The Capital Letter

Treasurys Tremble

JPMorgan CEO Jamie Dimon in 2019 (Jeenah Moon/Reuters)
The week of March 8: bond worries, Biden’s binge, the cult of asceticism, and much, much more.

In a Capital Note last week, I wrote about the debate over inflation (coming or not?). With the minor exception of a $1.9 trillion spending package now passed into law, not much has changed since then, other than the fact that there will be more days when markets focus on inflation risk. Friday was one of those days.

The Financial Times (late morning, Friday):

A “storm” swept through the US government bond market on Friday, sending a key measure of long-term borrowing costs to the highest level since last February.

Treasuries dropped in overnight trading after a large sale of long-dated bond futures in Asia, according to people familiar with the matter. Yields on the benchmark 10-year note, a key marker across global asset markets, jumped to 1.63 per cent, having traded around 1.53 per cent the day before.

Analysts said the scale of the move underscored how jittery the $21tn market had become against the backdrop of a more robust economic rebound. Treasuries are the biggest and deepest market in the world, something that typically insulates it from sharp rises and falls in prices.

Treasuries have been under pressure since the start of the year, as investors anticipate higher inflation and growth in the coming months following another enormous injection of fiscal stimulus with the passage of the Biden administration’s latest package.

It is hard to deny that some anxiety over inflation is called for. With rates as low (in absolute terms) as they are, and with government debt so high, it is not as if there is much margin for error for bondholders. Back in December, Jamie Dimon, the CEO of JPMorgan Chase, commented that he would not touch Treasurys at the rates that then prevailed “with a ten-foot pole.” While this was hyperbole (as CNBC pointed out, “a lending institution with $3.2 trillion in assets, JPMorgan has to continually purchase Treasurys and other low-yielding investments to earn a spread, a fact that Dimon acknowledged”), the point he was trying to make was a fair one.

Since then, the yield on the ten-year has risen sharply in relative terms (when Dimon spoke, it was yielding around 0.9 percent, against 1.63 percent at the time of writing on Friday), but in absolute terms, meh.

Let’s put it another (and wildly over-simplified, yet not) way. Would you lend money to Uncle Sam for ten years at that rate? Would you feel well rewarded for the risk that you were taking? The question, I think, answers itself.

In an article for the FT earlier this week, Thushka Maharaj, global multi-asset strategist at, well, JPMorgan Asset Management, notes that, “after taking into account inflation, real 10-year yields remain deeply negative,” and observes how low nominal rates leave little room for maneuver: “As a result, the extent to which they can move lower and provide protection in times of stress is limited.”

What is more:

The policy mix is changing. Fiscal policy is being used more actively to stimulate growth and monetary policy is prioritising higher average inflation expectations. This implicitly imposes a floor for bond yields.

In short, stronger economic growth sparked by unprecedented stimulus or the return of inflation, will eventually lead to a pullback in liquidity support from central banks. Investors today, perhaps, are preoccupied with the risk that the economic recovery is too sharp, rather than not sharp enough. That is a fear that is not well hedged by a large allocation to sovereign bonds.

Indeed not, and that is even more the case in the euro zone where any recovery looks set to lag that in the U.S. by quite some while, not least thanks to the mess that the EU has made of COVID-19-vaccine procurement and rollout. Meanwhile, the European Central Bank’s interest-rate policy is forever mired in the contradictions of a monetary union that should never have been born, something at which we will again be taking another look before too long.

In the meantime, those interested (and who are able to peer behind the Daily Telegraph’s paywall) should read Ambrose Evans-Pritchard’s latest article. Evans-Pritchard is not always the calmest columnist there is, but it is hard to push back against his argument that rising yields in the U.S. may well cause problems for the ECB (led by Christine Lagarde, a central bank president with no central-banking experience). Lagarde is being forced into a tricky balancing act. On the one hand, a number of the euro zone’s “northern” milch cows would have little objection to higher rates. On the other hand, at least one of the currency union’s southern laggards might find itself a touch squeezed if it had to pay them.

