Welcome back to Finance Friday, the supreme leader of your inbox.
The president of the Dallas Federal Reserve speculated that the Fed will begin to taper its open-market operations (i.e., creating money to buy bonds and mortgages) in October. That may be mathematically impossible. There’s the small matter that someone has to tax, borrow, or more likely, create the dollars that our political class is spending like drunken sailors.
The Senate passed an “infrastructure” bill that the media must remind us in every headline is “bipartisan.” Unfortunately that is not fake news. Some eighteen Senate Republicans—36 percent of the caucus—voted with the Democrats. Senator Bill Hagerty, who voted against the bill and managed to hold it up briefly, stated what should have been obvious:
“As the Senate continues its debate around a $1 trillion infrastructure proposal, we know what is just around the corner: It’s a completely partisan 50-50 vote with Vice President Kamala Harris as tiebreaker, and we can expect everything Democrats took out of the bipartisan deal that they couldn’t get agreement on… In the short term, the Democrats’ reckless $3.5 trillion tax-and-spend blowout will dramatically increase the size and scope of the federal government.”
Absent from all reporting is that the $1 trillion “infrastructure” bill and upcoming $3.5 billion progressive bonanza will be on top of the actual federal budget for the fiscal year that begins on October 1, which is also set to be another orgy of profligacy. In the current fiscal year, Washington will spend a record $7.2 trillion and take in only $3.6 trillion, leaving a deficit of $3.7 trillion and bringing the national debt to nearly $29 trillion—about 130 percent of our GDP. That level is now higher than France’s, and about to get a lot higher, shockingly implying we cannot make fun of the French as much. And this is not occurring during a recession, depression, or world war, but in peacetime when the economy is growing fast and has never been larger.
Alas, Senate Republicans are now vowing not to vote for an increase in the debt limit in a transparently insincere demonstration of fiscal restraint. How stupid do they think voters are? Republicans have effectively joined Democrats in running up the biggest fiscal tab ever, and will also own part of whatever fiscal conflagration comes as a result. They immediately lose credibility on the best economic talking point today, which is that Democrats are causing inflation, because Republicans are now part of the overspending and overborrowing that helps drive that inflation. And did they not think two steps ahead to how Democrats will lambaste them for voting for spending but then irresponsibly threatening a default on U.S debt—just before the inevitable Republican capitulation? Apparently not. At the helm, Senate Republican leader Mitch McConnell heaped praise on Biden for the bipartisan deal.
While prospects are still strong for Republicans to pick up the House of Representatives in midterm elections next year, the Squishy Eighteen who voted with Democrats have made Rick Scott’s job a lot harder. The Florida senator voted against the deal but is charged with leading Senate Republicans to victory in 2022. Candidates seeking to replace retiring Republicans in North Carolina, Ohio, and Pennsylvania can try to disavow the Respendicans in their party, but Scott may still have a tougher time getting crucial small donors to spend.
To pick up the Senate, Republicans need to hold all of their open and vulnerable seats and pick off either Raphael Warnock in Georgia or Mark Kelly in Arizona. It’s still doable but less likely today.
Things We Missed While Debating How Many Genders There Are
The SEC issued an 82-page rule approving Nasdaq’s plan to require listed companies to have at least two “diverse” members of boards of directors. The rule helpfully explains:
“’Diverse’ would be defined to mean an individual who self-identifies in one or more of the following categories: (i) Female, (ii) Underrepresented Minority, or (iii) LGBTQ… ‘Female’ would be defined to mean an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth; ‘Underrepresented Minority’ would be defined to mean an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx…” and so on.
Thus is a government agency that is supposed to keep the securities business honest allowing an exchange that is supposed to have little to do with how listed companies are managed require those companies to choose board members based on characteristics other than merit. Companies can opt out, but they have to explain their transgression in writing if they do so, and we know how brave today’s CEOs are about stuff like that. We wonder why any companies go public in the United States anymore, especially with so many debt and private equity alternatives to satisfy capital needs.
