The Struggle Sessions Are Real

It’s early yet, but last week may go down as the week that the journalism industry lost its damn fool mind. You’ve heard (too much!) about the exhaustive WTFery at The New York Times, but here are some other cases making the news:

* Philadelphia Inquirer Editor Stan Wischnowski resigned Saturday after a staff revolt stemming from an opinion piece headlined “Buildings Matter, Too.”

* Variety Editor-in-Chief Claudia Eller was placed on administrative leave after she (a) wrote a self-critical column about not doing enough to diversify her newsroom, then (b) called one of her subsequent you’re-still-not-doing-enough critics “bitter.”

* Several news organizations, after tweeting or sending out messages of support for the protests and/or Black Lives Matter, were met with “name and shame” campaigns for not doing enough.

So provides the backdrop for this week’s Reason Roundtable, featuring Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch. The gang talks about the original (bad) idea behind Tom Cotton’s New York Times op-ed, the federal government’s heavy-handed use of force against D.C. protests, blatant epidemiological hypocrisy, and more media skedaddling than you can shake whipping stick at.

Audio production by Ian Keyser and Regan Taylor.

Music: “Incoming Transition” by The Whole Other.

Relevant links from the show:

James Bennet’s Resignation Proves the Woke Scolds Are Taking Over The New York Times,” by Robby Soave

New York Times Journalists Scared To Have an Op-Ed Page,” by Matt Welch

Tom Cotton Wants to Double Down on the Authoritarianism That Sparked Riots,” by J.D. Tuccille

Defense Secretary Mark Esper Contradicts Trump on Using Military To Quell Protests,” by Christian Britschgi

It Wasn’t Tear Gas. It Was a Gaseous Substance That Causes Tears,” by Elizabeth Nolan Brown

California County Will Allow Outdoor Social Gatherings of 12 People—and Outdoor Protests of 100 People,” by Christian Britschgi

Public Health Experts Have Undermined Their Own Case for the COVID-19 Lockdowns,” by Robby Soave

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Democrats Unveil Policing Reform Bill

Congressional Democrats released wide-ranging police reform legislation today in response to the national outrage over last month’s killing of George Floyd by a Minneapolis police officer.  

The Justice in Policing Act would end qualified immunity, establish a national registry for police misconduct, ban police chokeholds and no-knock raids in some circumstances, and limit the transfer of military equipment to state and local police departments. It would also require federal law enforcement officers to wear body cameras and to have dashboard cameras installed in their vehicles.

“The martyrdom of George Floyd gave the American experience a moment of national anguish as we grieve for the black Americans killed by police brutality today,” House Majority Leader Nancy Pelosi (D–Calif.) said at a Capitol Hill news conference today. “This moment of national anguish is being transformed into a movement of national action as Americans from across the country peacefully protest to demand an end to injustice.”

The protests that erupted after Floyd’s death have given sudden momentum to reforms that criminal justice activists have been trying to advance for years, such as opening up police disciplinary records and getting police out of schools.

Several of the measures in the bill, like curtailing no-knock police raids and qualified immunity—a legal doctrine that shields cops from liability in civil rights lawsuits—have been on libertarians’ wish lists for a long time. But there are questions about just how much some of the bill’s provisions could actually impact day-to-day policing. New York City, for example, banned police chokeholds, but that didn’t stop officers from violating the policy or from largely escaping discipline when they did it.

And Congress has limited power to curtail police unions, one of the biggest impediments to bringing more transparency and accountability to police departments, because they are governed on the state and local levels by “law enforcement officers bills of rights” and collective bargaining agreements.

Civil liberties groups applauded some portions of the bill but criticized provisions that would increase federal funding for state and local law enforcement. The bill would authorize a $100 million grant program for state attorney generals to conduct investigations into systemic civil rights violations at police departments. Another provision authorizes a $750 million grant program for states to investigate and prosecute excessive force incidents.

Kanya Bennett, senior legislative counsel at the American Civil Liberties Union (ACLU), said in a press release that, while the bill “takes significant steps to protect people and ensure accountability against police violence,” it “also provides hundreds of millions more to law enforcement, and for the ACLU, that’s a nonstarter.” 

