Month: October 2021

Taiwan is expressing outrage after China flew a total 38 military aircraft inside the island’s Air Defense Identification Zone on Friday. In a Saturday statement Taiwan Premier Su Tseng-chang blasted China as having been “wantonly engaged in military aggression” which is “damaging regional peace”.

The Friday flyovers came in two separate incursions, which happened on China’s ‘National Day’ which marked the establishment of the communist People’s Republic of China on October 1, 1949. Initially Taiwan’s defense ministry said 25 total jets breached its air defense identification zone Friday (ADIZ) in the first incident.

The self-ruled island scramble air patrols and additionally put its anti-air missile defenses on high alert. Later into the evening, 13 more were recorded inside the ADIZ in a separate breach, totaling a record-smashing 38 Chinese aircraft.

Oct. 1 wasn’t a good day. The #PLAAF flew 38 warplanes into #Taiwan‘s ADIZ, making it the largest number of daily sorties on record. Threatening? Of course. It’s strange the #PRC doesn’t bother faking excuses anymore. JW

(📸 via @MoNDefense) pic.twitter.com/U2fHUwV5uK

— 外交部 Ministry of Foreign Affairs, ROC (Taiwan) 🇹🇼 (@MOFA_Taiwan) October 2, 2021

Prior to the ROC premier’s Saturday statement, Taiwan Foreign Minister Joseph Wu said in a Friday tweet:

“Oct. 1 wasn’t a good day. The PLAAF flew 38 warplanes into Taiwan’s ADIZ, making it the largest number of daily sorties on record. Threatening? Of course. It’s strange the PRC doesn’t bother faking excuses anymore.”

Both Chinese aerial formations were sent through contested airspace near the disputed Patras islands, as The Hill describes based on official statements: 

Taiwan’s defense ministry said that on Friday night another round of Chinese military aircraft flew toward Taiwan, including 10 J-16 fighter jets, two H-6 bombers and one KJ-500 early warning aircraft. According to Reuters, those planes flew around the Bashi Channel.

Previously the record number of aircraft to breach the Taiwan ADIZ stood at 25, which had happened on a couple of occasions, with the first last April.

These threatening PLA incursions have only caused Taipei to double down on increased military spending, as well as its willingness to receive weapons from Washington.

For example Taiwan’s defense ministry said in a statement a week ago that “In the face of severe threats from the enemy, the nation’s military is actively engaged in military building and preparation work, and it is urgent to obtain mature and rapid mass production weapons and equipment in a short period of time.” 

By Ryan Fitzmaurice, senior commodity strategist at Rabobank

Summary:

• A confluence of bullish factors propelled oil prices to new multi-year highs this week

• The Chinese government has reportedly given state-owned energy companies a directive to secure winter energy supplies at all costs in response to recent shortages

• The last time oil prices were this high was back in early October 2018, right before prices crashed in the fourth quarter of that year, although the setup is much different this time

Panic buying

Spot oil prices continued their ascent this week, setting new multi-year highs in the process as a confluence of factors worked to bid up nearby futures. This recent show of strength is largely inline with our expectations and notably, oil prices have shrugged off news of a Chinese SPR release, a stronger US dollar, and a risk-off event with relative ease, continuing higher unabated.

Moreover, China appears to have made an abrupt and key policy change with respect to their commodity markets approach. To that end, recent reports are indicating that the central government there has given state-owned energy companies a directive to secure winter energy supplies at any and all costs. As many are aware, commodity inflation is soaring and pressuring large importers and particularly China, and at the same time, supply shortages are becoming more and more frequent across the globe. Up until now though, China was more focused on trying to pressure commodity and oil prices lower by releasing strategic reserves and tightening import licenses, however, things have changed. Now the plan is to hoard all available supplies no matter the cost, to support continued economic growth, especially in a cold winter scenario.

This is a potential game-changer for energy markets and is likely to kick off a panic buying spree such as we saw in toilet paper and other household items in the early days of the pandemic and even more recently in the UK’s ongoing supply chain crisis. Further to that end, the oil markets already have the herd of systematic traders on the bid-side of the market, as well as inflation-driven macro flows, and with plenty of room for those positions to grow. In addition to the speculative interest, the world’s biggest commodity importer is now going on a historic buying spree. As such, this buying is a strong tailwind for oil, as supply certainty trumps price in the near-term.

