Industrial CMBS Delinquency Soars As ‘Deep Freeze’ Hits CRE Market

Industrial CMBS Delinquency Soars As ‘Deep Freeze’ Hits CRE Market

Commercial real estate building owners face significant headwinds as they try to refinance maturing loans in an environment of high rates and tightening credit conditions. New data reveals more rumblings in the commercial-backed securities (CMBS) market, as well as a ‘deep freeze’ spreading across the CRE space.

The new report by real estate company Trepp shows a significant surge in industrial CMBS delinquency rates. This spike is in addition to the rising delinquency rates in office tower CMBS, which have increased since the regional banking turmoil in March. Moreover, there’s a slight uptick in multi-family CMBS delinquency as well. 

In a separate report, The Wall Street Journal cites Trepp data that shows a deep freeze has engulfed the entire CRE market:

Total volume of commercial real-estate loans held by banks, the largest source of debt financing, declined during the first two weeks of October, according to analysis of Federal Reserve figures by Trepp, a data provider. Bank commercial property lending has declined for only two months since 2014. Most other two-week periods since 2014 have shown positive growth. 

Other debt providers are also in retreat. Only $28.2 billion of loans converted into commercial mortgage-backed securities have been issued this year, the lowest figure since 2011, according to Trepp. Additionally, the largest mortgage REITs halted loans to new borrowers in the first half of the year.

Overall, the entire commercial property debt market—including banks, commercial mortgage securities and nonbank lenders and others—increased less than 1% in the second quarter. That was the lowest quarterly rise since the first quarter of 2014, said Matthew Anderson, managing director of Trepp.

As previously noted, the majority of CRE debt is held by small to mid-size banks. A Goldman report said banks with less than $250 billion in assets hold more than 80% of these loans. These smaller banks are facing the most strain due to the ongoing pressures of deposit flight and high-interest rates. 

In March, we pointed out (“New “Big Short” Hits Record Low As Focus Turns To $400 Billion CRE Debt Maturity Wall“) that the regional banking crisis kick-started CRE turmoil. At the time, JPMMorgan Stanley, and Goldman Sachs all joined the CRE gloom parade. 

A more recent note from Morgan Stanley expects CRE office prices to slide 27.4% from peak to trough in 18 to 24 months this cycle, not that far off from the -34.9% during the GFC in 34 months, which will range from a decline of 15% for apartments to a stunning plunge of 40% for office. 

Michael Levy, chief executive of Crow Holdings, one of the country’s largest developers of rental apartments and industrial space, told WSJ that yield shocks in treasuries have “spooked the marketplace.” He warned: “Capital market malaise is crushing everybody.” 

Bankers and mortgage brokers told WSJ:

“Conditions aren’t as bad as during the global financial crisis when lenders had almost completely vanished and buyers disappeared. Loans are still available today but from fewer players and at a higher price.”

In places like San Francisco and Baltimore, some office tower prices have already crashed:

A recent survey by Blomberg of Terminal users revealed two-thirds of the 919 respondents believe the office tower market needs to crash before a rebound can be seen. 

Nearly half (44%) of respondents said tower prices will trough in the second half of 2024. About 29% believe 2025 or later. 

This slow-moving CRE train wreck is gaining momentum. 

Tyler Durden
Tue, 10/31/2023 – 15:20

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Ball For Higher US Yields Is Back In Treasury’s Court

Ball For Higher US Yields Is Back In Treasury’s Court

By Simon White, Bloomberg Markets Live reporter and strategist

Yields and risk assets face rising risks from the Treasury Department’s borrowing report Wednesday.

The BOJ’s underwhelming move today has taken some of the pressure off global rates, with US 10-year yields lower on the session. That puts the ball back in Treasury’s court on whether yields resume their upwards trend this week, with the remainder of its quarterly refunding announcement on Wednesday.

We got their borrowing estimates on Monday. The total was lower than expected, but it is still the largest amount borrowed in the fourth quarter. However, it’s the split between bills and bonds (by bonds here I mean all debt more than one-year maturity) that has the most significant near-term implications for liquidity and longer-term yields.

Issuance has been skewed towards bills this year, which has limited the liquidity impact on risk assets as money market funds (MMFs) have been able to absorb them by using inert liquidity already parked in the reverse repo (RRP) facility at the Fed. But bills are now over 20% of total debt outstanding, normally towards the higher end of where the Treasury prefers it.

The Treasury has stated it will remain above 20% for now, but it will gradually skew issuance away from bills. MMFs cannot directly buy longer-term debt, so the buying will shift to higher-velocity holders of reserves, e.g. households. This will extract liquidity from of the system, leaving stocks and other risk assets more vulnerable.

The Treasury’s account at the Fed (the TGA) will be increasingly pivotal here. Treasury aims for this to be $750 billion at the end of 4Q and 1Q (it’s ~$850 billion at the moment). Currently it is de facto backed by bill issuance.

