Authored by Robert Gore via StraightLineLogic.com,

Would-be rulers embrace a moronic oxymoron…

The Houthis stymie 12 percent of the world’s shipping. Israel has bitten off more than it can chew and is desperately trying to maneuver the U.S. into a broader Middle Eastern engagement and years of pointless war. In Europe, farmers and truckers are protesting and blocking roads over climate change measures and other grievances. In the U.S., a governor ignores a Supreme Court decision and receives support from 25 fellow governors.

At the recently concluded confab at Davos, the world’s would-be rulers conferred on how they would rule the world. How quaint. They’re going to rule a world that’s spinning out of their, or anybody else’s, control. A Russian politician, Konstantin Dolgov, coined a phrase for the oxymoronic pipe dream that prevails in Washington, Davos, Brussels, and Tel Aviv:

“The Americans need controlled instability to realize their own plans.” Dolgov noted:

“But this instability has long been out of Washington’s control.”

Controlled instability is a futile hope from a bygone age. The instability that manifests daily is anything but controlled.

Texas Governor Greg Abbott and his fellow governors’ defiance marks an emerging phase: instability and conflict among actors within the political system. It may be posturing, but it still amounts to a middle finger from the governors to the federal government and its once revered Supreme Court.

The Supreme Court has been rubber-stamping expansion of the federal government’s power since the Constitution was ratified. The most egregious recent examples were National Federation of Independent Business v. Sebelius (2012) and King v. Burwell (2015), the decisions that upheld Obamacare. Nobody protested against the program that hastened the destruction of American health care. Nine years after Burwell, anti-government rage is kindling fires in the U.S. and all over the world. Control is losing; instability is winning, and the game is still in the early innings.

The control freaks cling to their empire and wars. Empire is untenable, but the U.S. military is being deployed into another Middle Eastern quagmire. The Middle East is particularly unsuited for U.S. imperial ventures. The sum total of Western knowledge of the region is a nanoparticle compared to the Everest of its ignorance.

The Middle East is tribal; the concept of a nation with a national government is a foreign import. Tribal rivalries date back to Old Testament times and have always undermined the best laid plans of emperors, kings, sultans, sheiks, satraps, and other poobahs. The Islamic religion has been the one quasi-unifying force, but it is split and both the Sunni and Shia denominations are splintered into various sects.

The secret Sykes-Picot treaty of 1916 between Britain and France, with assent from the Russian Empire and the Kingdom of Italy, drew lines on the map of the Ottoman Empire (allied with the losers in World War I), specified European spheres of influence, and created so-called nations to be dominated by the European victors.

It was hubristic folly, matched by the Balfour Declaration one year later. In a letter from British Foreign Secretary Arthur Balfour to Lord Rothschild, a leader of the British Jewish Community, the British government declared its endorsement of a “national home for the Jewish people” in what would become, in 1922, the British Mandate for Palestine and Transjordan. At that time, Jews were only a single-digit percentage of Palestine’s population.

Outsiders, especially those bent on domination, have never fared particularly well in the Middle East. It’s tough enough for insiders bent on domination. Outsiders can generally find compliant satraps whose ostensible loyalty is secured through bribery and extortion, but the average Mohammad deeply resents his overlords and resists them in his own way. No wonder then, that Sykes-Picot and the Balfour Declaration proved to be recipes for disaster.

The U.S. threw it and the UN’s weight behind the Zionist project in 1948, when Palestine became Israel and Jews began displacing Palestinian Arabs, an ongoing process that has accelerated since the October 7 Hamas massacre. Pre-October 7 controlled instability in Gaza has given way to all-out war, ostensibly against Hamas insurgents, but the death toll among Palestinian civilians is approaching 30,000.

The U.S. has long considered Israel its forward base in the Middle East. That imperial projection is now under attack on multiple fronts. Anyone who claims to know how the Houthis, Hezbollah, Hamas, and various other insurgent groups in Iraq and Syria—collectively known as the Axis of Resistance—are structured, coordinate with each other, or interact with Iran is lying. However, they are making war on the U.S.-Israel alliance, gradually ratcheting up the pressure, and last week the U.S. lost its first three soldiers since October 7.

The alliance will lose because it can’t win. The only way an outside power can “win” in the Middle East is to stay out. Occupation is the concomitant of empire, but now the costs of invasion and occupation dwarf the costs of insurgency. It’s no sure thing that the Israelis will be able to expel the Palestinians, their ultimate aim. Even if the do, it will only lead to greater instability over a wider area. The Axis of Resistance is opening new fronts almost daily across the Middle East. The U.S. empire and Israel have neither the military and financial staying power nor the regional support necessary for a lengthy war.

At Israel’s behest, demented warmongers are urging an alliance attack on Iran, which would exponentially compound its difficulties. An attack would probably bring in Russia and perhaps China. The alliance’s only option would be to take it nuclear, which could lead to humanity’s extinction. That’s apparently what the warmongers have been looking for all these years.

The West’s rulers and string pullers regard their internal opposition as so many Hamas, Houthis, Hezbollah, and Iranians. That characterization is more apt than they realize, particularly in the well-armed U.S. Anything those “extremists” can do in the Middle East can be done by what the Biden administration reckons are tens of millions of “domestic extremists” in the U.S. And what the Middle Eastern extremists are in the process of doing is defeating the U.S. government and its allies.

