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Prospects For The UK & The Pound

Prospects For The UK & The Pound
Tyler Durden
Sun, 12/13/2020 – 07:00

Authored by Alasdair Macleod via GoldMoney.com,

This article assesses the likelihood of the pound following the dollar into monetary hyperinflation. Between March…

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Prospects For The UK & The Pound Tyler Durden Sun, 12/13/2020 - 07:00

Authored by Alasdair Macleod via GoldMoney.com,

This article assesses the likelihood of the pound following the dollar into monetary hyperinflation. Between March and September, the US Government financed twice as much of its spending by bond sales — mostly through inflationary QE — compared with tax revenues. And there is much more monetary inflation to come.

A hyperinflating dollar is now the international backdrop for all currencies, including sterling.

To date, the UK’s budgetary arithmetic is less alarming than that of the US. In theory, the UK government has a workable plan, to turn the UK into a global entrepôt. However, if, as is becoming increasingly certain, the dollar falls heavily on the foreign exchanges in the coming months, dollar interest rates will rise, and so will those for sterling — catastrophic for government finances and the future of debt-laden zombies. Furthermore, with counterparty exposure to insolvent Eurozone banks and escalating covid-related insolvencies, British banks are not strong enough to withstand the general credit contraction a rise in dollar rates would trigger.

As a matter of utmost urgency, the UK Treasury should rebuild the nation’s gold reserves, secretly if necessary, so that the government can stabilise the pound by backing it with gold at the appropriate time. There is then a way out of this mess, but will the UK government take it?

Introduction

Living in the UK one is all too aware of the visible damage the virus lockdowns are doing to the economy. Hotels, pubs and restaurants have been driven towards bankruptcy, and only those whose owners have enough stored wealth to pay the bills while there is little or no income will survive. Many retailers whose margins were slim after paying rent, local authority rates and sales taxes have closed for ever. To some extent these problems have been deferred through payment holidays and furlough schemes. But the fact remains that high streets in the market towns up and down the country have had the heart ripped out of them.

Major retail chains are now going bust. If only the government could recognise it, the changes we see today were going to happen anyway. But instead of an evolutionary process it has been brought about all of a sudden by the covid crisis and its handmaiden, a likely banking crisis to follow. Schumpeter’s process of creative destruction has been bottled up for ten years before being unleashed.

If permitted, the new world that beckons the UK is high streets which combine housing, shops and all the other facilities that humans decide between them are required and desired, and not those mandated by planning laws and local government. The travel industry has taken a massive hit, with spontaneous airline travel probably going out of fashion: why not stay at home nine times out of ten and watch documentaries on the places you would otherwise have visited? British holidays taken by Brits who in the past went abroad could become a future growth industry.

One could go on, but the point is that Britain is not going to return to the old normal. And the principal obstacles to change are central government and the local authorities. Through massive waves of monetary inflation, central government is supporting the world of yesteryear, of business zombies. And because they are losing income from business rates, the local authorities are resisting the change of use from retail to housing. In fact, if they embraced this evolution in the towns and cities, much of the “housing crisis” everyone talks about would disappear without the need to concrete over much of rural England.

To be fair to the politicians, they are always elected not so much on a manifesto, but to maintain the status quo ante. No one votes for evolution. They vote for new businesses, green energy and the rest, on condition that their existing businesses and jobs continue unaffected by change. And in a Keynesian world, where monetary capital can somehow be created out of thin air, it appears to everyone to be eminently possible. And as is the situation in nearly all advanced economies, UK government policies backed by monetary inflation have resisted change, fostering crony-capitalism, regulatory protectionism and zombie businesses.

The current UK government and its cabinet ministers must be extremely frustrated by the predicament they find themselves in. As elected politicians they started out being perhaps more free market orientated than any post-war administration. All that intent is now on hold, and they are forced into retreating into the same old botched policies of perpetuating yesterday’s businesses and backing today’s failures.

This article examines the specific economic and monetary situation faced by the United Kingdom. There is an eventual way out of the covid trap, but it cannot be achieved by relying on bureaucratic intervention and ignoring monetary and economic developments elsewhere.

The government spending problem

The screenshot below is taken from the UK’s Office for Budget Responsibility’s Economic and Fiscal Outlook, published in November.

