bank runs Archives - The Automatic Earth

If more Democratic swing-state representatives defect from the impeachment camp, which seems likely, House Speaker Nancy Pelosi will have a big problem. How can she proceed?
• If the House votes down impeachment Donald Trump wins.
• If the House holds no vote on the issue Donald Trump wins.
• If the House votes for censure Donald Trump will have won on points and the issue will be over.
• If the House votes for impeachment the case goes to the Senate for trial.

The Republican led Senate has two choices:
• It can decide to not open an impeachment trial by simply voting against impeachment. Trump wins.
• It can open a impeachment trial, use it to extensively hurt the Democrats and, in the end, vote against impeachment. Trump wins big time.

Should the House vote for impeachment the Senate is likely to go the second path. During impeachment the whole Senate sits as the High Court. The House of Representatives sends ‘managers’ who act as prosecutors. The chief justice of the U.S. presides. A vote for impeachment at the end of the trial requires a two-third majority. The Republican majority in the Senate could use such a trial to bring disarray into the Democrats’ primary. Elizabeth Warren, Bernie Sanders, Kamala Harris, Cory Booker, Amy Klobuchar and Michael Bennet are all senators and Democratic primary candidates. They would probably have to stop campaigning to attend the trials. Another leading Democratic candidate would be a top witness.

The Republican senators would immediately call up a number of people for questioning. These would include Joe Biden, Hunter Biden, his business partner Devon Archer, John Kerry who was Secretary of State when Biden intervened for Burisma owner Mykola Zlochevsky and of course the CIA spy and (not-)whistleblower Erik Ciaramella. It would also be of interest to hear how deep the former CIA director John Brennan was involved in the issue. The Senators could use the impeachment trial to dig into all the crimes the Democrats under Obama committed in Ukraine. They would concentrate not on the Maidan coup but on the aftermath when the deals were made. There surely is a lot of dirt out there and it is not only Joe Biden’s.

Free speech.

• The One Terrific Impeachment Defense The White House Is Not Making (DW)

As Texans will certainly remember, then-Governor Rick Perry was indicted in 2014 by a grand jury for abusing his official capacity when he threatened to withhold $7.5 million in funding for the Travis County district attorney’s Public Integrity Unit unless the district attorney, who had previously been convicted of drunk driving and subsequently incarcerated, resigned. Sounds a lot like a quid pro quo, no? At the time, the special prosecutor’s operative legal theory required that the First Amendment not protect a governmental actor’s right to threaten taking a lawful action in order to attain a preferred political outcome. If the special prosecutor were wrong, then Governor Perry’s attempted quid pro quo would hardly be illegal at all — it would actually be constitutionally protected speech.

At the time, powerful and ideologically diverse group of attorneys argued that the special prosecutor sought to criminalize constitutionally protected speech. The group included right-leaning legal luminaries such as law school professors Eugene Volokh and former Judge Michael McConnell, as well as former U.S. Attorney General Michael Mukasey. The group also includes historically liberal-leaning First Amendment scholars, such as Floyd Abrams and Alan Dershowitz. The counsel of record on this notable amicus brief was then-private attorney James C. Ho — for whom, in the interest of full disclosure, I served as a law clerk upon his successful nomination as a judge on the U.S. Court of Appeals for the Fifth Circuit.

The amicus brief argued that “[a] political official has the right to threaten to perform an official act in order to persuade another government official to engage in some other official act.” It continued: “That is not a crime — it is core political speech.” Governor Perry’s quid pro quo with respect to withholding funds from the Travis County district attorney’s Public Integrity Unit, the brief contended, “is protected free expression, and the [g]overnor cannot be prosecuted for it.” The Texas Court of Criminal Appeals, which is the Lone Star State’s highest court for criminal cases, agreed. “[P]ublic servants have a First Amendment right to engage in expression, even threats, regarding their official duties,” the Court held. “Many threats that … public servants make as part of the normal functioning of government” would be criminalized under the special prosecutor’s legal theory, the Court continued.

The Court’s rationale is not even remotely partisan or political; it is pure logic and common sense. Quid pro quos routinely happen in politics as a day-to-day reality of politics. Before issuing his DAPA executive amnesty, President Barack Obama consistently threatened to use his “pen and phone” if Congress did not take the legislative action he desired. Unruly congressmen often have their committee assignments threatened by committee chairmen if they fail to vote in accordance with congressional leadership’s desires. Heck, does anyone think that neither House Speaker Nancy Pelosi (D-CA) nor Senate Majority Leader Mitch McConnell (R-KY) engages in dozens of quid pro quos on a weekly basis as a rudimentary requirement of executing their chamber-wide leadership jobs?