But if its size is maintained as the Treasury expects and issuance moves away from bills, or the RRP becomes too low, then it will be increasingly backed by longer-term debt that will deplete higher-velocity reserves and pose a serious headwind for risk assets.

Tyler Durden
Tue, 10/31/2023 – 15:00

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Second Amendment Roundup: “Do as I Say, Not as You Ruled”

On November 7, the Supreme Court will hear oral argument in United States v. Rahimi. That’s the case in which the Fifth Circuit unanimously held that 18 U.S.C. § 922(g)(8) violates the Second Amendment. Section 922(g)(8) is the federal statute that prohibits individuals who are subject to a state domestic violence restraining order (DVRO) from possessing any firearm.  Under the federal law, they can be sent to prison for up to fifteen years if they do.

The Fifth Circuit faithfully applied the text and history methodology first deployed by the Supreme Court in District of Columbia v. Heller and then further prescribed in New York State Rifle & Pistol Ass’n v. Bruen, decided in 2022. The Fifth Circuit determined that the statute could not stand because the Government did not demonstrate that the statute’s “restriction of the Second Amendment right fits within our Nation’s historical tradition of firearm regulation,” which is the Government’s burden to prove under the express language of Bruen.

The Government submitted its reply brief to the Supreme Court on the merits on October 25. In that brief, Merrick Garland’s Justice Department took an astonishing position: Bruen‘s methodology should essentially be ignored.

Bruen meticulously laid out detailed procedures and tests for evaluating whether a present-day statute comports with the Second Amendment.  The first part of the inquiry is textual: “when the Second Amendment’s plain text covers an individual’s conduct,” Bruen instructs, “the Constitution presumptively protects that conduct.” The second part of the inquiry is historical:  the presumption based on plain text may be overcome only if the Government can show through historical analogues that the firearm regulation is “consistent with the Nation’s historical tradition of firearm regulation.” Only then may a challenged regulation be upheld as constitutional, because it regulates conduct that falls outside the Second Amendment’s “unqualified command.”

Bruen outlines the methodology to implement that two-part approach in future cases (where the issue has not already been decided by the Court), and then applies that methodology to the concealed carry issues before it. “Interest balancing,” such as levels of scrutiny, cannot be employed. Historical analogues to a challenged statute addressing a new societal problem must be “relevantly similar.” For problems that have persisted since the Founding, the fit must be tighter—they must be “distinctly similar.”

But any purported analogue must meet one of these two tests for similarity. In deciding whether the modern gun control laws in question are sufficiently similar, the Court emphasizes “at least two metrics: how and why the regulations burden a law-abiding citizen’s right to armed self-defense.” The Court goes into significant detail about how to evaluate historical analogues.

How does the Government’s brief try to get around these detailed methodologies?  The technique is quite simple, if remarkably unconvincing.  The Justice Department makes up its own test, at a very high level of generality, and asserts again and again that it is the rule endorsed by Bruen and Heller, when it is no such thing.

Under the first, “plain text” step of the Bruen methodology, the Rahimi case poses the question of who has the right to possess arms. The Second Amendment’s text answers that question: “the right of the people to keep and bear arms, shall not be infringed.” So, the right is possessed by the people, not some unspecified subset, and (as Heller held) the right is certainly not limited to militia members. Quoting an earlier decision by the Court, Heller defined “the people” as “persons who are part of a national community or who have otherwise developed sufficient connection with this country to be considered part of that community.”

The Government’s reply brief gives short shrift to this explicit definition in Heller, which is part of the first step of the Bruen methodology, and instead substitutes its own definition of who has the right to keep and bear arms. Citing Heller, the Government asserts that “Congress may disarm persons who are not ‘law-abiding, responsible citizens.’.” Indeed, nearly all of its reply brief is subsumed under the twin headings “Congress May Disarm Individuals Who Are Not Law-Abiding, Responsible Citizens” and “Section 922(g)(8) Disarms Persons Who Are Not Law-Abiding, Responsible Citizens.”

But Heller never said that people who are not law-abiding, responsible citizens may be disarmed. The actual quote from Heller is that the Second Amendment “surely elevates above all other interests the right of law-abiding, responsible citizens to use arms in defense of hearth and home.” That quote does not purport to specify who has the constitutional right to keep and bear arms.  Heller already did that when it defined “the people.” And it certainly does not say when people who have that right may sometimes lose it.

To support its claim that limiting Second Amendment protection to “law-abiding, responsible people” is a “constitutional principle,” the Government’s brief asserts that “Bruen used the term ‘law-abiding, responsible citizen’ and its variants more than a dozen times.” Five things are notable about that assertion.