“While many of the reforms in this bill are laudable and vital, more must be done to change the role of police in our society fundamentally,” Bennet continued. “There can be no more Band-Aid or temporary fixes when it comes to policing, which is why we are calling for divestment from law enforcement agencies and reinvestment into the Black and Brown communities that have been harmed by over policing and mass incarceration. The role of police has to be smaller, more circumscribed, and less funded with taxpayer dollars.”

Several civil rights groups, including the Southern Poverty Law Center (SPLC) and the NAACP, put out statements saying that the bill isn’t perfect but they still support it. Lisa Graybill, deputy legal director for criminal justice reform at SPLC Action, said the Justice in Policing Act “is an overdue step in the right direction.”

The bill will face opposition from the right as well. White House press secretary Kayleigh McEnany said at a press conference today that ending qualified immunity was a “nonstarter” for the Trump administration.

“We should vote on each proposal separately,” Rep. Justin Amash (L–Mich.), who introduced his own bill to end qualified immunity, tweeted. “Massive bills with dozens of topics aren’t serious efforts to change law. They’re messaging bills with no expectation of getting signed. They cram in so much that they’re never written well or reviewed carefully.”

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Federalist Society Online Conference on COVID-19 & the Law

The conference promises to be excellent, with a wide range of views (including appearances by such prominent liberals as Ian Ayres, Dan Farber, Nadine Strossen, and Cass Sunstein, among others); I’m on the last panel, and our own Jonathan Adler is on the second panel.

The Federalist Society announces a major conference on COVID-19 & the Law to take place virtually on June 11-12. The conference will consist of six panels covering a range of legal issues related to the COVID-19 pandemic. Each panel will be available to watch as a webinar and as a live stream. Register now to take part in the webinars!

THURSDAY, JUNE 11

Government vs. Private Decisionmaking
10:00 AM EST

  • Prof. Ian Ayres, William K. Townsend Professor of Law, Yale Law School
  • Prof. David Hyman, Scott K. Ginsburg Professor of Health Law & Policy, Georgetown University
  • Prof. Jason Johnston, Henry L. and Grace Doherty Charitable Foundation Professor of Law; Armistead M. Dobie Professor of Law; and Director, John M. Olin Program in Law and Economics, University of Virginia School of Law
  • Prof. Anup Malani, Lee and Brena Freeman Professor of Law, University of Chicago Law School
  • Moderator: Eugene Meyer, President and CEO, The Federalist Society

Address
11:30 AM EST

  • Hon. Ajit Pai, Chairman, U.S. Federal Communications Commission

Federalism and COVID-19
1:30 PM EST

  • Prof. Jonathan Adler, Johan Verheij Memorial Professor of Law, Director of the Center for Business Law & Regulation, Case Western Reserve University School of Law
  • Prof. Daniel Farber, Sho Sato Professor of Law; Faculty Director, Center for Law, Energy, & the Environment, University of California, Berkeley
  • Karen Harned, Executive Director, National Federation of Independent Business Small Business Legal Center
  • Prof. Roderick M. Hills, William T. Comfort, III Professor of Law, New York University School of Law
  • Moderator: Kay James, President, The Heritage Foundation

Federal Executive Power and COVID-19
3:30 PM EST

  • Hon. C. Boyden Gray, Founding Partner, Boyden Gray & Associates
  • Prof. Daniel B. Rodriguez, Harold Washington Professor of Law, Northwestern University Pritzker School of Law
  • Prof. Lisa Grow Sun, Professor of Law, BYU J. Reuben Clark Law School
  • Moderator: Prof. Gary Lawson, Philip S. Beck Professor of Law, Boston University School of Law

FRIDAY, JUNE 12

COVID-19 and the 2020 Elections
10:00 AM EST

  • Dr. Rachel Kleinfeld, Senior Fellow, Democracy, Conflict, and Governance Program, Carnegie Endowment for International Peace
  • Prof. Michael T. Morley, Assistant Professor, Florida State University College of Law
  • Prof. Richard H. Pildes, Sudler Family Professor of Constitutional Law, New York University School of Law
  • Hon. Bradley A. Smith, Josiah H. Blackmore II/Shirley M. Nault Professor of Law, Capital University Law School
  • Moderator: Hon. R. Patrick DeWine, Associate Justice, Supreme Court of Ohio

