China’s Triangulation Of Russia And The West

The Daily Escape:

Joshua tree in bloom, Joshua Tree National Landmark SW, UT – March 2023 photo by Lisa Simer

We’re back at the Mansion of Wrong after a few lovely days in St. Helena, CA. Surprisingly, it seems that lots of things happened while we were away. From Heather Cox Richardson:

“So, for all the chop in the water about the former president facing indictments, the story that really seems uppermost to me today is the visit China’s president Xi Jinping made today to Moscow for a meeting with Russia’s president Vladimir Putin.”

In 2015, shortly after Russia intervened in the Syrian Civil War, Wrongo asked a visiting Russian author who spoke at our local library whether Putin wanted to move Russia closer to the west or to the east. He said unequivocally that Putin was a product of the west and would keep Russia in the west’s orbit.

It’s clear that he was wrong. Russia has moved away from the west, possibly permanently. Earlier in March, Wrongo said the following:

“The US is attempting to isolate both China and Russia. With Russia, we’re using ever-tightening economic sanctions. With China, we’re building a geographic containment strategy among our allies in Asia.”

And on Monday, Chinese President Xi met with Russian President Putin in Moscow. Here’s a meeting summary from the blog Institute for the Study of War:

“… [the meeting]…on March 20…offered a more reserved vision for Russian-Chinese relations than what Putin was likely seeking. Xi and Putin touted the strength of Chinese-Russian relations in their meeting…but offered differing interpretations of the scale of future relations….on March 19 Putin published an article in Chinese state media in which he argued that Russia and China are building a partnership for the formation of a multipolar world order in the face of the collective West’s seeking of domination and the United States pursuing a policy of dual containment against China and Russia.”

….Xi offered a less aggressive overarching goal for Russian-Chinese relations in his article published in Russian state media….in which he noted that Russia and China are generally pursuing a multipolar world order but not specifically against an adversarial West. Xi instead focused…on presenting China as a viable third-party mediator to the war in Ukraine….

David Ignatius concluded in the WaPo that the meeting was about:

“A strong China…bolstering a weak Russia….The Chinese aren’t providing weapons (yet), but Xi certainly offered moral and psychological support in what might be described as a get-well visit to an ailing relative….The paradox of the Ukraine war is that Putin’s bid for greater power in Europe has made him weaker. This diminished Russia will fall increasingly under China’s sway….Maybe that’s the biggest reason for Xi’s…visit: He is bolstering a flank against America and the West.”

China’s dominance over Russia will grow if Russia cannot find a way to end the war in Ukraine. Russia has lost its energy markets in Europe because of the invasion, so it must depend heavily on demand from China. China’s growing economic power in Asia coupled with its capabilities in space, cyber, and artificial intelligence will increasingly dwarf Russia’s.

Russia’s economy is concentrated on exports of energy. It also has a major population problem. The Economist reports: (emphasis by Wrongo)

“Over the past three years the country has lost around 2million more people than it would ordinarily have done, as a result of war, disease and exodus. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti. The number of Russians born in April 2022 was no higher than it had been in the months of Hitler’s occupation.”


“…the life expectancy at birth of Russian males plummeted from 68.8 in 2019 to 64.2 in 2021, partly because of Covid…Russian men now die six years earlier than men in Bangladesh and 18 years earlier than men in Japan.”

And the Economist says the exodus of well-educated young people at the start of the Ukraine War also hurts Russia’s future. According to its communications ministry, 10% of IT workers left the country in 2022. Many were young men, further skewing Russia’s unbalanced sex ratio. In 2021 there were 121 females over 18 for every 100 males. More:

“Demographics is rapidly making Russia a smaller, worse-educated and poorer country, from which young people flee and where men die in their 60s.”

As Wrongo said, separating China from Russia used to be a central goal of US foreign policy. The Biden administration tried that strategy in reverse: Warming relations with Moscow at the June 2021 summit in Geneva in part to concentrate on the challenge China presented.

How did that work out?

Now it’s China trying the role of triangulator. Xi’s playing off the split between the US and Russia, helping Putin, but also keeping some distance while building China’s bona fides with the third world.

Xi’s also used China’s close relations with Iran to make a diplomatic breakthrough between the Saudis and the Iranians, something that the US could never achieve.

We seem powerless to blunt what’s happening before our eyes.

And all the while, the Republican Party of the world’s greatest superpower argues about drag queens and wokeness.

Wake up America! Check out what China, Russia, Iran and Saudi Arabia are building for us. You’re not going to like it.


