Saturday, September 19, 2020

Fed Market Manipulations

 It is unclear to me what the long term effect will be of the Fed’s huge role in the financial markets, not just for the pandemic, but since the 2008 great recession.  Interest rates have been close to zero despite stock and real estate markets that have been on fire.  Part of the reason may have been the Fed’s program of buying all kinds of bonds. 

When people want to buy bonds, interest rates stay low.  Governments or companies do not have to offer higher rates to entice investors to buy the bonds.  If it is hard to sell bonds, then borrowers have to offer higher interest rates to persuade buyers to buy.  If the bond market is unattractive to ordinary bond buyers, but the Fed steps in to buy at any price, the Fed keeps rates lower than they would be in a free market. 

What happens if these bonds go bad?  The Fed currently holds about $7 trillion in assets.  Presumably most of these are US government bonds.  While the Fed’s ability to purchase assets is unlimited, its ability to sell assets is limited by the amount of assets it holds.  If those assets become worthless, the Fed’s ability to sell them becomes more and more limited.  The Fed sells assets to fight inflation and keep interest rates low.  Currently there is no need to do this, since interest rates are zero. 

At some point, however, the dollar could threaten to become worthless.  Currently the dollar is the main international currency, which means that the US and other countries borrow in dollars.  China holds an enormous amount of US dollars.  According to MarketWatch, China holds $1.2 trillion of US debt; Japan holds $1 trillion, Brazil and Ireland hold $300 billion each, while other countries hold lesser amounts.  If the dollar became worthless, i.e., its value dropped precipitously against the yuan and the yen, the US would have to start paying much more for imports and perhaps pay in other currencies, such as the Euro.  More expensive imports would be inflationary, creating pressure on the Fed to sell assets that are becoming worthless. 

Although this scenario seems unlikely at the moment, with inflation at zero and the economy doing well, it is not out of the question for future.  The Fed should be thinking about how to unwind its huge asset holdings. The last time the US faced a debt problem like this, during World War II, it issued savings bonds and encouraged patriotic Americans to buy them, basically to finance the war effort.  It is not clear that most Americans are patriotic enough to do that again, especially if there is no threat of a physical, military invasion. 

In particular, black Americans do not like America.  They expect the government to give them money.  They are not interested in giving money to the government so that the country can survive.  Blacks probably won’t buy savings bonds, like white Americans did during World War II.  So, the government and the Fed would have to find some other mechanism to help the United States survive a different kind of economic calamity.  For now, we’ll just hope it doesn’t come, and that the government can just keep throwing money into the air for whoever can catch it first, probably Wall Street tycoons. 

Sunday, April 12, 2020

Virus Model Numbers Going Down

Something important is happening as the coronavirus crisis continues: Estimates of its lethality keep going down. On March 31, the White House estimated that, even with social distancing policies in place, between 100,000 and 240,000 Americans would die of covid-19. Anthony S. Fauci recently indicated the government’s estimates will soon be revised downward.
The University of Washington model — which has been cited by the White House — predicted on March 26 that, assuming social distancing stays in place until June 1, U.S. deaths over the next four months would most likely be about 81,000. By April 8, it had made more than five revisions, to get to the current number: 60,415. That’s on par with the number of people estimated to have died of the flu in the 2019-2020 season.

Wednesday, April 08, 2020

Wartime President?

In wartime, we expect our leaders to provide truthful accounts of the enemy’s treachery and a sober rendering of the costs of battle, as Franklin Roosevelt did after Pearl Harbor. By contrast, President Trump spent weeks playing down Covid-19, comparing it to the flu, and in January claimed: “We have it under control. It’s going to be just fine.” That caused many Americans to discount the threat and resist essential social-distancing measures.

https://www.nytimes.com/2020/04/07/opinion/trump-coronavirus-us.html?searchResultPosition=1

Wednesday, October 02, 2019

Schiff’s Whistleblower and the Mueller Report


The whistleblower complaint against President Trump alleges acts very similar to those examined by the Mueller Report which occurred during the June 9, 2016, meeting in Trump Tower between the Russian attorney Natalia Veselnitskaya, Donald Trump, Jr., and several other participants.  In both episodes there was the possibility of a foreign government giving Trump opposition research information relevant to his campaign opponent. 