Two companies that certainly have diverse boards are Exxon and Philip Morris. Perhaps inspired by a Dutch court’s order to Shell to commit suicide, Exxon, which sells nothing but hydrocarbons, is reportedly flirting with promising to go carbon neutral by 2050. Not to be outdone, the CEO of Philip Morris, which produces nothing but smoking products, said, “I want to allow this company to leave smoking behind,” and vowed to stop tobacco sales in Britain within ten years. The companies have a combined $200 billion in revenue, although maybe not for long. Can they make that up by selling cappuccinos?
Meanwhile, companies and countries not run by clowns are quietly skeptical of the green energy transition, at least on the timeline our political-cultural overlords have in mind. A story that affects our world even more than hideous Megan Markle’s inability to get invited to Obama’s sophisticated 60th birthday is the showdown in OPEC+ that saw the United Arab Emirates take on Saudi Arabia and win. At issue was how quickly to resume oil exports that were cut when demand collapsed during the pandemic. Abu Dhabi, which some analysts believe was willing to walk away from OPEC, demanded and received a higher baseline amount of oil exports.
One impetus was that the UAE has wisely invested in oil production and transportation, and is intent on using oil revenue to finance its transformation from an oil economy. The UAE is much farther along than Saudi, and both are infinitely ahead of Russia, which has no plan. The real-world impacts are that Saudi is no longer totally in charge of OPEC, that OPEC+ will pump more oil that it would have otherwise, and that those who invested in oil and gas production are going to do very well in years ahead with likely higher oil demand and pricing. Unfortunately, U.S. production is still way off pre-pandemic highs and likely to stay that way with the Democrats’ war on energy. The White House was cluelessly quiet when OPEC+ was actually meeting. Now Biden is calling for OPEC to produce more oil still as Americans strain under higher gasoline prices. Biden seems oblivious of the irony that his administration’s anti-oil agenda has crimped domestic production and his monetary policy is helping spike prices.
Is it too glib for us to say that we can sell you several thousand good-as-new Afghan Army rifles that have never been fired and only dropped once? (Kubrick aficionados recognize that as a stolen ARVN joke from Full Metal Jacket.) It probably is, given the human suffering under way in Afghanistan amid a Taliban surge. Town after town is falling to the Taliban, some without defenders even firing a shot. Neither side has seemed to care much about the negotiations they agreed to in the Khalilzad deal: Kabul spent more effort on lobbyists in Washington trying to derail U.S. withdrawal, and the Taliban have been encouraged by Biden weakness that has included patiently taking abuse from Chinese diplomats, begging Iran unsuccessfully to rejoin an appeasement nuclear deal, and threatening Putin over cyber-attacks and then doing nothing.
It is unclear if the Afghan Army will toughen as the battle draws nearer to Kabul, and if it can at least hold until October or so when fighting usually subsides in Afghanistan until spring. That would provide breathing room and perhaps a modicum of leverage for talks between the parties in Doha to take place. But as Nixon and Kissinger understood, surging armies don’t think highly of negotiating (hence Nixon’s decision to unleash devastating and successful air attacks in Operation Linebacker). The glum, shuffling Biden gives every appearance of having already accepted a fall-of-Kabul scenario.
Another set of culprits who should not escape blame is the long line of generals who overstated the capabilities of Afghanistan’s military and police, and the broader national security establishment. While individual units of U.S. troops never wavered in combat, and can be proud of stopping al Qaeda and preventing another 9/11, some of their politician-generals let their country down. We are also reminded of the obsolescence of NATO, which played a prominent role in the “good” Afghanistan war while steering clear of Iraq. NATO’s sole major mission outside of Europe, which still required major U.S. assistance, failed.
Hopefully this development will get the USA out of Cowboys and Indians in backwaters to focus directly on deterring China and Iran. Past instances where the USA and its allies helped install democracy (Japan, West Germany, Panama, Grenada) no longer seem to have much applicability. The great modern surges of freedom in Spain (1977), the Philippines (1986), South Korea (1987), New Europe (1989), Russia (1991), Taiwan (1996), and Indonesia (1999) occurred amid U.S. diplomatic pressure, and at times involved military posturing, but not actual U.S. administration or war.