First, the Rahimi case is the first time the Supreme Court has had occasion to consider what individuals, though remaining part of “the people,” may be stripped of the right to arms under the Heller/Bruen “text and history” method of analysis. The Government’s brief pretends that the Court has already decided that issue in Bruen. But Justice Alito, concurring in Bruen, correctly observed that “Our holding decides nothing about who may lawfully possess a firearm,” and not a single member of the Court disagreed with him.

Second, as with the above quote from Heller, in none of those passages did the Court purport to be providing a definition of who has the right to keep and bear arms.

Third, the phrase “the people” also is used in the First and Fourth Amendments. This phrase should be given the same meaning across the Bill of Rights. Thus, if the Government were right, it would mean that individuals who are not law-abiding and responsible also lose those rights. That cannot possibly be correct.

Fourth, even if an individual is part of “the people” and presumptively has the right to arms, constitutional rights can sometimes be lost or restricted. For example, most would agree that physically violent felons may forfeit their Second Amendment rights, though they remain part of “the people.” Indeed, firearm rights are often restored to individuals who have previously lost them. That is the case with § 922(g)(8) itself—an individual’s right to arms is restored automatically on the expiration of the DVRO. It would make no sense to say that a person can move back and forth between either being in or out of the people in this way. Rather, a person remains part of “the people” at all times; whether the person’s rights can be restricted is a matter of historical inquiry.

Fifth, the alleged “constitutional principle” that persons who are not “law-abiding, responsible citizens” may be disarmed is hopelessly vague and overbroad. Is someone not “law-abiding” because he or she has received one or more speeding tickets?  Is an individual not “responsible” because of too much gambling? The essentially limitless and uncertain sweep of this “principle” suggests that for the Government it is not a bug but a feature—it allows them to disarm anyone at will.

Thus, by positing that the Court has already decided the very issue before it, the Government’s brief tries to sidestep Bruen‘s methodology. Fortunately, the attempt is pretty transparent, and even if the Court rules to uphold § 922(g)(8), it seems unlikely that it will adopt the vague, overbroad, non-test pushed by the Justice Department.

The post Second Amendment Roundup: "Do as I Say, Not as You Ruled" appeared first on Reason.com.

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Why Is Halloween Candy So Expensive? Sugar Protectionism.


A lit Jack-o-lantern sits next to a candle and some Halloween candy | Photo 77780884 © Roman Baiadin | Dreamstime.com

There ain’t no such thing as free candy, not even on Halloween—as anyone who has stocked up in advance of Tuesday’s holiday can attest.

Candy prices have jumped over 7 percent since last year and are up over 21 percent since October 2021, according to inflation data from the Bureau of Labor Statistics. Even in an environment where everything is getting more expensive, candy prices have climbed even faster than the overall rate of inflation for groceries and other home goods.

The main culprit is rising prices within the supply chains for America’s candy makers—and, specifically, rising sugar prices. Much of America’s supply of the sweet stuff comes from Mexico, where a dryer-than-normal summer meant a below-average sugar crop, Barron‘s reports. The New York Times spreads the blame a bit wider: Everything from high fertilizer prices (thanks to the Russian invasion of Ukraine) to hotter, dryer weather all around the world that affected sugar crops in Asia, Central America, and West Africa.

There is, however, one major factor that the Times ignores entirely: America’s sugar policies.

The series of subsidies and tariffs that the federal government uses to artificially inflate sugar prices in the United States cost consumers between $2.5 billion and $3.5 billion every year, according to a timely Government Accountability Office (GAO) report released today. Those protectionist policies aren’t the cause of the recent spike in sugar or candy prices, of course, but prices would absolutely be lower without them.

The so-called “sugar program” administrated by the federal Department of Agriculture “creates higher sugar prices, which cost consumers more than producers benefit, at an annual cost to the economy of around $1 billion per year,” the GAO concludes. No matter what happens to cause global sugar prices to fluctuate, Americans have consistently paid higher prices over the past 20 years:

Those higher prices get baked—quite literally—into the cost of everything from Milky Ways to Sour Patch Kids. And, as the GAO also points out, this is a classic case of concentrated benefits for a special interest that results in huge, but very diffused, costs for everyone else: “Because the program guarantees relatively high prices for domestic sugar, sugar farmers benefit significantly, and sugar farms are substantially more profitable per acre than other U.S. farms.”

The U.S. sugar program is an industrial policy of the type that is increasingly being sought on both the political right and left as a supposed solution to America’s perceived economic problems—whether to boost manufacturing jobs or on-shore supply chains of critical equipment like semiconductors. Its history suggests many of the possible flaws with those new plans.

That includes not only higher costs for consumers but also the government’s own inability to effectively run these types of schemes. In the case of sugar, the GAO points to the complicated and overlapping tariff rate quotas that are used to artificially restrict imports from many foreign countries. Those tariff quotas are based on 40-year-old data and the U.S. Trade Representative and USDA have shown no interest in updating them, according to the GAO.