While much of the Western citizenry remains supine and susceptible to state propaganda and narratives, the ranks of the aware and engaged, fed by the alternative media hydra, keep expanding. Even the Corruptocracy and its media mouthpieces are starting to realize that fundamental change is afoot. At Davos, there were begrudging admissions (and lamentations) that the media no longer controls the narrative and dim recognition that nobody trusts it. Invitees even subjected themselves to Argentinian president Javier Milei’s and Heritage Foundation president Kevin Roberts’ excoriations.

What the Davos set doesn’t get is that for the next few centuries, change will messily burble up from the bottom, not be neatly imposed from the top. That’s actually the way it’s been for centuries, but the top has gotten all the press. Politics, governments and war are newsworthy, innovation and progress are not. The perpetual war of the former on the latter never gets mentioned at all. Regardless, the top will go on proposing; the bottom will go on disposing.

The transition in global affairs is hailed as multipolarity, but multipolarity proponents show little recognition that it’s not just the American empire and its confederates in the crosshairs, but all governments. Those coming together in the various not-the-West arrangements are still governments, and are just as tyrannical and corrupt as Western governments, in many cases more so.

Multipolarity will proceed full steam ahead, but it won’t stop until there are 8 billion plus poles, call it multi-multipolarity. The age of the state and ostensible control is giving way to the age of the individual and instability. That doesn’t mean that order won’t eventually emerge, but it will be order based on individual sovereignty, cooperation, and voluntarily exchange, or as friend of SLL Leif Smith calls it—freeorder—“Order spontaneously emergent from the imaginations and actions of free people.”

Recognition can come from anywhere. Governments may offer concessions to the new reality, their wiser functionaries realizing that limits on their power are better than no power at all. Argentina’s Milei could turn out to be in the vanguard of a much larger trend. Governments will never abolish themselves, but any moves towards freedom and away from control will be beneficial.

In the interim, instability will reign, and we ain’t seen nothing yet.

Some of the wealthiest liberal enclaves in the country are being classified by the Biden administration as “low-income” in order to qualify for an electric vehicle (EV) charger subsidy program contained within the Inflation Reduction Act (IRA), the Daily Caller reports.

The locales includes Martha’s Vineyard in Massachusetts, as well as Montauk and Fishers Island in New York. Yes, the same Martha’s Vineyard that freaked out over a few migrants on their hallowed soil.

The administration’s EV charger tax credit program — made possible by the Inflation Reduction Act (IRA), President Joe Biden’s signature climate bill — is specifically designed to route subsidies to “low-income” or “non-urban” areas of the country. The “low-income” emphasis for eligibility aligns in spirit with the Biden administration’s wider pursuit of so-called “environmental justice,” which is effectively the combination of social justice ideology and green policy.

Numerous elite hangouts and locales — including Montauk and Fishers Island in New York, and parts of Martha’s Vineyard and Nantucket in Massachusetts — are among the areas that the administration has classified as “low-income” and eligible for receipt of EV charger subsidies, according to a Daily Caller News Foundation analysis of the Department of Energy’s (DOE) interactive eligibility map.

The nationwide charging network is a central plank of the Biden administration’s EV agenda. While plenty of charging stations are located in wealthy areas (where people can afford EVs), the IRA was supposed to blunt the costs of charger construction in non-urban, less wealthy areas of the country that would be less likely to implement them on their own.

“This tax credit provides up to 30% off the cost of the charger to individuals and businesses in low-income communities and non-urban areas, making it more affordable to install EV charging infrastructure and increasing access to EV charging in underserved communities,” the White House boasted on Jan. 19.

In order to meet the definition of “low-income,” a given area must have a poverty rate of 20% or more, or, if the median family income is below 80% of the median family income in the wider metropolitan area, or if a given Census tract isn’t attached to any specific metro, according to section 45D(e) of IRS code, the Caller reports.

But the latter definition for a “low-income” area has enabled many areas, according to the report.

For example, nearly half of the landmass of Nantucket Island, one of the ritziest summer vacation destinations favored by New England’s elite, is eligible for EV charger subsidies, according to the DOE’s interactive eligibility map.

The Vineyard Haven area of Martha’s Vineyard, another destination frequented by New England’s upper crust, is also eligible as a “low-income” area, according to the DOE’s map. For context, many of the homes in the covered area are valued at well over $1 million, with several properties valued between about $2 million and $5 million. Former President Barack Obama also owns a massive $11.7 million estate on the island.

Large pockets of Cape Cod, another pricey locale, are also eligible for “low income” EV subsidies. This includes Hyannis, the longtime home base of the Kennedy political dynasty, and Great Island, which features numerous multi-million dollar properties. -Daily Caller

Other wealthy areas which can take advantage of this loophole include a three block zone in New York City’s Upper East Side, Rehoboth Beach, Delaware (a few miles from Joe Biden’s ‘office’), and Fishers Island, New York – enclave known as a hangout for dynastic families such as the Rockefellers, Roosevelts and DuPonts.

