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Numbers At Giant Truck Lender BMO Show Worsening Credit Conditions

Numbers At Giant Truck Lender BMO Show Worsening Credit Conditions

By John Kingston of FreightWaves

Further credit deterioration in trucking is evident in the quarterly earnings report of Canada’s BMO bank.

BMO, the former Bank of Montreal, is one of the largest lenders to the trucking industry. Its transportation unit, purchased from GE Capital in 2015, has a customer base believed to be in the tens of thousands. Roughly 90% of its transportation sector is reportedly truck financing.

Provisions for credit losses at BMO in the quarter ended April 30 climbed to CA$56 million (U.S. $41 million). That marks the seventh consecutive quarter in which that important benchmark figure has risen, and it is easily the highest figure in the history of the BMO data going back to 2015 when the bank bought the business from GE Capital.

That seven-quarter stretch started with provisions of $2 million in the fourth quarter of 2022, an amount that followed a net positive provision of $3 million a quarter earlier. Provisions can be positive when losses are extremely low and are offset by earlier provisions being removed from the danger list as financial conditions allow earlier troubled borrowers to get financially healthy.

Since that Q4 2022 figure, the provisions rose sequentially to $6 million, $18 million, $19 million, $26 million and $41 million before its latest amount. In one year,  provisions for credit losses in the transportation group at BMO have risen about 210%.

Even in the depths of the pandemic, in the second quarter of 2020, provisions for credit losses in BMO’s transportation group were only $38 million.

Write-offs also have soared. In the second quarter, BMO write-offs in the transportation sector were $51 million. The sequential transportation sector write-offs over the prior four quarters were $10 million, $16 million, $20 million and $31 million.

But BMO’s transportation group shows no signs of pulling back. Its gross loans and acceptances rose to $15.05 billion, the highest in its history since the activities became part of the bank’s operations.

Another key category, gross impaired loans, totaled $305 million, up from $230 million in the prior quarter. An impaired loan has been defined as one about which management believes there is significant doubt whether it can be repaid. The sequence at BMO for that category in the previous four quarters is $91 million, $113 million, $170 million and $230 million. 

If there was anything positive in the report about the credit health for trucking, it came in allowances for credit losses, which held at $24 million. The difference between allowances and provisions, which worsened considerably, has been described as allowances representing a balance sheet item that gets charged against gross loans. Provisions for credit losses have been described as a figure that affects bank income.

On BMO’s earnings call with analysts, the transportation group was the subject of specific discussion, which is not the norm.

Chief Risk Officer Piyush Agrawal said BMO has been in transportation “for 40 years, 50 years. We’ve been through several cycles. We managed through several cycles, and we’re beginning to see some recovery or flattening out of delinquencies out there.”

According to a transcript of the call, Agrawal added that the transportation business is weighted toward small truckers, many with 10 or fewer trucks in their fleets.

BMO’s transportation group is outperforming delinquency benchmarks, Agrawal said. But it still took increased impairment charges for the quarter, leading to the increased level of impaired loans.

“We feel good about that performance because with the summer, tonnage is picking up. Freight rates will move up,” Agrawal said. “And I think as supply goes down, they should do well.”

Tyler Durden
Fri, 05/31/2024 – 06:30

Private Prescription Of Puberty Blockers Banned In UK

Private Prescription Of Puberty Blockers Banned In UK

Authored by Victoria Friedman via The Epoch Times,

The UK government has banned private gender clinics from prescribing puberty blockers to under-18s, in a move which campaigners say will close a loophole for access to the drugs.

The Department of Health and Social Care (DHSC) announced on Wednesday that it would put a three-month emergency ban on supplying puberty-suppressing hormones to gender-confused children in England, Wales, and Scotland. It will apply to prescriptions written by prescribers in the UK and those registered in the European Economic Area and Switzerland.

The ban, taking affect on June 3 until Sept. 3, was made “to address risks to public safety,” the DHSC said.

“Indefinite restrictions” have also been put in place on the prescription of these drugs within the National Health Service (NHS), the UK’s publicly-funded health care system. The NHS has already stopped the routine prescription of puberty blockers.

Announcing the measures on social media platform X, Health Secretary Victoria Atkins said, “Today I have taken bold action to protect children following the Cass Review, using emergency powers to ban puberty blockers for new treatments of gender dysphoria from private clinics and for all purposes from overseas prescribers into Great Britain.”

Ms. Atkins added that she had introduced similar restrictions for NHS prescriptions “to further close the loopholes.”

Concerns Over Private Clinic Loophole

Published in April, the Cass Review criticised NHS care providers for pushing gender-confused children onto inappropriate pathways of medical treatment that included drugs and surgery.

