Loonie Tumbles After Unexpectedly Dovish BOC Removes “Appropriate Rate” Language
And another central bank is getting ready to cut rates even as the world is supposedly “rebounding” from the 2019 growth scare.
Moments ago, the Bank of Canada held its overnight rate at 1.75%, in line with expectations, and highlighting the stabilization in the economy and trade but emphasizing the high degree of uncertainty and geopolitical tensions.
However, in a surprisingly dovish turn, the BOC revised its forward guidance, removing the “appropriate” rate language from final paragraph when referring to how Governing Council views maintaining the current level of overnight rate. The language as it now stands is “in determining the future path for the Bank’s policy interest rate, Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast. In assessing incoming data, the Bank will be paying particular attention to developments in consumer spending, the housing market, and business investment.” Here, the BOC dropped the line “Based on developments since October, Governing Council judges it appropriate to maintain the current level of the overnight rate target.”
The central bank also focused on Q4 weakness, noting that “job creation has slowed and indicators of consumer confidence and spending have been unexpectedly soft.”
Amid the dovish reversal, the bank also said growth will be weaker and the output gap wider in the near term than was predicted in October, and as a result its revised its growth estimate lower, now expecting Q4 2019 GDP growth to 0.3%, from 1.3% previously.
In listing the factors behind this slowdown, the BOC said that “the effects of global trade conflicts and elevated uncertainty may have spread beyond investment and exports, contributing to the slowdown in the labour market and weighing on confidence. This may have contributed to more cautious behaviour by households.” The central bank also pointed to “special factors” weighing on growth including strikes, adverse weather, production shutdowns and inventory adjustments.
And in a direct hint that Canada may soon experience its own negative rates, the BOC said that “Canadians have been saving a larger share of their incomes, which could signal increased consumer caution.” Well, we all know how central banks approach the problem of too much savings, and it rhymes with -IRP.
In kneejerk response to this surprisingly dovish statement, the loonie tumbled 100 pips, with the USDCAD kneejerking from 1.3040 to 1.3140.
Green is the buzzword of the day. And it seems everywhere you turn today there are only two topics that matter — Climate Change and impeaching Donald Trump.
Everything else has been put on the back burner, so to speak.
The annual convocation of oiligarchs known as Davos is underway and all that the dutiful media would report on was the intense focus on climate change.
President Trump, for his part, came into that room and did what he always does, step on the metaphoric duck and draw the ire of the globalist glitterati.
But nothing Trump said landed with any weight because The Davos Crowd is in the process of getting rid of America’s Loki anyway.
The Green economy is being touted by everyone now. It was one thing when it began with Alexandria Ocasio-Cortez and her insipid Green New Deal. When it was just her and the Justice Democrats pushing this it could be dismissed as a silly tactic to push the Democratic Party in the U.S. unacceptably left by a bunch of malcontent Bernie Bros.
But when it’s every major central banker in the world, including heads of major Federal Reserve Banks, it is quite another. When Greta Thunberg is speaking at both the United Nations and Davos, you know this is official policy.
And, as good as Mike’s article is it doesn’t get to the heart of the matter.
Because he doesn’t ask why? And, more importantly, why now?
Why is this now such a crisis that we have to alter the shape of the world economy to deal with the potential catastrophe of climate change?
Why won’t these tone deaf oligarchs finally come clean about the reality of the weather? The IPCC is adding the particle forcing data to their 2022 report which will fundamentally change their climate models to incorporate a small part of the real story of the sun’s effect on our weather.
And even that will force through a change in outlook that will make these decades of demonization of carbon dioxide look incredibly silly.
It can’t be because the weather has been so unbearable hot, because it hasn’t. Reality is a harsh mistress as there is record snowfalls all across the northern hemisphere. Bomb cyclones sweeping in to drop feet of snow across the northeastern U.S. that are literally unheard of.
It was a cold, wet spring which delayed plantings. It was an early winter which interrupted harvests. The more the data comes in the more the USDA is altering past crop reports to make the damage not look so bad.
And the corn prices coming out of the U.S. are something you have to pay attention to.
By the way, it isn’t just the U.S. Russia put in a hard export limit on grains for the first half of this year. The last time they did this was because of an incredibly weak harvest.
The priority of the ministry is the food security of the country, so it sees as important that favorable external conditions do not lead to shortages of grain in the domestic market, the ministry said.
