Month: March 2016

They can’t stop him

by digby

I wrote this for Salon this morning:

As of this morning, this is the state of play in the Republican campaign for president:

Updated GOP Super Tuesday delegate totals:
Trump 243
Cruz 220
Rubio 101
Kasich 21
Carson 3

— Mark Murray (@mmurraypolitics) March 2, 2016

One might surmise from that total that the race for the Republican presidential nomination is now a race between Donald Trump and Ted Cruz.  Their total was separated by only 23 delegates as compared to the 142 points that separates Trump from Marco Rubio.  Trump has won ten contests. Ted Cruz has won four. Rubio has won one. Kasich and Carson are irrelevant. (The press is reporting that people are starting to lean on the former and it appears Carson has either seen the light or someone’s made him an offer he can’t refuse.)

The problem with all of this for the establishment is that they loathe both Trump and Cruz, the first and second choices of their voters. This should tell them something but it doesn’t yet seem to have penetrated: their voters don’t care what they think. Indeed, their voters are basically saying that if these people are for it, they’re against it.

Still, the establishment rages against this reality, belatedly having recognized that Trump is a real threat, devising plans to thwart their two top candidates to install someone they see as both electable and palatable. There are massive ad campaigns in the works with the intention of “informing” Trump voters that their man is a hypocrite:

Those people simply don’t understand Trump’s appeal. He openly explains these apostasies away by saying that he is a businessman who had to play all sides because that’s the cost of doing business.  He doesn’t hide it and his voters don’t mind it. They think he’s a smart guy who wins by any means necessary. After all, he’s a billionaire!

Trump voters aren’t hostile to a wealthy businessmen like Trump. In fact, his profession is very high on the list of the things they like best about him. They believe that the honest hardworking businessmen are just doing what they need to do to make a buck and if we could get the government to put America first they’d be able to keep the jobs here and everything would be fine.

Matt Yglesias laid out the Trump agenda this way:

• On trade, he wants to revise existing deals and replace them with ones that the United States will “win.”
• On foreign policy, he is suspicious of idealistic ventures but willing to be maximally brutal and maximally avaricious when force does need to be used.
• On drug prices, he wants the US government to stop acting like the biggest sucker in the world by letting itself get ripped off by rootless multinational firms.
• On immigration, what really needs to be said.
• Trump’s speeches these days also loudly and proudly invoke support for veterans and law enforcement, identifying his movement with the agents of the state.
• More subtly, Trump breaks with conservative orthodoxy by opposing cuts to Social Security and Medicare, positions that research by Donald Kinder and Cindy Kam find to be associated with white ethnocentric sentiment.

Trump and his followers are authoritarian nationalists and they could not care less that he’s been all over the map on other issues. What matters to them is that he wants America — and by extension them — to dominate. Until someone can find a way to make these people doubt his sincerity or competence in accomplishing that goal his people will not abandon him.

According to Nate Cohn in the New York Times, the numbers show that it’s not too late to stop him if the anti-Trump forces could get their act together. But they are running out of time:

He holds only 33 percent of the popular vote in the returns counted so far; 35 percent if you exclude Ted Cruz’s home state, Texas. It’s a low enough number to suggest he could still lose the nomination if the field ever narrowed to a one-on-one race[…]

By March 15, nearly 60 percent of all the delegates to the Republican nomination will have been awarded. Five large states will cast ballots, and several, including Florida and Ohio, are winner-take-all states. Illinois and Missouri award their delegates in a way that will most likely assure a lopsided margin for the victor. 

If Mr. Trump isn’t defeated on that date, he will be in a strong position to amass a majority of delegates by the end of the primary season. If he had a big day on March 15 and then won by even a little afterward, say by a margin as small as three percentage points, he would probably have enough delegates to avoid a contested convention.

