China’s natural gas imports are set for a 7-percent rise next year as the country reopens after Covid lockdowns, which could aggravate an already tight supply situation globally.
The 7-percent import increase forecast was made by state-owned energy major CNOOC, which said, as quoted by Bloomberg, that it was already looking for LNG cargoes for next year.
The report notes that gas inventories at ports in the northern part of the country are depleting at a faster rate than usual because the weather is colder, pushing consumption higher, and this will, too, have an effect on future demand for imports.
What’s more, pipeline supply of natural gas from Central Asia is in decline, which means China will need to rely more on LNG in its gas import mix to make up the difference. And this means more intense competition for a limited number of cargoes between Asia and Europe next year as well.
This year, Chinese gas demand has been trending lower for most of the year, with imports declining consistently over the first ten months of the year, per a report by Energy Intelligence. LNG imports were down by a sizeable 21.6 percent over the ten-month period, reflecting the effects of lockdowns and other restrictions under the country’s zero-Covid policy.
Yet now this policy is being reversed, mass mandatory testing is being dropped and analysts expect a rebound in economic activity before too long. This will drive higher demand for energy and contribute to higher prices due to the tight supply situation in both oil and gas.
This reversal of Beijing’s Covid policy surprised many, who expected tepid demand for energy to continue in one of the world’s largest consumers. If activity rebounds fast, securing sufficient gas supply for the next heating season will likely become a major problem for most importers.
Lawyers Say Bankman-Fried Needs Better Defense Than ‘I F*cked Up’
FTX founder and Democrat megadonor Sam Bankman-Fried’s ‘I’m Sorry, I fucked up‘, ‘It wasn’t me, but I’ll get to the bottom of this whole mess’ act needs some serious work, according to lawyers cited by Bloomberg.
Bankman-Fried, who just filed a new application for bail before the Bahamian Supreme Court (set to be heard on January 17th), has been playing dumb and blaming competitors since day one.
For weeks, FTX founder Sam Bankman-Fried has been previewing a possible defense to criminal charges over the cryptocurrency exchange’s collapse: I made mistakes but I didn’t mean to do it.
But that’s probably not going to cut it now that he’s been arrested in the Bahamas and charged by federal prosecutors in New York, several lawyers not involved in his defense said. According to the indictment unsealed Tuesday, Bankman-Fried, 30, defrauded FTX customers and investors by using at least $1.8 billion of their money for personal expenses and risky bets by its sister trading firm, Alameda Research. -Bloomberg
“I wish things worked out in the end’ is more of a (guilty) plea allocution than a defense,” according to former federal prosecutor Harry Sandick. “It’s hard to see that being a triable defense. It’s hard to know what the whole thinking was in terms of those public statements, or if there was very much thinking.”
SBF’s current posture is aimed at suggesting the FTX meltdown was unintentional, but the eight-count indictment against him clearly lays out how he lied over and over again about fund transfers. What’s more, prosecutors likely have cooperating witnesses from FTX or Alameda who have flipped on SBF.
“Although this is an extremely high-profile case, the indictment is a no-nonsense, no-frills document,” said Jaimie Nawaday, another former federal prosecutor. “The factual statements are short and plain. The theories of fraud are very standard — lying to get money, lying about what you’re doing with the money.”
While the bare-bones indictment doesn’t indicate what actual evidence the US government has against him, according to Nawaday, SBF’s public statements may have been more than enough rope for the FTX founder to have hung himself in court. If those statements are later contradicted, it would be devastating for his defense, Sandick also notes.
“There’s a saying that a false exculpatory statement is almost as good as a confession,” he said.
Robert Frenchman, a New York white-collar defense lawyer, said Bankman-Fried’s claims that FTX’s collapse resulted from management missteps aren’t all that convincing, even without the prosecution showing its hand. In particular, Frenchman said, the relationship between FTX and Alameda is hard to spin as innocent. -Bloomberg
“There’s some very troubling facts here that don’t fit the mismanagement narrative,” said Frenchman, adding “I think it’s very difficult to mount that kind of a defense when the defendant is alleged to have given secret preferential treatment to his own hedge fund. Those facts surrounding Alameda are going to be much tougher to defend. They look a lot more like fraud and deception than anything unintentional.“
White Christmas? Meteorologists Warn Of Potential “Blizzard Over East Coast”
Long-range weather models forecast the increasing possibility of a white Christmas for parts of the Northeast.