Large swaths of San Francisco deemed “low-income” also qualify, along with areas of Beverly Hills.

Not exactly as advertised, is it?

Authored by Alex Berenson via ‘Unreported Truths’ substack,

The New York state fraud case against Donald Trump is absurd; and the White House now openly tells its operatives to defy Congressional subpoenas. Democrats seem blind to the risks they’re running.

Even dictatorships have judges.

Which doesn’t mean they have justice.

Democrats appear ever-more enamored with “lawfare” — a term that hardly existed before Donald Trump was elected president in 2016 — as they try to keep Trump from returning to the White House.

Left-wing politicians, prosecutors, and lawyers may be sincere when they say they believe Trump is an existential threat to democracy who must be stopped by any means necessary.

But they would be wise not to become what they fear.

The Democratic effort to twist the legal system has accelerated in the last few months.

Trump and his most ardent supporters now face an unrelenting flow of civil and criminal cases, some of which at best stretch legal theories to their limits. But judges in blue cities and states have been notably reluctant to push back on them.

Meanwhile, as I wrote yesterday, the Biden White House has now openly encouraged its operatives to defy Congressional subpoenas by promising them carte blanche to do so – even as the Justice Department tries to jail Trump’s advisors for similar moves.

The issue stretches far beyond the four flagship criminal cases and 91 charges that Trump faces. In those, at least, he has the protections that criminal law gives defendants, and the financial resources to use them.

The Associated Press estimated that Trump has spent $77 million in the last two years defending himself. Even bigger expenses lie ahead as his criminal trials approach.

Some of Trump’s biggest supporters are not so lucky. In Washington, D.C., prosecutions over the Jan. 6 protests and riot are increasingly unhinged. Even the New York Times admitted last month they have now caught many people who “did little more than walk into — and then out of — the Capitol.”

In Colorado, the former general counsel of the Democratic Party has led an effort to use language meant for Confederate secessionists to keep Trump off the 2024 ballot.

And in New York, the reality that Trump cannot count on anything like impartial hearings from neutral judges has been clear for months. Not coincidentally, the actions that have damaged Trump the most were both brought in Manhattan, where Trump is widely hated and Joe Biden won 87 percent of the vote in 2020.

Most stunningly, Trump faces up to $370 million in fines and the loss of his businesses for a civil “fraud” case brought by the state of New York in which he took out loans – then fully repaid them. 

Even the Associated Press questioned the ruling, writing that Trump’s companies were:

the only big business found that was threatened with a shutdown [under the New York law used against Trump] without a showing of obvious victims and major losses.

Some legal experts worry if the New York judge goes ahead with such a penalty in a final ruling expected within the next couple of weeks, it could make it easier for courts to wipe out companies in the future.

Then there are the two “defamation” lawsuits from E. Jean Carroll, a woman who was completely unknown until she accused Trump in print of raping her. (Carroll’s suits might more accurately be called “famation” cases.)

Manhattan juries have already decided against Trump in those suits and awarded Carroll almost $90 million. Trump certainly used nasty language to defend himself against Carroll’s claims, but it is unclear how exactly he could have denied them without incurring a jury’s wrath.

*  *  *

Back in Washington, the Biden Administration is now extending its (literal) contempt of the law to Congress, as I wrote yesterday:

URGENT: Ex-White House advisor Andy Slavitt is refusing to comply with a subpoena over questions about how he tried to censor me and others in 2021

ALEX BERENSON· FEB 4

Andrew Slavitt, the former Biden Administration operative who in 2021 helped conspire to violate my First Amendment rights and make Twitter ban me, has refused to comply with a Congressional subpoena to testify about his actions. Slavitt’s lawyers told

Read full story…

That the White House has told two of its former operatives – Andy Slavitt and Rob Flaherty, the deputy campaign manager of Biden’s 2024 presidential campaign – to ignore a lawful Congressional subpoena is ugly enough.

But the fact that it has done so while prosecuting two of Trump’s advisors for refusing similar testimony is far worse.

Of course, none of this has stopped me and James Lawrence from suing the White House for its censorship efforts in Berenson v Biden.

I remain a believer in the court system – and very optimistic that federal Judge Jessica G.L. Clarke will see the merits of our case. After all, Judge William Alsup – a Clinton appointee – took our arguments in Berenson v Twitter seriously and rejected Twitter’s motion to dismiss the suit.

But the overall picture is ugly.

Sure, Democrats are winning tactical victories and costing Trump money. But they’re not considering how these efforts to use the courts look, not just to Trump partisans but anyone who thinks elections should be decided by voters, not judges or juries.

And Trump’s criminal prosecutions haven’t even gotten to trial yet.

*  *  *

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A new survey from YouGov reveals that President Joe Biden would lose in a hypothetical matchup against former President Donald Trump, but would beat Nikki Haley, if the election were held today.

The survey of 12,000 US adults released Feb. 2 found that 45% of respondents preferred Trump, vs. 44% for Biden. If it’s Biden vs. Haley, however, the president wins 39% to 38%.

In a separate (but similar) question, respondents were asked who they think will win regardless of their personal preference. This resulted in an 11-point margin for Trump (47% to 36%), while a Biden-Haley matchup would yield a 38-32 victory for Biden.