Oh yes, as Evans-Pritchard points out, the ECB’s balance sheet has already ballooned to 71 percent of GDP — twice the levels of that of the U.S. Federal Reserve.


Fear of a German and north European backlash is visibly constraining the ECB. It partly explains why the bank’s decision on Thursday to counter US bond market contagion with more QE pledges degenerated into incoherence, prompting a blizzard of criticism from analysts and veteran ECB-watchers.

“The outcome of the governing council meeting does not, in our view, bring any meaningful clarity to what the ECB policy is, in theory or in practice,” said Citigroup.

You can see the statement after the Governing Council meeting here. And here’s an account of the press conference that followed. Enjoy!


Lagarde contradicted herself. She said the ECB is trying to control financial conditions (to ease stress) but is definitely not pursuing “yield curve control”. Citigroup said these two concepts are “substantially the same thing”, so what is she talking about?

“It’s not QE, it’s not yield curve control, so what is it?” asked Ruben Segura-Cayuela and Evelyn Herrmann from Bank of America. “We now have more doubts about the ECB’s reaction function than we did before. Do they target prices? Do they target quantities? Both? None? The compromise today leaves us nowhere.”

The ECB’s pledge did succeed in lowering bond yields for a few hours, but the effect has mostly dissipated. Bund yields are higher than they were before the announcement.

Bank of America said the EU had inadvertently created a cliff-edge that will be tested by markets and could make matters worse: “We worry beyond the next few months. At a time when a long-term commitment is needed, the ECB has shortened the guidance to one quarter.”

Pimco called it a “muddle-through compromise of a highly-divided governing council”. Axa’s Apolline Menut tried to be polite: “ECB will have to get lucky, as they are not targeting quantities and they are not targeting prices either.”

What it reflects is intellectual chaos at a split institution that no longer knows what it is trying to do. All the while, the external threat builds. Yield contagion and imported monetary tightening from the US is only going to get worse this year.

Looking at it from a purely selfish American perspective, perceptions of trouble in the euro zone might increase demand for Treasurys, as, among the safe havens, the U.S. is still seen as the healthiest horse in the glue factory, so there is that.

This might come in handy, not least, possibly, in the very short term if a short-term break given to the banks last March is allowed to expire.

The FT:

Investors are also on edge about the potential for a regulatory change at the end of the month that may hamper Treasury market functioning, with Scott Thiel, chief fixed-income strategist at BlackRock calling it a “significant factor” contributing to the recent volatility.

At the height of the coronavirus-induced financial ructions last year, US regulators introduced a temporary rule change that allowed banks to exclude Treasuries and cash reserves when calculating how much additional capital they need to hold. The aim, in part, was to encourage banks to step in more forcefully to stabilise whipsawing markets without worrying about balance sheet constraints.

The exemption is set to expire at the end of the month, and analysts warn a failure to extend it could magnify the problems in the Treasury market, especially given the sheer size of the supply set to flood the market this year in order to fund the record-sized stimulus programmes passed to support the economic recovery.

“If the rule is not extended, it is certainly possible, maybe even probable, that illiquidity returns to the Treasury market,” said Kelcie Gerson, an interest rate strategist at Morgan Stanley.

The rule should be extended. Some say that this is an irrelevance (I don’t agree), but even risking a rerun of last March’s shambles in the Treasury market would be unwise at this point, even if it could give banker-bashers on the populist left (Hullo, Senator Warren!) a potentially useful talking point.

Bloomberg’s Brian Chappatta details the issues involved in an excellent article here. The whole thing is well worth reading, but some key extracts:

As a way to push banks to help the country get through the Covid-19 pandemic, regulators allowed them to temporarily exclude U.S. Treasuries and deposits at the Federal Reserve from the SLR denominator because they are the closest thing to risk-free assets. In addition to helping banks continue to take deposits and lend during the health crisis, it also served to ensure they would help backstop the unprecedented fiscal and monetary policy support that flooded the financial system with cash . . .