It is probably true that in the few weeks since it was published this central forecast has drifted somewhat towards a worst case, particularly as it is now unlikely that covid restrictions will cease before the end of the first quarter of 2021. With nearly four months yet to run, the estimate of public sector net borrowing for the current fiscal year to 5 April 2021 is likely to be revised up from £393.5bn to well over £400bn. And the estimate that it will then fall to £164.2bn in 2021—22 appears increasingly optimistic. Elsewhere in the document, the OBR admits it is guided by the IMF’s World Economic Outlook, published in October, “[whose] projections were, however, compiled before the strength of the second wave in Europe and the US became evident”

As is usual for all government agencies, the OBR seems oblivious to what GDP actually represents. Their analysis is on the basis that GDP is economic activity, when, in fact, it merely records the monetary value of included and recorded transactions, a value that only reflects the addition of central bank money and bank credit in the period covered. The easiest way to goal-seek a nominal GDP number is to print money, which is exactly what the Bank of England has been doing ever since the Lehman failure. Quantitative easing between 2008 and 2019 produced an extra £645bn in circulating currency, during which time nominal GDP increased by £625bn, a difference of only 3.2% which could easily be attributed to other factors. Subsequently, in 2020 the extra QE to deal with the virus is £250bn, an additional 13.8% to M1 money supply, before supplementary lending schemes by the Bank through commercial banks are taken into account.

The pretence that inflationary financing is beneficial arises only from what is seen; the magic of government money being distributed for the common good. What is not seen is the dilution of everyone’s savings, assets, earnings and pensions for the benefit of the government’s finances. The transfer of wealth leaves everyone worse off, once the economy has absorbed the extra fiat money. The benefit is visible, while the cost is hidden and cannot be easily quantified. And every time the Bank deploys QE it is transferring yet more wealth from the productive economy to the government. It is a policy that ends up bankrupting the nation and destroying the currency.

In common with other central banks, the Bank of England denies that wealth is transferred, or at least if it is it is limited to the 2% inflation target, which is somehow “stimulative”. But as a consequence of the statistical imperative to reduce the cost of indexation to the government, changes in the CPI as a measure of the general price level have become both misleading and meaningless. There is no independent estimate of the UK’s rise in the general price level, but we know from the US that independent calculations place the rate of US price inflation closer to ten per cent every year for the last ten years, while the official CPI has hardly deviated from its 2% target, the same as that of the Bank of England.

The evidence is that government statistics have become so self-serving that in any proper analysis they must be ignored. The expansion of the money quantity is the relevant story to follow. Since the Lehman failure, the UK’s M4 broad money supply has increased by about 50%, diluting the monetary value of GDP accordingly, a process likely to accelerate even faster in the future as a result of covid.

Rather, therefore, than challenge the OBR’s assumptions about future GDP, we should accept it is a meaningless figure, useless for estimating economic progress and its future course. And being the basis of all economic modelling by government departments, their models should be rejected as well. Furthermore, the OBR’s forward projections look eerily similar to the guesswork of the US’s Congressional Budget Office.

Neither agency can have a clue about future economic activity. It is unknowable. As Ludwig von Mises put it, the assumption is of an evenly rotating economy, where the human action that drives economic progress is ignored. But by not understanding the difference between progress and an accounting total, it inevitably leads to an error: the support of yesterday’s businesses which are less relevant to the future, and that consume capital instead of adding value demanded by consumers. Evidence of policy support for these zombies is found in the Bank’s Term Funding Scheme (TFS) and the incentives for commercial banks to lend to smaller business, leading to £56bn in loans being made under these schemes since March.

In the narrow context of public sector indebtedness, the situation is nowhere near being a disaster, as the next screenshot, of central government debt to GDP shows.

The scale of government borrowing is not where the problem currently lies. Britain has tolerated far higher levels of relative government debt in the past and managed to reduce it over time. Furthermore, by issuing undated gilt stock, it is possible to fund government spending without the principal ever having to be repaid. Arguably, the current situation could present such an opportunity.

The UK’s economic problems are analogous to the situation in the mid-1970s, when government debt to GDP was half the current level. But with a socialist government bent on destroying private sector wealth, nationalised industries dominating the economy, and trade unions emasculating businesses of all sorts, the then Chancellor of the Exchequer, Denis Healey, was forced to go to the IMF for a bailout loan in 1976.

The situation today has different content, but similarities in terms of overall effect. Income and corporate taxes are lower for the wealth creators, but instead of being hampered by rampant trade unionism, businesses have been burdened by unproductive debt since before the Lehman crisis. Coupled with increasingly onerous regulation, the UK economy has been like an overloaded aircraft struggling to get off the runway. Private sector debt at end-2019 is estimated at £3.429 trillion, about 1.6 times GDP. This has increased from £2.965 trillion at end-2008, when it was almost the same ratio to GDP. The increase in the private sector’s debt to GDP number occurred before the financial crisis, rising from 94% since 2000, while in Keynesian terms, the economy has merely stagnated ever since.

