Ok, everyone try not to laugh.
Donald Trump has “a solemn duty to ensure that the laws of the United States are faithfully executed.”
So said Trump on Monday evening in the course of summarily booting Lisa Cook from the Fed Board.
It’s hard to know which joke to tell first. Trump’s a twice-impeached, four times-indicted convicted felon, who’s been charged with 88 criminal counts and found guilty of 34. On his first day in the Oval Office for the second time, he pardoned 1,500 people charged in connection with the first armed rebellion since the Civil War.
I could obviously go on. And on. And on. Importantly, if I did (go on), I wouldn’t have to express an opinion. All I’d have to do is state facts. Like those I just stated. You get the point, right? “Ironic” doesn’t even begin to suffice as an adjective that meets the moment when Trump declares himself a sentinel of American legality.
With that out of the way, Trump’s decision to fire Cook was a foregone conclusion. So much so that it’s last week’s news despite happening this week. I’ve written so much about it by now that I’m not sure what else there is to say.
Trump wants as many Fed Board seats as he can get. He captured two by making converts of Chris Waller and Miki Bowman. Then Adriana Kugler resigned. Thanks to Bill Pulte’s sleuthing, Trump now has a fourth seat. Cook’s. Whoever sits in that seat at the September FOMC meeting will be a loyalist like Stephen Miran, who’s sitting in for Kugler until January.
As discussed in the latest Weekly, this — the effort to commandeer the Fed Board — is precisely what you’d expect out of a transitional autocracy, which is what America is under Trump. And as detailed in “The 800-Pound Gorilla,” there’s no use being obtuse with regard to what’s happening right in front of our eyes.
Pulte’s turned the FHFA into an extension of Pam Bondi’s Justice Department which, alongside Kash Patel’s FBI, is hard at work executing on Trump’s retribution campaign against political foes and sundry “deep state” antagonists.
Cook might’ve committed occupancy fraud, but so did an estimated 22,000 other borrowers who took on a mortgage between 2005 and 2017, according to — ahem — the Fed.
Trump on Monday evening accused Cook of “deceitful and potentially criminal conduct in a financial matter.” Americans, he went on, “cannot have confidence” in Cook’s “integrity.” “At a minimum,” Trump chided, Cook’s decision to attest that a property in Georgia would be her primary residence just two weeks after saying the same thing about a house in Michigan “exhibit[s] the sort of gross negligence that calls into question [her] competence and trustworthiness as a financial regulator.”
Look: We all know what’s going on here. This has absolutely nothing to do with Cook’s mortgages and everything to do with Trump wanting Fed Board seats. So, before you declare that Cook got what she deserved for making a silly “mistake,” consider that if Trump decides he wants something you have, he’ll be just as quick to find some silly mistake you made and exploit it.
This is a hallmark of autocrats: They leverage bureaucratic technicalities to make life difficult on anyone they view as insufficiently loyal or antagonistic to their agenda. If your argument says owner-occupancy fraud isn’t a “bureaucratic technicality,” but rather a crime, just be sure you’re prepared to accept that assessment if and when it’s applied to some mistake (or “mistake,” with scare quotes) that you or someone you care about makes during Trump’s third term. Or Don Jr.’s first.
Also, Lisa: What the f-ck were you thinking?
I guess I should finally watch Civil War (2024 movie) to see where it is we’re headed. I wonder how many deputized federal ‘officers’ or Guardsmen will relish shooting up a polling place in a very blue area whenever that happens (I’m thinking more 2028 than mid-terms, I don’t think the country is sufficiently ‘softened up’ enough for that by next Nov).
This from a guy that added floors to Trump Tower to boost the valuation at a time when his solvency was dependent on how much Russian laundry he got done.
Yeah, Powell must have asked Lisa the last question as well and think, nail, coffin.., for all his efforts to maintain Fed independence as long as he could, only to lose it earlier than needed because of this.
I rewatched “The Wire” recently, and there is an episode where Detective Lester Freamon (played by Clarke Peters) discovers signed checks that prove Senator Clay Davis (Isiah Whitlock Jr.) used campaign contributions to pay-off a mortgage loan involving his mother. Lester remarks something to the effect that in the DOJ that is what’s known as “the headshot.” The first thing that came to my mind when I heard about Governor Cook’s predicament regarding her mortgage applications was what Clay himself probably would have said: “Sheeeeeeeee-it!”
One wonders whether Kugler had a few rentals as well
Sorry, last one; Cook announced she will continue her work at the Fed and fight the dismissal.
That will put Powell in a difficult spot, no? If she shows up for work and her badge and laptop still work, that might be construed as mismanagement by Powell and risk him being fired as well? I wonder if she will really put him in that situation.
Trump loyalists coined Lawfare to describe what they considered the unjust persecution of Trump’s legitimate [sic] business dealings
And unironically, they once again demonstrate for them every accusation is an admission
Maybe Powell could “do a trump” and change his mind about the September rates decrease just before he is supposed to announce it. That certainly would put a cat among the pigeons (and maybe cause the alleged USD100 bn bond investment made by the Orangutan to tank). It’s called scorched earth.
