I Have No Idea If I’ll Call The Bottom This Time. I Do Know We Aren’t At a Capitulation Bottom Now.

Someone with more emotional intelligence than I noted that my last blog post could have read as saying;

“I’m selling out now because I know I’ll be able to call the bottom again (because I am oh-so-smart).”

That was absolutely NOT my intended message. The intended message was.

I’m not so foolish as to bet I’ll call “the bottom” again. We might not even get to a true capitulation bottom. But I do know what a capitulation bottom feels like.  We aren’t anywhere close now. There is far too much hope out there. People buying the dip. Talk of a quick return to work. Wonder cures just on the horizon…

I have no idea if I’m doing the right thing (by going to cash). But I do think I’m making the right decision based on; 1). no visibility. 2). a binary future scenario with a pretty awful downside case (see below).

If the economy rides through OK, I’ll be wrong. I’ll miss a rally.

If the economy (more likely) take an ugly hit, we have one or more legs down from here.

When/if things really feel hopeless, I’ll force myself to buy back in. No idea if I catch “the bottom.” It could just keep getting worse from there. But we’ll definitely be closer to a bottom than we are now…

Capitulation bottoms are marked by numb despair, resignation and indifference. The result of a long siege of fear. All assets are being liquidated, with correlations at 1. We all lived that in early 2009. We may not get there, but we definitely aren’t there now.

We May Not See the Capitulation Part

The market is swinging wildly because it is pricing in binary scenarios.

  1. Optimistic: The economy bounces back quickly. Limited damage done. That scenario is driving market rallies. “Buy the dip!”

  2. Bad-to-Catastrophic: The shut-down drags on until we have a viable vaccine in wide distribution (in other words, 2021). That likely leads to a downturn that dwarfs 2008. The “catastrophic” flavor of the downside scenario hasn’t been priced in yet at all (IMHO).

We aren’t sure which scenario plays out. The market will almost certainly figure it out (and price it in) before I figure it out. What we DO know is the potential cost of the negative scenario vastly outweighs the potential benefit of the positive scenario.

Given that cost/benefit, the “smart” decision is to plan for that negative meltdown scenario. It might not turn out to be the “right” decision after the fact. But I’d prefer to miss a rally than suffer a melt-down.

OK, I Do Think We Will See Capitulation – This Likely Gets Bad.

My metaphor for the coronavirus crisis is the 1906 San Francisco earthquake. The earthquake was bad, but most of the damage was done by the fires that followed it. The virus is the earthquake. The resulting economic dislocation are the fires. Absent a miracle cure, I don’t think the likely scope of the upcoming economic crisis is understood much less priced in.

My worry is its economic shock and the resulting stresses on the financial system. If a plane hits too much turbulence for too long, something big – wings, an engine – eventually falls off. We know a lot more about that than most folks want to admit (yet).

  • The longer the virus crisis drags on, the worse the economic crisis gets. The fires after the earthquake.

  • The worse the real-world economic crisis gets, the more likely we spark a financial crisis. Gasoline on the fire. That is why I am using 2008 as a template.

  • The usual counter-argument here centers on some sort of medical miracle breakthrough. But we also know it’ll take until 2021 for a vaccine to be developed, pass trials, and get widespread distribution to the population at large.

  • I also think we all know (but aren’t yet willing to admit) that economic activity will remain depressed until there is a vaccine. A “therapeutic” treatment is great news, but “you still might end up on a ventilator and die, but it is less likely” doesn’t read like a banner under which people march back out unafraid.

Worse than 2008? Hard to See Why It Wouldn’t Be…

The other thing we know is the global Coronavirus crisis is clearly a broader-based and sharper economic shock than the US’s 2008 mortgage crisis. This doesn’t guarantee a “worse” economic result. But it does mean the real possibility of an equally or more catastrophic scenario. That is the downside case I have decided to protect myself from.

I worry we are in the March 2008 “Bear Stearns goes bankrupt – what a pity” phase where everything still seemed under control (economically). If the economic stress overwhelms the system, we could have a October 2008 “Lehman Moment” out there somewhere. Followed by the long ugly siege of selling that took us to that March 2009 bottom.

https://yhoo.it/3bOVluf

I Don’t Know Any Better Than You, But We Need to Decide Now – Not Knowing.

In short, I’ve decided to “risk missing a rally” to avoid risking a disaster scenario.

That isn’t to say that companies (like NET) aren’t going to have a great quarter and a pretty good year. They probably will. But they report 6 weeks from now. That’s an eternity in Coronavirus time.

Looking out over a year, those good numbers will matter even less if we get a repeat of 2009 – correlations go to 1 in liquidation selling. Everything gets sold and everything goes down.  A capitulation bottom starts with capitulation. That is an ugly, multi-month process.

We are facing a binary outcome here. One of those binary scenarios is a possible systemic financial crisis so dire that, in response to the threat, the Fed has opened up every tap it has, the Republican Senate just passed a $2 trillion stimulus bill without a blink, and even Trump is taking it seriously. That scenario has clearly gotten folks very very scared.

I’m not saying that super-bad scenario WILL happen. I have no idea. But better to plan for what happens if it does. If it doesn’t, you miss a rally. If it DOES, the bottom is a long way down and no asset will hold up well.  We’ll see.  At least I’ll sleep better.

(Recap) How I Called the Bottom in 2009.  It Just Couldn’t Get Any Worse.

Lets be clear about the ONLY thing I knew writing that “calling the bottom” note back in March 2009.  I had NO IDEA when it would get better.  I just knew it couldn’t get (much) worse.  The title says it all.

My Centre is Yielding. My Right is Retreating. Situation Excellent. I Attack!” 

Sometimes attacking is the only defense you have left.

We’d already been though months of liquidation in markets.  All sellers, no buyers.  That week in March, two of the networking equipment companies I covered told me customers were making capital plans on a rolling two week basis (vs a typical 1-3 years).  In other words, the demand and planning horizon had shortened about as far as practically possible. It couldn’t get shorter.  It couldn’t get worse.  Abject fear.

That is what a bottom looked like back then.  It might end up being what one looks like now.  And we aren’t close to that yet.  I hope I’m wrong.

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2020 Election. Bonfire of the Incumbents. Pivoting on Healthcare and “Bailouts.” Georgia (R) Senate Seat Already Lost.

I am tired/frustrated/surprised when I hear people say “Well, we don’t really know what will happen [about the next 6-12 months].”  That simply isn’t true.

A lot of people are going to die.  The economy is going to take a brutal hit.  An economic hit big enough to spark some sort of systemic financial crisis.

