Easter Weekend Open Thread

18 thoughts on “Easter Weekend Open Thread”

1. “A true pessimist knows it is already too late to be one.”  Victor Miesel

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2. Batten down the hatches, we're in for a bumpy ride. It's the volatility. It would actually be better if Trump just comitted to a depression.

   Very good Paul Krugman interview with Nathan Tankus on the financial system plumbing (treasuries, banking & currency) and the impending crisis.

   The article has lots of parts, but one serious problem is that hedge funds have become huge players in treasuries and management of risk-portfolios. When times are good, risks are low and liquidity is high. With Trump's chaos, we're seing capital flight, dollar decline and treasury sales. Hedge funds won't be able to handle the risks, just like banks weren't able handle all the bad loans in 2008.

   Read the whole thing if you want to be properly scared, but here is one quote:

   With other financial crises, there's all sorts of financial indicators that you can look at to judge whether a crisis is gonna get more severe. The issue is, because everything is just related to volatility and the volatility in this situation is just related to Trump, there's no real financial expertise that can tell you exactly where this is going. It's like, you just need a psychologist. You need someone who's somehow an expert in Trump's mind palace or the people around Trump and how they can manipulate him (or not) to judge whether volatility is going to explode next week or whether it'll settle down and he'll just, you know, flip channels and not get so focused on the news that week.

   Paul Krugman Yeah. So what's strange is that it's not even so much the level of tariffs. It’s the fact that you don't know what they're going to be. We had one radical break in the tariff regime on April 2nd and then it zipped in a completely different direction on April 9th and then another big change on April 12th. And that's what's really the problem.

   Nathan Tankus And that's why I said the financial system would do a lot better if Trump just committed to creating a depression. Then you'd be like, “okay, he's going to raise tariffs a lot.

   He's going to stick to it. It's going to cause a global recession. But we know it's going to cause a global recession.” The volatility now has been about trying to predict what will happen. And all the back and forth. And those huge swings between “the economy will be fine” vs. “a depression is coming” is what's interacting with these extant vulnerabilities in the financial system.

   Krugman asks if there is a floor to how bad it can get:

   Paul Krugman Okay, I'm not sure if this is a devil's advocate argument or not, but is there kind of a floor on how bad things can get? Because if the Fed steps in with facilities to address these kinds of balance sheets, and all the volatility contagion, if it's bad enough, they can always make sure that there is enough liquidity. They are essentially the buyer of last resort for a lot of assets.

   Nathan Tankus Let me think about that. I think to a certain extent that's true, but only for short bursts. There's just a certain level of volatility where some of these non-bank financial institutions will blow up. I really think we were close to that Wednesday. I think if he had not backed off, if he had waited another day, we easily could have had a firm or multiple firms blow up and go down. And that's why I brought up Lehman Brothers in one of my posts. I saw it as that serious and frankly, I was trying to be one of the voices to be, like, “Hey, this is a Lehman moment. So back off and, you know, try not to blow up a number of firms.”

   And I definitely think there is a level of volatility and a duration of volatility, like a set of days where, beyond that, we would see multiple firms blow up. And then there's also a question of international firms blowing up. And then of course, that brings up larger questions about the dollar. I think it'll be weeks, months, maybe even years before we fully understand just how close we came. And there's a lot of people who are keeping their cards very close to the vest because you don't want to say that your firm was, like, 24 hours from blowing up or whatever.

   But I think we're going to learn more extraordinarily alarming things about last Tuesday, last Wednesday than is currently acknowledged.

   Paul Krugman Just for time reference, April 2nd was the first big tariff announcement.

   And that was a Wednesday. Weeks ago. And then basically a week after that, we were pretty close to the edge of a of a post-Lehmann style financial crisis. And then Trump announced a different set of tariffs that were actually, overall, maybe just as high, but different anyway, and were perceived as a step back from the brink.

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   1. Couple more fascinating-scary quotes.

      On herd behavior on Wall Street.

      Markets are conventional wisdom processors. That’s kind of a reference to Friedrich Hayek and the idea of markets as an information processor. It’s a little bit of the same thing but something different. The idea that they’re conventional wisdom processors is that there's a general idea among a certain rarefied group of people who are the most active participants in these markets and what is conventionally believed among them is really what drives things, not access to information that any group of people have. Or a consensus among a different group of people.