Among her recommendations, Dr. Hilary Cass called for a “holistic” approach to treating gender dysphoria, in a move away from the prevalent “gender-affirming” approach which saw health care professionals simply affirming a child’s chosen gender and prescribing them puberty blockers and then cross-sex hormones and putting them on the path to surgical interventions.

The completion of the landmark review saw publicly-funded NHS England and health authorities in Scotland stopping the prescription of puberty blockers, but campaigners warned at the time that private clinics would still be able to provide the drugs to children.

Stephanie Davies-Arai, director of Transgender Trend, welcomed the government’s announcement, telling The Epoch Times it will “close that loophole for puberty blockers.”

The government has gone as far as it could go “in preventing those drugs moving through UK pharmacies,” Ms. Davies-Arai said, adding that while there will always be black market means to obtain the drugs, largely it is going to be “much more difficult to get hold of puberty blockers.”

Cross-Sex Hormones

The Transgender Trend director also voiced concern that masculinising/feminising, or cross-sex, hormones for those aged 16 and over were still available on the NHS and privately, despite the Cass Review saying they should be prescribed with “extreme caution.”

Cross-sex hormones can cause a range of health problems and permanent physical changes, such as infertility in both sexes and male pattern baldness and a deep voice in women. For men, known side effects of testosterone-blocking drugs include an increased risk of blood clots and cardiovascular disease.

Ms. Davies-Arai said that banning puberty blockers was a significant step, but that it “doesn’t really solve the problem if teenagers are getting cross-sex hormones that are going to have effects for the rest of their lives—some of them known, some of them not known, because this is so new.”

Following the Cass Review, the NHS said it will review the prescription of cross-sex hormones. Scottish health services dealing with patients with gender dysphoria have said that patients will no longer be prescribed cross-sex hormones until they are 18.

The Vulnerable 17–25 Cohort

The Cass Review was triggered following a sharp increase in referrals to the Gender Identity Development Service run by the now-closed Tavistock and Portman NHS Foundation Trust in London, which specialised in working with children and young people who have gender dysphoria.

Dr. Cass’s review also looked at provisions for older teenagers and young adults. The review suggested that NHS England ensures regional gender care centres which have been set up to replace the Tavistock clinic have a “follow-through service” for 17- to 25-year-olds to ensure continuity of care and support during what Dr. Cass noted was “a potentially vulnerable stage in [the patient’s] journey. ”

Ms. Davies-Arai shared her concerns over provision for this older teen/young adult cohort, which she said was “incredibly vulnerable,” noting those in that stage life are becoming adults, often moving away from home for the first time.

She added that that generation in particular have been brought up with gender ideology taught to them “as fact and that biological sex is irrelevant” and that gender transition has been “marketed ruthlessly to young people.”

While still legally adults at that stage, the Transgender Trend director said that it is still “much too young to be making those kinds of decisions.”

“I don’t think informed consent can be given to treatments that are at such an experimental stage,” she explained.

“The NHS have now committed to doing a full Cass-style review of the adult clinics, and that can’t come soon enough,” Ms. Davies-Arai said, adding: “Adult clinics are similar to the private clinics. They’re based on gender affirmation, giving ‘gender affirming care.’ And there is not enough exploration and finding out what’s behind the young person’s distress.”

She warned that many of these young people “coming up from the Tavistock” may have other underlying issues that have not been explored by health professionals, including gay and lesbian youths struggling with their sexuality, mental health problems, trauma, or if they have been in the care system.

Last month, The Epoch Times spoke to detransitioner Ritchie Herron, who underwent gender reassignment surgery in his mid-20s in an attempt to live as a woman. He is calling for reform of adult gender services to protect vulnerable adults so that they are given a comprehensive psychological assessment and the support they need.

Mr. Herron—who is autistic and has obsessive compulsive disorder—said that psychologists did not consider his mental health problems or his struggle to come to terms with being gay and did not assess him for autism before putting him on the path of drugs and surgery.

Tyler Durden
Fri, 05/31/2024 – 06:00

Watch: Trump Responds After NY Guilty Verdict

Watch: Trump Responds After NY Guilty Verdict

Update (1710ET): Former President Donald Trump has been found guilty on all 34 counts in his New York ‘hush money’ trial. The outcome makes him the first former president to become a convicted felon.

Trump reportedly stared ahead motionless as the verdict was read.

The trial centered on allegations that Trump falsified business records in order to conceal a hush money payment to porn star Stormy Daniels ahead of the 2016 US election. Prosecutors under Manhattan DA Alvin Bragg argued that Trump oversaw a scheme to influence the 2016 election by using Trump Organization records to conceal the payments.

“Everything Mr. Trump and his cohorts did in this case is cloaked in lies,” said prosecutor Joshua Steinglass. “The evidence is literally overwhelming.”

