What It’s Like To Work in the Portland Jail During the George Floyd Protests

reason-justice

On the first night of large-scale protests in Portland, Oregon, over the killing of George Floyd in Minneapolis, Jennifer Styles (who we granted anonymity so that she could speak freely about the situation at her workplace) was working the graveyard shift at the Multnomah County Justice Center, which houses the headquarters of the Portland Police Bureau and one of the city’s two county jails. It was May 29 and the 28-year veteran of law enforcement was alone in the basement’s booking and reception area when the fire alarms started going off.

Not being able to see outside, Styles switched on the news. The front of the Justice Center was on fire, a fact confirmed when friends immediately started to text, asking about her safety. By then smoke was pumping through the building’s ventilation system.

“I was in a secure part of the jail but I had civilian co-workers I was talking to in another area that was not secure,” she says, including people who worked as nurses and counselors and support staff for the jail. “Those people are not trained on confrontation. They’re not trained on how to deescalate. They’re not trained on how to fight people and protect themselves.”

Styles stayed on the phone with civilian staff, working out what to tell them if they needed to escape, weighing the possibility that running into a mass of the people attacking the jail would put them in additional danger. Then Styles heard the sound of breaking glass: the Justice Center’s big first floor windows were coming down. 

“You could hear the glass cracking and shattering,” she says. “At that point, the rioters were in.” 

Alone in the basement, Styles listened to what was happening overhead. “You could hear [rioters] throwing stuff. They were tipping over all the copiers. They were picking up computers and throwing them across the room,” she says. “And you could hear yelling, and it was very hard to distinguish if the yelling was from staff or if it was the rioters.”

She considered whether her coworkers were being beaten. They were not. That first night, they made it to the basement, where, until the ventilation system reversed, “we all got to breathe in toxic fumes,” she says. “The next week, they set dumpsters on fire, so then we got to inhale and have burning lungs from construction dumpsters.”

Such was the determination and demonstrativeness of Portland protesters that they continued to direct rage at the Justice Center for weeks, ripping down temporary fencing, sandbagging doors, and shooting fireworks inside. 

Then, on June 26 Trump signed an executive order to protect national monuments and federal buildings. Suddenly, the protesters had a new target: the Mark O. Hatfield United States Courthouse, directly north of the Justice Center. 

The presence of federal law enforcement has been widely decried by local and state officials, and understood to have only escalated tensions between law enforcement and citizenry. However, it’s also given those who want to commit violence against a symbol an even bigger one, which has conversely taken pressure off the Justice Center.

“Up until the feds showed up, it didn’t feel like anybody cared,” says Styles. “Most staff felt like we were left out to be eaten, because we never knew when the politicians were going to say, ‘You know what? You’re all on your own.’ That’s what it’s felt like, like [Portland Mayor Ted] Wheeler and [Oregon Governor Kate] Brown have completely hung us out to dry. They’re more and more anti-police. They’re basically tying [the hands] of all the tactical teams, as to what they’re allowed to do to protect themselves and to protect us. But you know, there’s no rationale to, ‘Hey, go ahead and spend millions of dollars destroying these buildings, while blocking human beings inside and setting things on fire so they potentially can’t escape.'”

While Styles might feel more secure with the arrival of federal police, the consensus in the city is that federal forces have served only to embolden peaceful protestors who, if they did not before feel sympathy for the more violent factions among them, do now. They’re appalled at the violence federal agents are leveling at people, at the lack of accountability, at the rank overreaction. 

Styles does not see it this way. She thinks those committing violence have been allowed to get away with attacking buildings and monuments because they’ve become accustomed to a police force that has been told not to arrest protestors, the definition of which refracts depending on where you stand on the political spectrum.

“We hear on a regular basis, ‘We’re just protesting! We haven’t done anything criminal; we’re not doing anything violent,'” she says. “Tearing apart all the fencing, blocking people—mothers, fathers, husbands, whatever—in a building and then trying to either smoke us out or set us on fire? And all they’re going to get is a slap on the wrist. Their lives and their rights are more valuable than ours.”

As far as Styles can tell, there are two types of people attacking the buildings every night; committed radicals, and assorted hooligans.

“The fact is that these people, the agitators, are very organized,” she says. “You catch them at night live-streaming on either Twitch or YouTube or Periscope, and you can hear them talking about what tools they need to bring the next night so they can dismantle this or that block and make it harder for the officers to get out.”