“In practice, this has led to fewer sugar imports than planned and delays in obtaining sugar,” the report concludes.

Global trade and supply chains look a lot different today than they did four decades ago, but when the government is granted broad powers over markets, it usually struggles to keep up. And that means higher prices for candy and lots of other goodies—regardless of how droughts or wars might affect those supply chains—on Halloween and throughout the rest of the year.

 

The post Why Is Halloween Candy So Expensive? Sugar Protectionism. appeared first on Reason.com.

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Putin Issues Scathing Attack On West’s Role In Gaza Crisis, Blames Spies For Dagestan Airport Riot

Putin Issues Scathing Attack On West’s Role In Gaza Crisis, Blames Spies For Dagestan Airport Riot

Russia says police have arrested 60 people in the wake of the Sunday mob attack on an airport in the southern Russian republic of Dagestan. Local police in the Muslim-dominant region said they had identified 150 rioters who had breached airport security while looking for Jews said to have arrived on a flight from Tel Aviv. 

Dramatic videos had shown men swarming an airplane, with some even jumping on its wings and waiving Palestinian flags, while the passengers huddled inside and the captain refused to open the door. 

Screengrab of footage taken at Makhachkala Uytash airport in Dagestan, via Al Jazeera

Russia’s interior ministry said 20 people were injured in the whole ordeal, which many publications are calling an antisemitic pogrom wherein security personnel may have looked the other way or at least failed to intervene in time.

Interestingly, Russian authorities are busy blaming Ukrainian spies, though without evidence. For example, Sergei Melikhov, Dagestan’s governor, said the violence was the result of “our enemies” – and called out Kiev.

Putin spokesman Dmitry Peskov has also said the riot was “in large part the result of external interference” – in a further suggestion it was stoked by either Ukrainian or US operatives – and that it came in the context of “the horrors of what is happening in Gaza.” Peskov said, “It’s very easy for our ill-wishers to use these images to exploit the situation, to provoke and anger people.” The US promptly blasted and denied the charge.

President Putin has also added his voice in a Monday national security meeting, blaming the West for fueling instability and aggression in the Middle East which has aided Israel in its campaign resulting in “bloodied children, dead children”

Putin’s words, spoken before a meeting of his top security officials and televised, were some of the harshest yet issued on the Gaza crisis, at a moment the Palestinian death toll has surpassed 8,500.

Below is a selection of key Putin quotes from the Monday speech, as presented and translated by RT:

Israel committing collective punishment

He noted that the recent flare-up in the Middle East was triggered by the terrorist attack by Hamas militants against Israeli civilians. However, “instead of going after criminals and terrorists,” Israel has since resorted to “exact revenge [on the Palestinians] in the form of collective punishment.” 

Washington sows instability & chaos

The US and its allies are the “main beneficiaries of the global instability,” the Russian president said, arguing that the West was making “blood money” from various conflicts.

“The American-run world, with its single hegemon, is falling to pieces. It is gradually but irreversibly becoming a thing of the past,” Putin said.

On the Dagestan airport rioting

“Yesterday’s events in Makhachkala were inspired through social media, including from the territory of Ukraine, by the agents of Western services,” Putin said. He stressed that legitimate concerns for the Palestinians must not lead to outbreaks of violence.

Putin followed with: “They don’t want a lasting peace in the Holy Land. They want constant chaos in the Middle East. That’s why they are slandering the countries that are insisting on an immediate ceasefire in the Gaza Strip.”

Tyler Durden
Tue, 10/31/2023 – 14:40

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UAW Strike Ends But Spiking Labor Costs Will Hamper Detroit For Years To Come

UAW Strike Ends But Spiking Labor Costs Will Hamper Detroit For Years To Come

After the six week UAW strike ended officially yesterday, there’s one thing we know for sure: it’s going to put upward pressure on the price of vehicles for time to come. The six-week strike concluded on Monday when General Motors secured a provisional labor agreement with the UAW, following similar deals with Ford and Stellantis.

But as the Wall Street Journal pointed out on Monday, the labor costs are going to hamper the automakers for years to come. Ford has already come out and said the new deal will add $850 to $900 per vehicle in additional costs. 

UAW President Shawn Fain, apparently unable to grasp the concept that if the automakers go bankrupt there’s a chance no one will have jobs, proudly proclaimed on Monday: “We wholeheartedly believe that our strike squeezed every last dime out of General Motors.”

He added: “When we return to the bargaining table in 2028, it won’t just be with the Big Three, but with the Big Five or Big Six.”

The Journal noted that by the contract’s 2028 expiration, most union workers at Detroit automakers would earn mid-$80,000s annually, excluding overtime. Initially resistant, companies eventually agreed to reinstate cost-of-living adjustments, relinquished by the UAW in 2009.

The union also secured several key victories, including the right to strike over plant closures, better pay for temp workers, and a shorter path to max wages. Additionally, the UAW won the reopening of a previously idled Illinois factory.

