Private security in CHOP

Joseph Spiro [manager of Iconic Global] tells CHS that Iconic Global “high threat private protection” teams have deployed in the area protecting client businesses and residential properties with patrols and rapid response to threats and dangerous situations near the protest zone.
https://www.capitolhillseattle.com/2020/06/private-high-threat-protection-team-part-of-response-to-overnight-chop-shooting/

If you disband the police, then gangster warlords and private security companies will step in to fill the void.

See also: Minneapolis has paid $63,000 to private security firms for 3 council members

[Minneapolis spokeswoman Sarah] McKenzie said the city has spent $63,000 over the past three weeks for security service for three council members. She said contracts for less than $175,000 typically do not need public approval from council, and they do not expect these expenses to surpass that threshold. The security is coming from two companies: Aegis and Belcom. McKenzie said the companies provide licensed, armed security officers.  The council members have been under increasing scrutiny since they and some of their colleagues gathered in Powderhorn Park earlier this month and promised to begin the process of ending the Minneapolis Police Department. 

FISC Order about Carter Page

This isn't news as the document I am about to link to is dated January 7, 2020.  But I wasn't aware of this before today.  The Foreign Intelligence Surveillance Court  issues orders approving surveillance of US citizens, which would otherwise be illegal under the 4th Amendment.  It approves over 99.9% of all requests.  And these are secret orders - the subject of the order isn't aware of them ever.

In the Carter Page case, the FISC issued an unclassified opinion stating that the original applications had "material misstatements and omission".  See https://assets.documentcloud.org/documents/6669964/FISC-Declassifed-Order-Re-Page-FISAs.pdf  This was a huge rebuke to the FBI agents who originally filed the applications.

I think that all FISC orders should be unclassified after a certain number of years.

Banks can't determine who is credit-worthy

Banks have pulled back sharply on lending to U.S. consumers during the coronavirus crisis. One reason: They can’t tell who is creditworthy anymore.  Millions of Americans are out of work and behind on their debts. But, in many cases, the missed payments aren’t reflected in their credit scores, nor are they uniformly recorded on borrowers’ credit reports.

The confusion stems from a provision in the government’s coronavirus stimulus package. The law says lenders that allow borrowers to defer their debt payments can’t report these payments as late to credit-reporting companies. From March 1 through the end of May, Americans deferred debt payments on more than 100 million accounts, according to credit-reporting firm TransUnion, TRU +0.96% a sign of widespread financial distress.

https://www.nakedcapitalism.com/2020/06/wsj-says-banks-cant-determine-who-is-credit-worthy-morecovid-19-fallout.html (citing the Wall Street Journal)

So, the stimulus law says that borrowers can defer their debt payments and lenders can't report these as late payments.  The result is that credit card issuers have totally stopped issuing new credit cards.  (Well not totally, new credit cards issued dropped from 1.2 million per week in 2019 to 483,000 per week in May 2020).

Mall of America in default and may become dead mall

The Mall of America is located in Bloomington, Minnesota, which is about 10 miles of downtown Minneapolis.  Minneapolis is rapidly becoming the next Detroit, after allowing looters and arsonists to destroy or severely damage more than 1500 buildings and then deciding to disband its police force. 

Minnesota’s Mall of America, one of the nation’s largest shopping centers, missed its third payment on its $1.4 billion mortgage, Bloomberg reported. That puts its owner, Triple Five Group, more than 60 days delinquent. The Canadian-based company failed to make its $7 million debt payment for June, the news service reported, citing unnamed sources. Don Ghermezian, a senior executive at the real estate development company, told CNBC in April that without federal assistance, “many malls will be headed into default.”

The 5.6-million-square-foot complex on nearly 100 acres features more than 520 shops, including Macy’s and Nordstrom and two hotels. In addition, the mall’s center has a 7-acre indoor theme park, Nickelodeon Universe, according to the company’s website. Since it opened in 1992, more than 1 billion people have visited the mall.
https://www.pymnts.com/debt/2020/mall-of-america-mortgage-payments-reportedly-overdue/

So, more than 1 billion people have visited the mall since it opened in 1992, but it is on track to becoming a dead mall.  If they have missed 3 mortgage payments, it is highly unlikely they will ever catch up. The Mall officially reopened with 150 of its 500 stores on June 10, but it is unlikely to ever return to the previous level. 