This time is different

The last time oil prices were this high was back in early October 2018, right before prices crashed in the fourth quarter of that year. At the time, we were bearish on oil prices as the speculative “long” oil trade was extremely crowded with money managers holding the largest position on record with net exposure reaching an impressive 1.08 million contracts between the ICE Brent and NYMEX WTI crude oil benchmarks at the peak. Furthermore, the macro backdrop was bearish in 2018 with Chinese equity markets registering ytd losses of more than 20% in October of that year. On the supply-side, OPEC+ had much less pricing power back then as the US shale drillers were still in aggressive growth mode. On top of that, and as many market participants will remember, the US surprised the oil market by issuing temporary oil sanction waivers to Iran in an effort to pressure prices lower. The ploy ultimately sent the market into a free-fall, in large part due to the extreme “long” positioning that had to be unwound in short order.

Fast forward to today though, and the backdrop couldn’t be more different and the same is true of our bullish outlook this time around. As for fundamentals, OPEC+ has much more pricing power now and is in full control of the supply-side given US production is well off the pre-pandemic highs with much slower growth expected in the coming years as ESG investor pressures and local court rulings stifle production growth from the shale drillers and oil majors. On the demand side, we can now throw price insensitive Chinese buying into the equation as well. On the macro front, an inflationary backdrop has taken a strong hold, resulting in significant money flows into commodity index products in the first half of the year.

This is a trend we fully expect to continue into 2022 as asset managers and institutional money play catch up and increase commodity allocations albeit on a  lag.

Finally, on the positioning side of markets, the “long” oil trade remains far from “crowded” by many metrics. In fact, the current net position held at money managers sits well below the highs of 2018 at just 610k contracts, so nearly 500mb off the highs. This is perhaps the most important aspect as speculators have plenty of dry powder at hand to bid the market higher, especially in light of the recent buying directive out of China coupled with tremendous amounts of central bank liquidity flushing through global financial markets. As such, we are viewing this as a rare setup for oil markets where fundamentals and quantitative signals are bullish, the macro backdrop for commodities is as strong as its been in over a decade, and speculators are underinvested.

Looking Forward

Looking forward, we see scope for a potential bullish OPEC+ surprise at next week’s supply meeting, as we explained here. Beyond that though, we are viewing the recent directive out of China to secure energy supplies at all costs, as very bullish for oil and commodity markets in the months ahead. Furthermore, this new policy has the potential to trigger panic buying in physical markets, which will likely spill over into financial markets as institutional money chases returns.

The tension between parents and American school-board members has worsened since we first reported that members of the boards were quitting en masse over “toxic” parents opposing masks, vaccine mandates and CRT.

And according to the National School Boards Association, an organization that represents school board members, the risks of violence breaking out involving a parent and a school-board member have intensified to such a degree that the organization is asking the federal government to start providing security to board members and teachers to protect them from “terrorist” parents.

Terrorists?

The organization made its demands in a letter to President Biden, signed by NSBA President Viola Garcia and Interim Executive Director and CEO Chip Slaven. They called on Biden to personally use his executive authority to mobilize the FBI and other federal agents to guard school officials, according to the Daily Mail.

“The National School Boards Association (NSBA) respectfully asks for federal law enforcement and other assistance to deal with the growing number of threats of violence and acts of intimidation occurring across the nation,” the letter to Biden begins.

The letter also mentions “threats of actual acts of violence”” against school staffers alleging that “angry mobs” have hindered their ability to hold school board meetings, because of reported outbursts from ‘extremist’ parents irate over vaccine and mask mandates being pressured upon their students in order for them to go to school.

Let’s get this straight: In an era when school shootings are seen as a constant threat, these people want security guards…for the teachers?

“As these threats and acts of violence have become more prevalent,” the org asserts in the note, “NSBA respectfully asks that a joint collaboration among federal law enforcement agencies, state and local law enforcement, and with public school officials be undertaken to focus on these threats.”

It adds that the threats are “impacting the delivery of educational services to students and families,” and also cites several examples of disruptions at school board meetings around the country.

The rest of the letter mostly pleaded with the president to put the proper “safeguards in place” and that this is a “critical time,” before asking for “immediate assistance” in the form of federal agents playing security guard.