They are also getting bolder, staging people at the Justice Center’s parking ramp, writing down or taking photos of staff license plates and, via DMV records, posting employees’ home addresses, she says. 

“All I can do is put on my bright lights and hope they cannot see it,” says Styles.

The attacks have destroyed all of the Justice Center’s street level windows, and the office on the first floor had to be gutted. Half the staff has relocated to the other county jail (which has thus far escaped destruction), while those who remain at the Justice Center learn to navigate the nightly tensions.

It’s not for everyone. 

“It takes a psychological toll, when we are told on a daily basis that we should all die, that everybody hates us,” says Styles. “We’re grown adults, but when you start hearing that on a regular basis, and you see the news that we should be defunded and all cops are bastards and all pigs should die, you get to the point where officers are quitting and resigning and retiring early.”

Styles is staying. She’s set to retire in two years, and also, she likes her job, albeit it requires her to “hear stories of horrific things” that people do to each other.

“I have to talk to these people who have committed the crimes, and they have no concern over other human beings,” she says. “And then I see all these people out here demolishing our building and wanting to kill officers. And it’s the same thing; they have no concern over human life. How is that any different?”

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Trump’s Political Opportunism Has Shredded Federalism

Donald Trump, Mike Pompeo

The left has long regarded federalism as a total sham whose real purpose, since slavery, has been to maintain white dominance, not limit federal power over states. And President Donald Trump—aided by his administration’s enablers—is doing everything in his power to prove leftists right. Even before the pandemic, but certainly after it, Trump has toggled between invoking and dissing states rights depending on what would go down best with his predominantly white base.

Trump got elected on an anti-immigration platform that played on nativist fears. Its central pillar consisted of attacks on so-called sanctuary cities that don’t fully cooperate with federal efforts to eject undocumented immigrants, the vast majority of whom happen to be Latino. And true to his word, Trump has left no stone unturned to go after these jurisdictions in his four years in office. He has made multiple attempts, including via executive order, to strip federal aid from such cities. Courts have repeatedly rebuffed his efforts—but that didn’t stop him from threatening again in April to even deny pandemic-related aid to these cities if they didn’t fall in line with his immigration enforcement priorities.

Nor has President Trump shown much appreciation for state autonomy when it comes to reopening the economy in the midst of the pandemic. He claims to have “ultimate authority” to force states to end their lockdown. If a liberal president made such statements to, say, deal with a climate emergency, Republicans would have conniptions. Yet when Trump invoked it, Vice President Mike Pence, a religious conservative who built his own failed run for the presidency in 2016 around a “renewed vision of federalism” to push back against federal diktats on gay marriage and other cultural issues, insisted that there was a “long history” demonstrating that “the authority of the president of the United States during national emergencies is unquestionably plenary.”(Plenary power means that the president can act without regard to constitutional constraints.) To be sure, governors who are prolonging the lockdowns without factoring in economic costs deserve pushback. But that hardly means that a president lacking granular knowledge of local disease spread should usurp local control, something that Pence of all people ought to understand.

Likewise, Trump wants to withhold federal education dollars from school districts that are reluctant to physically reopen. He was originally proposing to strip them of existing federal funds but that is unlikely to pass legal muster. Hence, as with sanctuary cities, he is now is toying with tying new coronavirus relief funding to the reopening of schools. Trump hasn’t ruled out a veto on the trillion-dollar “stimulus” package currently in the works if it fails to make school aid conditional.

Does Pence, who, as governor of Indiana, refused the Obama administration’s $80 million federal pre-school grant, claiming it would result in “federal intrusion,” have any qualms about Trump’s intrusions? Nope! He’s all on board and has pledged to explore ways to “give states a strong incentive and encouragement to get kids back to school.”

But such soft extensions of Uncle Sam’s powers of the purse in violation of principles of federalism pale in comparison with the hard police power that Trump is deploying in cities experiencing protests against police brutality.

To burnish his bona fides as a “law and order” president, Trump dispatched federal agents wearing tactical gear driving unmarked vehicles to scoop up and detain protesters in Portland, Oregon, who Trump has branded as “violent anarchists.” His initial pretext was to safeguard federal buildings from “vandalism” (which initially mostly consisted of graffiti). But on July 11, as per The Dispatch’s Charlotte Lawson, a “rapid deployment team” cracked down on a largely peaceful crowd with “brutal” force deploying tear gas, batons, and rubber bullets—cracking the skull of one protester. This has only escalated the situation, inciting even more—and less peaceful—protests, prompting local and state lawmakers to plead with Trump to call off his troops and to sue him.