Regulation or “Don’t Let a Good Crisis Go to Waste”
1:30 PM EST

  • Prof. Sally Katzen, Professor of Practice and Distinguished Scholar in Residence; Co-Director of the Legislative and Regulatory Process Clinic, New York University School of Law
  • Dr. Roger D. Klein, Faculty Fellow, Center for Law, Science & Innovation, Sandra Day O’Connor College of Law, Arizona State University
  • Prof. Erika Lietzan, Associate Professor of Law, Center for Intellectual Property and Entrepreneurship, University of Missouri School of Law
  • Prof. Paul G. Mahoney, David and Mary Harrison Distinguished Professor of Law, University of Virginia School of Law
  • Prof. Cass Sunstein, Robert Walmsley University Professor, Harvard Law School
  • Moderator: Prof. Susan E. Dudley, Director, GW Regulatory Studies Center & Distinguished Professor of Practice, Trachtenberg School of Public Policy & Public Administration, The George Washington University

Civil Liberties and COVID-19
3:45 PM EST

  • Prof. Julia Mahoney, John S. Battle Professor of Law; Class of 1963 Research Professor in Honor of Graham C. Lilly and Peter W. Low, University of Virginia School of Law
  • Prof. Nadine Strossen, John Marshall Harlan II Professor of Law, Emerita, New York Law School; Former President, American Civil Liberties Union, 1991-2008
  • Prof. Mila Versteeg, Martha Lubin Karsh and Bruce A. Karsh Bicentennial Professor of Law; Director, Human Rights Program; Senior Fellow, Miller Center, University of Virginia School of Law
  • Prof. Eugene Volokh, Gary T. Schwartz Distinguished Professor of Law, UCLA School of Law
  • Moderator: Hon. Christopher C. DeMuth, Distinguished Fellow, Hudson Institute

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Professionalizing Police Hasn’t Worked. Try Privatizing Instead.

The Minneapolis City Council’s plan to dismantle the city’s police department following the death of George Floyd in police custody has some people concerned about how order will be maintained afterward.

It’s a reasonable concern. All too often in public policy, overreaction to a scandal creates its own problems. The flip side of that, though, is tolerating abuse, mismanagement, or incompetence. That’s too common in government.

Police abuse has qualities that make it especially troubling. There’s an asymmetry between an armed police officer and a mostly unarmed civilian population. Since many of us operate with the starting assumption that the police are there to protect us, it’s a particular betrayal when they threaten us instead. And police action may seem arbitrary rather than rules-based.

This abstract truth was made concrete to me last year on a weekend morning when I was driving my 20-year-old, beat-up car through one of Boston’s fanciest suburbs. I turned a corner and suddenly a man in plainclothes was in front of the car waving me toward the curb. He accused me of speeding, flashed a badge, and identified himself as police, and asked me where I was going. At some point in the interaction, I asked if he had a radar gun. He said, “never ask a police officer if he has a radar.” He said I seemed to be reacting very emotionally. I was shaken by the whole thing but never filed a complaint. The whole thing happened in a town where I’m not a resident.

When any government institution loses public confidence, it’s worth asking, what are the accountability mechanisms? In colonial Boston, individuals were elected to one-year terms as constables. Having to face the voters frequently for re-election is one way of creating accountability.

 Like so many other government functions in the progressive era, though, policing was professionalized and depoliticized. Some of this was a sincere effort to reduce corruption and move from patronage to civil service; some of it was caught up in the anti-Catholic, anti-immigrant sentiment of other “reform” and anti-machine politics of the day. A key figure in the professionalizing trend was August Vollmer, who began in 1909 as chief of the Berkeley, California, police department.

During various police scandals over the years, there has been discussion of moving from the model of an appointed police chief or police commissioner to one directly elected by the public, or one accountable to a school-committee-style police commission of members elected by the public. Even frequent direct elections, though, are no guarantee of managerial quality or of public job-approval, to judge by polls of what people think of Congress.