Yesterday, Fox officially gave up on Marco Rubio.  Roger Ailes reportedly said, “we’re finished with Rubio. We can’t do the Rubio thing anymore.”  Sean Hannity knows how to follow orders and he immediately went ballistic on Rubio on his radio show yesterday:

What I suspect has happened is that Marco Rubio has sat in a room with a lot of establishment types. I guarantee you he has been promised millions and millions and millions of dollars for his campaign, I suspect deeply that this dramatic change — this is not a subtle change that, you know — listening to him go on and on about the con artist, the fraud, the scam artist. “He refuses to repudiate the KKK.” “Hire illegal immigrants.” Misspelled words. I suspect that this has all been coached. I suspect that this is a strategy that has been put together by all of these people that are angry really at you because they don’t like the way you, the American people, are voting.

There’s no mystery about where the Fox empire is heading. Rupert Murdoch himself tweeted,
“As predicted, Trump reaching out to make peace with Republican “establishment”. If he becomes inevitable party would be mad not to unify.”

It’s unknown what Trump has done to “reach out” but if he’s referring to his bizarre victory “press conference” on Super Tuesday, it’s probably wishful thinking. Nonetheless, it’s clear that Fox is reaching out to him. They seem to be gluttons for punishment. Trump has been playing them for fools for months.

But not everyone has accepted the inevitability of Trump. Some members of the GOP establishment are still raging at the dying of the Republican Party at his hands and are even willing to entertain the unthinkable. Senator Lindsay Graham who recently joined the ranks of potty mouthed public officials when he described his party as “batshit crazy” went on CBS yesterday, swallowed hard and said:

He’s not my favorite but we may be in a position where we have to rally around Ted Cruz to stop Donald Trump.

It’s a testament to just how loathsome his fellow elected Republicans find Cruz that this is the first, perhaps the only, time anyone has mentioned this as a possibility.  (Well Cruz himself did, unctuously suggesting that all of his rivals  “prayerfully consider” dropping out of the race. It’s not hard to see why fellow officials think he’s so repellent.)

Today Mitt Romney is scheduled to give a speech about the Republican race and is expected to say that Republicans should vote for either Rubio or Cruz. I think it’s fair to say that such an entreaty coming from him will likely have the effect of clinching the nomination for Donald Trump.  It’s that kind of campaign.

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Gotta love Notorious RBG
by Tom Sullivan

350z33 at English Wikipedia [CC BY-SA 3.0
or GFDL], via Wikimedia Commons

The women on the U.S. Supreme Court had a bit of a field day when the Texas abortion case of Whole Woman’s Health v Hellerstedt came before the court yesterday. The 2013 Texas law at issue requires clinics offering abortion services to meet standards set for ambulatory surgical centers. In addition, it requires doctors performing those abortions to have admitting privileges at local hospitals. Hannah Levintova at Mother Jones sets the stage:

The Texas health department argues that these provisions are necessary to protect women’s health—a standard that was established in 1992 in Casey as a legitimate reason for states to pass abortion restrictions. Casey also established, however, that the state’s interest in women’s health has to be weighed against whether an abortion law would place an “undue burden” on women seeking abortion care. This is where the plaintiff’s argument lies. Whole Woman’s Health, which runs three abortion clinics in Texas, argues that the burdens on women created by HB 2—clinic closures across the state that have forced thousands of women to travel hundreds of miles for abortion care—far outweigh any interest in protection of women’s health that Texas has. They point to many medical groups, including the American Medical Association, that have said ambulatory surgical facilities and admitting-privileges requirements are not necessary to provide safe abortion care.

Dahliah Lithwick takes up the narrative as Chief Justice Roberts and Justice Sonia Sotomayor question Stephanie Toti who argued on behalf of the Texas clinics:

Roberts spends a good deal of Toti’s remaining time suggesting that the “undue burden” test after Casey has nothing to do with the state’s purpose in passing the law. Toti replies that the court looked carefully at the state’s intent when it assessed the abortion regulations in Casey. At around this point, Sotomayor decides that she has some things to say: “There’s two types of early abortion­­ at play here. The medical abortion, that doesn’t involve any hospital procedure. A doctor prescribes two pills, and the women take the pills at home, correct?” Toti explains that the woman has to take them at the abortion facility under Texas law.