The leader of a party that champions federalism and respect for states’ rights would listen to them. Trump, however, is doubling down. He is threatening to send more federal forces to Chicago and other cities “run by very liberal Democrats.”

This is reminiscent of the tactics that President Richard Nixon, another law and order president whose political strategy Trump seems to be channeling, deployed to court his Southern white base. In fact, notes Foundation for Research and Equal Opportunity’s Jonathan Blank, federal SWAT teams are a 1970s invention whose express purpose was to quell white fear of racial unrest.

But its not just Trump’s assaults on federalism that are calculated to rally his base, his invocations of it are too.

Masks are deeply unpopular with Trump supporters and have become yet another flashpoint in the culture wars. Until recently, Trump was refusing to wear one himself much less use the bully pulpit to encourage their use despite their widely accepted efficacy in stopping the spread of the disease. So when asked why he didn’t support a national mask mandate he said he wants to “leave it up to the governors” and that “people need a certain freedom.”

This would of course be a perfectly respectable answer—just because something is desirable does not mean it should be imposed!— if Trump weren’t simultaneously cracking heads of protesters in violation of their freedoms and strong-arming states to do his bidding on other issues. Under the circumstances, however, it is not just hypocritical but a dangerous mockery of individual freedom and states’ rights.

Liberals never had any use for federalism and have always been perfectly willing to deploy federal power to advance their tyranny of good intention. But Trump’s brazen and self-serving inconsistency will make it all but impossible for genuine federalists to rely on this principle to push back against such tyranny.

They can blame Trump when the left turns around and accuses them of being mere protectors of white power.

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The Beginning Of The End For Gas Flaring

The Beginning Of The End For Gas Flaring

Tyler Durden

Thu, 07/23/2020 – 13:17

Submitted by Irina Slav of OilPrice.com,

The Texas Railroad Commission last month surprised many: it said it would tighten the rules for gas flaring at oil fields later this year. Texas is certainly not the state with the best environmental policies record for obvious reasons. After all, it is the largest single producer of oil in the United States. But gas flaring literally wastes billions of dollars. 

Perhaps the time has come to stop the waste.

Every year, the oil and gas industry flares some 140 billion cubic meters of natural gas. The reasons vary: at oil fields, gas is flared when there are no pipelines to transport it to a collection or storage hub; at refineries, some gases need to be flared to avoid explosions.

And there is more. Many oil producers have no idea how much gas they are wasting through flaring because they have no monitoring systems, Mark Davis, CEO of Capterio – a company that provides flaring elimination services–said. They also don’t see the gas they flare as a potential revenue stream, mostly because in order to start capturing it, they need to make an additional investment, which is often deemed uneconomical. And finally, Davis says, there are capex constraints. A lot of oil producers, especially in the United States, simply cannot afford to stop flaring, at least on their own.

Yet these billions of cubic meters of unwanted gas costs money, even if the global gas market is currently oversaturated. Therefore, flaring gas means losing money. It also means higher emissions of both methane—which is what most of the flared gas is made up of—and carbon dioxide.

Methane is drawing more and more attention from climate change activists and other organizations because of its powerful greenhouse properties. As a result, the energy industry has come under stricter scrutiny, with many companies voluntarily announcing plans to keep a closer eye on how much methane they produce in the process of oil and gas extraction. Exxon, Chevron, and BP were among the first to announce methane monitoring systems.

“When you look at the future, the Achilles heel of the gas industry is the methane emissions,” the head of the International Energy Agency, Fatih Birol, said

last year. “And the good news is for the industry, this can be fixed by existing technology, only using the best practices. And I can tell you that many companies are taking this seriously.”

They have no other choice but to take it seriously in an environment fraught with mistrust of the industry and accusations of driving climate change with their business. Shareholder pressure alone has proven to be a major driving force behind the change, at least for the public players in the field. And now, the pressure to end flaring may increase, after it became clear what a powerful effect on flaring-related emissions oil production cuts had.