For Britain, the financial crisis of 2008 was the unwinding of excessive bank credit, and ever since then the policies of successive UK governments have been focused on preventing business failures. Consequently, the UK economy has become increasingly dependent on continuing support from inflationary monetary policies and the extension of that debt. It leaves the government and the Bank with the problem of supporting a private sector, which remains at least as vulnerable as it was in 2008, and under Denis Healey in 1976.

Indeed, the current Chancellor is doing what he can to support today’s zombies. And it is becoming clear that yet more help from him will be needed to fund the private sector through the entirety of the covid pandemic. Except at the margins, tax rises can be ruled out along with cuts in public spending, which places the entire emphasis on the magic money tree. And no one yet is talking about a post-pandemic world, merely assuming there will be a return to the normality suggested by the government’s economic models, where consumers will be fully employed, paying their taxes and spending their money on the same items as in the past.

To these uncertainties are added Brexit. At the time of writing, trade terms with the EU have not yet been agreed. But if there is no agreement, no doubt the government will announce new measures to support industry through the necessary changes, financed, of course, by further monetary inflation. But after that, Britain will have to become more of an entrepôt, and this is indeed planned with a series of free ports. But for the policy to be successful it will require the government to allow all capital resources to be mobilised towards new businesses, which can only happen if zombies are abandoned to their fate.

Sterling and post-Brexit challenges

The mistakes of monetary and government policies described above fail to anticipate three problems that seem bound to derail them. The first is rising interest rates, which I shall address later. The second is an almost certain banking crisis, which will involve Britain’s banks, which will also be addressed later. And the third, which we will now discuss, is the potential for foreign ownership of sterling to undermine the currency.

Due to continual trade deficits, Britain’s balance of payments has led to an ebb and flow of foreign ownership of UK financial investments, including government stock. The liquid element is ownership of bank deposits, reflecting commitments in wholesale money markets and correspondent banking balances. Foreign ownership of non-financial assets and listed equities is estimated at about £4 trillion, not far from twice GDP.[iv]

If the government allows the economy to evolve itself, then as an entrepôt Britain should be able to retain and make a virtue of this involvement. Furthermore, a side benefit of covid is that budget deficits, particularly those of the US, are leading to increasing trade deficits. While domestic markets may be tanking, export business to the US and other consumer-driven economies is set to boom next year, offering substantial opportunities for UK businesses, much of which is internationally owned. For this to work effectively the whole structure of the economy must evolve, with the state reducing its burden on the economy. But that can only happen following the current crisis, which I will address at the end of this article. Meanwhile, we must assess the position of the more liquid foreign investments in sterling.

Foreign investment in gilts is estimated at £560bn, but sterling is still a substantial part of foreign exchange reserves for central banks, and offshore captive insurance companies also hold their sterling liquidity in gilts. These balances are likely to be broadly retained. If there is to be pressure on sterling, it is likely to come from sterling deposits in British banks from non-residents, which according to the Bank of England’s database totalled £537bn at end-October. If, in the coming days there is no trade deal with the EU, it is reasonable to assume some of this balance will be sold, driving sterling lower from its recent highs against the US dollar. But that in itself seems unlikely to be enough to destabilise sterling beyond its normal volatility.

British banks

Systemic risk is eerily absent from nearly everyone’s radar, but as Table 1 below shows, the big five UK banks are highly leveraged, particularly when the market discount to book value is taken into account.

Along with share prices of banks in the EU, British banks have rallied strongly since mid-September, but in most cases their market capitalisations are still less than half their balance sheet equity. The position for many Eurozone banks, with which London has significant counterparty risks, is more troubling. Furthermore, both HSBC and Standard Chartered have substantial exposure to China and Hong Kong, which implies there are geopolitical and counterparty risks from that region as well. Clearly, the British banking system is inadequately capitalised for an economic shock, such as the accumulation of bad debts from the covid pandemic, or for that matter, a banking crisis in another jurisdiction.

We should note that the global cycle of bank credit moved from a ten-year expansion to a sharp contraction in September 2019, when the US repo market indicated the dollar-based banking system had run out of balance sheet capacity. This was about a year after it became clear that the trade tariff war between the US and China had destabilised international trade, and about ten years after the expansionary phase had started. There is enough evidence, even from the nineteenth century, that the expansionary phase of bank credit, when bankers move from caution to increasing lending confidence, usually lasts about ten years.

As we saw with the Lehman crisis, the expansion of bank credit had led to speculation, malinvestments and rising interest rates, a recipe for an impending crisis that ends with bank failures. With Eurozone banks in a far more fragile condition today than those in the US, where the liquidity crisis in September 2019 occurred, it seems highly likely that that is the weakest point in global banking. And given that TARGET2 imbalances are hiding accumulated bad debts, covid-related bankruptcies and a global credit contraction will almost certainly lead to a collapse of the Eurozone banking system — possibly in a few months or even weeks.