The Fed has been unusually silent about the SLR’s fate ahead of its policy decision next week . . .

Some background:

First, it’s important to understand the mechanics behind the Fed’s bond-buying program. When it purchases Treasuries from a money manager, those securities become an asset on the central bank’s balance sheet. The seller will deposit the cash it received at a bank, which, left as reserves at the Fed, is an asset for that bank and a liability for the Fed. In other words, quantitative easing boosts the asset levels of U.S. banks, which, in turn, means they need to hold more capital.

There’s nothing wrong with the Fed, as a regulator, requiring that banks maintain adequate capital to avoid another financial crisis. But it’s a hard sell when the Fed, as the nation’s monetary policy authority, is forcibly increasing the asset base. This kind of internal struggle explains why the SLR [Supplementary Leverage Ratio] exemption was put in place; it’s anyone’s guess what might have happened without it as the Fed expanded its balance sheet by almost $3 trillion in three months.

So, what to do? At first glance, the easy answer seems to be to just extend the SLR exemptions for Treasuries and reserves to avoid disrupting this market plumbing. By some measures, this break allowed banks to expand their balance sheets by as much as $600 billion — why mess with that? However, the Fed created its own political problem by loosening its restrictions on banks’ cash distributions, which had been put in place after the pandemic. Banks are now buying back stock and distributing capital to shareholders, or, in SLR terms, willfully reducing their numerator. It stands to reason, then, that they could afford to have the denominator return to its usual form.

This is the argument from Democratic Senators Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio . . .

That, I suppose, depends on how those numbers pan out, but even then, there is the issue of the banks being “forced” to increase their asset base.

Please note this:

Dimon, for his part, raised the specter of having to turn away deposits at some point without SLR relief during the bank’s earnings call in January, which would obviously be quite a drastic business decision.


To Cabana [Mark Cabana, head of U.S. rates strategy at Bank of America], the recent angst over the SLR extension has less to do with the actual mechanics and is more about the rapid increase in Treasury yields over the past two months, which happened to coincide with the expiring exemption. “What all of this indicates to me is there’s heightened sensitivity over where Treasury demand is going to come from and whether Treasury rates can remain here,” he said. “Because there’s a lot of debt out there, and it’s only going to keep growing.”

Just the time to spend $1.9 trillion.

On a brighter note, the Dow Jones Industrial and the S&P 500 closed up on Friday. The NASDAQ composite was off a little. GameStop (no note can pass without a mention of GameStop) was up around 1.73 percent on the day and closed at $264.50, compared with its close on March 5 of $137.74, and an intra-day peak of $295.50.

All is well.

The Capital Record
We recently launched a new series of podcasts, the Capital Record. Follow the link to see how to subscribe (it’s free!). The Capital Record, which will appear weekly, is designed to make use of another medium to deliver Capital Matters’ defense of free markets. Financier and NRI trustee David L. Bahnsen hosts discussions on economics and finance in this National Review Capital Matters podcast, sponsored by National Review Institute. Episodes feature interviews with thenation’s top business leaders, entrepreneurs, investment professionals, and financial commentators.

In the eighth episode, David Bahnsen (joined by himself and himself alone this week) examined the $1.9 trillion stimulus bill, looking at what it means to markets, to national debt, to economic growth, and more.

And the Capital Matters week that was . . .
The week began, gloomily as always, on this occasion with Wayne Crews looking at “the hidden tax of regulation”, and how the Biden administration seems set on increasing it.

The Swamp floats thousands of other rafts, too. These are the guidance documents, memoranda, interpretative bulletins, circulars, letters, and various other kinds of “regulatory dark matter” that spew from agencies, that, while not law, add to federal regulatory-compliance burdens.

In addition to striking one-in, two-out, Biden eliminated a Trump executive order requiring that these myriad proclamations be made readily available to the public . . .

