Blain: The Biggest Risk For Markets Is, Perversely, “Truth!”

Blain: The Biggest Risk For Markets Is, Perversely, “Truth!”

Tyler Durden

Tue, 06/16/2020 – 09:10

Authored by Bill Blain via MorningPorridge.com,

“This is Ripley, last survivor of the Nostromo, signing off.”

Markets are beginning to depress me. I’ve spent 35 years working in capital markets, trading rooms and finance. I once blithely believed free and liberal Financial Markets and the invisible hand had the power to change the world through efficient allocation of capital.

Now? I fear markets have become so distorted they are evolving into something parasitical – feasting on central bank and government largesse as they suck the lifeblood from economies while fuelling rising inequality across the globe. OUCH! 

Today I have few expectations markets will play any significant role in solving the Coronavirus crisis. Its governments that are going to drive solutions and recovery, saving us all… not private enterprise and markets. (And that will infuriate any conservative, mainly because they will know it’s true.. I will be bombarded with emails telling me its government conspiracy etc.. )

Whether it is the financially conservative Germans cutting VAT and granting hand-outs to families, the US looking at a massive infrastructure programme, or even the UK finally getting serious about the Brexit negotiations – it’s going to be government actions that determine how quickly the global economy comes out the looming recession. 

Already the signs of recovery are promising. There is clearly pent up demand underlying economies – we can see that in the queues at shops y’day, or the swift recovery in the economic data since April. It’s not going to be a V-Shape, but a shorter-tail tick-shape to recovery by 2021/22 feels likely. 

Recovery has been fuelled by government action. Markets have just played along and made money from the ructions. Let me explain:

We had yet another 180 degree market sentiment flip yesterday – fears about the rising number of reopening coronavirus hotspots and economic threats were superseded by unbounded joy as the Fed announced it will buy secondary market corporate bonds direct rather than thru ETFs, without any need for companies to certify their eligibility. That pressed the risk on button – and markets recovered. 

Tomorrow the market might crash again. It might be someone expressing doubts on the vaccines, or a new virus flare up that triggers a flop-moment that pushes markets down again. 

But the biggest risk for markets is perversely “truth”. If Fed Chairman Jay Powell isn’t bullish enough when he speaks later today – then markets will have a hissy fit, furious he isn’t doing more to support them by expanding on their bull outlook. (And Powell will find himself on the receiving end of a Trump twitter-storm telling him how crap he is.)

A few years ago markets famously collapsed on the threat of the taper – the taper tantrum – the threat to remove QE support from the markets. Now markets aren’t in the least scared of taper – they just demand feeding.. they want, and they want more. 

However, the Fed corporate bond programme is really interesting and genuinely innovative. The Fed (advised by Blackrock, I should imagine) has set its own list of names based on its own rating criteria and other metrics, which translates as it can buy any company that was investment grade before the crisis… and which remains investment grade in the Fed’s mind. It means the Fed will buy whatever it thinks it might need to buy in order to avoid corporate shocks dragging down the economy. 

It means the large US corporates the Fed is backing to drive the economy retain access to unlimited liquidity and remain solvent. Two crisis points addressed for the price of one. Keeping Corporate America cosmetically solvent – despite the dire economic reality – means these firms will continue to be able to raise cash to weather the crisis, keep their factories open, maintaining trickle-down orders to the SME’s that supply them, giving time for the economy to develop new internalised supply chains and preserving jobs. The Bank of England will announce something similar. 

Corporate QE Infinity is positive fiscal policy in a monetary guise. 

However… what does it mean for markets? That’s when I start to despair. 

Every single investment bank and research fund is rightly advising clients to go long bond and credit risk. Rates are going to remain low. Corporate QE infinity means corporate bonds are going to tighten – supported by the fact Central banks are now de-facto guarantors of the corporate bond market. Bonds tighten, yields diminish.. Hungry capital will look elsewhere for returns – which means taking on-board higher risks to avoid declining returns 

But yields are so tight, you need to search further for any meaningful returns… 

Junk Bonds are also going to tighten in line with the underlying corporate bond market. They aren’t yet directly supported by QE Infinity, but the trend is the friend that pulls them higher. Buyers will be selective, trying to avoid the obvious living-dead names, but their buy-decisions with have nothing to do with sound credit metrics… just the likelihood they will tighten on the back of tightening… (yep.. I wrote that deliberately..). 

