Editor’s note: the introductory audio recap of “America This Week” with Matt Taibbi and Walter Kirn will be coming out presently, so please watch your TK feed for its release.
Welcome to America This Week, the national news wrap-up so true, we recommend you stow all sharp objects before reading. This week: history’s most important (and fiercely disputed) search warrant, more Covid ripoffs, heightened Sino-American tensions, more evidence that affluent nations have forgotten how babies are made, locusts, bug-eating, other signs of the apocalypse, and more.
The lead stories:
Trump Home Raided Unless you spent the week in a disabled submarine at crush depth, you already know the Mar-a-Lago home of Donald John Trump was raided by the FBI Monday, reportedly over mishandling of classified material. Trump is the target of at least five inquiries now, with New York State investigating his businesses for possible fraud, Georgia probing election interference, federal investigators questioning witnesses in alleged efforts to overturn the 2020 election, and congress similarly investigating his role in the January 6th “insurrection.” The week saw an extreme paucity of official explanation for the historically massive raid story. The White House claimed Joe Biden was “not aware of this,” while Attorney General Merrick Garland kept schtum until Thursday, only saying “I personally approved the decision” after even the administration-friendly New Yorker said “silence is not an option.” Outlets like the New York Times and Washington Post that dependably communicate official attitudes began sticking the raid below the fold, the pretext reduced in the Times to a half-sentence: “An investigation into sensitive material that he took when he left the White House.” (Note the absence of the word “classified”). The blackout has Republicans chirping the archive issue was pretext for a wider search (which took nine hours and reached into Melania Trump’s wardrobe) for evidence implicating Trump in more serious charges related to January 6th. The next step? Publication of the warrant, which Trump said he supported “immediate release of” after Garland’s presser. A crazy, unclear, queerly reported tale of enormous import.
Signs of Coming Economic Horror Accrue Despite a spate of unconvincing reassurances to the contrary, evidence of approaching disaster continues to accumulate. Americans (particularly those under 25) are overwhelmed by basic costs and spent spring and summer digging bigger holes for themselves via record levels of consumer borrowing. Federal Reserve stats this week showed a staggering 233 million credit card accounts were opened in the second quarter, the most since 2008, while a just-as-staggering $46 billion was added to credit card balances during that same period. Household debt passed $16 trillion for the first time, while overall credit card debt has jumped $100 billion this calendar year. “The impacts of inflation are apparent in high volumes of borrowing,” the Fed drily commented, noting prices are rising higher than at any time in four decades. The worsening economic struggle for most of the population has become the shadow story to the tale of widening political division that moved closer to Defcon 1 level with the Mar-a-Lago raid this week, a yin-yang nightmare of snowballing financial and political frustration.
Reuters Votes to Strike The unionized employees of Reuters, including roughly 300 journalists at seven American bureaus, voted to go on a 24-hour strike in protest of slow contract negotiations. In a storyline that should sound familiar — this has been happening across multiple industries — the company’s employees have been without a new deal for 20 months, and the union last week filed a complaint with the National Labor Relations Board over what it considers stalling tactics. The company’s best offer was annual pay raises of 1%, to which a Reuters report deadpanned, “The current rate of inflation in the U.S. is about 9%.” Thomson Reuters is an interesting media story in itself, in that its core business relies on delivery of hard information, with Reuters Legal and Tax, Accounting, and Compliance services in addition to its traditional reporting business, allowing clients access to regulatory changes and databases of legal cases in addition to news. These are always in demand, one reason the company announced raised revenue projections for the year (amusingly, on the same day as the worker walkout). Whatever the outcome of the labor dispute, news companies should pay more attention to the success of oft-disdained wire services like Reuters, who prove that “just the facts” have evergreen commercial value.
Corporate Landlords Ripped for Misuse of Covid Funds In one of the first of a likely cascade of similar reports, the House Select Subcommittee on the Coronavirus Crisis zeroed in on a quartet of mega-landlords — Pretium Partners, Invitation Homes, Ventron Management, and the Siegel Group — that booted 15,000 tenants despite an eviction moratorium and more than $46 billion appropriated to keep people in their homes. The report’s main utility should be introducing America to these newish characters in American commerce. Nearly two-thirds of all evictions in cities like Atlanta, Houston, and Phoenix involve these Sam’s Club versions of slum-lords, rental corporations with over 1,000 units who borrow to scale-devour rental properties at light speed. Many such firms launched when the bottom fell out of American real estate after 2008. Pretium for instance is run by Donald Mullen, a Goldman, Sachs veteran famous for the bank’s “Big Short” bet against the same type of subprime investments it marketed. Mullen in 2012 helped found Pretium, whose subsidiaries now own 80,000 properties (double their 2021 number). New York Magazine commented of Mullen that “a guy whose most famous trade was a successful bet on the full-scale implosion of the housing market is now swooping in to pick up the pieces on the other end.” That’s capitalism, one supposes, but the new report shows Pretium and other firms also accepted millions in state Paycheck Protection loans, debt in many cases forgiven, inexplicably — all four were profitable in the pandemic years.
