Streetwise Professor

Last week’s edition of Trumpsteria involved the leak of a 28 point peace plan hashed out between Russia and the US. The plan represented something of a retreat from Russia’s maximalist position, but still imposed major concessions-specifically territorial ones-on Ukraine.

The provenance of the plan is murky. It first emerged on Telegram, in Russian. Trump said it was The Plan. Later, according to statements from some senators briefed by Marco Rubio, it wasn’t The Plan. But then it was.

In any event, at the outset Trump sure made it sound like The Plan when he demanded that Ukraine accept it, in toto, within a week or lose all US support.

This all of course led to a rush to the fainting couches. All around knob and former Putin punching bag Michael McFaul’s take was typical: “Trump is once again acting as Putin’s agent.”

Zelensky’s reaction was subdued, rather than defiant. He said Ukraine faced a choice between humiliation and loss of an essential ally. But he didn’t say no.

And then, just like that, a Ukrainian delegation met in Geneva with Rubio. The Secretary of State waxed optimistically about the talks, calling them the most constructive ever.

And what emerged was another plan, this one consisting of a mere 19 points.

So what to make of all this? I, like everyone else, is akin to the denizens of Plato’s cave, just viewing shadows on the wall. (One difference between me and McFaul and his ilk is that I admit it). So everything is speculative and conjectural.

But one way to reconcile these seemingly contradictory developments is as follows. The US is basically engaged in shuttle diplomacy. Since the parties won’t meet directly, the US is negotiating with each and securing proposals that move the parties closer together.

As for Trump’s apparent ultimatum to Ukraine, my guess is that when presented with the Russian plan in private Zelensky balked and vowed to make no concessions. In response, Trump made his public demand. This got Zelensky’s mind right, which led to the talks in Geneva, where Ukraine budged off its previous positions. Which led Rubio to praise the talks and Ukraine.

In other words, classic bad cop (Trump), good cop (Rubio).

Throughout, Trump has been putting pressure on both sides. On Russia mainly via sanctions; on Ukraine mainly via threats of withdrawing US support. Said threats causing the McFauls of the world to damn Trump as a Putin puppet.

It’s a painfully slow process. Will it work? Perhaps not, but I see nothing better on offer. And when it comes down to it, something along the lines of the plan first mooted is the only thing that is feasible. Ukraine will have to give up territory, and won’t be in Nato. The only question really is how much territory, and what non-Nato security will Ukraine obtain.

Yes, that will be deemed capitulation to Putin by McFaul et al. In fact, it is capitulation to the reality of the battlefield. Ukraine can’t roll back Russia’s gains, and would almost certainly lose the land sacrificed in The Plan in time. The only difference being the cost that Russia has to pay to get it–and the cost that Ukraine has to pay to defer the inevitable loss.

As Zelensky’s former spokesperson said, Ukraine is bleeding out.

Every subsequent deal for Ukraine will only be worse — because we are losing. We are losing people, territory, and the economy.
The EU (which by the way has paid Russia more than €311 billion for energy and goods since February 2022) has no real strategy, no way to stop fueling… pic.twitter.com/zx8lBKQn7X

— Iuliia Mendel (@IuliiaMendel) November 22, 2025

Continuing the bleeding is not only futile (because it will not change the ultimate outcome), it is counterproductive (because it will make Ukraine more vulnerable in the future).

So Mendel is right. Maybe this deal is bad–but it is the least bad of any feasible alternative. If Trump’s shuttle diplomacy can secure Ukraine a few concessions, Zelensky should be grateful. And the Ukrainian people even more so.

Even in our degraded, hyperpartisan political culture I cannot recall seeing anything as outrageous and repulsive as this:

We want to speak directly to members of the Military and the Intelligence Community.

The American people need you to stand up for our laws and our Constitution.

Don’t give up the ship. pic.twitter.com/N8lW0EpQ7r

— Sen. Elissa Slotkin (@SenatorSlotkin) November 18, 2025

This is an outright call for disobedience–indeed, mutiny–made by representatives and senators who apparently believe their prior service grants them the authority to do so. The irresponsibility and hubris is off the charts.