Russian grain exports are so far down 18% this season compared with a year ago, and export prices for Russian wheat are currently at this season’s high.
Corn Prices in Chicago are still dormant, well within in recent historical norms. But that is likely because the USDA is still counting on 1.3 billion bushels of corn being salable that in reality isn’t. Keep an eye peeled there.
Ultimately, the market will suss this out but the reality is that the Grand Solar Minimum is here and it’s playing havoc with the weather in ways which are simply not reducible to ‘CO2 bad mkay!’
No matter what PTSD Greta and the Mighty Gore have to say about it.
So, again ask yourself the questions, “Why? And why now?”
It started with new ECB President Christine Lagarde who made the first central bank pronouncement about the need for tackling climate change through Green initiatives fueling monetary policy.
This will require tens of trillions in new spending programs to implement the changes needed to combat this problem head on. After her, it was Mark Carney of the Bank of England last week.
Martin Armstrong, who has also been warning about the colder planet and the grand solar minimum, picked up on Carney’s statement. And he comes close to the truth as to why this push for climate hysterics from the central bankers and The Davos Crowd.
Any investment in “green” companies has resulted in major losses. So there is no logic to what Carney is saying unless it is a cover-up for the pension crisis that is unfolding. Governments have ordered pension funds to buy government debts and then they take interest rates down to negative. The governments, without climate change, are ensuring that pensions will be worthless. It seems that he is using climate change as the excuse for the pension system failure.
But, I think Martin misses the critical point of Carney’s statement. Carney, like Lagarde, the Fed and Kuroda at the Bank of Japan are all in agreement now.
And when central bankers start coordinating their communication worldwide it is because they are getting ready to do something drastic. They know there’s something out there they can’t contend with.
Carney is helping to prep the ground for Lagarde to implement the green new deal as a Keynesian stimulus within the European Union. She will have to override Germany’s opposition to this while pushing for fiscal integration across the European Union.
But that won’t be hard, Germany’s economy is about to bring the house of Europe down.
She was put in charge of the ECB to enforce whatever plan they come up with to deal with tens of trillions in over-priced European sovereign debt that is beginning to rise in yield.
But, I think this goes even further than that. The Green New Deal is also an excuse for how they’re going to sell us on the amount of money they will need to print to deal with the next financial crisis. Last time they could blame it all on the greed of Wall St.
This was then turned into Occupy Wall St. and has given rise to the well-intentioned progressive Left that is rightfully (and righteously) angry that Wall St. was bailed out at the expense of the lower and middle classes, just like Karl Marx described.
It’s all horseshit but so what? What does the truth matter when there’s another generation to destroy when this thing blows up?
They can’t be the blame for it. These are humanity’s saviors after all.
They’ll blame Wall St. again this time and The Davos Crowd will try and use their cover as paragons of wokeness and serving the needs of the people to usher in the next attempt to protect themselves from the laws of economics.
The next crisis is one in sovereign debt. It will be bigger than the central banks.
They have been prepping the narrative for a couple of years now with MMT — Modern Monetary Theory — which is essentially print money until you drop. It comes in various disguises — Universal Basic Income, Earned Income Tax Credits and the Green New Deal.
But unlike the last crisis, the money won’t go to save the banking system but to save the broke governments. And you save governments by inflating away their previous liabilities, in this case the pensions and promises made during the last cycle.
Hence, the appeal to greenness and the spectre of the Climate Change Bogeyman. Honestly, it’s pathetic. But, unfortunately, it’s also working with a lot of people.
So, the answers to the questions I posed earlier are simple. Why now?
Because the crisis is already here and they have to have us prepared for it when it happens. That’s what the repo crisis is. That’s why the Fed is considering opening up their repo window to hedge funds.
It’s why the Trump administration is still complaining about a rising dollar while running a $1.3 trillion deficit and monetizing it through short-term treasury auctions.
It’s why there are more hundreds in circulation than singles. And it’s why we haven’t even gotten started yet.
Moreover, the response to the crisis has to happen before people really begin to question the whole nonsensical runaway greenhouse gas nonsense as they dig themselves out of snowfalls not seen in a hundred years.
When Mark Carney, a central banker, is showing us maps of Florida before and after a 9 foot rise in global sea levels, the whole climate change narrative hasn’t just jumped the shark, it’s carved it up and served it for dinner.
