. Levine/Newscom; Dominick Sokotoff/Sipa USA/Newscom

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Kamala Harris Says Equal Outcomes Should Be the Goal of Public Policy

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Democratic vice presidential candidate Kamala Harris provided narration for a short animated clip that appeared on her Twitter feed Sunday. In the clip, Harris gives voice to a leftist-progressive narrative about the importance of equity—equal outcomes—rather than mere equality before the law.

“There’s a big difference between equality and equity,” says Harris. “Equality suggests, ‘Oh, everyone should get the same amount.’ The problem with that, not everybody’s starting in the same place.”

Harris contrasted equal treatment—all people getting the same thing—with equitable treatment, which means “we all end up at the same place.”

This may seem like a trivial difference, but when it comes to public policy, the difference matters. A government should be obligated to treat all citizens equally, giving them the same access to civil rights and liberties like voting, marriage, religious freedom, and gun ownership. The government cannot deny rights to certain people because they are black, female, Muslim, etc.—this would be unequal treatment.

A mandate to foster equity, though, would give the government power to violate these rights in order to achieve identical social results for all people. In accordance with this thinking, the authorities might be justified in giving some people more rights than others. Indeed, this would arguably be strictly necessary, in order to create a society where everyone ends up in the exact same situation.

Conservatives swiftly condemned Harris’s tweet in characteristically dramatic fashion: Rep. Liz Cheney (R–Wyo.) accused Harris of sounding “just like Karl Marx.” Harris probably isn’t a committed Marxist—if anything, her core ideology seems to be whatever the current political moment calls for—but it’s probably true that the people on her staff who helped make this video are well-informed about the sort of lingo that appeals to young progressive activists. This cohort is certainly interested in radical ideas like using wealth redistribution to engineer leftist social outcomes.

If the Biden-Harris ticket triumphs on Election Day, expect some of these people to find themselves staffing the vast federal bureaucracy, taking jobs in the Departments of Education, Labor, Housing, and elsewhere. There are a million different ways for these bureaucrats to make marginal, under-the-radar policy changes that support an equity-over-equality worldview. That’s a far greater danger than Harris’s earnest and clumsy attempts to woo the wokest of the woke.

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Make Elections Not Matter So Much Again

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My son’s school, located near a polling place, is hosting online-only classes on Election Day and the day before. It’s doing so “out of an abundance of caution,” despite making a successful transition from a hybrid schedule to optional full-time in-person teaching, because supporters of America’s two political death cults can’t be trusted to behave themselves when encountering one another on the way to vote.

This, bluntly, is insane. Elections to government office shouldn’t matter so much that they pose threats to the safety of school kids. And the only way to make who wins government office matter less is to lower the stakes by making government itself less important.

Schools aren’t the only places worried about election fallout.

“We have seen some isolated civil unrest and as we have done on several occasions over the last few years, we have moved our firearms and ammunition off the sales floor as a precaution for the safety of our associates and customers,” a Walmart spokesman noted last week. (On Wednesday, I witnessed staff hurriedly removing guns from the sales floor of a Phoenix-area store.)

Amidst much pushback, the company reversed the decision two days later. But the fact remains that a major U.S. retailer fears its customers might riot and try to kill one another if they’re disappointed with the outcome of the vote.

Government officials are similarly worried. “Bracing for possible civil unrest on Election Day, the Justice Department is planning to station officials in a command center at FBI headquarters to coordinate the federal response to any disturbances or other problems with voting that may arise across the country,” reports The Washington Post. NPR has a similar piece on “How Police, National Guard And Military Are Preparing For Election Day Tensions.”

How did we get to the point that Americans might turn to violence if they don’t like the outcomes of elections?

“The key to peaceful transition is that politicians and their supporters must be able to lose an election,” writes Hoover Institution Senior Fellow John H. Cochrane. “Losers and their supporters understand that they may lose on policy issues, but they will have the chance to regroup and try again. They will not lose their jobs or their businesses. They will not be put in jail, dogged with investigations, prosecuted under vague laws, regulated out of business. Their assets will not be confiscated.”