Final Thoughts On The SVB Situation

The Daily Escape:

Spring wildflowers, Four Peaks Wilderness, AZ – March 2023 photo by Chris Flores

(This will be the final column for this week as Wrongo and Ms. Right are heading to CA for the Napa Valley wedding of granddaughter Nicole. Columns will resume on 3/23)

Several readers commented on how Silicon Valley Bank’s (SVB) major problem went beyond Wrongo’s discussion of asset management. They’re all former bankers and former colleagues of Wrongo, and they rightly brought up liability management as a key contributor to SVB’s problem.

For banks, the deposits that people make are the bank’s liabilities. The essence of banking is borrowing short term (deposits, overnight borrowings and medium term borrowings) in order to lend that money out for a longer term (mortgages, long term loans or, investments in bonds and long dated US treasuries). The difference between what they pay on their liabilities and what they earn on their loans and investments (the spread) is how banks make their profits.

SVB had little risk that their loans wouldn’t be eventually paid back (credit risk), but they did have substantial interest rate risk if rates went up. That included the risk that the face value of the bonds they invested in would decline in value in higher interest rate scenarios.

This is a well-known challenge for all banks. They try to maintain enough of their assets in easily sold investments so if there’s an unforeseen need to pay out cash to depositors, they can meet that need. The bigger the expected (or unexpected) cash need, the more assets the bank must hold that are easily converted to cash.

It wasn’t a surprise to the banking industry that the Federal Reserve (Fed) was raising rates; Chair Powell clearly said they were going to do that until inflation was under control. Basic liability management principles should have told SVB to move to hedge the risks in a rising rate environment by investing more in very short term (near cash) assets. But SVB didn’t. Maybe they thought they knew better.

SVB isn’t alone. The Fed raised interest rates quickly and sharply during 2022, so the face value of bonds fell. According to the FDIC, US banks were sitting on $620 billion in unrealized losses (assets that had decreased in market value but were still on their books at purchase price) at the end of 2022.

Of that amount, Bank of America alone had unrealized losses of around $114 billion, or 18% of the total.

A major risk that the banks didn’t correctly anticipate was the effect of huge cash injections into the economy during the pandemic, along with a prolonged period of historically low interest rates that predated the pandemic. That had ripple effects on all banks. According to Marc Rubinstein:

“Between the end of 2019 and the first quarter of 2022, deposits at US banks rose by $5.4 trillion. With loan demand weak, only around 15% of that volume was channeled towards loans; the rest was invested in securities portfolios or kept as cash.”

Then came the Fed’s rapid rise in interest rates. From FDIC Chairman Martin Gruenberg:

“The current interest rate environment has had dramatic effects on the profitability and risk profile of banks’ funding and investment strategies….Unrealized losses weaken a bank’s future ability to meet unexpected liquidity needs,”

Banks do not continually adjust the value of their bond portfolio to market. So their unrealized losses can be difficult for an outsider to see. It also means banks find that selling parts of the portfolio will bring in less cash than they may need, because the securities are worth less in the market than they originally paid for them. That happened to SVB.

From Michael Batnick at Irrelevant Investor:

“Without the pandemic, rates are not at zero for two years. Without the pandemic, $638 billion does not go into venture capital. Without the pandemic, rates don’t go from 0% to 4.5% in a year. And without the pandemic, we wouldn’t be talking about a run on the bank.”

So there’s plenty of blame to go around. The SVB management surely failed: More Treasury bills and fewer bonds would have helped, that’s for sure. They had to know that their customer base, which was concentrated in start-ups, were hemorrhaging cash. They knew that they had unrealized losses in their bond portfolio. Shouldn’t they have shortened their asset mix?

Should we blame the regulators or SVB’s auditors? KPMG gave them a clean bill of health just a few weeks before they went belly up. You would think KPMG should have seen what was coming. And the Fed just announced that they are leading a review of “the supervision and regulation of Silicon Valley Bank in light of its failure.”

For SVB, the government drastically changed its policy about insured deposits. Had SVB been “The Bank of Depositors With No Political Clout”, you can bet that the $250,000 insured deposit limit would have been enforced. And depositors with larger deposits would have had to wait for their money.

But, the exception was made, and now, it will certainly happen again. Ben Carlson says it best:


Another Bank Bailout!

The Daily Escape:

Pronghorn in Las Cienegas National Conservation Area, AZ  – March 2023 photo by Alan Nyiri Photography

More about the Silicon Valley Bank (SVB). A joint announcement by Treasury Secretary Yellen, Fed Chair Powell, and FDIC Chairman Gruenberg said:

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13…”

This appears to be the mechanics of the bailout:

  1. The Fed gives money to the FDIC as needed.
    2. The FDIC makes all deposits available on Monday. Not just those that are FDIC-insured.
    3. The FDIC then sells the assets of the banks, which will take time.
    4. The difference between the cost of bailouts and the net proceeds from the asset sales is the actual amount the FDIC will have lost.
    5. The FDIC will charge all other banks a “special assessment” to cover the losses.
    6. The FDIC will then pay the Fed back with the special assessment funds it collects.