A more radical reform might be privatizing the police. Perhaps the profit motive will create incentives to use technology and scale to innovate in ways that would reduce crime and also reduce abuse. The same way that, say, Amazon and Walmart compete to serve retail customers most efficiently, or ATT and Verizon compete to offer the best cellphone service, police contractors—perhaps even minority-owned or managed-ones—might compete to provide cities with the least crime, the least abuse and misconduct, and the best resident ratings for satisfaction with police services. A risk of that approach is that the private police companies could wind up like defense contractors at their worst—hiring former officials or winning fat contracts with the help of campaign contributions or lobbying expenditures rather than on the basis of quality performance. But even the threat of privatization might help improve accountability for existing government police forces.

It’s also worth exploring whether there are steps short of full privatization that might have similar benefits in terms of competition and choice. Perhaps police reform could borrow a page from education reform and create “charter precincts,” where neighborhoods opt-out of their city’s central police bureaucracy and are allowed flexibility to experiment with different approaches. Successful charter precincts might grow to become charter-management organizations the same way that KIPP or Success Academy or Uncommon Schools charter schools operate multiple sites.

As a cause of death, killings by police, at about 1,000 a year in the U.S., are small in comparison to the numbers dead because of medical errors or “deaths of despair” from alcoholism, drug overdoses, or suicide. There may even be some overlap in cases of “suicide by cop.” No amount of protesting, violent or peaceful, is likely to reduce that toll in the absence of structural reforms that increase accountability, competition, choice, and incentives. The Minneapolis City Council’s action, though it appears drastic, could be a gesture in the right direction.

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Federalist Society Online Conference on COVID-19 & the Law

The conference promises to be excellent, with a wide range of views (including appearances by such prominent liberals as Ian Ayres, Dan Farber, Nadine Strossen, and Cass Sunstein, among others); I’m on the last panel, and our own Jonathan Adler is on the second panel.

The Federalist Society announces a major conference on COVID-19 & the Law to take place virtually on June 11-12. The conference will consist of six panels covering a range of legal issues related to the COVID-19 pandemic. Each panel will be available to watch as a webinar and as a live stream. Register now to take part in the webinars!

THURSDAY, JUNE 11

Government vs. Private Decisionmaking
10:00 AM EST

  • Prof. Ian Ayres, William K. Townsend Professor of Law, Yale Law School
  • Prof. David Hyman, Scott K. Ginsburg Professor of Health Law & Policy, Georgetown University
  • Prof. Jason Johnston, Henry L. and Grace Doherty Charitable Foundation Professor of Law; Armistead M. Dobie Professor of Law; and Director, John M. Olin Program in Law and Economics, University of Virginia School of Law
  • Prof. Anup Malani, Lee and Brena Freeman Professor of Law, University of Chicago Law School
  • Moderator: Eugene Meyer, President and CEO, The Federalist Society

Address
11:30 AM EST

  • Hon. Ajit Pai, Chairman, U.S. Federal Communications Commission

Federalism and COVID-19
1:30 PM EST

  • Prof. Jonathan Adler, Johan Verheij Memorial Professor of Law, Director of the Center for Business Law & Regulation, Case Western Reserve University School of Law
  • Prof. Daniel Farber, Sho Sato Professor of Law; Faculty Director, Center for Law, Energy, & the Environment, University of California, Berkeley
  • Karen Harned, Executive Director, National Federation of Independent Business Small Business Legal Center
  • Prof. Roderick M. Hills, William T. Comfort, III Professor of Law, New York University School of Law
  • Moderator: Kay James, President, The Heritage Foundation

Federal Executive Power and COVID-19
3:30 PM EST

  • Hon. C. Boyden Gray, Founding Partner, Boyden Gray & Associates
  • Prof. Daniel B. Rodriguez, Harold Washington Professor of Law, Northwestern University Pritzker School of Law
  • Prof. Lisa Grow Sun, Professor of Law, BYU J. Reuben Clark Law School
  • Moderator: Prof. Gary Lawson, Philip S. Beck Professor of Law, Boston University School of Law