“The vanishing ability to lose an election and not be crushed is the core reason for increased partisan vitriol and astounding violation of basic norms on both sides of our political divide,” Cochrane adds. He points to the growing use of regulations, legal interpretations, and criminal investigations by election winners to punish their enemies as making politics a game that nobody can afford to lose.

Chants of “lock her up!” aimed at Hillary Clinton by Donald Trump—or by any candidate at a political opponent—may rally the mob, but they raise the very real possibility that disappointment at the polls will have consequences far more dangerous than thwarted career aspirations. There are plenty of countries where coming out in the wrong end of a vote can land you behind bars.

Likewise, the weaponization of regulatory agencies by New York Gov. Andrew Cuomo and his ilk to strong-arm banks and other firms into denying services to political opponents is a threat to “the First Amendment rights of all organizations to engage in political advocacy without fear that the state will use its regulatory authority to penalize them for doing so,” as the American Civil Liberties Union warns.

Yet these thuggish tactics have become regular features of our political life. Politicians thrill their supporters with promises to misuse the vast and dangerous power of the state to crush despised opponents. And then we’re supposed to wonder why our political seasons turn into societal pressure cookers with election outcomes treated as existential threats. Well, our political class and their rabid partisans are doing their best to make sure that losing a vote really is an existential threat.

The pandemic has certainly exacerbated the situation. People suffering from economic distress and social isolation enforced by government lockdowns are fodder for civil disorder.

“Economic growth and the unemployment rate are the two most important determinants of social unrest,” warns the International Labour Organisation (ILO).

“The domestic situation surrounding the COVID-19 pandemic creates an environment that could accelerate some individuals’ mobilization to targeted violence or radicalization to terrorism,” cautions the U.S. Department of Homeland Security.

But that’s fuel added to an already-smoldering fire. The political culture in the United States was sick long before anybody heard of COVID-19. All too many Americans already hated each other and plotted to destroy their political enemies. Responses to the virus just add a little more chaos to the mix.

So, how to lower the temperature so that school kids aren’t imperiled by their proximity to ballot-wielding Democrats and Republicans and retailers don’t feel compelled to strip their sporting goods departments prior to Election Day?

“If government ran less of your life, you wouldn’t have to spend so much time worrying about ‘election fraud’ this and ‘deadlines for counting ballots’ that, etc etc,” the Goldwater Institute’s Timothy Sandefur mused a few days before the latest Most Important Election Ever ™.

That’s true. Traditional philosophical arguments over the proper role of government and the balance of majority wishes with individual autonomy have been replaced by one important observation: the government we have now is so large, powerful, and dangerous that nobody can afford to lose control to their enemies. Politics is now an escalating struggle between death cults whose partisans realistically fear doom if vote totals don’t go their way.

I’ve suggested before that the most promising short-term path is for individuals and localities to follow in the footsteps of Sanctuary Cities and Second Amendment Sanctuaries in ignoring commandments from further up the governmental food chain. That’s relatively straightforward since it requires no agreements among factions. Better still would be formal decentralization that doesn’t rely on defiance.

But one way or another we have to make elections less consequential so that people can afford to lose them without fearing their treatment by the winners. Given that power is inevitably abused by those who wield it, that means reducing government’s authority over our lives so that ballot-box victors can’t so easily punish their enemies.

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Under a New Law, People Charged With Hate Crimes Are Disproportionately Black and Homeless

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South Carolina is one of just a few states lacking a hate crime law, so in 2019, Columbia’s city council passed an ordinance to establish one locally. A year later, the results are in: Five of six people to face charges under the ordinance are black, and several are homeless.

“If that is happening, it is an unintended consequence,” Councilman Howard Duvall told The Post and Courier, which reported on the unanticipated results.

In at least two cases, police were called to the scene to deal with homeless people who then referred to the cops using slurs. The victims were the police, according to the paper:

Rickey Smith, another Black man who listed a homeless shelter as his address, was believed to be under the influence of drugs while begging on a street corner along North Main Street on May 12, according to police reports.

While on patrol, the officer saw Smith in the roadway, weaving between cars and slowing evening rush-hour traffic. Smith ran when he saw the officer, according to police reports.

