From The Mushroom Head To It's Political.

Well, there you have it: Trump has been indicted and apparently there are 30 counts. (I wouldn't want to be the fool who leaked the contents of a sealed indictment but hey, idiots will be idiots.)

Let's start off on the left: many are beyond thrilled with lots of mushroom head jokes a circulating. Some of these people quite literally want Trump charged and convicted of any felony. Anything.

Moving to the right: it's political! Nothing more. And it's unprecedented. Sure is.

Both of these views are right and wrong. First off, indictments are just that. Defendants must be presumed innocent until a trial says otherwise, which it may or may not. Or it could be a split decision at trial.

Now the middle: plenty of people both on the left and right are worried. The DA actually campaigned on indicting Trump for heaven's sake. Not good. And then there's the matter of going first with your strongest case and this isn't it. This is a campaign violation for Christ's sake. I thought the grand jury would never indict and set an admittedly dangerous precedent. Remember that Ray didn't charge Clinton after he left office. 

So, I think this is a mistake. You go with your ace and that's January 6th, again with the presumption of innocence.

If there really are a multitude of counts then your hand as a prosecutor is strengthened but not by that much. I expect mostly acquittals at trial. This ain't beefy enough.

Then there's the elephant in the room: of course, it's political. Absolutely. Most Americans are less fond of Trump then when he was elected president. So, this is chicken-shit compared to January 6th.

It might end up as an unmitigated disaster for prosecutors. We'll see. It's the wrong hill to die on.

Finally, as many of you know, I think of Trump as a POS, on his best day. Always have, always will. But the Manhattan DA is on the wrong path here. God help us as this moves through the courts.

No, I don't expect widespread and continuous violence nor a spark that starts a civil war. But it's still exceedingly dangerous for the body politic. After all, this isn't Israel.

Time will tell. I'll be praying that the United States can survive this. I think so, but don't bet the farm on it anyway, just in case.

TBTF. Right.

Ask yourselves what's the next shoe to drop that could potentially take down a Too Big To Fail Bank. For my money, it's Commercial Real Estate. Some companies have already stopped paying their leases or abandoned the premises. 

That could be the beginning of a cascading effect and it comes on the heels of a similar phenomenon in Residential Real Estate.

Add to that the lack of confidence in the entire banking sector that seems to be growing and you have quite a recipe for a banking catastrophe.

Money is being pumped into the system by Treasury, The Federal Reserve and the largest banks themselves and still no end in sight for this banking crisis. 

Meanwhile, traditional instruments seen as safe are taking a hit: Treasuries are now less attractive along with corporate bonds. Bitcoin and Crypto are also viewed as somewhat suspect while Gold is the great unknown what with only one-half of one percent invested in it. 

So...what's the next big thing where money can flow as we head into a likely recession? Certainly not stocks.

I guess that means we can now kiss off disinflation, as inflation fails to sufficiently moderate, even after interest rate hikes. Some say, hyperinflation is in the cards next. I doubt that the dollar can be killed off that easily. I'm more a stagflation type of guy.

There also seems to be some worry about Wells Fargo and Bank of America but is that founded? Who knows. But just look at human psychology -- a clearly rattled Yellin and Powell -- tells you all you need to know about what could potentially come next.

It's like the blind leading the blind, with no one having a clear idea of what to do next. It's improvisation at its worse. Comforting thought...the plan is no plan.

American Bank Bail-Ins Almost Inevitable.

First off, let's start with a truism: Treasury, The Federal Reserve and FDIC simply don't have the reserves to make all depositors whole across every bank that gets into trouble as the contagion continues to spread. Hence, talks are ongoing with Warren Buffett, who in previous incarnations bailed out Bank of America and Goldman Sachs. Sound familiar? And now, Buffett supposedly will backstop some regional banks, but can the contagion be limited to that bank category? I doubt it.