“There also must be safeguards in place to protect public schools and dedicated education leaders as they do their jobs,’ the note asserts, then labeling the outraged parents showing up at school board meetings across the county as right-winged radicals.”

“As the threats grow and news of extremist hate organizations showing up at school board meetings is being reported, this is a critical time for a proactive approach to deal with this difficult issue,” the statement reads.

Federal resources could help “investigate, intercept, and prevent the current threats and acts of violence against our public school officials.”

As if to try and curry favor with the president, the note goes on to praise the Biden Administration and the president’s “leadership to end the proliferation of COVID in our communities and our school districts.”

The thing is, now that California has ordered mandatory vaccination for its students, and other states are set to follow through, President Biden has the perfect excuse to authorize something like this, if he was so inclined.

Authored by Grace Curley via SpectatorWorld.com,

The rule-makers are not as concerned with medicine, science or health as they purport to be…

At the beginning of the coronavirus pandemic, first responders were the toast of the town. Most of us appreciated that while we binge-watched Tiger King in our sweatpants and attempted to make sourdough bread from scratch, not everyone was lazily locking down.

Nurses, doctors and healthcare professionals were on the frontlines of the fight, taking on a virus the world knew little about. This sacrifice did not go unnoticed.

Americans proudly stuck signs on their front lawns that read ‘thank you first responders!’ McDonald’s gave out free ‘thank you meals’ to those who were helping fight COVID-19. Dr Anthony Fauci wasn’t the only one who made the TIME 100 List last year. The magazine also dubbed healthcare workers 2020’s ‘Guardians of the Year’.

‘On the front line against COVID-19, the world’s healthcare workers displayed the best of humanity — selflessness, compassion, stamina, courage — while protecting as much of it as they could,’ the fawning piece read.

Companies like Google, Dove and Adidas (to name but a few) produced commercials focused on celebrating first responders for their courage and bravery. In a time of division and frustration, the gratitude for productive and resilient members of our society was refreshing and well-deserved.

Sadly, something has quickly shifted.

Those who just one year ago were celebrated are now being vilified. The architects of this drastic rebrand? The ruling elite.

In New York, Gov. Kathy Hochul announced Saturday that she would call in the National Guard to replace healthcare workers who did not meet Monday’s vaccination deadline.

Dr Marty Makary, a professor of surgery at Johns Hopkins, tweeted in response to the story, ‘Swapping out experienced nurses with nat guard who are not familiar with a hospital’s systems, local ways of doing things & emerg protocols has risks. Recognize natural imm, instead of demonizing our heroes who put their lives on the line and got COVID.’

He is right — Hochul is creating a nightmare for hospitals.

Bringing new employees into the fold is tricky in any job — let alone in the medical field. Hochul is eliminating a number of skilled, willing workers at hospitals that desperately need them — all in the pursuit of making a point.

If Joe Biden’s ‘righteous’ drone strike in Afghanistan showed us anything, it is that innocent people often pay a high price for  politically motivated PR stunts.

The fact that some of the most fervent and outspoken opponents of vaccine mandates are healthcare workers is another interesting aspect of this highly publicized debate.

No, I am not about to go down a rabbit hole of conspiracy theories about how the medical community knows something we don’t! There is something they aren’t telling us!

There is a much more logical explanation for their hesitancy. A great deal of essential workers came in contact with the virus early on in the pandemic.

Unlike members of what Karol Markowicz calls the pajama class, healthcare workers didn’t have the luxury of performing their jobs on Zoom call happy hours inside their cozy apartments.

It makes sense that these workers, who operated for months in the real world, might refuse a vaccine if they already have antibodies due to natural infection. Antibodies which, for the record, appear to offer a higher level of immunity than the COVID shots. So why are they being forced to either take the Fauci ouchie or the pink slip?

In August during a San Diego County Board of Supervisors meeting, Heather Cauvel, a registered nurse, railed against vaccine mandates.

‘It was no problem working in the healthcare system over the last 18 months, without a vaccine, but now, all of a sudden, I’m a threat to public health?’

Cauvel went on to resign from her position.

The truth is that the rule-makers are not as concerned with medicine, science or health as they purport to be. This is about submission. Power-hungry pols do not care about protecting people. They are far more interested in controlling people. That’s why all of our freedoms over the last 18 months have been contingent on whether or not we follow the rules.

