2023: The Year of Phony Crisis

We've had some real critical moments in the past couple of years:  the COVID pandemic, the 2020 Presidential election and the January 6 aftermath of it, and the definitive break with the "postwar" and "post-Cold War" peaceful international status in the West caused by Putin's invasion of Ukraine. 

What's going on now with our 24/7 news cycle is a batch of invented crisis-mongering, whipping ourselves into unwarranted frenzies about lesser issues, or news stories that aren't even issues.  Our electoral parties are similarly making somewhat hysterical appeals--for fundraising purposes, of course--in a year where there are really no domestic elections of national significance.  On that subject, let's just keep our political contribution powder dry this year, as we will be called upon for 2024, which is certain to be an epic battle with massive potential consequences.

Looking at some of the specific so-called crises: 

The Border - The expiration of the Title 42 mandate requiring US border authorities to turn away virtually all migrant asylum-seekers is the opposite of a crisis.  It instead marks the official end of pandemic crisis-related policy with regard to immigration.  The policy was likely a violation of international law, but we have often seen that concern fall by the wayside when it runs up against national security interest.  Personally, I doubt that Title 42 really had all that much to do with protecting public health--the virus never observed border niceties--but was instead a convenient method for our Dickhead 45 to fulfill his populist promise to close down opportunities for immigration.

Now, the promised tidal wave of uncontrolled border crossing has not materialized.  If we are looking forward for initiatives to manage likely future surges of unsponsored people seeking to immigrate, I can propose one (see * below), but for the time being our careful preparations are providing for orderly handling of asylum applications.   This clear failure of one of the Republicans' pet political rabble-rousing notions is an outcome worthy of public promotion. 

"Balloongate" - The publicly-revealed identification of a Chinese spy balloon over us was accidental.  (see The Sheep Look Up, an underrated near-future sci-fi novel from a couple decades ago by the hugely underrated, largely-forgotten John Brunner).   The balloon's incursion was no big deal, it turns out; they'd sent them over us before, and our intelligence agencies knew it.  It was kind of fun to shoot it down, though I thought it would be more spectacular to figure out how to capture it whole.  The problem is that it poisoned further our messy relationship with China, which is one of utmost importance.  Overreaction should be carefully avoided, on both sides. 

The Debt Limit -- Our Federal government's brinkmanship in authorizing this routine measure is totally unnecessary.  Congress approved the spending, and the revenue measures which only partially fund them, and thus the debt.  The Treasury does not need to have approval to execute the laws that relate to these--that's in the Constitution.  They must issue the debt instruments, just as they must seek to collect revenues.  If the subject is, instead, reducing that gap between revenue and spending, fine.  A different question.  President Biden will find a way to have two linked bills, as a concession to the Republican House majority, but the one relating to the debt limit needs to have some measure preventing future inanity of the sort going on now. 

Banking Deposits - One unintended consequence of the official interest rate rises the Federal Reserve has used, in its efforts to combat the higher inflation seen since the pandemic receded, has been some banks' competition to attract or retain deposits by raising the rates they offer.  Banks naturally want to grow profits, and in order to make more loans they need to have funding to correspond, but there is great danger in getting too far ahead of the pack.  The money thus attracted is unstable, ready to pull out when a new, even higher rate is offered by others, or simply because the depositors' timeframe is short-term.

From the accounts I've read, the failed Silicon Valley Bank had this problem.  Their management seemed to think they had a nearly-unlimited profit-generating machine, taking in large demand deposits (getting those depositors to promise exclusivity, a different bad practice) and laying off the money in long-term bonds, getting fat spreads between rates offered and loans (bonds are a form of loan).  This creates what's called "duration risk"; it is mitigated if a bank has, behind that speculative funding, some more stable core deposits or sufficient capital.  Without that, when these well-heeled tech firms found other needs for their deposits and pulled them out, a liquidity crisis occurred at SVB--they didn't have the money to pay back the depositors--and the bank became insolvent and was taken over by regulators.  This was a huge error by the bank's asset-liability management function, which is expected to contain such a risk. 

Treasury regulators moved to assure that all deposits would be protected and available, even those way in excess of the FDIC's insurance limits.  The move was a regrettable precedent, one necessitated by their belated recognition that this medium-large bank's failure presented a risk to the whole banking system. Yet the contagion they spotted has spread to other banks, ones not necessarily afflicted with the same problem:  any bank is vulnerable to depositors' panicky flight if enough of them act simultaneously (as in Jimmy Stewart's bank in the movie It's a Wonderful Life).  Banking institutions are now obliged to take some unpleasant measures, reducing their spreads and reducing their lending to make sure they protect their liquidity. A broader crisis should thus be averted, and banks will subsequently look for opportunities to start taking deposit rates back down to restore profitability as soon as they feel they can. 

This one is more like the "opportunity event" that is supposedly the Chinese term for "crisis". The lesson going forward is that it is not just the identified "too big to fail" extra-large institutions that need close supervision on the management of assets, liabilities, and capital, and that smaller institutions' contributions to the FDIC (an agency which is normally self-funded by the banks that are themselves regulated by it) need to have, in their calculations, the risk of deposit outflow taken more into account. 