Trump Responds

This is a rigged, disgraceful trial,” Trump said in response, adding “The real verdict will be on November 5.”

Judge Juan Merchan will now decide Trump’s sentence on July 11 – days before Republicans are set to select him as the 2024 nominee. The crime has a maximum sentence of four years in prison. That said, Merchan could also opt for home confinement, probation, supervised release, fines or community service.

Biden Campaign Responds

“In New York today, we saw that no one is above the law,” reads a statement.

“Donald Trump has always mistakenly believed he would never face consequences for breaking the law for his own personal gain. But today’s verdict does not change the fact that American people face a simple reality. There is still only one way to keep Donald Trump out of the Oval Office: at the ballot box. Convicted felon or not, Trump will be the Republican nominee for president.”

Trump is certain to appeal the verdict, which could take months or even years – however Democrats now have their ‘Felon Trump’ talking point which they think will help Joe Biden come November. 

As ‘Techno Fog’ of The Reactionary notes, 

The target might have been Trump, but the real goal was to influence the 2024 election, no matter the shaky facts and dubious legal theories of the case. Democracy must be saved even through unlawful and unethical means. The enemies of society must be hunted, the obstacles to progress must be destroyed.

As the years-long Trump investigation and prosecution continued, and as New Yorkers continue to deal with rampant crime and theft and felony assaults – which they often don’t even report due to “the revolving-door criminal injustice system” – Trump was pursued with rare intensity. The bodega shopkeepers, facing a shoplifting and armed robbery epidemic which empties their shelves and puts their lives at risk, are besides themselves. As are normal citizens whose safety is at risk daily. If only their interests were political. If only the perpetrator were the Republican presidential frontrunner and not a career criminal then perhaps they would see justice.

In trial, venue matters. It’s strategic, it’s the selection of a favorable judge and jury. Monsanto is sued in San Fransisco and the jury pours them out for $289 million. Cook County (Illinois) is notorious for high jury verdicts. So too is Philadelphia and Lansing, Michigan. Corporate defendants tremble in fear at being sued in working class cities along the Gulf coast. Texas brings suit against the Biden Administration in the Southern District of Texas – Galveston Division because the one federal district judge there (a Trump appointee) will not hesitate to stop unlawful acts or policies. Hawaii brought suit in Honolulu against the Trump Administration and obtained a temporary restraining order against Trump’s travel ban from an Obama-appointed judge. He was reversed by the Supreme Court, but that process took over a year.

And as ‘End Wokeness’ notes, there’s no turning back from the new precedent which has just been set by Democrats.

Meanwhile, WinRed, the Republican donation platform, is currently overwhelmed.

The 77-year-old Trump still faces criminal trials in Washington and Georgia over alleged attempts to overturn the results of the 2020 election, as well as one in Florida pertaining to his handling of classified national security documents taken from the White House.

*  *  *

The jury empaneled in the NY v. Trump case said it has reached a verdict.

The 12-person jury – which has requested 30 minutes to fill out the paperwork  – will soon enter the courtroom and announce what it has decided. Manhattan District Attorney Alvin Bragg charged former President Trump with 34 counts of falsifying business records in the first degree, and Trump pleaded not guilty to all counts.

Judge Juan Merchan will invite the jury in to read its verdict.

Prior to receiving the jury’s note around 4:20 p.m., Merchan had indicated he would excuse the jury for the day at 4:30 as a growing number expected a mistrial due to a hung jury however the presence of a verdict means that we will shortly know if the jury has found Trump “guilty” or “not guilty.”

Prosecutors needed to prove beyond a reasonable doubt that Trump falsified business records to conceal a $130,000 payment to Stormy Daniels, a pornographic performer, in the lead-up to the 2016 election to silence her about an alleged affair with Trump in 2006.

Michael Cohen, Trump’s former attorney, was the prosecution’s “star witness.”He testified that he personally made the $130,000 payment to Daniels using a home equity line of credit in an effort to conceal the payment from his wife.

Cohen said he did this because Trump told him to “handle it” and prevent a negative story from coming out ahead of the election.But Trump’s defense attorneys maintained that the president never directed Cohen to do so.

 

Tyler Durden
Fri, 05/31/2024 – 05:44

Swiss Franc Pinned Against Dollar, Euro, But Has Tailwind Versus Yen

Swiss Franc Pinned Against Dollar, Euro, But Has Tailwind Versus Yen

Authored by Ven Ram, Bloomberg cross-asset strategist,

The Swiss franc has had a twin life so far this year, weakening against the dollar and the euro, but proving to be resilient against the yen. 

That double role may persist so long as real rates in the US stay aloft.