      The stock market would change very differently if suddenly, a week from now, all the major stock traders were scientists. What they would price in, especially around things like climate change, would be very, very different from the current set of participants. So it's important.

      The way people talk about markets is that there is an objective measure. That they just take information from everywhere and process them. But really, it's a specific set of people.

      As I say in that piece, you would have to have a specific mindset and be a specific person in the world to believe that Donald Trump would be better for the stock market than Joe Biden. To believe not only that Donald Trump would be good for the stock market, that he'd be so much better than having four years of Kamala Harris or whatever, that you can track the odds of

      Trump winning with the stock market going up when Trump's odds of winning were going up.

      On DOGE seizing money from your bank account.

      The other thing is just what we started with, the main thing that I've been focusing on, what I've been calling the Trump-Musk payments crisis. The impoundment issues and just sort of taking seizure of the federal government. People used to talk about political risk being part of what gets priced in. Well, there's an enormous amount of political risk in the United States right now.

      And then there's the further point where they’re in the process of claiming that they can take money out of anyone's bank account or freeze anyone's bank account. It's actually mind-bending trying to keep up with these stories of all the different ways that they're going after bank accounts. I mean, they froze a New York state government bank account related to EPA grants that were already handed out that were being administered by Citibank. And I want to dig into that more and write about it more. But that's just one of, I would say, four or five different payment stories that are calamitous.

      Let alone their wanting to move social security off of COBOL, which we talked about. They want to do it within two to three months, and they want to use AI to do it. I mean, that is an existential threat to social security existing. That’s a cockamamie plan. And I don't know what the current state of it is. I've been focusing on the financial crisis, so I need to get back into it. But I don't even know how to articulate how insane a disaster this is. And hey, there's a lot of financial risk if social security breaks and no one's getting social security checks.

       

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   2. There is some "big picture" sense to all this economic chaos  if you consider that Trump is doing Putin's will.

      I imagine some of those cute confidential phone calls, during which Putin tellis Trump " Keepi it up – you're doing great!"

       

      https://imgflip.com/i/9rb63q

       

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3. Overnight, the Supreme Court issued an order: My go to site for explanations is SCOTUSblog.  Amy Howe writes this morning: Justices temporarily bar government from removing Venezuelan men under Alien Enemies Act

   Over a dissent by two of the court’s conservative justices, the Supreme Court temporarily barred the Trump administration from removing a group of Venezuelan men currently in immigration custody in the northern region of Texas under an 18th century wartime law. The prohibition came in an unusual overnight order that followed a Friday evening appeal from lawyers representing the men, who told the justices that “dozens or hundreds” of detainees “are in imminent and ongoing jeopardy of being removed from the United States without notice and opportunity to be heard, in direct contravention of” a ruling by the justices less than two weeks ago.

   District court apparently threw up its hands and said it couldn't do anything around 9 PM Eastern.  Before 1 AM the 9 of SCOTUS apparently had a conversation and got to a 7-2 decision saying

   The Government is directed not to remove any member of the putative class of detainees from the United States until further order of this Court. See 28 U. S. C. §1651(a). 

   Justice Thomas and Justice Alito dissent from the Court’s order. Statement from Justice Alito to follow.

    

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   1. Every time I see some awful dissent from the fascists, Thomas and Alito, I’m grateful that Scalia is dead, and I snicker that Barrett hasn’t been the complete whack-nut Yammie-pie (okay, Leonard Leo) thought he was getting.

       

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      1. Yes, Amy Coney Barrett has really impressed me, too.

         No, I don't agree with her position in Dobbs, and I'm probably going to be unhappy with her position when they get the request to reconsider and overrule Obergefell. But she wasn't selected because she was an advocate of reproductive choice or gay rights. On the contrary.

         What impresses me is that she has the guts to stand up for the rule of law which isn't as common as it once was. 

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4. Reuters has an article about tariff impacts already hitting the US economy, and uses a couple of Colorado anecdotes.

   That seat will cost how much? US businesses already seeing impact of Trump tariffs

   In Denver, Colorado, Aisha Ahmad-Post, the executive director for the Newman Center for the Performing Arts at the University of Denver, has spent more than a year managing a major renovation – the replacement of all 971 chairs inside the June Swaner Gates Concert Hall.