There is some time to correct course, if Congress takes note. As part of his order, Trump also directed executive agencies to issue a final rule on guidance — we’ve taken to calling them “FROGs” — and specifically to set up internal procedures for their creation and posting. Thirty agencies issued FROGs, all of which provided for searchable disclosures, by the time Biden took office.

Since these “rules on rules” are part of the Code of Federal Regulations, Biden cannot strike them out with his pen as he did the underlying Trump order. Nonetheless, Biden has directed agencies to “promptly take steps to rescind any orders, rules, regulations, guidelines, or policies, or portions thereof, implementing or enforcing” the Trump orders that he rescinded.

When asked at a briefing why President Biden rescinded an order aimed at transparency, White House press secretary Jen Psaki ducked and accused the Trump White House of erecting “unnecessary hurdles and cumbersome processes for agencies.” That is a clear signal that the Biden White House prioritizes the convenience of bureaucrats over the public’s right to know about the rules they are being told to follow.

Of course it does.

In the next in our Supply & Demand series, John Cochrane asked whether the Fed’s monetary policy threatens inflation:

By conventional measures, yes. But those conventional measures have failed in the past. I believe that the short-run danger is less than it appears, but the long-run danger is larger . . .

Brainard, like other Fed officials, speaks of “anchored” inflation expectations. Anchored by what? Are expectations an anchor, or a balloon in a temporarily windless sky? Given the number of words coming out of the Fed on this long-run strategy, perhaps they believe inflation expectations are anchored by great speeches. So did their predecessors in the 1970s, culminating in President Ford’s ludicrous Whip Inflation Now (“WIN”) buttons.

Anchoring is important. If people do not expect inflation to continue, when they eventually see some of it, they treat it as a transitory blip and do not build inflation into the prices they charge or are willing to pay, the wages they offer or demand, and the prices of assets they buy and sell. Once people expect inflation in the future, we have inflation now.

There is only one “anchoring” that makes sense: anchoring by actions. People must believe that if inflation got out of hand, the Fed would quickly do what it takes to bring it back. If that means reliving the awful recessions of 1980–1982, people must believe the Fed would do it. Today, anchored expectations depend on fiscal policy as well. People must believe that if inflation were to break out, the federal government would swiftly retrench, stop spreading money around like fertilizer, and put its house in order with a tax and entitlement reform.

Indeed, Brainard writes, “If, in the future, inflation rises immoderately or persistently above target, and there is evidence that longer-term inflation expectations are moving above our longer-run goal, I would not hesitate to act and believe we have the tools to carefully guide inflation down to target.” It matters that people believe this, even if the actions cause immense short-term pain. Do people still believe the Fed has that will? Do people believe that the Treasury Department and Congress have the parallel will to take fiscal steps to contain inflation if it should come?

Does the Fed really have the tools to do it? I am doubtful. For ten years, interest rates were zero. (Interest rates were either too high or too low, depending on your view of things, but stuck at zero in any case.) For ten years, the Fed ran massive quantitative easing after quantitative easing. Inflation just sailed along slightly below 2 percent. This episode suggests the Fed has a lot less power than it thinks. But that is also a cheery view, as if the Fed’s interest-rate and bond-purchase tools are relatively powerless, then not much of what the Fed is doing will cause inflation either. In the current economy, fiscal policy and fiscal anchoring seem the greater danger to inflation than even the monetary mistakes of the 1970s.

Veronique de Rugy cast a skeptical eye over the administration’s climate policies, focusing on the role of the Ex-Im Bank:

At the end of January, President Biden issued an executive order to combat climate change. The whole thing is what you’d expect from this administration. The EO is lots of signaling to the climate crowd, and it will likely offer fertile grounds for government failures and nasty unintended consequences . . .

In the end, I predict that all we are likely to get from this EO is bad climate policies such as subsidies to well-connected green companies (see the 1705 loan program) and measures to destroy the domestic oil and gas industries while Ex-Im will continue to subsidize corrupt PEMEX. It’s messed up.