In the United States, in the Permian alone, carbon dioxide emissions from gas flaring are set to drop by half during the second half of this year thanks to the well shut-ins producers were forced to implement in response to the oil demand—and price—crash from earlier this year, according to Rystad Energy. In addition to the shut-ins, there will be fewer new wells brought online in the second half of the year, which would also contribute to the decline in flare-related emissions.

This would be a decline following a plateau of flaring-related emissions.. After last year, gas flaring in the Permian hit an all-time high of 661 million cu ft of gas, it declined slightly to 500 million cu ft towards the end of the year and stayed there until the oil price crash. Now, if the Texas Railroad Commission does tighten rules for flaring, the decline would likely accelerate as E&Ps look for other ways to deal with the waste gas, which, by the way, in 2018 alone cost Texas oil and gas producers almost $750 million.

“The oil and gas industry has been undergoing fundamental change over the past several years, transforming from a cash-inundated juggernaut to an unstable, declining player that the State of Texas depends upon for its financial health,” said the authors of the report that calculated how much Texas had lost from flaring.

“In this context, the RRC’s duty to address waste in oil and gas production is not only a legal requirement but also a practical imperative that is becoming more and more critical for the financial future of Texas,” the Institute for Energy Economics and Financial Analysis said.

It’s not just money that is wasted, either. The World Bank, which has launched a “Zero Routine Flaring by 2030” initiative, has calculated that the amount of gas flared annually could generate as much as 750 billion kWh of electricity. This is more than Africa’s total consumption. While the WB notes that not all flared gas can be used for electricity generation, there are other things one can do with it, such as reinject it into oil wells to stimulate production.

There are also purely practical considerations regarding flaring. Flaring in the U.S., counterintuitive as it may seem, is low, Capterio’s Davis told Oilprice.com. Flaring in some large OPEC producers, on the other hand, is very high. And in addition to wasting all this money and opportunities, it can literally damage equipment if the company flaring does not pay enough attention. Add this to the reasons why ending flaring is good for the industry.

But times right now are challenging and an increase in oil well yields, for example, is hardly a good reason to capture associated gas instead of flaring it. Capex constraints have increased significantly as shale producers struggle to survive. Yet pressure is increasing from both environmental groups and government agencies, and, importantly, from energy investors.

“We cannot continue to waste this much natural gas and allow the practice of flaring to tarnish the reputation of our state’s thriving energy sector to the general public and investors on Wall Street,” the chairman of the Texas RRC said after the announcement of the planned flaring caps.

Investors have always had the swing vote in oil and gas. This time, their vote may well mark the first step towards ending a decades-old practice of wasting energy and money in a win-win situation.

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Beijing Plans To Shutter US Consulate In China In Retaliation For Houston Mission Closure

Beijing Plans To Shutter US Consulate In China In Retaliation For Houston Mission Closure

Tyler Durden

Thu, 07/23/2020 – 13:01

China is preparing to unveil its promised retaliation against the US over the Trump Administration’s decision to close China’s Houston consulate, a diplomatic mission that Sen. Marco Rubio once described as “a nest of spies”.

In keeping with the promise, first published in the Global Times, that Beijing would inflict “real pain” on the US in its response to the closure of the Houston consulate, Editor Hu Xijin warned that China’s decision – which would involve the closure of at least one US diplomatic mission (though likely not the one in Wuhan, as Hu dismissed that idea yesterday).

Stocks slid on the news…

….while yuan traded offshore also weakened.

Hu also warned about “serious consequences” for the US. And this was before WSJ published leaked prepared remarks from a speech by Secretary of State Mike Pompeo that he’s set to give later today.

Earlier today, a spokesman for China’s Foreign Ministry accused Washington of breaking down the “friendship bridge” uniting the world’s two largest economies. Washington’s decision to shutter the consulate – the US is giving Chinese personnel 72 hours to leave – prompted officials to take to the roof in a flurry of document-burning that caught the attention of local authorities. Beijing later claimed that its embassy in Washington and people who work there had been threatened.

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Pompeo To Essentially Call For ‘A People’s Uprising’ In Communist China

Pompeo To Essentially Call For ‘A People’s Uprising’ In Communist China

Tyler Durden

Thu, 07/23/2020 – 12:50

Secretary of State Mike Pompeo is about to apply the Syria-Iran-Venezuela model to China.

