Digby's Hullabaloo Posts

Trump strong armed the Indiana GOP into coming back to do the redistricting he ordered with his MAGA army doing the dirty work. Here’s one guy’s thinking:

On Monday I spoke with a Republican member of Indiana’s legislature who opposes President Donald Trump’s push for the state to redraw its congressional map to gain two GOP seats and help the party hold its House majority in next year’s midterm elections. Trump, with support from Indiana’s Republican governor, Mike Braun, has vowed to back primary challengers against members of the GOP who are, for now, blocking the redistricting plan. The lawmaker I spoke with asked that I not publish his name. He isn’t worried about Trump’s political wrath; he doesn’t plan to run for reelection. His fear of speaking out is much more personal: “I’d rather my house not get firebombed,” he told me by phone.

Note that he’s not running for re-election. He’s frightened anyway. And that’s not irrational.

Meanwhile, others aren’t buying it:

Sen. Greg Walker, R-Columbus, said he turned down an invitation to visit the Oval Office last week and is accusing the White House of violating federal law in its push to pressure Indiana Republicans to redraw the state’s congressional districts ahead of next year’s midterm elections.

Walker, a Republican who has been an outspoken critic of early redistricting, said he was contacted by a White House official on Nov. 17 and was invited to visit President Donald Trump in the Oval Office on Nov. 19, the day after the Indiana General Assembly’s Organization Day.

The state senator said he declined the invitation and believes it violates the Hatch Act, which restricts certain political activities by federal employees. Walker said he would have reported the alleged violation to federal authorities “if I thought that there was anyone of integrity in Washington that would follow through on my accusation and actually cause someone to lose their job over it.”

“I refused (the invitation), but the underling who reached out to me is trying to influence the election on my dime,” Walker told The Republic. “That individual works for me. He works for you. He’s on my payroll, he’s on your payroll, and he’s campaigning on company time. That’s a violation of the Hatch Act. He’s a federal employee. He works in the White House. But does anyone care about the rules anymore? Not that I can tell.”

[…]

The Oval Office invitation came two days before Walker became the sixth GOP senator to be targeted in a swatting incident since Indiana Senate leaders said they were rejecting Trump’s push for congressional redistricting.

Click the link to read more of his comments because it’s so refreshing to see a GOP office holder expressing what is obvious to everyone but Trump’s most sycophantic toadies. It gives you hope that

He’s not the only one:

On Thursday, President Donald Trump once again found it acceptable to use the r-word, directing it towards Minnesota Governor Tim Walz, in a Truth Social post which also attacked Somali immigrants in the state.

“The seriously [r-tarded] Governor of Minnesota, Tim Walz, does nothing, either through fear, incompetence, or both,” Trump posted.

For Republican Indiana State Senator Michael Bohacek, Trump’s most recent use of this anti-disability slur was “the final straw” in his decision not to support Indiana redistricting in support of Republicans winning more seats. On Friday, Rep. Bohacek posted the following on Facebook:

Many of you have asked my position on redistricting. I have been an unapologetic advocate for people with intellectual disabilities since the birth of my second daughter. Those of you that don’t know me or my family might not know that my daughter has Down Syndrome. This is not the first time our president has used these insulting and derogatory references and his choices of words have consequences. I will be voting NO on redistricting, perhaps he can use the next 10 months to convince voters that his policies and behavior deserve a congressional majority.

Cue the shrieking about “woke” and political correctness. But one hopes that if there is any decency left among Republican voters that they’ll cringe when they see Trump’s crudeness. (Yeah … I know.)

This is the real political violence that’s happening in our country right now. Yes, there are lone actors out there making violent political statements about various issues. There’s always been an element of that in our political culture. But this is a systematic reign of violent intimidation and terror being visited upon independent thinkers in the Republican party by other members of their party at the direction of the President of the United States. Unless more of these people stand up to it it’s going to get worse with potentially catastrophic consequences. That man who said he’s afraid of having his house firebombed wasn’t kidding.