The Mueller Report examined the June 9, 2016, meeting in great detail.  Its conclusion was that there was no violation of campaign finance laws.  The same conclusion should apply to Trump’s phone call with Ukrainian President Zelensky.  The Report said:

Accordingly, taking into account the high burden to establish a culpable mental state in a campaign-finance prosecution and the difficulty in establishing the required valuation, the Office decided not to pursue criminal campaign-finance charges against Trump Jr. or other campaign officials for the events culminating in the June 9 meeting.
In particular, on the question of whether opposition research provided by a foreign government constituted a thing-of-value, the Muller Report said:
… no judicial decision has treated the voluntary provision of uncompensated opposition research or similar information as a thing of value that could amount to a contribution under campaign-finance law. Such an interpretation could have implications beyond the foreign-source ban, see 52 U.S.C. § 30116(a) (imposing monetary limits on campaign contributions), and raise First Amendment questions. Those questions could be especially difficult where the information consisted simply of the recounting of historically accurate facts. It is uncertain how courts would resolve those issues. 
The Democrats working on impeachment refuse to mention the Mueller Report, although it is clearly relevant to their investigations.  Since the factual situations are so similar it is important to review the Mueller Report’s extensive analysis of the June 9, 2016, meeting between Trump Jr. and Veselnitskaya.  The Democrats would no doubt argue that they are different because Trump threatened to withhold aid from Ukraine, but in fact, Trump asked Zelensky to do him a “favor.”  A favor is not something you pay for.  It is something done at the other party’s discretion, and need not be done at all.  Zelensky did not do anything in response to Trump’s request, and Trump did not withhold the aid.  In that sense it was like the June 9 meeting in that nothing happened with regard to providing opposition research. 
Because it is so relevant, following is the complete text from the Mueller Report of its legal analysis of the June 9 meeting. 
Begin quote:
3. Campaign Finance
Several areas of the Office's investigation involved efforts or offers by foreign nationals to provide negative information about candidate Clinton to the Trump Campaign or to distribute that information to the public, to the anticipated benefit of the Campaign. As explained below, the Office considered whether two of those efforts in particular- the June 9, 2016 meeting at Trump
Tower Harm to Ongoing Matter ---:-eonstituted prosecutable violations of the campaign-finance laws. The Office determined that the evidence was not sufficient to charge either incident as a criminal violation.
a. Overview Of Governing Law
"[T]he United States has a compelling interest... in limiting the participation of foreign citizens in activities of democratic self-government, and in thereby preventing foreign influence over the U.S. political process." Bluman v. FEC, 800 F. Supp. 2d 281, 288 (D.D.C. 2011) (Kavanaugh, J., for three-judge court), ajf'd, 565 U.S. 1104 (2012). To that end, federal campaign- finance law broadly prohibits foreign nationals from making contributions, donations, expenditures, or other disbursements in connection with federal, state, or local candidate elections, and prohibits anyone from soliciting, accepting, or receiving such contributions or donations. As relevant here, foreign nationals may not make- and no one may "solicit,' accept, or receive" from them- " a contribution or donation of money or other thing of value" or "an express or implied promise to make a contribution or donation, in connection with a Federal, State, or local election." 52 U.S.C. § 30121(a)(l)(A), (a)(2).1283 The term "contribution," which is used throughout the campaign-finance law, "includes" "any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office." 52 U.S.C. § 30101(8)(A)(i). It excludes, among other things, "the value of [volunteer] services." 52 U.S.C. § 30101(8)(B)(i).
Foreign nationals are also barred from making "an expenditure, independent expenditure, or disbursement for an electioneering communication." 52 U.S.C. § 30121(a)(l)(C). The term "expenditure" "includes" "any purchase, payment, distribution, loan, advance, deposit, or gift of money or anything of value, made by any person for the purpose of influencing any election for Federal office." 52 U.S.C. §,30101(9)(A)(i). It excludes, among other things, news stories and non-partisan get-out-the-vote activities. 52 U.S.C. § 3010I(9)(B)(i)-(ii). An "independent expenditure" is an expenditure "expressly advocating the election or defeat of a clearly identified candidate" and made independently of the campaign. 52 U.S.C. § 30101(17). An "electioneering communication" is a broadcast communication that "refers to a clearly identified candidate for Federal office" and is made within specified time periods and targeted at the relevant electorate. 52 u.s.c. § 30104(f)(3).