You can thank the Trump Administration for a lot of this: the Federal Reserve eliminated all reserve requirements for depositary institutions in March 2020. Bingo. Before that, large banks had to have reserves of 10% and medium-sized banks 3%. Good going! Thanks to those idiots, there no longer is a fractional reserve requirement. Translation: when there's a run on a bank, there is no money there set aside by the banks to deal with it. 

Banking is all about depositors and their confidence that when push comes to shove that the money will be there to make them whole for each account they have in a bank to the tune of $250,000 USD. But if bank runs multiply like rabbits, then the system eventually goes under. For now, people are moving their money up the food chain, likely leading to more small and regional bank failures. But don't expect the fun to stop there: once people realize that the so-called Too Big To Fail Banks have no fractional reserves either, then it's all over. 

Biden doesn't want to go there. In fact, they've chickened out at least for now on bank bail-ins, but that can't last. That's why the FDIC has seized SVB's 2 billion. They want to give it to depositors to lessen the burden on FDIC. Will a bankruptcy court judge go for that? Probably. So what does that do to the concept of banking when bondholders end up holding the bag? Not good. 

Look at Credit Suisse, where AT1 bondholders get zip after UBS buys Credit Suisse. So, that in effect is a bank bail-in for bondholders. An ominous trend for the future.

But back to American banks: if the contagion takes on a life of its own, which could very well happen, then the gloves will almost inevitably come off about bank bail-ins in the United States. It will be either that or watch potentially a TBTF bank go down. Think back to 2008 when the TBTF banks ended up being bailed out by Uncle Sam. Otherwise, it was bye, bye.

These are exceedingly dangerous times. Perhaps Churchill put it best when he said: "It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

FTX...Silvergate...SVB...Signature.

Hum, why has the federal government chosen to make depositors whole at SVB and Signature? And why not any other banks in the future?

Maybe, just maybe, a lot of these folks were reliable Democratic Party donors. No kidding. But then there's the other thing: crypto banks and money laundering. Funny thing is, when you make all depositors magically whole, you tend to shut tight a lot of mouths that might otherwise have run off and had plenty to say, if they suffered a financial beef. The United States government, hard at work for all of you, and with a smile! Crony capitalism at its best.

How Many Other Shoes Are About To Drop?

Credit Suisse is well on its way to being taken over by UBS. But what will be the next shoes to drop? Commercial and Residential Real Estate are in crisis worldwide. The magnifying glass is on Blackstone right now. Others, like Pacific Investment Management and Brookfield, are also being eyed as well.

In this country, that brings me back to BMO and CIBC. So, we definitely live in interesting times, but to qualify this as interesting is the understatement of the year.  

Banks: Waking Up North Americans By Giving Them A Nightmare.

My advice is to get drunk now. After First Republic's bailout from other banks, and Treasury, The Fed and FDIC making all depositors whole at SVB and Signature, there's no way that they can do that for the next 180 banks who could theoretically go under, or if you prefer, become technically insolvent.

Jeff Snider, Steven Van Metre and Johnny Bravo are already all over it on YouTube. Waiting for The Maverick of Wall Street and Greg Mannarino, The Robin Hood of Wall Street.

UPDATE: If over 180 banks were to go down, all depositors would be wiped out, period. Why? Because the FDIC and CDIC simply don't have the assets to cover all depositors across a far reaching banking panic. This is a self-fulfilling and self-perpetuating hamster wheel: depositors panic and move their money to larger institutions. That undermines the small and regional banks as contagion spreads. So, in effect, it's more depositors that are killing the banks than the greedy and incompetent management that made so many banks already technically insolvent. How ironic is that? At some point, no bank becomes too big to fail. Even Canadian banks are potentially at risk, what with the real estate shenanigans which reportedly took place at BMO and CIBC. Fun, eh?

Trump, Trump, Trump, Again.