Auto executives entered these negotiations aware that they’d have to be more generous than in years past, given the tight labor market, inflation, and the UAW’s invigorated bargaining power.

Union leaders capitalized on this momentum to achieve significant contract improvements, positioning the union for further gains, including attempts to unionize non-union U.S. auto plants like those of Tesla, Toyota, and Volkswagen.

Ford’s CFO said: “We have work to do. We have to identify efficiencies. We have to increase productivity. It is a record contract.” 

Pending votes in the upcoming weeks will determine the fate of preliminary deals that feature a 25% wage hike over a four-year period. Alongside cost-of-living adjustments, this would elevate the highest hourly wage for manufacturing employees to roughly $42.

The recent tentative agreements with UAW would mark the most lucrative contracts for auto workers since the 1960s, surpassing total wage increases from the last 22 years, the article notes. GM CEO Mary Barra said the deal would allow continued investment and job creation.

However, GM and Ford stock have declined, reflecting concerns beyond labor issues, like Ford’s missed Q3 earnings and GM’s autonomous driving setbacks.

Finally, both companies were also forced to scale back their electric vehicle (EV) investment plans, citing less-than-expected market demand and the need to re-engineer tech to cut costs.

Regulatory pressures still make abandoning electric transition plans untenable. Meanwhile, Tesla and Chinese automakers continue to gain ground. Industry analysts see clouds forming over traditional automakers, including the potential for profit margins to erode as consumer willingness to spend may decline.

In other words, the effects of higher labor costs have already hampered the companies’ stocks and slowed EV adoption, which is obviously counterintuitive to the left’s pro-union stance. And it won’t be long until this “record contract” the UAW is celebrating eventually winds up being the catalyst for layoffs, we’re sure. 

Tyler Durden
Tue, 10/31/2023 – 14:00

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Rachel Maddow’s Prequel Is a Deceptively Framed History of the Radical Right


Rachel Maddow with the cover of her book "Prequel" in the background | Illustration: Lex Villena

Prequel: An American Fight Against Fascism, by Rachel Maddow, Crown, 416 pages, $32

“American democracy itself was under attack from enemies within and without,” Rachel Maddow writes in Prequel: An American Fight Against Fascism. If you’re not sure whether she is speaking of the past or the present, that’s because she wants to conflate the two.

Prequel is a deeply flawed and deceptively framed history of right-wing radicalism in the United States on the eve of American entry into World War II. Maddow’s treatment of this well-worn topic draws principally from primary sources generated from the protagonists of her story, a collection of private spies and anti-fascist activists, as well as contemporary press reporting, sundry government documents, and a narrow base of secondary sources, one that noticeably omits prominent works in the field. Deficiencies in her sources, methods, and analyses make for a book that recapitulates past passions at the expense of sober reflection and reality.

Maddow opens with her strongest case study, covering the German-born Nazi agent George Sylvester Viereck, who tried to push Americans toward neutrality by using personal connections with Congress to spread noninterventionist literature. She then switches focus to her weakest case study, that of populist Democratic governor and senator Huey “Kingfish” Long and his influence on the Nazi sympathizers Philip Johnson and Gerald L.K. Smith. Maddow does not clarify why Long, who died in 1935, is discussed here. But her tone and source selection imply that she agrees with the Kingfish’s contemporary critics that his populism and demagoguery made him a proto-fascist and a political gateway drug for more radical figures, like Johnson and Smith.

Maddow then abruptly changes focus to the dark history of American segregation and its influence on Nazi racial science, following the German lawyer Heinrich Krieger’s travels through the American South. Then she circles back to more-prominent characters, such as the American fascist Lawrence Dennis, the antisemitic preacher Charles Coughlin, and the abstruse spiritualist (and leader of the fascist Silver Shirts) William Dudley Pelley, among others.

The book’s first half is occasionally productive. The chapter on Pelley does a good job of exploring the roots of his ideology: his conflation of anti-communism with antisemitism, his eclectic spiritualism, his millenarian Christianity. And the chapter on American race law is a haunting look at how American legislatures maintained racial hierarchy and what the Nazis learned from their practices.

But what narrative value she creates is relinquished by her analytical leaps, which conflate fascism with phenomena that were already well-grounded in American life well before the 1920s. And Maddow never directly states the size and scope of the groups she covers, such as the German American Bund and the Silver Shirts; instead we get such vague phrases as “many,” “a lot,” and “an insane number.” This makes it easier to confuse the breadth of Maddow’s cast of characters for the depth of their influence. (According to historian Francis MacDonnell’s Insidious Foes, the German American Bund never attracted more than 25,000 members and the Silver Shirts maxed out at 15,000.)