This is broadly how the franc has performed this year:

Outlook against the dollar:

The franc has been hobbled against the dollar and the euro, with higher nominal and inflation-adjusted yield differentials proving to be a particular handicap against the US exchange rate. Against the dollar, the franc will continue to be on the back foot so long as real rates in the US stay higher for longer. The Swiss National Bank is perturbed sufficiently by the prospect of weakness in the franc stoking domestic inflation as to warn that it might intervene in the currency markets.

Indeed, the franc has recovered some 0.6% on the day on the back of SNB President Thomas Jordan’s comments. While the SNB may be willing to put a floor on the franc, it’s unlikely that it will be able to turn the tide entirely on what is a broader dollar move.

The franc will claw its way back against the dollar when signs emerge that a rate cut from the Federal Reserve is imminent, but we aren’t yet at that point.

Outlook against the euro:

The euro is also better placed against the franc given that nominal rate differentials between the euro zone and Switzerland will continue to work in favor of the former in the months to come.

Traders are factoring in about 60 basis points of policy loosening from the European Central Bank this year, though as noted before, there is a chance that we could get only two cuts. The carry on a long euro position against the franc is, therefore, bound to be significant, which will deter gains in the Swiss currency. Even with Jordan’s warning echoing in the background, EUR/CHF isn’t too far from parity.

Outlook against the yen:

The franc has proved more resilient against the yen than I expected it to be, though the bulk of that performance has stemmed from carry returns. An investor who is long the franc against the yen is essentially getting paid to put on the trade, which has underpinned the spot move in CHF/JPY so far this year.

The broader yen is dogged by immense gloom, which has sent Japan’s exchange rate tumbling a lot lower than it ought to have. While the franc may yet stay supported against the yen, traders will find that the carry that is enticing them won’t be sufficient to buffer the cross when broad sentiment toward the yen turns.

Tyler Durden
Fri, 05/31/2024 – 04:00

The State Of World Hunger

The State Of World Hunger

At least 735 million people were affected by hunger in 2022, according to the most recent report from the Food and Agriculture Organization of the United Nations (FAO).

And as Statista’s Martin Armstrong reports, nowhere does the problem have a larger scale than on the African continent. According to FAO, about 61 percent of the population there was experiencing moderate (including not enough money for healthy food, self-sufficiency problems, having to skip meals) or severe (including no food stocks, entire days without food) food insecurity (FAO’s definition). This represents an increase of 9.4 percentage points from 2017, and 4.9 points higher than the first Covid pandemic year.

Infographic: The State of World Hunger | Statista

You will find more infographics at Statista

Other world regions have seen a dip or plateau in hunger levels since the start of the pandemic, which caused widespread increases due to “an unequal pattern of economic recovery among countries and unrecovered income losses among those most affected by the pandemic”. Africa though has experienced an unabated rise.

Looking ahead, the FAO expects “most progress to occur in Asia, whereas no progress is foreseen in Latin America and the Caribbean, and hunger is projected to increase significantly in Africa by 2030.”

Tyler Durden
Fri, 05/31/2024 – 03:00

Putin Expects NATO, And Possibly Poland In Particular, To Escalate The Proxy War In Ukraine

Putin Expects NATO, And Possibly Poland In Particular, To Escalate The Proxy War In Ukraine

Authored by Andrew Korybko via Substack,

President Putin shared a lot of insight about the NATO-Russian proxy war in Ukraine during the press conference that he held during his latest trip to Uzbekistan. The first point of relevance that he made is that Zelensky is no longer regarded by Russia as Ukraine’s legitimate leader after his term expired. According to President Putin’s “tentative estimate” of this legal question, Rada Speaker Stefanchuk should now be seen as Zelensky’s legal successor.

The Russian leader also speculated that the only reason why the incumbent remains in power is for him to carry out scandalous moves like possibly lowing the draft age to 23 and even 18 years. In his words, “I believe that after this and other unpopular decisions are made, those who are acting today as representatives of executive government would be replaced with people who would not be responsible for the unpopular decisions made. These representatives will be simply replaced in a snap.”

Moving along, in response to a question about NATO chief Stoltenberg’s suggestion for members to let Ukraine use their arms to hit targets inside of Russia like the US just tacitly approved of Kiev doing, he reminded everyone that long-range precision strikes require space reconnaissance data. Since Ukraine lacks these capabilities, such strikes can only be carried out with NATO support, including through instructors inside Ukraine masquerading as mercenaries for plausible deniability purposes.

President Putin advised the West to think twice about this and then addressed Russia’s fresh push into Ukraine’s Kharkov Region, which he confirmed was in response to the shelling of Belgorod and aimed at carving out a “security area” exactly as he earlier warned he’d order if those attacks didn’t stop. On the topic of Belgorod, he lamented that the Western media doesn’t report on Ukraine’s strikes there, and hinted that his envisaged “security area” could expand to stop longer-range attacks if need be.