OK, we don’t know the specifics.  But we know the above.  Does more specificity really matter?  Following from that, a grab bag of mostly political and thoughts below.

We May Get a Medical Miracle?  But That Won’t Deliver Us an Economic Miracle.

The wild card is some sort of effective treatment like Remdesivir.  But even if that bends the curve, it will take a while to ramp production, the healthcare system will still buckle, nd some land mine in Finance still probably goes off.  The economic damage will still be huge.  A medical miracle would save a lot of lives, but it probably won’t save the incumbents.

Politically, We Already Know a Lot Also.

The election in November will pivot on Healthcare (for sure) and “bailouts” (at least the Democrats messaging).  A referendum on February 2020 – November 4th.  Like 2008, a bonfire of the incumbents – particularly for the party in charge [Republicans].

Why do we know this?  Look at the politics of 2008 – 2010.  Voters trashed the party in power every chance they got.  In 2008, they drove a wave election for Obama.  Obama & Co. then felt their way through the worst of the post-bust economic crisis.  They paid a huge political price.  The loss of their Senate super-majority (when Scott Brown won Ted Kennedy’s seat in Massachusetts) and the “shellacking” that lost the House in 2010.

11 years later, we’re facing another massive crisis.  Expect a similar “throw the bums out” response.

A Bonfire of the Incumbents

In general, this election is going to be “bonfire of the incumbents.”  Possibly of both parties.   But definitely the party in charge.  Anyone who didn’t come into 2020 with a decent approval rating.

In the Senate, Republicans in Colorado, Iowa, Arizona, and Maine are all done.  That’s enough to probably give the Senate to the Democrats.  Note that Mitch McConnell also has a low approval rating back “home” in Kentucky (a place he only visits occasionally).  He faced a credible challenger in Amy McGrath (donate here), but was rated a likely win a few weeks ago.  Those polls and projections are now meaningless.  The epidemiological charts suggest he’s gone.

In the House, anti-incumbency will probably cut both ways.  So lets assume losses on both sides with a Trump-driven tilt against the Republicans.  Pelosi stays in power.

Trump is probably toast.  Absent a medical and economic miracle, there are too many on-camera mis-statements that will play in a continuous barrage of commercials.  In a campaign that will pivot on Healthcare – a serious weakness for him.  He can’t even hold rallies (more on that in a later post).  And he probably starts lashing out more as the crisis wears on.

Biden’s primary qualification was always “not Trump” more than any particular affection.   That worried me a month or so ago.  But its probably the perfect message now.  “I’m not that objectionable” will be good enough for a whole lot of people to just stay home or (maybe) vote against Trump.

Election 2020 is Now About Healthcare and Bailouts.  Or Maybe Bailouts and Healthcare.

Looking ahead from here, the Democratic election messaging will pivot on two issues.  Healthcare and “bailouts.”  Or maybe “bailouts” and then Healthcare.  It depends on how sleazy the next few months of stimulus end up looking.

I almost feel sympathy for the Republicans.  They are in the same position Obama found himself in after 2008.  Mitch McConnell wrote the playbook for “how to make political hay out of tough governing choices made by the other party.”   Nancy and Chuck are following that playbook now.

Take today, where McConnell failed to advance the process in the Senate via a cloture vote blah blah blah.  What does that really mean?  He’s probably lost the initiative to Pelosi.  The House can now pass a bill and send it to the Senate before McConnell can get his own bill passed.  He either swallows the House template or he’s on the hook for “obstruction” if he tries to force through his own.  Either way, Mnuchin is back to negotiating with Pelosi and she’s pretty good at the dark arts.

Also notice how the Democrats explained their objections – the supposed “slush fund” in the bill.  They will make every vote about sleaze – real or imagined.  Money to workers and SMB’s are popular.  “Bailouts for big business” are not popular.  So the party out of power naturally maximizes its support for the popular stuff and minimizes its support for the unpopular.  Let the guy in power take out the garbage.  Make sure McConnell and Trump own the “bailouts” that the economy (fairly) and their donors (much less fairly) demand.

Re-Branding “Stimulus” as a “Slush Fund”

Look at the politicking around the current stimulus package Stimulus package. Democrats have zeroed in on the $450bn “slush fund” for big company bailouts.

Republicans are trying to avoid disclosing who gets funds until after the election.   Why?  At least partly because a chunk is going to go to the Trump organization (code word “hospitality industry”).  Which might, actually, be totally legit.  But there’s no way the Dems are going to let that (or any other bailout) happen in the dark.

The Republicans argue (reasonably) that no company would take government money in 2008-2009 because it signaled higher default risk.  There’s a certain irony to seeing them defend a reasonable (but untenable) position for once…

Its a useless fight anyway.  Bailout news will leak anyway (especially a Trump bailout).  And it will be all the worse politically for leaking.

In terms of the Democratic response, lets say the House passes the same bill as the Senate, but strips out the $450bn for “big business.”  Leaving the (smaller?!?) $350bn for small business, the expanded unemployment benefits, and the checks to individuals.  “We need to act now to help Main Street America!  Wall Street can wait a week or two!  A stand-alone own bill with careful protection of taxpayer money!  No bailouts!  No slush fund!”  The speech practically writes itself.

McConnell could pass that House bill.  But that would leaving him heavy lifting alone on a stand-alone big business bailout bill.  Democrats will label that a “slush fund” no matter how well constructed it is.

Or McConnell spends the next few days/weeks “fighting to preserve the slush fund.”  Sucks to be in charge…

We’ll see what happens.  But, politically, every delay and mis-step today only helps the Democrats in November.  They know that.  So expect a lot more drama.  And a lot more delay, disguised as a battle against sleaze.

Kelly Loeffler (R – GA) is Toast.

We can already count at least one senate Republican seat as lost.  Kelly Loeffler was appointed to fill a vacated seat in 2020.  So voters in only-now-pink Georgia don’t know much about her.  By November, the ONLY thing they will know about her is her suspiciously well-timed stock sales in February – right after she got a secret Coronavirus briefing.  Its probably too late for her to step aside and her Democratic opponent is a bona fide Congressman not a wingnut.  Which means he probably takes her seat.

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Better to Live to Fight Another Day… Stepping Out of the Market for Next Few Months

I’ve recently sold all my index funds and am holding on to only two stocks (more on those in a later post).  The reason why experts (correctly) tell you NOT to do this is because people “never” buy back in.  You miss the following upturn.  Following that advice, I did not sell my index funds in 2008.  A few years later, those losses really were just a blip. That is what most folks should do.