The UK Treasury will then be faced with either nationalising the entire UK banking system, or at least underwriting their entire balance sheets, amounting to some £5.4 trillion, over twice the UK’s GDP. At that point, the Bank of England, in common with other major central banks, will be faced with a slump in the economy, and its Keynesian response will almost certainly be to flood the system with inflated money in an attempt to stabilise it. Its other policy tool, interest rates, was always useless, which is our next topic.

The fallacy behind interest rate suppression

The Bank of England believes that interest rates are the cost of money and that by lowering them economic activity can be stimulated. That its policy planners still believe it in the face of continual failures to achieve their policy objectives is a triumph of hope over experience, and is certainly not confirmed by theory either.

In the nineteenth century, Thomas Tooke noticed that the rate of interest and the general level of prices were positively correlated, an observation repeated in 1923 by Arthur Gibson in an article for Banker’s Magazine. It was named Gibson’s paradox by Keynes in his 1930 publication, A Treatise on Money. Keynes commented that it was “one of the most completely established empirical facts in the whole field of quantitative economics.” Subsequently, he chose to ignore it.

The point is that the correlation is between rising interest rates and rising prices, and not between falling interest rates and rising prices. In other words, the rate of price inflation cannot be managed by raising interest rates.

The economic and empirical facts behind the relationship between interest rates and prices take on a new importance, because the Bank of England is clearing the way for negative interest rates. Again, the Bank flies in the face of experience, because negative interest rates in the Eurozone and Japan have failed to stimulate prices, the reason for this failure being explained by Gibson’s paradox. But misjudged experiments with interest rates can only persist so long as the purchasing power of fiat currencies does not collapse.

The risk of such a collapse is now acute. While it is not yet the case for sterling, there can be no doubt that the dollar is set for monetary hyperinflation. Between March and September (the second half of the US fiscal year) one third of US Government spending was funded by taxes, and two-thirds by sales of US Treasury bonds, mostly through QE, which amounts to monetary inflation. And it is not ending there. There will be a second round, once the presidential election is finally settled, and again, the US Government will face the need to fund its spending more through monetary inflation than by tax revenue. In short, without substantial cuts in budget spending, the purchasing power of the dollar is on its way to a collapse in its purchasing power.

The first hit to the dollar is now developing from the unwinding of excess foreign ownership. Foreign ownership of US financial assets in total amount to $28.5 trillion, or about 150% of US GDP, and $6 trillion of this in bank deposits and short-term bills. It will only be a matter of time before lenders realise there will be certain losses by not taking into account the future values of dollar loans in their interest rate calculations. Selling of dollars is bound to increase and term interest rates will then rise. Government finances will be fatally undermined, and term rates being the basis of comparative valuation for equities are likely to crash.

The process has already started, evidenced by the fall in the dollar’s trade weighted index and the rise in the yield on the ten-year Treasury bond. Rising dollar rates will lead to the ending of negative rates in other currencies along with talk of them at the Bank of England as well, and sterling interest rates will begin to rise. The walking shadow of Denis Healey will return — but this time there will be no IMF bailout available. It will be exogenous events that will do for sterling, likely emanating from a collapse of the Eurozone banking system or from a collapse in the dollar and dollar-denominated financial assets.

A strategy for the future

Let us make two assumptions: firstly, that the current government remains in power for its full term, and secondly that the Prime Minister and other senior ministers retain their belief in free markets. These being the case, it should be possible to reconstruct the UK economy on better lines, following the following eight steps.

1. Restore the Treasury’s stock of gold bullion as soon as possible, now that it is becoming clear that the dollar is hyperinflating and that sterling is at risk.

2. Let sterling slide with the dollar and other fiat currencies. The destruction of the currency is a precondition for reform, which cannot be achieved without the electorate realising welfarism and state intervention must be abandoned. And in any event, attempts to support unbacked fiat pounds will fail.

3. Before the pound disappears into complete worthlessness, make it convertible into gold at the then prevailing rate. The purpose of widely owned paper and digital money will no longer be to act as the state’s money, but to act as a mechanism for distributing monetary gold via the currency acting as a gold substitute. Gold coins as sovereigns and half sovereigns must be permitted to circulate alongside gold substitutes and be available to citizens on demand.

4. The ability of government to pay for and deliver any welfare and education services will be destroyed, as well as its ability to regulate the private sector. Government must retrench to provide only defence, policing, and the legal system. Everything else must go, and while it will be painful, a worthless currency will make it obvious to the electorate that there is no alternative to substantial cuts in government spending and a radical reduction in the scope of its activities.