But unlike these countries, which in recent years have seen US-backed covert proxy war operations attempt to foment ‘mass uprisings’ leading to regime change, it’s likely to produce little effect on the ground, other than further enraging Beijing.

Via The Washington Times

The WSJ, which has seen a copy of the State Department speech to be delivered Thursday afternoon, describes that it more or less calls for a people’s uprising in Communist-run China

Mr. Pompeo says Chinese leader Xi Jinping is a “true believer in a bankrupt totalitarian ideology.” Mr. Pompeo stops shy of explicitly calling for regime change, urging allied countries and the people of China to work with the U.S. to change the Communist Party’s behavior.

And more:

The Communist Party “fears the Chinese people’s honest opinions more than any foreign foe,” Mr. Pompeo plans to say in the speech at the Richard Nixon Presidential Library and Museum. The U.S. “must also engage and empower the Chinese people,” Mr. Pompeo says, according to the draft.

The speech is entitled “Communist China and the Free World’s Future” and promises to be the most fiery yet, after a series of top officials as well as senators like Marco Rubio, have lambasted China’s theft of trade secrets and coronavirus research.

Pompeo also recently vowed in an interview, “Look, the American people are not going to allow our economic work, our talent to be stolen by the Chinese Communist Party.”

After this week the FBI said the Chinese government is acting like “an organized criminal syndicate” for widespread cyber theft and hacking of American trade secrets as well as coronavirus research, State Department spokesperson Morgan Ortagus said earlier in the day Thursday it’s estimated that China stole at least $1 billion total in research from the United States.

Amazingly, stocks have thus far ignored the growing all-out diplomatic war between Washington and Beijing, but that could change by the day’s end, depending perhaps on just what is layed out in the Secretary of State’s impeding address.

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Miners Can’t Keep Up With Gold’s Breakneck Rally

Miners Can’t Keep Up With Gold’s Breakneck Rally

Tyler Durden

Thu, 07/23/2020 – 12:30

By Michael Msika, macro commentator at Bloomberg

Gold prices have been rising since March, and the rally still has legs as the Covid-19 pandemic, dovish policies, a weaker dollar and potential inflation all bode well for the metal. But while prices are getting close to record highs, miners of the precious metal are still far away from their 2011 highs, which means there could be room for a catch-up rally in the sector.

Gold miners have outperformed during this year’s market rout, and have continued to climb during the recovery.  Meanwhile, escalating tensions between the U.S. and China are adding to the case for the haven.

“Both fundamentals and positioning look aligned for gold miners to shoot higher,” Societe Generale SA strategists led by Sophie Huynh say, adding that gold and gold miners “have a very temporary strong relationship whenever powerful market shifts are underway.” The strategists note that unlike bullion, the miners are still far from 2011 levels, but with anticipation of a new mini-cycle, the stocks could offer a way to boost portfolios as “embedded call options” on the metal, while providing a hedge against inflation.

“The environment is still looking very good for gold and gold miners,” Amundi Asset Management fund manager Arnaud du Plessis wrote earlier this month, arguing that central banks are staying on full alert as the resurgence of Covid-19 in some parts of the world is creating fears of a second wave.

Analysts are upbeat on bullion, with Citigroup forecasting prices to reach $2,000 in the next few months. The broker has upgraded Fresnillo Plc this week and reiterated its top buy rating on Polymetal International Plc.

M&A could be an additional driver for gold miners, as historically such global activity in the sector accelerates when the metal’s price is buoyant, says Bank of America analyst Michael Jalonen. In fact, deals heated up in the second quarter with 12 transactions announced, the highest quarterly total since 2012, with a total transaction value of $2.86 billion, nearly double that in the first quarter, he says.

Gold prices have been boosted as rising inflation expectations pushed real yields to new lows, but central banks’ demand has also been strong, according to the Invesco Sovereign Management Study. Some 4.8% of total central bank reserve portfolios are now alloted to gold, up from 4.2% in 2019, and almost half of those increased allocations made with a view to replace negative yielding debt.

The recent price action still pushes toward caution and Goldman Sachs Group strategists warn that the S&P 500 Index and gold have become more positively correlated owing to their link to real yields, suggesting lower diversification benefits, they say.

A move significantly higher for gold toward $3,000 an ounce, as suggested by economist David Rosenberg in March, is “a possibility but seems unlikely,” says Paul Jackson, global head of asset allocation research at Invesco. That’s because the path for such an advance would mean a loss of confidence in central banks and the monetary system, and would likely rely on a dramatic further weakening of the global economy and deeper declines in real yields, he adds.