Much about this makes Wrongo’s blood boil. We have a well-defined regulatory system for the US banking industry. But, as with our lax regulation of train traffic that resulted in the Norfolk Southern accident in East Palestine, these pesky banking regulations were considered a major impediment to Mr. Market.

Regional banks argued that they shouldn’t be held to the same standards as the biggest banks because if they failed, they wouldn’t pose systemic risks to the banking industry or the nation.

So in 2018, Dodd-Frank was amended by the Trump administration to raise the asset threshold at which a bank would be considered “too big to fail” from $50 million to $250 billion. The 2010 original law required that banks considered systemically important keep more capital on hand, undergo stress tests and produce a “living will” that would provide for their orderly dissolution.

But now five years later, the FDIC says that SVB and Signature Bank in NY really do pose a systemic risk to the banking system! The regulators are saying that the threat of a systemic risk gives them the authority to hold all SVB depositors harmless, even if their deposits exceed the current FDIC maximum of $250,000.

Few if any average Americans have $250,000 in a single bank account. Who has bank accounts above $250,000? Corporations.

The FDIC insurance on deposits is meant to assure retail customers, not companies that hold very large balances. Why? Because companies have the ability to perform their own risk analysis. This risk analysis should force them to ask questions about the business practices of the bank, to make sure the bank will properly manage their assets.

The US is going to protect the deposits of corporations in this bailout despite the fact that there’s a product called “Insured Cash Sweep” that cuts your large deposits into pieces that are FDIC insured (i.e. $250k each). In the event of a bank run, those deposits would not be over the limit, so they would be safe.

But, for reasons unknown, the Silicon Valley Venture Capital masters of the financial universe didn’t deign to use it.

American capitalism remains a system that privatizes profits until shit happens. And then? We socialize the losses, meaning it’s up to the federal government and taxpayers to handle the problem. When Biden says the banking system will pay fees via a special assessment, that means the cost will ultimately be paid by depositors and borrowers through higher fees and interest costs.

This is why people have so little faith in our government.

The very serious people in finance and politics were worried that the 2023 version of the US banking system might be close to another 2008-style collapse. So the Treasury, Fed and FDIC had to step in.

The basic problem relates to what’s called “asset management” in the banking biz. The goal of asset management is to maximize the return of the bank’s investment portfolio while maintaining an acceptable level of both liquidity and risk.

For banks, that means keeping a certain amount of cash available to meet the needs of depositors and investing the rest in loans or bonds. SVB invested in long-term bonds in order to realize better returns on their investment portfolio, because short-term interest rates were very low. They, like others, felt it was necessary to maintain a portfolio of higher yielding assets to offset the low market rates generally available to them.

But when mass withdrawals from depositors started to happen, they had to sell bonds at a loss, ultimately leading to default and FDIC takeover. Wasn’t it the job of the SVB executives to foresee this? And adjust their asset management accordingly?

This seems to mean that the $250,000 FDIC limit has effectively gone away. If true, there’s systemic risk that taxpayers will have to bail out bank deposits with uninsured deposits at any bank. Most of those depositors will be corporations. So, new rules must be written. And until then, we’re in trouble.

The big picture is that very few people of means in America ever pay a price for bad management.

And none go to jail.

Average Americans who get caught cheating on their taxes might go to jail if you were represented by an overworked public defender. But if you had the means to hire a high-priced lawyer, most likely, you will get community service, or probation.

It’s never been a fair system. Back in the 2008 Great Financial Crisis, then-Treasury Secretary Timothy Geithner worked to save his banker cronies; they didn’t lose money. They didn’t go to jail. The economy was saved, but no one who profited from blowing it up paid a price.

The bottom line: If I’m bad at my job, I’ll get fired. If these bankers are bad, they may get rescued by the government.

And one way or another, we’ll be paying for it.


Monday Wake Up Call, Diplomacy Edition – March 13, 2023

The Daily Escape:

Wildflower bloom, Peridot Mesa on the San Carlos Reservation, AZ  – March, 2023 photo by Sharon McCaffrey

China has brokered an agreement between Iran and Saudi Arabia to re-establish diplomatic relations. The agreement, reached after four days of talks with senior officials in Beijing, may ease tensions between the two Middle East powers after seven years of fighting a proxy war in Yemen. In the war, Saudi Arabia has supported Yemen’s government and Iran has backed the opposition Houthis.

Both Iran and Saudi Arabia announced they will resume diplomatic relations and open up embassies once again in their respective nations within two months, according to a joint statement.

Saudi Arabia is Sunni Muslim while Iran is a Shiite Muslim country. Saudi broke off relations with Iran in 2016 after protesters stormed the Saudi embassy in Tehran. The protests followed the Saudi execution of a Shiite Muslim cleric, Shia preacher Nimr Baqr al-Nimr. Al-Nimr had earlier spent 10 years studying in Tehran.