The city of Bloomington is likely being heavily affected because of the drop in sales tax payments and property taxes.

The owner is Triple Five Group, which also owns the West Edmonton Mall in Alberta, Canada (which is even bigger than the Mall of America) and the American Dream, which is another huge mall that partially opened in East Rutherford, New Jersey in 2019 and then promptly closed because of the pandemic and still hasn't reopened. Triple Five used its ownership stakes in the Mall of America and the West Edmonton Mall as collateral to borrow $1.7 billion to build the American Dream.  Bonds sold to finance it are in junk bond territory.

The West Edmonton Mall reopened on May 13, and seems unaffected by the troubles afflicting the other two malls.

Replicating the Self lender model

I just wrote about the Self Visa and how ingenious it is.  I realized that there is a way to replicate this and at a lower cost.  Here is how:

1. Join a local credit union.  This usually can be done for $25.  All you need is a savings account, although you can get a free checking account too if you need it.
2. Save up at least $1000 in the savings account. $1500 or $2000 is better.  (Yea, you can use a secured credit card with a $200 balance instead, but that is a different strategy).
3.  Get a shared secured loan for $1000 or what you saved.  Even with bad credit, you can probably get a loan for 12% or less, because it is secured.
4.  With the proceeds of the loan, make a deposit and get a secured credit card.
5. Make sure to make the payments on time. Boom, same results, the only difference is that you save the money up front.

Which banks are too big to fail?

The technical term is Global Systemically Important Financial Institutions, and here is the list by tiers, where higher is more important.  I also think it is interesting where these are headquartered.

Tier Four:
JP Morgan Chase (New York)

Tier Three:
Citigroup (New York)
HSBC (London)

Tier Two:
Bank of America (Charlotte, NC)
Bank of China (Beijing)
Barclays (London)
BNP Paribas (Paris)
Deutsche Bank (Frankfurt)
Goldman Sachs (New York)
Industrial and Commercial Bank of China (Beijing)
Mitsubishi UFJ FG (Tokyo)
Wells Fargo (San Francisco)

Tier One:
Agricultural Bank of China (Beijing)
Bank of New York Mellon (New York)
China Construction Bank (Beijing)
Credit Suisse (Zurich)
Groupe BPCE (Paris)
Groupe Crédit Agricole (Paris)
ING Bank (Amsterdam)
Mizuho FG (Tokyo)
Morgan Stanley (New York)
Royal Bank of Canada (Toronto)
Santander (Boston)
Société Générale (Paris)
Standard Chartered (London)
State Street (Boston)
Sumitomo (Tokyo)
Mitsui FG (Tokyo)
Toronto Dominion (Toronto)
UBS (Zurich)
UniCredit (Milan)
Source: https://www.fsb.org/wp-content/uploads/P221119-1.pdf

Self Visa

I really like this idea.
1. So go to Self and choose a plan - I suggest the $150 plan for 12 months, although you can start for as little as $25/month.
2. Sign up for a non-refundable fee of $9.  Self will open a CD for $1663.
3. Each month, make the $150 payment.  Self will report this to the 3 credit bureaus - Experian, Equifax and Transunion.
4. Once you have a least $100 in principal saved and made 3 on-time payments, Self will also give you a secured visa card to use with the credit limit that you choose, up to the amount of your savings, rounded to the nearest $100.  There is no hard pull on your credit report for this.
5. After 12 months, you can keep the visa with a credit limit of up to $1600.  Or you can cancel the plan and visa and get a check for the full $1663.

So you get: 1) an installment loan reporting to the credit bureaus;  2) a visa card with up to a $1600 credit limit with no credit check; 3) a savings plan.

There is a cost to this.  The interest rate is about 15%.  You pay in $1800 and get back only $1663.  Also, if you don't make all 12 payments, they will cancel and use the CD as security and charge extra fees. But still, this is an excellent idea for some people.