When the officer caught him, the two wrestled to the ground, with Smith accused of balling his hands into fists while atop the officer, police reports say. Reports say he used unidentified racial slurs toward the officer, who is White, and threatened other bystanders. He also allegedly hurled similar slurs and threats at medical staff when taken to the hospital.

Columbia has inadvertently simulated one of the principal problems with hate crime laws: Their enforcement reflects existing societal inequities. Far from preventing some scourge of hate, these well-intended laws typically result in over-incarcerated populations receiving harsher sentences.

This happens by design. Contrary to the imaginations of those who do not understand the First Amendment, it is unconstitutional for the government to outlaw hateful expression on its own. Hate crime laws pass muster because they criminalize speech that maligns a specific protected category—race, sex, sexual orientation, etc.—while a crime is being committed. It is not illegal to use a racial slur, but under a hate crime law, using a racial slur while committing vandalism, assault, or robbery could result in additional charges.

As a result, people who have more encounters with the police in the first place are going to find themselves in situations where hate crime charges could be a factor. This means that hate crime laws, by and large, are not mounting some significant challenge to resurgent white nationalism. Instead, they are often additional penalties for communities that are already worse off. And remember, the authorities have no evidence that the existence of such laws deters hate crimes at all.

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Why Electing Biden (or Trump) Won’t Settle Anything for Long

8070739_thumbnail

You’re kidding yourself if you think our long, national, electoral nightmare will be over on Nov. 3—and not just because it might take days or even weeks before we know who won.

If Donald Trump wins, anti-immigration, anti-abortion, and protectionist Republicans will continue pushing their largely unpopular agenda in Washington. If Joe Biden wins, then anti-capitalist, anti-school choice, and pro-regulation progressives will rush to pass legislation similarly out of sync with America’s more centrist electorate.

But whoever wins, there’s a good chance that power will flow to the other side in 2022 or 2024. That’s because we’re living in an era of “unstable majorities,” according to Stanford political scientist Morris P. Fiorina. Since the Reagan era, Republicans and Democrats have sorted almost completely into ideologically conservative and liberal groups, raising the stakes of each election even as fewer people identify with either major party. For the past 20 years, control of Congress and the White House has jumped back and forth between increasingly extreme wings of both parties.

The incoming majority rushes to implement its highly ideological agenda, overreaches, and gets bounced in the next election or two, says Fiorina. That’s what happened to the Democrats and Barack Obama in 2008. They won the White House and both houses of Congress in a landslide, only to surrender control of the House and Senate in 2010. Trump won in 2016 but the GOP promptly lost the House two years later.

Fiorina doubts that whoever wins the presidency and control of Congress will be able to enact an agenda that satisfies a large enough majority of Americans to keep power for more than a few years. “I don’t think we’re on the verge of civil war,” he tells Nick Gillespie. “The fever swamps of our newsrooms and social media are just not reflective of the mood out there in general but there are big problems and no one seems to have a good idea of how to get a handle on them.”

Written and Narrated by Nick Gillespie. Edited by John Osterhoudt. Feature Image by Lex Villena.

Music: “Believe” by Maya Pacziga; “Free Radicals” by Stanley Gurvich; “Discovery” by Kevin Graham

Photos: Ivy Ceballo/ZUMA Press/Newscom; Everett Collection/Newscom; Adam Schultz/ZUMA Press/Newscom; Dominick Sokotoff/Sipa USA/Newscom; Ron Sachs/Pool via CNP/SplashNews/Newscom; Joel Gillman/Flickr/Creative Commons; Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0; NATO North Atlantic Treaty Organization/Flickr/Creative Commons; Gina M Randazzo/ZUMA Press/Newscom; Luis Santana/ZUMA Press/Newscom; Michael Nigro/ZUMA Press/Newscom; Mindy Schauer/ZUMA Press/Newscom; Mindy Schauer/ZUMA Press/Newscom; Jay Janner/TNS/Newscom; JASON REED/REUTERS/Newscom; John Rudoff/Sipa USA/Newscom; Erica Price/Sipa USA/Newscom; Michael Nigro/Pacific Press/Newscom; Anthony Behar/Sipa USA/Newscom; Anthony Behar/Sipa USA/Newscom; Niyi Fote/ZUMA Press/Newscom; Richard B. Levine/Newscom; Dominick Sokotoff/Sipa USA/Newscom

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Peter Schiff: The Worst Pre-Election Stock Market Ever

Peter Schiff: The Worst Pre-Election Stock Market Ever

Tyler Durden

Mon, 11/02/2020 – 11:15

Via SchiffGold.com,

The US stock market is coming off its worst week since March. It was also the worst pre-election stock market in history. In his latest podcast, Peter talked about the market, the election and what’s likely ahead.

