Tyler Cowen summary:
- The issue is now a global one, which has not been the case historically. German bunds now trade at a negative swap spread (the yield on cash bonds is higher than on similar tenor swaps). This is a fairly recent development. It suggests the problem has shifted from being primarily a shortage of USD cash (though that is still true to a significant degree), to a global oversupply of longer dated bonds.
- A crunch in repo funding does not seem to be primarily responsible here. Balance sheet efficient methods of intermediating repo (sponsored repo) are more available now than they have been in the past. And they haven’t solved the problem.
- Permitting bond basis to fluctuate is quite pernicious. It meaningfully reduces the negative correlation between long bonds and risk assets. Meaningully reducing the attractiveness of holding them in a portfolio and increasing funding costs.
Some extremely telling quotes from former Biden admin officials on the challenges they had trying to advance priorities through their own bureaucracy.
more:
NGOs operate outside the chain of command. They answer to no electorate, no oversight, no public mandate. They can push any agenda they choose without accountability.
So the real question isn’t how this happened, or even why. The real question is: why were we surprised? The moment Biden took office, the plan was already in motion. NGOs had the infrastructure, the logistics, the funding pipelines; everything ready to go. They didn’t need permission. They just needed power. And when they got it, they had it all set up from day 1: overnight, we were flooded with illegal immigrants under the cover of a coordinated strategy that had been waiting in the wings.
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locally, taxpayer funded grants have long driven policy outside of elected governance. Small Learning Communities and the one size fits all English 10 experiments are two examples.