 

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China Stole At Least $1 Billion In Trade Secrets & Research From US: State Dept

China Stole At Least $1 Billion In Trade Secrets & Research From US: State Dept

Tyler Durden

Thu, 07/23/2020 – 12:05

After this week the FBI said the Chinese government is acting like “an organized criminal syndicate” for widespread cyber theft and hacking of American trade secrets as well as coronavirus research, State Department spokesperson Morgan Ortagus said on Thursday it’s estimated that China stole at least $1 billion total in research from the United States.

She further identified the Chinese consulate in Houston, which the US has ordered closed and to “cease all operations and events,” as being “the epicenter” of the alleged research theft.

China’s PLA file image, AFP/Getty

Mike Pompeo is expected to further address the matter this morning, as well as possibly the search for a Chinese military researcher in California wanted by the FBI, but who subsequently was given safe harbor in the Chinese consulate in San Francisco.  

An angered Beijing has vowed to issue reciprocal measures in the wake of the Houston consulate closure. 

But China’s foreign ministry has been vowing such a response also in the wake of human rights abuse related sanctions the Trump administrations rolled out earlier this month.

Nothing significant has yet to materialize, however, as it appears Beijing is looking for an off-ramp amid the intense Washington pressure campaign. So far it remains at the level of serious counter-threats:

Meanwhile, all of this is just in time for a major gathering for China’s top decision-making body

“…scheduled for the end of this month, it will be closely watched by economists and analysts keen on sussing out signals from the top Chinese leadership over what Beijing will do next, after the nation saw surprising economic growth in the second quarter.

At the mid-year meeting of the 25-member Politburo of the ruling Communist Party, President Xi Jinping is expected to set the tone for future economic policies in the second half of the year and even beyond.”

Recall that previously foreign ministry spokesman Zhao Lijian promised that “In response to the wrongful move by the US, China has decided to take reciprocal action against institutions and individuals who have acted egregiously on Xinjiang affairs.”

Thus we could finally see what these big measures are following the Politburo meeting soon to take place by close of this month.

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It’s Time To Rethink Asset Correlations In Era Of QE

It’s Time To Rethink Asset Correlations In Era Of QE

Tyler Durden

Thu, 07/23/2020 – 11:45

By Laura Cooper, macro strategist at Bloomberg

A flood of money is distorting traditional relationships between stocks, bonds and FX, and leaves investors with no choice but to rethink long-standing asset correlations. The growing adoption of quantitative easing as the policy tool of choice has increased the average balance sheet of major central banks fourfold in the past decade. Global liquidity, as measured by M2 money supply, ballooned to more than $88 trillion.

This clearly changes the way financial assets respond to policy measures. For instance, balance sheet expansion is more correlated, and statistically significant, with equities in this cycle compared with past cycles.

The MSCI All-World equity index returned an annualized 12% when the aggregate balance sheet of 12 major central banks expanded while posting losses when it stopped growing. The S&P 500 showed similar trends, with advances of 14% and 8%, respectively.

In FX, the thesis that currency depreciation plagues countries with the fastest balance sheet growth is being tested. The decade-long negative correlation between the U.S. Dollar Index and the Fed balance sheet is being challenged with the number of G-10 central banks adopting QE doubling since the global financial crisis.

Three-year rolling correlations show a breakdown between balance sheet growth and trade-weighted indexes for the euro, dollar, and yen – currencies of countries that leveraged QE during the GFC.

Negative correlations with the greenback are strongest for currencies backed by fresh bond purchasing programs, even if balance sheet expansion is outpaced by the Fed.

Bonds’ response to central bank measures is also shifting. Beyond the obvious suppression of yields, they are also exhibiting diminishing marginal returns from policy measures.

Ten-year government bond yields declined 11bps on average in developed economies and 43bps in emerging markets three days after 21 central banks first announced QE during the pandemic. The impact was much smaller for sovereign yields where central banks had relied on bond purchases back in the GFC era, according to the National Bureau of Economic Research.

With consensus forecasts tilting toward more QE this year, asset correlations as investors know it could permanently change. Some of the shifts to consider include the implications of an estimated $1 trillion bond glut; what the effective monetization of sovereign debt means for government spending; the longer-term distortions around the zombification of the economy, and moral hazard as the health crisis passes.