News of the diplomatic breakthrough came as a surprise to the US and to Israel. It was also a diplomatic and political success for Beijing. Here are some of the winners and losers in this.

The winners:

  • Iran, now with Russia, China and Saudi as allies, may be able to break the US sanctions.
  • Saudi Arabia has distanced itself even further from the US. It may now be able to end its involvement in the war in Yemen.
  • China, by outplaying the US. China’s success in achieving is recognition of its growing status in global politics.
  • Iraq and Syria will become more influential Middle East players as Saudi and Iran move to end their rivalry.

The losers are:

  • Israel, and specifically Netanyahu. For years, his twin foreign policy goals have been the isolation of Iran and the normalization of ties with Saudi Arabia, which has never recognized Israel. Also his efforts to pull the US into a war with Iran is now even more unlikely.
  • The US for being outplayed on a playing field it used to dominate. And for losing more global prestige to its rival China.
  • The Emirates for losing some political influence and also losing some of its sanctions busting trade with Iran.

Wrong thinks this could be a big geopolitical deal. It may bring peace or at least, an absence of war in Yemen. It is also a bold example of using diplomacy as a tool of national power. That’s a good reminder since the US has been mainly thinking about the war in Ukraine (and the threat of war in Taiwan). Our global focus has been on military power and economic sanctions.

The Ukraine war has led to a revival of the NATO alliance. This, along with the strengthening of European relations are diplomatic accomplishments. But since the start of the war, US global diplomacy has been directed at jawboning the third world into agreeing to the sanctions regime against Russia.

So China’s use of diplomacy to deliver a breakthrough agreement between Saudi Arabia and Iran makes the US efforts look small and foolish. The NYT quotes Daniel C. Kurtzer, a former ambassador to Israel and Egypt:

“It’s a sign of Chinese agility to take advantage of some anger directed at the United States by Saudi Arabia and a little bit of a vacuum there….And it’s a reflection of the fact that the Saudis and Iranians have been talking for some time. And it’s an unfortunate indictment of US policy.”

After Trump killed the Iran nuclear deal in 2018 and reimposed heavy economic sanctions on Iran, Iran moved to deepen its relations with Russia and now with China. Tehran has provided drones for Russia to use in its war in Ukraine, making it an important partner for Russia.

Now, by turning to China to mediate with the Saudis, Iran has elevated China in the region, while Israel finds its hopes for an anti-Iranian coalition with Saudi Arabia dashed. Is the looming axis of Iran and China a direct threat to the US? Probably not, but the balance of power in the region is changing.

We’ve spent decades in various wars in the Middle East, at a cost of more than $8 trillion. We tried showing the Middle East that strength came from military might. But China is showing the Middle East that you can win both the diplomatic and the economic battle without firing a bullet. Who knew?

Their approach to the Middle East is more constructive than America’s. China, like the US, has an agenda. But it has committed to building 1000 schools in Iraq; a country we “helped” by invasion.

Time to wake up America! The world is now challenging America’s heavy-handed unilateralism. We may be seeing the start of a post-America Middle East. To help you wake up watch and listen to Marcus King and Stephen Campbell of the Marcus King Band perform the 1966 Merle Haggard tune “Swinging Doors” at Carter Vintage Guitars:

Sample Lyric:

And I’ve got swinging doors, a jukebox and a bar stool
My new home has a flashing neon sign
Stop by and see me any time you want to
Cause I’m always here at home till closing time.


Sunday Cartoon Blogging – March 12, 2023

Let’s talk about Silicon Valley Bank (SVB). The tech industry’s go-to lender just became the second-largest bank failure in US history. The bank’s customers withdrew $42 billion from their accounts on Thursday. That’s $4.2 billion an hour, or more than $1 million per second for ten hours straight.

We ancient, moss-covered former bankers call this a bank run. That occurs when a large number of customers of a bank withdraw their deposits simultaneously over concerns about the bank’s solvency.

Nearly half of all venture-backed US companies were SVB customers. We’re unsure why the run started, but on Thursday, several Venture Capital firms started telling their client companies that pulling cash from SVB was prudent, and the run began.

While bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, few of SVB’s deposits, by value, were FDIC insured, since its customers were overwhelmingly corporations with much more than $250,000 in the bank. By Friday, there was no cash left in SVB’s coffers. In fact, the cash on hand was negative, to the tune of $958 million.

Do you remember when Trump and Republicans rolled back some of the regulations Dodd-Frank placed on regional banks?:

“Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.”

Trump signed the bill despite a report from Democrats on Congress’s joint economic committee warning that under the new law, SVB and other banks of its size:

“…would no longer be subject to nearly any enhanced regulations”.