I think that may be the grossest post he’s ever written and that’s saying something. He ‘s this close to just spitting out the “N” word. I thoroughly expect it to happen.

Having said that, I expect the first draft was done by Stephen Miller. Trump doesn’t know about terms like “reverse migration” or “denaturalization” and he’s not one to talk about western civilization. That’s Stephen. The “retard” stuff and the crude racism, however, is all him.

Anyway, he’s had quite a holiday weekend:

REPORTER: Officials say the suspect in the DC shooting was vetted and it came up clean

TRUMP: He went cuckoo. He went nuts. There was no vetting

REPORTER: Actually, your DOJ IG just reported that there was thorough vetting of Afghans who were brought into the US. So why do you… pic.twitter.com/0SRbdZ6RjU

— Aaron Rupar (@atrupar) November 28, 2025

REPORTER: Officials say the suspect in the DC shooting was vetted and it came up clean

TRUMP: He went cuckoo. He went nuts. There was no vetting

REPORTER: Actually, your DOJ IG just reported that there was thorough vetting of Afghans who were brought into the US. So why do you blame Biden?

TRUMP: Are you stupid? Are you a stupid person? You’re just asking questions because you’re a stupid person

Asked what Somalis have to do with the shooting in DC, Trump admits “nothing, but then claims they “cause a lot of trouble” pic.twitter.com/IDu3PJRSpF

— Aaron Rupar (@atrupar) November 28, 2025

Asked if he’ll attend the funeral of the slain National Guard member from West Virginia, Trump immediately pivots to talking about how popular he is in that state pic.twitter.com/ep3mk34d93

— Aaron Rupar (@atrupar) November 28, 2025

Trump claims he personally redesigned Coast Guard ships because he’s a “looks” person pic.twitter.com/9o7lglZItu

— Aaron Rupar (@atrupar) November 28, 2025

Trump: The whole thing with artificial intelligence. I’ve never liked the word artificial. I don’t know what artificial is. I think they ought to change the name.

I’ve always said that’s a lousy name to have. Artificial anything.
pic.twitter.com/rfAVAACThL

— Republicans against Trump (@RpsAgainstTrump) November 28, 2025

More:

Their paeans to peace are hot air but their intentions are clear:

Three powerful businessmen—two Americans and a Russian—hunched over a laptop in Miami Beach last month, ostensibly to draw up a plan to end Russia’s long and deadly war with Ukraine.

But the full scope of their project went much further, according to people familiar with the talks. They were privately charting a path to bring Russia’s $2 trillion economy in from the cold—with American businesses first in line to beat European competitors to the dividends. 

At his waterfront estate, billionaire developer-turned-special envoy Steve Witkoff was hosting Kirill Dmitriev, head of Russia’s sovereign-wealth fund and Vladimir Putin’s handpicked negotiator, who had largely shaped the document they were revising on the screen. Jared Kushner, the president’s son-in-law, had arrived from his nearby home on an island known as the “Billionaire Bunker.” 

Dmitriev was pushing a plan for U.S. companies to tap the roughly $300 billion of Russian central bank assets, frozen in Europe, for U.S.-Russian investment projects and a U.S.-led reconstruction of Ukraine. U.S. and Russian companies could join to exploit the vast mineral wealth in the Arctic. There were no limits to what two longtime adversaries could achieve, Dmitriev had argued for months: Their rival space industries, which raced one another during the Cold War, could even pursue a joint mission to Mars with Elon Musk’s SpaceX.

For the Kremlin, the Miami talks were the culmination of a strategy, hatched before Trump’s inauguration, to bypass the traditional U.S. national security apparatus and convince the administration to view Russia not as a military threat but as a land of bountiful opportunity, according to Western security officials. By dangling multibillion-dollar rare-earth and energy deals, Moscow could reshape the economic map of Europe—while driving a wedge between America and its traditional allies.