And since they’ve already destroyed one generation of savers, they have convinced the next one that it is good and virtuous to have less, to have lowered expectations, to eat bugs and fake meat and all the rest of it.
Because that is the reality of what’s coming. A colder planet, higher food prices as a percentage of a debased income and total surveillance over your entire life to ensure 100% tax compliance.
The truth is we went broke a helluva lot earlier than when we got woke.
Now the only question is, will you buy what they’re selling or protect yourself?
At an impromptu news conference from the World Economic Forum in Davos, Switzerland, on Wednesday, President Donald Trump threatened trade war with the European Union, fumed about teen activist Greta Thunberg, and offered a questionable analysis of impeachment proceedings. Trump also said he knew about injuries suffered by U.S. troops in Iran’s January 8 airstrike, but announced that no Americans were harmed because he didn’t think their injuries were serious.
The 11 injured service members showed signs of concussions and were, as of last week, being treated for potential traumatic brain injuries.
Trump told reporters this morning that at the time of his initial statements, he “heard they had headaches and a couple of other things.” Asked whether he considered potential brain trauma serious, Trump said he did not hear about this part until several days ago but still did not consider these to be “serious injuries relative to other injuries I’ve seen.”
On Davos itself, Trump touted all the world leaders he was meeting and all the deals he was supposedly making. Which translates roughly to “expect more tariffs.”
The European Union is “frankly, more difficult to do business with than China,” said Trump.
“I wanted to wait till I finished China. I didn’t want to go with China and Europe at the same time,” Trump told CNBC’s Joe Kernen. “Now China’s done, and I met with the new head of the European Commission…And had a great talk. But I said, look, if we don’t get something, I’m going to have to take action, and the action will be a very high tariffs on their cars and other things that come into our country.”
Much of the focus at this morning’s press conference was on impeachment proceedings, which began against Trump in the Senate yesterday. (The president admitted he’s been sneaking a peek at them when he can from Davos.) Congressional Democrats have no case because “we have all the material, they don’t have the material,” Trump said.
He repeated his assertion that his conversation with Ukraine’s president was “perfect” and that the impeachment proceedings are “a hoax.” Asked whether he still thinks climate change is a hoax, however, Trump said, “No, not at all.”
(Perhaps he’s just trying to boost his chances with Time magazine…Asked about a Davos speech by Thunberg—Time’s 2019 person of the year—Trump first asked how old she was and then commented “she beat me out for Time.”)
Trump also suggested that he still feels sorry for former President Bill Clinton over impeachment:
Trump addresses his past attacks on Ken Starr: "I didn't think that Bill Clinton should have been impeached, and I thought it was terrible. … In a certain way I was sticking up for Clinton, Bill Clinton, and I still feel that way." pic.twitter.com/80APl6Rju2
Impeachment to take longer. Senate Majority Leader Mitch McConnell (R–Ky.) announced revised rules for President Donald Trump’s impeachment trial in the Senate, after everyone complained about his initial plan, which would have seen much of the proceedings going on in the middle of the night.
“Both parties will now have 24 hours each over the course of three days to present evidence, as opposed to the two days that were originally allotted,” notesReason‘s Billy Binion. And:
McConnell also altered a rule that would have blocked House evidence unless the Senate voted to admit it. Now all relevant documents will be automatically entered into the record and barred only if the Senate votes to exclude them.
More evidence of corruption in Kamala Harris world:
How seriously did California attorneys general Kamala Harris and Xavier Becerra take the Orange County jailhouse snitch scandal? Four deputies were interviewed during an alleged 4-year investigation. Wild, important story by @JamesQueallyLAT and @melmason: https://t.co/FOG6lvpvRR
US Existing Home Sales Soar Near Fastest Rate In Two Years Amid “Dire Housing Shortage”
After tumbling to the lowest level since June, December existing home sales soared to their highest SAAR since Feb 2018
Existing home sales roise 3.6% MoM in December (rebounding from the 1.7% drop in November and well above the 1.5% jump expected).
At 5.54mm SAAR, this is the highest in almost 2 years.
Source: Bloomberg
The median sales price climbed 7.8% from a year earlier, the most since January 2016, to $274,500 as inventories declined for a seventh-straight month.