He was later asked about Ukraine inviting French “instructors”, to which he responded by saying that his forces regularly “hear English, French, or Polish on the radio” when listening in their opponents, thus confirming that their mercenaries have long been deployed there. Of those three, President Putin believes that the Polish ones are the least likely to leave, which is an allusion to Russian officials’ prior claims that it plans to annex Western Ukraine or at least incorporate it into a sphere of influence.

As for how he sees everything ending, he reaffirmed his commitment to peace talks and reminded everyone that it’s Ukraine that unilaterally froze this process, not Russia. Mid-June’s upcoming “peace talks” in Switzerland are only designed to “create a semblance of global support” for the West’s unilateral demands of Russia aimed at inflicting a strategic defeat upon it. Suffice to say, President Putin promised that this won’t succeed, and he concluded by saying that it’ll only be more painful for Ukraine.

Reflecting on his remarks, the Russian leader signaled that he’s sincerely interested in peace but is also preparing for an escalation in the conflict since NATO’s latest moves suggest that it’s still disinterested in compromising. The US is using Zelensky as its figurehead for implementing unpopular decisions aimed at indefinitely perpetuating this doomed conflict, after which it’ll likely replace him with someone else once public opinion demands it.

Even in that scenario, however, it’s unclear whether another Ukrainian regime change would precede the recommencement of genuine peace talks that ensure Russia’s national security interests. President Putin’s words about Poland came amidst it expressing support for using Western arms to strike targets inside of Russia, countenancing shooting down missiles over Western Ukraine, and repeating its position that a conventional intervention in that neighboring country can’t be ruled out.

From the looks of it, Poland is indeed preparing to conventionally intervene in Ukraine if Russia achieves a military breakthrough, which could spike the risks of World War III by miscalculation due to the US’ dangerous game of nuclear chicken that it’s playing as explained here. In sum, the NATO-Russian security dilemma is spiraling out of control, and Russia might use tactical nukes in self-defense to stop any large-scale NATO invasion force that threateningly crosses the Dnieper towards its newly unified regions.

Therein lies the importance of President Putin hinting that his country might expand its “security zone” to defend against Ukraine’s use of long-range precise strike systems against targets within its pre-2014 territory. He wants NATO to know the territorial extent to which Russian forces might go in the event that the front lines collapse, which is essentially dependent on them and their decision to allow it to use such Western arms with the bloc’s space reconnaissance support.

The message being sent is that Russia has no interest in going beyond those geographical limits that NATO itself is responsible for setting through its abovementioned decision, which is meant to prevent the bloc from overreacting if their opponents achieve a military breakthrough. A Polish- and/or French-led conventional intervention would already be dangerous enough, but that invasion force’s potential crossing of the Dnieper could trigger a tactical nuclear response from Russia in self-defense.

The latest military-strategic dynamics suggest that a conventional NATO intervention is seriously being considered, even if it’s only a partial one that remains west of the Dnieper. The signals coming from NATO as a whole and Poland in particular show that they want an escalation in order to continue fighting Russia to the last Ukrainian, but President Putin just countersignaled that his country is prepared for all eventualities.

It’s therefore up to the West whether or not everything spirals into World War III.

Tyler Durden
Fri, 05/31/2024 – 02:00

The 3 Layers Of The Technocratic State

The 3 Layers Of The Technocratic State

Authored by Jeffrey Tucker via The Epoch Times,

There are three layers to the U.S. state that lord it over the American people and the world: deep, middle, and shallow. It’s a typology of how technocracy works in practice. Let’s talk about how it works and how the layers interact.

Donald Trump popularized the term deep state, and it is a good one. There is a large and serious literature on the topic. It refers mostly to the long-operating and largely out-of-public eye intelligence agencies and their cut-outs in the private sector. It is inclusive of security agencies, which means CIA but also some portions of the FBI, NSC, NSA, CISA, DHS, top brass at the Pentagon, and more besides.

They are the most powerful force in American politics and have been for many decades. Anyone who calls them out is called a “conspiracy theorist” simply because there is a lack of documentation for these claims that everyone knows are true. They are “classified,” Washington’s magic term for anything they want to hide from you.

Lately, there has been an opening up on this topic, thanks very much to Robert F. Kennedy, Jr., Trump, journalist Mike Benz, and many others who have worked so hard over the years to expose the cabal. This new attention is mostly due to a series of audacious plots that unfolded since 2016: the bogus claim of Russia interference in the election, as manufactured by the deep state, the surreptitious weaponization of the justice system still ongoing, as well as the pandemic policies that had deep-state fingerprints all over them.