Dmitriev, a Goldman Sachs alumnus, had found receptive partners in Witkoff—Trump’s longtime golfing partner—and Kushner, whose investment fund, Affinity Partners, drew billion-dollar investments from the Arab monarchies whose conflict with Israel he had helped mediate. 

[…]

“Russia has so many vast resources, vast expanses of land,” Witkoff told The Wall Street Journal, describing at length his hopes that Russia, Ukraine and America would all become business partners. “If we do all that, and everybody’s prospering and they’re all a part of it, and there’s upside for everybody, that’s going to naturally be a bulwark against future conflicts there. Because everybody’s thriving.”

I have no idea if Witkoff believes that drivel but it doesn’t matter. He’s going to get his, no matter what. The grift is unprecedented in world history and illustrates that we are now fully in the grip of a global oligarchy with a fascist political arm.

There’s more:

In the days after Alaska, a European intelligence agency distributed a hard-copy report in a manila envelope to some of the continent’s most senior national security officials, who were shocked by the contents: Inside were details of the commercial and economic plans the Trump administration had been pursuing with Russia, including jointly mining rare earths in the Arctic. 

Witkoff has worked closely with Vice President JD Vance and Secretary of State Marco Rubio. But Trump’s special envoy for Ukraine, former Lt. Gen. Keith Kellogg, has been all but frozen out of serious talks, and last week said he is leaving the government.

To understand the story behind the administration’s Russia negotiations, The Wall Street Journal spoke to dozens of officials, diplomats, and former and current intelligence officers from the U.S., Russia and Europe, and American lobbyists and investors close to the administration. The picture that emerges is a remarkable story of business leaders working outside the traditional lines of diplomacy to cement a peace agreement with business deals.

Don’t worry MAGA. I’m sure you’ll benefit from all this too. Maybe you’ll get to keep social security and Medicare, which is really generous. Kind of like Ukraine getting to keep Kiev.

Major energy investors are in on the deal, meeting with Russian state owned energy companies with quite a few Trump donors at the head of the line. Natch.

Puck’s Julia Ioffe goes into the last week or so’s chaotic 28-point plan talks, pointing out just how inept these Masters of the Universe actually are:

In Washington—at least among the bipartisan crowd that, like most Americans, still backs Ukraine—people are alarmed. One foreign-policy insider pointed out that Ukraine, which is now arguing over a 600,000-troop limit on its military, “has been forced to negotiate against itself and make preemptive concessions.”

Others are simply confused. “Has there been anything else since this morning?” said Rep. Don Bacon, Republican of Nebraska, given the sundry peace plan drafts in circulation. Still, Bacon told me, what he had read most recently was an improvement over the original leaked draft. “It’s disgraceful that the U.S. would submit a proposal to give up Ukrainian territory and give up Ukrainian sovereignty,” he said. “It angered me to no end. And it embarrasses me as a Republican.” Bacon viewed the original 28-point plan as “Witkoff run amok,” and was reassured that Rubio seemed to be caught off guard by it as well. “I trust him,” he said. “I don’t think he’d give away the store.”

Bacon believes that the U.S. isn’t effectively using its leverage. After all, Trump could be sending Ukraine more weapons and dialing up the sanctions on Russia, then pushing for bigger concessions from the Russians. In short, Bacon said, Trump could be telling Putin, “If you want territory, let them into NATO. If not, then leave Ukrainian territory. Tough, but that’s the choice!” And the United States could insist on it.

“I don’t want Neville Chamberlain’s name in the same sentence as the president’s in the history books,” Bacon continued. “That’s where we were headed Thursday. And I told that to the White House.” Asked how the White House responded, Bacon said, “They say it’s just negotiating.”