As most of you already know, I think of Trump as a POS, even on his best day. That will never, ever, change, but hey, unlike our Prime Minister, he actually isn't a total idiot: the guy is smart enough never to touch entitlements: Trump did not and will never go anywhere near Social Security, Medicare, Medicaid, etc. That's called political smarts. Haley and others are playing with fire, even though it takes guts to talk about entitlements, the retirement age and the rest of it. Another place where Trump is dead-on is when he labelled DeSantis DeSanctimonious. Bingo! Sanctimoniousness goes down great with the red-meat crowd in the party, but with crucial Independents, not so much.

Remember that the biggest lie in American politics is that this is a 50-50 country. Not a chance. Independents are by far the biggest political group, followed by Democrats, with Republicans bringing up the rear. Trump won because he had Independents with him. He lost because Independents went with Biden last time. Trump has learned his lesson. He knows now that Independents are incredibly turned off by preachy sanctimony. 

But this is the Republican Party we're talking about. Trump is beyond thrilled that he likely will be charged in Manhattan. He's calling for protests, you know, the same old MAGA-type garbage. He actually thinks that lightning will strike again in the same place, but it won't, not after January 6th, when Trump basically lost the country. But put it in Republican-speak, that's the way to go for Trump. He needs something big to fight off DeSantis. Let's get real here. DeSantis is going up in the polls, not Trump. So, Trump has cast himself in the role of Jesus Christ. He thinks it will work, but will it? Kind of depends on if your average Republican is big-picture or not. If not, it'll work great and DeSantis is already history, even before announcing. But if Republicans are primarily big-picture thinkers, they will want to go with DeSantis to broaden support in the general. That's the right strategy for '24. Don't get me wrong, DeSantis IS a sanctimonious hypocrite and asshole, but he's the one who can run the table with Independents. For Biden to lose and Republicans to win the presidency, they NEED to run DeSantis. Take Biden out of the mix and Republicans likely lose, unless Harris is the nominee. She has already been sent to Democratic political Siberia by a plurality of potential voters. Life, in and out of politics, just ain't fair. So, Harris is already finished. 

But back to Trump: if most Republicans want to stick with MAGA, which they probably don't, at least to some pollsters, then Trump's strategy is bound to fail. But if in their heart of hearts, they are still pro-MAGA, then Trump can't lose the nomination to DeSantis. Period. This is the scenario I see playing out. Trump gets the nomination, especially if he's indicted, and then gets blown away politically in the general. Even Biden can beat Trump, but Biden can't beat anyone else, not with this economy and this inflation. 

Now, if I was going to nail Trump to the cross with indictments, there's no way that I would lead with this type of small-potatoes. Most people, in similar circumstances, never get charged. It's a misdemeanour, nothing more. So...it's an incredibly stupid hill for a Democratic Manhattan DA to die on. Can they even get a conviction? I have serious doubts. The last thing most people want, even on grand juries, is to see Trump turned into a martyr. They don't want to go back to the hornets' nest. They don't want to see another January 6th. Tying it all up with a bow means for yours truly that Trump will likely be acquitted on any charges. I think Trump already realizes that and that's why he's playing it up as much as he can because ultimately, it will be to his political benefit.

This isn't about heads, it's all about hearts. How the party collective actually feels will determine the result, both for the Republican nominee and in the general election.

Johnston.

Give me a break. So what if the guy is Trudeau's friend. So what if Harper got him the job of Governor General. Really, do either of those things diminish his potential and likely level of impartiality? Not a chance.

This isn't  a thing to play political games with. Anyone who expects Johnston not to do the job with tenacity, rigour, dedication, thoroughness and impartiality is simply playing politics, for politics sake. Period.

And not only that. Johnston won't be holding or faking any punches. If the goods are there, they will be found with the chips falling as they may.

Johnston is a full speed ahead type of guy and damned the torpedoes. Some people, in some quarters, may come to regret the report when it comes out. If it looks like a duck, quacks like a duck, walks like a duck, rest assured it will ultimately be labeled as a duck. Of that, I have not a shred of doubt. That's quite simply, Johnston at work, the Johnston way.

Is First Republic Next?

Is this thing all about regional banks becoming insolvent due to unrealized losses? And are the big-five too-big-to-fail-banks relatively secure? 