The heroes of the pandemic were applauded by the left when they pushed the correct agenda. When the first responders had bruise lines below their eyes from tight goggles, they were useful and welcome additions to the storyline du jour.

But when those same people pushed back against the diktats and questioned the mandates — they went from first responders to second-class citizens in a New York minute.

Amid a recent spate of covert espionage attacks on Iranian infrastructure – some publicly known and more that are possibly unknown – Iran’s foreign ministry has declared that “war with Israel has already begun”.

A foreign ministry spokesmen told the major Israeli national Hebrew-language daily newspaper Maariv that “Israel has carried out attacks that were intended to destroy our nuclear program for peaceful purposes.” Saeed Khatibzadeh declared “the war with Israel has already begun” – in an ominous message intended as a warning to the Israeli public and leadership. 

The spokesman added that Israel “has murdered nuclear scientists and harmed the Iranian people. Iran is blamed for terrorism, but there is no good or bad terrorist. The entire crisis in the region is the fault of Israel.”

Rare or unlikely as it is for a top Iranian official to speak to Israeli publication, it’s the closest Tehran has come in years to direct communication with Israeli entities. It’s a sign that the two countries are truly on the brink of direct conflict. 

“Israel severely harmed our civilian and research system,” he described. “They speak about the Iranian nuclear threat, but Israel has hundreds of bombs, and it never signed the non-proliferation treaty for nuclear weapons.”

He’s no doubt referencing the prior Natanz nuclear facility sabotage attack – now widely believed an act of covert espionage by Israel (likely via cyberattack) – as well as the brazen assassination outside of Tehran of top nuclear scientist Mohsen Fakhrizade by a “remote controlled gun”. There’s also the near weekly Israeli attacks on Syria, which Tel Aviv says is part of campaign to disrupt Iranian and Hezbollah operations there. 

In the interview Khatibzadeh also alleged that the United States too is still waging a campaign of “soft terror” through far-reaching sanctions. He said that the Iranian people are even prevented from obtaining crucial life-saving medicines through Washington sanctions. By design the US-led sanctions also pressure and punish any nation wishing to transfer goods into Iran, including European Union countries which have long taken are more sympathetic stance to the Iranians’ plight.

Just in the past week there’s been more possible attacks on Iranian military sites…

Before & after: An explosion occurred (27 September 2021) at an #IRGC secret missile base of Shahid Hemmat Industrial Group pic.twitter.com/OYnsijeXiq

— ImageSat Intl. (@ImageSatIntl) September 30, 2021

The official also charged that Israel is actively seeking to subvert high level nuclear talks in Vienna, which have been stalled since last June, though US and Israeli officials have blamed the Iranian side for the stall. 

“The region is tired of wars,” Khatibzadeh added, while arguing Iran is honestly seeking a diplomatic and peaceful breakthrough with Western powers in Vienna. “We must find a new approach to solve the problems according to United Nations decisions. All of the sides must display a political desire to reach agreements.”

After slashing the police budget by $15 million last year in response to the ‘defund the police‘ movement, Portland is now giving its firefighters bulletproof vests as violent crime surges in the Democratic stronghold.

According to Portland Fire & Rescue, the decision was the result of a “changing landscape” which includes more calls involving ‘aggressive patients and bystanders.’

According to Oregon Live, many details surrounding the vests are still unclear – including when the vests will be worn (on top of the 45 lbs of gear they’re already wearing), how many will be purchased, and when they will become available.

“We always will do anything and everything to keep firefighters safe because that’s what keeps people in Portland safe,” said Isaac McLennan, vice president of the Portland Fire Fighters’ Association, who added that the decision is fully supported by the firefighters union.

Firefighters have been more concerned for their safety because of responders being attacked or stabbed in Oregon and other parts of the country, McLennan said.

McLennan referenced a 2018 fire in Springfield where a man started shooting at firefighters responding to a house fire. Police said authorities believed the man intentionally set the 4 a.m. blaze to ambush emergency responders.

No one was seriously injured, but the attack left fire truck windshields riddled with bullet holes. -Oregon Live

McLennan said that the vests would be used in situations where firefighters go in to rescue an injured person while police are securing an area with an active shooter. 