Sotomayor is back: “I’m sorry. What? She has to come back two separate days to take them? … When she could take it at home, it’s­­ now she has to travel 200 miles or pay for a hotel to get those two days of treatment?”

Toti confirms that there is no reputable evidence that there is a medical benefit to having a medication abortion at “a ­multi-million­-dollar surgical facility.”

Sotomayor asks for more time to finish her two-part question and the chief justice nods, resigned. Then Sotomayor asks why a dilation and curettage associated with a miscarriage can be performed in a doctor’s office whereas a basically identical D&C must be performed in an ambulatory surgical center when it’s for an abortion. Toti replies, and Sotomayor keeps talking. The chief thanks Toti but Sotomayor forges on, wondering if any other medical procedures require taking pills in a hospital. No, says Toti. Sotomayor is finally content to rest her case.

Justices Sotomayor and Elena Kagan observed that more risky procedures such as dental surgery and colonoscopies are not similarly regulated in Texas. They are routinely performed in a doctor’s office.

Justice Ruth Bader Ginsberg might have had the most biting remarks of the hearing:

Seconds after Texas Solicitor General Scott Keller began to speak Wednesday morning, Justice Ruth Bader Ginsburg zeroed in on the “undue burden” question—quickly and mercilessly knocking Keller off balance and setting the tone for the rest of his nearly 40 minutes at the lectern. Ginsburg asked Keller how many women would live 100 miles or more from a clinic if the Texas law went into effect. About 25 percent, he responded—but that didn’t include the clinic in Santa Teresa, New Mexico, just over the border from El Paso. The existence of this clinic featured heavily in the 5th Circuit’s decision to uphold the Texas statute; it asserted that the law did not impose on “undue burden” on abortion-seeking El Paso women, because they could simply cross state lines for the procedure.

“That’s odd that you point to the New Mexico facility,” Ginsburg said, in a clear and firm voice. New Mexico, after all, doesn’t force abortion clinics to meet the same standards that Texas would—standards which, Texas claims, are absolutely critical to protect women.

“So if your argument is right,” Ginsburg continued, “then New Mexico is not an available way out for Texas, because Texas says: To protect our women, we need these things. But send them off to New Mexico,” to clinics with more lenient standards, “and that’s perfectly all right.”

“Well,” Ginsburg concluded, with just a hint of pique in her voice, “If that’s all right for the women in the El Paso area, why isn’t it right for the rest of the women in Texas?”

You gotta love Notorious RBG.
With this season’s conservative Sturm und Drang over the supposed scourge of political correctness, you’d think the purveyors of this and similar laws would simply drop the subterfuge, cut the crap, and boldly state for the cameras that these laws are cynical attempts to kill off Roe by a thousand cuts. But no, that would take honesty and guts.

The Trump Republican Party

by digby

Why should this upset anyone? After all, the front runner for the presidential nomination is calling Ted Cruz a pussy on national TV.

The newly elected chair of the Republican Party in the county that includes the Texas Capitol spent most of election night tweeting about former Gov. Rick Perry’s sexual orientation and former President Bill Clinton’s penis, and insisting that members of the Bush family should be in jail.

He also found time to call Hillary Clinton an “angry bull dyke” and accuse his county vice chair of betraying the values of the Republican Party.

“The people have spoken,” Robert Morrow, who won the helm of the Travis County GOP with 54 percent of the vote, told The Texas Tribune. “My friends and neighbors and political supporters — they wanted Robert Morrow.”

Morrow’s election as Republican chair of the fifth-largest county in Texas left several members of the Travis County GOP, including vice chair Matt Mackowiak, apoplectic. Mackowiak, a Republican strategist, immediately announced over social media that he would do everything in his power to remove Morrow from office.