Veronique returned to the topic of the administration’s greenery a few days later and explained that more contradiction and confusion was going to be added to a situation where both flourish already:

On Tuesday, I mentioned that it is likely that the Biden administration will continue misguided green policies pursued by other Democrats of heavy green subsidies and attacks on gas and oil industries, all the while the federal government will continue to subsidize state-owned and private oil and gas companies abroad.

Today, I came across this video from this brand new company Kite & Key Media, which touches on the internal conflict of the U.S. green-energy policy. This video, which is their first, is about such minerals as graphite, lithium, or manganese that are needed to produce many of the modern life products we love as well as several of the “green products” that environmentalists are so fond of.

As the video narrator explains “the greener we try to be, the more mining it requires.”

The Biden administration has made it clear that it will force more green energy on the U.S. through the regulatory process. In doing so, it will also both be making it harder to mine these minerals here at home and it will increase the amount of mining we buy from these less than environmentally friendly countries. That, of course, will happen all the while the administration continues to insist on idiotic “made in America” requirements and to demand repatriation of our supply chains in the name of propping up manufacturing jobs and national security . . .

Good times.

Michelle Minton highlighted yet another counter-productive move by Congress (in this case, the last one):

Amid the economic devastation caused by COVID-19, one industry has actually thrived: the cigarette business. Some people are smoking to relieve the emotional and economic stress of lockdowns. But many others returned to smoking when the lower-risk options they relied on, such as nicotine vapor products, became too expensive or hard to find when compared with the combustible tobacco available at every gas station and corner store. Now, Congress wants to eliminate the ability for adults to receive e-cigarettes by mail, a measure that will reduce access to these life-saving options even after the lockdowns end.

Buried within the omnibus spending bill passed at the end of last year was the “Preventing Online Sales of E-Cigarettes to Children Act.” The Act, colloquially called the “vape mail ban,” prohibits the U.S. Postal Service (USPS) from delivering nicotine or cannabis vaping products. One might think that e-cigarette makers could simply switch to private carriers, such as FedEx or UPS. But these private carriers don’t deliver to all addresses, particularly in rural areas. Private carriers actually rely on USPS to make “last mile” deliveries. Even if private carriers did deliver everywhere in the U.S., most — including FedEx, UPS, and DHL — have yielded to the anti-vaping mob, voluntarily ending e-cigarette deliveries . . .

Robert VerBruggen wasn’t too sure about the polling on the Democrats’ expanded child tax credits:

The Democrats’ COVID bill will send a lot of money to most parents — $3,600 for each kid under six, plus $3,000 for older kids up to age 17 — for the next year, the plan being to make it permanent in the future. This is controversial not only because it’s big new federal spending, but also because the money goes to parents regardless of whether they’re working. Skeptics say this basically brings back the pre-reform welfare system.

A lot of liberals have convinced themselves this policy will be a huge hit. A CNN poll says it has 85 percent support!

I’m not so sure. CNN asked people if they support “providing larger tax credits for families and making them easier for low-income households to claim,” which, er, doesn’t quite get at why this is controversial.

By contrast, back in 2019 I wrote up a survey that asked people about several different options and was clearer about whether work was required. (It also offered a “neither favor nor oppose” response that was far more common than the “no opinion” answers in the CNN survey.) Two options were reasonably popular, garnering much more support than opposition: A tax credit that goes to all parents who pay income taxes, and a tax credit where parents with lower incomes “get back” relatively more. The former is framed as broad tax relief for parents and was popular across the political spectrum; the latter is framed a little more as welfare and was much more popular with Democrats.

You know what bombed? A child allowance for everyone “whether they pay income taxes or not.” Only about 30 percent of respondents favored this; about 40 percent opposed it . . .

And David Harsanyi wasn’t too sure about the polling on the Biden spending package:

There is overwhelming bipartisan support for the $1.9 trillion “American Rescue Plan.” No doubt about it. Every poll says so. The latest Morning Consult poll, for instance, informs us that Americans support the bill by a wide 75–18 percent margin. Among Democrats, it’s 90–5. Among the GOP, it’s 59–35. Among independents, it’s 71–20.