The decision comes amid a year of surging violence in Portland – as the police logged 837 shootings through August, with the largest increase occurring in the city’s North Precinct – where 383 shootings as of Aug 31 brings the increase over last year to more than 100%.

Gun violence in particular has become so bad in Portland that DA Mike Schmidt announced that the city will spend $1 million to hire four new prosecutors and two investigators to handle cases.

As of Sept. 24, 65 people died in homicides in the city – approaching the city’s all-time record of 70 homicides in 1987. The vast majority of victims were killed in shootings.

“For many of the prosecutors in my office who have been doing this for 20, 30 years, this is a once in a career surge in violent crime,” said Schmidt.

While Democrats claimed a minor victory last week – passing a Continuing Resolution (CR) to keep the federal government from defaulting until December 3, deep divisions between Senate moderates and House progressives have turned into an embarrassing game of chicken for Democratic leadership.

At issue are two massive spending packages; the $1.2 trillion bipartisan infrastructure deal which the Senate has already passed – only to be held up by House progressives – unless the Senate agrees to pass a $3.5 trillion economic blueprint which moderate Democratic Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) refuse to support unless it undergoes major legislative surgery to shed around $2 trillion. Manchin and Sinema’s votes are crucial, as the only way Democrats can hope to pass the economic blueprint is via reconciliation – which requires the two holdouts to achieve a simple majority of 50 votes, with Vice President Kamala Harris as the tiebreaker.

In an ill-advised attempt to outwit Manchin and Sinema, White House Chief of Staff Ron Klain has apparently been coaching house progressives to “hold firm” against the infrastructure vote until the holdout Senators fold.

As I read this reporting in the NYT, the White House chief of staff (Klain) appears to be counseling House progressives to hold the line while Speaker Pelosi was trying to get the infrastructure bill passed first.

All while the president on the sidelines.

What a cluster. pic.twitter.com/NALyUslzhi

— Josh Kraushaar (@HotlineJosh) October 2, 2021

Andrew, why didn’t you let the President take questions from his own democratic caucus yesterday? https://t.co/lIKOeuUl2f

— Stephen L. Miller (@redsteeze) October 2, 2021

Klain’s coaching resulted in a win for progressives on Friday, after House Speaker Nancy Pelosi (D-CA) canceled a Friday vote on the infrastructure package when negotiations with the 96-member progressive caucus broke down. According to the Wall Street Journal, at least 50 members of her group were willing to withhold their votes from the $1.2 trillion bipartisan legislation.

“I am so proud of our caucus; I have never seen our caucus so strong,” said Jayapal before the vote was canceled. “And I am a very good vote counter also,” she added. “Maybe not quite as good as Nancy Pelosi sometimes. But I’m excellent.”

Both Manchin and Sinema, however, appear to be holding strong – with Sinema slamming Pelosi for canceling the vote, calling it “an ineffective stunt to gain leverage over a separate proposal,” adding “Over the course of this year, Democratic leaders have made conflicting promises that could not all be kept — and have, at times, pretended that differences of opinion without our party did not exist…”

.@SenatorSinema unloads after the House delays a vote on her infrastructure bill:

“inexcusable, and deeply disappointing for communities across our country.”

“ineffective stunt to gain leverage over a separate proposal”

“betrays the trust the American people have placed” pic.twitter.com/Vu4jNy8qy4

— Sahil Kapur (@sahilkapur) October 2, 2021

President Biden, it seems, has taken a back seat to Klain and other White House officials.

On Friday, he said it would be irresponsible if Senate Republicans block a vote on suspending the US debt ceiling – which is set to hit around Oct. 18 according to Treasury Secretary Janet Yellen. If this happens, the US could lose its AAA sovereign rating according to Fitch. Of course, Democrats have furiously resisted raising the debt limit via reconciliation – the only explanation being that they want to share blame for recklessly driving up the national debt.

“Well, I hope Republicans won’t be so irresponsible as to refuse to raise the debt limit and to filibuster the debt limit,” said Biden, adding “That would be totally unconscionable. Never been done before. So I hope that won’t happen.”

NO QUESTIONS

For anyone still questioning Biden’s figurehead status, Biden’s handlers prevented yet another Q&A session on Friday – preventing him from taking any questions during a Democratic caucus meeting on Capitol Hill.