Speaking of Neville Chamberlain, at least he was genuinely idealistic, if cripplingly naive, about the need for peace at all costs. “Peace” is obviously just Trump’s schtick in order to get a prize he can display proudly down at Mar-a-lago with his various golf championships he “won” at his golf courses. The big score is all the money he’ll make for Javanka and the boys along with his good buddies like Lutnick and Witkoff.

Trump knows about nothing but his daddy’s real estate business and licensing deals for cheap ties and nasty perfume. The crypto stuff he’s into now is way beyond his Ken. Because of his personality defect, limited bandwidth and sociopathic tendencies he does not have the capacity to understand anything more complicated and this term his henchmen have validated his belief that he can run the entire world through this myopic little worldview. It’s unleashed this global oligarchy that is going to lead to catastrophe. Ioffe adds:

Why would that be???

I assume it could be stopped with a strong pushback from political actors, perhaps competition with other global actors, and the clear ineptitude of these people who believe they are much more intelligent and competent than they really are. But I don’t have a lot of faith that it will. This really feels like a runaway train right now and I have no idea where it ends up.

I think it might be a good idea to re-read “The March of Folly.” There’s also a movie on Netflix right now that’s pertinent, called “Munich, The Edge of War” with Jeremy Irons as Neville Chamberlain. As I said, at least he was genuinely idealistic. Trump is just a greedy moron surrounded by fascists and oligarchs. Sadly, I suspect the motives don’t much matter in the end. The people who seek world domination will use any advantage they have.

 President Donald Trump’s job approval rating has fallen five percentage points to 36%, the lowest of his second term, while disapproval has risen to 60%. The latest decline follows three months of stability, with 40% to 41% of Americans expressing approval of his handling of the presidency. His prior second-term low point in approval was a statistically similar 37% in July, and his all-time low was 34% in 2021, at the end of his first term after the Jan. 6 attack on the Capitol.

Both Republicans’ and independents’ ratings of Trump have worsened significantly since last month. Republicans’ approval has fallen seven points to 84%, while independents’ has slipped eight points to 25%. Republicans’ rating is the lowest of Trump’s second term, while independents’ is the worst in either term. Trump’s prior low point among independents, 29%, was last recorded in July and, prior to that, was only seen once before, in August 2017.

Meanwhile, Democrats’ rating of the president remains mired in the low single digits (3%).

And yest he is undeterred.

This is literally insane

How’s the White House’s supply of antacids holding up?

Trump to pardon ex-Honduras president convicted of drug trafficking

Donald Trump has said that he will pardon the former president of Honduras, Juan Orlando Hernández, who was convicted of drug trafficking charges in a US court last year.

The US president said Hernández had been “treated very harshly and unfairly” in a social media post announcing the move on Friday.

Hernández was found guilty in March 2024 of conspiring to import cocaine into the US, and of possessing machine guns. He was sentenced to 45 years in prison.

Senate committee vows ‘vigorous oversight’ in killing of boat strike survivors

The head of the Republican-led Senate Armed Services Committee has pledged “vigorous oversight” after a Washington Post report that Defense Secretary Pete Hegseth gave a spoken order to kill all crew members during the first U.S. strike against suspected drug smugglers in the Caribbean earlier this year.

A live drone feed showed two survivors from the original crew of 11 clinging to the wreckage of their boat following the initial missile attack on Sept. 2, The Post reported on Friday afternoon. The Special Operations commander overseeing the operation then ordered a second strike to comply with Hegseth’s directive, according to two people with direct knowledge of the operation, killing both survivors. Those people, along with five others in the original report, spoke on the condition of anonymity because of the matter’s sensitivity.

LIVE: Donald Trump says Venezuela airspace now closed as tensions surge

• US President Donald Trump declares the airspace above and surrounding Venezuela should be considered “closed in its entirety” in the latest escalation of tensions between the two countries.
• The US president’s statement comes as Trump’s administration piles pressure on Venezuela with a major military deployment in the Caribbean that includes the world’s largest aircraft carrier.