The Trump impeachment defense should adopt this line of argumentation. How on earth can the president of the United States be impeached for engaging in constitutionally protected speech? How on earth can the president’s deployment of constitutionally protected speech, in the context of foreign policy, amount to an “abuse or violation of some public trust” that merits impeachment less than one year away from a presidential election?

Oh boy: “..we have a field of very accomplished, very serious and passionate and smart people..”

• Obama Privately Said He Would Speak Up To Stop Sanders (Hill)

President Obama privately said he would speak up to stop Sen. Bernie Sanders (I-Vt.) from becoming the Democratic presidential nominee, Politico reported Tuesday. The former president reportedly said if Sanders held a strong lead in the Democratic primary, he would speak out to prevent him from becoming the nominee. A close adviser to Obama told Politico he could not confirm whether Obama would stand up against Sanders. “He hasn’t said that directly to me,” the adviser said. “The only reason I’m hesitating at all is because, yeah, if Bernie were running away with it, I think maybe we would all have to say something. But I don’t think that’s likely. It’s not happening.”

An Obama spokesperson, when asked about his previous comments on Sanders, referred to the president’s past comments that he would back whomever became the Democratic nominee. “Look, we have a field of very accomplished, very serious and passionate and smart people who have a history of public service, and whoever emerges from the primary process I will work my tail off to make sure that they are the next president,” Obama said earlier this month, according to his spokesperson.

This must be the weirdest poll graph I’ve ever seen.

• MSNBC Doesn’t Try To Hide ‘Contempt’ Towards Gabbard (Hill)

Progressive journalist Michael Tracey claimed Tuesday that MSNBC is has dropped all pretenses for their “contempt” towards Rep. Tulsi Gabbard (D-Hawaii). The political news contributor said the left-leaning network has treated her fellow 2020 Democratic candidates, including businessman Andrew Yang and Sen. Bernie Sanders (I-Vt.) unfairly, but he argued that with Gabbard it, “crosses a certain threshold.” “Fundamentally they’re beholden to whatever the market incentives are and right now it’s within their market interests to depict Tulsi as an infiltrator, as a Trojan horse in the Democratic Party and not deal on the substance with what she’s saying which is why over and over again they tar her as a Russian plant essentially,” Tracey told Hill.TV.

“There’s nobody who can really offer any kind of countervailing view because it’s just not economically advantageous for them at this point,” he added. Tracey pointed to a fiery exchange between Gabbard and Sen. Kamala Harris (D-Calif.) during last week’s 2020 primary debate as a prime example. During the debate, Harris accused Gabbard of being a conservative media darling and consistently going on Fox News to bash President Obama during his tenure. “I think that it’s unfortunate that we have someone on this stage who is attempting to be the Democratic nominee for president of the United States, who, during the Obama administration, spent four years full-time on Fox News criticizing President Obama,” Harris said. Gabbard dismissed the criticism, calling it “ridiculous.”

I think Hong Kong is a lot more than a “financial window”. It feels like China would be blind without it.

• China Risks Losing Its Financial Window On The World (G.)

[..] although the leisure sector may have landed in the rough, the decision by the US Congress to pass the Hong Kong Human Rights and Democracy Act could represent a more significant long-term threat to the territory’s economic fortunes. The bill has infuriated Beijing as an “intervention” in its affairs but despite the delicate stage of US-China trade talks, Donald Trump is expected to sign the legislation because of its near-unanimous backing in Congress. The bill means the US would make an annual check that Hong Kong has sufficient autonomy from Beijing to qualify for the special US trading consideration that bolsters its status as a world financial centre. It also gives officials the power to levy sanctions against officials responsible for human rights violations in Hong Kong.

A second bill, which the Senate also approved unanimously on Tuesday, would ban the export of certain crowd-control munitions to Hong Kong authorities. George Magnus, the former chief economist of the investment bank UBS and now an associate of the London School of Economics’s IDEAS thinktank, said the legislation was potentially damaging for China. “Hong Kong is China’s financial window on the world, and vice versa. The territory lends China capital, clout and kudos. All of this is now at risk.” The consultancy Capital Economics said the bills highlighted a growing feeling that Hong Kong’s autonomy was “deteriorating” and could persuade some firms to look for new accommodation in east Asia. “The bill itself would not directly reduce the territory’s international status unless other countries follow suit,” Capital said this week.