Sleepy Joe is going to win

Source: https://www.270towin.com/

There are only 7 swing states: Arizona, Florida, Michigan, Minnesota, North Carolina, Pennsylvania, and Wisconsin.  And Biden is going to win all of them except North Carolina.   I could be wrong, I hope I am wrong, but this is how I see it as of today.

The biggest swing group is white Catholics and they didn't like Hillary.  Biden is one of them.  He is from Scranton, PA, a state he has locked up.

Let's say Trump wins Arizona, Florida, and North Carolina.  That's still only 260 electoral votes.  Where will the other 9 come from?  Wisconsin?  Biden is ahead 47.7 to 42.3 there.

Update:
This post, from a far-right commentator, thinks Trump has a zero percent chance of winning Florida in November.

Update 2:  Ohio should also be considered a battleground state.  The latest poll there shows a tie (44.7 to 44.7).   They have voted for the national winner every time except one since 1944.  I am going to keep it in the Trump category for now, but this could easily go either way.

Update 3: A recent poll in Georgia shows Biden in the lead 47 to 45.  I don't think Biden will win Georgia, but it is within the margin of error, so Georgia should be considered a battleground state as well.

Also, Maine shows a little red, but I doubt it, so that gives another point to Biden.

And North Carolina is leaning towards Biden.  But now Pennsylvania seems wide open, so I will temporarily swap them.  Result:  Even if Trump wins Ohio, Pennsylvania, and Georgia, heck lets give him Florida too, but not North Carolina, Biden still wins 285 to 253.

Coin Shortage

See Coronavirus pandemic poses new challenge to US economy: a coin shortage
The pandemic has "significantly disrupted the supply chain and normal circulation patterns" of pennies, nickels, dimes and quarters, the Federal Reserve district banks said recently.

I think coins are very interesting. Federal Reserve Notes are a liability to the Federal Reserve (called "Federal Reserve Notes Outstanding"), but coins are not - they are a liability of the US Treasury.  So when you look at total Currency in Circulation, you have to subtract the coins to get the liability of the Fed.  See https://aftermath2022.blogspot.com/2013/12/what-is-treasury-currency-outstanding.html

Note that Federal Reserve Notes in Fed vaults have no value, but they do in US Government vaults.  On the flip side, coins in US Government vaults have no value, but they do have value in Fed vaults.

There was talk a few years ago about issuing a trillion-dollar coin, which is ridiculous, but the US Government could issue high-value coins, like 1-ounce gold coins with a face value of $10,000.  The Treasury Department would earn the seigniorage on these.  Note that this would still add to the national debt, because they would be a liability of Treasury.

Hertz does a reverse Robinhood

A reverse Robinhood is where you steal from the poor and give to the rich.

Hertz stock (HTZ) was worth $20.29/share on 2/20/20 but fell to as low as $0.56/share on 5/26/20 after it declared bankruptcy.  It has since then surged to $5.53 before later dropping to $2.06.  Because of its volatility it is popular with daytraders and Hertz plans to take advantage of its popularity and stockowner's naivety to issue another $1 billion of stock.  Everyone is talking about how stooopid people are for buying the stock.

But the daytraders and small speculators may have the last laugh.  Consider the following:  1) Hertz is filing for a Chapter 11 (reorganization) not a Chapter 7 (liquidation).  So the company will still exist post-bankruptcy. 2) The stock will be de-listed from the NYSE but the stock can still be bought and sold OTC (over the counter).  3) The company will be in better shape post-bankruptcy without all the debt.  So the speculators are betting that Hertz continues as a going concern.  4) Hertz may be getting some bailout money.  This is just my speculation as I haven't heard anything about it.

So I don't think the daytraders and speculators are stupid.  They may be on to something.

The May 2020 deficit was $399 billion

See: https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0520.pdf

The fiscal YTD deficit is $1.88 trillion.  There are 4 months left in the fiscal year and if they have deficits of $400 billion per month, the total deficit for the fiscal year would be about $3.5 trillion.

Note that loans made to others, such as student loans or SBA loans, are not considered outlays, because they theoretically will be paid back.  (I think they may fall into "off-budget outlays").