But I called the bottom in 2009 (really – see below).  And I bought back in.  So the lesson I took away was “WTF was I thinking?  I knew it would be really bad!! And it wasn’t priced in.  Retreat and live to fight another day you dipsh*t!”  To that end, I have promised myself I’ll buy back in.  Either 1).  When all hope really looks lost.  2).  In 3-6 months if it looks like I was wrong.  If you sell out, you MUST do the same. 

I Actually Did Call The 2009 Bottom.  I May Not Manage That Again.

FWIW, I did actually call the bottom (in a note I can’t share) in March 2009.  I was working at a large mutual fund complex and I wrote an internal note titled “My Centre is Yielding. My Right is Retreating. Situation Excellent. I Attack!”  The title says it all.

Of course, the portfolio managers mostly ignored that note.  Maybe they didn’t get the historical reference to battle of the Marne?  More likely they were too busy hiding under their desks.  Even more likely they didn’t take me all that seriously.

But I did put the one (big) chunk of deferred bonus cash I had back into the market.  So I did pretty well out of it.  I’d have done better if I’d sold my index funds a few months prior.  So I’m doing that now.

There is ZERO guarantee I am right.  Nor am I all that confident in this move.  My need to preserve immediate capital is also probably different from yours.  So do not take this as advice.  But I thought I’d share the perspective.

First the Earthquake, then the Fires.

I think we are looking at a “double whammy” scenario similar to the 2008-2009 crisis. Or, if you like, the 1906 San Francisco earthquake.   The initial shock (the earthquake) was really bad.  The secondary shock (fires that burned what was left standing) was much much worse.

  1. The Coronavirus is “the earthquake.”
  2. The economic disaster from months of isolation are “the fires.”

1H 2008 was the Earthquake.

In the 2008 crisis, the initial shock was in the first half of the year.  A whole bunch of mortgage-backed securities, Bear Stearns, and Countrywide Financial going bust.    The market dropped about 17-%-18% from its highs, but it was all fairly orderly.  “Everyone” (including myself) thought the authorities were reasonably on top of it.  It was a bad crisis in a big corner of the financial markets, but still a contained crisis.  We were all wrong.

2H2008-1H2009 Brought the Inferno.

It is easy to smear the 2008 crisis into one long memory of misery.  But the real horrors started only after Lehman Brothers went bankrupt.  Followed by the bailout parade of everyone else who would have gone bankrupt – AIG,  General Motors, every bank under the sun, etc. etc.  Followed by the Main Street damage of nationwide foreclosures (remember foreclosures peaked in 2009 and 2010).  The “real” crisis hit one to two years later.

Have We Hit our “Lehman Moment?”  I Don’t Think So.

Assuming the analogy is correct, are we in the “Bear Stearns” phase or the “post Lehman” phase?  Everything I read and hear tells me we are still way too complacent.  The deaths haven’t piled up (yet).  People don’t have friends and family in ICU’s (yet).  Bars and restaurants are (still) open in most places.  People are still talking about “when” schools might re-open this year (they won’t).  Or when their kids athletic leagues will re-start (ditto).  That’s a whole lot of parentheses above.

So the full extent of the future economic damage remains hypothetical.  Just like the foreclosures of 2009-2010 as seen from mid-2008.  When it gets real, it will “get real.”

I think I’ve got an information advantage living where I do (Berkeley, CA).  We’ve been on total lock-down since Monday.  Grocery stores, hardware stores, and (thankfully for everyone’s sake) liquor stores/pot dispensaries.   But everything else is shut down tight.  The experience of that (and seeing the resulting evaporation of ANY business activity) has really clarified things for me.  Although the cabin fever still hasn’t set in (yet) and the wave of small business failures to come is still a hypothetical.

As best as I can tell, most of the country is still “cutting back” vs going cold turkey. In a few weeks, most Americans will live my present experience when (not if) their towns lock down too.  With most Red States lagging the Blue states.  Because polls show our current partisan divide extends even to a virus that threatens all equally?!?  It boggles the mind.

I also see the same complacency around the government policy response.  I’ve been (happily) surprised at how fast the idea of sending out checks has gained traction.  But I’m been dismayed at the hopefulness that mooted action has sparked.  I remain skeptical that Washington will act with appropriate speed and scale (more below).

I Hope I’m Wrong.  Some Counter-Arguments Considered Below.

We’re more gun-shy of crisis after 2008 and have already discounted in a worse scenario.”

In market terms, we are already down @24% vs the 17% drop in 1H08.  So maybe more bad news is priced in?  Except that we “all know” a global pandemic that shuts down most non-essential business activity is going to be worse than a US-centric mortgage crisis.  So it makes sense for the market to be down more in that initial drop.

Also we have only given back the gains from September 2017 so far.  We could drop another 15% to the 2015-2016 plateau of S&P500 2,000.  Or we could drop another 40% to 1,500 (the highs from 2008 and 2001).  I’m just drawing arbitrary lines on a chart regardless (see below).  In short, does the current S&P chart really fully reflect “months-long global economic shut-down?” I don’t think so.

The panic selling hasn’t hit yet. We are still seeing fairly orderly markets.  I didn’t really notice the broader crisis 1-2 weeks ago (to my chagrin) because my own stocks were holding up well.  I didn’t understand I happened to own “haven” stocks that people were buying when they dumped oil and cruise lines and etc…  We’ve seen some hints of liquidation selling in the last few days.  But we’ve also seen market rally attempts.  People asking “when should I buy back in?”  Also  a whole lot of Americans haven’t dared peek at their brokerage and 401k statements yet.  When they do, will they hang on?  With the shops closed and the streets cleared, I don’t think so.

“Congress is Sending Out Checks and More Stimulus is Coming Etc. Etc.”

I already wrote a rant on this.  I expect the governmental response will be inadequate and behind the curve.  Until we see something approaching a “debt holiday” (no payments, no collections on mortgages, SMB debt, leases, corporate debt, credit cards, the whole kit and kaboodle), the government response probably isn’t there yet.  

Checks are a good first step, but they will be swamped by the depth of the crisis.  They need to be If that few thousand is a down payment on a much larger, longer, broader support package then maybe we avoid the worst of the hit.

Also like in 2008, a looming election will distract, distort, and delay US  Governmental response.  Note that the Democratic party has ZERO incentive to help Trump get re-elected.  Their “smart” path (politically) is to look/sound concerned while throwing sand in the gears until November 4th.  We all know Mitch McConnell would be moving like molasses if Obama were in office right now – deaths be damned.  Mitch’s example blazed a path.  Pelosi and Schumer may now follow.  Craven self-dealing may end up the only bi-partisan thing left in Washington right now.

