News Updates

America This Week: September 18-24

The Fed dishes out the pain, Fat Leonard’s brilliant use of scissors, Putin mobilizes, Brit spies recruit kids, Canadian broadcaster tests insect protein theory, three finance headlines, and more

Reminder: to listen to Walter Kirn and Matt Taibbi’s podcast edition of ATW, click here.

 

Financial officials are like offensive linemen: if you’re not noticing them, they’re probably doing a great job. Fed chief Jerome Powell had a tough week, and was in the news everywhere. Metaphorically, he gave up about fifty sacks. But he wasn’t the only big headline this week. The top stories:

Free Fat Leonard! Perhaps ending what’s been one of the funniest stories of all time and maybe the most damning indictment ever of America’s security matrix, the notorious contracting swindler Leonard Glenn Francis, a.k.a. “Fat Leonard,” was captured in Caracas, Venezuela, as he tried to board a plane for Russia. As Walter Kirn and I discuss on this week’s podcast episode, Fat Leonard in his heyday might have been the world’s most conspicuous con-man, weighing upwards of 400 pounds and forever wearing improbable suits that inspired thoughts of the classic Robin Williams joke (“Somewhere there’s a couch saying, ‘I’m so cold!’”). This character, visible literally from a mile away, walked right through the American military security system with shockingly small bribes of cash, Versace purses, and prostitutes, inducing as many as 200 military figures to steer vessels to his port services company, Glenn Defense Marine Asia. There, they were gouged via overpriced fuel and tugboats, low-quality supplies, and invoices for non-services to the tune of roughly $200 million. Spending anywhere from a half-million to “millions” of dollars in bribes, he was able to learn top-secret information like the future locations of nuclear carriers, which wasn’t even his goal. Imagine if he’d been trying to learn secrets. After pleading guilty to various crimes in 2016, he was transferred to home detention in 2018, and due to be sentenced this month when he cut his ankle monitor — reportedly, with “heavy scissors” — and sauntered past a predictably missing security force to go on the lam. The enormous missing personage then apparently drove straight from his San Diego home to Mexico (perhaps with a U-Haul, which had been spotted outside his house), and from there to Venezuela. A final perfect irony: because America doesn’t recognize the socialist government of Nicolas Maduro, and imposed what even NPR calls “crushing sanctions” on the country, leaving enforcement cooperation “rare,” the U.S. faces an “uphill challenge” in returning the fugitive to American soil. Though morally Leonard may be a rare 0 out of 100, or at least no Robin Hood, the sheer absurdity of his life path gives all a rooting interest in his story’s continuation. Free Fat Leonard!

King of Pain Clubber Lang alert: the hot headline word of the week was “pain.” How much ‘pain’? Fed to signal more rate hikes ahead, wrote the AP, while Politico went with Fed’s Powell to America: Brace yourself for more pain ahead, and the Washington Post trotted out Fed Splits the Difference on Labor Market Pain, among many, many others. Conventional wisdom says Jerome Powell in announcing an unprecedented third straight 0.75% rate hike (and the fifth overall hike this year) created the macabre black comedy of well-heeled analysts and financial reporters, many bylined from Oligarch Base One at Jackson Hole, Wyoming, explaining to broad audiences what “pain” is. Powell admitted that “restoring price stability” while “achieving a relatively modest increase in unemployment” would be “challenging,” to which the average person probably thought: “Dude, not sure achieving is the word to use when talking about raising unemployment.” As Eric Salzman notes below (see THREE FINANCE HEADLINES), the Fed’s own projections may have seriously undercut “pain” estimates, and the spectacle of unelected financial technicians in $5000 suits talking openly about attacking inflation by scaring ordinary families with the threat of joblessness so that they’ll hoard cash rather than spend — i.e. “reducing consumer demand” — is going to start to look rather awkward soon. In the 2008 crash it was decided to accelerate a plan to pay banks to hold reserves at the Fed, so while the soaring interest rates mean “pain” for everyone else, it will for the first time since 2008 mean truly massive sums for the banks, including as much as $15 billion in payments just to, say, JP Morgan Chase, or more than 10% of the bank’s expected $129 billion in revenue this year. This puts a new spin on Chase CEO Jamie Dimon testifying before congress this week and giving Powell’s “pain” agenda the big thumbs-up, saying, “Conquering inflation is a very important thing to do.”

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