The poll also found that Americans feel more favorably towards Trump than Haley, and more view him as a strong leader. In fact, there isn’t a single issue in which Haley polled better than Trump.

As the Epoch Times notes further, for President Trump, the YouGov poll’s results will surely be welcome—though not unexpected—news. On his Truth Social platform, the former president has touted several polls showing his continued dominance in not only the Republican primary but also the general presidential race.

One such poll, released on Jan. 31 by Morning Consult, indicated that President Trump currently leads President Biden in all seven swing states, and in most cases, it’s not close.

In North Carolina—the only swing state President Biden lost in 2020—President Trump holds a commanding 10-point lead, besting his successor 49-39 percent. Meanwhile, in both Georgia and Nevada, his advantage is a slightly smaller, though still significant, 8 percent. In Michigan and Wisconsin, the former president has a 5 percent lead, while in Arizona and Pennsylvania, his edge is just 3 points.

If those numbers hold steady and the rest of the country votes as it did in 2020, President Trump would win in November with 312 Electoral College votes.
Of course, he would first need to secure the Republican presidential nomination. The RealClearPolitics average of polls shows that he has now expanded his support to include roughly 73 percent of Republican voters. Ms. Haley is hovering at around 19 percent.

Still, the former ambassador to the U.N. is determined to keep up the fight. Opting to forgo the Nevada caucus, she is instead betting it all on her home state of South Carolina. But she faces an uphill climb there as well, down 27 points to President Trump. Brushing off the polls, Ms. Haley told CNN’s Jake Tapper that she was going to work her way to a Palmetto State victory.

“We’re going to do it the same way we did in New Hampshire,” she said on Feb. 2. “We moved 25 points in New Hampshire the last three weeks before the election. We’re at that same point here. We’re going to be anywhere and everywhere, all over South Carolina.”

The candidate added that she intends to remind South Carolina voters of her conservative record as governor “and then show them that we could do that same thing as president.”

But even among those who support the former governor, hope for an upset appears to be fading.

“Honestly, I don’t think it’s going to be great,” Charleston resident Kelly Wade, who plans to vote for Ms. Haley, told USA Today. “I feel like if there’s a state she could win, it would be our state, but I just think the people who are diehard for Trump, they’re going to carry him all the way to the end.”

After years of criticism and a public spat with Vivek Ramaswamy, who said Republicans under her watch have become a “party of losers,” RNC Chairwoman Ronna McDaniel is stepping down.

According to the NY Times, which required four journalists, McDaniel has told former President Donald Trump that she’ll quit shortly after the South Carolina primary on Feb. 24, according to two people familiar with the plans (ah yes, ‘people familiar’).

In her place, Trump is expected to promote Michael Whatley, chairman of the North Carolina Republican Party – after which an election will take place.

McDaniel, the longest-serving chair since the 19th century, came under fire in January of 2023 after Republicans had terrible results going back to 2018.

“We’ve had three substandard election cycles in a row: ‘18, ’20, and ’22,” Florida Governor DeSantis told TPUSA founder Charlie Kirk in an interview. “Given the political environment of a very unpopular president in Biden, huge majorities of the people think the country is going in the wrong direction—that is an environment that’s tailor-made to make big gains in the House and the Senate and in state houses all across the country, and yet that didn’t happen.”

McDaniel also took barbs from attorney and GOP committee member Harmeet Dhillon, McDaniel’s primary challenger in the Jan. 2023 election for chair, telling Fox News: “But you know, at the end of the day, like I said, this isn’t school. You don’t get a gold star forever. You don’t get to stay in your job forever. If you continuously under perform what you promised your clients, they don’t hire you the next time around.”

In November, after the GOP lost several races that should have been layups, more people called for Ronna’s head.

“What, exactly, does Ronna McDaniel do, besides lose?” asked former Trump administration official Monica Crowley on X. “The only thing she SHOULD do is RESIGN. Effective immediately.”

What, exactly, does Ronna McDaniel do, besides lose?

The only thing she SHOULD do is RESIGN.

Effective immediately.

— Monica Crowley (@MonicaCrowley) November 8, 2023

 “FIRE RINO RONNA MCDANIEL NOW!” tweeted Florida congressional candidate Anthony Sabatini, an Army veteran, adding “Ronna McDaniel will go down as the worst RNC Chair in history.”

FIRE RINO RONNA MCDANIEL NOW!

— Anthony Sabatini (@AnthonySabatini) November 8, 2023

🚨 Steve Bannon and John Solomon are calling for Ronna Romney McDaniel to resign after the GOP’s performance in elections last night

pic.twitter.com/yAHjk2Kv3c

— Benny Johnson (@bennyjohnson) November 8, 2023

McDaniel has also come under fire for picking NBC to host a November GOP debate – during which former 2024 presidential contender Vivek Ramaswamy suggested she come up on stage and quit during said debate, as the GOP has become a “party of losers” under her watch.

“…there is a cancer in the Republican establishment… Since Ronna McDaniel took over as chairwoman of the RNC in 2017 we have lost 2018, 2020, 2022, no red wave, that never came.”