“But it could lead the large number of foreign firms operating in the city to increasingly focus their energy on other Asian financial centres with less uncertain outlooks.” [..] with most experts agreed that Beijing will not back down and allow Carrie Lam’s government to give concessions to the pro-democracy groups, it is hard to see how the situation can be resolved quickly and pull the economy back from a disastrous, prolonged recession. Dan Harris, a lawyer at the Seattle firm of Harris Bricken who has done business in the region for decades, says the ongoing protests mean Hong Kong as an international financial centre is “no more”. “It’s finished as an international business centre because it was based on trust, safety and the rule of law and that’s all gone. Companies are looking to leave. No one is thinking of moving in,” he said.

There are bank runs, small ones for now.

• More Than Half Of China’s Banks Fail Central Bank Stress Test (ZH)

[..] with less income from lending and without the full suite of funding options available to much larger peers, the interest rates that China’s legion of small banks may have to offer to attract deposits could further undermine their stability. The irony is that to preserve their critical deposit base, small banks have to hike deposit rates even higher to stand out, in the process sapping their own lifeblood and ensuring their self-destruction, or as we dubbed it earlier, China’s own version of Europe’s “doom loop.” Dai Zhifeng, a banking analyst with Zhongtai Securities, told Reuters the funding difficulties risked distorting small banks’ behavior, making failure even more likely: “Lacking core competitiveness, some of them have turned to high-risk, short-sighted operations,” he said, adding that a liquidity crunch was possible at some institutions.

But for a nation with a $40 trillion financial system, double the size of US banks, and well over 4,000 small, medium and massive, state-owned banks, here please recall that the 4 largest banks in the world are now Chinese:• ICBC: $4TN • China Construction: $3.4TN • Agri Bank of China: $3.3TN • Bank of China: $3.1TN … the question how many banks will fail in the near future, is especially relevant not only for China but for the entire world. Luckily, we got an answer from none other than China’s central bank, which on Monday said that China’s banking sector is “showing signs of strain”, with more than 13% of 4,379 lenders now considered “high risk” by the central bank. In other words, take the 5 banks listed above which either suffered a bank run and/or were bailed out or nationalized, and add to them over 500 which are about to suffer the same fate.

Full control of the process is the only thing the FAA could do. They are co-responsible for the entire crisis.

• Boeing’s Problems Mount As FAA Vows To Ramp Up 737 MAX Oversight (BI)

The FAA said on Tuesday that it planned to exercise full control over all aspects of certification of Boeing’s 737 Max, even once the plane returns to commercial service. Relatively routine activities, such as certifying individual airplanes as they roll off the production line — as opposed to certifying the overall type of plane — will be performed by FAA officials, an agency spokesperson told Business Insider. Normally, routine day-to-day activities like certifying individual planes of an already certified type — the issuing of Airworthiness Certificates — which are among the final phases of the manufacturing process, are delegated to the planemaker.

Additionally, the likelihood of the plane being cleared to fly in 2019 was cast into further doubt, as was the possibility of Boeing resuming deliveries of completed planes to airline customers before the plane was fully cleared to reenter commercial service, according to The Air Current, an aviation industry publication. Boeing had stated earlier this month that it expected to resume deliveries in December, and for the plane to be fully cleared to fly again in January. However, it was not clear whether airline customers would accept delivery of the plane while it was not allowed to carry passengers.

“The FAA notified Boeing today that the agency will retain authority over the issuance of Airworthiness Certificates for all newly manufactured 737 MAX aircraft,” the FAA said in a statement. “This action is in line with Administrator Steve Dickson’s commitment that the agency fully controls the approval process for the aircraft’s safe return to service.” [..] “The FAA has not completed its review of the 737 MAX aircraft design changes and associated pilot training. The agency will not approve the aircraft for return to service until it has completed numerous rounds of rigorous testing. The FAA will take all the time it needs,” the agency added.

NATO is a monster that has taken on a life of its own because of arms manufacturers.

• Is Macron Right? Is NATO, 70, Brain Dead? (Buchanan)

During the Cold War, NATO enjoyed the widespread support of Americans and Europeans, and understandably so. The USSR had 20 divisions in Germany, surrounded West Berlin, and occupied the east bank of the Elbe, within striking distance of the Rhine. But that Cold War is long over. Berlin is the united free capital of Germany. The Warsaw Pact has been dissolved. Its member states have all joined NATO. The Soviet Union split apart into 15 nations. Communist Yugoslavia splintered into seven nations. As a fighting faith, communism is dead in Europe. Why then are we Americans still over there?