The real crises for the US, apart from that looming 2024 electoral battle royal, are festering policy problems that are not being addressed, storms that are gathering force.  I would list among those our electoral system (voting rights, anti-democratic measures, threats to electoral officials), our decaying education system (especially the lack of grounding in civics, history, and critical analysis in it, along with inadequate funding and inadequate compensation for teachers), lack of commitment to measures to combat or mitigate climate change, our diplomatic impasse with China (subject of more posts here in the near future), lack of a meaningful immigration policy (actually, a global problem), and, of course, guns. 

* My long-term proposal would be to work with Mexico (imagine that!) to create a large, well-funded expanded consulate somewhere a decent distance away from our border (Matamoros, or Monterrey, maybe) as a center for handling asylum applications for those coming from beyond Mexico.  Additional staffing to handle them, and housing for 30 days for those would-be migrants, along with enhanced security provided both by Mexico and the US, working together.  It's not the comprehensive reform of immigration policy we need, but just a sufficiently aggressive provision to cool the issue until such time as we can look at it rationally (post-Trump). 

A Longer Shrift

Whatever a "shrift" is, we had a short amount of it for baseball in my "Play-In Tournament" posting.  Yes, I was in a hurry to get it out, and I wanted to mention briefly baseball's season just beginning.  However, I failed to mention among the "aspiring" teams two or three that I should have noted.  Two are Toronto, always a little more than just average, and Minnesota, who can win their AL Central division anytime they get adequate pitching, and theirs has been more than adequate so far.   

The main omission, though, was the Tampa Bay Rays, who were 10-0 at the time.  They made that 13-0 before losing, tying the major league record for consecutive wins at the start, and then, once the streak ended, redoubled their success.  At this point, approximately 20% of the regular season completed, they are still on record pace, and now appear to be at least co-favorite to win the AL championship.  

In a short playoff series, surprises should be expected--as with the Phillies' run to the World Series last year--but the Rays' success in playoffs would be more like fulfillment of long-held expectations than a surprise.  They have a relatively low budget among contenders, but field a well-rounded, balanced team that produces plenty of runs, led by the underrated Randy Arozarena.  He had a huge playoff run a couple years ago, but we'd sort of forgotten how good he can be, until now. 

Of course, regular season brilliance can be easily wiped out by an early playoff loss, as we have seen recently with the first-round loss of the NBA's best regular-season team, the Milwaukee Bucks, and also with that of the NHL's record-breaking regular season team this year, the Boston Bruins.  My solution:  raise the relative payout for regular-season success in relation to playoff success, and introduce firm penalties for bad standings results.  Tanking must go!  

I have no clue which NHL team will win the Stanley Cup:  my standard answer is "the team with the hottest goalie".  With regard to the NBA Finals, I should be humble, but I will go with Boston over Denver.  It's not a hard-and-fast rule, but the team with more playoff experience tends to win out, and in that match, it would the Celtics, as the Denver Nuggets have never made the NBA Finals, while the Celtics were there last year.   In making those picks, I am looking past the 76ers, who have not been able to press the advantage of a road win in Game 1 vs. Boston; past the Miami Heat, who should defeat the Knicks, and who cannot be dismissed while Jimmy Butler is on the court; past the Phoenix Suns, who are currently showing against Denver the limitations of a team with two stars and a thin bench (with Chris Paul out); and in particular I am looking past the Golden State Warriors and Los Angeles Lakers, two star-studded teams beating each other up in an unprecedented second-round matchup of the #6 and #7 teams. 

Back to baseball, I am very much encouraged by the early season look of the game.  The dramatic preseason tourney of the World Baseball Classic (final:  Japan defeats the US behind Unicorn Ohtani) was a good omen, and the quality of play in the majors has noticeably improved from this fan's perspective.  Apart from the welcome reduction in the length of games, there is more hitting, more stolen bases, more scoring, but the top pitchers are still able to dominate. I am not a fan of the new rule prohibiting the extreme infield shift--it basically gives advantage to left-handed hitters, who are already advantaged.  I am a fan of the larger bases--as I suggested, it provides a larger target for a runner sliding into second or third, thus basically eliminating the odious play where the fielder holds the tag on the runner if he leaves contact with the base for a moment.  Maybe even more significant, though, is the rule limiting the pitcher's chances to throw over to hold the runner to two times between pitches.  It was added to help shorten the game and remove boring non-events, but once the pitcher's thrown over once, the edge goes to the potential runner. 

As for my Cincinnati Reds, they look somewhat improved, though pitching in the Great American Ballpark (which I will soon attend for the very first time) remains a challenge.  They may yet overtake their chief rival for third place, the Pittsburgh Pirates, who started off way better than they should be. (I assume the St. Louis Cardinals will get it together after a slow start and pass both of them).

Finally, I feel duty-bound to mention that my team in the English Premier League, the Chelsea Football Club, has finally won a match, for the first time in months.  I want to thank the interim manager, one of the Blues' alltime heroes, Frank Lampard, for his service.  The 3-1 win over Bournemouth was played without the downpour which accompanied the grievously-dubbed King Charles III's ascension to the throne of Great Britain.  Although Chuck is best seen as a transitional monarch, presumably to his more propitiously named son, who would then be William III, I'm thinking Charley will be the last before Scotland decamps from that once-great-Empire.