He really wants that Nobel Peace Prize, doesn’t he? Somebody get the net!

If you’re more upset about Democrats reminding members of the military NOT to commit war crimes than you are about Republicans using the military TO commit war crimes, then congratulations, because you are an idiot, an asshole, and you’re in a fucking cult.

— JoJoFromJerz (@jojofromjerz.bsky.social) 2025-11-29T13:25:40.171Z

* * * * *

Is this a private fight, or can anyone join?

No King’s One Million Rising movement 
50501 
May Day Strong
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Indivisible: A Guide to Democracy on the Brink 
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Thirty lonely but beautiful actions
Attending a Protest Surveillance Self-Defense

It is if you were naturalized

Pod Save America’s Jon Favreau on Friday spent more time on Friday on one item I mentioned in passing from Donald Trump’s Thanksgiving night rants: denaturalization.

Favreau tweeted:

People aren’t focused enough on the word “denaturalize” here

The President says that he will revoke the *citizenship* of Americans who weren’t born here if he and @StephenM determine decide they need to go.

Denaturalization is a rare and legally difficult process that Miller and white nationalists like Nick Fuentes have been pushing to “supercharge” the process for years now.

But as Trump makes clear by citing the number 53 million – which includes foreign-born CITIZENS – any American who wasn’t born here is now, at least in the eyes of the government, at risk of deportation.

Xenophobia on steroids

Yes, Trump, Stephen Miller, and their Project 2025 accomplices want to “adjust” the U.S. population through mass deportations. They mean to keep the “wrong” people from diluting the political strength of the shrinking white-Christian majority. Mark Steyn’s “It’s the Demography, Stupid” sounded this alarm in the Wall Street Journal back in 2006. He wrote of how the Muslim birthrate in Europe threatened western civilization and let white-Christian America read between the lines for what demographic change would mean here.

As slippery slopes go, this one is motor oil on teflon. America was still in its post-September 11 moral panic over Islam in 2006. Mexicans and other brown-skinned immigrants were only temporarily eclipsed as the demographic bogeymen. Not to worry, Lou Dobbs was already mentioning illegal immigration in most of his shows, backed up on Fox News by Bill O’Reilly and by Glenn Beck on CNN. Xenophobia had an audience among Real Americans™.

Trump began his first term trying to ban Muslim visitors and immigrants from the U.S. He has since taken his xenophobia beyond brown-skinned Latinos and Muslims. The gilded fan of racehorse theory now want so declare any non-native-born Americans not to be real citizens. (Tough break for Ted Cruz, notes one X user.) Trump means to ethnically cleanse the country of them too:

Trump declared his intent to “remove anyone who is not a net asset to the United States” (including the stray European), to “denaturalize migrants who undermine domestic tranquility,” and to “deport any foreign national who is a public charge, security risk, or non-compatible” with Western (read: white) civilization. Trump declared a program of “REVERSE MIGRATION” (read: ethnic cleansing).

Ron Brownstein adds (brackets mine):

Per @pewresearch 46% of US foreign born are naturalized citizens. They are 13% of workforce & per @AP Votecast were 7% of voters (which would translate into 11 [million] voters) Trump not only threatens to denaturalize them but says they’re mostly on welfare or criminals, mentally ill

This represents a kind of “patriotic” fundamentalism. (It’s not enough for Christian fundies that you accept Jesus as your savior. If you don’t subscribe to their sect’s particular set of beliefs, you go to hell on a technicality, heathen.) Trump not only wants to eliminate the birthright citizenship guarantee in “All persons born or naturalized in the United States,” he now wants to eliminate the naturalized part as well. Under Trump and Miller, America will be purged and purified.

Give them time and they’ll try to abolish the 15th Amendment too.

* * * * *

Is this a private fight, or can anyone join?