This also affects ordinary people. Wrongo has a California friend who banks with SVB. Here’s a quote from her:

“While I’ve been waiting to sign the purchase contract on a condo, I woke to the news that my lender Silicon Valley Bank has been closed and taken over by regulators. That concludes literally 8 months of working on this….and the end of my effort to buy a home.”

So don’t listen to the pleas for another bank bailout. Wrongo would be okay with bailouts if they were accompanied by personal accountability by management. Like, we’ll rescue your institution, but none of the bank senior management can ever work in finance again. On to cartoons.

Tucker’s mendacity:

It takes two teams to play:

Walmart’s OK with pills for boners, but not for pregnancy:

GOP wants to regulate Trans not Trains:

GOP loves doormats:

Most appropriately named movie of this or any year:


Saturday Soother – March 11, 2023

The Daily Escape:

Sunset, Santa Elena Canyon, Big Bend NP, TX – March 2023 photo by Rick A. Ludwig. Cliff on left is in Mexico, the one on the right is in US. The Rio Grande is in the middle.

Signs that we’re starting to think about the 2024 election are everywhere. Wrongo wants to connect a few dots regarding Biden’s recent efforts to move the Democratic Party more to the middle on crime and immigration while staying left on financing the country’s social and military needs.

Biden proposed a budget to reduce the deficit, protect Medicare and Social Security, and raise taxes on wealthy individuals and corporations. From the NYT:

“In a speech in Philadelphia on Thursday, Mr. Biden said that his budget was designed to ‘lift the burden on hard working Americans’ and drew sharp contrasts with the proposals that Republicans have offered, which the president argued would threaten the nation’s social safety net programs and benefit the rich.”

This contrasts with Biden’s right-leaning position on the recent DC crime bill. Since DC is controlled by the Congress, it’s legislation can be vetoed by the US Senate. Also from the NYT:

“The Senate…voted overwhelmingly to block a new District of Columbia criminal code that reduces mandatory minimum sentences for some violent offenses, with Democrats bowing to Republican pressure to take a hard line on crime in a move that underscored the rising political potency of the issue ahead of the 2024 elections.”

By an 81-to-14 vote, with 31 Democrats voting with the Republicans, the Senate passed the Republican-written measure to undo the District’s law. It now goes to Biden, who after initially opposing it abruptly changed course and said he would sign it.

So, Biden’s tacking left on spending but to the center-right on crime. He’s making a series of calculated moves to position his Party to compete successfully in 2024. Still, it’s disappointing that Biden and 31 Democrats joined with the Right to deny DC residents the right to govern their own city.

But this shouldn’t be surprising. Last year, Biden and the Democrats turned their backs on labor during their contract battle with the railroads.

Here’s Nick Catoggio in the Dispatch: (Brackets by Wrongo)

“[Biden has]…begun to tiptoe toward the center lately on another major Democratic liability, immigration…..Centrist analysts…have warned Biden and his Party that their political viability depends on escaping the…“cultural bubble” in which an unsecured border is treated as a civic good.”

And last week Biden changed his immigration policy. He’s requiring asylum seekers to seek refuge in nations they pass through rather than waiting to do so in the US.

These new policies bring Biden closer to public opinion. Among Democrats, a plurality want to see the number of asylum applicants increased rather than reduced. Among the overall public, it’s the opposite. Biden is tilting toward the latter.

Biden wants to be seen as strong on crime. Democrats walk a fine line of being against crime but not wanting to wholly support the police. Doing that would risk looking anti-Black in cities that are so important to their political success. Dems support compassionate justice and not retributive justice, so they get tied up in knots when violent crime increases, which is rising in America. The problem of course is that the descriptor “violent” isn’t consistently applied.

Biden’s idea is to try to win more votes from people who are not fanatic MAGA types. That means picking off White suburban voters, Asian voters and Hispanic and Black voters, all of whom are concerned about crime.

Tom Sullivan points out that while the moderate-to-conservative White population is in slow decline, their votes remain significant, and that Democrats shouldn’t ignore them over the next two years:

“Sadly, Democrats often do. Campaigning in concentrated urban areas that tend to vote your way is simply easier and more cost-effective. What it means for largely rural states like North Carolina is that while it remains possible to elect a Democrat like Roy Cooper as governor, Democrats’ urban focus bequeaths him a Republican-dominated legislature…”

Sullivan says the Democrats need to start acting like the big-tent party that they used to be.

And that’s what Biden is attempting to do.

Time to say “enough” to war-gaming the 2024 election. It’s time for our Saturday Soother. The daffodils have sprung through the snow, a sure sign of spring. We turn back the clocks tomorrow night, another win for those who hate dark days.