This comes on the heels of crypto exchanges and companies that previously went belly up. Three big boys are still strong: Binance, Coinbase and Galaxy Digital. That contrasts with the likes of FTX, Blockfi, Three Arrows, Voyageur Digital and Celsius that either went or are in the process of likely going under. Meanwhile, over at Gemini, changes are coming to its business relationships while DCG is cutting jobs. 

That brings us to Silvergate, a Silicon Valley Bank subsidiary. When it went down, it likely had a cascading effect on SVB. SVB is purportedly the second-biggest American bank bankruptcy in history. And to add insult to injury for depositors, Yellin said that a bailout is out of the question. The Biden Administration fears a cascading effect. No kidding. But what about the elephant in the room: a bail in by depositors, under Dodd-Frank? À suivre.

SVB had bank runs before going under and First Republic is subject to considerable ATM withdrawls since yesterday. Not good. Hopefully, FR won't be the next victim.

Then there's the canary in the coalmine but what exactly is it chirping: some stocks dropped on Friday: Charles Schwab, Wells Fargo and the aforementioned First Republic -- while hedge funds are now shorting, among other companies, KeyCorp, with its biggest quarterly loss in its history, Signature, Zions and Truist. That's the trouble with bank panics, perception, not reality, very quickly becomes nine-tenths of the law. 

So, the FOMC is bound to have a very interesting private and closed meeting tomorrow morning. Watch them sweat, as they should.

UPDATE: Two MSN.com and MarketWatch.com articles that are a must-read.

10 banks that may face trouble in the wake of the SVB Financial Group debacle (msn.com)

20 banks that are sitting on huge potential securities losses—as was SVB - MarketWatch

2ND UPDATE: Reports say that Signature Bank just went down and a bailout is coming, but it won't technically be a bailout. Right.

3RD UPDATE: Federal Reserve and JPMorgan come to First Republic's rescue to boost liquidity.

Meanwhile, rumours are swirling around PacWest Bancorp.

4TH UPDATE: First Republic shares are still sinking even though liquidity was further injected. Looks like a bank crisis of confidence. Definitely not good.

China: Inquiry, What Inquiry?

The Trudeau Liberals are perfectly OK with Chinese election interference both in 2019 and 2021. Makes you wonder if they actually encouraged it. The CCP wanted the Trudeau Liberals re-elected. You know, this fool of a Prime Minister as an enthusiastic dupe of a totalitarian regime. Par for the course, given that this PM is on his best day, a certifiable idiot. But that gang of fawning dumbasses is far worse. They're enthusiastically ready to put our national security at risk, no questions asked. But I digress.

So...you may ask yourself why our KnumbskullTM refuses to hold a public inquiry. Simple. The Trudeau Liberals are so arrogant and self-serving that they actually believe that Martin was wrong to look into Sponsorship. That's why this poor excuse for a PM will never, ever, agree to an inquiry. And "unreasonably", people will conclude that this government has so much to hide that they already know that an inquiry will undoubtedly be politically fatal. So...no inquiry but eventually an election, and down will go the Liberals for at least a decade. Most people have finally had enough.

Marc Garneau Hangs It Up.

Marc is leaving politics. He's resigned his seat in the Commons. I can't let him go without thanking him for his service to Canada in so many ways: in the Navy, in our space program and, of course, in politics. 

Marc is one of the nicest people I ever met in politics. With a record like his and his quite obvious decency and sense of integrity, it was no contest during my Liberal incarnation to support him for leader. For me, he's the Stanfield of our age.

I know whatever may lie ahead for Marc, he will still keep his hand in at least indirectly to continue serving his fellow man and to make Canada an even better place than when he found it. 

All the best going forward and God's speed for what lies ahead.

Trudeau WILL Resign.

This Chinese election interference thing is well on its way to taking on a life of its own. Like most scandals, it's not so much about which Canadian politicians, Liberal or Conservative, who were prepared to enthusiastically do China's bidding, it's far more about who got money, in what quantities, and for what purpose. And on this front, the usual suspects with the last name of Trudeau are likely exceedingly vulnerable.