“We will explore every single option that exists, whether it be persuading him to resign, trying to force him to resign, constraining his power, removing his ability to spend money or resisting any attempt for him to access data or our social media account,” Mackowiak told the Tribune. “I’m treating this as a coup and as a hostile takeover.”

“Tell them they can go fuck themselves,” Morrow told the Tribune.

I’d guess he’s angling for the job of Trump’s press secretary. He is, unsurprisingly a big fan:

Morrow, who’s also tweeted that Sen. Marco Rubio of Florida is “very likely a gayman who got married,” said he supports the brand of Republican politics he most closely associates with Donald Trump and Sen. Ted Cruz.

“The Republican Party, I would hope, is about limited government with a libertarian perspective,” Morrow said. “But it’s a big tent, and there are many factions in it, and that’s okay with me.”

Morrow’s main complaint is with “establishment” Republicans, who he does not believe should hold elected office, he said. Last week, he tweeted that the Republican National Committee was just a “gay foam party.”

Morrow has a long history of critiquing prominent state Republicans in vulgar, and often sexually explicit, terms. For years, he has alleged that Perry is secretly bisexual; in 2010, he referred to him as “Gov. Skank Daddy” in an email.

“Perry is an epic hypocrite,” he told the Tribune on Wednesday. “I think he has been a rampaging bisexual adulterer for many decades.”

Though Morrow has tweeted often about sexually explicit acts involving Democratic presidential frontrunner Hillary Clinton and his last several Facebook profile pictures were of scantily clad women, he said he denies any charge that he is sexist.

“It’s derogatory toward Hillary Clinton because I hate Hillary Clinton,” he told the Tribune. “But I’m not sexist. Why would you ask that? I’m not sexist.”

“I like beautiful women, I celebrate feminine beauty,” Morrow added. “I’m like Donald Trump — I love women.”

When the Tribune asked about the content of some of Morrow’s social media posts, without using the specific racial slur Morrow had employed, Morrow seized on the omission as an example of corruption within the media.

“You are a perfect example of what the Trump movement is revolting against because you can’t even pronounce the word n—– when you are talking about a Facebook post,” Morrow said. “What a pathetic excuse for a reporter you are.”

He’s a perfect representative of “The Trump Movement.”  He sounds just like his leader.

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There’s just something they like about him

by digby

Why do you suppose it is that these people listen to Trump and instantly feel such an affinity for him?

The host of an “unapologetically pro-White” radio program received press credentials from the Donald Trump campaign at a rally last weekend in Memphis, Tennessee, according to a blog post flagged by Little Green Footballs.

James Edwards, the host of the “Political Cesspool” show, wrote a glowing blog post describing his positive experience at the Millington Regional Airport event, where he recorded an episode of his show from within the press pen. Photos interspersed throughout the post show Edwards beaming with a Trump media badge pinned to his suit jacket, as well as other reporters in the cordoned-off press area who he describes as “the enforcers of political correctness.”

“I must admit that this rally lived up to my expectation,” Edwards wrote in the post.

“I’ve been saying for years on the radio that the majority of Americans fundamentally agree with us on the issues and that the neocons were generals of a phantom army,” he continued. “I am being proven right. Our people just needed a viable candidate and they’ve identified Trump as that man. There is no doubt that Trump’s populism and nationalism is galvanizing our nation and may change the course of American history for the better right before our very eyes.”

Edwards also notes that he will air a previously recorded 20-minute interview with Donald Trump, Jr. on his show on Saturday.

The Trump campaign did not immediately respond Wednesday to TPM’s request for comment.

The Political Cesspool’s mission statement outlines a hard-right ideology that rejects “abortion, feminism, and homosexuality” and calls “to grow the percentage of Whites in the world relative to other races.” Archived blog posts celebrate Edwards’ efforts to preserve Confederate monuments in Memphis, Tennessee and refer to interracial sex as “white genocide.”

They love the guy. And why not?

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I guess the money finally dried up

by digby

Either that or somebody offered him a bribe to drop out (which is entirely possible.)The rumor is that they are offering him money to run for the Senate in Florida. Presumably he’ll endorse Rubio if that’s so.