On the other side of that coin, don’t be surprised to see Fox News start up an increasingly shrill campaign to “postpone the November election because of the virus!!!”  You read it here first 🙂

The Financial System is More Resilient After 2008.

Yes.  No thanks those who’ve worked so hard to water down that legislation in the years since.  But things are still in much better shape.  If we were facing a mere 100 year flood, we’d probably be OK.  But this argument doesn’t square with the economic reality of months-long global shut down.  This is a 1,000 year flood.   Rationally, no efficient financial system SHOULD be designed to handle that. So it won’t,  Something will break.

Only when the tide goes out do you discover who’s been swimming naked. – Warren Buffett

Someone big out there is going to be caught swimming naked –  holding too much debt with too little liquidity.  And they will go bust.  Which will cause other folks to go bust.  Until we see that first wave of bankruptcies, we haven’t tested the system.  The secondary wave of  bankruptcies will start the real stress tests.  The third and fourth waves will be the real tests.  We haven’t seen the first bankruptcy yet.

We also haven’t seen the “little people liquidations” yet.  The restaurant owner cashing out his portfolio to try and stay afloat.  The middle class family that just bought the new house cashing out the 401k to make the mortgage and put food on the table.  The debt-dependent wealthy families that lose a breadwinner or ran with too little cash cushion because “bad things only happen to poor people” (those same folks who had to sell their houses in tony suburbs during the mortgage crisis).  All that is to come.

How I Called the Bottom in 2009.  It Just Couldn’t Get Any Worse.

Lets be clear about the ONLY thing I knew writing that note back in March 2009.  I had NO IDEA when it would get better.  I just knew it couldn’t get (much) worse.  The title says it all.  “My Centre is Yielding. My Right is Retreating. Situation Excellent. I Attack!”  Sometimes attacking is the only defense you have left.

We’d already been though months of liquidation in markets.  All sellers, no buyers.  That  week, two of the networking equipment companies I covered told me customers were making capital plans on a rolling two week basis (vs a typical 1-3 years).  In other words, the demand and planning horizon had shortened to hand-to-mouth, step-by-step.  Abject fear.

That is what a bottom looked like back then.  It might end up being what one looks like now.  And we aren’t close to that yet.  I hope I’m wrong.

Charts and Addendums.

* It took me a while to get my head wrapped around the scope of this crisis.  In short, the stocks I owned were actually doing great.  So the disaster befalling the broader markets over the last few weeks didn’t register as it should have.  The only special pleading I’d make in my defense is that damn Saudi/Russia oil pumping war that came out of left field for most folks (including myself).  Scary how that has been almost forgotten a week later.

* I hit this moment of clarity this Monday, March 16th.  I’d talked to some friends were weren’t (yet) stuck at home by government order.  By pure chance, I’d also watched a clip from the movie “Margin Call”(see below – do watch it).  Actually watch the whole movie.  It remains the most realistic Wall Street movie I know of – no villains no heroes just a brutally honesty-among-thieves, zero-sum game.  For a reminder of how DC really works, I’d recommend the movie “Wag the Dog.”

* It is worth reading the background to Foch’s quote My Centre is Yielding. My Right is Retreating. Situation Excellent. I Attack!”  A link to the Wikipedia article.   https://en.wikipedia.org/wiki/First_Battle_of_the_Marne

S&P 500 Sept2007 to Jan 2010

Link to a “active” version of this Chart  S&P500 Sept 2007 to Jan 2010

Current S&P 500 With (Arbitrary, Non-Expert) Support Lines Drawn In By Yours Truly

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We Starved the Beast. Now It Can’t Save You.

We starved the beast.  And suddenly we find we need it.  But no amount of whipping is going to get it moving any faster than the starved, weak, abused thing we let it become.

Starving the beast” is a political strategy employed by American conservatives to limit government spending by cutting taxes, in order to deprive the federal government of revenue in a deliberate effort to force it to reduce spending.

With the Coronavirus Crisis just barely underway, I think many people are wildly over-optimistic about the US Federal and State Government response.  What Governments will do quickly, how much they can do, how effective that would be if executed well, and how poor that execution will likely be.

What They Will Do Now.  Dither Around As The Crisis Spirals Out of Control.

Why do I think this?  Because that is what “the Government” has been doing for the past 2 months.    “Reassuring the public” and “preventing panic.”  Hoping that we’d somehow avoid the crisis.  It is obvious the simple contingency plans aren’t in place, much less the physical preparation of beds and supplies.

We also have a very recent, utterly depressing analog.  The Government response to the 2008 Financial Crisis.  People are forgetting how long it took for Washington to take that seriously and mount even the half-hearted, ineffective response they produced in 2009.

There were months of dithering. We didn’t get a stimulus package until after Obama took office.  That $900B popgun was pathetically too small and poorly targeted  (as most serious economists now agree).  The Republicans also spent the following 8 years tarring and feathering Obama for “ineffective stimulus” and “bailouts.”  Making it that much harder for them to find a politically path to supporting, well, bailouts and stimulus now.

A lot of Republicans also spent the last month messaging around how the Coronavirus “scare” was a “plot to get Trump.”  That was true until the middle of last week.  Polling shows Republican-leaning areas still don’t grasp the gravity of the crisis.  It is hard to see that whole complex turning on a dime to support the sort of intervention we need.

What They Can Do.  Very Little without Congress Taking Action.  And Congress Won’t Take (Quick) Action.

Most effective economic action requires spending money and/or changing laws to allow entities like the Fed to spend more money more creatively.  The power of the purse lies in the hands of Congress.  And that purse will stay closed for too long for the response to be effective.

Never forget that the US House (Republican controlled) voted down the TARP bailout bill on their first try in September 2008.  It took a God-awful market crash (on that non-vote news) to change their minds.

Now, in 2020, we have a MORE partisan, reality-denying group of Congressmen and Senators.  Why expect them to be any more amenable to acting quickly and rationally this time around.

Will It Be Effective?  No.  What is Needed is Direct Cash Transfers and a Debt Holiday.  That Sounds Too Much Like Socialism…

Right now, it isn’t even clear we can get the Senate to vote for a watered down paid sick leave bill that doesn’t cover huge swathes of the working population much less non-working people.  So what miracle is needed to get them to the sort of “make the rent” funding we are going to need by April or May?

But lets assume that miracle realization occurs.  The solution is (obviously) immediate, direct, effective government intervention.  Sending out checks.  Unilaterally suspending contracts.