Who benefits? Jobs are kept open, but the upside rewards will largely go to the private owners of junk companies who successfully retain the equity upside while debt markets fund them. 

What about Emerging Market Debt? The picture around the globe looks bleak as supply chains crumble, the virus overwhelms health provision in poorer nations, while the prospects of social unrest mount. None of these factors apparently matter. Analysts predict the default rate in EM will be lower than feared because these economies will indirectly benefit from the improving outlook for the key developed nations. Defaults might be falling – but I suspect the IMF will be very busy negotiating debt extensions that will tie EM nations into penury for longer. 

As a result, EM spreads will tighten… and force investors to continue to seek enhanced returns… which means all that money ends up in the already overheated and frankly daft equity markets… 

What has all this QE Infinity and ZIRP interest rates created? A global market economy where every flea has its own fleas…Where emerging market nations dreams of social improvement are forgotten while they remain beholden to the West (and China) for any chance of growth?  Where market prices have become meaningless as a result of financial asset inflation? Where junk bonds are priced like AAA securities, allowing private equity funds to thrive? 

I am beginning to wonder if there is any point in thinking about markets any more… Just follow the central banks… don’t think.. Just buy. 

The long-term consequences of rising inequality across every metric will likely be glossed over. Which shows just how wrong we can be. While the developed world is convulsed about Black Lives Matter, we seem to be happy creating bailouts that will ensure the rich get richer and poorer nations will be penalised for longer. 

Should we remain in thrall to markets? We have little choice at the moment. But long term we have to get markets back on track – and that means cold-turkey as we wean ourselves off the dangerous QE Infinity distortions. 

Meanwhile… 

Clearly the past 4 months has been pretty traumatic. Bridgewater is in the press this morning for taking a 15% seal-clubbing as a result of founder Ray Dalio being fully invested when the No-See-Em hit. Embarrassing, but not really a problem. Real money invested long-term has to lead the flow – and will get hit by unforeseen events. Any investment manager that says they were prepared for the coronavirus was more likely underinvested, and got lucky. 

My own solution is steer clear of distorted financial assets when you can. Look to invest directly into the economy – infrastructure, growth, green and energy. Seek investments with clear business upside potential, rather than just a boost from QE distortions.  Someday it will end. 

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Audio Edition of My Book “Free to Move: Foot Voting, Migration, and Political Freedom”

For those interested, the audio edition my book Free to Move: Foot Voting, Migration, and Political Freedom, recently published by Oxford University Press, is now available for sale at Amazon and elsewhere, and should be delivered to your device by June 23. The audio is narrated by the excellent Peter Lerman, who also did the audio version of my earlier book Democracy and Political Ignorance: Why Smaller Government is Smarter.

 

I recently did an interview about the book with Yale Law School Prof. Jack Balkin, at his Balkinization blog (Part I and Part II). I also recently did an audio interview about the book with Canadian economist Garret Petersen for his “Economics Detective” podcast series.

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SCOTUS Splits 7-2 Over Federal Easement Law

Outside the muddy waters of the Takings Clause, the Supreme Court seldom decides property disputes. On Monday, the Supreme Court decided a fun case with a funny title: United States Forest Service v. Cowpasture River Preservation Assn. The facts were quite complicated. But at bottom, the case turned on whether “the Forest Service had authority under the Mineral Leasing Act to grant a natural-gas pipeline right-of-way through lands in the George Washington National Forest traversed by the Appalachian Trail.”

Justice Thomas has this pithy summary, with a delightful pun at the end:

In sum, read in light of basic property law principles, the plain language of the Trails Act and the agreement between the two agencies did not divest the Forest Service of jurisdiction over the lands that the Trail crosses. It gave the Department of the Interior (and by delegation the National Park Service) an easement for the specified and limited purpose of establishing and administering a Trail, but the land itself remained under the jurisdiction of the Forest Service.To restate this conclusion in the parlance of the LeasingAct, the lands that the Trail crosses are still “Federal lands,” 30 U. S. C. §185(a), and the Forest Service may grant a pipeline right-of-way through them—just as it granted a right-of-way for the Trail. Sometimes a complicated regulatory scheme may cause us to miss the forest fort he trees, but at bottom, these cases boil down to a simple proposition: A trail is a trail, and land is land.