Here’s Ben Carson’s position this morning:

Here was @RealBenCarson last night on the future of his campaign https://t.co/xONzrCfjuC

— Independent Journal (@INJO) March 2, 2016

Here it is this afternoon:

Ben Carson will not attend tomorrow’s debate, and will tell supporters Friday that he doesn’t see “a path forward” pic.twitter.com/qrnaR7slLx

— Independent Journal (@INJO) March 2, 2016

He seems to be shifting from the presidential campaign grift to the Sarah Palin-style post political cult of personality grift. He’s got a hell of an email list.

I’ll miss him.

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Christie’s not even pretending anymore

by digby

He’s all in on Trump and clearly believes his political future is so tied to him that he no longer needs to even pretend to be a Governor:

Six New Jersey newspapers issued a joint editorial Tuesday calling on Gov. Chris Christie to resign in the wake of his failed presidential campaign and his subsequent endorsement of rival Donald Trump.

The six newspapers including the Asbury Park Press, the Cherry Hill Courier-Post and the Morristown Daily Record — all Gannett-owned papers that are part of the USA TODAY NETWORK — were apparently spurred to editorial outrage by a Monday press conference in which Christie refused to answer questions about anything other than his nomination of a state Supreme Court judge. Asked why, Christie replied, “Because I don’t want to.”

“We’re fed up with Gov. Chris Christie’s arrogance,” the papers wrote. “We’re fed up with his opportunism. We’re fed up with his hypocrisy.”

The joint editorial notes that Christie spent part of 261 days out of state last year and traveled out of state to endorse Trump and campaign with him after he quit the race Feb. 10.

“For the good of the state, it’s time for Christie to do his long-neglected constituents a favor and resign as governor. If he refuses, citizens should initiate a recall effort,” the editorial said.

They are calling for him to resign or be recalled. This was a man who just a couple of years ago was said to be a shoo-in for the GOP nomination for president. Now he is nothing more than Donald Trump’s major-domo.

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The veil has finally fallen from the Big Boyz’s eyes

by digby

I wrote about the  GOP establishment’s dawning awareness of reality for Salon today:

Trump in his own words

by digby

I’m going to guess that ads like this are going to be running a whole lot over the next few weeks. It will be very interesting to see if they have any effect:

I think the people who like Trump are so disaffected from ordinary politics that they refuse to believe any criticism of him even when it’s presented in his own words.  They’ll discount this, saying the clips have been doctored or are out of context. (And they would be right in some respects.)

And he’s covered himself with the explanation that he’s a businessman who had to say and do things for the sake of his business.  Republicans respect this about him.

I don’t think people really understand what right wing populism is — sure they blame banks and corporations for their loss of economic security but they don’t blame the people who run them for being greedy and avaricious. That’s natural. They blame the government for failing to “compete” properly with foreigners and letting those foreigner make a “better deal” with our virtuous businessmen.

Trump was forced to be completely without integrity because that’s how you do business, amirite? Not his fault. He needed to kiss up to all politicians.

It’s the politicians’ fault that he had to do it.

by digby

There will be a lot of words but this is it in a nutshell:

“We have a big problem at this point, because I agree with you a lot. I agree that we have taken [Trump] not seriously, we have not respected his voters, but there is a dark underside here, and S.E. is right,” Jones began. 

“He is whipping up and tapping into and punching buttons that are very, very frightening to me and frightening to a lot of people. Number one, when he is playing funny with the Klan, that is not cool.” 

Jones continued, “I know this man when he gets passionate about terrorism. I know how he talks about terrorism. The Klan is a terrorist organization that has killed –” 

“– A leftist organization,” Lord interrupted. 

He answered, “You can put any label on it you want. That’s your game to play.” 

He then put an exclamation point on it, saying, “No, you need to take a serious look at the fact that this man has been playing fast and loose and footsie — when you talk about terrorism, he gets passionate. He’s says no, this is wrong. But when you talk about the Klan, oh, I don’t know, I don’t know. That’s wrong.”