As the Washington Post’s lead “fact-checker” Glenn Kessler put it recently on Twitter, presidents dream “of getting numbers like this for a major piece of legislation — especially if no one from the opposition party votes for it.”

Indeed, they do. But the dream can be made reality only if the media abdicate their responsibility of critically reporting and properly highlighting the partisan boondoggles in trillion-dollar legislation. How popular would the “American Rescue Plan” be if pollsters asked voters grown-up questions rather than push-polling for Democrats?

I’ll take one of David’s questions:

Do you support an emergency-rescue bill that spends a third of proposed funding, around $700 billion, in 2022 or later, rather than right now?

Ought to answer itself. Ought to.

Robert P. O’Quinn thought the package was a waste of over a trillion dollars:

At a time when Dr. Seuss is being canceled, it might seem as if nothing could be more ridiculous. But consider this: The economy is currently growing at an annual rate of 8.4 percent, and Democrats have decided, nevertheless, that it is time for a massive stimulus. Never has such a massive policy come at a time that is more inconsistent witheconomic reason.

Why the rush to have a stimulus when none is needed? You guessed it. Democrats won the election and are engaged in an effort, in the false name of stimulus, to transfer a massive pile of taxpayer cash to their pet projects and constituencies. Indeed, the American Rescue Plan Act of 2021 is loaded with more than $700 billion in payoffs to such causes, completely unrelated to the pandemic. Claiming that any of this wasteful spending is stimulative is laughable.

In another Supply & Demand, Casey Mulligan and Tomas Philipson made clear that they didn’t think too much of it either:

As an economic stabilizer, Congress has long been recognized to be notoriously bad in its timing. Such packages take a long time to debate, and many of its projects are not within a year of being “shovel ready,” long after downturns have subsided. Lawmakers can’t keep up and often end up either stimulating an already growing economy or restraining an economy that is already contracting. Meanwhile, the private sector steams ahead as we saw in the February job gains and in the surprisingly low unemployment claims that were reported last week.

Failing to argue that the Recovery Act is a stimulus, some economists have instead resorted to arguing that it should be viewed as a liquidity bridge. In other words, the measures harm economic incentives but provide a bridge to an economy saved by the vaccines that the private sector produced with record speed under Operation Warp Speed . . .

Since last summer, we have argued that there has been a massive fiscal overreaction to COVID in terms of liquidity. Bothe the CARES Act and the December bailout was subject to this and the same is true of the Recovery Act.

At first glance, it would seem that the $1.9 trillion would increase national spending as Americans begin to cash the government checks. But aggregate spending includes not only the spending of government-program participants, but also the spending (both consumption and investment) of those who finance the government. When government redistributes, the taxpayers and lenders to our government have less to spend and save. Even a foreign lender who decides to lend that extra $1 million to our government may well be lending less to U.S. households and companies. At best, redistribution from workers to the unemployed reallocates aggregate demand rather than increases its total. Indeed, retail sales really started to grow in August and September when parts of the March 2020 CARES Act began to expire, in direct contradiction to the “Keynesian” predictions.

Maybe a better path for mitigating harm to the economy would be for Congress to acknowledge its own handicaps and stop inflicting more damage. Less is more when it comes to governments helping economies.

Robert VerBruggen noted a revealing catch amid all the largesse:

Jared Walczak of the Tax Foundation has a fascinating blog post about one of the amendments that made it into the COVID-relief bill.

The bill doles out $350 billion to state and local governments, nearly $200 billion of it to states. (There’s also, separately, money for schools and public transportation.) But states haven’t seen their revenues decline anywhere near that much, and some states aren’t hurting at all. So for many governments this is just a big windfall to spend.

But not so fast! The Democrats who passed the bill don’t want the free money to go to something icky, and they especially don’t want it to go to something really icky like tax cuts . . .