But the greatest distortion may be that an abundance of liquidity hasn’t resulted in inflation, partly because the velocity of money has dropped to record lows. Should the demand shock prove less severe, supply constraints and labor market scarring can bring about an elusive rise in prices.

Yet any return of inflation would be in the context of asset classes that have been transformed and distorted by a flood of stimulus. In this new regime, investors will have to rethink their response to price pressures, as well as other macro drivers.

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Congress Debates Next Round Of Direct Stimulus Checks

Congress Debates Next Round Of Direct Stimulus Checks

Tyler Durden

Thu, 07/23/2020 – 11:25

As negotiations continue in Washington DC over the next coronavirus relief package, Republicans and Democrats have shifted their focus to the next round of direct stimulus payments.

While Democrats are looking to maintain the same income limits required to receive aid, Republicans are arguing for lower limits.

In March, the CARES Act established that individuals with incomes of up to $75,000 and married couples making up to $150,000 would qualify for the full amount of $1,200 or $2,400 respectively. Individuals making over $99,000 and couples with no children who make over $198,000 annually are excluded from receiving payments.

GOP Senate Majority Leader Mitch McConnell of Kentucky wants that lowered, saying in a statement earlier this week “I think the people that have been hit the hardest are people who make about $40,000 or less.”

House Speaker Nancy Pelosi (D-CA) slammed McConnell’s suggestion, saying “I think families making over $40,000 probably need assistance … depending on their family situation.”

It’s unclear how committed Republicans are to lowering the income limits, and what exactly a lower ceiling would look like. But GOP lawmakers and the White House have indicated that they want to focus coronavirus relief efforts on those who have been most affected by the pandemic and that they want to limit the total price tag of the next coronavirus bill.

Treasury Secretary Steven Mnuchin said Monday that Republicans are using a $1 trillion price tag for the overall package as their starting point. The Joint Committee on Taxation estimated that the first round of payments would lower federal revenue by nearly $300 billion, so a second round of payments that is identical in scope to the first would account for a significant percentage of Republicans’ desired total cost. –The Hill

Conservative and Democratic experts are similarly divided on direct payments.

According to The Hill, the right-leaning National Taxpayers Union EVP Brandon Arnold arguest that “it’s definitely a step in the right direction to lower the income threshold,” as it makes no sense to give money to people who don’t need it.

Former Obama Treasury Department economist and current Eercore ISI employee Ernie Tedeschi disagrees, saying that he doesn’t see a good economic reason to curtail the income limits.

He said that the first round of payments “was already well-targeted at lower- and middle-income families” and that these families are likely to quickly spend the money.

Tedeschi analyzed a scenario in which individuals making up to $40,000 and married couples making up to $80,000 were eligible for the full payment amounts, and the phase-out rate was the same as with the first round of payments. He estimated that in this situation, 20 million fewer families would get payments than did under the first round, and many families who still did receive payments would get smaller ones. He also said that payments with these income limits would cost about $60 billion less than payments with the same limits as the first round, and argued that that amount of savings is insignificant in the context of a big stimulus bill. –The Hill

Meanwhile, while ‘economists and tax professionals across the ideological spectrum’ may have praised the IRS for issuing the vast majority of checks from the March stimulus, some people are still waiting on their money – including many low-income taxpayers who aren’t required to file tax returns, and don’t receive various Social Security, Supplemental Security Income, veterans benefits, or Railroad Retirement benefits.

On Tuesday, IRS Commissioner Charles Rettig asked tax professionals to help the agency deliver payments to people for whom it has no information.

“The underserved communities here need help,” he said.

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Trump’s Political Opportunism Has Shredded Federalism

Donald Trump, Mike Pompeo

The left has long regarded federalism as a total sham whose real purpose, since slavery, has been to maintain white dominance, not limit federal power over states. And President Donald Trump—aided by his administration’s enablers—is doing everything in his power to prove leftists right. Even before the pandemic, but certainly after it, Trump has toggled between invoking and dissing states rights depending on what would go down best with his predominantly white base.