The statute defines "foreign national" by reference to FARA and the Immigration and Nationality Act, with minor modification. 52 U.S.C. § 30121(b) (cross-referencing 22 U.S.C. § 61 l(b)(l)-(3) and 8 U.S.C. § 1101(a)(20), (22)). That definition yields five, sometimes- overlapping categories of foreign nationals, which include all of the individuals and entities relevant for present purposes-namely, foreign governments and political parties, individuals
outside of the U.S. who are not legal permanent residents, and certain non-U.S. entities located outside of the U.S. ·
A and willful[]" violation involving an aggregate of $25,000 or more in a calendar year is a felony. 52 U.S.C. § 30109(d)(l)(A)(i); see Bluman, 800 F. Supp. 2d at 292 (noting that a willful violation will require some "proof of the defendant's knowledge of the law"); United States v. Danielczyk, 917 F. Supp. 2d 573, 577 (E.D. Va. 2013) (applying willfulness standard drawn from Bryan v. United States, 524 U.S. 184, 191-92 (1998)); see also Wagner v. FEC, 793 F.3d 1, 19 n.23 (D.C. Cir. 2015) (en bane) (same). A "knowing[] and willful[]" violation involving an aggregate of $2,000 or more in a calendar year, but less than $25,000, is a misdemeanor. 52 U.S.C. § 30109(d)(l)(A)(ii).
b. Application to June 9 Trump Tower Meeting
The Office considered whether to charge Trump Campaign officials with crimes in connection with the June 9 meeting described in Volume I, Section IV.A.5, supra. The Office concluded that, in light of the government's substantial burden of proof on issues of intent ("knowing" and "willful"), and the difficulty of establishing the value of the offered information, criminal charges would not meet the Justice Manual standard that "the admissible evidence will probably be sufficient to obtain and sustain a conviction." Justice Manual§ 9-27.220.
In brief, the key facts are that, on June 3, 2016, Robert Goldstone emailed Donald Trump Jr., to pass along from Emin and Aras Agalarov an "offer" from Russia's "Crown prosecutor" to "the Trump campaign" of “official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to [Trump Jr.'s] father." The email described this as "very high level and sensitive information" that is "part of Russia and its government's support to Mr. Trump-helped along by Aras and Emin." Trump Jr. responded: "if it's what you say I love it especially later in the summer." Trump Jr. and Emin Agalarov had follow-up conversations and, within days, scheduled a meeting with Russian representatives that was attended by Trump Jr., Manafort, and Kushner. The communications setting up the meeting and the attendance by high-level Campaign representatives support an inference that the Campaign anticipated receiving derogatory documents and information from official Russian sources that could assist candidate Trump's electoral prospects.
This series of events could implicate the federal election-law ban on contributions and donationsbyforeignnationals,52U.S.C.§3012l(a)(l)(A). Specifically, Goldstone passed along an offer purportedly from a Russian government official to provide "official documents and information" to the Trump Campaign for the purposes of influencing the presidential election. Trump Jr. appears to have accepted that offer and to have arranged a meeting to receive those materials. Documentary evidence in the form of email chains supports the inference that Kushner and Manafort were aware of that purpose and attended the June 9 meeting anticipating the receipt of helpful information to the Campaign from Russian sources.
The Office considered whether this evidence would establish a conspiracy to violate the foreign contributions ban, in violation of 18 U.S.C. § 371 ; the solicitation of an illegal foreign- source contribution; or the acceptance or receipt of "an express or implied promise to make a [foreign-source] contribution," both in violation of 52 U.S.C. § 3012l(a)(l)(A), (a)(2). There are reasonable arguments that the offered information would constitute a "thing of value" within the meaning of these provisions, but the Office determined that the government would not be likely to obtain and sustain a conviction for two other reasons: first, the Office did not obtain admissible evidence likely to meet the government's burden to prove beyond a reasonable doubt that these individuals acted "willfully," i.e., with general knowledge of the illegality of their conduct; and, second, the government would likely encounter difficulty in proving beyond a reasonable doubt that the value of the promised information exceeded the threshold for a criminal violation, see 52 U.S.C. § 30109(d)(l)(A)(i).