Justice Sotomayor, dissented, joined by Justice Kagan. She responded to the majority:

The Court’s analysis of private-law easements is also unconvincing. In the Court’s words, a private-law easementis “a limited privilege” granted to “a nonowner” of land. Ante, at 7; see also ibid. (adding that “the grantor of [an] easement retains ownership” over the land and that “easements are not land, they merely burden land that continuesto be owned by another”). But as the Court recognizes, “theFederal Government owns all lands involved here,” ante, at 8, so private law is inapposite. Precisely because the Government owns all the lands at issue, it makes little sense to ask whether the Government granted itself an easement over its own land under state-law principles. Between agencies of the Federal Government, federal statutory commands, not private-law analogies, govern.

I am not familiar with this statutory scheme. Generally, when a person acquires an easement over his own land, the easement merges into the land, and the person has fee simple. Is this doctrine relevant? If anyone is knowledgeable, please email me.

One final note about Cowpasture. The majority opinion, which was joined by Chief Justice Roberts and Justice Kavanaugh, offered this citation of Whitman v. American Trucking.

Under our precedents, when Congress wishes to “‘alter the fundamental details of a regulatory scheme,'” as respondents contend it did here through delegation, we would expect it to speak with the requisite clarity to place that intent beyond dispute. See Epic Systems Corp. v. Lewis, 584 U. S. ___, ___ (2018) (slip op., at 15) (quoting Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468 (2001)). We will not presume that the act of delegation, rather than clear congressional command, worked this vast expansion of the Park Service’s jurisdiction and significant curtailment of the Forest Service’s express authority to grant pipeline rights-of-way on “lands owned by the UnitedStates.” 30 U. S. C. §185(b).

Bostock v. Clayton County, also decided on Monday, rejected the elephants-in-mouseholes argument in Bostock.

The weighty implications of the employers’ argument from expectations also reveal why they cannot hide behindthe no-elephants-in-mouseholes canon. That canon recognizes that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions.” Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468 (2001). But it has no relevance here. We can’t deny that today’s holding—that employers are prohibited from firing employees on the basis of homosexuality or transgender status—is an elephant. But where’s the mousehole? Title VII’s prohibition of sex discrimination in employment is a major piece of federal civil rights legislation. It is written in starkly broad terms. It has repeatedly produced unexpected applications, at least in the view of those on the receiving end of them. Congress’s key drafting choices—to focus on discrimination against individuals and not merely between groups and to hold employers liable whenever sex is a but-for cause of the plaintiff ‘s injuries—virtually guaranteed that unexpected applications would emerge over time. This elephant has never hidden in a mousehole; it has been standing before us all along.

Apparently, Elephants can’t hide in forests, and never hid in Title VII.

 

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SCOTUS Splits 7-2 Over Federal Easement Law

Outside the muddy waters of the Takings Clause, the Supreme Court seldom decides property disputes. On Monday, the Supreme Court decided a fun case with a funny title: United States Forest Service v. Cowpasture River Preservation Assn. The facts were quite complicated. But at bottom, the case turned on whether “the Forest Service had authority under the Mineral Leasing Act to grant a natural-gas pipeline right-of-way through lands in the George Washington National Forest traversed by the Appalachian Trail.”

Justice Thomas has this pithy summary, with a delightful pun at the end:

In sum, read in light of basic property law principles, the plain language of the Trails Act and the agreement between the two agencies did not divest the Forest Service of jurisdiction over the lands that the Trail crosses. It gave the Department of the Interior (and by delegation the National Park Service) an easement for the specified and limited purpose of establishing and administering a Trail, but the land itself remained under the jurisdiction of the Forest Service.To restate this conclusion in the parlance of the LeasingAct, the lands that the Trail crosses are still “Federal lands,” 30 U. S. C. §185(a), and the Forest Service may grant a pipeline right-of-way through them—just as it granted a right-of-way for the Trail. Sometimes a complicated regulatory scheme may cause us to miss the forest fort he trees, but at bottom, these cases boil down to a simple proposition: A trail is a trail, and land is land.