5. Local communities should be encouraged to take over the running of schools, hospitals and health services on a charitable basis. The establishment of sound money will make this possible soon after the initial disruption.

6. Banking must be reformed. The banks that survive should be made by law to have unlimited liability for directors and shareholders, in order for the credit cycle to be tamed, while retaining some flexibility for seasonal financing factors.

7. As the economy rebuilds, the government must pursue hands-off, sound money policies, and allow the private sector to recover national wealth without an undue burden of the state. People must learn to look after themselves and take responsibility for their own decisions.

8. Never again should the government regard itself as being above the people.

Following the ending of the fiat pound, it should take no more than a year or two for economic stability to return, the consumer to drive competition and the trend for human progress to return.

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President Biden Delivers The “Darkest, Most Un-American Speech Given By A President”

President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through…

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President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through the State of The Union, President Biden can go back to his crypt now.

Whatever 'they' gave Biden, every American man, woman, and the other should be allowed to take it - though it seems the cocktail brings out 'dark Brandon'?

Tl;dw: Biden's Speech tonight ...

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

"that was possibly the darkest, most un-American speech given by an American president. It wasn't a speech, it was a rant..."

Carlson continued: "The true measure of a nation's greatness lies within its capacity to control borders, yet Bid refuses to do it."

"In a fair election, Joe Biden cannot win"

And concluded:

“There was not a meaningful word for the entire duration about the things that actually matter to people who live here.”

Victor Davis Hanson added some excellent color, but this was probably the best line on Biden:

"he doesn't care... he lives in an alternative reality."

*  *  *

Watch SOTU Live here...

*   *   *

Mises' Connor O'Keeffe, warns: "Be on the Lookout for These Lies in Biden's State of the Union Address." 

On Thursday evening, President Joe Biden is set to give his third State of the Union address. The political press has been buzzing with speculation over what the president will say. That speculation, however, is focused more on how Biden will perform, and which issues he will prioritize. Much of the speech is expected to be familiar.

The story Biden will tell about what he has done as president and where the country finds itself as a result will be the same dishonest story he's been telling since at least the summer.

He'll cite government statistics to say the economy is growing, unemployment is low, and inflation is down.

Something that has been frustrating Biden, his team, and his allies in the media is that the American people do not feel as economically well off as the official data says they are. Despite what the White House and establishment-friendly journalists say, the problem lies with the data, not the American people's ability to perceive their own well-being.

As I wrote back in January, the reason for the discrepancy is the lack of distinction made between private economic activity and government spending in the most frequently cited economic indicators. There is an important difference between the two:

  • Government, unlike any other entity in the economy, can simply take money and resources from others to spend on things and hire people. Whether or not the spending brings people value is irrelevant

  • It's the private sector that's responsible for producing goods and services that actually meet people's needs and wants. So, the private components of the economy have the most significant effect on people's economic well-being.

Recently, government spending and hiring has accounted for a larger than normal share of both economic activity and employment. This means the government is propping up these traditional measures, making the economy appear better than it actually is. Also, many of the jobs Biden and his allies take credit for creating will quickly go away once it becomes clear that consumers don't actually want whatever the government encouraged these companies to produce.

On top of all that, the administration is dealing with the consequences of their chosen inflation rhetoric.

Since its peak in the summer of 2022, the president's team has talked about inflation "coming back down," which can easily give the impression that it's prices that will eventually come back down.

But that's not what that phrase means. It would be more honest to say that price increases are slowing down.

Americans are finally waking up to the fact that the cost of living will not return to prepandemic levels, and they're not happy about it.

The president has made some clumsy attempts at damage control, such as a Super Bowl Sunday video attacking food companies for "shrinkflation"—selling smaller portions at the same price instead of simply raising prices.

In his speech Thursday, Biden is expected to play up his desire to crack down on the "corporate greed" he's blaming for high prices.

In the name of "bringing down costs for Americans," the administration wants to implement targeted price ceilings - something anyone who has taken even a single economics class could tell you does more harm than good. Biden would never place the blame for the dramatic price increases we've experienced during his term where it actually belongs—on all the government spending that he and President Donald Trump oversaw during the pandemic, funded by the creation of $6 trillion out of thin air - because that kind of spending is precisely what he hopes to kick back up in a second term.

If reelected, the president wants to "revive" parts of his so-called Build Back Better agenda, which he tried and failed to pass in his first year. That would bring a significant expansion of domestic spending. And Biden remains committed to the idea that Americans must be forced to continue funding the war in Ukraine. That's another topic Biden is expected to highlight in the State of the Union, likely accompanied by the lie that Ukraine spending is good for the American economy. It isn't.