The book’s meandering journey narrows in later chapters, as Maddow argues that German propaganda had a pervasive influence on “isolationist” congressmen. She presents the propagandists’ efforts as far more effective than they were, giving the impression that they were the root of Americans’ general desire to stay out of World War II. She pays only lip service to the deeper roots of “isolationism,” with a mere passing reference to the fallout from World War I. She does not mention the post-WWI revelations of Allied and American propaganda, the widespread alarm at the armaments industry’s intimate relationship with the government, or the Great War’s domestic abuses of civil liberties. (When Sen. Ernest Lundeen (R–Minn.) denounces a draft bill as “nothing short of slavery,” she dismisses him as “shrill.”) Instead, she writes as though the desire to remain neutral simply stemmed from abroad, stripping noninterventionism of its historical context and arguing that the “threads of isolationism, antisemitism, and fascism were becoming an ominously tight weave.”

To make her case, Maddow retells a well-worn story about Viereck’s use of the congressional frank, a taxpayer-funded mailing service, to distribute what Maddow calls “pro-German mailings.” In fact, it was predominately literature that advocated neutrality. As historian Douglas M. Charles argued in J. Edgar Hoover and the Anti-interventionists, “All Viereck managed to accomplish was a wider distribution of anti-interventionist literature that, in any event, did not lead Americans to reassess their views on the Allies.”

Her book culminates in the 1944 sedition trial, in which the United States federal government charged a heterogeneous and largely unaffiliated assortment of 30 defendants, which included far-right figures like George Sylvester Viereck, Lawrence Dennis, and William Dudley Pelley, for sedition under the 1940 Smith Act. She presents the episode as a missed opportunity to uproot homegrown fascism. In fact, the Justice Department filed its flimsy charges on politically motivated grounds—a clear threat to constitutionally protected speech and association, no matter how unsympathetic the defendants could be.

Throughout Prequel, Maddow displays a systemically uncritical use of her source material, frequently presenting the self-gratifying hyperbole of fascist propagandists and the motivated reasoning of anti-fascist reporters as gospel.

Whether she knows it or not, Maddow is dredging up a thesis from the past, written in the wake of World War II when passions were high and perspectives blinkered. This view does have some academic adherents, and she cites their work: Bradley W. Hart’s Hitler’s American Friends, James Q. Whitman’s Hitler’s American Model, Sarah Churchwell’s Behold, America, Steven J. Ross’s Hitler in Los Angeles, and others. But she drives her thesis beyond the confines of her evidence in a manner that these scholars do not. Hart, for example, hedges where Maddow does not, acknowledging that the “United States was not at risk of an imminent fascist takeover in the late 1930s” when he argues that there was “fertile terrain in which dictatorship might be able to take root.” Yet Maddow leaves the impression that there was a risk of an imminent fascist takeover in the 1930s, with German propaganda fertilizing that fertile terrain.

Meanwhile, there is a sizeable body of work that challenges Maddow’s thesis and that of her source material. Such works include established scholarship such as Leo Ribuffo’s The Old Christian Right, Deborah Lipstadt’s Beyond Belief, and Bruce Kuklick’s recent Fascism Comes to America, to name a few. While these works do not downplay the pernicious ideologies of the far right nor their presence in American life, they do not sensationalize or dehistoricize them nor assign them more influence than they deserve. Lipstadt, who has devoted much of her career to combating the radical right’s penchant for Holocaust denial, dedicated an entire chapter of Beyond Belief to challenging American anxieties about a Nazi “fifth column”—the very fears that Maddow is trying to resurrect. While Nazi Germany did have spies and propagandists in the U.S., Lipstadt cautioned that “they never constituted a network with the scope and power the press attributed them.”

In Insidious Foes, MacDonnell argues that while odious and illiberal, right-wing extremists “never posed any real danger to the republic”; instead, a media echo chamber constructed the perception of a vast and powerful far right. He also makes a good case that Germany’s propaganda effort was “spectacularly unsuccessful” and ultimately did more damage to the noninterventionist cause than it aided it. Ribuffo‘s classic The Old Christian Right (a work that Maddow mentions in her author’s note but does not cite) similarly argued that the fear of these groups was a “brown scare” that often “exaggerated both [the far right’s] power and its Axis connections.”

How does Maddow square her findings with those of these earlier works? We do not know, because she does not tell us.

In closing the book, Maddow invites the reader to take inspiration from the work of Americans who sought to stop homegrown fascists by “any means at hand,” assessing their legacies as worth remembering and emulating. Yet Maddow omits the pernicious legacy that followed from using “any means at hand” and violating the very norms her heroes sought to protect. They created the destructive and restrictive myth of isolationism, which held that it was an absence of American power from the world’s stage that directly led to the rise of fascism abroad. They actively colluded with a foreign power—Great Britain—to interfere in American elections and manipulate American media. And they helped stoke the panic that led to Japanese internment and spurred the growth of the domestic security state. The latter, ironically, soon boomeranged against the left.