Fed eliminates reserve requirements

As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020.  This action eliminated reserve requirements for all depository institutions.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm

So that means that any US Bank has a license to print an unlimited amount of money.  The only constraint on this ability is the credit-worthiness of the borrower, because the bank has to eat the cost if the loan isn't paid back.  However, the FDIC will guarantee the deposits of any bank that goes under.  So if a bank goes bankrupt, this is a loophole.

Imagine a world where corporate tycoons and Wall Street Bankers had less than sterling characters.  It could never happen, right?  So picture this - you have Good Bank and Mega Corporation, which are both relatively decent and honest as capitalism goes.  Good Bank has a hidden affiliate called Bad Bank, and Mega Corporation secretly owns Rotten Corp.  Rotten Corp borrows millions, no lets make that billions from Bad Bank (remember this is no limit on the amount of loans that can be created).  Now imagine that Rotten Corp has to pay Mega Corporation millions annually for something, lets call it "intellectual property payments".  Finally, the inevitable happens.  Rotten Corp goes bankrupt and defaults on its loans from Bad Bank, Bad Bank goes bankrupt and is shut down and its depositors are bailed out by the FDIC. Everybody wins, right?  And what if Rotten Corp could keep borrowing money to cover its losses, you could keep the casino going forever, right?  Bail everybody out forever!

So its not just the Fed printing money, every bank in the country is printing money as well.
Let the Good Times Roll!

The Fed is bailing out the NYC subway system

At the urging of Sen. Chuck Schumer, the Fed will add the Metropolitan Transportation Authority, that is the New York City subway system, to the list of entities that it will bail out. The Fed, via its Municipal Liquidity Facility, is going to buy $30 billion of MTA paper.
https://www.economicpolicyjournal.com/2020/06/now-federal-reserve-is-bailing-out-new.html

So how much money does the Municipal Liquidity Facility have?
The facility will purchase up to $500 billion of short term notes directly from U.S. states (including the District of Columbia), U.S. counties with a population of at least 500,000 residents, and U.S. cities with a population of at least 250,000 residents. 
https://www.federalreserve.gov/monetarypolicy/muni.htm

What is the equity of the MLF?
The MLF will provide a liquidity backstop to issuers of Eligible Notes through an SPV. The Treasury Secretary, using funds appropriated to the Exchange Stabilization Fund under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), will make an initial equity investment of $35 billion in the SPV.

So let's think about this.  The Fed prints green paper out of thin air (dollars) but it wants something in return.  The US Treasury prints bonds and notes and trades them (indirectly through the primary dealers) to the Fed in exchange for the cash. That is what is causing the national debt to soar.  But no worries, even though it is called debt, it never has to be paid back.  (They do have to make payments on it, but they can borrow more to make up for the payments). So the ability to print bonds is really the ability to print money.

Now municipalities and the New York subways system have the same ability.  With municipalities, the type of security is different.
The immediate purpose of the MLF is to enhance the liquidity of the primary short-term municipal securities market through the purchase at issuance of Tax Anticipation Notes (TANs), Tax and Revenue Anticipation Notes (TRANs), Bond Anticipation Notes (BANs), Revenue Anticipation Notes (RANs), and similar short-term notes.

So, the ability to issue TANs,TRANs,BANs, and RANs is really the ability to print money, up to a collective total of $500 billion. And if number is reached, Congress will probably authorize more.  So, free money ($30 billion) to the subway.

Everybody is happy.  But what does this do to the value of the dollar?

The recession officially began in February 2020

The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.

The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak.

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough.

https://www.nber.org/cycles/june2020.html

The NBER defines "troughs" and "peaks".  A trough means that a recession has ended and a recovery has begun the same month.  A peak means that the expansion has ended and the recession has begun in the same month.  The last trough was in June 2009.  June 2009 to February 2020 is 10 full years plus 7 months in 2009 and 2 in February 2020, so that is 129 months.  So they allocate 1/2 month to both recession and expansion.  Effectively, what they are saying is that the expansion began on June 15, 2009 (plus or minus a few days) and ended on February 15, 2020 (plus or minus a few days), and since mid-February we have been in a recession.