A military can function only with strict obedience. Presumably these people believed that when they were in the military. (Though maybe they only believed that their subordinates had to obey them, not that they had to obey their superiors. I can see that).

They probably believe it now–it’s just that they are willing to jettison those beliefs in order to obstruct the policy of the duly elected commander in chief. That is, purely unprincipled partisan opportunism wrapped in a Constitutional gauze.

There is so much wrong with this. But two things stand out.

The first is the insinuation that domestic deployment of the military “against US citizens” is illegal and unconstitutional. This is false. The president has the authority to do so under certain conditions that are broadly subject to his judgment as to whether the conditions apply.

Many idiots say “but but but the Posse Comitatus Act!!!” False. The Act confers the power to deploy the military domestically on the president, and the president alone. Prior to the passage of the Act, local officials (e.g., US marshals) could employ military personnel and units as part of a posse.

Which leads to the second major problem, which is indeed the more serious in my mind. These legislators are conveying the impression that it is totally OK for a member of the armed services to make a judgment of their own whether the president is lawfully exercising his authority to deploy the military “against US citizens.”

In fact, it’s an open question as to whether even the courts have the power to make that judgment. But it is clearly outside the ken of any private, seaman, or airman–and indeed, any general or admiral–to make it.

But these . . . people . . . [channeling Robert E. Lee there] are suggesting that this is totally OK, and indeed, a duty. And the danger is that some kid will believe them, disobey orders, and end up breaking rocks in Leavenworth.

The UCMJ makes things crystal clear. Article 90: “An order requiring the performance of a military duty or act may be inferred to be lawful, and it is disobeyed at the subordinate’s peril. This inference does not apply to a patently illegal order, such as one that directs the commission of a crime.” These people are encouraging individuals, many who might be quite naive and believe they are doing the right thing, to put themselves in peril by challenging orders that are anything but patently illegal.

The illegality of an order is a defense against a charge of disobedience. It is also a defense that is almost certain to fail in cases other than, say, an order to rob a bank.

The main protection offered by the concept of illegal order is to those who obey, not those who disobey. Unless “the accused knew the orders to be unlawful or a person of ordinary sense and understanding would have known the orders to be unlawful,” he cannot be found guilty at a court martial for obeying it. It is to protect subordinates from the illegal actions of superiors, not to give subordinates the power to challenge their superiors.

But no doubt if anyone follows the siren call of these . . . people . . . and gets sentenced to hard time, said . . . people . . . will say: “You fucked up! You trusted us!”

It brings to mind Civil War Congressman Clement Vallandingham, who along with others encouraged Union troops to desert. Lincoln lamented: “”Must I shoot a simple-minded soldier boy who deserts, while I must not touch a hair of a wily agitator who induces him to desert?” (Vallandingham was convicted by a military court and sentenced to prison for the duration of the Rebellion. Lincoln eventually commutated his sentence to banishment to the Confederacy).

And it goes without saying that our latter day wily agitators threaten the good order and discipline of the military by raising doubts about whether orders must be obeyed, and who has the right to make that determination. That’s no way to run an army, navy, air force, or marines.

Is there anywhere we can banish these people? Which fate would be in fact quite generous given what they really deserve.

I vacillate between calling Germans the world’s dumbest smart people or the world’s smartest dumb people. Whichever way you look at it, however, it is abundantly clear that a people that has produced amazing scientists, engineers, philosophers, and writers has a penchant for self-destructive stupidity, e.g., starting world wars that they have no hope of winning that result in national destruction.

Germany’s recent idiocies fortunately have been more contained in their effects, and have been especially concentrated in energy policy that has wreaked havoc in Germany itself. Energiewende. An obsession with renewables in a climate where the wind often stops blowing and sunshine is extremely limited for months at a time. Closing nuclear power plants. Carbon neutrality. Dependence on Russian gas.

The result of these combined acts of self-harm has been very high energy prices. These high prices have exacted a heavy toll on German manufacturing. Which is kind of a bad thing when manufacturing is your comparative advantage.