Neolibs Go Nuts
The liberal media had an enjoyable freak-out over Tucker’s Carlson trip to Hungary and socks-optional interview of Viktor Orban. It was like Judy Garland died all over again—inconsolable! New York magazine, which is so anti-fascist it censored Andrew Sullivan for having the wrong opinions, declared, “Tucker Carlson Has Seen the Future, and It Is Fascist.” The kiddoes at Vox wrote, “Carlson’s visit to Budapest, a follow-up to previous pro-Orban coverage, shows that this authoritarian envy is no longer confined to a fringe.” Never one to be out-crazied, Alexander Vindman (aka the Fat Colonel), who for some reason Donald Trump had on his national security council staff trying to oust Donald Trump, took to pointless CNN to assert, “It’s interesting to hear folks like Tucker Carlson demonize and hate the United States because that’s what he’s doing. He’s hating the United States.”
Orban is the prime minister of a government that he has made so fascist and undemocratic that he faces competitive elections next year. Next to Russian President Vladimir Putin, he is the chief object of hate for neoliberals whose vision for a New Europe as self-loathing, multi-cultural, woke, and secular as today’s West is crumbling before their eyes. Orban is like an effective version of Trump who actually grasps policy: he got his wall built on Hungary’s southern border to halt illegal immigration and has prevented globalist, corporate “citizens of the world” from taking over Hungary’s media and broader culture.
Orban has expressed doubt about the Left’s state religion, climate change, and called for a “Christian democratic” approach to climate that includes improving the environment for humans by cleaning up rivers and cities rather than just raising energy costs to appease the pagan sun god. As Christopher Caldwell wrote in a thorough 2019 piece spotlighted by Roger Kimball: “Orban was the first conservative politician to rediscover, after the crash of 2008, that a ‘strong state’ is sometimes needed to attain conservative ends—in this case, avoiding the debt bondage and extinction of sovereignty that were to be Greece’s fate.” (That method of using government to weaken advocates of big government is one we echoed in “Bring back HUAC” and calls to break up big tech.)
The reason progressives hate Orban (and Carlson) is that he demonstrates the success of healthy nationalism and a culture centered ultimately if abstractly around God and family rather than politics. Hungary is a small fish, but if one accepts that there is more to like about Orban’s vision than that of self-loathing, post-modernists in Berlin, London, and among wokeistas here, then one may also wonder if Russia, despite its corruption and trademark hazardous misconduct, is really the mortal enemy to civilization that neoliberals would have us believe. If one wants to oppose both woke neoliberalism and the Chinese model of authoritarianism while defending the idea of America, then one should understand the political instincts on display in New Europe, and in some cases embrace them. Is it wrong to admire nations where people are proud of their countries and culture and don’t let former dudes compete in women’s sports?
It is if you’re in the Biden administration. Possibly in reaction to Carlson, the White House announced Wednesday that it was convening a “Leaders’ Summit for Democracy,” which despite occurring four months from now, will of course be “virtual” to accommodate our frail president. The stated goal: “…defending against authoritarianism, fighting corruption, and promoting respect for human rights.” What that really means is a digital collection of bobos espousing globalism, open borders, and wokeism. Lame!
Speaking of Putin, the interview of him that Carlson sought presumably would have occurred during this trip to Europe. Attempting to arrange that was the topic of the conversation on which the NSA eavesdropped and then illegally leaked. The NSA’s inspector general is now reportedly on the case, but you can expect that to go the way of other deep state investigations of itself. Here’s hoping Tucker eventually lands that Putin interview so we can enjoy the next meltdown.