A weak stock market right before election day doesn’t bode well for President Trump’s reelection, given that he’s touted the stock market as his great accomplishment. Peter has said he doesn’t think Trump will win and that the stock market would ultimately sell off on the reality of a Biden presidency – that it would be “buy the rumor, sell the fact.”

Well, apparently they’re not waiting for the fact and they’re selling on the rumors. They bought on the rumor Biden was going to win and now they’re selling on the rumor that he’s going to win, because a Biden victory is not good for the stock market. It means much higher taxes and that is not going to be offset by the Federal Reserve.”

Most people seem to think that regardless of who wins, even if we have a contested election and don’t know a winner for days or weeks, it really won’t be a problem for the markets because the Federal Reserve will step in and backstop it. Everybody seems confident that the Fed has their back.

The only leg that this market is standing on is the Federal Reserve and money printing. But ultimately, that’s not going to be enough. The market is not going to be able to survive when that is the only support.”

Tech stocks were hit particularly hard during last week’s sell-off. The NASDAQ had the biggest decline on Friday and is down over 11% from its September high. But even with the drop, many tech stocks still have sky-high valuations.

Typically, a big selloff in stocks means a strong bond market, but last week, the bond market was also relatively weak. Long-term interest rates were up. Normally, when you see people running to get out of stock, they move into bonds.

There was no refuge this week because even if you had a diversified portfolio, you were down on your stocks and you were down on your bonds. Yes, your bonds went down less than stocks, but everything went down and nothing went up.”

Peter said he thinks this will compound problems in the stock market. Typically, a surging bond market during a stock market selloff helps mitigate the pain. When bonds rise as stocks fall, the lower interest rates help stock valuations. Rising bond prices also offset stock losses for those with diversified portfolios. But if both stocks and bonds are falling at the same time, you have no gains to offset losses. You just have losses on top of your losses.

So, I think this is going to be particularly brutal, because not a lot of people have hedges that are outside of traditional US stocks and bonds. There’s not a lot of investors that have gold or gold stocks that are hedging their portfolio. I think eventually they will. As I’ve been saying for a while, I think gold is going to be the last safe haven standing and ultimately that’s where all the safe-haven money is going to flow.”

Gold also sold off this week. As we have reported, it looked an awful lot like early March with everything selling off. But gold wasn’t down significantly and it rallied a bit on Friday. Peter doesn’t think we’re going to see a significant drop in gold this time around, even if stocks really crash.

Given where the Fed is, given how much money has already been printed, given how much money is going to be printed, I just don’t think you’re going to see any kind of significant weakness in the price of gold. So, any weakness that you get is going to be a buy signal.”

Meanwhile, the Fed has already thrown out one lifeline, lowering the limit on its Main Street lending program to small businesses to $100,000. Peter asked a key question: why does the Fed even need to run such a program? Why can’t small businesses just get these loans from their banks? Answer: they aren’t credit-worthy.

They know they’re not going to get the money back because these companies are bad credit risks and so private lenders don’t want to make the loans. Now, why should the government do that? If these businesses can’t repay the loans, why is the government lending them any money? And it’s not really a loan. If you’re loaning money to businesses that can’t repay it, it’s not really a loan, it’s a grant, or it’s a gift. But you know it sounds a lot better if you can pretend it’s a loan. But this is all pure inflation. The Fed is just printing up money and handing it out to small businesses.”

Peter said he thinks this explains the number of small businesses being created in the midst of an economic collapse. They can take advantage of this giveaway and get money from the government.

Of course, none of this is constitutional. And it’s bad economics. Peter said the craziest thing is nobody even seems to care.

via ZeroHedge News https://ift.tt/35Y7Oug Tyler Durden