Pointing at Lord, he continued, “And then you came on the air and you said this is just like when Reverend Wright was speaking. Reverend Wright never lynched anybody. Reverend Wright never killed anybody. Reverend Wright never put anybody on a post and you guys play these word games. And it is wrong to do in America.” 

Lord replied, “It is wrong to understand that these are not leftists.” 

“What difference does it make what you call them? Call them chipmunks, they killed people. And don’t play games with that!,” Jones shouted. 

Lord taunted, “Don’t hide and say that’s not part of the base of the Democratic party. They were the military arm, the terrorist arm of the Democratic party according to historians” 

Jones answered, “I don’t care how they voted 50 years ago. I care who they killed.” 

After another back and forth, Jones brought up Trump’s smear of the black kids in the Central Park jogger case, pointing out that after Trump got the entire city stirred up over it and after the kids were proven innocent, he never apologized for what he did. 

Jones also raised the things Trump has said about Native Americans and others, to which Lord chided him. “Van, what you’re doing is dividing people. This is what liberals do. You’re dividing people by race.” 

Orwell would be nodding approvingly at that one, wouldn’t he? 

Jones replied, “The Klan divided people by race. The Klan killed people by race. And he had the opportunity.” 

“They did it to further the progressive agenda, hello,” Lord answered. 

Jones countered, “That is first of all, so absurd. The Democratic Party of the South in the old days was a racist party. You are correct, sir. They were a violent party. But that’s not the Democratic party of today, so what are you talking about that for? You play these games –” 

“That is the Democratic party of today. The Democratic Party of today divides by race,” interrupted Lord. 

Jones then related a story about his 7-year old child, saying that he wants him to watch the news but whenever his son watches, he hears such hateful things he doesn’t even know how to explain it to him. 

“Tell Donald Trump he needs to, for my children’s sake, if he’s going to lead this country he needs to be as passionate about what is happening to my kid as anybody else’s.”

“We have to be passionate about, as Robert Kennedy used to say, that this country is colorblind,” Lord countered. “Race has no place in American life, or law,” he added.
“We have lost that totally because the Democratic Party insists on dividing people by race,” Lord concluded.

This is a common fatuous “I know you are but what am I” argument these wingnuts use to deny their racism. Lord had used it earlier on CNN.  

“Donald Trump isn’t playing the game, although he certainly denounced him,” Lord declared. “I mean, David Duke is a hardcore leftist. He’s an anti-Semite.” 

“Yes, Margaret, the Ku Klux Klan is a function of the left. It was the military arm of the Democratic Party,” he added. 

This is the recycled garbage about Southern Democrats who actually left the Democratic Party 50 years ago as part of the Republican Party’s Southern Strategy. The KKK hasn’t voted Democrat in decades, but “analysts” like Lord really do take their viewers for fools. 

Margaret Hoover called him out on it, too, reminding him that the KKK is a hate group, not a “leftist group,” but to no avail. 

Lord insisted, “Margaret, it is a racist hate group from the left. And that counts. That is important to understand. It is not conservative. It has nothing to do with conservatism. All of these Klan members who have been elected to Congress and U.S. Senate and governorships over the years, supporting Franklin Roosevelt because they like Social Security. Let’s get our history straight.”

I don’t know if he believes this drivel but it doesn’t matter.  He is prepared to go on CNN and argue with a straight face that President Obama is aligned with the KKK, a notorious left wing organization.

And  CNN is prepared to let him. That’s where this election is going.

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Junk bonds are in worse shape than before the Lehman collapse

by Gaius Publius

We know that there will be another economic “big one” like the crisis of 2008. All of the pieces are in place — Wall Street greed and literal pathology, the even greater size of too-big-to-fail institutions, a literal get-out-of-jail free card that almost blesses continued financial fraud, and the like. We just don’t know when it will occur, or what will trigger it. Last time it was triggered by the collapse of the bubble-sized home mortgage market. The time before that, it was the bubble-sized tech stock valuations. Where’s the bubble now, or the inverse bubble, the market hole that may be forming somewhere?