The resulting economic malaise has spurred the government into action. Prices to high? No problem! Impose price controls!

Because price controls always work, right? Right?

To illustrate just how dumb smart people can be, I give you this:

In this case, high prices are the result of insufficient supply (capacity). Indeed, high prices are a signal of scarce capacity, and provide the incentive to invest in capacity.

Capping prices distorts the signal, and eliminates the incentive to add capacity. Capping prices ensures that new capacity will never materialize, let alone materialize quickly. Meaning that the policy will inevitably have the exact opposite of its intended effect.

The caps might lead to increased industrial production, and thus increased consumption of electricity by manufacturers. But since prices are high because of inadequate capacity, where is the electricity output supposed to come from? It will have to be diverted from other consumers. Who will have to pay a higher price either directly in the form of higher prices, or in the form of reduced quality (e.g., lower reliability), or indirectly via taxes, and through lower consumption.

I’m sure they’ll be pleased. But that assumes that they realize the connection, because the government has every incentive to hide the higher cost. But a higher cost there will be.

Alas, the Germans are not unique in seizing on price controls to combat high prices. (Yeah, Mamdani–I’m looking at you). This despite the fact that at least since the time of Diocletian, the results have been the same–bad. Very bad.

In many cases–and I believe this to be so with Germany today–it is because the high prices complained of are the result of government policies, and rather than admit failure/error and undo the destructive policies, governments seize on a known nostrum that will inevitably fail. But in the meantime the government will have kicked the can down the road and claimed to have done something. The lag between doing something and the reckoning with what has been done gives it time to come up with new excuses, and new bad policies.

So enjoy, Germans. You are like the Delta guys in Animal House, intent on futile and stupid gestures. Except without the charm.

The FT has a long article about the aborted Gunvor purchase of Lukoil International. It adds a few interesting details.

For one, the orders to squelch the deal came from the upper levels of the Treasury, most likely Scott Bessent himself: “As Gunvor’s offer inched through a half-functioning bureaucracy [due to the shutdown], the decision to kill it came down from high up in the Treasury, according to two people familiar with what happened.”

No doubt because the structure of the deal made it look for all the world like Gunvor was merely a straw buyer, or a parking spot: “A banker briefed on the Lukoil proposal said Gunvor planned no upfront payment and did not need additional financing. Instead, profits would be placed in escrow until sanctions were lifted.”

Uh-huh. The company would remain intact, managed by another company without the expertise or experience to do so (even “Törnqvist admitted Gunvor might not be the natural owner for such a wide portfolio”), with the profits socked away until the day sanctions disappeared. Totally makes sense!

So what was in it for Gunvor?

And the company could be sold right back to Lukoil when sanctions disappeared. Oh yeah, Törnqvist insisted “there was no path for Lukoil to buy back assets spanning the globe that it had spent decades acquiring.”

Sorry, but “no path, swearsies!” doesn’t cut it. If there was a path to sell it kit-and-kaboodle, and it remained intact kit-and-kaboodle in the Gunvor parking lot, there would be a path to buy it back kit-and-kaboodle.

The US’s action has also cast a taint on Gunvor that will hang over it for the foreseeable future. One bank (Santander) withdrew from participating in a financing facility for Gunvor. Others are sticking, but one told the FT that it would “review new financing in a way we wouldn’t have previously.” I bet they will. In fact, every bank will look at Gunvor with the understanding that Uncle Sanctions is looking over their shoulder.

And no doubt that is part of Treasury’s plan. To put the squeeze on Gunvor, presumably because it views the company as Putin’s cat’s paw as long as Törnqvist is in charge.

The FT says “At Gunvor, the shock of the past week has given way to ‘serious self-reflection’ according to one person with knowledge of the situation.” There’s a lot to reflect on.

Törnqvist had to know the risks he was running. That given the structure of the deal, with all the profits going into escrow, there was little in it for his company, and this would be evident. Yet he did it anyways. Which suggests that he was effectively compelled to do so.