Total housing inventory at the end of December totaled 1.40 million units, down 14.6% from November and 8.5% from one year ago (1.53 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from the 3.7-month figure recorded in both November and December 2018. Unsold inventory totals have dropped for seven consecutive months from year-ago levels, taking a toll on home sales.
“America is facing a dire housing shortage condition,” Lawrence Yun, NAR’s chief economist, said at a briefing in Washington.
“We need to build more.”
Looking across 2019, existing-home sales grew at a 5.34 million pace, the same as 2018.
Three of four major regions saw gains from the prior month, led by a 5.7% rise in the Northeast. The Midwest posted a modest decline.
First-time buyers made up 31% of sales, down slightly from 32% the previous month.
As CNBC’s Diana Olick noted, soaring prices are creating fears that eventually, buyers will be “choked out of the market.”
Tulsi Gabbard Sues Hillary Clinton Over ‘Russian Asset’ Remark
Rep. Tulsi Gabbard (D-HI) has filed a lawsuit against Hillary Clinton, accusing the former Secretary of State of defamation for remarks characterizing the Democratic presidential candidate as a Russian asset.
Filed on Wednesday in the US District Court for the Southern District of New York, Gabbard’s attorneys allege that Clinton “smeared” Gabbard’s “political and personal reputation,” according to The Hill.
Tulsi Gabbard is suing Hillary Clinton and the first page of the filing is WILD AF pic.twitter.com/DXHLPfy016
“Tulsi Gabbard is a loyal American civil servant who has also dedicated her life to protecting the safety of all Americans,” said Gabbard’s attorney Brian Dunne in a statement.
“Rep. Gabbard’s presidential campaign continues to gain momentum, but she has seen her political and personal reputation smeared and her candidacy intentionally damaged by Clinton’s malicious and demonstrably false remarks.”
In a podcast released in October, Clinton said she thought Republicans were “grooming” a Democratic presidential candidate for a third-party bid. She also described the candidate as a favorite of the Russians.
Clinton did not name the candidate but it was clear she was speaking about Gabbard.
“They’re also going to do third party. I’m not making any predictions, but I think they’ve got their eye on somebody who’s currently in the Democratic primary and are grooming her to be the third-party candidate,” Clinton said.
“She’s the favorite of the Russians, they have a bunch of sites and bots and other ways of supporting her so far, and that’s assuming Jill Stein will give it up, which she might not, because she’s also a Russian asset. Yeah, she’s a Russian asset, I mean totally. They know they can’t win without a third party candidate,” Clinton said. –The Hill
Rose Mary Knick, the plaintiff in Knick v. Township of Scott, with her lawyers from the Pacific Legal Foundation. (Pacific Legal Foundation).
My forthcoming article, “Overturning a Catch-22 in the Knick of Time: Knick v. Township of Scott and the Doctrine of Precedent” (Fordham Urban Law Journal, symposium issue) is now available for free downloading at the SSRN website. The article is coauthored with Prof. Shelley Ross Saxer of Pepperdine University, a leading property law scholar. Here is the abstract:
The Supreme Court’s decision in Knick v. Township of Scott was an important milestone in takings jurisprudence. But for many observers, it was even more significant because of its potential implications for the doctrine of stare decisis. Knick overruled a key part of a 34-year-old decision, Williamson County Regional Planning Commission v. Hamilton Bank, that had barred most takings cases from getting a hearing in federal court.
Some fear that the Knick decision signals the start of a campaign by the conservative majority on the Court that will lead to the ill-advised overruling of other precedents. In this article, we explain why such fears are misguided, because Knick’s overruling of Williamson County was amply justified under the Supreme Court’s established rules for overruling precedent, and also under leading alternative theories of stare decisis, both originalist and living constitutionalist.
Part I of this Article briefly summarizes the reasons why Williamson County was wrongly decided, and why the Knick Court was justified in overruling it on the merits — at least aside from the doctrine of stare decisis. The purpose of this Article is not to defend Knick’s rejection of Williamson County against those who believe the latter was correctly decided. For present purposes, we assume that Williamson County was indeed wrong, and consider whether the Knick Court should have nonetheless refused to overrule it because of the doctrine of stare decisis. But the reasons why Williamson County was wrong are relevant to assessing the Knick Court’s decision to reverse it rather than keeping it in place out of deference to precedent.