So, it’s time to take a few minutes to center yourself. Start by sitting in a comfy chair and watch and listen to Lili Boulanger’s “D’un matin de Printemps” (On a spring morning). She wrote this piece in 1917 when she was 23. Boulanger battled bronchial pneumonia throughout her short life, dying a year later at age 24. Here, it is played by the Seattle Symphony conducted by Cristian Măcelaru.

Listen and think about her writing this during the darkest days of her life:


New Legal “Doctrines” Help Supreme Court Push Farther Right

The Daily Escape:

Sunset, midtown Manhattan viewed from the Williamsburg Bridge – March 2023 photo by Mike Davis

Plenty of ink has been scrawled or printed describing how the Supreme Court (SCOTUS) has navigated its way into being the supreme executive branch of our government. The SCOTUS has long been a bastion of Conservative thought in America, but since gaining its 6-person supermajority, we’re seeing them bring forward novel legal concepts to help move decisions towards the Right’s agenda.

The best example is the Court’s majority creating new “doctrines” to help deliver rulings that their clients on the Right argue for. Prior to embracing “the major questions” doctrine and the “Independent state legislature” doctrine, Conservative members of the court used to insist on “textualism” to achieve their goals. Textualism says that when interpreting the Constitution, judges should confine themselves only to the words of the Constitution. Originalism says that if the words are unclear, then judges need to consult historical sources to determine their meaning at the time of ratification.

But we’re now seeing cases where a statute’s words aren’t delivering a decision that the Supremes are aiming for, so using these new doctrines give them a pretext for breaking their own rules.

That’s how they blew up the EPA’s Clean Power Rule. Eight months ago, SCOTUS first invoked the “major questions doctrine” in a majority opinion, using it to limit the Environmental Protection Agency’s power to address climate change.

Last week, the court seemed ready to use it again, to kill  Biden’s proposed student loan relief. More on the new “doctrines” from the NYT’s Adam Liptak: (brackets by Wrongo)

“On the last day of the 2021-22 Term, the Supreme Court handed down a decision on “the major questions doctrine” and [agreed] to hear a case presenting “the independent state legislature doctrine” – neither of which had been called “doctrines” there before.”

The rationale behind the major questions doctrine is the contention by the Justices that the agencies must receive explicit direction from Congress to address a particular issue if action by the agency is of political or economic significance. Conveniently, this “doctrine” gives the Court’s Conservative supermajority a tool to achieve their preferred outcomes when textualism doesn’t get them there.

Liptak quotes Allison Larsen, a law professor at William & Mary:

“The phrase was used just once by any federal judge before 2017, and in only five federal decisions — at any level of court — before 2020,”

But you guessed it, the turning point in 2017 was when Justice Brett Kavanaugh, then a judge on the US Court of Appeals, used the term in a dissent. More from Professor Larsen: (brackets by Wrongo)

“[Using] the word ‘doctrine’ to describe the major questions concept was first used by law professors and then bandied about on blogs…and used as a rallying cry in opinion pieces and programming by those seeking to challenge the administrative state….In 2016 — long before it was anointed a ‘doctrine’ by the Supreme Court — the ‘major questions doctrine’ was featured by name in the annual Federalist Society conference,”

Interestingly, at Kavanaugh’s Supreme Court confirmation hearings, Sen. Amy Klobuchar (D-MN) asked him about the doctrine, calling it “something else that you (Kavanaugh) came up with.” Liptak reports that Kavanaugh responded vaguely that the “major questions doctrine is rooted in Supreme Court precedent.”

In his 2017 dissent, Kavanaugh conceded that “determining whether a rule constitutes a major rule sometimes has a bit of a ‘know it when you see it’ quality.” That’s some real Wavy Gravy right there.

Back to the EPA case: Chief Justice Roberts wrote that the Court’s use of the term was unexceptional:

“It took hold….because it refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

Turning to the student loan debt relief case, in the oral arguments, Roberts argued that since loan relief is expensive, it must be authorized by Congress. But as Justice Elena Kagan said in the same oral argument, “Congress could not have made this much more clear, adding, “We deal with congressional statutes every day that are really confusing. This one is not.”

Welcome to 2023, where when cases come out the way the Conservative justices want, it’s just fine. But if the legal text gets in the way, the “major questions doctrine” allows them to make the explicit text disappear because they’re willing to engage in bad faith readings of statutes to get the job done.

So much for the rule of law.

If under a Republican president, when the Supremes need to find a sweeping executive branch authority to justify a Conservative wet dream policy, they’d find it without even a whiff of self-reflection.

Will we ever make up the ground now being lost to the decisions by these ideologues?


The Looming Russia-China Alliance

The Daily Escape:

Peach trees in bloom, Low Gap, NC – March 2023 photo by Donna Johnson

Springtime brings hope after a dark, cold winter. The clocks leap forward this Sunday. It’s also a time to take stock of the old assumptions that our recent geopolitical strategies are built on. The US is trending in what may be an unsustainable direction in our global politics.