“Some of the models are depicting a weather pattern taking shape that could result in very cold air pouring into the central and eastern United States next week — which could set the stage for a potential winter storm along the East Coast heading into Christmas weekend,” media outlet NJ.Com wrote.
DiMartino said atmospheric patterns and a few weather models show what appears to be a developing storm that has the “potential to be pretty impressive.”
“However, before anyone starts putting out snow maps or anything else that you might see on social media, understand there are a lot of moving parts in this storm,” he noted.
“You have a disturbance in the subtropical jet stream, interaction with the Gulf stream — which is a very warm body of water off the East Coast — and an impressive Arctic air mass driving towards all of that rising air,” DiMartino continued.
“When you have all these features come together, usually a big storm evolves … but as far as the details are concerned, I caution you not to jump on every model guidance that shows up, because a lot can change over the next couple of days,” he added.
DiMartino said the storm’s exact timing, track, and impacts are still unknown. Such forecasts will be made available in the coming days.
Another meteorologist by the name of Joe Bastardi, who runs WeatherBELL Analytics LLC, tweeted:
“Christmas week blizzard over the east with severe cold liable to cause thousands of travel-related cancellations as the pattern evolution been trying to show based on old school methods seem to be working out. Euro going ballistic.”
Christmas week blizzard over the east with severe cold liable to cause thousands of travel-related cancellations as the pattern evolution been trying to show based on old school methods seem to be working out. Euro going ballistic pic.twitter.com/OeBTZiEsZp
Meteorologists have yet to lock in any forecast, and there’s still a degree of uncertainty about the storm’s details, though some weather experts believe parts of the Northeast could be looking at a white Christmas.
South Dakota Gov. Kristi Noem announced on Dec. 13 new proposed legislation to restrict farmland purchases by foreign countries, namely China.
“With this new process, we will be able to prevent nations who hate us—like Communist China—from buying up our state’s agriculture land,” Noem said in a statement.
“We cannot allow the Chinese Communist Party to continue to buy up our nation’s food supply, so South Dakota will lead the charge on this vital national security issue.”
The proposed plan marked the latest step by the Republican governor to clamp down on the Chinese Communist Party’s (CCP’s) influence in her state.
The statement revealed that Noem and state legislators planned to create a new board, the Committee on Foreign Investment in the United States–South Dakota, to review proposed agricultural land purchases by foreign entities. The board, which would consist of three ex officio members and two experts in the agricultural industry and national security, would recommend either approval or denial of land sales.
“We grow the world’s food, and we need to protect the security of that food supply for our kids,” said state Sen. Erin Tobin, a sponsor of the proposed legislation.
Besides food security concerns, lawmakers also view the land that could be owned by CCP-affiliated entities as problematic from a national security perspective.
“With vital national security resources like Ellsworth Air Force Base, we cannot afford for our enemies to purchase land in South Dakota,” said state Rep.-elect Gary Cammack, another sponsor of Noem’s proposal. “We want to keep this land in the hands of South Dakota agriculture producers.”
The plan comes amid growing scrutiny of U.S. farmland being owned by Chinese investors. In September, 51 House Republicans raised national security concerns about the sale of 370 acres of farmland in North Dakota to Fufeng Group, an entity with close ties to the CCP.
The Chinese agribusiness proposed to set up a corn mill plant on the site. The proposed project is located about 12 miles from the Grand Forks Air Force Base, home to sensitive U.S. drone, satellite, and surveillance technology.
The site could become “the ideal location to closely monitor and intercept” the Air Force base’s “exceptional intelligence, surveillance, and reconnaissance capabilities,” the lawmakers wrote in a letter dated Sept. 26 addressed to several Biden administration secretaries.
Despite strong pushback from lawmakers and local residents, the Committee on Foreign Investment in the United States (CFIUS) stated that it wouldn’t block the deal, because the farmland purchase is “not a covered transaction” under the panel’s jurisdiction, according to a Dec. 13 statement from CFIUS Staff Chair Andrew Fair.
The total value of Chinese-owned U.S. agricultural land has jumped more than 20-fold in the past 10 years, according to data from the U.S. Department of Agriculture. In 2020, Chinese-owned U.S. agricultural lands were worth more than $1.8 billion, compared to $81 million in 2010.