Part II shows that Knick’s overruling of Williamson County was amply justified based on the Supreme Court’s existing criteria for overruling constitutional decisions, which may be called its “precedent on overruling precedent.” It also addresses Justice Elena Kagan’s claim, in her Knick dissent, that the majority’s conclusion requires reversing numerous cases that long predate Knick. Part III explains why the overruling of Williamson County was justified based on leading current originalist theories of precedent advanced by prominent legal scholars, and by Supreme Court Justice Clarence Thomas in his recent concurring opinion in Gamble v. United States. In Part IV, we assess the overruling of Williamson County from the standpoint of prominent modern “living constitutionalist” theories of precedent. Here too, it turns out that overruling was well-founded.
This article focuses on the stare decisis issues raised by Knick. Last summer, I published another article that explores the underlying merits of the decision, aside from the the issue of precedent.
Ironically, the article on Knick and stare decisis turned out to be substantially longer than the the piece focusing on the case as a whole! That’s because it took a lot of space to go over all the different major theories of precedent out there, and explain how they apply to Knick’s overruling of Williamson County.
If nothing else, I learned about the various theories of stare decisis in the process of writing this article. Shelley and I also got to consult with many of the leading scholars working in this field, who generously gave useful advice.
Among the many notable works on the subject of precedent, I recommend recent books by Randy Kozel and Bryan Garner, and this article by Larry Solum. In the Knick article, we also discuss major contributions by many other constitutional law luminaries, including the Volokh Conspiracy’s own Randy Barnett and Will Baude, and judges such as Elena Kagan, Antonin Scalia, and Amy Coney Barrett.
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David Rosenberg explores Recession Arithmetic in today’s Breakfast With Dave. I add a few charts of my own to discuss.
Rosenberg notes “Private fixed investment has declined two quarters in a row as of 2019 Q3. Since 1980, this has only happened twice outside of a recession.”
Here is the chart he presented.
Fixed Investment, Imports, Government Share of GDP
Since 1980 there have been five recessions in the U.S.and only once, after the dotcom bust in 2001, was there a recession that didn’t feature an outright decline in consumption expenditures in at least one quarter. Importantly, even historical comparisons are complicated. The economy has changed over the last 40 years. As an example, in Q4 of 1979, fixed investment was 20% of GDP, while in 2019 it makes up 17%. Meanwhile, imports have expanded from 10% of GDP to 15% and the consumer’s role has risen from 61% to 68% of the economy. All that to say, as the structure of the economy has evolved so too has its susceptibility to risks. The implication is that historical shocks would have different effects today than they did 40 years ago.
So, what similarities exist across time? Well, every recession features a decline in fixed investment (on average -9.8% from the pre-recession period), and an accompanying decline in imports (coincidentally also about -9.5% from the pre-recession period). Given the persistent trade deficit, it’s not surprising that declines in domestic activity would result in a drawdown in imports (i.e. a boost to GDP).
So, what does all of this mean for where we are in the cycle? Private fixed investment has declined two quarters in a row as of 2019 Q3. Since 1980, this has only happened two other times outside of a recession. The first was in the year following the burst of the dotcom bubble, as systemic overinvestment unwound itself over the course of eight quarters. The second was in 2006, as the housing market imploded… and we all know how that story ended.Small sample bias notwithstanding, we can comfortably say that this is not something that should be dismissed offhand.
For now, the consumer has stood tall. Real consumption expenditures contributed 3.0% to GDP in Q2, and 2.1% in Q3. Whether the consumer can keep the economy from tipping into recession remains to be seen.
Dave’s comments got me thinking about the makeup of fixed investment. It does not take much of a slowdown to cause a recession. But there are two components and they do not always move together.
Fixed Investment Year-Over-Year
One thing easily stands out. Housing marked the bottom in 12 of 13 recessions. 2001 was the exception.
Fixed Investment Year-Over-Year Detail
Fixed Investment Tipping Point
We are very close to a tipping point in which residential and nonresidential fixed investment are near the zero line. The above chart shows recessions can happen with fixed investment still positive year-over-year.
At an impromptu news conference from the World Economic Forum in Davos, Switzerland, on Wednesday, President Donald Trump threatened trade war with the European Union, fumed about teen activist Greta Thunberg, and offered a questionable analysis of impeachment proceedings. Trump also said he knew about injuries suffered by U.S. troops in Iran’s January 8 airstrike, but announced that no Americans were harmed because he didn’t think their injuries were serious.