Justice Sotomayor, dissented, joined by Justice Kagan. She responded to the majority:

The Court’s analysis of private-law easements is also unconvincing. In the Court’s words, a private-law easementis “a limited privilege” granted to “a nonowner” of land. Ante, at 7; see also ibid. (adding that “the grantor of [an] easement retains ownership” over the land and that “easements are not land, they merely burden land that continuesto be owned by another”). But as the Court recognizes, “theFederal Government owns all lands involved here,” ante, at 8, so private law is inapposite. Precisely because the Government owns all the lands at issue, it makes little sense to ask whether the Government granted itself an easement over its own land under state-law principles. Between agencies of the Federal Government, federal statutory commands, not private-law analogies, govern.

I am not familiar with this statutory scheme. Generally, when a person acquires an easement over his own land, the easement merges into the land, and the person has fee simple. Is this doctrine relevant? If anyone is knowledgeable, please email me.

One final note about Cowpasture. The majority opinion, which was joined by Chief Justice Roberts and Justice Kavanaugh, offered this citation of Whitman v. American Trucking.

Under our precedents, when Congress wishes to “‘alter the fundamental details of a regulatory scheme,'” as respondents contend it did here through delegation, we would expect it to speak with the requisite clarity to place that intent beyond dispute. See Epic Systems Corp. v. Lewis, 584 U. S. ___, ___ (2018) (slip op., at 15) (quoting Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468 (2001)). We will not presume that the act of delegation, rather than clear congressional command, worked this vast expansion of the Park Service’s jurisdiction and significant curtailment of the Forest Service’s express authority to grant pipeline rights-of-way on “lands owned by the UnitedStates.” 30 U. S. C. §185(b).

Bostock v. Clayton County, also decided on Monday, rejected the elephants-in-mouseholes argument in Bostock.

The weighty implications of the employers’ argument from expectations also reveal why they cannot hide behindthe no-elephants-in-mouseholes canon. That canon recognizes that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions.” Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468 (2001). But it has no relevance here. We can’t deny that today’s holding—that employers are prohibited from firing employees on the basis of homosexuality or transgender status—is an elephant. But where’s the mousehole? Title VII’s prohibition of sex discrimination in employment is a major piece of federal civil rights legislation. It is written in starkly broad terms. It has repeatedly produced unexpected applications, at least in the view of those on the receiving end of them. Congress’s key drafting choices—to focus on discrimination against individuals and not merely between groups and to hold employers liable whenever sex is a but-for cause of the plaintiff ‘s injuries—virtually guaranteed that unexpected applications would emerge over time. This elephant has never hidden in a mousehole; it has been standing before us all along.

Apparently, Elephants can’t hide in forests, and never hid in Title VII.

 

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Another Round of Coronavirus Lockdowns Might Be Coming. They’ll Be Far Less Enforceable Than Before.

There’s probably no better demonstration of the nonsensical nature of America’s ongoing coronavirus lockdowns than the scene that played out on Monday at a children’s playground in Brooklyn. 

Middleton Playground, in the New York City borough’s Williamsburg neighborhood, had been closed since June 1 for “social distancing violations”—because children were using the playground to, well, play. After repeated violations of the closure order, the city dispatched workers to the playground on Monday to weld the gates shut.

“We had to secure the location and did not have our typical resources available so as a short term fix we welded one of four entrances shut,” a spokesman for the city’s parks department told National Review‘s Zachary Evans.

Residents of the neighborhood soon took matters into their own hands.

This is the state of affairs all across America nearly three months after quarantines, lockdowns, and stay-at-home orders were first imposed to “flatten the curve” of the coronavirus pandemic. The number of COVID-19 cases is rising in many places, prompting fears that reopening plans could be halted or reversed. But public officials—from the ones running the Centers for Disease Control and Prevention to New York City Mayor Bill de Blasio—have largely squandered the public trust that would be necessary to impose another round of shutdowns.

People are understandably frustrated that for months they were forbidden from attendings weddings or funerals for loved ones because officials said gatherings of more than 10 or 25 people were a public health threat—only to see many of those same officials cheer massive protests that have spread through cities in recent weeks.