It's not possible to predict all the ways President Biden will exaggerate, mislead, and outright lie in his speech on Thursday. But we can be sure of two things. The "state of the Union" is not as strong as Biden will say it is. And his policy ambitions risk making it much worse.

*  *  *

The American people will be tuning in on their smartphones, laptops, and televisions on Thursday evening to see if 'sloppy joe' 81-year-old President Joe Biden can coherently put together more than two sentences (even with a teleprompter) as he gives his third State of the Union in front of a divided Congress. 

President Biden will speak on various topics to convince voters why he shouldn't be sent to a retirement home.

According to CNN sources, here are some of the topics Biden will discuss tonight:

  • Economic issues: Biden and his team have been drafting a speech heavy on economic populism, aides said, with calls for higher taxes on corporations and the wealthy – an attempt to draw a sharp contrast with Republicans and their likely presidential nominee, Donald Trump.

  • Health care expenses: Biden will also push for lowering health care costs and discuss his efforts to go after drug manufacturers to lower the cost of prescription medications — all issues his advisers believe can help buoy what have been sagging economic approval ratings.

  • Israel's war with Hamas: Also looming large over Biden's primetime address is the ongoing Israel-Hamas war, which has consumed much of the president's time and attention over the past few months. The president's top national security advisers have been working around the clock to try to finalize a ceasefire-hostages release deal by Ramadan, the Muslim holy month that begins next week.

  • An argument for reelection: Aides view Thursday's speech as a critical opportunity for the president to tout his accomplishments in office and lay out his plans for another four years in the nation's top job. Even though viewership has declined over the years, the yearly speech reliably draws tens of millions of households.

Sources provided more color on Biden's SOTU address: 

The speech is expected to be heavy on economic populism. The president will talk about raising taxes on corporations and the wealthy. He'll highlight efforts to cut costs for the American people, including pushing Congress to help make prescription drugs more affordable.

Biden will talk about the need to preserve democracy and freedom, a cornerstone of his re-election bid. That includes protecting and bolstering reproductive rights, an issue Democrats believe will energize voters in November. Biden is also expected to promote his unity agenda, a key feature of each of his addresses to Congress while in office.

Biden is also expected to give remarks on border security while the invasion of illegals has become one of the most heated topics among American voters. A majority of voters are frustrated with radical progressives in the White House facilitating the illegal migrant invasion. 

It is probable that the president will attribute the failure of the Senate border bill to the Republicans, a claim many voters view as unfounded. This is because the White House has the option to issue an executive order to restore border security, yet opts not to do so

Maybe this is why? 

While Biden addresses the nation, the Biden administration will be armed with a social media team to pump propaganda to at least 100 million Americans. 

"The White House hosted about 70 creators, digital publishers, and influencers across three separate events" on Wednesday and Thursday, a White House official told CNN. 

Not a very capable social media team... 

The administration's move to ramp up social media operations comes as users on X are mostly free from government censorship with Elon Musk at the helm. This infuriates Democrats, who can no longer censor their political enemies on X. 

Meanwhile, Democratic lawmakers tell Axios that the president's SOTU performance will be critical as he tries to dispel voter concerns about his elderly age. The address reached as many as 27 million people in 2023. 

"We are all nervous," said one House Democrat, citing concerns about the president's "ability to speak without blowing things."

The SOTU address comes as Biden's polling data is in the dumps

BetOnline has created several money-making opportunities for gamblers tonight, such as betting on what word Biden mentions the most. 

As well as...

We will update you when Tucker Carlson's live feed of SOTU is published. 

Tyler Durden Fri, 03/08/2024 - 07:44

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What is intersectionality and why does it make feminism more effective?

The social categories that we belong to shape our understanding of the world in different ways.

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Mary Long/Shutterstock

The way we talk about society and the people and structures in it is constantly changing. One term you may come across this International Women’s Day is “intersectionality”. And specifically, the concept of “intersectional feminism”.

Intersectionality refers to the fact that everyone is part of multiple social categories. These include gender, social class, sexuality, (dis)ability and racialisation (when people are divided into “racial” groups often based on skin colour or features).

These categories are not independent of each other, they intersect. This looks different for every person. For example, a black woman without a disability will have a different experience of society than a white woman without a disability – or a black woman with a disability.

An intersectional approach makes social policy more inclusive and just. Its value was evident in research during the pandemic, when it became clear that women from various groups, those who worked in caring jobs and who lived in crowded circumstances were much more likely to die from COVID.

A long-fought battle

American civil rights leader and scholar Kimberlé Crenshaw first introduced the term intersectionality in a 1989 paper. She argued that focusing on a single form of oppression (such as gender or race) perpetuated discrimination against black women, who are simultaneously subjected to both racism and sexism.

Crenshaw gave a name to ways of thinking and theorising that black and Latina feminists, as well as working-class and lesbian feminists, had argued for decades. The Combahee River Collective of black lesbians was groundbreaking in this work.

They called for strategic alliances with black men to oppose racism, white women to oppose sexism and lesbians to oppose homophobia. This was an example of how an intersectional understanding of identity and social power relations can create more opportunities for action.

These ideas have, through political struggle, come to be accepted in feminist thinking and women’s studies scholarship. An increasing number of feminists now use the term “intersectional feminism”.

The term has moved from academia to feminist activist and social justice circles and beyond in recent years. Its popularity and widespread use means it is subjected to much scrutiny and debate about how and when it should be employed. For example, some argue that it should always include attention to racism and racialisation.

Recognising more issues makes feminism more effective

In writing about intersectionality, Crenshaw argued that singular approaches to social categories made black women’s oppression invisible. Many black feminists have pointed out that white feminists frequently overlook how racial categories shape different women’s experiences.

One example is hair discrimination. It is only in the 2020s that many organisations in South Africa, the UK and US have recognised that it is discriminatory to regulate black women’s hairstyles in ways that render their natural hair unacceptable.

This is an intersectional approach. White women and most black men do not face the same discrimination and pressures to straighten their hair.

View from behind of a young, black woman speaking to female colleagues in an office
Intersectionality can lead to more inclusive organisations, activism and social movements. Rawpixel.com/Shutterstock

“Abortion on demand” in the 1970s and 1980s in the UK and USA took no account of the fact that black women in these and many other countries needed to campaign against being given abortions against their will. The fight for reproductive justice does not look the same for all women.

Similarly, the experiences of working-class women have frequently been rendered invisible in white, middle class feminist campaigns and writings. Intersectionality means that these issues are recognised and fought for in an inclusive and more powerful way.

In the 35 years since Crenshaw coined the term, feminist scholars have analysed how women are positioned in society, for example, as black, working-class, lesbian or colonial subjects. Intersectionality reminds us that fruitful discussions about discrimination and justice must acknowledge how these different categories affect each other and their associated power relations.

This does not mean that research and policy cannot focus predominantly on one social category, such as race, gender or social class. But it does mean that we cannot, and should not, understand those categories in isolation of each other.

Ann Phoenix does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Biden defends immigration policy during State of the Union, blaming Republicans in Congress for refusing to act

A rising number of Americans say that immigration is the country’s biggest problem. Biden called for Congress to pass a bipartisan border and immigration…

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President Joe Biden delivers his State of the Union address on March 7, 2024. Alex Brandon-Pool/Getty Images

President Joe Biden delivered the annual State of the Union address on March 7, 2024, casting a wide net on a range of major themes – the economy, abortion rights, threats to democracy, the wars in Gaza and Ukraine – that are preoccupying many Americans heading into the November presidential election.

The president also addressed massive increases in immigration at the southern border and the political battle in Congress over how to manage it. “We can fight about the border, or we can fix it. I’m ready to fix it,” Biden said.

But while Biden stressed that he wants to overcome political division and take action on immigration and the border, he cautioned that he will not “demonize immigrants,” as he said his predecessor, former President Donald Trump, does.

“I will not separate families. I will not ban people from America because of their faith,” Biden said.

Biden’s speech comes as a rising number of American voters say that immigration is the country’s biggest problem.

Immigration law scholar Jean Lantz Reisz answers four questions about why immigration has become a top issue for Americans, and the limits of presidential power when it comes to immigration and border security.

President Joe Biden stands surrounded by people in formal clothing and smiles. One man holds a cell phone camera close up to his face.
President Joe Biden arrives to deliver the State of the Union address at the US Capitol on March 7, 2024. Chip Somodevilla/Getty Images

1. What is driving all of the attention and concern immigration is receiving?

The unprecedented number of undocumented migrants crossing the U.S.-Mexico border right now has drawn national concern to the U.S. immigration system and the president’s enforcement policies at the border.

Border security has always been part of the immigration debate about how to stop unlawful immigration.

But in this election, the immigration debate is also fueled by images of large groups of migrants crossing a river and crawling through barbed wire fences. There is also news of standoffs between Texas law enforcement and U.S. Border Patrol agents and cities like New York and Chicago struggling to handle the influx of arriving migrants.

Republicans blame Biden for not taking action on what they say is an “invasion” at the U.S. border. Democrats blame Republicans for refusing to pass laws that would give the president the power to stop the flow of migration at the border.

2. Are Biden’s immigration policies effective?

Confusion about immigration laws may be the reason people believe that Biden is not implementing effective policies at the border.

The U.S. passed a law in 1952 that gives any person arriving at the border or inside the U.S. the right to apply for asylum and the right to legally stay in the country, even if that person crossed the border illegally. That law has not changed.

Courts struck down many of former President Donald Trump’s policies that tried to limit immigration. Trump was able to lawfully deport migrants at the border without processing their asylum claims during the COVID-19 pandemic under a public health law called Title 42. Biden continued that policy until the legal justification for Title 42 – meaning the public health emergency – ended in 2023.

Republicans falsely attribute the surge in undocumented migration to the U.S. over the past three years to something they call Biden’s “open border” policy. There is no such policy.

Multiple factors are driving increased migration to the U.S.

More people are leaving dangerous or difficult situations in their countries, and some people have waited to migrate until after the COVID-19 pandemic ended. People who smuggle migrants are also spreading misinformation to migrants about the ability to enter and stay in the U.S.

Joe Biden wears a black blazer and a black hat as he stands next to a bald white man wearing a green uniform and a white truck that says 'Border Patrol' in green
President Joe Biden walks with Jason Owens, the chief of the U.S. Border Patrol, as he visits the U.S.-Mexico border in Brownsville, Texas, on Feb. 29, 2024. Jim Watson/AFP via Getty Images

3. How much power does the president have over immigration?

The president’s power regarding immigration is limited to enforcing existing immigration laws. But the president has broad authority over how to enforce those laws.

For example, the president can place every single immigrant unlawfully present in the U.S. in deportation proceedings. Because there is not enough money or employees at federal agencies and courts to accomplish that, the president will usually choose to prioritize the deportation of certain immigrants, like those who have committed serious and violent crimes in the U.S.

The federal agency Immigration and Customs Enforcement deported more than 142,000 immigrants from October 2022 through September 2023, double the number of people it deported the previous fiscal year.

But under current law, the president does not have the power to summarily expel migrants who say they are afraid of returning to their country. The law requires the president to process their claims for asylum.

Biden’s ability to enforce immigration law also depends on a budget approved by Congress. Without congressional approval, the president cannot spend money to build a wall, increase immigration detention facilities’ capacity or send more Border Patrol agents to process undocumented migrants entering the country.

A large group of people are seen sitting and standing along a tall brown fence in an empty area of brown dirt.
Migrants arrive at the border between El Paso, Texas, and Ciudad Juarez, Mexico, to surrender to American Border Patrol agents on March 5, 2024. Lokman Vural Elibol/Anadolu via Getty Images

4. How could Biden address the current immigration problems in this country?

In early 2024, Republicans in the Senate refused to pass a bill – developed by a bipartisan team of legislators – that would have made it harder to get asylum and given Biden the power to stop taking asylum applications when migrant crossings reached a certain number.

During his speech, Biden called this bill the “toughest set of border security reforms we’ve ever seen in this country.”

That bill would have also provided more federal money to help immigration agencies and courts quickly review more asylum claims and expedite the asylum process, which remains backlogged with millions of cases, Biden said. Biden said the bipartisan deal would also hire 1,500 more border security agents and officers, as well as 4,300 more asylum officers.

Removing this backlog in immigration courts could mean that some undocumented migrants, who now might wait six to eight years for an asylum hearing, would instead only wait six weeks, Biden said. That means it would be “highly unlikely” migrants would pay a large amount to be smuggled into the country, only to be “kicked out quickly,” Biden said.

“My Republican friends, you owe it to the American people to get this bill done. We need to act,” Biden said.

Biden’s remarks calling for Congress to pass the bill drew jeers from some in the audience. Biden quickly responded, saying that it was a bipartisan effort: “What are you against?” he asked.

Biden is now considering using section 212(f) of the Immigration and Nationality Act to get more control over immigration. This sweeping law allows the president to temporarily suspend or restrict the entry of all foreigners if their arrival is detrimental to the U.S.

This obscure law gained attention when Trump used it in January 2017 to implement a travel ban on foreigners from mainly Muslim countries. The Supreme Court upheld the travel ban in 2018.

Trump again also signed an executive order in April 2020 that blocked foreigners who were seeking lawful permanent residency from entering the country for 60 days, citing this same section of the Immigration and Nationality Act.

Biden did not mention any possible use of section 212(f) during his State of the Union speech. If the president uses this, it would likely be challenged in court. It is not clear that 212(f) would apply to people already in the U.S., and it conflicts with existing asylum law that gives people within the U.S. the right to seek asylum.

Jean Lantz Reisz does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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