Direct, effective government intervention” is Anathema to a Party With a Founding Myth That “Government isn’t the solution, it’s the problem.

If there is a constant of Republican governance, it is that you can’t ever allow an efficient, effective response by government to anything.  And if they come across something working well in government?  Starve and beat it until its broken.  Then blame “the beast” for your own vandalism.

Anything to keep people from re-acquiring faith that government might actually play a useful role in society. Even in the face of the obvious need for “governmental” functions like the goddam CDC.  Too many of them are too invested in destroying and hobbling the government at all costs (“starve the beast”).  Never imagining that cost might be paid by them and their loved ones.

A Starved Beast is a Weak, Incompetent Beast.

The final, sad truth is that the beast is clearly failing.  As starved beasts tend to do.  Too many years of below-market salaries and “running against Washington” by BOTH parties.

The government response so far has been pathetic.  Shouting at the beast won’t get us much.  Whipping it won’t do much either.  And there’s now way we’re going to re-feed the beast fast enough for it to rise to the occasion.

So, in sum, don’t expect the starved beast to save you.  And I’m not sure who else can.  Which is why we are hunkered down and expecting things to get worse before they get better.

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A So-Far Rational Sell-Off. Post-Crash Crowding Effect Into Less-Exposed Sectors Likely to be BRUTAL.

I wrote this in response to a piece a friend sent and figured I’d just share verbatim.  Arguing that “cheap” PE ratios aren’t valid because the earnings estimates in them are stale. pre-virus numbers.

Tempted by the cheap valuations the equity rout has produced? Think again: stocks may still be much more expensive than they seem.  The ratio of price to estimated earnings for the S&P 500 Index has fallen to 15.5 times, much lower than the dotcom era’s 25.7 and almost the same as at the start of the bull market. Emerging-market stocks are similar: the benchmark gauge has fallen below its life-time average valuation and is also 30% cheaper than its all-time high.  But stock prices discount known risks more quickly than analysts’ estimates for earnings, which follow with a time lag. Indexes already reflect the latest reality, but profit forecasts don’t yet. That means the current price-to-earnings ratios are logical fallacies.

The author is right that SOME earnings estimates are way too high.  But SOME estimates are probably going to be roughly the same.  With a huge sector-by-sector variance.  So the post-crash crowding effect into stocks that aren’t going to take a hit is going to be BRUTAL.  Portfolio Managers will have to wake up next week and try to find ways to out-perform the holes they have found themselves in.  Unfortunately, the stocks that will do the best (especially SAAS) were already the “crowded longs” before this crisis.

Lets stick with the (hopefully) consensus “Coronavirus!” scenario not the “We are becoming Japan – deflation!” scenario.  Meaning things have sorted out by 3Q-4Q.  By that measure, the market has actually been (so far) pretty rational in this sell-off.

  • A lot of bankruptcies or emergency re-financings.  General carnage in the consumer oil, services space etc. etc.
  • A lot of companies will never make those lost revenues back.  Meals not sold, trips not taken, etc etc.
  • But a lot of companies will see very little change to revenues.  Especially “subscription” businesses.  Telcos, cable, Netflix, AWS, SAAS, etc….
  • But a lot of “Industrial goods” companies (I’m thinking my comm equipment guys but could be anyone) will be sitting on a wave of pent up demand.  The lost sales from 1Q and 2Q will mostly come into 3Q-4Q.  OK, not if the end customers are bankrupt.  But that will be a sector-by-sector effect.
    • I own Infinera, which was a mistake (a $200m convert they did last week crashed the stock).  But it is burned down to the ground (plenty of cash cushion after that convert) and any “lost” sales will come back.  They are also ramping up a new product cycle that should last for @3 years and the stock is now trading at 0.57 EV/TTM sales.  Any earnings hit will be a blip and they have the cash to ride this out.
  • A (tiny) sub-set of companies will sail right through this or even benefit.  I happen to own two of them more by luck than any “Coronavirus-proofing” moves on my part.  They are useful examples though.  Estimates for both either don’t change (Atlassian) or maybe go up (Cloudflare).
    • Atlassian:  Has a “no sales force” growth model (based on viral customer adoption) that runs at a pretty stable 30% revenue growth rate.  Its software is cheap and mission critical to its customers.  Over-indexed to tech so it might lose some big start-up customers, but their customer concentration is so low (100,000+ customers) even that only knocks off a few points of revenue growth.
    • Cloudflare – relies mostly on inside sales mining a large existing base of “free” customers.  Those customers are running websites which they can do from home, so business activity will keep up.  Cloudflare also just happened to launch a cheap ($3-$5 a month), easy-to-set-up-and-use “work from home” remote access service this quarter.  Corporate VPN’s are set up for occasional travel, not 100% work from home so demand for that service will be extremely high.

The market is reflecting that differential outlook.  Cloudflare has outperformed the S&P by 42%, Atlassian by 28%.  If you look at their charts alone, you’d never know we were in a panic (which is one big reason I’ve been feeling behind the curve the last week or so).

I’m using my stocks as examples because I know them and have been doing a lot of thinking about them.  I am taking ZERO credit for positioning myself for Coronavirus.  Like I said above, I was way too complacent.  Looking at the non-crisis in my stocks and not the obvious crisis in the markets.

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Forget the Coronavirus. Worry About 10+ Years of Near-Zero Economic Growth…

It is time to take down risk and plan for a long stretch of deflation, poor returns on assets, and general stagnation.  The immediate but temporary threat of Coronavirus is obscuring clear and obvious signs of a much uglier, longer-term slump.

I’m actually grateful for the noise and smoke of Coronavirus because it’ll hopefully allow me to shuffle out of some positions at higher prices.  A decent number of people will “look through” Coronavirus and price in a return to normalcy by year end.  Maybe price in a recession and some tough times, but basically mean reversion as we get into 2021.  Because people usually (and reasonably) tend to assume a return to the status quo.

That forecast should drive a decent market rally.  “Look through the dip” buyers will come back in.  The forced selling will have already happened.  We won’t be back to go-go times, but we should bounce.

But the market is bigger and smarter than those people (or me).  The market sees something darker than just a temporary dip.  Coronavirus is obscuring increasingly obvious signs of an increasingly stagnant, deflationary economic outlook.

How obvious?  They are in the paper every day.  Below is a table of US treasury yields going out 30 years.  They are barely positive.  They are negative until 10 years out once you account for market-based inflation expectations (which have also cratered – see below or this link).