Since the Cold War, we have doubled the size of NATO. We have brought in the Baltic republics of Estonia, Latvia and Lithuania but not Finland or Sweden. We have committed ourselves to fight for Slovenia, Croatia, Albania and Montenegro but not Serbia, Bosnia or North Macedonia. Romania and Bulgaria are NATO allies but not Moldova or Belarus. George W. Bush kept us out of the 2008 Russia-Georgia clash over South Ossetia and Abkhazia. And Barack Obama refused to send lethal aid to help Ukraine retrieve Crimea, Luhansk or Donetsk, though Sen. John McCain wanted the United States to jump into both fights. In the House Intel Committee’s impeachment hearings, foreign service officers spoke of “Russian aggression” against our Ukrainian “ally” and our “national security” being in peril in this fight.

But when did Ukraine become an ally of the United States whose territorial wars we must sustain with military aid if not military intervention? When did Kyiv’s control of Crimea and the Donbass become critical to the national security of the United States, when Russia has controlled Ukraine almost without interruption from Catherine the Great in the 18th century to Mikhail Gorbachev in the late 20th century? Among the reasons Trump is president is that he raised provocative questions about NATO and Russia left unaddressed for three decades, as U.S. policy has been on cruise control since the Cold War. And these unanswered questions are deadly serious ones.

Yes, it takes a group of Germans to probe how Americans fell for Browder. And for their own Deep State, which used the story because RussiaRussia.

• Questions Cloud Story Behind Browder, Magnitsky (Spiegel)

There are two versions of what happened to Magnitsky. The more well-known version has all the makings of a conspiracy thriller. It’s been repeated in thousands of articles, TV interviews and in parliamentary hearings. In this version of the story, the man from the Moscow cemetery fought nobly against a corrupt system and was murdered for it. The other version is more complicated. In it, nobody is a hero. The first version has had geopolitical implications. In 2012, the United States passed the Magnitsky Act, which imposed sanctions against Russian officials who were believed to have played a role in his death. The measure was signed into law by then-President Barack Obama after receiving a broad bipartisan majority.

Back then, if there was one thing that politicians on both sides of the aisle could agree on, it was their opposition to a nefarious Russian state. In 2017, Congress passed the Global Magnitsky Act, which enabled the U.S. to impose sanctions against Russia for human rights violations worldwide. The facilitator behind these pieces of legislation is Bill Browder, Magnitsky’s former boss in Moscow. “When he was put to the ultimate test, he became the ultimate hero,” Browder says of Magnitsky. Browder was born in the U.S.. For years, his company, Hermitage Capital Management, was one of the largest foreign investors in Russia. At the time, Browder was an advocate for Russian President Vladimir Putin in the West. That is, until he was prohibited from entering Russia in 2005.

[..] Browder tells a gripping story of how Magnitsky, the whistleblower, is believed to have died. This narrative is his ticket into the political sphere. It’s why he’s received by members of parliament, diplomats and human rights activists alike, often with open arms. They support his push for more legislation because they see it as setting an important precedent: Corrupt regimes all over the world that are violating their citizens’ rights must be held accountable and made to suffer consequences in the form of entry bans and frozen accounts as laid out by the Global Magnitsky Act. The law makes it more difficult, if only slightly, for autocrats to sneer at and ignore human rights.

But there’s another version of the Magnitsky saga, one that is more contradictory than Browder’s telling and more difficult to summarize. The legal documents that underpin it fill dozens of binders, not only in Moscow, but also in London and New York. After sifting through thousands of pages, one might begin to wonder: Did the perfidious conspiracy to murder Magnitsky ever really take place? Or is Browder a charlatan whose story the West was too eager to believe?

Now dig into Bellingcat’s role in MH17.

• Narrative Managers Faceplant In Hilarious OPCW Scandal Spin Job (CJ)

Before we begin I should highlight that Bellingcat is funded by the National Endowment for Democracy, which according to its own cofounder was set up to do overtly what the CIA had previously been doing covertly, namely orchestrating narrative management geared toward the elimination of governments which refuse to comply with US interests. NED is funded directly by the US government, which means that Bellingcat is funded by the US government via an organization set up to promote imperialist regime change agendas. Bellingcat is also funded by Open Society Foundations, another imperialist narrative management operation.