Trump got elected on an anti-immigration platform that played on nativist fears. Its central pillar consisted of attacks on so-called sanctuary cities that don’t fully cooperate with federal efforts to eject undocumented immigrants, the vast majority of whom happen to be Latino. And true to his word, Trump has left no stone unturned to go after these jurisdictions in his four years in office. He has made multiple attempts, including via executive order, to strip federal aid from such cities. Courts have repeatedly rebuffed his efforts—but that didn’t stop him from threatening again in April to even deny pandemic-related aid to these cities if they didn’t fall in line with his immigration enforcement priorities.

Nor has President Trump shown much appreciation for state autonomy when it comes to reopening the economy in the midst of the pandemic. He claims to have “ultimate authority” to force states to end their lockdown. If a liberal president made such statements to, say, deal with a climate emergency, Republicans would have conniptions. Yet when Trump invoked it, Vice President Mike Pence, a religious conservative who built his own failed run for the presidency in 2016 around a “renewed vision of federalism” to push back against federal diktats on gay marriage and other cultural issues, insisted that there was a “long history” demonstrating that “the authority of the president of the United States during national emergencies is unquestionably plenary.”(Plenary power means that the president can act without regard to constitutional constraints.) To be sure, governors who are prolonging the lockdowns without factoring in economic costs deserve pushback. But that hardly means that a president lacking granular knowledge of local disease spread should usurp local control, something that Pence of all people ought to understand.

Likewise, Trump wants to withhold federal education dollars from school districts that are reluctant to physically reopen. He was originally proposing to strip them of existing federal funds but that is unlikely to pass legal muster. Hence, as with sanctuary cities, he is now is toying with tying new coronavirus relief funding to the reopening of schools. Trump hasn’t ruled out a veto on the trillion-dollar “stimulus” package currently in the works if it fails to make school aid conditional.

Does Pence, who, as governor of Indiana, refused the Obama administration’s $80 million federal pre-school grant, claiming it would result in “federal intrusion,” have any qualms about Trump’s intrusions? Nope! He’s all on board and has pledged to explore ways to “give states a strong incentive and encouragement to get kids back to school.”

But such soft extensions of Uncle Sam’s powers of the purse in violation of principles of federalism pale in comparison with the hard police power that Trump is deploying in cities experiencing protests against police brutality.

To burnish his bona fides as a “law and order” president, Trump dispatched federal agents wearing tactical gear driving unmarked vehicles to scoop up and detain protesters in Portland, Oregon, who Trump has branded as “violent anarchists.” His initial pretext was to safeguard federal buildings from “vandalism” (which initially mostly consisted of graffiti). But on July 11, as per The Dispatch’s Charlotte Lawson, a “rapid deployment team” cracked down on a largely peaceful crowd with “brutal” force deploying tear gas, batons, and rubber bullets—cracking the skull of one protester. This has only escalated the situation, inciting even more—and less peaceful—protests, prompting local and state lawmakers to plead with Trump to call off his troops and to sue him.

The leader of a party that champions federalism and respect for states’ rights would listen to them. Trump, however, is doubling down. He is threatening to send more federal forces to Chicago and other cities “run by very liberal Democrats.”

This is reminiscent of the tactics that President Richard Nixon, another law and order president whose political strategy Trump seems to be channeling, deployed to court his Southern white base. In fact, notes Foundation for Research and Equal Opportunity’s Jonathan Blank, federal SWAT teams are a 1970s invention whose express purpose was to quell white fear of racial unrest.

But its not just Trump’s assaults on federalism that are calculated to rally his base, his invocations of it are too.

Masks are deeply unpopular with Trump supporters and have become yet another flashpoint in the culture wars. Until recently, Trump was refusing to wear one himself much less use the bully pulpit to encourage their use despite their widely accepted efficacy in stopping the spread of the disease. So when asked why he didn’t support a national mask mandate he said he wants to “leave it up to the governors” and that “people need a certain freedom.”

This would of course be a perfectly respectable answer—just because something is desirable does not mean it should be imposed!— if Trump weren’t simultaneously cracking heads of protesters in violation of their freedoms and strong-arming states to do his bidding on other issues. Under the circumstances, however, it is not just hypocritical but a dangerous mockery of individual freedom and states’ rights.

Liberals never had any use for federalism and have always been perfectly willing to deploy federal power to advance their tyranny of good intention. But Trump’s brazen and self-serving inconsistency will make it all but impossible for genuine federalists to rely on this principle to push back against such tyranny.

They can blame Trump when the left turns around and accuses them of being mere protectors of white power.

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