Rare Military Contracting Expose Becomes Partisan Football A new CBS investigation called Arming Ukraine has already infuriated people of all political persuasions by reporting a substantial chunk of the $8 billion in American arms already appropriated for Ukraine — as much as 30% — has not reached its “final destination,” thanks to “illegal diversion.” American media has always been distinguished by a near-total absence of hardcore reporting about military contracting corruption. Missing appropriations money, failed weapons systems, payola schemes involving procurement officers, and other forms of budget burglary are so rarely examined that successful whistleblowing is a cinematic event. Air Force Colonel James Burton’s quixotic quest to make public failures in the $10 billion Bradley Fighting Vehicle program earned him a transfer to Alaska before Hollywood made an underrated film called Pentagon Wars starring, of all people, Kelsey Grammar. A 2018 CNN expose displaying American-built munitions in a civilian area of Yemen and the Washington Post’s hard-fought 2019 Afghanistan Papers story are recent examples that seemed to take both parties by surprise. Now CBS, tiptoeing between unwritten prohibitions on criticism of Ukrainian officials (whose failure to “appropriately safeguard” deliveries is at the heart of the report) and increasingly overt pressure to avoid printing stories that might be used by Russian media (it already happened in this case), has partially retracted some of the story, with its sources backing up and claiming efficiency has “significantly improved” since original shooting.
KEEP AN EYE ON:
Trump Pleads the Fifth While feds spent six years buried in probes of fantastical conspiracies involving Russia and Ukraine, prosaic investigations of Trump’s finances always loomed larger: his invocation of right to silence this week was notable.
Monkeypox cases surpass 10,000. On Wednesday alone, 1,391 new cases of monkeypox were reported, and cases are doubling every 8.6 days in populous states. The plus side: no U.S. deaths yet. We get monkeypox, we don’t die from it, MFers.
Mormon Sex Abuse Scandal The Associated Press obtained 12,000 pages of records dealing with the record of the Church of Latter Day Saints (a.k.a. the Mormon church) in dealing with reports of child sex abuse. Threatens to be Spotlight for Mormonism.
INTERNATIONAL NOTES Five Chinese companies — China Life Insurance, PetroChina, and China Petroleum & Chemical, as well as Aluminum Corp. of China and Sinopec Shanghai Petrochemical, announced an intention to delist from American exchanges in an ongoing dispute over American disclosure laws. Roughly 250 Chinese firms may eventually be denied access to American capital markets if they don’t submit to audits, with our SEC having already begun refusing new applications beginning last July ★ Japan, like Germany and the U.S. a symbol of a declining birth rate issue observable across many Western countries, reported a population drop of 0.57%, with negative growth in every prefecture except Okinawa. People over 65 now account for a shocking 29% of Japan’s population, the latest sign that affluence globally is translating to dimmed or delayed family growth ★ The U.S.-Chinese messaging war is heating, as an NGO called the China Society for Human Rights Studies issued a report accusing the U.S. of sweeping human rights abuses in the Middle East, including “war crimes, crimes against humanity, arbitrary detention… torture of prisoners, and indiscriminate unilateral sanctions,” as well as “warmongering” by launching military operations in 40% of earth’s nations since 2001. Iraq, Afghanistan, and Syria are portrayed as abused subject populations using language remarkably similar to U.S. NGO reports about, say, Uighurs. Brace for ugly.
COUNTDOWN TO APOCALYPSE: AT LEAST 1% CLOSER
Covid-19, monkeypox, then news that a 20-year-old Rockland County, New York man contracted the first polio case in decades, with the Centers for Disease Control and Prevention (CDC) saying it could be evidence of “several hundred cases” in the community was bad enough. Now, news that “at least three dozen” people in China have been infected by a newly identified “Langya” virus transmitted by shrews, with no deaths yet but several victims developing “blood-cell irregularities” and kidney damage, ratchets paranoia further. Add still more learned experts preparing the masses for futures of bug-eating (Could grasshoppers replace beef?, BBC) and huge locust invasions in Sardinia and, this week, Argentina, and the needle clearly moved.
Time magazine quoting Rachel Kleinfeld, “political violence analyst” at the Carnegie Endowment for Peace:
“Acceptance of violence for political ends in America is approaching the levels seen in Northern Ireland at the height of their Troubles.… fanning the flames of violence through incendiary language is the worst possible thing they could be doing.”