The vibe I get comes from the Godfather, with in the role of the undertaker Bonasera and Putin playing Don Corleone:

Due to the US sanctions on Lukoil, that day came. But Gunvor could not provide that service, because an even more powerful Godfather stood in the way.

I’m baaaccckk. Posting pause due to travel (which I’ll write about in my next post) and a pressing expert report deadline.

The biggest news event of interest to me during the hiatus was the agreement for Gunvor to buy the non-Russian assets of the just sanctioned Lukoil, and the early term abortion thereof, with Treasury Secretary Scott Bessent administering the abortifacient. Sort of a reverse of the Anchor Man meme:

It was surprising, not to say shocking, to read of the announcement of the Gunvor-Lukoil deal. It raised many questions.

For one thing, this was a minnow trying to swallow a whale. With a book value of around $6.5 billion, Gunvor was trying to acquire assets worth between 3 and 4 times as much.

Which meant that Gunvor would have needed to raise substantial financing. When the deal was announced, no mention was made of this.

And seriously, what non-Russian bank would want to touch this? Or was it thought that some Middle Eastern SWF be willing to step up? Even that is a stretch. Nobody wants to attract the attention of a sanctions-happy US.

Strategically it would have created a beast somewhat unique in the energy trading world. Lukoil, with significant upstream and downstream assets as well as a largish trading operation, is more analogous to Shell, BP, Total, and the like than it is to a trading firm. Yes, trading firms (e.g., Vitol, Trafigura) have become asset heavier, but the contemplated acquisition would have turned Gunvor into a privately owned, very asset heavy company very different from its peers. There would have been a serious mismatch between ownership structure, capital structure, and asset structure.

There’s also a serious question about the ability of Gunvor to manage such an enlarged, and much more complicated, organization. Torbjörn Törnqvist has not demonstrated that expertise, and in any event, he is 72 and a management transition is on the horizon. He is trying to groom his son for the role, but he obviously has even less experience.

Given all the very serious questions about the deal, one is led to wonder why it was even attempted. The most benign interpretation is that it matched a desperate seller to an opportunistic buyer wanting to do something unprecedented.

A less benign, and probably more accurate, interpretation is that Törnqvist was acting as the Kremlin’s cat’s paw. That is, Putin wanted to retain control over the assets, and therefore wanted them to go into friendly hands that he could control, at least to some degree.

Gunvor’s Russian roots are well known. The sanctions against Gennady Timchenko, former co-owner of Gunvor, in 2014 created an existential crisis which Törnqvist successfully navigated. (Though the details of how he did so remain obscure). With the exception of the Ust Luga port asset Gunvor had shed its Russian assets. The company claims complete independence.

But there is a history of deep connections. And Törnqvist’s second (current) wife is Russian, and continues to operate an environmental NGO in Russia. Further, given the opacity of the commodity trading world generally, and the Russian commodity trading world specifically, it is always reasonable to suspect that subsurface connections still remain, and that Russia has leverage over Gunvor and Törnqvist.

The US Treasury Department certainly thinks so, and said so bluntly when it torpedoed the deal.

President Trump has been clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never get a license to operate and profit.

— Treasury Department (@USTreasury) November 6, 2025

“Kremlin’s puppet.” Brutal. And “Never” seems pretty final.

I laughed when I read that. No bureaucratic doublespeak. Just a right cross to the jaw. (Which Bessent is apparently quite capable of throwing. As Elon).

Of course, the US has far more information about Gunvor and its doings than a mere blogger. You can bet its communications are surveilled, and it is likely that the US has human assets working in the company, and in Lukoil too. Meaning that allegations of puppetry are likely grounded in hard intelligence.

So, whither Lukoil? Well, it will be more like wither, Lukoil.

The trading operation has to be totally shtuped. Trading lives on credit and they won’t get it. And any buyer will feel Uncle Sanctions looking over their shoulder.

Bulgaria is planning to nationalize the Lukoil refinery there. Romania is likely to do something the same with the refinery in its country.