   The Newman Center considered chairs from two U.S. suppliers and one in Canada. One of the American makers was far over their budget and the other's chairs required the use of harsh dry-cleaning solvents as maintenance. In early 2024, Ahmad-Post ordered chairs from Montreal-based Ducharme for just over $560,000 and blacked out a six-week period of hosting any shows for installation in mid-July.

   On March 5, Ahmad-Post received a letter from Ducharme that it was required to comply with the new Trump trade taxes and "apply the corresponding tariffs to your project."

   At the time, those tariffs for Canada were at 25% – an increase in $140,000 for the Newman Center seat project, an unwelcome development for an institution still trying to rebuild its rainy day fund that was depleted by the COVID-19 pandemic.

   "The chairs are already in production, it's not like we can just pivot," Ahmad-Post said. "Now we're stuck trying to figure out how we'll pay for this."

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5. Maybe they could call it "iStasi"… because I'm completely sure they won't expand the scope of work to track…well, everyone.
    

   ICE Is Paying Palantir $30 Million to Build ‘ImmigrationOS’ Surveillance Platform

   In a document published Thursday, ICE explained the functions that it expects Palantir to include in a prototype of a new program to give the agency “near real-time” data about people self-deporting.

   Immigration and Customs Enforcement is paying software company Palantir $30 million to provide the agency with “near real-time visibility” on people self-deporting from the United States, according to a contract justification published in a federal register on Thursday. The tool would also help ICE choose who to deport, giving special priority to “visa overstays,” the document shows.

   According to the document, ImmigrationOS is intended to have three core functions. Its “Targeting and Enforcement Prioritization” capability would streamline the “selection and apprehension operations of illegal aliens.” People prioritized for removal, ICE says, should be “violent criminals,” gang members, and “visa overstays.”

   Its “Self-Deportation Tracking” function would have “near real-time visibility into instances of self-deporation,” the document says. The document does not say what data Palantir would use for such a system, but ICE says it aims to “accurately report metrics of alien departures from the United States.” The agency stipulates that this tool should also integrate with “enforcement prioritization systems to inform policy” but does not elaborate on these systems or policies.

   Meanwhile, the “Immigration Lifecycle Process” function would streamline the “identification” of aliens and their “removal” from the United States, with the goal of making "deportation logistics” more efficient.

   https://www.wired.com/story/ice-palantir-immigrationos/

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   1. Also: Peter Thiel and Jared Kushner's company "Ramp", wants to take over all the government payment systems for Social Security, and also the payment system used for government credit card expenses.

      They would get a fee for every transaction. Nice work if you can get it. No competition bidding. Add billions in costs to Social Security.

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   2. That third item troubles me most, I think. While all of it is gobbledygook, that one seems most likely to become aggressive and get out of control.

      “Making “deportation logistics” more efficient” is code. I think it means they can then Shanghai anyone they want…including citizens like you and me.

      I have been begging anyone who would listen, to believe this very circumstance was coming. Donald Trump ran for President to spite Barack Obama. It has never been about anything but Trumps’ ego and retribution. His hatred has poisoned America.

      He isn’t making America great…he is making us weak and afraid. Welcome to the third world, ya’ll.

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      1. "Efficiency" is not always a good thing, and it is generally antithetical to due process, which requires both notice and an opportunity to be heard.  That pesky Fifth Amendment really messes with "efficiency" in deportations.  

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6. Reply to parkhill:

   Yes..it really is all about the grift.

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7. Here's a sampling of signs from Saturday's anti-Trump rallies around the country

   They are all strong and to the point.  My favorite is this one

   

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8. Some great stuff there, harry. Thanks for the link.🙂

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9. Who could have guessed a drunk with no experience could make basic mistakes???

    

   https://www.nytimes.com/2025/04/20/us/politics/hegseth-yemen-attack-second-signal-chat.html?unlocked_article_code=1.BU8.G_mP.5fJ18eQyeuHv&smid=url-share

    

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   1. Perhaps a more concerning and pertinent question might be, "Who couldn't"?

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      1. Let us imagine the spectacle soon to be thrust upon us. I understand the Emperor will have his parade.  Oughta be something! 

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