FRIDAY, JUNE 12

COVID-19 and the 2020 Elections
10:00 AM EST

  • Dr. Rachel Kleinfeld, Senior Fellow, Democracy, Conflict, and Governance Program, Carnegie Endowment for International Peace
  • Prof. Michael T. Morley, Assistant Professor, Florida State University College of Law
  • Prof. Richard H. Pildes, Sudler Family Professor of Constitutional Law, New York University School of Law
  • Hon. Bradley A. Smith, Josiah H. Blackmore II/Shirley M. Nault Professor of Law, Capital University Law School
  • Moderator: Hon. R. Patrick DeWine, Associate Justice, Supreme Court of Ohio

Regulation or “Don’t Let a Good Crisis Go to Waste”
1:30 PM EST

  • Prof. Sally Katzen, Professor of Practice and Distinguished Scholar in Residence; Co-Director of the Legislative and Regulatory Process Clinic, New York University School of Law
  • Dr. Roger D. Klein, Faculty Fellow, Center for Law, Science & Innovation, Sandra Day O’Connor College of Law, Arizona State University
  • Prof. Erika Lietzan, Associate Professor of Law, Center for Intellectual Property and Entrepreneurship, University of Missouri School of Law
  • Prof. Paul G. Mahoney, David and Mary Harrison Distinguished Professor of Law, University of Virginia School of Law
  • Prof. Cass Sunstein, Robert Walmsley University Professor, Harvard Law School
  • Moderator: Prof. Susan E. Dudley, Director, GW Regulatory Studies Center & Distinguished Professor of Practice, Trachtenberg School of Public Policy & Public Administration, The George Washington University

Civil Liberties and COVID-19
3:45 PM EST

  • Prof. Julia Mahoney, John S. Battle Professor of Law; Class of 1963 Research Professor in Honor of Graham C. Lilly and Peter W. Low, University of Virginia School of Law
  • Prof. Nadine Strossen, John Marshall Harlan II Professor of Law, Emerita, New York Law School; Former President, American Civil Liberties Union, 1991-2008
  • Prof. Mila Versteeg, Martha Lubin Karsh and Bruce A. Karsh Bicentennial Professor of Law; Director, Human Rights Program; Senior Fellow, Miller Center, University of Virginia School of Law
  • Prof. Eugene Volokh, Gary T. Schwartz Distinguished Professor of Law, UCLA School of Law
  • Moderator: Hon. Christopher C. DeMuth, Distinguished Fellow, Hudson Institute

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Professionalizing Police Hasn’t Worked. Try Privatizing Instead.

The Minneapolis City Council’s plan to dismantle the city’s police department following the death of George Floyd in police custody has some people concerned about how order will be maintained afterward.

It’s a reasonable concern. All too often in public policy, overreaction to a scandal creates its own problems. The flip side of that, though, is tolerating abuse, mismanagement, or incompetence. That’s too common in government.

Police abuse has qualities that make it especially troubling. There’s an asymmetry between an armed police officer and a mostly unarmed civilian population. Since many of us operate with the starting assumption that the police are there to protect us, it’s a particular betrayal when they threaten us instead. And police action may seem arbitrary rather than rules-based.

This abstract truth was made concrete to me last year on a weekend morning when I was driving my 20-year-old, beat-up car through one of Boston’s fanciest suburbs. I turned a corner and suddenly a man in plainclothes was in front of the car waving me toward the curb. He accused me of speeding, flashed a badge, and identified himself as police, and asked me where I was going. At some point in the interaction, I asked if he had a radar gun. He said, “never ask a police officer if he has a radar.” He said I seemed to be reacting very emotionally. I was shaken by the whole thing but never filed a complaint. The whole thing happened in a town where I’m not a resident.

When any government institution loses public confidence, it’s worth asking, what are the accountability mechanisms? In colonial Boston, individuals were elected to one-year terms as constables. Having to face the voters frequently for re-election is one way of creating accountability.