According to Politico‘s Sarah Ferris, Biden offered to take questions, “but his staff jumped in.”

INSIDE the caucus:

At the end of his remarks, BIDEN offered to take questions from members but his staff jumped in.

He didn’t take any questions.

— Sarah Ferris (@sarahnferris) October 1, 2021

Who’s really running the show?

Known for his violent crackdown on drug dealers and other unorthodox policy decisions that won him both admiration and hatred, Philippine President Rodrigo Duterte announced Saturday that he would be retiring from politics after dropping his bid for the presidency.

That Duterte is ending his political career so soon is ironic. Many western political analysts and high-handed scribes once condemned Duterte as a violent authoritarian who would shift the Philippines’ political system closer to that of Russia’s.

However, that never happened. And now, Duterte, who is constitutionally forbidden from seeking another term as president, has decided not to run as Vice President in 2022, claiming “the public” doesn’t support him potentially subverting the country’s constitution to extend his rule (but we thought he was an authoritarian?)

Duterte’s decision comes with a twist: his former top aide and now Senator Christopher “Bong” Go, who was believed to be the ruling PDP-Laban Party’s candidate to succeed Duterte as president, has instead filed paperwork to run for the vice presidential spot, now that Duterte has withdrawn his candidacy.

“Today, I announce my retirement from politics,” he said, appearing at the Commission on Elections center in Manila alongside Go, who also announced his decision to seek the VP spot instead of Duterte. “The overwhelming… sentiment of the Filipinos is that I am not qualified and it would be a violation of the constitution to circumvent the law, the spirit of the constitution,” Duterte said.

There’s reason to believe that Duterte’s retirement is part of a strategy of stepping aside to allow his daughter, Sara, to seek the presidency either in this cycle, or the next.

On Saturday, Sara Duterte-Carpio filed her certificate to run again for her current role of mayor of Davao City. However, Sara has been leading recent presidential polls, even as she has maintained her focus on getting re-elected in her home city. According to Bloomberg, back in August, presidential spokesman Harry Roque said Duterte could drop his bid for vice president if Sara were to seek the top job. And Duterte-Carpio has previously said she wouldn’t seek the top job with her father on the VP ticket, so his decision to step down could open the door for his daughter, who has already won her father’s old job as mayor of Davao City.

But if that is indeed the plan for the Duterte political dynasty, there’s one major obstacle in their way: Boxing legend and Philippine politician Manny Pacquiao, the only boxer to hold titles in 8 different weight divisions, became the first to file paperwork to seek the presidency on Friday.

Ironically, Pacquiao officially announced on Wednesday that he would be retiring from boxing to focus on his bid for the presidency.

“I just heard the final bell. Boxing is over,” Pacquiao said. “This is the hardest decision I’ve ever made, but I’m at peace with it. Chase your dreams, work hard, and watch what happens.”

To the greatest fans and the greatest sport in the world, thank you! Thank you for all the wonderful memories. This is the hardest decision I’ve ever made, but I’m at peace with it. Chase your dreams, work hard, and watch what happens. Good bye boxing. https://t.co/Bde4wO82sA

— Manny Pacquiao (@MannyPacquiao) September 29, 2021

As for whether this is really the end of the road for Duterte, who has been described as the ‘Filipino Trump’ due to his brash style and law-and-order approach, it’s worth noting that this isn’t Duterte’s first “retirement” from politics. Duterte said he would retire back in 2016 before launching his successful bid for the presidency.

Candidates must register their intention to run in next year’s vote with the Commission on Elections by Oct. 8. However, the final list of presidential contenders won’t be ready until mid-November. This means other rival politicians might emerge as potential contenders during a final attempt to join the race, a strategy that would be similar to that used by Duterte.

Authored by John Rubino via DollarCollapse.com,

Home prices have never been higher when compared to the average family’s income.

This kind of imbalance is normally a sign of an impending crash in home sales, followed by a drop in prices. But that’s not happening.

Some recent headlines:

• Home prices set records in July; Tampa 4th highest in nation

• With no slowdown in sight, Dallas home prices go up 23.7%

• Asking Price On Homes Increases 12% To An All-Time High

How is it that homes are both unaffordable and soaring in price?

As with so many other things that shouldn’t be, the answer can be found at the intersection of Wall Street and easy money.