And then the haymaker…

“We got trounced last night in 2023 and I think that we have to have accountability in our party,” he went on.

“For that matter, Ronna if you want to come up on stage tonight. You want to look the GOP voters in the eye and tell them you resign… I will turn over my time to you.”

Vivek Ramaswamy: “We’ve become a party of losers.”#debatten pic.twitter.com/GUeD2r5Dr5

— The Watcher 🌎 (@TheWatcherDaily) November 9, 2023

It took four months, but here we are. 

Even before Biden took over the White House thanks to millions of mailed-in harvested ballots dropping in at 3am in the morning, Seattle had emerged as one socialist America’s liberal meccas. Here are the consequences.

According to Seattle’s King5 news, Sandia, a Mexican restaurant in the city’s Laurelhurst neighborhood, has been broken into no less than 5 times in the past 6 months, costing the business $10,000.

“As of today, now we have been broken into five times,” said Nathan Yeager, the owner.

In the surveillance video provided to KING 5, you can see criminals break the front door with a crowbar, climb over the counter, steal money from the till, and then sneak around while looking in every door for something to take.

“People are just breaking in our windows blatantly, stealing nothing. I mean, they’re really getting away with nothing,” Yeager said.

Recently, someone broke in and took their elevator key box, which costs around $2,000 to repair and install.

Yeager said they are now out $10,000 for the repeat break-ins.

On Thursday night, someone smashed through the window facing the Burke Gilman Trail and took alcohol. They left behind broken glass everywhere.

“That was that $900 to replace the window for one bottle of alcohol,” Yeager said. Yeager feels at a loss for what to do about the crime. He feels “heartbroken, sad and defeated.”

Owning seven businesses in Seattle, Yeager had strong feelings about the brazen crime.

“I don’t think I’ll open another business in Seattle. I think that Seattle has failed small businesses,” he said.

The City of Seattle does have a “storefront repair fund,” and according to their latest update, funds are still available. They have updated the eligibility requirements for the $2,000 grants to include more small businesses and now nonprofit organizations.

Yeager has seen an incredible show of support from his customers after posting about the crime on the business’ Instagram. He hopes sharing his experience will lead to change.

“We just can’t keep writing these checks every day, you know, but we have to, you know, like, I have to fix this window. I have to fix this door,” Yeager said. “We’ve got to solve this problem somehow and figure this out.”

House lawmakers on Tuesday failed to impeach Homeland Security Secretary Alejandro Mayorkas, under whose tenure more than 10 million illegal immigrants have entered the US – doubling the existing population.

Three Republicans voted with House Democrats – while a fourth, Blake Moore (R-UT) flipped his “Aye” to a “No” in order to preserve the ability to bring ‘Motions to Reconsider’ (which can only be brought by someone who voted ‘no’).

The open-border Republicans who voted against impeachment are:

• Ken Buck (CO)
• Tom McClintonck (CA)
• Mike Gallagher (WI)

In a Monday op-ed in The Hill, Buck said that while Mayorkas may be incompetent, his behavior wasn’t impeachable, and that doing so would set a bad precedent.

The vote to impeach Mayorkas was held as a bipartisan effort in the Senate to send $60 billion to Ukraine and lock in 1.5 million illegal migrants per year unraveled.

In the articles of impeachment, Mayorkas was accused of demonstrating a “willful and systemic refusal to comply with the law,” and “breaching the public trust,” which Democrats suggested was nothing more than disagreements over policy or performance failings, but not impeachable crimes.

The border has become a central concern of Congress and the White House, as arrests hit records in recent months. Border Patrol agents in December set a monthly record of nearly 250,000 arrests of migrants caught crossing the border illegally, up 31% from November, with daily arrests sometimes topping 10,000. An additional 50,000 migrants entered the country in December at legal border crossings to seek asylum. 

Democrats said the effort to impeach Mayorkas amounted to political theater at the start of a heated presidential-election campaign in which immigration is expected to be a top issue for voters. –WSJ

According to Rep. Mark Green (R-TN), Mayorkas “is the very type of public official the Framers feared—someone who would cast aside the laws passed by a co-equal branch of government, replacing those with his own preferences.”

On Monday, the White House said that impeaching Mayorkas “would be an unprecedented and unconstitutional act of political retribution that would do nothing to solve the challenges our nation faces in securing the border,” and suggested that he’s been a great DHS secretary.

If the House had succeeded in impeaching Mayorkas, he would have been the second cabinet secretary in US history to be impeached.

With friends like these, who needs enemies?

Having seen the share price collapse to its lowest since 1997, following the regional lender’s reporting of a surprising (and large) loss for Q4 and slashing its dividend (to 5c vs 17c exp), ratings agency Moody’s has cut all long-term and some short-term ratings of New York Community Bancorp to ‘junk’ (Ba2 from Baa3).

NYCB is extending losses to a $3 handle after the downgrade…

While we heard all day about how NYCB was an idiosyncratic issue, Moody’s warns that this is anything but, generalizing to the multi-family CRE space being a problem:

NYCB is highly concentrated in rent regulated multi-family properties, a segment which has historically performed well for them. However, this cycle may be different.

While vacancy rates are low for this CRE segment, properties may face different challenges this cycle due to higher interest expense when refinanced and already higher maintenance costs due to inflationary pressures.

These higher costs may prove more challenging for owners of rent regulated properties to pass along through rent increases to tenants.

Beyond rent-regulated, the bank has a significant concentration of low fixed-rate multifamily loans. This type of loan portfolio faces refinancing risk.

As a reminder,:

Once a $3 trillion asset class, offices now are “probably worth $1.8 trillion,” said Barry Sternlicht, chief executive officer of Starwood Capital Group.

“There’s $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is.”

Additionally, Moody’s warns this could end badly:

“The company’s elevated use of market funding may limit the bank’s financial flexibility in the current environment.”

Moody’s also points out that, as of Dec 31st, 33% of NYCB’s deposits were uninsured, and “could face significant funding and liquidity pressure if there is a loss of depositor confidence.”

The total amount of public bonds & loans outstanding affected by this downgrade is $1.14 billion, according to data compiled by Bloomberg.

*  *  *

RATINGS RATIONALE

[ZH: emphasis ours]

Today’s rating action reflects multi-faceted financial, risk-management and governance challenges facing NYCB.

In terms of financial strategy, the bank is seeking to build its capital but just took an unanticipated loss on commercial real estate (CRE) which is a significant concentration for the bank.

The downgrade reflects Moody’s views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense, the risk and audit functions of the bank, at a pivotal time. In Moody’s view, control functions with strong knowledge of a bank’s risks are key to a bank’s credit strength.

NYCB’s core historical commercial real estate lending, significant and unanticipated loss on its New York office and multifamily property could create potential confidence sensitivity.

The company’s elevated use of market funding may limit the bank’s financial flexibility in the current environment.

NYCB is highly concentrated in rent regulated multi-family properties, a segment which has historically performed well for them. However, this cycle may be different. While vacancy rates are low for this CRE segment, properties may face different challenges this cycle due to higher interest expense when refinanced and already higher maintenance costs due to inflationary pressures. These higher costs may prove more challenging for owners of rent regulated properties to pass along through rent increases to tenants. Beyond rent-regulated, the bank has a significant concentration of low fixed-rate multifamily loans. This type of loan portfolio faces refinancing risk.

For the year, provision for credit losses rose 526% to $833 million from $133 million in 2022. Allowance for credit losses stands at $992 million as of 31 December 2023 which equates to 1.17% of total loans, or 1.26% when excluding loans with government guarantees and warehouse loans. Reserve for office loans is approximately 8% while reserves for multifamily is approximately 0.82%.

Moody’s views NYCB’s funding and liquidity as a relative weakness when compared to peers due to its relatively high dependence on market-sensitive wholesale funding and a smaller pool of liquid assets when compared with peers. NYCB’s loan-to-deposit ratio was 104% as of 31 December 2023, also higher than most peers. Market funding increased 49% during the fourth quarter to $20.3 billion, in part to fund an increase in the bank’s liquidity buffer as the bank prepares for Regulation YY compliance. Market funds as a percentage of tangible banking assets (TBA) rose to 18.8% as of 31 December 2023 from 12.9% in the prior quarter and 23.6% at the end of 2022. Liquid banking assets as a percentage of TBA rose to 18.2% as of 31 December 2023 from 14.5% in the prior quarter and 12.9% at the end of 2022.

NYCB’s share of uninsured deposits was 33% as of 31 December 2023.

The bank could face significant funding and liquidity pressure if there is a loss of depositor confidence.

NYCB relies heavily on wholesale funding from the Federal Home Loan Bank of New York.

NYCB’s capitalization, as measured by its common equity tier 1 (CET1) ratio, fell to 9.1% as of 31 December 2023 from 9.59% the prior quarter and 9.06% as of 31 December 2022. The decline in capital resulted from a $252 million net loss in the fourth quarter driven by a $552 million provision for credit losses. NYCB is targeting a 10% CET1 ratio by the end of 2024 and has cut its dividend to 5 cents a quarter from 17 cents to assist with capital generation.

Pressure on profitability could challenge NYCB’s internal capital generation plans. Management expects net interest margin (NIM) to be between 2.4% and 2.5% in 2024 as the company repositions into lower-yielding liquid assets to prepare for Regulation YY compliance. NIM was 2.99% in 2023 compared to 2.35% in 2022. Further provisions for credit losses, rising compliance costs, and higher funding costs could also negatively impact earnings. The bank’s transition to a Category IV bank entails meaningful investments in its risk management and compliance that will also weigh on profitability.

Reflecting Moody’s views of the high governance risks NYCB faces, Moody’s introduced a one-notch negative qualitative adjustment to Flagstar Bank, NA’s BCA and changed NYCB’s governance issuer profile score to G-4 from G-2 and NYCB’s ESG credit impact score to CIS-4 from CIS-2 to reflect the negative impact this risk has on NYCB’s ratings.

This should not come as a huge surprise, as we detailed earlier, Small banks are proper fucked without The Fed’s (soon to be killed) BTFP bailout facility (red line)…

Source: Bloomberg

…and one can’t help but notice the burgeoning balance sheet of the big banks – willing to scoop up small banks with the FDIC’s help?

Don’t believe us? Here’s Jay Powell on Sunday:

“We looked at the larger banks’ balance sheets, and it appears to be a manageable problem. There’s some smaller and regional banks that have concentrated exposures in these areas that are challenged.

…

There will be expected losses.

It’s a sizable problem… it doesn’t appear to have the makings of the kind of crisis things that we’ve seen sometimes in the past.

I don’t think there’s much risk of a repeat of 2008. I also think, you know, we need to be careful about making proclamations about the.. future.

…

There will be certainly be some banks that have to be closed or merged out of, out of existence because of this. That’ll be smaller banks, I suspect, for the most part.

You know, these are losses. It’s a secular change in the use of downtown real estate. And the result will be losses for the owners and for the lenders, but it should be manageable.”

Do you feel lucky, punk? Picking the right regional bank that will be bought before it’s closed under FDIC?

Canary meat coalmine.

Did Joe Biden really have the numbers in 2023 to beat Donald Trump as some surveys indicated?  If he did, he certainly doesn’t have them in 2024.  The polls are increasingly ugly for Democrats – public approval for the Biden Administration has hit the lowest levels in modern presidential history next to Jimmy Carter (a man who also mismanaged a stagflationary crisis).  Even the corporate media has been forced to acknowledge that things don’t look so good for “the big guy.”  

NBC has released its latest survey, which indicates a growing lead for Donald Trump in the general election (Trump 47% vs Biden 42%), but Trump also has a dramatic edge over Biden in most public issue categories.  On the economy, 55% of respondents preferred Trump vs 33% for Biden.  On border security, 57% wanted Trump and only 22% thought Biden would do a better job.  In dealing with crime, 48% would vote Trump vs. 32% for Biden.  And, when asked which candidate was more competent and mentally capable, 48% said Trump vs 32% for Biden.

A smaller percentage of people in each category chose the option of “not sure.”

NBC polling continues to observe an accelerating decline for Joe Biden in terms of public perception on a host of top concerns.  This seems to mirror his overall low approval rating which just dropped again to 37%. 

Democrats have taken to social media recently to demand answers, racking their brains trying to figure out why Biden’s brand is sinking faster than Bud Light.    

Extremely low voter turnout for the Democratic Primaries (only 4% of Democrats were interested this year) is not necessarily an indication of how many Dems will show up at the ballot box (or mail box) in November.  However, the stagflationary crisis, the draconian covid lockdowns, unnecessary tensions with Russia and the border crisis that Biden created by erasing numerous Trump era measures have definitely left the American public with a sour taste in their mouths.

People are less inclined to forget government trespasses than political think tanks seem to realize.  They’re definitely not going to overlook 30%-plus higher prices on most goods and services since 2020.  One must truly struggle to think of a single positive result of Biden’s last three years.  Even the low unemployment rate is mired in the suspicious creative math used by the Bureau of Labor Statistics and the public just isn’t buying it.   

One could argue that the election of 2024 isn’t about which candidate is loved; it’s about which candidate is less hated or mistrusted.  Under these conditions, Trump clearly wins.  Others would point out that ongoing national and global instability might disrupt the elections or throw them into disarray (as we witnessed when the covid pandemic struck in the middle of election season 2020 and mail-in ballots became a mainstay).  

If this is the case, the Biden Administration would be a primary beneficiary.  As it turns out, the long running propaganda campaign to demonize conservatives might have had the opposite effect to what Democrats intended.  Biden might need more than another overnight miracle in November to keep his seat in the Oval Office.        

Authored by Alice Giordano via The Epoch Times (emphasis ours),

Members of the notorious MS-13 gang, as well as several terrorists, including one linked to al-Qaeda and another to Tren de Aragua, Venezuela’s largest criminal organization, have recently been arrested by immigration officials in U.S. cities, including Baltimore, Philadelphia, Minneapolis, and Chicago.

According to U.S. Immigration and Customs Enforcement (ICE) records, they were all living in the United States illegally and were released by detention centers under the Biden administration despite previous convictions for violent crimes, including murder.

The latest arrest occurred just last week, involving an MS-13 gang member from El Salvador who had been convicted in 2023 of being an accessory after the fact in a first-degree murder case and was sentenced to five years in prison.

According to Darius Reeves, acting field director of ICE’s Enforcement and Removal Operations (ERO) in Baltimore, a Montgomery County Circuit Court judge suspended most of his sentence, ignored an immigration detainer issued against the Salvadoran national, and instead ordered his release into the general public.

“This unlawfully present Salvadoran gang member’s presence in the United States represents a threat to the safety and security of our residents,” Mr. Reeves stated. “Not only is he a validated member of a notorious criminal enterprise, but he also aided other criminals in the commission of a murder. ERO Baltimore will continue to apprehend and remove such criminal elements from our Maryland communities.”

An ICE spokesman told The Epoch Times that the name of the 30-year-old MS-13 gang member, who initially entered the United States illegally near Falfurrias, Texas, is being withheld pending a removal order, as mandated by federal law.

Two days after the MS-13 gang member’s arrest, Patrick Lechleitner, President Biden’s acting ICE director, admitted that last year, a Somali terrorist from the Islamic military group al-Shabaab was accidentally released after being found living illegally in the United States. He had been freely roaming until his re-arrest on Jan. 20 in Minneapolis.

According to the National Counterterrorism Center, al-Shabaab has killed more U.S. citizens than any other al-Qaeda affiliate. It reportedly has between 7,000 and 10,000 members, according to the federal agency. The group lists its main targets as U.S. military forces and is known to attack civilian targets such as hotels, shopping malls, universities, and busy intersections.

Members of other foreign terrorist organizations have also been discovered living illegally in the United States recently. Last month, a man from Bangladesh, convicted of attempting to provide material support to an unnamed foreign terrorist organization, was deported. He had been found living in the United States illegally more than eight years ago.

According to ICE records, Rakin Islam Chowdhury was granted temporary permission to remain in the United States on June 5, 2015. This authorization expired on Dec. 4, 2015.

Recent reports from Chicago have highlighted the presence of dangerous illegal immigrants in the United States, where law enforcement has allegedly discovered a cell operated by Tren de Aragua. This gang, known in English as the Aragua Train, is considered the largest criminal organization in Venezuela and is primarily engaged in sex trafficking.

Telemundo Chicago Investiga wrote in a Jan. 22, 2024, article that it had obtained communications between Willow Springs, Illinois, police chief Garry McCarthy and the Cook County Sheriff’s Department in Los Angeles, California, showing growing concerns about gang operations in their communities.

Neither Mr. McCarthy nor the Cook County Sheriff’s Police Department responded to multiple inquiries from The Epoch Times. A Telemundo report featured an email sent by the Cook County Sheriff.

“I wanted to give you a heads-up about a new threat developing among the newly arriving immigrant community,” the email stated. “There is a gang from Venezuela known as Tren de Aragua. This gang has strong human trafficking operations in Latin America and is likely engaged in sex and labor trafficking in the United States. Multiple agencies have confirmed their presence in the United States.”

The email includes a redacted source that claims to have “information that the gang is here in Chicago.”

In another report, Mr. McCarthy told Telemundo that law enforcement is having a hard time identifying gang members as they cross the border because Venezuela does not share criminal records with the United States.

“We do not have data on them because I am sure that if it is Venezuela, it does not share it with the United States. So you can’t connect dots when we don’t have points,” Mr. McCarthy told Telemundo.

In September, Interpol put out a red notice to law enforcement worldwide to be on the lookout for Tren de Aragua boss Héctor Guerrero Flores after he escaped from a prison in Venezuela.

On Monday, Borderreport.com quoted former U.S. Border Patrol agent Ammon Blair as saying Venezuela has become a “significant concern along the US-Mexico border.”

An ICE spokesman told The Epoch Times that the agency has encountered members of the Venezuelan gang, but did not yet have anything that could be released. Telemundo reported that Border Patrol confirmed that at least 38 members have been arrested around the United States in the past year and that all of their points of entry were in El Paso, Texas.

Several other members of MS-13, short for Mara Salvatrucha, have also appeared on ICE’s radar after crossing the Texas border.

In 2022, another MS-13 member who entered the United States illegally through Texas under the Biden administration’s open border policy, allegedly raped and killed Kayla Hamilton just days before she turned 20.

According to an investigation into Kayla’s murder by the Committee on the Judiciary and the Subcommittee on Immigration Integrity, Security, and Enforcement, the then 16-year-old gang member was housed by the Department of Health and Human Services (HHS) in the same foster home where Kayla was living. Kayla was autistic, but trying to transition to a life of independence.

The Republican-led committee concluded its investigation with a report blaming Kayla’s murder on the “Biden administration’s radical open-borders policies.”

The report highlighted that, in addition to an already lengthy criminal history, the Salvadoran minor had MS-13-specific tattoos, which should have alerted border officials to his affiliation and led to him being flagged for deportation.

Kayla’s mother Tammy Nobles has filed a $100 million wrongful death lawsuit against both HHS and the Department of Homeland Security.

In a press release announcing the suit, Ms. Noble’s attorney Brian Claypool, claims that another illegal immigrant was placed in charge of housing Kayla and her alleged murderer in the same home and that the MS-13 gang member was released to his custody.

“We’re bringing this lawsuit because we’re tired of being held hostage in our own country. We’re tired of DHS playing Russian roulette with our lives,” Mr. Claypool said in a Facebook post.

According to the judiciary committee’s investigation, the MS-13 gang member was originally apprehended at the Texas border on March 23, 2022, and referred to the Office of Refugee Resettlement (ORR). The ORR is a program run by the HHS’s administration for children and families and helps minor children who are not from the United States become what it calls “integrated members of American society.”

The recent reports of terrorists and gang members coming into the United States at the Texas border come amidst a recent Supreme Court ruling that Texas could not block the passage of illegal immigrants into the United States.

Texas is refusing to recognize the order, which has created a standoff between Texas law enforcement and federal border agents.

The report also comes amidst a controversial Senate bipartisan bill that seeks to allow up to 4,000 daily crossings by migrants before a cap is considered.

“Only a fool, or a radical left Democrat, would vote for this horrendous border bill,” former President Donald Trump posted on Truth Social on Monday.