The 11 injured service members showed signs of concussions and were, as of last week, being treated for potential traumatic brain injuries.
Trump told reporters this morning that at the time of his initial statements, he “heard they had headaches and a couple of other things.” Asked whether he considered potential brain trauma serious, Trump said he did not hear about this part until several days ago but still did not consider these to be “serious injuries relative to other injuries I’ve seen.”
On Davos itself, Trump touted all the world leaders he was meeting and all the deals he was supposedly making. Which translates roughly to “expect more tariffs.”
The European Union is “frankly, more difficult to do business with than China,” said Trump.
“I wanted to wait till I finished China. I didn’t want to go with China and Europe at the same time,” Trump told CNBC’s Joe Kernen. “Now China’s done, and I met with the new head of the European Commission…And had a great talk. But I said, look, if we don’t get something, I’m going to have to take action, and the action will be a very high tariffs on their cars and other things that come into our country.”
Much of the focus at this morning’s press conference was on impeachment proceedings, which began against Trump in the Senate yesterday. (The president admitted he’s been sneaking a peek at them when he can from Davos.) Congressional Democrats have no case because “we have all the material, they don’t have the material,” Trump said.
He repeated his assertion that his conversation with Ukraine’s president was “perfect” and that the impeachment proceedings are “a hoax.” Asked whether he still thinks climate change is a hoax, however, Trump said, “No, not at all.”
(Perhaps he’s just trying to boost his chances with Time magazine…Asked about a Davos speech by Thunberg—Time’s 2019 person of the year—Trump first asked how old she was and then commented “she beat me out for Time.”)
Trump also suggested that he still feels sorry for former President Bill Clinton over impeachment:
Trump addresses his past attacks on Ken Starr: "I didn't think that Bill Clinton should have been impeached, and I thought it was terrible. … In a certain way I was sticking up for Clinton, Bill Clinton, and I still feel that way." pic.twitter.com/80APl6Rju2
Impeachment to take longer. Senate Majority Leader Mitch McConnell (R–Ky.) announced revised rules for President Donald Trump’s impeachment trial in the Senate, after everyone complained about his initial plan, which would have seen much of the proceedings going on in the middle of the night.
“Both parties will now have 24 hours each over the course of three days to present evidence, as opposed to the two days that were originally allotted,” notesReason‘s Billy Binion. And:
McConnell also altered a rule that would have blocked House evidence unless the Senate voted to admit it. Now all relevant documents will be automatically entered into the record and barred only if the Senate votes to exclude them.
More evidence of corruption in Kamala Harris world:
How seriously did California attorneys general Kamala Harris and Xavier Becerra take the Orange County jailhouse snitch scandal? Four deputies were interviewed during an alleged 4-year investigation. Wild, important story by @JamesQueallyLAT and @melmason: https://t.co/FOG6lvpvRR
Trump Says Middle-Class Tax Cut To Be Announced Within Three Months
President Trump told The Wall Street Journal on the sidelines of the World Economic Forum in Davos, Switzerland, that the White House plans to unveil a new tax-cut proposal for the middle class in approximately 90 days.
“We’re talking a fairly substantial … middle-class tax cut that’ll be subject to taking back the House and obviously keeping the Senate and keeping the White House,” Trump said. He declined to elaborate more on the specifics of the plan.
Trump has been touting the idea of a middle-class tax cut since the 2018 midterm election, and more recently since the 2020 election year has begun.
White House National Economic Council Director Larry Kudlow said last week that tax cut 2.0 could be unveiled in the summer months.
Kudlow said the White House is considering a payroll tax cut and an expansion of the earned income tax credit. He said the new tax cut could spur consumer growth and help the middle class prosper.
However, Trump told reporters back in 2017 that tax cuts were “going to be one of the great gifts to the middle-income people of this country that they’ve ever gotten for Christmas” – it turned out that tax cuts funded by taxpayer debt allowed mega-corporations to repatriate hundreds of billions of dollars, not for CapEx purposes like what was promised, but rather a massive stock buyback binge.
With the effectiveness of the first tax cut waning, Trump has likely been advised by his economic team that the manufacturing recession has triggered an employment slowdown that could start damaging consumer spending, which is at least 68% of GDP.