The last recession began in December 2007 to June 2009, which was 18 months.  Hopefully, this recession won't last that long, but if it does, it wouldn't be over until August 2021.

$20 Trillion in Debt Held By the Public

Source: https://www.treasurydirect.gov/govt/reports/pd/pd_debttothepenny.htm

On 6/3/20, the Debt Held By the Public aka Public Debt, hit $20,031,292,630,338.74.
It first exceeded $19 trillion on 4/30/20, and $18 trillion on 4/7/20.  It first exceeded $17 trillion on 11/7/19.

And although it first exceeded $16 trillion on 11/30/18, it was frozen because of an obsolete idea called the debt ceiling at about $16.2 trillion until 7/31/19, (when the public debt was at $16.247 trillion).

So the public debt increased by about $3.8 trillion in only 10 months, an average of $380 billion per month.  We can round it down and call it $1 trillion every 3 months.  Will this rate of increase continue?  Well, no, the stimulus bill cost $2.2 trillion.  But we may see an increase of $1 trillion every 6 months from this point forward unless some serious budget cutting is done.

I want to do another long-range forecast the next time the CBO updates their report.

The Fed's Boss - Blackrock

Laurence D Fink, CEO of Blackrock

It’s called “Going Direct.” That’s the financial bailout plan designed and authored by former central bankers now on the payroll at BlackRock, an  investment manager of $7 trillion in stock and bond funds. The plan was rolled out in August 2019 at the G7 summit of central bankers in Jackson Hole, Wyoming – months before the public was aware of any financial crisis. One month later, on September 17, 2019, the U.S. Federal Reserve would begin an emergency repo loan bailout program, making hundreds of billions of dollars a week in loans by “going direct” to the trading houses on Wall Street.

The BlackRock plan calls for blurring the lines between government fiscal policy and central bank monetary policy – exactly what the U.S. Treasury and the Federal Reserve are doing today in the United States. BlackRock has now been hired by the Federal Reserve, the Bank of Canada, and Sweden’s central bank, Riksbank, to implement key features of the plan. Three of the authors of the BlackRock plan previously worked as central bankers in the U.S., Canada and Switzerland, respectively.

The authors wrote in the white paper that “in a downturn the only solution is for a more formal – and historically unusual – coordination of monetary and fiscal policy to provide effective stimulus.” https://wallstreetonparade.com/2020/06/blackrock-authored-the-bailout-plan-before-there-was-a-crisis-now-its-been-hired-by-three-central-banks-to-implement-the-plan/

This whole economic crisis we are in was carefully planned.  Part 1: The repo crisis of September 2019.  Part 2: The attempted impeachment of Trump.  Part 3:  The coronavirus pandemic.  Part 4:  The riots and looting.  

Read the plan at https://www.blackrock.com/corporate/literature/whitepaper/bii-macro-perspectives-august-2019.pdf .  Ok, it doesn't mention anything about repos, or impeachment, or coronavirus, or riots.  But it certainly was a plan on what central banks should do during the next crisis, which coincidentally started just one month later.

Blackrock has over $7 trillion in assets.  They are the boss of the Fed.  Meet your benevolent dictator, Laurence D Fink, CEO of Blackrock, the largest shadow bank in the world and the true president of the shadow United States.  Bill Gates is a billionaire, but this guy is a trillionaire.  Ok, his personal net worth isn't a trillion (it's only $1 billion), but he is in control of trillions.  He tells Jay Powell and Steve Mnuchin what to do.

See also: BlackRock Is Bailing Out Its ETFs with Fed Money and Taxpayers Eating Losses; It’s Also the Sole Manager for $335 Billion of Federal Employees’ Retirement Funds

Bank of Canada balance sheet jumps from $118 billion to $440 billion in 8 weeks

See http://jpkoning.blogspot.com/2020/05/a-quick-guide-to-what-bank-of-canada-is.html

See also: http://www.bondeconomics.com/2020/05/bank-of-canada-repo-printer-go-brrr.html