A year ago with Russia’s invasion of Ukraine, America sought to make Ukraine a proxy for the fight between authoritarianism and democratic forms of government. The Ukraine war caused several major changes within Europe and NATO:

  • Germany moved away from its strategic energy supplier, Russia.
  • NATO became more clearly unified than at any time since its founding.
  • The Eastern European members of NATO became the drivers of military engagement on the side of Ukraine.
  • The US and NATO have found they do not have the production capability to continue providing military weapons and ammunition at the rate Ukraine is using them.
  • This has made it clear that the US and NATO aren’t prepared for a major confrontation with a great power such as China or Russia.

The Ukraine war has precipitated other global consequences. While Russia has become a pariah to Europe, China has become one of Russia’s most important allies.

Many readers won’t remember that 60 years ago, there was a fundamental split between the Soviet Union and China, largely over differences in communist ideology. Over the years, they have slowly moved closer together, driven in part by US policy and by their shared quest for a global reset of geopolitical power.

Now they are willing to work together to dismantle or blunt the US-led world order.

This “alliance of autocracies,” is built on China’s and Russia’s belief that the US’s supremacy is waning. And they are entitled to rule within their own spheres of influence. And to use force if necessary to control those spheres. An alliance between China and Russia brings advantages to both countries. Recent US intelligence says that China may supply Russia with weapons to aid in its war against Ukraine. There is talk of China building a drone factory in Russia to supply its war in Ukraine.

Russia also desperately needs China to stabilize its economy by importing more below-market cost oil, a boon to China’s economy. In June 2022, Russia became the PRC’s largest oil supplier, eclipsing Saudi Arabia. While Russia is betting that Western fatigue will hand them a victory in Ukraine, China is sizing up America’s ability to engage in a faraway battle should China decide to invade Taiwan.

The US is attempting to isolate both China and Russia. With Russia, we’re using ever-tightening economic sanctions. With China, we’re building a geographic containment strategy among our allies in Asia. Containment has been helped by North Korea’s bellicosity against South Korea and Japan, who recently decided to partner militarily, much to China’s distress. The Pentagon has also expanded its bases in the Philippines while shrinking our military footprint in the Middle East.

With US/Russian relations basically clinging to life, prudence should have indicated that the US adopt a more friendly stance toward Beijing. However, we’ve prioritized support for Taiwan over better relations with China. Both the Trump and Biden administrations embraced high tariffs on Chinese imports.

In 2022, Biden added sweeping tech restrictions on China, including a provision barring the PRC from using semiconductor chips made with US tools anywhere in the world. That’s the harshest economic measure leveled against China since the normalization of diplomatic relations in 1979. This hasn’t gone unnoticed by China. China’s new foreign minister said:

“The more unstable the world becomes, the more imperative it is for China and Russia to steadily advance their relations.”

It’s clear that the Russia‐​PRC relationship isn’t yet a full‐​fledged military alliance, but it’s moving in that direction. And both are friendly with Iran and North Korea, which have also supplied weapons for Russia’s war in Ukraine. It isn’t a great stretch that these four could create a new “axis of evil” that could lead to the West needing to plan to fight two faraway wars simultaneously.

This is at a time when we cannot find enough munitions and weapons to fight one proxy war in Europe.

The odious Henry Kissinger once cautioned that it must be a high priority for the US to make certain that our relations with both Moscow and Beijing were closer than their relations are with each other. But our policy makers have done just the opposite.

While the argument for not continuing a proxy war in Ukraine has merit, Wrongo has argued that Ukraine is a war of necessity because democracy in Europe is what’s really on the line. And, with the 2024 presidential campaign about to start, Republican opposition to the war is growing.

Biden needs to keep what political capital he has, but he also needs to improve our ability to sustain our military support for Ukraine. That may be difficult because America hasn’t developed a solid military strategy for tomorrow’s battles which may well be with one or more of the great powers.

It is more difficult because we’ve spent the last 20+ years using $80 million-dollar planes to drop $400,000 bombs on $25 tents, while still wondering why we didn’t win any of our wars in the Middle East.

Ironically, our geopolitical strategy and the supporting military strategies may have the US in the position of being the midwife bringing a newborn Russia‐​PRC military alliance into the world.


Monday Wake Up Call, North Carolina Edition – March 6, 2023

The Daily Escape:

Early blooming Bradford Pear trees, near Cana, VA – March 2023 photo by Lee Ogle

North Carolina is in today’s news for two reasons: First, North Carolina Republicans, who control the state legislature, announced a deal to expand Medicaid under the Affordable Care Act. North Carolina would be the 40th state to expand Medicaid after a decade of Republican resistance.