 Like so many other government functions in the progressive era, though, policing was professionalized and depoliticized. Some of this was a sincere effort to reduce corruption and move from patronage to civil service; some of it was caught up in the anti-Catholic, anti-immigrant sentiment of other “reform” and anti-machine politics of the day. A key figure in the professionalizing trend was August Vollmer, who began in 1909 as chief of the Berkeley, California, police department.

During various police scandals over the years, there has been discussion of moving from the model of an appointed police chief or police commissioner to one directly elected by the public, or one accountable to a school-committee-style police commission of members elected by the public. Even frequent direct elections, though, are no guarantee of managerial quality or of public job-approval, to judge by polls of what people think of Congress.

A more radical reform might be privatizing the police. Perhaps the profit motive will create incentives to use technology and scale to innovate in ways that would reduce crime and also reduce abuse. The same way that, say, Amazon and Walmart compete to serve retail customers most efficiently, or ATT and Verizon compete to offer the best cellphone service, police contractors—perhaps even minority-owned or managed-ones—might compete to provide cities with the least crime, the least abuse and misconduct, and the best resident ratings for satisfaction with police services. A risk of that approach is that the private police companies could wind up like defense contractors at their worst—hiring former officials or winning fat contracts with the help of campaign contributions or lobbying expenditures rather than on the basis of quality performance. But even the threat of privatization might help improve accountability for existing government police forces.

It’s also worth exploring whether there are steps short of full privatization that might have similar benefits in terms of competition and choice. Perhaps police reform could borrow a page from education reform and create “charter precincts,” where neighborhoods opt-out of their city’s central police bureaucracy and are allowed flexibility to experiment with different approaches. Successful charter precincts might grow to become charter-management organizations the same way that KIPP or Success Academy or Uncommon Schools charter schools operate multiple sites.

As a cause of death, killings by police, at about 1,000 a year in the U.S., are small in comparison to the numbers dead because of medical errors or “deaths of despair” from alcoholism, drug overdoses, or suicide. There may even be some overlap in cases of “suicide by cop.” No amount of protesting, violent or peaceful, is likely to reduce that toll in the absence of structural reforms that increase accountability, competition, choice, and incentives. The Minneapolis City Council’s action, though it appears drastic, could be a gesture in the right direction.

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Protesters Want to Defund the Police. Joe Biden Wants to Hire More of Them.

“Defund the police” has become one of the most important mantras for the protesters demanding justice in the wake of George Floyd’s death. Protesters in Minneapolis, for instance, ostracized Mayor Jacob Frey after he admitted that he did not support the full abolition of the police. “Go home, Jacob, go home!” they shouted.

Minneapolis’s city council, unlike its mayor, seems to like the idea. Council members are expected to vote to dismantle the police department and “replace it with a transformative new model of public safety,” according to Council President Lisa Bender. It’s unclear what that would look like, but there are plenty of alternative models out there; municipalities should absolutely seize the moment as an opportunity to make policing less costly, deadly, and indifferent toward people’s rights.

But while many progressives are are now squarely behind the idea of defunding the police, the Democratic presidential nominee is not. Indeed, he wants to give cops more money.

“Vice President Joe Biden does not believe that police should be defunded,” a Biden campaign spokesperson announced in a statement.

On the contrary, Biden’s presidential platform would distribute an additional $300 million in federal grants via the Community Oriented Policing Services (COPS) program, which makes it possible for municipalities all over the country to hire additional police officers. The COPS program was a result of the 1994 crime bill spearheaded by Biden, who then was a senator. It is largely responsible for producing one of the most pernicious trends in modern policing: the rise of cops in schools. As Tyler Koteskey and I observed in a 2017 Reason article, COPS grants have helped place more than 6,000 cops in K–12 institutions.

The unfortunate result, which might have been anticipated, is that school disciplinary matters are increasingly handled by law enforcement rather than counselors, teachers, and principles. This is the school-to-prison pipeline at work, and the Democratic candidate for president wants to increase its budget.

