The clock is ticking

Today is an opportunity for the people to have their voices heard on how they feel about living with a tyrannical political abuser in the White House.

Depending on when you read this, we will either be waiting for the people to speak, or they will have spoken, but I suspect Trump’s response will be the same: ‘I don’t care’.

We’re living in Trump’s world. A world in which reality plays no part and the only thing that matters is power and wealth. We’re living in political silos, and it’s difficult to see things ever improving when every day we wake up to more lies, misdirection and disinformation. When I say politics is broken, it’s not a term I use lightly; it’s a term that should instil fear, because, along with fear, broken politics demonstrates a lack of vision and ambition. The type of vision and ambition an opposition party should be screaming from the mountaintops as they ride on the crest of a wave of disapproval for a failing government. Instead, it seems far too many Democrats seek comfort in the arms of the same corporate class that has caused this existential threat to democracy in the first place.

So how do I know politics is broken? It really is quite simple; the so-called party of the people is frightened to speak of healthcare as a human right, reluctant to fight for a living wage, tepid on paid family leave and affordable childcare. In some ways, I can understand this position when you’re facing a centrist Republican administration and need to be more nuanced in your policy approach. However, in this case, we have a lunatic out-of-control president advocating for social Darwinism who has imposed tax increases on everyday Americans by an average of 18% disguising them as import duties (tariffs).

The true litmus test is whether New Yorkers will decide to take a chance on Zohran Mamdani and his people-focused agenda, based on the simple premise of affordability. Will voters decide that the people of New York deserve better than more of the same old self-serving political dynasties that have all too often come to define American politics?

In times of existential threat, you can do one of two things. Take the edge off the threat, or break the glass and chart a new path forward. A path focused not on the mistakes that brought us to where we are, but on a people-focused, more equitable, yet equally economically ambitious vision for a prosperous America. It is, as they say, the height of stupidity to keep repeating the same thing over and over again, expecting a different outcome, yet here we are again.

It’s time to face the truth and admit that the US is fast becoming a techno slave plantation, and ‘we the people’ are the lab rats in this march to a new world order. The system is so broken it needs a reset, but in the real world, short of a revolution, change is incremental, and incrementalism can become the enemy of progress. I’ve talked many times about this being an inflexion point in American politics, but it is, I believe, far more than that; it’s a global inflexion point that will define the future of geopolitics.

I don’t think the American people understand just how much their decision at the ballot box over the next two years will determine the future of the world. It’s a joke in Europe that Americans think they are the centre of the universe, and, in a twist of irony, that has come to pass. America's previous success in building geopolitical trade around the dollar is now at the centre of a fight for global economic dominance. It’s going to get very ugly, and domestic politics in America will determine the future prosperity of billions worldwide. So no pressure then.

The November off-season elections may seem unimportant aside from key races that capture the attention of a now-neutered corporate media. However, they are an essential barometer of voter sentiment toward the sitting administration. As I said yesterday, the danger this poses is that Democrats misinterpret a protest vote against Trump as an endorsement of them. This is very dangerous and will serve as a false sense of security.

It’s no secret that the Democrats are being forced to examine what they represent and who they are as a party, because, for all the damage being done by Trump, voters have little faith in Democrats to defend them against this assault on their way of life from a lunatic drunk on power. Oddly, though, Democratic leadership is either blind to this reality or, more worryingly. The Democratic base is going to have to decide what they want, and it seems pretty clear to me that what they want and what Democratic leadership wants appear to be somewhat different.

It would be pointless for me to waste time even attempting to find a path to reconciliation on this front because I don’t believe there is one. My biggest fear in all of this, is that if there are elections in 2028, Democrats win as a result of a massive protest vote against Trump. Such a result would be a blessing for corporate America, because they’ve bought just as many Democrat politicians. As much as there needs to be a revolution against Trump, I believe there needs to be a revolution inside the Democratic Party, because until there is meaningful change at the top, America will continue to be governed by the same old political class they have had for decades. That’s why so many Americans now sit out elections.

The thing that infuriates me more than anything else is the lack of true social ambition in Democratic politics. The only way to create a fairer, and by definition, better society is through bold vision and a willingness to break the mould of mediocrity. The most frustrating thing is that the Democratic Party is blessed with a deep bench of political talent that could achieve this, yet leadership is preventing it. That’s soul-destroying to me.

Amidst the chaos of Trump committing war crimes in the Caribbean and his intent of committing crimes against humanity here at home, before having to be dragged kicking and screaming to provide nutritional assistance, it’s easy to miss the important stuff that’s going on behind the curtain.

At the moment, economic decision-makers are to some degree flying blind, working with only commercially available financial data, since the Bureau of Labour Statistics no longer publishes data on which they would usually rely—another reason why Trump is in no rush to reopen the government.

Following the COVID crisis, the Fed established a Repo Facility to protect the banking sector from potential runs. So what is a Repo, you ask?

Definition:

A repurchase agreement is a contract to sell securities, usually government bonds, and repurchase them back shortly after at a slightly higher price.

To give you some context, because I think you will, if you have not already been hearing about the level of Repos being relied on by banks at the moment, here’s an old video from 6 years ago from the Wall Street Journal that provides what I beleive is a both an excellent overview and wraps some context around why the Fed setup the Standing Repo Facility that banks are currently making unusually heavy use of and it’s raising some important questions.

If you want a current assessment, this piece by Michael S. Derby in Reuters, published on October 31st, is helpful and offers a more balanced outlook on what some are in a state of panic over at the moment. My concern here is that this is more an indicator of liquidity stress than some more optimistic observers would have you believe. In his piece, Michael notes:

The Fed’s Standing Repo Facility lent a total of $50.35 billion on Friday to eligible financial firms in two separate availabilities, the highest-ever usage since the tool was put in place in 2021 to provide fast loans collateralised with Treasury or mortgage bonds. At the same time, financial firms also parked a considerable amount of cash on Fed books, with the reverse repo facility seeing inflows of $51.8 billion.

The Fed’s Standing Repo Facility has mainly remained untapped since it was put in place in 2021 during the Biden administration. It was designed to be the oil that greases the fiscal cogs when liquidity is scarce and interbank borrowing seizes up. There is no disputing that if the banking sector is forced to use the system, stress exists. Then we get down to mortgage-backed securities being valid collateral for repo transactions. This is scarily reminiscent of 2008, when the banks lied to cover up their addiction to gambling with their clients’ money.

The claim last week was that this week, things would settle down again, yet yesterday we were into banks tapping the facility for a further $22 billion $14 billion of which was secured by mortgage-backed securities.

I know it can all seem a little daunting, wading through the complexities of how the economy works, and I certainly don’t want to overcomplicate it for those reading. While I am not in the camp of those screaming five-alarm fire just yet, what I would say is this: It’s clear that liquidity in the banks is under stress and that should not be ignored, even despite a government shutdown. The Fed will claim, this is precisely how the SRF should work, so there really is nothing to see here. I’m not buying that narrative, and it will be essential to monitor this closely and look for the introduction of withdrawal limits from banks. History tells us time and again, the banks are not to be trusted. It seems to me that the Fed is printing money to protect the economy from Trump’s awful decision making.

This week, we’re going to take an in-depth look at the economy to provide a clear assessment of where we are right now. This observation about bank liquidity stress is just one part of a complex economic jigsaw, for which Trump spends his days hiding the pieces, making it challenging to piece together the truth. When we catch up tomorrow, we will undoubtedly have a clearer picture of political sentiment following the election, which, if it’s not what Trump wants to hear, will likely make him even more aggressive in his mission to seize absolute power.

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