The next round of supply-side tax cuts should be viewed as “emergency tax cuts” because the “greatest economy ever” is continuing to decelerate and could be seen as a last-ditch effort by the administration to push off the recession for another couple quarters.
Former vice president Joe Biden’s extraordinary campaign memo this week imploring U.S. news media to reject the allegations surrounding his son Hunter’s work for a Ukrainian natural gas company makes several bold declarations.
The memo by Biden campaign aides Kate Bedingfield and Tony Blinken specifically warned reporters covering the impeachment trial they would be acting as “enablers of misinformation” if they repeated allegations that the former vice president forced the firing of Ukraine’s top prosecutor, who was investigating Burisma Holdings, where Hunter Biden worked as a highly compensated board member.
Biden’s memo argues there is no evidence that the former vice president’s or Hunter Biden’s conduct raised any concern, and that Prosecutor General Viktor Shokin’s investigation was “dormant” when the vice president forced the prosecutor to be fired in Ukraine.
The memo calls the allegation a “conspiracy theory” (and, in full disclosure, blames my reporting for the allegations surfacing last year.)
But the memo omits critical impeachment testimony and other evidence that paint a far different portrait than Biden’s there’s-nothing-to-talk-about-here rebuttal.
Here are the facts, with links to public evidence, so you can decide for yourself.
Fact: Joe Biden admitted to forcing Shokin’s firing in March 2016.
It is irrefutable, and not a conspiracy theory, that Joe Biden bragged in this 2018 speech to a foreign policy group that he threatened in March 2016 to withhold $1 billion in U.S. aid to Kiev if then-Ukraine’s president Petro Poroshenko didn’t immediately fire Shokin.
“I said, ‘You’re not getting the billion.’ I’m going to be leaving here in, I think it was about six hours. I looked at them and said: ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money,’” Biden told the 2018 audience in recounting what he told Poroshenko
“Well, son of a bitch, he got fired. And they put in place someone who was solid at the time,” Biden told the Council on Foreign Relations event.
Fact: Shokin’s prosecutors were actively investigating Burisma when he was fired.
While some news organizations cited by the Biden memo have reported the investigation was “dormant” in March 2016, official files released by the Ukrainian prosecutor general’s office, in fact, show there was substantial investigative activity in the weeks just before Joe Biden forced Shokin’s firing.
The corruption investigations into Burisma and its founder began in 2014. Around the same time, Hunter Biden and his U.S. business partner Devon Archer were added to Burisma’s board, and their Rosemont Seneca Bohais firm began receiving regular $166,666 monthly payments, which totaled nearly $2 million a year. Both banks records seized by the FBI in America and Burisma’s own ledgers in Ukraine confirm these payments.
To put the payments in perspective, the annual amounts paid by Burisma to Hunter Biden’s and Devon Archer’s Rosemont Seneca Bohais firm were 30 times the average median annual household income for everyday Americans.
For a period of time in 2015, those investigations were stalled as Ukraine was creating a new FBI-like law enforcement agency known as the National Anti-Corruption Bureau ((NABU) to investigate endemic corruption in the former Soviet republic.
There was friction between NABU and the prosecutor general’s office for a while. And then in September 2015, then-U.S. Ambassador to Ukraine Geoffrey Pyatt demanded more action in the Burisma investigation. You can read his speech here. Activity ramped up extensively soon after.
In December 2015, the prosecutor’s files show, Shokin’s office transferred the evidence it had gathered against Burisma to NABU for investigation.
In early February 2016, Shokin’s office secured a court order allowing prosecutors to re-seize some of the Burisma founder’s property, including his home and luxury car, as part of the ongoing probe.
Two weeks later, in mid-February 2016, Latvian law enforcement sent this alert to Ukrainian prosecutors flagging several payments from Burisma to American accounts as “suspicious.” The payments included some monies to Hunter Biden’s and Devon Archer’s firm. Latvian authorities recently confirmed it sent the alert.
Shokin told both me and ABC News that just before he was fired under pressure from Joe Biden he also was making plans to interview Hunter Biden.
Fact: Burisma’s lawyers in 2016 were pressing U.S. and Ukrainian authorities to end the corruption investigations.
Burisma’s main U.S. lawyer John Buretta acknowledged in this February 2017 interview with a Ukraine newspaper that the company remained under investigation in 2016, until he negotiated for one case to be dismissed and the other to be settled by payment of a large tax penalty.