The middle state is the administrative bureaucracy, the civil service, as they are called. Invented by the Pendleton Act of 1883 and growing through wars and crises, and deeply entrenched in the 21st century, it is more than 2 million strong and consists of more than 400 agencies, some innocuous and some deeply threatening. Elected politicians only pretend to control the middle state but the reality is the opposite. They are the people with permanent positions, institutional knowledge, and the focus to preserve the status quo no matter who shows up in town for the party.

Very often, newly elected politicians come to town naively hoping to make some difference. They quickly encounter an awesome and impenetrable force all around them, staffers moving from office to office, random people from agencies about which they have never heard, and attending briefings designed to introduce the newbie to the ways of Washington but which are really designed to intimidate them into compliance. Most newly elected leaders arrive with no real understanding of this system.

This is what Trump faced when he was elected. He believed that the president was supposed to be in charge, like a CEO or an owner of a company. That’s the only world he knew, one in which he was at the top of the heap and his word was a marching order. He figured that this day would arrive after the inauguration. It did not. He simply couldn’t get over it and never was willing to simply play the marionette as others had done, in exchange for plaudits and payoffs.

Once Trump figured it all out, he assigned his trusted staff to do something about it. He issued a series of executive orders to get the middle state under control. In May of 2018, he took his first steps to gain some modicum of control over this deep state. He issued three executive orders (E.O. 13837, E.O. 13836, and E.O.13839) that would have diminished their access to labor-union protection when being pressed on the terms of their employment. Those three orders were litigated by the American Federation of Government Employees (AFGE) and sixteen other federal labor unions.

All three were struck down with a decision by a D.C. District Court. The presiding judge was Ketanji Brown Jackson, who was later rewarded for her decision with a nomination to the Supreme Court, which was affirmed by the U.S. Senate. The prevailing and openly stated reason for her nomination was said to be mostly demographic: she would be the first black woman on the Court. The deeper reason was more likely traceable to her role in thwarting actions by Trump which had begun the process of upending the administrative state. Jackson’s judgment was later reversed but Trump’s actions were embroiled in a juridical tangle that rendered them moot.

Later came a wonderful executive order that would have reclassified a range of middle-state employees as “Schedule F” and thus subject to control by the elected president. That order caused Washington to fly into wild panic. Joe Biden reversed the order on his first day in office. They have had four years now to pass restrictions to prohibit that from happening again.

As recently as last week, Biden’s Office of Personnel Management finalized rules to make it difficult for Trump to strip civil servants in policy making roles of their permanent positions. Yes, the plot against a possible second Trump term is fully engaged already.

The third layer is the shallow state. It consists of legacy media outlets such as CNN, the New York Times, the Washington Post, MSNBC, in addition to social media companies like Facebook, LinkedIn, Reddit, as well as common internet tools like Google and Wikipedia. It includes military contractors and tax-supported academia as well.

These are all captured institutions, with revolving doors with the deep and middle states. The reporters at these large media outfits have close relationships with the top bureaucrats at the agencies they cover, which is why the agencies themselves are rarely investigated closely.

When lockdowns came, Facebook and all the mainline social media companies instantly signed up to be both propagandists and censors. When they worried about the impact on their business models, middle and deep state bureaucrats hounded them to step it up and serve their masters. They mostly complied. We know all this by virtue of tens of thousands of pages of correspondence that is now moving through the courts, possibly resulting in judgments that would bring back the First Amendment.

The shallow state also includes a major swath of the banking and financial sector that depends fundamentally on the benevolence of the middle-state Federal Reserve to provide an uninterrupted stream of liquidity to fuel its operations. In some sense, the entire system mapped out here depends on this funding source, without which the lockdowns, wars, welfare state, and enormous corporate subsidies (to pharma, agriculture, and the Green New Deal) could not and would not exist.

What is and isn’t included in the shallow state is obviously debatable on many levels. What about an institution that massively benefitted from lockdowns, such as Amazon, but didn’t actively lobby for the policy? How does the fact that its founder and major investor also owns the Washington Post which did push for lockdowns affect the judgment? And what about online learning companies that got rich solely due to school closures? Are they also shallow state? There are good discussions to have here.

The relationship between the three layers is perfectly illustrated in the way pharmaceutical companies work. They do the bidding of the deep state with biodefense work that is classified, making both pathogens and antidotes. They work with the middle state, with board members and managers of companies going back and forth with the NIH and FDA, sharing royalties on new patented consumer products. The companies then dominate advertising on all the main media venues, which means that the media covers up for them at every turn and echoes deep and middle state priorities.