Thousands of people gathered outside of the Brooklyn Museum for a Black Trans Lives Matter rally on Sunday, but a few dozen kids can’t go to a playground on Monday?

Some officials, including de Blasio, have tried to explain this seeming contradiction away by arguing that the protests matter so much that violations of lockdowns and social distancing should be tolerated. But the relative values of social justice and playtime don’t matter much to the average American, who is now far more likely to roll his or her eyes at the idea that we should modulate our concern about spreading a deadly disease for some social activities but not others.

Of course, the alternative to another set of lockdowns is pretty grim too.

Sure, you can probably expect most civic and state officials to handle things with considerably more finesse than de Blasio. The next round of lockdowns, if they occur, are unlikely to involve literally locking the public out of certain spaces. But that may not matter, now that people have decided to bring bolt-cutters.

FREE MINDS

Police in Albuquerque, New Mexico, will no longer respond to some non-emergency 911 calls under a plan unveiled Monday by Tim Keller, the city’s mayor. Instead, Albuquerque will put together an unarmed civilian public safety department to respond to calls involving “homelessness, addiction, and mental health.”

If such a program had been in place in March, at least one resident of Albuquerque might still be alive today. Valente Acosta-Bustillos was killed by police inside his own home on March 30 during what was supposed to be a routine “wellness check.” Acosta-Bustillos’ daughter had called the police to ask them to check on her dad after he had not shown up to work for several days.

Even without such hideous examples—and there are far too many—of police officers killing the people they are supposed to be helping, Albuquerque’s new policy makes a lot of sense. Police exist to enforce the law, not to serve as frontline social workers. And since any encounter with an armed police officer, no matter how mundane, has the potential to turn violent in an instant, cities should be aiming to reduce how frequently those encounters occur.

FREE MARKETS

The Federal Reserve will begin buying up corporate debt from private corporations in an attempt to reduce those companies’ borrowing costs. The Fed was already buying corporate bonds from companies in some circumstances, but now it will allow itself to purchase the debt of any corporation selling bonds on the open market.

The shift in strategies is meant to address growing worries about the record-high levels of debt on corporate balance sheets. But, as the Associated Press notes, “the Fed’s purchases should hold down corporate bond yields, making it cheaper for companies to borrow.” That’s not a recipe for getting companies to reduce their levels of debt, plus it seems more likely to only further inflate the corporate debt bubble. Whether as a moral hazard or as an act of overt corporate welfare, the Fed’s new policy seems questionable at best.

QUICK HITS

• Some members of Congress benefited from loans that were supposed to help small businesses survive the coronavirus-imposed economic shutdown, and the Trump administration is still refusing to disclose vital information about the program.

• Some governments around the world are asking people to use wearable devices—like smartwatches—to track coronavirus cases, but that’s causing “new unintended consequences for privacy, association, and freedom of expression.”

• North Korea destroyed a building used for diplomatic meetings with South Korean officials. It was not occupied at the time.

• There may not be a Major League Baseball season at all this year, as negotiations between team owners and the players union over a proposed shortened season have soured.

  • Lord Fairfax will haunt your dreams:

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SCOTUS grants a “Motion for reconsideration of order denying leave to proceed in forma pauperis filed by petitioner”

Another post on Monday’s fascinating orders list. (My previous posts here, here, and here).

In October 2019, pro se petitioner Deshay Ford filed a petition for a writ of certiorari and a motion for leave to proceed in forma pauperis (IFP). On January 13, 2020, the Court denied leave to proceed IFP:

The motion of petitioner for leave to proceed in forma pauperis is denied. Petitioner is allowed until February 3, 2020, within which to pay the docketing fee required by Rule 38(a) and to submit a petition in compliance with Rule 33.1 of the Rules of this Court

Nine days later, Ford submitted a motion for reconsideration denying leave to proceed IFP. He wrote:

The Appellant is a poor destitute Appellant who was fired from his job on 12/2/2019 ( Appendix 1 Appendixes 1, December 2,2019, IABA, termination). The Appellant do not have the available Funds to pay the $300.00 Docket fee. The Docker fee has the effect of preventing poor and destitute American Citizens from access the State and U.S. district Courts, and the United States Supreme Court.( 42 ESC: 1981 Access to the Courts).On 1215 The British’s Magna Carter granted to poor English’s citizens their Common Law’s Rights to access to the Royal Court without paying for their rights under the Magna Carter of 1215.