Those legacies are also worth remembering if we are to preserve liberty from an ever-present threat—not from enemies within our ranks or outside our walls, but within ourselves.

The post Rachel Maddow's <i>Prequel</i> Is a Deceptively Framed History of the Radical Right appeared first on Reason.com.

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Overcrowding Causes ‘Unsafe and Unsanitary’ Conditions for Youth In Philadelphia Jail 


Juvenile Jail in Philadelphia | City of Philadelphia; Illustration: Lex Villena

One Philadelphia, Pennsylvania juvenile jail is keeping youth in overcrowded, filthy conditions. According to The Philadelphia Inquirer, the situation has grown so dire that the city has now requested that a judge hold the state in contempt of court for failure to address the crisis.

Legal documents claim that the facility, which is built to house 184 juveniles, reached a peak of 242 this June. As a result, at least 30 children were forced to sleep in “mattresses on the floor in the admissions area,” or “in physically crowded cells with no windows.” Violence in the facility also reportedly increased. 

The city claims that the overcrowding at the Juvenile Justice Services Center (JJSC) was caused by the state’s inability to transfer youth who have been sentenced to prison into other facilities. The JJSC is a jail, meaning that children are only meant to be held there pre-trial and immediately post-sentencing.

According to legal filings, the city previously had contracts allowing it to send youth to serve their sentences at one of several private facilities around the county. However, according to the Inquirer, abuse at those facilities forced Philadelphia to remove youth housed there. Struggles to find other facilities that will take sentenced children have contributed to the current overcrowding crisis.

Pennsylvania’s own policies around juvenile incarceration also contribute to overcrowding. The state “confines youth, both pre-trial and post-adjudication, at
significantly higher rates than many other jurisdictions around the country,” according to an amicus brief filed by the Juvenile Law Center in Philadelphia’s lawsuit against the state. “This overuse of confinement…flies in the face of research showing little benefit to public safety from confinement, and which in fact shows a greater risk of re-offending among incarcerated youth.”

But despite a state judge’s ruling in July mandating that the jail reduce its population, the number of youth incarcerated at the JJSC remains well above the jail’s maximum, according to the Inquirer.

Making matters worse, kids kept in the JJSC who have been sentenced to serve prison time don’t get credit for time spent incarcerated in the JJSC facility—meaning that some have had their incarceration extended by as much as six months as they await transfer.

“Our children are very frustrated because the time they are sitting in JJSC, or lying on a mattress on the floor with lights on 24 hours a day, none of that time counts,” Keisha Hudson, chief of the Defender Association of Philadelphia told the Inquirer.

The situation is so dire that some children are allegedly asking to be sent to a private facility in Texas, with which the city now has a contract. Even though the Inquier reports that the facility has “a history of using disciplinary tactics including days-long isolation, mechanical restraints, and strip searches,” Hudson said that some youth are “asking their lawyers, ‘Please let me go because I’d be closer to coming home.'”

While an immediate solution seems unlikely, there is a way that Pennsylvania can reduce its population of incarcerated children: sending fewer kids to jail or prison and handing down shorter sentences.

“Pennsylvania particularly places youth at high rates for non-criminal acts such
as status offenses and technical violations, with the fourth highest rate of juvenile
confinement for these acts nationally.” reads the Juvenile Law Center’s amicus brief, adding that 73 percent of incarcerated youth in the state “are removed from their homes for their first adjudicated offense.”

The post Overcrowding Causes 'Unsafe and Unsanitary' Conditions for Youth In Philadelphia Jail  appeared first on Reason.com.

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Can We Talk About Anti-Semitism and Israel Without “Both-Sidesism”?

In the immediate aftermath of the atrocities of October 7–even before any Israeli counter-attacks began–a common refrain from progressives was “Both-Sidesism.” In the same breath, elites would mourn the tragedies in Israel and immediately turn to the plight of Palestinians. Often this pivot happened in the same sentence. Jews didn’t even get a period. Maybe a comma. These statements have become more common over the past few weeks. At this point, both-sidesism is performance art–virtue signaling at its worst. How can you indicate a normal human reaction to the rape, decapitation, burning, kidnapping, and torture of innocent civilians, and at the same time, how can you subtly draw a false parallel between medieval barbarism with a modern military taking steps to minimize civilian casualties in difficult urban warfare?

Lawyers, in particular, are taught to view like things alike, and different things differently. But when it comes to Israel, basic logic goes out the window. (Sort of like the revised LSAT.) Dean Erwin Chemerinsky, to his credit, took a stand. He called out anti-semitism in no uncertain terms. Those calling to free Palestine from the Jordan River to the Mediterranean Sea are advocating for an actual genocide of the Jewish people. (See David Bernstein’s post from earlier today.) Protestors didn’t shut down the Brooklyn Bridge to mourn the beheading of infants. They shut down the Brooklyn Bridge to call for the elimination of the Jewish state.