No King’s One Million Rising movement 
50501 
May Day Strong
Freedom Over Fascism Toolkit
The Resistance Lab
Choose Democracy
Indivisible: A Guide to Democracy on the Brink 
You Have Power
Chop Wood, Carry Water
Thirty lonely but beautiful actions
Attending a Protest Surveillance Self-Defense

Thanksgiving at the zoo. It’s all about the feast.

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Who needs reality?

I guess I’m glad to hear that we are not the only country in the grips of irrationality:

When Shabana Mahmood, Britain’s Home Secretary, announced restrictive new measures last week aimed at cracking down on legal immigration, she used dire language to bolster her case.

“The pace and scale of migration in this country has been destabilizing,” she said in a speech to Parliament. She warned of “unprecedented levels of migration in recent years” and vowed that with her new policies: “That will now change.”

In fact, it already has.

Official data released Thursday showed that net migration to Britain fell sharply in the 12 months leading up to June, to 204,000 people, down from the previous year’s total of 649,000.

Those numbers continue a downward trend in Britain. Net migration — the number of people who arrived, minus the number of people who left — almost halved in 2024, the result of tougher rules announced at the end of the previous Conservative government, and of changes in global migration patterns.

Overall, net migration to Britain has now plunged by almost 80 percent since its peak of nearly a million people in 2023.

I guess it takes a while for change to sink in. But the result is that everyone reacting to something that’s already over and the policies are counterproductive. The UK may end up getting that clown Nigel Farage as a PM which is almost as bad as electing Trump.

I feel sick:

The longer the U.S. surveillance aircraftfollowed the boat, the more confident intelligenceanalysts watching from command centers became that the 11 people on board were ferrying drugs. Defense Secretary Pete Hegseth gave a spoken directive,according to two people with direct knowledge of the operation. “The order was to kill everybody,” one of them said.

A missile screamed off the Trinidad coast, striking the vessel and igniting a blaze from bow to stern. For minutes, commanders watched the boat burning on a live drone feed. As the smoke cleared, they got a jolt: Two survivors were clinging to the smoldering wreck.

The Special Operations commander overseeing the Sept. 2 attack — the opening salvo in the Trump administration’s war on suspected drug traffickers in the Western Hemisphere — ordered a second strike to comply with Hegseth’s instructions, two people familiar with the matter said. The two men were blown apart in the water.

Hegseth’s order, which has not been previously reported, adds another dimension to the campaign against suspected drug traffickers. Some current and former U.S. officials and law-of-war experts have said that the Pentagon’s lethal campaign — which has killed more than 80 people to date — is unlawful and may expose those most directly involved to future prosecution.

The alleged traffickers pose no imminent threat of attack against the United States and are not, as the Trump administration has tried to argue, in an “armed conflict” with the U.S., these officials and experts say. Because there is no legitimate war between the two sides, killing any ofthe men in the boats “amounts to murder,” said Todd Huntley, a former military lawyer who advised Special Operations forces for seven years at the height of the U.S. counterterrorism campaign.

Even if the U.S. were at war with the traffickers, an order to kill all the boat’s occupants if they were no longer able to fight “would in essence be an order to show no quarter, which would be a war crime,” said Huntley, now director of the national security law program at Georgetown Law.

Hegseth has always been a huge fan of war crimes. He’s the guy who persuaded Trump to pardon war criminals in his first term. (He did it eagerly.)

I guess enough Americans think murderous sociopaths are fine leaders as long as they don’t have to pay a few more cents for eggs that they wanted to put them back in power. No one should be surprised by any of this.

We’ve never been perfect, far from it. Slavery, Jim Crow, all of it should have been a clue. But I think we’re seeing now that it’s such an indelible part of our national character that any progress we think we have made will be erased once we get a taste of blood. And we are so powerful now that I wonder if the only answer will be for the entire world to band together in opposition. That possibility seems very remote right now.