Apologies. It should be mn not bn. Trump’s penchant for hyperbole seems to be contagious
And the head of the FBI said no one is above the law.
Nothing seems real anymore.
I updated my chatGPT conversation about losing central bank independence to an autocratic populist administration. It said this development with Cook and entering a volatile seasonal has pushed the 18 month plan up a little. It’s suggesting a position in junk as we see junk yields compress and it suggested hedging with CDX HY, an instrument retail cannot access. Further it suggested adding more international exposure to spread out currency risk and augment with gold and commodities. That’s just for Phase 1… Phase 2 is the Liquidity Phase when the bubble really gets bigger, concentrating in US growth equities, while building real estate exposure. Phase 3 is when the shit hits the fan and go full into inflation hedging… Perhaps there’s an active manager out there discussing the same things with ChatGPT.
Typical Rally Sequence
1. Mega-cap tech / growth (fastest reaction to lower rates).
2. High-beta/speculative names (ARKK, crypto, biotech).
3. Financials & cyclicals (credit expansion optimism).
4. Commodities & real assets (lag a bit, then take leadership).
? Trading Implications
• Early Phase 1: Lean into liquidity darlings (mega-cap tech, ARKK-style names).
• Middle Phase 1: Rotate some into financials & cyclicals.
• Late Phase 1: Build commodity exposure — that’s what leads into Phase 2–3.
Reminder: Congress gave Trump $75 billion to grow his personal brown shirt regimen.
It’s even more insidious than that. Trump has certainly surrounded himself with smarter, evil people this time around. I’m convinced that the efforts to aim the National Guard and active duty troops at Democratic States serves one purpose. He is turning the military Republican. The lack of a loyal military is the one thing that kept his 1/6/21 coup from succeeding. Now he’s got 3-12 years left to ‘Republicanize’ the military. Every non republican guard member or active duty member will become discouraged and resign their commission or not re-enlist. Children of Democratic minded parents will not want to join a Republican military. While the military is currently 60-70% Republican, he will make it 90% plus by driving that political wedge. He’s got Congress, the Supreme Court, and soon the military. It will be unstoppable at that point.
This is an excellent argument for compulsory military service.
Trump has certainly surrounded himself with evil people that think they are smart but anyone that has served can tell you that it ain’t fun. Hence, it’s called service. These troops are underpaid, away from their spouses and families. They aren’t making enough money to support a family and may not have a job when their deployment ends. And yet they work beside ICE goons making $100k/year and drinking up their $10k signing bonus. What could possibly go wrong? No, Trump will destroy the Guard just like everything else that he uses and disgards while sending the bill to republican states that are closing rural hospitals due to – well you know the rest of that story. https://wyofile.com/wyoming-guard-looks-to-congress-for-money-as-trump-deployments-hit-accounts/
How many times can you wake up in this comic book and plant flowers!
If truly Lisa fights this (and perhaps with at least the implicit support of the rest of the Fed) then one has to wonder if Drumphie might have bit off more than he can chew this time.
This makes me wonder if there was behind the scenes pressure/blackmail that caused Adriana Kugler to step down. Her abrupt resignation was suspect.
I’m as sure as one can be that Trump is at least the proximate cause of her resignation. Much like that four star Air Force general who spontaneously announced early retirement, one doesn’t claw their way to nearly the pinnacle of their profession only to quit for no reason. When there’s a good reason, people always tell you, if only briefly. “After hearing the diagnosis, I knew I wanted to spend the last few months remaining to me with my closest family and friends.”
While it could be old-fashioned blackmail (in fact that was my first assumption)–the sort of thing that can’t get you fired for cause but which you don’t want becoming public, e.g. marital infidelity–it could also just be anxiety from the debilitating stress of being in such a pressure-cooker. Can you imagine? Trump and his cronies have demonstrated an enthusiastic fondness for doxing people, his supporters are the type who fetishize marksmanship, and Trump happily pardons those who break the law in the course of doing his bidding. That could easily lead to the kind of anxiety that puts a person in the hospital. I can’t imagine what it’s like living under those conditions.
Or maybe she lied about her home-office deduction on her taxes. Regardless, her abrupt departure was not a coincidence.
Stupid question: Why is the Fed board made up of political appointees? Doesn’t this sort of invite politics into things? As a further show of my ignorance, why is the Supreme Court made up of political appointees?
How else would you do it? The Senate was supposed to be the backup but no more.
Why not use the class A & B directors from each of the Federal Reserve Banks? There would be no more “unanimous decisions”, but you could just use a simple majority. Does it really take a dedicated position nominated by the president to attend a meeting once a month? How close is a Fed Governor to the issues happening on a daily basis with their bank? Do they get more and more involved with the daily workings of the bank over their 14-year term?