From the WaPo:

“The deal marks a stark turnaround for Republican leaders that played out over years in North Carolina and in states across the country, as more and more governors and legislatures expanded Medicaid to low-income residents.”

NC’s governor, Democrat Roy Moore will sign the bill if it gets to his desk. Passage would extend Medicaid coverage to 600,000 of the state’s poor citizens. Dozens of rural hospitals in NC closed during Covid, so maybe it dawned on NC’s Republican Party that dead constituents have a difficult time voting for them.

As with other states, this will allow North Carolina, at no cost to the state government, to give health insurance to the state’s working poor. The federal government will pay for 90% of the cost, and the rest will be covered by a new tax on hospitals and insurance companies.

Wrongo wrote about how the Medicaid expansion was a great source of revenue to state governments here. The NC House Speaker, Republican Tim Moore said that since the federal government will pay North Carolina a $1.8 billion bonus if expansion passes, the GOP was motivated to sign on.

The extra money is part of the 2021 stimulus package signed into law by Biden, that offered signing bonuses to states that expanded Medicaid. In NC’s case, $1.8 billion. Biden reacted:

“This is what I’m talking about….That’ll be 40 states who’ve expanded. 10 more to go.”

It’s doubtful that any other states will sign on this year.

Shouldn’t Red states be taking care of their residents? Instead of wasting time with anti-trans bills and anti-woke bullshit? But that’s too much to expect.

A second North Carolina story involves a case in front of the US Supreme Court, Moore vs. Harper. Last fall the Supremes heard this case about the “Independent State Legislature Theory“. The case started out as a challenge to a Republican-gerrymandered voting map that the NC Supreme Court ruled was unconstitutionally partisan.

NC’s GOP then appealed to the US Supreme Court, arguing that the Constitution’s election clause gives state legislatures freedom to do whatever they decide about their own elections, and that no court can intervene in that. A decision was expected in June, 2023.

But the Supremes may not get a chance to weigh in, since the case is back before the NC high court. Why you ask? Well the NC Supreme Court is elected. And in November, the Republicans won a majority of the seats on the court.

Unsurprisingly, the court decided to review two cases that were decided against Republicans. What’s remarkable is the extent to which NC Republicans are willing to go in order to take control over the outcome of elections away from voters. And they’re not even trying to be covert about it.

On February 3, the NC Supreme Court granted a petition to rehear the case. That means the state supreme court may reconsider a case that is already in front of the US Supreme Court.

On March 2, the US Supreme Court asked for a supplemental briefing. They’re asking the NC Republicans, (the plaintiffs that originally challenged the maps), and the Biden administration to submit supplemental briefings about what effects the state court’s reconsideration might have on the Supreme Court’s ultimate decision.

So the legal jousting about voting rights in North Carolina continues. Maybe the state’s decision to embrace Medicare expansion after a decade means that we simply have to wait for the GOP to come around to an idea that most Americans favor. In the case of voting rights, Wrongo suggests continuing the fight, not waiting.

Time to wake up America! The Biden administration won’t be sending free money to the states to get them to embrace universal voting rights. That may have worked with Medicare, but not with voting rights.

To help you wake up, watch, and listen to Roy Rogers play “Walkin Blues” from his video “Slide Guitar For Rock & Blues” on a 12 string resonator guitar. Rogers makes it his own, and the playing and vocals are terrific:

This is dedicated to our friend Rene S, who also plays a mean guitar. “Walkin Blues” is a blues standard that’s been recorded countless times, often with different lyrics. Son House, Robert Johnson, Muddy Waters, Eric Clapton and the Grateful Dead all have their own versions.


Sunday Cartoon Blogging – March 5, 2023

Not sure who buys their drugs at Walgreen’s but this seems like a bad management decision:

“The nation’s second-largest pharmacy chain confirmed Thursday that it will not dispense abortion pills in several states where they remain legal — acting out of an abundance of caution amid a shifting policy landscape, threats from state officials and pressure from anti-abortion activists.”

It seems that Republican state attorneys general in about 24 states wrote to Walgreens in February, threatening legal action if the company continued distributing the drugs in their states.

These abortion pills are the nation’s most frequently used method for ending a pregnancy.

The company subsequently told the states that it will not dispense abortion pills either by mail or at their brick-and-mortar locations in those states.

This is where America is at: Large corporations are doing more to obstruct access to abortion than the law requires. On to cartoons.

Women’s history month at the Supreme Court:

Wrongo and Ms. Right watched the Oscar-nominated movie “Women Talking” last night. It’s message is that women should no longer accept things they cannot change; that it’s time to change the things they can’t accept. Like the Dobbs decision.

Tennessee outlaws drag. And they’re so pro-life that they want to execute any woman who gets an abortion.:

Make facts your weapon:

Disney today:

Dilbert exits:

Jimmy’s with us for a little while longer: