March Into Madness

March 29, 2024

Here we are, nearing the end of Q4 ‘24 - a quarter-way through this calendar year, and soon to be a quarter-way through this century.  It’s somehow both funny and sad to me that I think of “modern” as basically anything from after 2000.   Many issues of our now-modern age were not even on the radar “back in the 90’s”, and to be honest - some days I shake my head at the world I find myself observing.  

March Madness is upon us, literally with the NCAA tournament coming to a head, and metaphorically as we march into the madness of a can’t win (for the people) war in Ukraine, a can’t win (for the people) Presidential election, and all the can’t win stances one might have on energy policy, free speech, auto manufacturing, student loans, race relations, LGBTQIA+, and more!  I’m zooming up into big picture stuff with this month’s blog, and probably for many of you I’ll express some sentiments you don’t appreciate - and I appreciate that.  We won’t always agree, but I hope you agree it’s good to share and debate ideas.  I don’t know many answers, but I have a lot of questions, and I enjoy the process of writing and thinking, thinking and writing, and so join me if you will.

I’m going to start with Ukraine, now over 2 years into a fight for survival after Russia invaded in February 2022. This war has been a meat grinder for both Russia and Ukraine, and the battle lines have barely changed in the last 12 months - and that primarily in Russia gaining new ground in the east.  Both nations were in a demographic free-fall previous to the war, and those trends have been exacerbated of course by death and departure, with departures particularly acute on the Ukraine side at perhaps more than 15% of their pre-war population having left the nation.  The young men who should become fathers are embroiled in the war or dead already, and the young women who should become mothers have moved to Poland or USA or anyplace in between - and most will not likely return.  

Of course, the US and NATO can keep funding Ukraine with economic support, and we can keep shipping drones and tanks and artillery shells to them, but eventually they’re going to run out of men to fly the drones and shoot the guns and gas up the tanks.  That’s why I say this war is unwinnable for the people of Ukraine - they just don’t have the population scale that Russia has, likely not the will nor the ability to keep throwing more and more men into the war machine.  And so the US and NATO face a very tough choice - would we put troops on the ground for this war?  Putin has threatened to use “tactical” nuclear weapons if we do, the use of which would likely expand to full-on nuclear war in most any scenario - and so we cannot send troops - period!  

You can dig into this a bit with me if you like - good info on Ukraine’s demographics is here - and a great overview of the war stakes and strategies is here, and here’s an article about how the UK’s Boris Johnson scuttled early peace talks under Biden’s direction (why?).  So, all this taken together, in my view, along with rapidly decreasing interest in funding the costs by the citizens of the US and EU, suggests that Ukraine should sue for peace now, before its population and finances reach a place of no return.  Oh, and here’s a fun 3-hour podcast conversation between Lex Fridman and Annie Jacobson about how quickly after the first nuclear launch the world turns to a flaming shitpile and any survivors go back to hunter gatherer culture.  

And - as bad as I feel for the people of Ukraine in this, and as much as I fear the increased potential for a world-ending nuclear war - the biggest casualty of this war in my eyes is the US Dollar.  

De-dollarization is becoming fashionable in the global community, with the % of global reserves held in dollars now below 60%.  This continues a trend we’ve seen since the 70’s, when dollars were 85% of global reserves, but the trend has been accelerating.  Here’s a long article about it from International Banker, which shares that even France and China are making bilateral energy trades outside of dollars recently, and probably many readers will have seen headlines about efforts to create a BRICS currency - an alignment of Brazil, Russia, India, China, and South Africa - and now many others who are pushing against US hegemony. Who knows if they can be successful - each of them has their own problems so a union of problems may be fraught with peril - but that they are trying says a lot.  

What’s this got to do with Russia-Ukraine war though?  Glad you asked!  After the war started, banks in the US and EU seized and froze nearly $300 Billion in foreign exchange reserves - basically Russia’s stash of cash, mostly in dollars.  Now, there are rumblings that the cash should be used to support the Ukraine war effort or to help rebuild the country after the war is concluded.  And I get it - Russia is a bad actor here - but it is absolute madness to just grab a sovereign nation’s cash on an international stage!  All the nations of the world that have reason not to trust the US already suddenly have a lot more incentive to de-dollarize - and that’s pretty much all of them!  Here’s a great article from Brookings about this topic.  

Tons of links today, but I want you’all to know I read stuff about the topics that I write about.  

This March also marked the conclusion of the Democratic and Republican primary races, with Biden and Trump both winning handily.  Of course, this was expected because of - math.  Trump has a strong foundation among republicans, something a bit over 50%, but he’s also an egomaniac and a narcissistic, and the other half of Republicans don’t really have the stomach for him.  But that left 7 then 5 then 3 then 1 candidate to try to overcome Trump, and the last woman standing, Nikki Haley, smelled too much like defense industry money for most independent minded voters.  

Biden of course ran virtually unopposed, which is expected of an incumbent with his record of success and popularity (sarcasm in case you missed it).  RFK, Jr. attempted a run at the Democratic primary, but was blocked by the DNC establishment at every turn, and is now pulling pretty high numbers as an Independent candidate for President, all but ensuring a Trump victory in November - if Trump is not in prison, and RFK is not dead.  Here’s a link with RFK talking about the disenfranchisement of voters during the Democratic primary - including in states that Biden lost in 2020 - that was accomplished by the DNC in rules changes leading up to the primary.  Democrats - just so you know - your freedom to choose your candidate was taken from you by your party. Republicans are facing the same challenge, but from a different angle.   

The big news this week in the “Trump Trials Saga” was a scale back in his required bond in the NY fraud case, from $454M down to $175M, due in 10 days.  To refresh the memories of my readers, or for those who have intentionally tuned anything Trump out of their feeds - this trial is centered on the accusation that Trump filed false financial statements, especially from periods going back to 2012 - 2018.  The most significant seems to be that while he was valuing Mar a Lago, his Florida beachfront estate at $450M - $600M, the tax assessor’s office only valued it at $18M - $27M at the time.  Therefore, so the accusation goes, banks in NY loaned Trump organizations more money against projects, and at better rates, than they would have.  Everyone was paid back, projects were completed, but an example must be set for future would-be fraudsters that overvaluation of assets is bad - so pay us (the State of NY) $454M and also you’re banned from doing business in the state for 3 years.  

Here’s some choice quotes from the trial:  

“Countless hours of testimony proved that there was no wrongdoing, no crime, and no victim,” Trump attorney Alina Habba said in a statement.

But Engoron wrote in his ruling that the statute used in the case does not require that a victim lose money.

“It is undisputed that defendants have made all required payments on time; the next group of lenders to receive bogus statements might not be so lucky,” he wrote.

“Defendants submitted blatantly false financial data” as they sought to borrow more money at better loan rates, “resulting in fraudulent financial statements,” Engoron wrote.

Now, I don’t know if Mar a Lago is worth a half billion dollars or not, or was back in 2018, but I do know that the shack in our lead-in photo would cost a grip of dollars to replace or rebuild these days, hundreds of millions anyway, and I also know that it doesn’t really matter what he said his house was worth.  As a banker of 15 years, I can say with conviction that MOST of my borrowers were optimistic about the value of their homes, their properties and businesses, and often even their vehicles.  It was my job as a banker to do my own assessments of values, and to get appraisals and do pro forma analysis on real estate projects that were financed.  What he said his house was worth had little to do with creditworthiness, unless you were sure you’d have to sue him and foreclose - but I see no evidence that he was even granting 2nd mortgages to the banks in question!  

What I do know, is that this obvious lawfare attack on Trump in NY bodes terribly for the future economics of the state.  What sane person would choose to move their company there after this, or what prudent real estate investor would build a high-rise, if a court can come back on you a decade later with accusations of fraud - on paid-off loans - and sue you for all of your profits on the project and more?!  New York is playing stupid games, and will win stupid prizes for their efforts in this case, mark my word.    

And the Georgia RICO trial is a pig circus, with Fani Willis paying exorbitant consulting and travel fees to her unqualified boyfriend - that she had hooked up with before the trial - not that it really should matter - and was having secret meetings at the White House to set the stage and terms for the trial.  Rebuked, but not removed (really? - after clear perjury?), Fani presses on, in what must be an appeal lawyer’s dream!  We’re living in a clown world, and everybody is so busy with their kids’ sports and instagram feeds and opiates habit that we’re just slowly marching into this madness like everything is normal.  

And if you think it’s not normal, you might be far right, or a racist, or mental!  

I haven’t even mentioned Planet Fitness, Missouri vs. Biden, the abandonment of Israel, or a dozen more topics that make me wonder if we’re living in some kind of simulation.

One of my favorite short form podcasts is from Douglas Wilson, Blog & Mablog, and he’s recently released a new book, Mere Christendom.  I haven’t read it yet, but I’ve heard him talk about portions of it, and the vision for the book is an America that returns to its Christian roots - because we must.  His premise is that a secular society without transcendental truth is one that will rot and decay and eventually dissolve - but that we may still be redeemed!  It’s Christ or Chaos, Doug would say, and the more of this crazy world I see, the more I’m inclined to agree.  

So maybe after reading this, you’re thinking it might be time to dust off that old Bible, and come to church this weekend for Easter Sunday.  Jill and I go to this one, service is at 10am on Sunday and every Sunday - it’ll probably be standing room only.  We also have a darkening service for Good Friday at 7:30pm. 

Maybe it really is Christ or Chaos.  The world may march into madness, but we don’t have to march along.  Be Smart, Be Kind, Be True, Be Local, Be the Change, Be You!  

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