So, this will hit this Prime Minister where he lives: the guy is no genius, but he's sentient enough to recognize major political trouble when it's coming so quite naturally, he doesn't want an inquiry or commission. Think back to Sponsorship and how that PC and Liberal largesse killed the Liberals for almost a decade -- this is definitely reminiscent of that.

As in so much that amounts to a political scandal, the fun part will be following the money. One suspects that many a class in Ottawa is already out for Trudeau's hide, deeming him, at the very least, as being a serious national security risk. 

As a result, expect this PM to get the George Santos treatment: first a trickle, then a brook, followed by a river, a sea and ultimately coming face with ocean currents. Liberals have to ask themselves at precisely what point does this guy become expendable? The short answer is, of course, before they do. 

That means that when push inevitably comes to shove, they will have no other realistic choice but to JettisonJustinTM. For his part, Trudeau will want to save himself from utter humiliation, so that's when he'll finally resign.

Can't happen soon enough for me.

Kellyanne & George Are Divorcing.

My God, the end of any marriage is always sad and somewhat tragic, but this was predictable and, dare I say it, long overdue. I mean, why they stayed together this long given their irreconcilable differences, political that is, is way beyond me. All that misery, suffering in silence and general unhappiness. What a waste of time, given our collective precious short period on Earth.

So, I wish the best for each of them. I hope they find happiness eventually. But this really needed to be done and finally will be. Generally speaking, a Chinese water torture of a marriage is never fun.

On The Phone With An American Conservative.

I spoke with an American Conservative on Thursday. We were discussing the French fact in North America and how Quebec stuck with the British after 1759 when they were promised they could keep their religion and language. Otherwise, they might have joined the Revolutionary War down south, which was less than two decades away. At some point, I mentioned how the British had burned the White House, not to mention occupied Congress. He said he hoped that would happen again. I replied, I hope not.

And then I went into my lecture on the greatness of the United States of America, and more importantly, what made that country great: not American power, economic or military, not prestige. What made and makes today the United States great is the American experience, and who Americans are.

Just think back to how the rest of the world was so grateful for the Yanks in WWI. When Americans finally came in, it was decisive enough to ensure that we won that war. Then there's what happened when America joined WWII, right after Pearl Harbor. That quite literally saved Western democracy and rid the Earth of the Hitler demon seed and his evil worshippers.

SO...what I tell Americans until I'm blue in the face is that your country can continue to be great because of who the average American is and what he or she stands for in their heart -- not their mind. Put another way, you can be an American, first, last and always like McCain, or you can ignore your better angels and run on tribalism by giving way to your political mind and its inherent biases. 

We're at an inflection point where the United States must take a fork in the road to achieve its true destiny on Earth. Only your average American can make that choice, both individually and collectively. America can continue to do God's work in Ukraine (even though Ukraine is a very flawed nation) or the country can go the other way. If the United States sticks to its higher angels, America will once again save the free world in the next WW, which isn't that far off. Now, if the country collectively decides to continue on its current domestic political trajectory, where the other side is the blood enemy, to which no quarter must ever be given, then the fuse will be lit for the inevitable: a second Civil War.

Americans have a choice. I have no doubt which path they will choose, when push comes to shove. Without the United States of America, totalitarianism would quite literally control this planet. It would be hell on Earth, no doubt about that. So, as every American president says: may God bless the United States and protect her troops.

Chinese Election Interference.

This Prime Minister has painted himself in a corner. The TRUDEAU Liberals have boxed themselves in: most of the PRC's favourite candidates were Liberals and money flowed freely to a number of Liberal causes.

They have to stonewall -- they quite literally have no other choice -- if they don't and it all comes out, for starters, they lose power for at least a generation. And then there's the other thing: who and how many people get convicted and end up doing a stretch in the big house?

So...kiss off an inquiry. Never going to happen.