The motion was distributed at the 2/28/20 conference. And the Court took no action until May 26, when the motion was distributed for the 6/11/20 conference.

And on June 15, the Court grants the motion for reconsideration!

Motion for reconsideration of order denying leave to proceed in forma pauperis filed by petitioner GRANTED. The order entered January 13, 2020, is vacated.

I cannot recall ever seeing a motion for reconsideration of an IFP request granted. Indeed, motions for reconsideration are almost always denied.

What happened here? Methinks Justice Sotomayor was behind this move. Ford’s petition has a Gideon’s Trumpet vibe to it. She likely found it sympathetic, even if the case lacked merit. And I’d like to think that this date of the order was symbolic. Ford cited Magna Carta. And Magna Carta was signed at Runymede on June 15, 1215.

Alas, Mr. Ford’s victory was short-lived. Immediately after the Court granted reconsideration, it denied cert. But this decision was a huge victory for IFP petitioners. It should be cited in all future IFP cases.

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The Court Calls for the Views of the Solicitor General in Texas v. California, An Original Jurisdiction Case

One of the few positive developments on the Court’s Monday’s orders list was a CVSG. (My previous posts are here and here). The Court called for the views of the Solicitor General in Texas v. California. No, not the dispute between Texas and California over the Affordable Care Act. This original jurisdiction case challenges California’s interstate “travel ban.” Texas offers this description:

12. In 2016, California’s Legislature enacted A.B. 1887, which prohibits state-funded or state-sponsored travel to a State that, after June 26, 2015, has enacted a law that (1) has the effect of voiding or repealing existing state or local protections against discrimination on the basis of sexual orientation, gender identity, or gender expression; (2) authorizes or requires discrimination against same-sex couples or their families or on the basis of sexual orientation, gender identity, or gender expression; or (3) creates an exemption to antidiscrimination laws to permit discrimination against same-sex couples or their families or on the basis of sexual orientation, gender identity, or gender expression.

13. California’s travel ban expressly targets the citizens and businesses of States, like Texas, that “offer[] more protection for religious freedom” than California believes is required by the First Amendment. A.16. The quintessential example cited by the California Legislature is a law that would protect “a wedding photographer who objected to same-sex marriage” on religious grounds from being forced “to provide photographic services for a same-sex wedding.” A.11; cf. Masterpiece Cakeshop, 138 S. Ct. at 1723.

14. California’s travel ban is grounded in animus towards religion.

…

21. California has so far applied its travel ban to eleven States: Alabama, Iowa, Kansas, Kentucky, Mississippi, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, and Texas.

22. California has targeted each of these States, except Iowa and North Carolina, because they have sought to protect religious freedom.3

Today, the Supreme Court called for the views of the Solicitor General. One of SG Noel Francisco’s last acts in office will be to decide how to handle this case. A brief will be filed at some point before the end of the year. If the administration changes, that brief will probably be withdrawn.

In any event, this case looks quite different after Bostock. 

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Why did the Supreme Court deny certiorari in the California Sanctuary City Case after 13 Relists?

Monday’s order list provides a fascinating opportunity for SCOTUS kremlinology. I previously blogged about the Court’s decision to GVR Andrus v. Texas, rather than grant cert. Here, I will blog about a single line in the list:

19-532 UNITED STATES V. CALIFORNIA, ET AL. The petition for a writ of certiorari is denied. Justice Thomas and Justice Alito would grant the petition for a writ of certiorari.

This case did not involve the Trump Administration’s efforts to withhold certain funding from sanctuary cities. Rather, in this case, then-AG Sessions went on offense: he challenged the constitutionality of California’s sanctuary state laws.

Ilya Shapiro and I wrote about the case in the WSJ. At the time, I predicted that the Supreme Court would rule against the Trump Administration on some, but not all of the claims. And in doing so, the Court could cement certain principles of federalism and the separation of powers–perhaps even with a 9-0 majority. For example, we wrote:

The first challenged statute, styled the California Values Act, limits how state and local officials may cooperate with federal immigration officials. Absent a judicial warrant, law-enforcement agencies in California are forbidden to provide federal authorities with information about an alien’s release date. That prevents federal agents from taking custody of suspects at a secure facility, reducing the likelihood that the suspects will be caught and potentially putting federal officers in dangerous situations.

The Supreme Court held in Arizona v. U.S. (2012), which struck down some provisions of that state’s strict immigration law, that states can’t enact laws that interfere with Congress’s plenary power over immigration. And Mr. Sessions argues that the California Values Act defies a 1996 federal law that bars state and local governments from prohibiting the exchange of “information regarding” an individual’s immigration status.

The California Values Act, however, doesn’t interfere with federal law, because, as the Court recognized in Printz v. U.S. (1997), Congress can’t “commandeer” state officials. It is not a proper exercise of federal power to dictate how state law-enforcement agencies manage their resources and prioritize their missions. California’s policy of noncooperation no doubt makes enforcement more difficult, but it doesn’t constitute obstruction or interference.

Will we get a Supreme Court decision edifying the principles of federalism? Nope. What happened here?

We know that the case was relisted 13 times. John Elwood provided this count:

relisted after the January 10, January 17, March 6, March 20, March 27, April 3, April 17, April 24, May 1, May 15, May 21, May 28 and June 4 conferences.

Over the course of four months, I think Justices Thomas and Alito tried to prevail on their colleagues to grant review. They may have even circulated a dissent from denial of certiorari. Alas, nothing. Efforts to persuade the newest members of the Court, Justices Gorsuch and Kavanaugh, failed.

In the end, AG Sessions’s signature legal case amounted to a cert-denied.

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Another Round of Coronavirus Lockdowns Might Be Coming. They’ll Be Far Less Enforceable Than Before.

There’s probably no better demonstration of the nonsensical nature of America’s ongoing coronavirus lockdowns than the scene that played out on Monday at a children’s playground in Brooklyn. 

Middleton Playground, in the New York City borough’s Williamsburg neighborhood, had been closed since June 1 for “social distancing violations”—because children were using the playground to, well, play. After repeated violations of the closure order, the city dispatched workers to the playground on Monday to weld the gates shut.

“We had to secure the location and did not have our typical resources available so as a short term fix we welded one of four entrances shut,” a spokesman for the city’s parks department told National Review‘s Zachary Evans.

Residents of the neighborhood soon took matters into their own hands.

This is the state of affairs all across America nearly three months after quarantines, lockdowns, and stay-at-home orders were first imposed to “flatten the curve” of the coronavirus pandemic. The number of COVID-19 cases is rising in many places, prompting fears that reopening plans could be halted or reversed. But public officials—from the ones running the Centers for Disease Control and Prevention to New York City Mayor Bill de Blasio—have largely squandered the public trust that would be necessary to impose another round of shutdowns.

People are understandably frustrated that for months they were forbidden from attendings weddings or funerals for loved ones because officials said gatherings of more than 10 or 25 people were a public health threat—only to see many of those same officials cheer massive protests that have spread through cities in recent weeks.

Thousands of people gathered outside of the Brooklyn Museum for a Black Trans Lives Matter rally on Sunday, but a few dozen kids can’t go to a playground on Monday?

Some officials, including de Blasio, have tried to explain this seeming contradiction away by arguing that the protests matter so much that violations of lockdowns and social distancing should be tolerated. But the relative values of social justice and playtime don’t matter much to the average American, who is now far more likely to roll his or her eyes at the idea that we should modulate our concern about spreading a deadly disease for some social activities but not others.

Of course, the alternative to another set of lockdowns is pretty grim too.

Sure, you can probably expect most civic and state officials to handle things with considerably more finesse than de Blasio. The next round of lockdowns, if they occur, are unlikely to involve literally locking the public out of certain spaces. But that may not matter, now that people have decided to bring bolt-cutters.

FREE MINDS

Police in Albuquerque, New Mexico, will no longer respond to some non-emergency 911 calls, under a plan unveiled Monday by Tim Keller, the city’s mayor. Instead, Albuquerque will put together an unarmed civilian public safety department to respond to calls involving “homelessness, addiction, and mental health.”

If such a program had been in place in March, at least one resident of Albuquerque might still be alive today. Valente Acosta-Bustillos was killed by police inside his own home on March 30 during what was supposed to be a routine “wellness check.” Acosta-Bustillos’ daughter had called the police to ask them to check on her dad after he had not shown up to work for several days.

Even without such hideous examples—and there are far too many—of police officers killing the people they are supposed to be helping, Albuquerque’s new policy makes a lot of sense. Police exist to enforce the law, not to serve as frontline social workers. And since any encounter with an armed police officer, no matter how mundane, has the potential to turn violent in an instant, cities should be aiming to reduce how frequently those encounters occur.

FREE MARKETS

The Federal Reserve will begin buying up corporate debt from private corporations in an attempt to reduce those companies’ borrowing costs. The Fed was already buying corporate bonds from companies in some circumstances, but now it will allow itself to purchase the debt of any corporation selling bonds on the open market.

The shift in strategies is meant to address growing worries about the record-high levels of debt on corporate balance sheets. But, as the Associated Press notes, “the Fed’s purchases should hold down corporate bond yields, making it cheaper for companies to borrow.” That’s not a recipe for getting companies to reduce their levels of debt, plus it seems more likely to only further inflate the corporate debt bubble. Whether as a moral hazard or as an act of overt corporate welfare, the Fed’s new policy seems questionable at best.

QUICK HITS

• Some members of Congress benefited from loans that were supposed to help small businesses survive the coronavirus-imposed economic shutdown, and the Trump administration is still refusing to disclose vital information about the program.

• Some governments around the world are asking people to use wearable devices—like smartwatches—to track coronavirus cases, but that’s causing “new unintended consequences for privacy, association, and freedom of expression.“

• North Korea destroyed a building used for diplomatic meetings with South Korean officials. It was not occupied at the time.

• There may not be a Major League Baseball season at all this year, as negotiations between team owners and the players union over a proposed shortened season have soured.

  • Lord Fairfax will haunt your dreams:

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SCOTUS grants a “Motion for reconsideration of order denying leave to proceed in forma pauperis filed by petitioner”

Another post on Monday’s fascinating orders list. (My previous posts here, here, and here).

In October 2019, pro se petitioner Deshay Ford filed a petition for a writ of certiorari and a motion for leave to proceed in forma pauperis (IFP). On January 13, 2020, the Court denied leave to proceed IFP:

The motion of petitioner for leave to proceed in forma pauperis is denied. Petitioner is allowed until February 3, 2020, within which to pay the docketing fee required by Rule 38(a) and to submit a petition in compliance with Rule 33.1 of the Rules of this Court

Nine days later, Ford submitted a motion for reconsideration denying leave to proceed IFP. He wrote:

The Appellant is a poor destitute Appellant who was fired from his job on 12/2/2019 ( Appendix 1 Appendixes 1, December 2,2019, IABA, termination). The Appellant do not have the available Funds to pay the $300.00 Docket fee. The Docker fee has the effect of preventing poor and destitute American Citizens from access the State and U.S. district Courts, and the United States Supreme Court.( 42 ESC: 1981 Access to the Courts).On 1215 The British’s Magna Carter granted to poor English’s citizens their Common Law’s Rights to access to the Royal Court without paying for their rights under the Magna Carter of 1215.

The motion was distributed at the 2/28/20 conference. And the Court took no action until May 26, when the motion was distributed for the 6/11/20 conference.

And on June 15, the Court grants the motion for reconsideration!

Motion for reconsideration of order denying leave to proceed in forma pauperis filed by petitioner GRANTED. The order entered January 13, 2020, is vacated.

I cannot recall ever seeing a motion for reconsideration of an IFP request granted. Indeed, motions for reconsideration are almost always denied.

What happened here? Methinks Justice Sotomayor was behind this move. Ford’s petition has a Gideon’s Trumpet vibe to it. She likely found it sympathetic, even if the case lacked merit. And I’d like to think that this date of the order was symbolic. Ford cited Magna Carta. And Magna Carta was signed at Runymede on June 15, 1215.

Alas, Mr. Ford’s victory was short-lived. Immediately after the Court granted reconsideration, it denied cert. But this decision was a huge victory for IFP petitioners. It should be cited in all future IFP cases.

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