If you are seeking to set up and manage a 21st-century technocratic regime, the ideal mechanism of compulsion and coercion is centered in the shallow state, because it is private, consumer-facing, and trusted more than any other layers of the state. Every form of coercion can be “market washed” as if these are purely private actions taking place. The strategic objective of any really good plan for hegemony, then, is to push the agenda from the deep state, through the middle state, and land in the shallow state for distribution to the public.

This is because the shallow state is the most effective tool for bringing about results. You want the large corporations and big finance to be the ones to move against political enemies, and you want the major media rather than the agencies to distribute the propaganda. You want the doctors to sell the drugs and the search engines to generate the message. Whatever trust remains is centered on these shallow-state institutions and therefore they are the ones you want to capture to do your bidding.

Yes, it all sounds very corrupt. It is. And it has absolutely nothing to do with this document called the Constitution, which is supposed to be the real law of the law. For the three-layer state, this document simply doesn’t matter. A quiet coup has taken place over the decades that has entrenched this wild system in contradiction to everything the Founding Fathers desired.

All three are right now plotting to resist a possible victory by Donald Trump in November. The notion that he would win in 2016 seemed outlandish. But the prospect of returning after a four-year hiatus to gain the presidency again is nearly miraculous. In any case, it is something no one imagined possible a few years ago.

Indeed it is easily one of the biggest political comebacks in history, and amounts to the closest thing we’ll likely ever see to a genuine revolution in modern times. What comes of it, we’ll have to find out but this much is clear: the whole of the three-layered state has done everything to stop it. Right now, the whole system is in complete freak-out mode, in full display of the whole world.

There is plenty of reason to doubt aspects of the Trump agenda. I’ve personally authored what is by now a large literature against features of the ideology that drives it.

But there is no getting around the real issue today. We are nearing a perfect battle between the people, who are supposed to rule or at least have some line of influence over the regime, and this three-layer cartel of overlords that is actually in charge.

No one who aspires to freedom and dignity can possibly defend this status quo, so it makes sense to look forward to its overthrow, if it is at all possible.

Tyler Durden
Thu, 05/30/2024 – 23:45

PCE Preview: A 3 Year Low?

PCE Preview: A 3 Year Low?

Two weeks after the latest CPI print came in fractionally below estimates and sent yields to their May lows, tomorrow at 8:30am, we will get the Fed’s preferred inflation metric, the April core PCE inflation numbers.

EXPECTATIONS: headline PCE prices are seen rising +0.3% M/M in April (prev. +0.3%), with the annual rate expected to be unchanged at 2.7%. The core measure is seen rising +0.3% M/M (prev. +0.3%), while the core rate of annual PCE is seen unchanged at 2.8% Y/Y, although even a modest dip in the annual print would lead to the lowest annual increase in three years, since April 2021.

CPI AND PPI: As noted above, and as Newsquawk writes in is PCE preview, headline CPI data was cooler than expected in April, while the core CPI metric saw the smallest increase since December; and while the PPI data for the month surprised to the upside in the month, analysts noted that the internals — components that feed into the PCE data – were more constructive (insurance sectors, health and medical components, air transportation). As a reminder, PCE gives far lesser weight to Housing/Shelter, as well as transportation (recall that transportation insurance is soaring right now and is the biggest drive of CPI inflation), which is why overall core inflation viewed through the lens of PCE is far lower.

Ahead of the data, Goldman Sachs said using CPI, PPI and import prices, “we estimate that core PCE increased 0.26% M/M, a pace well below the 0.36% average of the prior three months, but probably not sufficient for a July cut if maintained in May and June.” That said Goldman estimates that the market-based core PCE index—which has been referred to by Fed Chair Powell in recent remarks—rose just 0.18%, a pace GS says would be quite consistent with a July cut if maintained.

FED: After a hawkish set of FOMC meeting minutes, and some cautious chatter from Fed officials, as well as constructive incoming data (decent PMI data for the month saw Fed cut pricing diminish sharply); money markets are pricing no easing at the Fed’s June 12th meeting, and only a 10% chance of a cut in July. The first fully discounted rate cut is seen in December, although markets are assigning a c. 80% probability of a cut in November. Goldman recently pushed its first rate cut forecast from July to September.

Tyler Durden
Thu, 05/30/2024 – 23:04

The Rise In America’s Billion-Dollar Extreme Weather Disasters

The Rise In America’s Billion-Dollar Extreme Weather Disasters

Since 1980, there have been 383 extreme weather or climate disasters where the damages reached at least $1 billion. In total, these disasters have cost more than $2.7 trillion.

Created in partnership with the National Public Utilities Council, this chart, via Visual Capitalist’s Jenna Ross, shows how these disasters have been increasing with each passing decade.