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Amid Small Business Carnage, Fed Expands Eligibility Of Main Street Lending Program

Amid Small Business Carnage, Fed Expands Eligibility Of Main Street Lending Program

Tyler Durden

Mon, 06/08/2020 – 16:23

With stocks recovering all 2020 losses, one would think that the economy is firing on all cylinders. Unfortunately, based on the message just sent out by the Fed, nothing could be further from the truth.

While the market still waits for the Fed to officially start making loans on its Main Street Lending Program, today at 330pm, the Fed announced that it expanded the eligibility criteria for this facility “to allow more small and medium-sized businesses to be able to receive support.” The facility will be open for eligible lenders “soon,” while the burden on banks that create the loans would be lessened.

Changes to the eligibility criteria include:

  • Lowering the minimum loan size for certain loans to $250,000 from $500,000;
  • Increasing the maximum loan size for all facilities;
  • Increasing the term of each loan option to five years, from four years;
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
  • Raising the Reserve Bank’s participation to 95% for all loans.

In short: America’s small businesses – and we mean really small business, those which desperately need as little as 250K to survive yet can’t find willing bank lenders – are in such dire shape that only the Fed has the willingness to step in and bail them out as banks refuse to take on the credit risk.

To juice bank interest in participating, going forward they will be required to hold only 5% of the loans on their balance sheet for all three facilities, far less than the 15% they had to hold previously.

“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Powell said in the statement explaining the expansion. “I am confident the changes we are making will improve the ability of the Main Street Lending Program to support employment during this difficult period.”

And here is the Fed again confusing solvency with liquidity, and assuming that just because business incur billions more in debt they will somehow become more viable or retain workers. Unfortunately, as we discussed on Friday, this simply won’t happen because whereas US corporations have already issued over $1.1 trillion in IG debt, the bulk of its has been retainer (or is being used to fund dividends and buybacks), even as millions of workers are being let go.

The Fed also unveiled that The Main Street program will be open for lender registration soon, and the central bank will start buying loans “shortly afterward.” The three facilities are backed by a $75 billion investment from the Treasury Department that’s part of the $454 billion allocated by Congress in the CARES Act for the Fed’s emergency-lending programs during the coronavirus pandemic. Expect the entire investment to be wiped out over the next few years as all the companies that take out the Fed-guaranteed loans file for bankruptcy anyway.

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

Quant-Quake Continues: Momentum Melts Down As Stocks & Bonds Rally

Quant-Quake Continues: Momentum Melts Down As Stocks & Bonds Rally

Tyler Durden

Mon, 06/08/2020 – 16:02

On the day that NBER announces the US Economy officially entered recession in February, S&P scrambled green year-to-date…

Nasdaq 100 and Composite both made new record highs…

Source: Bloomberg

Because fun-durr-mentals…

Source: Bloomberg

But while the surface of the ocean of wealth creation looks “calm” and v-shaped, it is a turmoiling disaster down below as a major quant quake is under way as inflation bets are resurgent.

All momo gains YTD are now erased as the momentum factor tumbles 6 days in a row (this is the biggest 6-day drop on record)

Source: Bloomberg

And markets are the most ‘euphoric’ since 2002:

“We are concerned that thoughtful approaches are being overwhelmed by the need to at least keep pace with price moves,” Citi’s strategists said.

“People are ignoring joblessness, trade friction, social unrest, and risks that loom including possible Covid-19 reinfections, the end of bonus supplemental unemployment checks and the upcoming elections.”

Still, who cares – you can buy 5 shares of HTZ and 10x your money in a day (more below)…

Crazy indeed…

David Rosenberg (@EconguyRosie)

It’s the mother of all ‘money illusion’ rallies. In 3 months, the Fed juiced up M2 by a cool $2.5T, and the S&P 500 mkt cap surged dollar for dollar. Who needs earnings? Who needs productivity? Who even needs buybacks anymore? MMT arrived early and with a Republican in office!!”