Why are so many students drawn to that worldview? For starters, I would wager that they are never taught about anti-semitism and Israel in the abstract. At most, they learn that Nazis were bad (the Holocaust), Catholics were bad (the Inquisition), Catholics were bad (the Crusades), and so on. Any instruction on Anti-Semitism focuses on how disfavored groups engaged in bad policies. The Jewish people are discussed, if at all, only through the lens of their oppressors. Generally CRT advocates argue that oppressed people can define their own narratives. Not us! Students are never taught about the timeless link between the Jewish people and the land of Israel. That link predates all other major world religions. The Jewish people were expelled from the Holy Land many times over the millennia. Next time you celebrate Indigenous Persons day, think of the Jews! In any objective pyramid of intersectionality that considers the full sweep of history, the Jewish people should be at the apex of Giza. But again, this history is not taught. Instead, students learn about a specific strand of Marxist ideology and colonialism that conveniently begins in 1948 or so.

Back to Dean Chemerinsky. Should he be so surprised, David Harsanyi and Glenn Reynolds ask? After all, last year student organizations at Berkeley banned “Zionist” (that is, Jewish) speakers. The writing has been on the wall for some time. In the past few weeks, I have talked to so many left-of-center colleagues who are shocked. I’m not. But more importantly, what comes next? Will this experience change anything? In other words, will the past three weeks affect approaches to hiring, curriculum development, DEI programming, and so on?  Is the Manischewitz worth the squeeze? Or, will colleges continue with business as usual, and pretend that both sides really are equal here. Color me skeptical.

The post Can We Talk About Anti-Semitism and Israel Without "Both-Sidesism"? appeared first on Reason.com.

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Peter Schiff: The US Isn’t Japan… It’s Argentina!

Peter Schiff: The US Isn’t Japan… It’s Argentina!

Via SchiffGold.com,

Does the massive national debt matter?

A lot of people don’t think it does, at least not yet. They point to Japan as an example of a country that has a much higher debt-to-GDP ratio and is doing fine. Peter Schiff said they’re looking at the wrong country. The US is more like Argentina than Japan.

The debt to GDP ratio in Japan is over 200%. The US debt-to-GDP ratio is only around 125%. If Japan is doing fine, why should we worry here in the US?

Peter notes the fact that Japan isn’t really doing “fine.”

They’re having a problem right now in Japan. They’re on the cusp of a crisis.”

The yield on a 10-year Japanese Government Bond is up to 8.7%. The yen recently broke the 150 mark. Meanwhile, price inflation is ratcheting up.

Don’t say, ‘Hey, Japan got off scot-free.’ They didn’t. They’re about to get their come-uppance.”

Peter said the US is in a different situation than Japan and it will get its come-uppance sooner. It will never get to a 200% debt-to-GDP ratio. The US won’t even get to 150%.

Why not?

Peter said the big difference between the US and Japan is that Japan is a net creditor and the Japanese people save at a much higher rate than Americans.

The world owes Japan a lot of money. Japan has a lot of that money in US dollar assets — in US Treasuries, in US mortgage-backed securities. Japan is going to sell and is selling those assets to try to mitigate the damage. Because Japan was so wealthy, and didn’t have to borrow from abroad, they were able to run up their debt higher before the crisis happened. That doesn’t mean they’re not going to have a crisis. They just had more rope before they finally hung themselves with that rope.”

The US doesn’t have as much rope because the country is broke.

We owe the world. We owe the world a fortune. We depend on the world to buy our paper, to buy our Treasuries. That’s our biggest export — our debt — our dollars and our debt. If we can’t export that anymore, the economy doesn’t function anymore. It’s built on that whole foundation, which is in the process of collapsing. So, you can’t draw some false comfort in the fact that Japan got away with it to 200% of GDP, or whatever it is, so we can too. We’re not Japan. We are worse. We’re Argentina.”

The Argentinian central bank is also in a war against price inflation it can’t win. It recently raised its interest rate to 133%. And that’s still below the country’s inflation rate.

Even though they have interest rates in the triple digits, it’s not going to work. It’s not going to stop inflation. The budget deficits are rising in Argentina. The national debt is rising. So, inflation is not going away. These rate hikes aren’t going to stop it because they can’t change the dynamic of government spending. We are in the same predicament.”

Some people will say you can’t compare the US and Argentina. Peter said, “Sure we can.”

The laws of physics work in America the same way they work in Argentina. Economics are laws. We have the same consequences.”

Peter noted that at one point, Argentina was one of the wealthiest nations in the world.

So, Argentina wasn’t always broke. They are now. So, if it can happen to Argentina, it can happen to America if we’re doing the same exact thing that they did – running these big deficits, printing all of this money.”

Tyler Durden
Tue, 10/31/2023 – 13:40

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