During the previous decade’s Great Recession, hedge funds and private equity firms figured out that they could borrow for next-to-nothing and buy up the houses that banks were repossessing, then rent those houses back to millions of newly homeless Americans for good returns. Combine these positive cash flows with massive recent price appreciation, and those foreclosed houses turned out to be phenomenal investments. 

Now Wall Street is doubling down, using hundreds of billions of essentially free money to outbid individual buyers for whatever houses are still available. In some cases investment giants like Blackrock buy up entire neighborhoods at big premiums to the asking price, pushing everyone else out of the market. Hence the disconnect between home prices and family incomes. 

But wait, there’s more. Now the securitization machine has discovered houses. 

Zillow’s Home-Flipping Bonds Draw Wall Street Deeper Into Housing

(Bloomberg Businessweek) — Zillow Group Inc. is best known for the addictive real estate listings that keep people browsing the internet all night, has dived into the house-flipping business, offering to quickly take properties off sellers’ hands. And in the process it’s helping pull Wall Street even deeper into the $2 trillion U.S. housing market.

In August, Zillow raised $450 million from a bond backed by homes it’s bought but not yet sold. The offering, led by Credit Suisse Group AG, was modeled on the loan facilities that car dealerships use to finance floor models. The novelty of using that structure for houses didn’t scare off investors hungry for a new way to bet on the hottest housing market on record. The offering was over subscribed and Zillow, which declined to comment on its bond market activities, is now in the process of selling another $700 million in bonds. 

Now those volumes are set to explode. Zillow expects to acquire homes at a pace of 5,000 a month by 2024. Another competitor, Offerpad Solutions Inc. could eventually buy 70,000 homes a year, based on its view of the future opportunity. Opendoor, still the largest iBuyer, has said its playbook calls for the company to capture 4% of all home sales in 100 markets. Together the three companies could soon be buying close to $100 billion worth of homes a year, requiring more than $20 billion in revolving credit facilities.

Looks like housing is yet another example of how easy money perverts formerly free markets. Where family income used to dictate (and limit) home prices, now the driver is the yield on corporate and asset-backed bonds. The lower those rates go, the higher home prices climb. If individual buyers are priced out, well, they can just rent from Wall Street, on whatever terms our new landlords think is fair.

An Oklahoma judge has just reminded Americans that there’s at least one judge in on the US District Court in Washington (which is handling the bulk of the Jan. 6 cases) who isn’t a Democrat.

Judge Trevor McFadden admonished prosecutors this week after handing down a more-lenient-than-expected sentence to Danielle Doyle, 37, who was given two months of probation on Friday for her involvement in the Jan. 6 demonstrations. Prosecutors had asked the judge to sentence Doyle to home confinement.

Doyle pleaded guilty in July to illegally demonstrating inside the Capitol, which she admitted to entering through a broken window.

She spent a total of 24 minutes in the building and there’s no evidence she committed any acts of violence or property damage.

In his statement, the judge openly questioned the prosecution’s “credibility,” wondering aloud why the DoJ hasn’t indicted any more of those arrested during the riots in Washington during the Black Lives Matter-inspired protests from last summer. 

While more than 600 people have been charged in relation to the Jan. 6 “Stop the Steal” demonstration, the judge said far fewer had been prosecuted for their role in the protests.

“I think the US Attorney would have more credibility if it was even-handed in its concern about riots and mobs in this city,” the Judge said, according to the AP. BLM riots across the country during the summer of 2020 caused up to $2 billion in insured property damage across the US and resulted in more than 20 deaths.

And for everybody asking: what about all those judges appointed by President Trump that the media was complaining about? Well, take a look at this chart, courtesy of Pew Research.

Doyle told the judge she regretted that a peaceful election-fraud protest escalated into a riot when people breached the Capitol. “So many people came here to represent things that were important to us, but in the blink of an eye, all of those things were overshadowed,” she said, per the AP. “For that, I’m sorry, because it overshadowed the things that were good.”

McFadden, who was appointed to the bench by former President Donald Trump, said Doyle’s behavior was inexcusable and that she was “acting like all those looters and rioters who attacked our city last year. That’s because looters and rioters decided the law didn’t apply to them.” He added that the January 6 riot made Americans feel “less safe,” just as the violent BLM protests did.