“OH BY THE WAY” HEADLINES OF THE WEEK
Bill Gates: COVID is a “Disease Mainly of the Elderly, Kind of Like Flu” Rumble
Rainwater is not safe to drink anymore due to ‘forever chemicals’ Interesting Engineering
Antarctica’s ‘Sleeping Giant’ Might Flood the World. Daily Beast
THE WTF? GRAF OF THE WEEK
“Under the auspices of the search for extraterrestrial intelligence (SETI), astronomers seek out space aliens… But increasingly, SETI scientists are grappling with the disquieting notion that, much like their intellectual forebears, their search may somehow be undermined by biases they only dimly perceive—biases that could, for instance, be related to the misunderstanding and mistreatment of Indigenous peoples and other marginalized groups that occurred during the development of modern astronomy and many other scientific fields.” Cultural Bias Distorts the Search for Alien Life, Scientific American, August 10
TWEET HISTORY SHOULD REMEMBER
Former CIA head Michael Hayden appears to put death on the table for Donald Trump:
AND FINALLY, THREE FINANCE HEADLINES YOU MAY HAVE MISSED, by Eric Salzman
Circle of Life This week, Bloomberg profiled a new group of “niche credit traders” who’ve shown up to clean the carcass of cryptocurrency exuberance. Finance and investing are a lot like life in the wild. Unsuspecting prey are lured into a seemingly safe situation, while a crafty predator lies in wait. When all seems well, the predator lunges and eats. After the kill, vultures appear to feast on the scraps. In the recent cryptocurrency/decentralized-lending fiasco we are at the vulture phase. Unsophisticated investors were lured into buying crypto with promises of high yields and low risk by lenders like Voyager Digital and Celsius Network. These lenders then lent the investors’ crypto at higher yields, mostly to hedge funds, over-collateralized usually with Bitcoin. “Over-collateralized” became moot when Bitcoin dropped over 50%, hedge funds couldn’t pay, and Voyager and Celsius declared bankruptcy. Enter “Vulture Investors” like Cherokee Acquisition, who now offer to buy the investors’ (turned creditors by the bankruptcies) claims at deep discounts. For many, this is the cleanest dirty shirt, the best of a menu of bad options. The circle of life is complete.
Lehman Memories This week Softbank, the tech-investing giant public company, announced a $23 billion loss for the second quarter. CEO and founder Masayoshi Son announced, “I am ashamed of myself for being so elated by big profits of the past.” This contrite Son is quite a bit different from the last time he had to announce a staggering loss. After losing $13 billion in Q1 2020, he said, “Even Jesus was also misunderstood and criticized.” Son joined famous investor Cathie Wood and infamous Bill Hwang in following Jesus-directed investment strategies to multi-billion-dollar losses. The problem: Softbank has become the dreaded “systemically important” institution, with an investment portfolio valued at approximately $210 billion dollars, about $44 billion in publicly traded debt, and deep intertwined relationships with Wall Street, all while losing money like a sieve. This week, Son addressed concerns by saying, “We have plenty of cash on hand. We have strengthened our defenses as promised” — a nearly word-for-word callback to Lehman CFO Erin Callan announcing in March, 2008 that the firm was “well positioned” even as it hemorrhaged cash and imperiled markets. Softbank is potentially a similar problem; even if they never become insolvent, the amount of stocks they would have to sell to stay afloat is huge. That selling can pound the markets and create a very bad chain reaction, which bears watching.
Fast Fingers Lead to Jail Time On Wednesday two JP Morgan Chase precious metals traders were found guilty of manipulating markets from 2008 to 2016. Michael Nowak and Gregg Smith used a trick called “spoofing,” a practice that’s been going on forever and is not very complex. A trader looking to buy, say, gold futures will put in phony sell orders to trick real sellers into selling him the futures at his level. As soon as the trader gets his futures, he cancels his phony sell orders. Spoofing used to take place over the phone until replaced first with trading platforms and then high frequency trading algorithms that can place and cancel phony orders in milliseconds. Smith appeared to have done most of his spoofing via a trading platform, through a “rapid succession of clicking on a mouse,” as Bloomberg described one witness testifying, making and canceling bogus orders so fast that colleagues joked he needed to ice his fingers. It was, the witness said, an “open strategy on the desk.”
That’s it for this week. Click the web version later to see additional illustrations and links. Special thanks to Eric Salzman, Walter Kirn, TK site chief Emily Bivens, illustrator Daniel Medina, proofers Jane Burn and Anne Marie Brown, translators Ahmed Seridi, Susie Lotfian, Christina Chen, A. Michael McCurtcheon, and Jakobus Reinhart, and all the subscribers who wrote in with comments and suggestions. More TK!