The American people can stop it. But it’s going to take courage and commitment similar to what the original revolutionaries mustered to extricate themselves from their king. They’ll have to see that there’s even more at stake than “affordability.” I’m still hopeful that they will. What choice do we have?

The old fashioned kind

Paul Krugman says it’s time to sober up:

On Sept. 15, 2008 Lehman Brothers failed. Within weeks the whole U.S. financial system was caught in the downward spiral of a massive bank run, on a scale not seen since the 1930s. Yet there was an important difference from the 1930s bank runs: in 2008, the panic mainly resulted in flight from “shadow banks,” nonbank institutions that performed bank-like functions. Conventional banks were largely immune from the 2008 panic because deposit insurance and federal regulations – a consequence of the 1930s bank runs – protected them.

While the U.S. economy was already in recession when Lehman fell, the financial crisis pushed it off a cliff into a deep recession. Despite frantic efforts to stabilize the financial markets, including large bailouts and huge lending by the Federal Reserve, America lost 6 million jobs in the year following Lehman’s fall. Total employment didn’t return to pre-recession levels until 2014. The share of prime-working-age adults with jobs remained depressed until the late 2010s:

The clear lesson of 2008 is that effective financial regulation is essential. For three generations after the great bank runs of 1930-31, America avoided “systemic” banking crises — crises that threaten the whole financial system, as opposed to individual institutions. This era, which Yale’s Gary Gorton calls the Quiet Period, was the result of New-Deal-era protections — especially deposit insurance — and regulations that limited banks’ risk-taking.

But post 1980, finance was increasingly deregulated. In particular, the government failed to extend bank-type regulation to shadow banks that posed systemic bank-type risks. And the crisis came.

In a way, the laxity that made the 2008 crisis possible was understandable. By the 2000s nobody in government or the financial markets remembered what a real financial crisis was like. And no, watching “It’s a Wonderful Life” on Christmas Day doesn’t count.

But here we are in 2025, and 2008 wasn’t that long ago. Many of us still have vivid memories of the gut-wrenching panic that gripped the world when Lehman fell. Yet Donald Trump’s allies and cronies are now moving rapidly to dismantle the precautionary regulations introduced after 2008 to reduce the risk of future financial crises. I say “allies and cronies” advisedly. There’s no indication that Trump himself has any idea what’s happening on his watch. But key players in Congress, within the administration, and, alas, at the Federal Reserve, are apparently determined to make a 2008 rerun possible.

The MAGA war on financial stability is being waged largely on two fronts. First, there’s an ongoing effort within some parts of the Federal Reserve to drastically weaken bank supervision — oversight of banks to prevent them from taking risks that could threaten the financial system.

The Fed has multiple roles: in addition to setting interest rates, it also has primary responsibility for bank supervision.

The Fed is supposed to be quasi-independent, and so far it has preserved its interest-rate-setting independence in the face of intense pressure by Trump to cut rates. Yet a Trumpian agenda is attempting to overtake the Fed’s bank supervision operations. In June, Michelle Bowman, a Trump appointee, became the Fed’s vice-chair of supervision. She is in the process of reducing staffing at the Fed’s supervisory and regulatory unit by 30 percent, while hiring new staffers drawn from the banking industry.

Bowman is expected to substantially loosen capital requirements. Capital requirements – requirements that a bank’s shareholders put a significant amount of their own money at risk to fund loans, and not just depositors’ money – are a critical component of reducing risk throughout the banking sector. Bowman has also sent out a memo sharply curtailing the ability of Fed staff to issue warnings about what they consider risky bank practices.

While it’s impossible to predict the precise effect of any of these moves, Bowman’s actions will clearly increase the banking industry’s profits in the short run while increasing the risk of another financial crisis – a risk that will inevitably fall on taxpayers’ shoulders, as they did in 2008.