We ran a lightly edited extract from Donald Devine’s new book, The Enduring Tension: Capitalism and the Moral Order:

When 60 percent of stock-market gains have come on dates that the Fed made a policy announcement, the stock markets have been driven not by capitalist supply and demand, but by investor reactions to mostly misguided governmental calculations.

Earlier, in 2014, the Bank for International Settlements (BIS) observed that it once appeared that “economic science had conquered the business cycle” after the Great Depression. There had been inflationary recessions in the 1970s and 1980s, but “long expansionist runs” from 1961 to 1969, and from 1991 to 2001. BIS noted, however, that even with multiple billions of dollars of stimulus spending, Federal Reserve policy since 2007 had failed to increase U.S. output, which was then 13 percent below where it would have been if previous growth rates had continued. The pattern was similar in other capitalist countries: output was 19 percent below earlier projections in Britain, 12 percent below in France, and 3 percent below in Germany. In fact, analysts had ignored the fact that bank and treasury stimulus did not work in the 1930s, 1970s, or 1980s either. By 2014, the idea that central banks could actually control economies was seriously in question.

As early as the financial crisis of 2007–08, it seemed clear that those in charge at Treasury and the Fed were operating by the seat of their pants each day, without any guiding plan, in the face of enormous market complexity. Indeed, all three top managers of the crisis — Ben Bernanke, Timothy Geithner, and Henry Paulson — would later essentially admit as much in their book on the subject, Firefighting. As the title suggests, they conceded that they had simply been putting out fires on the spot, with no comprehensive, rationalized plan to direct the markets.

Casey B. Mulligan, a professor of economics at the University of Chicago, argued that the unintended effects of firefighting based on instinct might even have made things worse. He maintained that the incentives to work, earn, and recover had been reduced by the stimulus programs, the six-year “emergency assistance” for the long-term unemployed, the expansion of the food-stamp program, the mortgage-assistance programs, and the like. The result was the lowest labor-force-participation rate in 30 years and a historically slow recovery . . .

Kevin Williamson discussed the contemporary cult of asceticism (which bears quite a resemblance to a good number of its predecessors):

Like its cousin misery, asceticism loves company, and so Manjoo proposes to begin his campaign of moral improvement with . . . you peons, of course.

“Do you really need to fly?” the headline asks. Maybe. Maybe not. Maybe you need to mind your own goddamned business.

But, why not play the game? Do you really need a tomato? You can live a perfectly happy life without one. The tomato, too, was once regarded as sinful: Europeans once thought of it as excessively voluptuous, associating it with the forbidden fruit of the Bible, believing alternately that it was poisonous or an aphrodisiac. Tomatoes apparently used to be sexy, which probably is why “tomato” used to be slang for an attractive woman.

Nobody needs a tomato.

Nobody needs fine Au Lit sheets or a Tesla. Nobody needs to go to the moon. Nobody needs more than one pair of shoes. Nobody needs another self-righteous New York Times columnist.

How about another book? How about an Internet connection? Do you really need . . . to be a blue-nosed busybody?

We are in the midst of a great national moral panic. It is a secular moral panic, but one of the interesting things about American political culture is that our secular social movements almost always simply recapitulate old-fashioned Christian practice in some bizarre new way. The green cathedral has its own stations of the cross and liturgy, its sacrament of reconciliation (carbon offsets), its saints and martyrs (Greta Thunberg), its sacred scripture, its confession of faith and apostles’ creed . . .

Michael Brendan Dougherty approved of Marco Rubio’s support for the unionization drive among Amazon workers in Alabama:

Lots of the talk about the Republican Party becoming a “multi-ethnic workers’ party” has been a little premature, even if I’ve been hoping for it all my life. The great populist GOP president passed a corporate tax cut that wasn’t even popular when it passed. Everyone can recognize that affluent and educated voters are moving en masse into the Democratic Party, and some downwardly mobile people are trickling in to the GOP. But what does it mean? All this talk of workers has been met with taunts from liberals in the media: “Fine, but when will the GOP ever take the side of workers against an owner?”