Many people are looking at collapsing oil prices and soaring supplies, which is causing the collapse of over-leveraged carbon companies of all types (coal, oil and methane), as a potential cause of the next crash. Others say that the collapsing price of oil is “contained” — unique and isolated — and is not contaminating other markets.

The following piece by Wolf Richter argues the opposite point — that the collapse in the carbon market is not contained at all, and that collapse is in danger of spreading via the increasing price of junk bonds. Is this a precursor to the next “big one”? See what you think.

Wolf Richter (my emphasis throughout):

Now It’s Even Worse Than it Was When Lehman Collapsed, But It’s “Contained”

“Distress” in Bonds Spirals into Financial Crisis Conditions

The pile of toxic corporate bonds in the US, euphemistically called “distressed” debt, ballooned 15% in the single month of February to $327.8 billion, up 265% from a year ago, according to S&P Capital IQ. The number of S&P rated US companies with distressed debt rose 9% in February to 353, up 128% from a year ago.

The last time the pile of distressed debt had soared to this level was in November 2008, and the last time the number of distressed issuers had shot up to these levels was in October 2008; Lehman had declared bankruptcy in September.

These “distressed” junk bonds sport yields that are at least 10 percentage points above US Treasury yields, according to S&P Capital IQ’s Distressed Debt Monitor. 

Note the definition in the final paragraph above. Bonds are considered “distressed” if they have to offer 10 points or more greater yield than U.S. Treasuries in order to attract buyers. Obviously, any company whose financing depends largely on these bonds is at risk of bankruptcy.

As a chart, the above data looks like this. Take a minute to study it.

Richter adds this about the S&P “distress ratio” for junk bonds and leveraged loans (see chart at the top):

The ratio hit the highest level since July 2009, when it was coming down from the Financial Crisis. But this is the spine-chilling part: Back in September 2008, before the Lehman bankruptcy had fully registered in the ratio, but when the Financial Crisis was already gaining a good amount of momentum, and when stocks were crashing left and right and prudent people were wearing hardhats while out on the sidewalk, the distress ratio was “only” 28.9[.]

Richter quotes the report he cites as saying that a rising ratio is “typically a precursor to more defaults.” If he’s right, we could be headed into the same soup we took years getting out of. And this time, it will be a political soup as well, since the country, both left and right, is in zero mood for another massive government bailout.

Not Confined to Oil and Gas

Nor is the damage in these markets confined to the carbon sector. Richter again:

And it’s not just the oil-and-gas and the minerals-and-mining sectors that are getting crushed. Of the 607 distressed bond issues in the ratio, 172, or 28%, are oil-and-gas related and 80 bond issues, or 13%, are minerals-and-mining related. The remaining 59% are spread across other the spectrum.

“Spillover effect,” is what S&P Capital IQ calls this. It has contaminated “the speculative-grade spectrum as a whole.”

The article has more along these lines, including a list of sectors affected, how many billions of dollars in debt are distressed in those sectors, and the main companies affected in each sector. It’s quite eye-opening.

Will Commodity Prices Cause the Next Collapse?

I’ve been personally watching all of this with interest. There is a bubble in commodities — especially those things that the very very wealthy are interested in (for example, Manhattan real estate and high-end art) — but really, in commodities in general. There’s also a major crack in the commodities bubble connected to carbon products (coal, oil and methane). I’ve wondered before if collapsing oil prices would spark a collapse in other commodities (stocks, for example) via the highly leveraged, and therefore highly vulnerable, nature of many fracking companies in the U.S.

It’s possible we’ll get an answer soon … or not. Still, this is worth watching. If you’re interested, Richter’s website, Wolfstreet.com, is worth checking on a regular basis.

(A version of this piece appeared at Down With Tyranny. GP article archive here.)

GP

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