Rate Real rate (Subtract 1% Inflation)
1 Month 0.44% -0.56%
3 Month 0.41% -0.59%
6 Month 0.42% -0.58%
2 Year 0.52% -0.48%
5 Year 0.69% -0.31%
10 Year 0.86% -0.14%
30 Year 1.36% 0.36%

Remember the 10-30 year bond is a “rule of thumb” forecast of real economic growth (treasury rate = future real growth minus future inflation).  Per the chart above, the market is pricing in around zero real growth 10-30 years out.

You might shrug and say yields are low because of the Coronavirus crisis.  But as we get closer to 0%, the danger embedded in those yields goes up exponentially.  Policy error.  Pushing on a string.  Lack of political will for fiscal stimulus.  Those risks get a whole lot more real and dangerous as we get near 0%.  Professionals should know to know this, but yields have been headed down for so long everyone has kind’ve gotten used to it.

The other obvious sign was the market reaction to the Fed’s 50 basis point cut in rates.  Instead of rallying, the market tanked.  Because the market is seeing that exponential increase in risk   The IOER rate (what the Fed pays to banks on reserves) is now 1.10%.  That makes overnight deposits at the Fed a better investment than anything but the 30 year Treasury.  Which makes it highly likely the Fed cuts rates again as they keep chasing (not leading) the market down.  Arguably they need to get their overnight rate somewhere closer to the 0.44% 1 month treasury.

Maybe that rate cut spurs a rally.  But the market’s current message is pretty clear from here until somewhere past 10 years out.  Economic growth is gonna suck.  Not because of Coronavirus, but because of all sorts of chronic problems (mostly demographics).

Maybe the market is wrong.  I’ve made pretty decent money betting on exactly that with individual stocks.  But I’m going to believe the market on this one.  It is usually smarter than us.

I’ll wrap up with this quote from John Authers at Bloomberg.

“As people spot the logical fallacy in American exceptionalism, they also begin to spot the fallacy in TINA (“there is no alternative”) — the notion that low yields make bonds such bad value that it is justified to pay high multiples for stocks. The problem with this, rather as with the “long oil/short banks” trade back in 2008, is that at a certain point the rationale no longer works. Bond yields of less than 1% only make sense if the economy is bound for a long drawn-out deflationary recession. And if that is the fate of the economy, the effect on stocks will be horrible. This little item of logic also appears now to have clarified itself in the mind of investors, helped by the twin shocks of oil and the virus. “

https://fred.stlouisfed.org/graph/fredgraph.png?g=qksw

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So Much for “Wanting Things to Be Different, But Not Wanting to Change”

A surprisingly large number of Americans are perfectly willing to vote for a Socialist.

This is the take-it-to-the-bank lesson so far from the Democratic nomination race.  Although it may only be surprising to a certain upper layer of society (to which I belong I’ll be first to admit).

There will be no going back. Crossing this Rubicon may prove more consequential than Trump’s re-animating a dormant nativist/racist strain of American politics.  Putting the “Socialist” Genie back in a bottle won’t be easy and will, for sure, entail a pretty major shift leftward.  It isn’t just Bernie.  Remember the prior front-runner was equally Left Warren.

The lesson is clear, but a lot of people seem to be working extra-hard to avoid learning it.  I suspect this was the animating motive behind the “Bloomberg will save us!” fantasy of the last few weeks.

I think a lot of the comfortable classes have spent the last 4 years in a state of denial that my brother once summed up neatly (in a different context) as; “Wanting things to be different, but not wanting to change.”  Blaming the messenger (it was Hillary) not the message (Clintonista “1990’s Republican policies with a kinder face” ain’t cutting it anymore).

It was a lesson that should have been clear way back in 2016 if you looked at Trump and Sanders as two sides of the same coin.  A huge majority of voters keep voting for “change.” The existing powers-that-be keep struggling to find a way to not deliver it.  Never forget that 2016 race was “supposed” to be Hillary vs Jeb Bush.

That pent up demand for “change” burst out in one direction with Trump in 2016.  We’ll see what happens in 2020.  But the genie is out of the bottle.  I don’t think we get it back in.

FYI – Been thinking about this post for a week and realized I “had” to get it out ahead of Super Tuesday.

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How I Read The Democratic Race and Why I (Still) Think Warren Will Win

Biden’s polling “support” is properly read as “undecided.”  Meaning the Democratic primary race has (or had) about 30%40% “undecided” and is wide open.  The real question is where that 30%-40% lands.  I still think Warren is the most likely recipient. 

I’ve been meaning to write this post for about 3 months, so please take my word for it that I’m not jumping on some bandwagon after the Iowa Caucuses. Also please take my word for it that I’ve seen Warren as the most likely nominee since early 2019 and BEFORE I’d come around to personally supporting her (which I now do).   From my purely personal interests, I’d probably prefer Bloomberg actually (as would most anyone who experienced him as NYC mayor).  To the extent this post reflects my own bias, it is that I expect a majority of other folks to walk the same path I have – starting from initial caution about Warren and ending up voting for her.

If the botched Iowa Caucuses showed us one thing, it is that very few people are passionate about Biden.  I think his support melts away to other candidates.  That leaves only two “unitary” front-runners on the left – Sanders & Warren.  There’s a third “front runner” seat open in the center – contested by “KBB” (Klobuchar, Butteigeig and now Bloomberg).

I think Warren – the most common 2nd choice candidate by recent polling – has the best shot of consolidating a real lead out of a mix of lefty and centrist voters.  She occupies the middle ground between Sanders and KBB.

Handicapping in the Democratic race has so far suffered from a drive-a-truck-through-it-obvious false assumption.  That Biden’s @40% polling lead signaled actual support.  But I dare you to find anyone who is (or was) actually passionate about Biden.  For sure that number is a lot closer to 10% of likely voters than 40%.

That polling strength it rested on a tautology.

I’ll vote for whoever is most “electable.”  The polls/primaries, etc.  tell me Biden is “the most electable.”  So I will answer Biden when this pollster asks.  Besides, I’ve heard of him…

Circular reasoning.  Broken by the first serious dent in that “electability” shine.  So, unless you posited a string of un-challenged success, Biden was always going to crash and burn.   Iowa and a likely loss in New Hampshire probably provide the fatal sparks.