Documents released under an open records lawsuit show Burisma legal team was pressuring the State Department in February 2016 to end the corruption allegations against the gas firm and specifically invoked Hunter Biden’s name as part of the campaign. You can read those documents here.
In addition, immediately after Joe Biden succeeded in getting Shokin ousted, Burisma’s lawyers sought to meet with his successor as chief prosecutor to settle the case. Here is the Ukrainian prosecutors’ summary memo of one of their meetings with the firm’s lawyers.
Fact: There is substantial evidence Joe Biden and his office knew about the Burisma probe and his son’s role as a board member.
The New York Times reported in this December 2015 article that the Burisma investigation was ongoing and Hunter Biden’s role in the company was undercutting Joe Biden’s push to fight Ukrainian corruption. The article quoted the vice president’s office.
In addition, Hunter Biden acknowledged in this interview he had discussed his Burisma job with his father on one occasion and that his father responded by saying he hoped the younger Biden knew what he was doing.
Fact: Federal Ethics rules requires government officials to avoid taking policy actions affecting close relatives.
Office of Government Ethics rules require all government officials to recuse themselves from any policy actions that could impact a close relative or cause a reasonable person to see the appearance of a conflict of interest or question their impartiality.
“The impartiality rule requires an employee to consider appearance concerns before participating in a particular matter if someone close to the employee is involved as a party to the matter,” these rules state. “This requirement to refrain from participating (or recuse) is designed to avoid the appearance of favoritism in government decision-making.”
Fact: Multiple State Department officials testified the Bidens’ dealings in Ukraine created the appearance of a conflict of interest.
In House impeachment testimony, Obama-era State Department officials declared the juxtaposition of Joe Biden overseeing Ukraine policy, including the anti-corruption efforts, at the same his son Hunter worked for a Ukraine gas firm under corruption investigation created the appearance of a conflict of interest.
In fact, deputy assistant secretary George Kent said he was so concerned by Burisma’s corrupt reputation that he blocked a project the State Department had with Burisma and tried to warn Joe Biden’s office about the concerns about an apparent conflict of interest.
Likewise, the House Democrats’ star impeachment witness, former U.S. Ambassador Marie Yovanovich, agreed the Bidens’ role in Ukraine created an ethic issue. “I think that it could raise the appearance of a conflict of interest,” she testified. You can read her testimony here.
Fact: Hunter Biden acknowleged he may have gotten his Burisma job solely because of his last name.
In this interview last summer, Hunter Biden said it might have been a “mistake” to serve on the Burisma board and that it was possible he was hired simply because of his proximity to the vice president.
“If your last name wasn’t Biden, do you think you would’ve been asked to be on the board of Burisma?,” a reporter asked.
“I don’t know. I don’t know. Probably not, in retrospect,” Hunter Biden answered. “But that’s — you know — I don’t think that there’s a lot of things that would have happened in my life if my last name wasn’t Biden.”
Fact: Ukraine law enforcement reopened the Burisma investigation in early 2019, well before President Trump mentioned the matter to Ukraine’s new president Vlodymyr Zelensky.
This may be the single biggest under-reported fact in the impeachment scandal: four months before Trump and Zelensky had their infamous phone call, Ukraine law enforcement officials officially reopened their investigation into Burisma and its founder.
The effort began independent of Trump or his lawyer Rudy Giuliani’s legal work. In fact, it was NABU – the very agency Joe Biden and the Obama administration helped start – that recommended in February 2019 to reopen the probe.
NABU director Artem Sytnyk made this announcement that he was recommending a new notice of suspicion be opened to launch the case against Burisma and its founder because of new evidence uncovered by detectives.
Ukrainian officials said that new evidence included records suggesting a possible money laundering scheme dating to 2010 and continuing until 2015.
A month later in March 2019, Deputy Prosecutor General Konstantin Kulyk officially filed this notice of suspicion re-opening the case.
And Reuters recently quoted Ukrainian officials as saying the ongoing probe was expanded to allegations of theft of public funds.
The implications of this timetable are significant to the Trump impeachment trial because the president couldn’t have pressured Ukraine to re-open the investigation in July 2019 when Kiev had already done so on its own, months earlier.
For a complete timeline of all the key events in the Ukraine scandal, you can click here.