The second front of MAGA’s war on financial stability is on behalf of the crypto industry. The Trump administration and its allies in Congress — including, I’m sorry to say, a number of Democrats in this case — are moving to promote wider use of crypto. In particular, the GENIUS Act (gag me with an acronym), passed in July, aims to promote stablecoins. And the fact is that stablecoins are effectively an alternative, weakly regulated and poorly supervised form of banking.

What are stablecoins? They’re privately issued tokens supposedly fixed in value at one dollar. They are, in effect, sort of a digital version of the bank notes that circulated during America’s private banking era in the 19^thcentury — an era in which gold coins were the only official U.S. currency, with paper money consisting of notes issued by private banks that promised to redeem these notes for gold or silver on demand. The most famous of these bank notes was the $10 “Dix” note issued by the Citizens’ Bank of Louisiana, which may have given the South its nickname:

Private banking had many serious problems: private banks frequently collapsed, thereby losing depositors’ money. Without effective government supervision, private banks could issue notes without the resources to honor their promise to redeem those notes on demand. Indeed, there was a proliferation of “wildcat banking” — establishing banks in remote locations “where the wildcats roamed,” thus making it difficult for noteholders to present their notes for redemption.

How do stablecoins compare with 19^th century private banking? One fact rarely mentioned about the stablecoin industry is that it’s dominated by two big issuers, Tether and USDC, with the rest consisting of a grab-bag of minor coins that collectively are much smaller than either:

Source

Tether has attracted the most scrutiny, in large part because it has, as The Economist puts it, become “money launderers’ dream currency.”

Leaving aside its role in facilitating global crime and viewing it as in effect a bank, how sound is Tether? On Wednesday S&P Global Ratings issued a scathing report, questioning the quality of Tether’s assets and noting that the company is highly secretive, giving outsiders no good way to assess its claims to be financially stable.

But aren’t government regulators keeping an eye on Tether? Um, no. Tether isn’t a U.S. company. It’s headquartered in and overseen by El Salvador, whose authoritarian ruler Nayib Bukele is best known in financial circles for his expensive, failing attempt to force Salvadorans to use Bitcoin as currency. El Salvador’s prudential guidelines for Tether are very lax, and how much faith do we have that even these weak rules are being enforced?

How did Tether respond to S&P’s assessment? With conspiracy theories, accusing S&P of being a tool of the “traditional finance propaganda machine.”

In short, as far as I can tell, Tether is a 21^st century version of a wildcat bank, issuing tokens while deliberately making it hard for anyone to know whether it has the resources to honor them. And it’s not an outlier — it’s most of the industry.

Does Tether satisfy the rules of the GENIUS Act? No. This means that in principle, once the act is fully implemented, Tether won’t be able to issue its coins in the United States. The company has floated the idea of issuing a separate coin that does obey GENIUS rules, but that hasn’t happened yet.

Maybe other stablecoins will emerge that do honor U.S. rules. But there are worrisome loopholes in those rules that are likely to make stablecoins risky. And anyway, with resources and staff for financial supervision being slashed, how will these rules be enforced? A special source of concern is the worry that stablecoins will draw money out of conventional bank deposits into institutions that will, at best, be less well regulated.

Why are Trump and his allies undermining financial stability? There may be an element of free-market dogma. But as always with this administration, you shouldn’t underestimate the importance of simple corruption. Tether is closely connected with the financial firm Cantor Fitzgerald, formerly run by Howard Lutnick, Trump’s secretary of commerce. On joining the government, Lutnick left his role at Cantor Fitzgerald — and handed it over to his sons.

This post is already long, so I’ll stop with a warning: Along with its many other sins, the Trump administration is doing its best to make a future financial crisis more likely. I hope the Democrats are paying attention and won’t let themselves be seduced by Wall Street and, worse, the blandishments of the crypto bros. Because if they don’t, they could set themselves for a 2008-type crash during a Democratic administration. And we can guess who will get the blame.

It’s the corruption. We are awash in it and it’s getting worse every day.