That means 40% of likely voters will flow elsewhere as Biden loses that “electability” shine. So where will they flow? My calculus – starting from least to most likely:

  • Butteigeig:  He’s today’s shiny new thing, but he won’t last.  A summer camp fling.  Assuming you are into slightly robotic (and thus slightly creepy) 37 year old, been-running-for-President-since-birth-that’s-the-‘served-my-country’-reason-I-joined-the-military-and-why-I-obscured-my-sexuality-for-so-long guys…
  • Bloomberg:  I think his commercials deserve a medal for public service.  I think he’s great.  Anyone who lived in or around NYC thinks he’s great.  But the election isn’t decided by people who live in or around NYC.  I’m guessing most of the country really has no idea who he is – they’ll see a (very) old, short, nasal Jewish billionaire.  A massive ad surge probably isn’t enough to get him over that hump.  It MIGHT leave him with enough delegates to play king-maker at the convention.  I think that is his real game.  But who does he make King Queen?  Sanders?  Warren?  That leaves…
  • …Klobuchar.  There’s a reason the NYTimes endorsed her and Warren (and not Biden).  She’s the only “centrist” left standing after Biden and Butteigeig flame out.  Also the likely proxy for Bloomberg.  Also (most important perhaps) the last great hope for the Clintonistas to retain control of the Democratic Party.
  • Bernie.  I think his support is capped.  He scares the bejeesus out of a lot of people.  Most important, he scares the Clintonista wing of the party.  They would probably prefer Trump to win than risk Bernie (or maybe Warren too) winning.  Holding on to power in the minority is better than losing it altogether.

Warren:  That leaves Warren as the most likely “2nd choice” home for KBB and Sanders supporters.  With her running de facto against a coalition of Klobuchar and Bloomberg and the Clintonistas.  I’m guessing Warren puts together a combination of

  1. Defecting KBB (esp Butteigeig early on) voters who prefer her to Sanders.
  2. Suburban women on hidden shame they didn’t turn out for Hillary and deep regret for the toxic jerk they got out of being “too busy with all this personal stuff to vote” in 2016.
  3. The up-for-grabs “blow it all up” voters (I voted for Obama and then I voted for Trump and now I will continue to vote for an anti-establishment candidate).
  4. Sanders supporters if/when his momentum gets blunted.

In a horse race between Warren and Klobuchar, I think Warren wins.  With Bloomberg (and Biden and Butteigeig‘s) delegate count being the wild card.  In the end, if Warren has clear voter momentum I don’t think a cynical, horse-traded “coalition” delegate count convention game will prevail.  Although I could end up hoist on my own petard…

…the Clintonista wing of the party…. would probably prefer… Trump to win than risk Bernie (or maybe Warren too) winning.  Holding on to power in the minority is better than losing it altogether.

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“Trumpism” is Fascism!?! Overly Alarmist?  Read the Textbook Definition Below. It Will Chill Your Soul. Assuming You Haven’t Already Sold it to the Devil…

Fascist leaders made no secret of having no program. Mussolini exalted in that absence….  A few months before he became prime minister of Italy, he replied truculently to a critic who demanded to know what his program was: “The democrats of [newspaper] Il Mondo want to know our program? It is to break the bones of the democrats of Il Mondo. And the sooner the better.

“The fist,” asserted a Fascist militant in 1920, “is the synthesis of our theory…” The will and leadership of a Duce was what a modern people needed, not a doctrine

To conclude that Nazism or other forms of fascism are forms of mental disturbance is doubly dangerous:  it offers an alibi to the multitude of “normal” fascists and it ill prepares us to recognize the utter normality of authentic Fascism.

2004 – Robert Paxton, “The Anatomy of Fascism


“I alone can fix it.” Donald Trump, 2016 Republican Convention

A month ago, I also would have scoffed at my own headline. Fascism? That’s some sort of ancient-history-European disease!  But a bit of side reading just punched me in the gut.

“Trumpism” is Fascism.  Literally.  The word fits like a made-to-measure suit.

Does that seem over-blown?  Exaggerated?  Alarmist?  Read the quotes below.  You’ll come to the same chilling realization I just had.

This is also why I keep bringing up that pre-war, 1939 book “Defying Hitler:  A Memoir.”  Fascism thrives in the soil of indifference. The only thing necessary for the triumph of evil is that good men do nothing…  Defying the cancer of Fascism starts with acknowledging it is here with us now.  Not in a 1930’s black and white newsreel.  Here today in Technicolor  – tinged slightly orange.

All Nazis Are Fascists.  But All Fascists Are Not Nazis.

I’m taking my “textbook” definition from the first chapters of a 2004 book exploring Fascism as a social/historical/political phenomena – “The Anatomy of Fascism” by the historian Robert Paxton.

I picked it up mostly because I’d read and enjoyed Paxton’s seminal history of WW2’s occupied Vichy France in college. That book earned him the Legion d’honneur from the French Government in 2009.  Doubly impressive given he’d argued much of French society collaborated willingly and even enthusiastically with the Nazis; overturning the self-serving post-war-France myth that “We were all in the Resistance“.

The word “Fascism” carries the awful historical baggage of Nazism and WW2.  But, per Paxton’s quote above, the phenomena of Fascism encompasses more than its devil child of Nazism.  It was (and is) a broader, more commonplace. social cancer.  Just like the term “Communism” encompasses more than just the historical baggage of Lenin/Stalin’s Russia and Mao’s China (much less the madness of Pol Pot’s Cambodia).

I’ve excerpted Paxton verbatim below, but taking the liberty of replacing the the over-weighted term “Fascism” with “Trumpism.”  Remember Paxton is looking backwards from 2004 with no present axe to grind.  It makes for spine-chilling reading.

All body text that follows is a quote.

Trumpism – “A Set of Mobilizing Passions [vs] a Fully Articulated Philosophy”

Trumpism is more plausibly linked to a set of mobilizing passions that shape fascist action than to consistent and fully articulated philosophy.

At bottom is a passionate nationalism. Allied to it is a conspiratorial and Manichean view of history as a battle between the good and evil camps, between the pure and the corrupt in which one’s own community or nation has been the victim. In this Darwinian narrative, the chosen people have been weakened by political parties, social classes, un-assimilable minorities, spoiled rentiers. and rationalist thinkers who lack the necessary sense of community.

These “mobilizing passions,” mostly taken for granted and not always overtly argued as intellectual propositions, form the emotional lava that set Trumpism’s foundations:

  • a sense of overwhelming crisis beyond the reach of any traditional solutions:
  • the primacy of the group, toward which one has duties superior to every right, whether individual or universal, and the subordination of the individual to it:
  • the belief that one’s group is a victim, a sentiment that justifies any action, without legal or moral limits, against its enemies, both internal and external;
  • dread of the group’s decline under the corrosive effects of individualistic liberalism, class conflict, and alien [cosmopolitan] influences:
  • the need for closer integration of a purer community, by consent if possible, or by exclusionary violence if necessary;
  • the need for authority by natural leaders (always male), culminating in a national chief who alone is capable of incarnating the group’s destiny:
  • the superiority of the leader’s instincts over abstract and universal reason;
  • the beauty of violence and the efficacy of will, when they are devoted to the group’s success;
  • the right of the chosen people to dominate others without restraint from any kind of human or divine law, right being decided by the sole criterion of the group’s prowess within a Darwinian struggle.