[..] Bellingcat’s latest phenomenal report on how you’re supposed to think about important geopolitical disputes, titled “Emails And Reading Comprehension: OPCW Douma Coverage Misses Crucial Facts”, addresses the leaked OPCW email which was recently published by WikiLeaks and various other outlets revealing that the OPCW omitted crucial information from its Douma report which indicated that a chemical weapons attack was unlikely to have occurred. I encourage you to go and check out Bellingcat’s new masterpiece for yourself. Don’t worry about giving them clicks; that’s not where they get their money.

The first thing you’ll notice about Bellingcat’s article is that at no point does it even attempt to address the actual inflammatory comments within it, such as the OPCW whistleblower’s assertion that the samples tested where a chlorine gas attack is alleged to have occurred in April 2018 contained levels of chlorinated organic compounds which were so low that it would be unreasonable to claim with any confidence that a chlorine gas attack had occurred at all. The whistleblower writes in the leaked email to the OPCW cabinet chief that the levels “were, in most cases, present only in parts per billion range, as low as 1–2 ppb, which is essentially trace quantities.”

As we discussed previously, early skeptics of the establishment Douma narrative highlighted the bizarre fact that when the OPCW published its Interim Report in July of last year its report contained no information about the levels at which the chlorinated organic chemicals occurred. Chlorinated organic chemicals occur at trace levels in any industrialized area, so they are only indicative of a chlorine gas attack when samples test at high levels. The email said they didn’t. The OPCW omitted this in both its Interim and Final Reports. The whistleblower told journalist Jonathan Steele that the levels found “were comparable to and even lower than those given in the World Health Organisation’s guidelines on recommended permitted levels of trichlorophenol and other COCs in drinking water.”

You go George.

• A Tale of Prince Andrew and Julian Assange (George Galloway)

The grand old Duke of York sleeps tonight on a feather pillow in a royal palace. Julian Assange, the publisher of the century sleeps in the hell of Belmarsh Prison, Britain’s own Guantanamo Bay. The Duke of York lied about the length duration and nature of his relationship with the presumed deceased child-sex trafficker Jeffrey Epstein. Julian Assange told the truth about the high crimes and misdemeanours of the rich and powerful during times of war and peace. The FBI need to speak to the Queen’s favorite son, but no power on earth will be deployed to make him testify about what he might have seen, or even have participated in, at the townhouse in Manhattan, a Sodom and Gomorrah of our times.

The same US Justice system has caused the cruel incarceration of Assange and his Kafkaesque entrapment in an extradition saga which may last for years – if he doesn’t die before it is over as no less than 60 doctors have recently warned he may well do. The US-UK extradition arrangements may be the most unequal treaty ever concluded by Her Majesty’s ministers. In this case the former Blair government Home Secretary David Blunkett, a blind man who could, nonetheless, see exactly what he was doing. In essence extradition from Britain to the US became virtually on request without the slightest need to show just cause. But not vice versa. It would be easier to pull a camel through the eye of a needle than for Britain to extradite a US citizen to face justice in the UK.

I was a member of the British Parliament at the time this treaty was signed. Not that this mattered a jot or tittle. The Treaty was signed during the Summer Recess when no Parliament was sitting and through the exercise of the Royal Prerogative. Only when it was already in operation was I even able to oppose the extradition of its first victims – alleged City of London financial fraudsters, as well as a fitted-up “terrorist” London man Babar Ahmad. Under the old extradition rules neither case could have satisfied the previous requirement to produce prima facia evidence sufficient to persuade a British judge. Under the new Treaty it was easy peasy lemon squeezy. And off they went.

Prince Andrew will face no such ordeal albeit now banished from Royal Circles and effectively reduced to the ranks, his epaulettes ripped off his glittering array of obscure medals turned to scrap metal on his tunic. Although accused of sexual abuse of a teenager and with an admitted close relationship to the alleged procurer of underage female victims, Ghislaine Maxwell, in whose London home it is alleged one of the sexual encounters took place – the US will never require the Prince to give evidence and the UK will never offer him up. Assange, who was falsely accused of rape, has spent virtually the last decade locked up in one form or other of incarceration. And faces up to 175 years of prison time, if successfully extradited.

It is a tale of two cities – Buckingham Palace and Belmarsh Maximum Security Prison. A tale of two individuals – one now a proven liar and one a well attested truth-teller. A tale of two fates. The Prince who became a moral pauper, the other an impecunious journalist who became a moral giant. It is a tale of our times.

Please support the Automatic Earth on Paypal and Patreon so we can continue to publish.

Top of the page, left and right sidebars. Thank you.