A total of 14 states have introduced plans to restrict foreign acquisitions on U.S. soil, according to Sens. Tommy Tuberville (R-Ala.) and Tom Cotton (R-Ark.). The two Republican senators are pushing for a federal-level ban on foreign-owned private U.S. farmland.
In South Dakota, the current law limits foreign ownership of farmland to 160 acres, according to Noem’s office.
Earlier this month, Noem had called for an immediate review of all investments to determine if taxpayer money is going to companies that “pose a threat to our national security.”
“South Dakotans deserve to know if their taxpayer dollars are being invested to benefit the Chinese Communist Party,” she said in a Dec. 8 statement.
The governor said she wanted the South Dakota Investment Council, a panel managing investment of the state’s pension, to complete the review in seven days.
“The Investment Council has ensured that South Dakota has the best-funded pension in the country. But it is not possible to make good deals with bad people,” Noem said. “If this review shows that such investment is taking place, then the Investment Council should propose alternative investment options.”
As we head toward the end of another year, I’m remembering several friends who left in 2022 for cheaper states. And I’m thinking about several other friends who are planning on leaving in 2023 or 2024.
The fact is California is difficult, often impossible, to live in if you’re in the middle class. The wealthy can afford to live here, although they often leave too, because that 13.3 percent top income tax rate really digs in, especially when they dream of moving to 0 percent Texas, Florida, or Nevada. The poor suffer, but California has a generous welfare state, so it’s easier in many ways for low-income residents than living in another state.
It’s the middle class, the rock bed of any society, that bears the brunt of California’s brutal living conditions—amidst the sublime weather. There are three areas where the middle class is hammered: taxes, high housing costs, and a broken education system. Let’s look at them as we peer toward 2023: a little winter organizing of our political mentalities.
1. Taxes.
The middle class does not pay that 13.3 percent rate on millionaires, but it does pay what long was the “top” tax: 9.3 percent. California’s income tax rates were indexed for inflation in 1978. But that was only after a decade of inflation pushed the middle class into the then-top rate of 9.3 percent. That is, today the middle class pays at a rate originally intended only for the very rich.
The middle class in no other state pays income taxes that high. Of the states, seven have no income tax at all. And 37 have a top rate below 9.3 percent.
Here are the five states after California with top income tax rates above 9.3 percent: Hawaii at 11 percent; New York 10.9 percent; New Jersey 10.75 percent; Oregon 9.9 percent; and Minnesota 9.85 percent.
However, for the middle class, the percentage is lower. For someone making $80,000 a year, here’s the marginal percentage tax rate for a single filer:
California 9.30
Oregon 8.75 (and no state sales tax)
Minnesota 6.80
New Jersey 6.37
New York 5.97
Hawaii 5.86
Year after year, that adds up. Moreover, in California, $80,000 really isn’t middle class, but lower middle class. Admittedly, New York, New Jersey, and Hawaii also are high-cost states in many areas.
But those states have much lower taxes for the middle class. And it’s easier to be in the middle class in those states because most things, especially taxes and property, are cheaper.
2. Housing.
At Chapman University’s 45th Economic Forecast, held Dec. 13 and co-sponsored by The Epoch Times, economist and President-emeritus Jim Doti brought up an interesting number I hadn’t heard before. “Home prices increased 400 percent since 1990” in California, he said. “5.2 percent per year. Overall inflation then was 2.6 percent—roughly half. Home prices increased two times CPI,” the consumer price index.
I came to California just before that, in 1987, and rented a nice one-bedroom apartment in Huntington Beach for $600 a month. In 1993 I moved to a nearby place and the price was about the same, $700 in the late 1990s. The rent crept up over the years to $1,000 in 2010, still tolerable. Then the rent started soaring, and I had to move. Today those two places rent for $2,429. My income sure didn’t go up four times in that period.
The median price for a home in 2021 was $854,280 in Los Angeles County and $1.2 million in Orange County—although both have dropped a bit in 2022. And the median price for all California was $554,866 in 2020, lower because the Inland Empire and other inland areas are cheaper.
But here are the median home prices in the other states I listed above for their relatively high income taxes:
Hawaii $636,451
Massachusetts $422,856
Oregon $361,970
New Jersey $335,607
New York $321,934
And here are some states with no income tax:
Washington $409,228
Nevada $301,753
New Hampshire $296,163
Florida $ $245,169
Texas $207,301
But according to the U.S. Census bureau, the median household income in California in 2021 was only $84,097, compared to $70,784 for the national median. That is, it’s 19 percent higher in the Golden State—which hardly covers the vastly greater expense of taxes and housing in California.
Which makes me wonder why I’m still living here. These two things—the highest taxes and second-highest housing prices—make it almost impossible for the middle class to accumulate capital to buy a home, start a business, or even raise a family.
3. Education.
I’ve written several articles here in The Epoch Times on the horrible state of the public schools in California, such as “Lessons From Running for California Schools Chief: Interview,” on Nov. 14. Test scores, already among the worst among the 50 states, dropped further during the excessive COVID-19 school lockdowns.
Then there’s the politically correct social engineering pushed on the students, beginning with critical race theory, now mandated in state schools under the guise of “ethnic studies.”
No wonder several of my friends left because they didn’t want their kids indoctrinated. A couple other friends with toddlers are planning to leave the next couple of years before the kids go to kindergarten.
Private schools are an option but cost money the middle class doesn’t have. Home schooling is another option but takes dedication some families don’t have, and is next to impossible if both parents are working—itself virtually a necessity in this expensive state.
Some school boards are kicking back against the indoctrination. Temecula Valley Unified School District on Dec. 13 banned critical race theory, while also adopting a resolution condemning racism. But few districts do this. And how long can Temecula and other districts hold out on the side of the parents and students against the pressure from the state government and the powerful teachers unions?
Conclusion: Adios, Middle Class
It’s simply impossible to be in the middle class in California, especially if you have kids. It’s no wonder more people keep leaving. At the Chapman Forecast, Doti provided the latest data, “Net domestic migration has been negative since 2011,” meaning more people leaving for other U.S. states than came here. “For the most recent year, 2021, it was negative 280,000.” If that keeps up, during the 2020s decade, California would lose 2.8 million people to other states.
Gov. Newsom touts his “California Way” as a contrast to the policies of the conservative governors of Florida and Texas. “They’re doubling down on stupid, and we will not follow their path, we’re going in a completely different direction,” he boasts. But the out-migration shows the state’s middle-class residents themselves are going in a completely different direction from Newsom—out of the state.
The Next Day: Media In Hysterics Over Twitter-Journo Bans
The MSM, which spent the better part of five years celebrating whenever a conservative news outlet was banned, suppressed, or demonetized by big tech, are suddenly turning Elon Musk’s temporary ban on a handful of left-wing journos into a First Amendment catastrophe.
To recap, Twitter on Thursday suspended several left-wing reporters without explanation – with Musk later suggesting they had ‘doxxed’ him at some point. Those kicked off the platform include, Keith Olbermann of MSNBC, Ryan Mac of the NY Times, Anthony Webster of Bellingcat, Donnie O’Sullivan of CNN, Micah F. Lee of The Intercept, Matt Binder of Mashable and Drew Harwell of the Washington Post.
The media reacted as if Musk had just committed two January 6ths and a 9/11 on their First Amendment rights – while remaining completely tone-deaf to their own behavior – such as when journalist Alex Berenson was kicked off the platform and had to sue his way back under Twitter’s previous management.
The Washington Post‘s resident doxxer Taylor Lorenz flipped out and complained in a “Twitter Spaces” forum about being doxxed herself.
“It’s just so rich to hear him [Musk] complain about doxxing and harassment,” said Lorenz. “I mean, I am doxxed and harassed constantly on this app. That doesn’t mean that everything on this app has to be moderated, but I do think users deserve more control over their own experience.”
Taylor Lorenz is complaining on Twitter spaces about being doxxed and harassed. The irony!
WaPo executive editor Sally Buzbee said Musk’s decision “directly undermines” his stated ‘free speech absolutism.’
The suspension of [Post reporter] Drew Harwell’s Twitter account directly undermines Elon Musk’s claim that he intends to run Twitter as a platform dedicated to free speech. Harwell was banished from Twitter without warning, process or explanation, following the publication of his accurate reporting about Musk. Our journalist should be reinstated immediately. -Sally Buzbee
Democratic operative lawyer Marc Elias suggested that ‘big media’ may not remain on Twitter – after the New York Times issued a statement Thursday evening calling the bannings “questionable and unfortunate,” and called for Twitter to offer an explanation. On Friday, the paper privately asked staff not to fight with Musk on Twitter, Semafor reports.
Instead, NBC News temporarily suspended senior reporter Ben Collins for his “editorially inappropriate” coverage of Musk.
“NBC News had already benched one of the journalists who has reported on Twitter and been harshly critical of Musk. NBC News temporarily suspended tech reporter Ben Collins from covering Musk on NBC and MSNBC airwaves” – Semafor https://t.co/8VDqQrFC60
As usual, (actual) journalist Glenn Greenwald has a spot-on take:
Watching the same liberal corporate journalists who explicitly agitated for a regime of social media censorship suddenly and righteously wrap themselves in the flag of free speech is simultaneously nauseating and hilarious – but also encouraging and inspiring. Welcome, indeed!🙏 https://t.co/o2UZhEwfe9
Every *genuine* free speech advocate I’ve ever known has tried to convince people to object to censorship *on principle*. But knowing many are bereft of principles – eg liberal journalists – we try the tactical approach: this regime is bad because it will be used against you.
I’d be genuinely happy if this were a transformative moment: where liberals who’ve spent years demanding online censorship now see its evils since it’s directed at them and their friends. But of course it’s not that: they’re complaining because they think *they* should be exempt.
CNN and NYT journalists and executives: “Wait. When we were demanding more of this, we didn’t mean that this should be done to *us*! This was supposed to be used only against right-wing cretins, conservative journalists, and other species of peasants — not against **us**.”
Just last month, EU officials were threatening @ElonMusk with sanctions and other legal reprisals if he doesn’t censor more.
Now they’re threatening him with sanctions due to last night’s bans.
Do you see the issue? Zero principles. Just whether the right people are censored: pic.twitter.com/Uv46J6jJJ0
Yet another conservative journalist objecting to the Twitter bans. I can count on one hand the liberal employees at major media corporations who ever objected to Big Tech censorship before last night. They wanted more of it. This is what “principles” are:https://t.co/78a16kP0ZF
As the snow flies and temperatures plummet, regulatory agencies and analysts alike warn that residents in multiple U.S. states are at an elevated risk of dangerous winter blackouts.
States such as Texas and North Carolina, and also the Great Lakes and New England regions are in the highest risk category, according to a report from the North American Electric Reliability Council (NERC).
Meanwhile, a “large portion” of the U.S. power grid is at risk of insufficient electricity supplies during peak winter conditions, the agency concluded in the same analysis.
Although climate change advocates claim that severe weather events are the primary culprit, energy insiders say tight fuel supplies and an outdated electric grid play a critical role in potential blackouts.
Conservative estimates this year put the cost of critical power grid and infrastructure upgrades at $4 trillion, with the use of supplemental nuclear power; the price tag jumps another $500 million without nuclear energy.
The Biden administration approved a $13 billion stopgap measure on Nov. 18 to “modernize and expand” the power grid. However, people in the energy industry say it will take months or years for U.S. residents to see the difference.
Falling Behind
“There is a significant gap to upgrade aging grid infrastructure to meet net-zero mandates and maintain reliability, and we are running out of time,” analyst Kim Getgen told The Epoch Times.
Getgen is the CEO and founder of Innovation Force, which tackles complex issues such as America’s energy crisis. She says the Biden administration’s infrastructure investment is a good start, but it’s exactly that, just a start.
“Upgrading aging infrastructure, system hardening, and resilience measures while complying with the evolving set of new cyber and physical security threats will require even more investment,” Getgen said.
She added that the American Society of Civil Engineers gave the U.S. power grid a C- grade on its 2021 Infrastructure Report Card.
Getgen maintains that a greater level of investment is needed, saying, “we can’t maintain the millions of miles of distribution and transmission lines that deliver the power, and we can’t harness the potential of renewable clean power.”
And although upgrades are crucial, some energy specialists say the U.S. electrical grid won’t become efficient overnight, or even by next winter.
“It’s important to remember that something as complex as the electricity grid takes time to change,” Ted Kury, director of energy studies at the University of Florida, told The Epoch Times.
Working in the university’s Public Utility Research Center, Kury says the regulatory process for new utility projects moves slowly, no matter how much money is thrown at it.
“It’s a process with numerous safeguards, but that also means it takes more time. It’s reasonable to think that we’ll start seeing impacts in the next few years,” he said.
Eric Hendrick, senior consultant in risk management at Customized Energy Solutions, agreed with Kury’s assessment.
“Given the politics involved in any legislation, it’ll take some time before any of these funds trickle down to the states that need the funds,” Hendrick told The Epoch Times.
During a press statement, John Moura, the director of reliability assessment for NERC, said there are “more areas at risk” of blackouts this winter amid power generation and fuel supply challenges.
U.S. Secretary of Energy Jennifer Granholm also noted in a November brief that 70 percent of the nation’s power grid is more than 25 years old.
Grid upgrades aside, strained natural gas and coal supplies are also, quite literally, fueling higher power-outage risks.
Fuel Factor
Not only are millions of Americans facing a greater risk of losing power this winter, they’ll also be paying more for energy.
Homes that run on natural gas can expect to pay 28 percent more. For those using heating oil, a 27 percent price spike is expected, and a 10 percent increase is likely for households that rely on electricity alone for heat.
The increases are due to a combination of higher market prices and demand, according to an Energy Information Administration analysis.
And with the continued push toward Biden’s net-zero energy goals, an additional 11,778 megawatts of coal generation was retired in 2022. Meanwhile, the demand burden has shifted heavily toward natural gas, which is already encountering supply issues.
Nearly two years after newly elected President Joe Biden ordered a halt to construction on the project, the Department of Homeland Security announced on Dec. 13 that it will work to close gaps along the southwest border of the wall between the United States and Mexico.
Biden’s 2020 campaign promise was that he would not build “one more foot” of the border wall, which was one of former president Donald Trump’s most prominent objectives.
The Biden administration is confronted with finding solutions to address the end of Title 42, which is set to expire on Dec. 21. DHS has said that could lead to an estimated 9,000 to 14,000 illegal immigrants crossing from Mexico into the United States every day.
Created as part of the Public Health Service Act under President Franklin D. Roosevelt in 1944, Title 42 was designed to prevent the introduction of contagious diseases in the United States.
At the start of the COVID-19 pandemic in 2020, the Trump administration invoked the order to restrict migrant entry into the United States.
For the 12 months ending Sept. 30, 2022, Customs and Border Protection stopped migrants more than 2,766,582 times, compared with 1.72 million times in fiscal year 2021, which was the previous high.
Once Title 42 is lifted, the number of migrants that Border Patrol agents must process will “likely be double or greater,” according to a U.S. Department of Homeland Security Office of Inspector General report released in September.
In addition to closing seven “small gaps” in the wall in the Yuma, Arizona, sector and filling in another space in the El Paso, Texas, sector, crews will also work on environmental issues surrounding the wall and finish building roads, according to DHS.
Overall, the new work will occur in the Border Patrol’s San Diego sector, which includes western Arizona and part of eastern California, and the El Paso sector, which covers western Texas and New Mexico.
Early in his tenure, Homeland Security Secretary Alejandro Mayorkas indicated last year that gaps would have to be closed, but DHS has been slow to move forward with the task.
The gaps have allowed illegal immigrants to enter the United States and add to the record number of illegal border activity that has escalated since Biden took office in January 2021.
Building the border wall was one of Trump’s most widely discussed campaign promises in 2016. The Trump administration erected more than 450 miles of fencing and planned on adding around 300 more miles of construction.
After Biden took office, crews were permitted to fill in holes and tie down loose materials, but they were ordered to halt construction.
A Government Accountability Office audit conducted in 2021 discovered that 69 miles of the wall constructed during the Trump administration includes all of the technology and the roads.
Construction at some parts of the wall created environmental issues that need repairs, which will take place as part of the new project, according to DHS.
This work will include installing drainage systems, adding safety features to roadways, and remediating some construction sites between El Paso and San Diego, DHS said.
“Prior to work, the Department of Homeland Security will work closely with stakeholders, including impacted landowners, tribal, state and local elected officials, and federal agencies to seek input and help on prioritizing potential remediation activities within each sector,” the DHS said in a statement.
Border Patrol agents have frequently emphasized the importance of a wall to help control illegal immigration.
In El Paso, Border Patrol said its agents are stopping migrants around 2,400 times a day on average compared with approximately 1,700 each day in previous months.
The migration rate across from Mexico into Texas has recently spiked with the rapidly approaching end to Title 42.
Migrants processed under the policy are not permitted to request asylum in the United States and are removed from the country.
On paper, Title 42 covers the Canada and Mexico borders and migrants of all nationalities. It has mostly been used along the southern border to remove illegal immigrants from Mexico, Guatemala, Honduras, and El Salvador from the United States.
One of Biden’s first actions as president was ending the “Remain in Mexico” policy implemented under Trump.
Under that law, asylum-seekers were required to remain in Mexico while their asylum claims were processed. Figures showed that the policy discouraged false asylum claims and decreased the number of illegal immigrants.
SEC Begins To Ask Questions As Blackstone’s Flagship Funds Hit Redemption Limits
Blackstone Inc.’s stock is down 42% year-to-date. The $68 billion Blackstone Real Estate Income Trust (BREIT) informed investment advisors and portfolio managers last month who plowed money into the fund that redemption requests in November and December would be capped. Recall BREIT’s redemption request policy is 2% of NAV can be redeemed per month or 5% per calendar quarter. This was the first-time BREIT faced redemption limits, spooking money managers. Then the Blackstone Private Credit Fund (BCRED), one of the largest investment vehicles with a portfolio of corporate loans, was subjected to redemption limits as now the Securities and Exchange Commission investigates.
BREIT and BCRED enforcing redemption limits have been the chatter on Wall Street. Earlier this month, we shared a “BREIT Advisor Guide” that was emailed to money managers with a Q&A section to keep their clients calm and prevent a further run on the fund.
Over the last several years, the non-tradeable funds have been massive outperformance vehicles for wealthy clients. Now there’s a sense of panic given the challenging macro conditions as the Federal Reserve risks sending the economy into a hard landing in the second half of 2023 due to overtightening. Investors fear these non-tradeable funds could become illiquid despite good performance and are pulling out funds and asking questions later.
BREIT’s Advisor Guide to money managers blamed the increased redemptions on Asia.
BREIT’s success has started to complicate its future. It’s attracted investors from all over the world, meaning it is exposed to the trends in a wider array of markets. In Asia, the strong dollar caused BREIT to become a bigger position in leveraged portfolios of wealthy Asians. When home markets tanked, a slew of Asian investors faced margin calls and turned to the parts of their portfolios that could be readily turned to cash — including the Blackstone trust.
Now the only issue is that someone yelled fire, and investors are panicking, which has caught the attention of the SEC, according to people familiar with the matter. Here’s what they told Bloomberg:
The regulator is trying to understand the market impact and circumstances of the events, and asked how the firms met redemptions and if affiliates sold before clients, one of the people said. The inquiries aren’t any indication that either firm is under investigation or committed any wrongdoing.
Here’s a timeline of BREIT’s redemptions via a recent note by Barclays.
Problems for Blackstone are worsening. Financial Times, citing sources, said the New York-based investment manager could delay the launch of the Blackstone Private Equity Strategies Fund, or BXPE, due to the unresolved issues surrounding BREIT and BCRED, dismal fundraising conditions, volatile financial markets, and an aggressive Fed tightening monetary conditions to tame inflation.
These issues are “casting a shadow over the entire industry,” said Sheldon Chang, president of CrowdStreet Advisors. He said, “it will prompt a review of semi-liquid funds and their structure. People will tend to get overly conservative.”
Blackstone has sent its top executives to financial media outlets to counter the redemption panic. President Jon Gray went on CNBC the other day to calm fears. At a conference, Steve Schwarzman, Blackstone’s chief executive officer, said that BREIT’s redemptions were due to investors needing liquidity for other reasons rather than issues with the fund.
What appears to be happening is that investors are exiting hard-to-trade assets ahead of the possible recession next year. People are building cash as the risk now is that the Fed could cause a hard landing.
The annual fiscal spending bill, which is meant to keep the federal government funded, will expire at the end of the current fiscal year, in September 2023.
A ban on earmarks was instituted in the House of Representatives since 2011, when Republicans controlled the chamber; but House Democrats recently revived them last year, with provisions to increase transparency.
House Republicans Cave on Earmark Spending, Outraging Fiscal Conservatives
However, the House Republicans voted to retain earmarks for annual spending bills after they won a slim majority in the midterm elections, outraging fiscal conservatives.
The $16 billion in proposed pork barrel spending projects for next year currently dwarfs the $9.7 billion in earmarks passed through the fiscal spending bill for 2022,reported Bloomberg.
Members in both houses are now attempting to negotiate a deal and avoid a year-long stopgap measure that would not include earmarks for lawmakers’ favorite pet projects.
The caving of House Republicans on earmarks is a significant victory for caucuses and members in swing districts, but a defeat for conservatives intent on reining in spending to reduce the federal deficit and waste.
Fiscal conservatives lost an earlier 158–52 closed-door vote at the GOP conference on Nov. 30, giving Republican leaders the power to bring spending bills to the floor that contain local funding for members’ favorite projects, reported Bloomberg.
Rep. David Schweikert (R-Ariz.) told Bloomberg that he opposed the decision on earmarks because he remembered “the bad old days” when it was abused by members for personal gain, and he believed that his peers were swayed by an argument that Congress members need to take back control of spending decisions.
“There’s an argument saying, look we do have certain things that have federal nexus, how do you do that open and transparent?” Schweikert said.
“But it can’t be buying a museum for someone to curry favor in the district.”
Certain retiring senators would be among the “biggest winners” if a deal on the omnibus was agreed upon, such as Senate Appropriations Chairman Patrick Leahy (D-Vt.), who got $213 million in earmarks; Vice Chairman Richard Shelby (R-Ala.), with $656 million in earmarks; and Senate Armed Services ranking member Jim Inhofe (R-Okla.), with $511 million in earmarks, Bloomberg Government reported.
Earmark Appropriations Surge for Fiscal Year 2023
As noted, the general omnibus framework agreement includes over 7,500 earmarks totaling $16 billion in 2023 appropriations bills that could make it into the overall annual spending package, reported Bloomberg Government.
The omnibus spending package comprises 12 separate appropriations bills, which span more than 2,500 pages of text, according to the Cato Institute, a libertarian think tank.
Bloomberg Government reported a total of 3,123 earmarks from the Senate, which will cost taxpayers $7,780,973,000, and 4,386 earmarks totaling $8,231,999,565 from the House, in next year’s appropriations bills.
Both chambers have proposed a combined 7,509 earmarks totaling $16,012,972,565.
However, the total of earmarks are slightly less than 1 percent of the roughly $1.7 trillion government spending bill that lawmakers expect to pass before the end of the year, Bloomberg reported.
Lawmakers in both parties reached a compromise in 2022, by agreeing to apply a 1 percent cap on new earmarking after it was revived for the fiscal package that year.
The Congressional Research Service defines earmarks as a benefit to “a specific entity or state, locality, or congressional district other than through a statutory or administrative formula or competitive award process.”
They consist of spending provisions or “pork” that members of the House and Senate attach to bills that are likely to pass and signed into law.
Many lawmakers enjoy adding earmarks into bills for projects in their districts, but they also have the reputation of being abused as a reward for members’ key donors and special interests.
Congressional leaders also like the use of earmarks to convince members of their caucus to vote with the party line by providing favors for their districts or states back home.
“If Congress extended all spending in the current Continuing Resolution for the remainder of FY2023, the U.S. would spend $1.707 trillion in discretionary spending,” wrote Romina Boccia of the Cato Institute in October.
“Add to that the $4.2 trillion (without subtracting off‐setting receipts) in mandatory spending the Congressional Budget Office projects for FY2023, and the federal government is projected to spend nearly $6 trillion this year.”
“And even these staggering figures likely understate next year’s federal spending footprint since they do not account for spending by the CHIPS Act, the Inflation Reduction Act, nor the most recent student loan forgiveness by executive order.”
House Passes Short-Term Funding Measure to Avoid Last-Minute Shutdown
The House approved a stop-gap spending measure on the evening of Dec. 14 to extend funding for federal agencies through Dec. 23 and avoid a partial government shutdown.
The final vote was 224–201, with nine House Republicans joining Democrats, giving Congress further time to craft a larger annual spending package.
Republican leaders in the House opposed the stop-gap legislation, calling it an “attempt to buy additional time for a massive lame-duck spending bill in which House Republicans have had no seat at the negotiating table,” reported CBS News.
“This Continuing Resolution is a simple date change that keeps the government up and running as we negotiate the details of final 2023 spending bills,” announced the Chairwoman of the House Appropriations Committee, Rep. Rosa DeLauro of Connecticut, a Democrat.
“I am encouraged by the agreement we have reached on a framework that provides a path forward to enact an omnibus next week. The House and Senate Appropriations Committees are working around the clock to negotiate the details of spending bills that will be supported by the House and Senate.”