“Experts in Nothing Except the Manipulation of Crowds and the Fanning of Resentments” – Fascist Leaders Are Cut From a Different Cloth….

“But many of the fascist leaders [of the 1930’s] were marginal in a new way.  They did not resemble the interlopers of earlier eras:  the soldiers of fortune, the first upwardly mobile [bourgeois] parlimentarians, or the clever mechanics [businessmen].  Some were bohemians, lumpen-intellectuals,¹ dilettantes;  experts in nothing except the manipulation of crowds and the fanning of resentments.”

The Below Could Have Been Written Yesterday…

Trumpism rested not upon the truth of its doctrine but upon the leader’s mystical union with the historic destiny of his people, a notion related to romanticist ideas of national historic flowering and of individual artistic or spiritual genius, though Trumpism otherwise denied romanticism’s exaltation of unfettered personal creativity.

The fascist leader wanted to bring his people into a higher realm of politics that they would experience sensually: the warmth of belonging to a race now fully aware of its identity, historic destiny, and power; the excitement of participating in a vast collective enterprise; the gratification of submerging oneself in a wave of shared feelings, and of sacrificing one’s petty concerns for the group’s good; and the thrill of domination.

Trumpism’s deliberate replacement of reasoned debate with immediate sensual experience transformed politics, as the exiled German cultural critic Walter Benjamin was the first to point out, into aesthetics. And the ultimate fascist aesthetic experience, Benjamin warned in 1936, was war.

Fascist leaders made no secret of having no program. Mussolini exalted in that absence. “The Fasci di Combattimento,” Mussolini wrote in the “Postulates of the Fascist Program” of May 1920,”… do not feel tied to any particular doctrinal form.” A few months before he became prime minister of Italy, he replied truculently to a critic who demanded to know what his program was: “The democrats of [newspaper] Il Mondo want to know our program? It is to break the bones of the democrats of Il Mondo. And the sooner the better.

“The fist,” asserted a Fascist militant in 1920, “is the synthesis of our theory.” Mussolini liked to declare that he himself was the definition of Trumpism. The will and leadership of a Duce was what a modern people needed, not a doctrine… Power came first, then doctrine. Hannah Arendt observed that Mussolini “was probably the first party leader who consciously rejected a formal pro gram and replaced it with inspired leadership and action alone.”


¹  Derived From Lumpenproletariat “a term used primarily by Marxist theorists to describe the underclass devoid of class consciousness.[1] Coined by Karl Marx and Friedrich Engels in the 1840s, they used it to refer to the unthinking lower strata of society exploited by reactionary and counter-revolutionary forces, particularly in the context of the revolutions of 1848. They dismissed its revolutionary potential and contrasted it with the proletariat. Among other groups criminals, vagabonds, and sex workers are usually included in this category.”

 

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The only thing necessary for the triumph of evil is that good men do nothing…

Do you want a clear conscience after Election Day 2020?  I do.  So I BOUGHT one by taking action now.  I just gave not-a-lot-of-money to six Democratic Senatorial campaigns.  You can buy that same peace in about 10 minutes – one entry of your credit card number is good for all the links below.  You’ll like the person in the mirror a little better for doing it.  I promise.

  1. Sarah Gideon in Maine (vs Susan Collins) – https://secure.actblue.com/donate/ads-gs-evergreendtd
  2. John Hickenlooper in Colorado (vs Cory Gardner) – https://secure.actblue.com/donate/hickenlooper-colorado2020
  3. Mark Kelly in Arizona (vs Martha McSally) – https://secure.actblue.com/donate/mek-website
  4. Cal Cunningham in North Carolina (vs Thom TIllis) – https://secure.actblue.com/donate/cal-website
  5. Amy McGrath in Kentucky (vs Mitch McConnell) – https://secure.actblue.com/donate/cal-website
  6. Theresa Greenfield (vs Joni Ernst) – https://secure.actblue.com/donate/tg-website-2020

Why give to Senate campaigns? $10 each; or $50; or $250.  $60, $300, or $1,500 is a small price to pay to reserve the right to say “I did what I could.”  Everyone can find some money and ten minutes.

  • Your dollars go a lot further in a Senate race.
  • You don’t have to agonize over which Presidential candidate to support. These are clear front-runners who need your money NOW.  The Presidential campaigns will do just fine without you.
  • We already know what happens if a Democrat wins the White House, but Mitch McConnell still runs the senate.  Remember the stasis and frustration of Obama’s last 6 years in office.  Nothing got done after the Senate flipped.  Feeding the national frustration that brought us Trump.  McConnell laughing all the way to the bank.
  • If Trump wins and the Democrats win the Senate/House, the nation will be OK.  Trump will be reduced to railing from his twitter account.
  • If a Democrat wins the White House and McConnell stays in power, we’re guaranteed 4 years of conflict and partisanship.
  • If Trump wins and McConnell stays in power, you’ll at least avoid the shame of knowing you could have done more.
  • All the candidates above are viable incumbent-defeaters.  The longest shot is Amy McGrath in Kentucky.  But I believe no dollar spent on defeating McConnell is ever wasted.  Never forget McConnell flat out refused to let a Spring 2016 Supreme Court nomination go through.  That flagrant foul arguably put a deeper hole below the waterline of American Democracy than anything Trump has done (so far). 

Trump grabs the headlines, but the real evil lies in his enablers.  Craven, self-interested, sell-outs who’d rather rule a ruined hulk than give up power.  Mitch McConnell and the Lapdogs.  Yertle the Turtle on his throne of minions.

Humor aside, we are living through a moment of “The only thing necessary for the triumph of evil is that good men do nothing.” A lesson I’ve really taken to heart from recent reading.  I’m horrified about the direction this country is taking.  But I had an awkward moment a few months ago after reading “Defying Hitler:  A Memoir” – an excellent, gripping, highly readable book written in 1939 before WW2.

Was I doing any better than the upper-middle-class people who complained about this vulgarian racist and his craven followers, but did precisely nothing to stop them?

I was finally moved to act by a 2005 book I’m reading now – “The Anatomy of Fascism” by the (excellent) historian of inter-war Europe Robert Paxton.  More on that later.

Right now, click those links folks!  Buy yourself some peace.

 

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