A Growing Concern

The U.S. National Oceanic and Atmospheric Administration (NOAA) tracks each disaster and estimates the cost based on factors like physical damages and time losses such as business interruption. They adjust all costs by the Consumer Price Index to account for inflation.

Both the number and cost of extreme weather disasters has grown over time. In fact, not even halfway through the 2020s the number of disasters is over 70% of those seen during the entire 2010s. 

Severe storms have been the most common, accounting for half of all billion-dollar disasters since 1980. In terms of costs, tropical cyclones have caused the lion’s share—more than 50% of the total. Hurricane Katrina, which made landfall in 2005, remains the most expensive single event with $199 billion in inflation-adjusted costs.

Electricity and Extreme Weather Disasters

With severe storms and other disasters rising, the electricity people rely on is significantly impacted. For instance, droughts have been associated with a decline in hydropower, which is an important source of U.S. renewable electricity generation

Disasters can also lead to significant costs for utility companies. Hawaii Electric faces $5 billion in potential damages claims for the 2023 wildfire, which is nearly eight times its insurance coverage. Lawsuits accuse the company of negligence in maintaining its infrastructure, such as failing to strengthen power poles to withstand high winds. 

Given that the utilities industry is facing the highest risk from extreme weather and climate disasters, some companies have begun to prepare for such events. This means taking steps like burying power lines, increasing insurance coverage, and upgrading infrastructure. 

Tyler Durden
Thu, 05/30/2024 – 23:00

Minimum Wage Folly

Minimum Wage Folly

Authored by John Stossel via The Epoch Times,

California now leads the nation in imposing dumb wage laws…

The state just raised the hourly minimum wage for fast-food workers to $20.

Gov. Gavin Newsom said: “We saw the inequities. … We had a responsibility to do more.”

Unions pushed for the higher minimum, and in Democrat-run states, unions usually get what they want.

CNN announced, “Half a million California fast food workers will now earn $20 per hour!”

Gullible leftists at the Center for American Progress claim, “A higher minimum wage would boost millions of families out of poverty and further stimulate the economy.”

Yippee! It’s a happy cycle! Win-win.

But wait, if it’s a win-win, why just make the minimum $20? Why not $30? Or $100?

Because the government requiring higher wages is not a win-win.

Interfering with market prices always creates nasty unintended consequences.

Frédéric Bastiat, in his work “That Which Is Seen, and That Which Is Not Seen,” points out that there are always seen and unseen consequences when government force impacts economic decisions. “Almost always,” he wrote, “the immediate consequence is favorable, the ultimate consequences are fatal.”

In this case, the immediate consequence is that existing workers get a raise. Great. That’s the seen. That’s what the media, unions, and Center for American Progress see. But the unseen effect is bigger, and worse:

No. 1: Thousands of Californians have already lost jobs because some restaurants closed. Others lost income because their employer cut worker hours. The chain El Pollo Loco cut employees’ hours by 10 percent.

Pizza Hut announced that it will lay off more than 1,000 delivery drivers. One, Michael Ojeda, understandably asked, “What’s the point of a raise if you don’t have a job?”

No. 2: Workers who still have jobs will lose them because now their employers have more incentive to automate. Chipotle just created a robot that makes burrito bowls. Even CNN acknowledged, “Some restaurants are replacing [fast food workers] with kiosks.”

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No. 3: Prices go up.

The day Mr. Newsom signed the bill, he was asked, “Can Californians expect the prices of their McDonald’s and Starbucks to go up?”

Mr. Newsom deceitfully replied: “I’ve heard that rhetoric before. And it didn’t happen!”

Nonsense. It did happen. It always happens when government forces wage increases. In this case, Starbucks prices have increased as much as 15 percent. Customers will pay about $200 per year more for their coffee. A chicken burrito at Chipotle will cost up to 8 percent more.

No. 4: Perhaps the worst unseen harm from minimum wage laws is that young and unskilled people won’t even be hired. They won’t gain valuable experience from a first job at a fast-food restaurant.

In 2014, when Seattle politicians raised the minimum wage to $15, I asked some teenagers what a higher minimum wage could do for them.

“Minimum wage actually hurts my chances of getting employed,” said one, Rigel Noble-Koza. “If I cost more, why would a company take a risk on hiring me? They’ll hire the worker with more experience instead.”

Another, Dillon Hodes, talked about his friend who had fast-food work but got her hours cut because “she was young and inexperienced.”

Of course, these students were unusual. They were finalists in a Stossel in the Classroom contest. They aren’t economically ignorant. They knew to look for the unseen.

If only politicians were that smart.

Government price fixing such as minimum wage laws hurt the young and the poor, the very people these laws are supposed to help.

Tyler Durden
Thu, 05/30/2024 – 22:30