i. Thing-of Value Element
A threshold legal question is whether providing to a campaign "documents and information" of the type involved here would constitute a prohibited campaign contribution. The foreign contribution ban is not limited to contributions of money. It expressly prohibits "a contribution or donation of money or other thing of value." 52 U.S.C. § 3012l(a)(l)(A), (a)(2) (emphasis added). And the term "contribution" is defined throughout the campaign-finance laws to "include[]" "any gift, subscription, loan, advance, or deposit of money or anything of value." 52 U.S.C. § 30101(8)(A)(i) (emphasis added).
The phrases "thing of value" and "anything of value" are broad and inclusive enough to encompass at least some forms of valuable information. Throughout the United States Code, these phrases serve as "term[s] of art" that are construed "broad[ly]." UnitedStatesv.Nilsen,967F.2d 539, 542 (11th Cir. 1992) (per curiam) ("thing of value" includes "both tangibles and intangibles"); see also, e.g., 18 U.S.C. §§ 20l(b)(l), 666(a)(2) (bribery statutes); id. § 641 (theft of government property). For example, the term "thing of value" encompasses law enforcement reports that would reveal the identity of informants, United States v. Girard, 601 F.2d 69, 71 (2d Cir. 1979); classified materials, United States v. Fowler, 932 F.2d 306, 310 (4th Cir. 1991); confidential information about a competitive bid, United States v. Matzkin, 14 F .3d 1014, I 020 (4th Cir. 1994); secret grand jury information, United States v. Jeter, 775 F.2d 670, 680 (6th Cir. 1985); and information about a witness's whereabouts, United States v. Sheker, 618 F.2d 607, 609 (9th Cir.
1980) (per curiam). And in the public corruption context, " ' thing of value' is defined broadly to include the value which the defendant subjectively attaches to the items received." United States v. Renzi, 769 F.3d 731,744 (9th Cir. 2014) (internal quotation marks omitted).
Federal Election Commission (FEC) regulations recognize the value to a campaign of at least some forms of information, stating that the term "anything of value" includes "the provision of any goods or services without charge," such as "membership lists" and "mailing lists." 11 C.F.R. § 100.52(d)(l). The FEC has concluded that the phrase includes a state-by-state list of activists. See Citizens for Responsibility and Ethics in Washington v. FEC, 475 F.3d 337, 338 (D.C. Cir. 2007) (describing the FEC's findings). Likewise, polling data provided to a campaign constitutes a "contribution." FEC Advisory Opinion 1990-12 (Strub), 1990 WL 153454 (citing 11 C.F.R. § 106.4(6)). And in the specific context of the foreign-contributions ban, the FEC has concluded that "election materials used in previous Canadian campaigns," including "flyers, advertisements, door hangers, tri-folds, signs, and other printed material," constitute "anything of value," even though "the value of these materials may be nominal or difficult to ascertain." FEC Advisory Opinion 2007-22 (Hurysz), 2007 WL 5172375, at *5.
These authorities would support the view that candidate-related opposition research given to a campaign for the purpose of influencing an election could constitute a contribution to which the foreign-source ban could apply. A campaign can be assisted not only by the provision of funds, but also by the provision of derogatory information about an opponent. Political campaigns frequently conduct and pay for opposition research. A foreign entity that engaged in such research and provided resulting information to a campaign could exert a greater effect on an election, and a greater tendency to ingratiate the donor to the candidate, than a gift of money or tangible things of value. At the same time, no judicial decision has treated the voluntary provision of uncompensated opposition research or similar information as a thing of value that could amount to a contribution under campaign-finance law. Such an interpretation could have implications beyond the foreign-source ban, see 52 U.S.C. § 30116(a) (imposing monetary limits on campaign contributions), and raise First Amendment questions. Those questions could be especially difficult where the information consisted simply of the recounting of historically accurate facts. It is uncertain how courts would resolve those issues.
ii. Willfulness