Marco Rubio has done just that in an op-ed today, supporting the unionization drive among Amazon’s workers in Alabama. Rubio’s critics have been quick to point out that he doesn’t offer a pro-worker rationale and doesn’t even seem to like unions. All the rhetorical emphasis seems to be on spite.

“For decades, companies like Amazon have been allies of the left in the culture war,” Rubio writes, “but when their bottom line is threatened they turn to conservatives to save them.” Rubio is looking down and whispering “No.”

And listen, it’s high time that conservatives recognize that corporate America is not a friend. And Rubio is right to recognize that this enmity isn’t just over culture-war issues — like censorship of conservative views — but also at an international level, where global corporations feel empowered to push around democratically elected governments at home, while serving the interests of dictators like Xi Jinping abroad . . .

Veronique de Rugy is no more impressed by the third airline bailout than she was by its two predecessors:

No one seems to care anymore but airlines will receive their third bailout in a year thanks to the new COVID-19 relief bill. That will make a total of $79 billion in airline bailout: $50 billion in the CARES Act ($25 billion in payroll support and $25 billion in subsidized loans), $15 billion in December 2020, and finally $14 billion for commercial airlines as part of the American Rescue Plan.

have written many times about why most of the money goes to bailing out shareholders and creditors rather than workers. In part, it is because the amount of each bailout covers more than the payroll costs of those workers who would have gotten furloughed. Oh, and by the way, airlines are receiving subsidies even when they have committed not to furlough anyone in 2021 even without a bailout, like Southwest has.

Gary Leff of View from the Wing also notes that while the airlines are picking our pockets, “Delta is even paying out large management bonuses”  and that “American even figured out how to keep workers they let go from collecting on payroll support.” . . .

It being that time of year, Steve Hanke and Christopher Arena argued that it was time to scrap the move to Daylight Savings Time, and then took it a step further with the suggestion that we all adopt UTC, a harder sell.

It’s that time of year when we “spring ahead” and switch to daylight saving time (DST). There is a good chance that this annual adjustment of the clock will damage not only your wallet but your health, too.

Before the adoption of standard measures of time, churches, city halls, and trains kept solar time. Every city, depending on its location, observed its own solar time, once referred to as “true time” in the United States. In the early 19th century, there were more than 300 “sun zones” in the U.S. alone. It wasn’t until the proliferation of railways that time standardization arose to resolve logistical and scheduling nightmares and passenger confusion, not to mention fatal railroad accidents. In 1875, there were 75 different railway times in the United States, with three in Chicago and six in St. Louis alone. In 1883, the time zones we know today were introduced as Standard Railway Time. It wasn’t until 1918, with the passage of the Standard Time Act, that our five current time zones (excluding Hawaii) were enacted into law.

In an attempt to conserve energy during World War I, the United States, armed with the Standard Time Act, followed Germany’s lead and adopted daylight saving time. The idea was that if daylight lasted for one more hour, that was one hour less of darkness during which people would need to use artificial lighting. But in today’s highly technological world, we are plugged in whether or not the sun is up. As a result, this original energy-conservation rationale for daylight saving no longer makes sense . . .

Finally, we produced the Capital Note, our “daily” (well, Tuesday–Friday, anyway). Topics covered included: GameStop, ice-cream cones, sock puppets and other fundamentals, China’s coal, Tesla and Texas, ghost kitchens, no, the financial markets are not “rigged,” retail investors calling the shots, sidewalk robots, DNA’s day in court, pay toilets, the bombing of Wall Street, $1.9 trillion, you say, the coming attack on Big Tech, inflation, when the selling starts, accounting for Bitcoin, woke capitalism, it’s here to stay; working from home, not the route to promotion; Germany’s energy mess (and India’s coal); bubble update; and Cisco’s hard lesson (now being ignored).


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