Odds and Ends
On the plus side for Republicans at the state level, a Democrat likely to challenge Texas Governor Greg Abbott next year, actor Matthew McConaughey, admitted he’s a smelly hippie who doesn’t bathe much—part of a new trend among celebrities whom we incorrectly thought could not be any more gross. McConaughey’s hygiene deficiency can’t possibly go over with Texans like famous if fictional Lone Star Stater Peggy Hill, who said, “I am not a feminist, Hank. I am Peggy Hill, a citizen of the Republic of Texas. I work hard, I sweat hard and I love hard; I gotta smell good and look pretty while I’m doing it.”
The Wall Street Journal news division, run by Dutch left-winger Almar Latour, gets a little bit worse every week. While busy getting scooped by other outlets with actual business news, a reporter who came to the paper from taxpayer-funded NPR (Nicaraguan Public Radio, right?) wrote on Wednesday:
“Joshua Bryant, who uses gender-neutral honorifics and pronouns, and their family canceled a trip to Turkey that was scheduled for October. They have a 1-year-old child who was supposed to join them. ‘The more we thought about it, the more we couldn’t really justify traveling internationally,’ Mx. Bryant says. The Portland, Ore., resident says they felt that, in addition to the risk of their child or other family members falling ill, it would be unethical to travel to a place that has less access to vaccines than the U.S. Mx. Bryant says they will feel comfortable traveling internationally again ‘when Covid is mostly a memory.’”
Yikes—we can’t even find crap like this in liberal Bloomberg and Financial Times. The WSJ increasingly breaks many of George Orwell’s rules for concise writing, and this woke jamboree violates his sixth: “Break any of these rules sooner than say anything outright barbarous.” Going woke works for the New York Times, given what longtime media executive Mark Simon calls the rise of subscription journalism: telling readers what they want to hear and, in the case of lefties, what makes them feel virtuous. But it won’t work with WSJ’s subscriber audience, at least not its current one. Hopefully the Murdochs don’t mind burning cash. And if you think the WSJ isn’t planning to go further into identity politics and reporting favorably on woke nonsense, have a look at its incoming class of interns and think again.
Mediocrity of the Week
As it turns out, Subway is not just about disappointing sandwiches, peculiar-smelling restaurants, and sex-criminal spokesmen. The corporate headquarters has thought up a new way to discourage customers from buying food from franchisees: running ads as part of a marketing campaign for which they charge franchisees a whopping 4.5 percent of top-line revenue, featuring the leftwing U.S. women’s soccer team captain who kneeled for the national anthem at the Tokyo Olympics. Yet another company’s management has given in to wokeistas in the marketing department who were too ignorant of the company’s purpose and customers to have foreseen easily predictable pushback.
But topping that this week is a triangle of mediocrity consisting of Scarlett Johansson, Disney, and the Screen Actors Guild (SAG). At issue is the latest piece of crap released by Disney, Black Widow. The movie flopped harder in theaters than any Marvel retread since 2009, but Disney salvaged significant loot by also releasing it through streaming Disney+ for a surcharge. That upset lefty preachy Johansson, some of whose overcompensation was tied to box office receipts, and who sued Disney, saying she lost out on $50 million. Disney put out a boilerplate statement about the suit having “no merit whatsoever” and asserting it “has fully complied with” the contract. Enter SAG, which couldn’t resist the woke path, claiming Disney used “gender-shaming” tactics in its statement, and whining that: “Women are not ‘callous’ when they stand up and fight for fair pay – they are leaders and champions for economic justice. Women have been victimized by pay inequity for decades, and they have been further victimized by comments like those in Disney’s press statements.”
These people all deserve each other. Of course, Johansson, SAG, and Disney couldn’t care less about “economic justice” or anything else on the grievance list. The real gripe is that Disney proved that even superhero films that lend themselves to viewing in theaters can do pretty well streamed directly to homes. Purchases of TVs surged in 2020, and many now provide a competitive viewing environment to theaters. (Meme traders might want to rethink whether AMC is really worth $16 billion; that’s up from less than half a billion bucks at the beginning of the year.) For taking the path of the woke instead of trying to figure out how make movies people actually want to watch, Johansson, SAG, and Disney share the mediocrity of the week award.
Have a great weekend.