Even assuming that the promised "documents and information that would incriminate Hillary" constitute a "thing of value" under campaign-finance law, the government would encounter other challenges in seeking to obtain and sustain a conviction. Most significantly, the government has not obtained admissible evidence that is likely to establish the scienter requirement beyond a reasonable doubt. To prove that a defendant acted "knowingly and willfully," the government would have to show that the defendant had general knowledge that his conduct was unlawful. U.S. Department of Justice, Federal Prosecution of Election Offenses 123 (8th ed. Dec. 2017) ("Election Offenses"); see Bluman, 800 F. Supp. 2d at 292 (noting that a willful violation requires "proof of the defendant's knowledge of the law"); Danielczyk, 917 F. Supp. 2d at 577 ("knowledge of general unlawfulness"). "This standard creates an elevated scienter element requiring, at the very least, that application of the law to the facts in question be fairly clear. When there is substantial doubt concerning whether the law applies to the facts of a particular matter, the offender is more likely to have an intent defense." Election Offenses 123. ·
On the facts here, the government would unlikely be able to prove beyond a reasonable doubt that the June 9 meeting participants had general knowledge that their conduct was unlawful. The investigation has not developed evidence that the participants in the meeting were familiar with the foreign-contribution ban or the application of federal law to the relevant factual context. The government does not have strong evidence of surreptitious behavior or effo11s at concealment at the time of the June 9 meeting. While the government has evidence of later efforts to prevent disclosure of the nature of the June 9 meeting that could circumstantially provide support for a showing of scienter, see Volume II, Section II.G, infra, that concealment occurred more than a year later, involved individuals who did not attend the June 9 meeting, and may reflect an intention toavoidpoliticalconsequencesratherthananypriorknowledgeofillegality. Additionally, in light of the unresolved legal questions about whether giving "documents and information" of the sort offered here constitutes a campaign contribution, Trump Jr. could mount a factual defense that he did not believe his response to the offer and the June 9 meeting itself violated the law. Given his less direct involvement in arranging the June 9 meeting, Kushner could likely mount a similar defense. And, while Manafort is experienced with political campaigns, the Office has not developed evidence showing that he had relevant knowledge of these legal issues.
iii. Difficulties in Valuing Promised Information
The Office would also encounter difficulty proving beyond a reasonable doubt that the value of the promised documents and information exceeds the $2,000 threshold for a criminal violation, as well as the $25,000 threshold for felony punishment. See 52 U.S.C. § 30109(d)(l). The type of evidence commonly used to establish the value of non-monetary contributions-such as pricing the contribution on a commercial market or determining the upstream acquisition cost or the cost of distribution-would likely be unavailable or ineffective in this factual setting. Although damaging opposition research is surely valuable to a campaign, it appears that the information ultimately delivered in the meeting was not valuable. And while value in a conspiracy may well be measured by what the participants expected to receive at the time of the agreement, see, e.g., United States v. Tombrello, 666 F.2d 485, 489 (11th Cir. 1982), Goldstone's description of the offered material here was quite general. His suggestion of the information's value-i.e., that it would "incriminate Hillary" and "would be very useful to [Trump Jr.'s] father"-w as non- specific and may have been understood as being of uncertain worth or reliability, given Goldstone's lack of direct access to the original source. The uncertainty over what would be delivered could be reflected in Trump Jr.'s response ("if it’s what you say I love it") (emphasis added).
Accordingly, taking into account the high burden to establish a culpable mental state in a campaign-finance prosecution and the difficulty in establishing the required valuation, the Office decided not to pursue criminal campaign-finance charges against Trump Jr. or other campaign officials for the events culminating in the June 9 meeting.
Mueller 183-188