Drunkenmiller, 2015

“Earnings don’t move the overall market… focus on the central banks and focus on the movement of liquidity”

Druckenmiler, 2020

“I would also say I underestimated how many red lines, and how far, the Fed would go,”

On the day, Small Caps dominated and while Nasdaq lagged it was still up another 0.5% (note the market never really accelerated until Europe opened and dived at the US open only to be insta-bid right after)…

VIX was higher on the day as it appears the call-buying is accelerating as stocks surge (never ends well)…

Source: Bloomberg

The S&P is the most overbought since Jan…

Source: Bloomberg

“Most Shorted” stocks are up 12 of the last 13 days (and 7 days in a row)

Source: Bloomberg

Treasury yields fell for the first time in 6 days (except 2Y which rose 2bps as the yield curve flattened notably today)…

Source: Bloomberg

10Y Yields are back below 90bps (down around 9bps from Friday’s highs)…

Source: Bloomberg

Interestingly the bond rally today was against the trend in the momo/value move…

Source: Bloomberg

The dollar fell for the 8th day in a row – the longest streak of losses since 2011

Source: Bloomberg

After nine straight days of higher highs, EURUSD made a lower high today breaking the longest streak since Oct 2010…

Source: Bloomberg

Notably EURUSD has recoupled with its EU and US rates differential…

Source: Bloomberg

Cryptos were largely flat since Friday – managing to come back from a decent selling effort yesterday…

Source: Bloomberg

Oil prices dared to fall today after Goldman suggested things were not quite as rosy as investors hoped (and hedge fund positioning was reduced)…it seems $40 was a limiter…

Gold futures scrambled back above $1700 after Friday’s payrolls puke…

Silver was also higher on the day – but underperformed gold – as it pushed back up towards $18…

And finally, there’s this utter farce.

Bankrupt HTZ stock is up 681% in the last 3 days and 1450% from its bankruptcy-announcement lows…

And CHK (also bankrupt)…

“Broken markets” indeed!!

via ZeroHedge News https://ift.tt/2UoKbpx Tyler Durden

Canadian Man Charged With Smuggling Drugs In Submarine, Found Unconscious In Detroit River

Canadian Man Charged With Smuggling Drugs In Submarine, Found Unconscious In Detroit River

Tyler Durden

Mon, 06/08/2020 – 15:50

A Canadian man was pulled unconscious out of the Detroit River Friday attached to 265 pounds of marijuana, Detroit News reported

The Windsor man, named Glen Richard Mousseau,49, is facing drug possession, smuggling, and immigration charges filed in the US federal court. 

Federal agents found Mousseau floating and unconscious east of Celeron Island on Friday morning. h/t Detroit News 

Mousseau was arrested one month earlier, where he confessed to authorities about his international smuggling operation using a submarine to shuttle drugs and cash between Detroit and Canada, according to a Department of Homeland Security affidavit filed in federal court. 

“During that interview, Mousseau stated that he directs a smuggling organization that moves money and narcotics between Canada and the United States,” Homeland Security Special Agent Christopher Leonard wrote in an affidavit filed in court.

The affidavit revealed an investigation of Mousseau started last month when he was pulled over in a traffic stop with nearly $100,000 in cash on him. After Homeland Security agents interviewed him, he admitted to illegally entering the country via a smuggling operation along the international border. 

It was also noted that Mousseau sent GPS coordinates to people, who then load and also retrieve cash or drugs from a “submersible watercraft” that would cross back and forth from the US to Canada. He also admitted to being the owner of a submarine seized by federal agents on April 23 near the Zug Island shoreline. 

“Mousseau stated that he provides GPS coordinates to an individual in Canada, who traverses the river using a submersible watercraft,” the agent wrote. “Mousseau would then send the contraband or currency and his associate back across the river.”

Mousseau was released from custody on the condition that he would remain at the Baymont by Wyndham Flat Rock hotel during the investigation. The filing said he disappeared shortly after his stay at the hotel on May 22, leaving his belongings behind.

And it appears he went back to work, shuttling cash and drugs across the border when federal agents found him floating unconscious Friday on the Detroit River with “approximately 265 pounds of suspected marijuana,” the affidavit said. 

“While approaching the floating bundles, agents observed a man, later identified as Mousseau, unconscious in the water,” Leonard wrote.

Mousseau is due in court for a detention hearing next week.

via ZeroHedge News https://ift.tt/37etBht Tyler Durden