The biggest asset is Lukoil’s big stake in an Iraqi oil field. Likely the other partners will continue operations, and the US will probably acquiesce, not wanting to see a hit to world oil supplies. Revenues can be escrowed, and conceivably Iraq could nationalize it.

Moldova is trying to obtain the Lukoil storage assets located there.

Lukoil stations in Finland, the US, and elsewhere are already having problems getting supplied with fuel. Those could be pieces that other entities, including trading firms or NOCs (note that Kuwait Petroleum operates Q8 gas stations) could snap up.

Meaning that the likely outcome is that rather than being bought in one piece, as Gunvor had proposed, pieces of Lukoil will be seized, sold, or shut down.

One issue I haven’t seen addressed is that of Lukoil International’s creditors, and how that will be handled. A subject for another day.

For now, suffice it to say that the Gunvor Gambit–and arguably the Putin Gambit–was shot down in flames by the United States, and there appear to be no survivors.

The severity of the US action, and the in-your-face explanation thereof, have a clear geopolitical subtext. Trump has had it with Putin. He offered Putin all sorts of off ramps, face saving deals, and the like. But an alternately smirking and snarling Putin refused to budge an inch on Ukraine.

So Trump tightened the sanctions screw, not just on Lukoil but on Russian oil sales generally, and these are having an effect. And he wasn’t about to give Putin a workaround on Lukoil via a transaction with a potentially friendly or even controlled buyer.

The cancellation of a mooted meeting in Budapest between Putin and Trump further demonstrates that Putin has exhausted Trump’s patience. (This cancellation sparked a rejuvenation of Kremlinology. The meeting was cancelled after a phone call between Russian Foreign Minister Lavrov and US SecState Marco Rubio. Lavrov was missing from some subsequent Kremlin meetings, leading to speculation that the failure of the call has led to his being disgraced, and to suggestions he stay away from windows).

But maybe Vova doesn’t care. He appears more than willing to spend another million lives to seize shreds of blasted territory in Ukraine rather than make any concessions whatsoever. Sad. And sick.

SEC Chairman Paul Atkins has clearly set out to be the anti-Gary Gensler. If that’s not an endorsement, I don’t know what is!

Case in point–his move to abandon to the mercies of the courts Gensler’s cretinous, pointless, and incredibly burdensome climate reporting rule. (I use that Sierra Club link to provide some levity. I love the smell of hysterical panic in the morning).

Atkins is also largely reversing GiGi’s anti-crypto agenda. (Well, he is a “crypto peddler” after all, at least according to the Sierra Club!) I am not a crypto evangelist by any means, but broadly support letting consenting adults trade what they want to trade. The regulatory framework for such trading should focus on legitimate investor protection, anti-fraud, and anti-manipulation measures as set out in the SEC’s authorizing statutes. That’s what Atkins’ SEC is striving to do, in contrast to Gensler’s mission to strangle crypto at every opportunity.

In crypto, but more generally, Atkins is also moving sharply away from Gensler’s regulation by enforcement approach, which is another welcome change.

And hot off the presses, Atkins has taken aim at the bloated and (IMO) pointless Consolidated Audit Trail. (Seriously–I found the above announcement while Googling “Atkins CAT” while writing this post. It came out hours before I put pixels to screen). Proposed in the aftermath of the 2010 Flash Crash, it always struck me as a hugely expensive solution to a non-existent problem. Yes, the CAT could assist in forensic evaluations of market events like the Flash Crash and market manipulation, but having worked on such evaluations in markets lacking the CAT, and reading the analyses of others, I conclude it is possible to carry out these analyses without CAT. Put differently, the marginal benefit of the CAT is minuscule relative to the cost.

One issue that has received less attention outside the equity trading community is market structure, and particularly RegNMS. The 20th anniversary of that regulation was the occasion for an SEC conference to reevaluate that regulation. (At the time of the passage of RegNMS, I wrote an article saying that it marked the 30 Years War over market structure that began with the 1975 Securities Act, and wryly suggested that there would actually be a 100 Years War over market structure. We are now at the halfway mark!)

Along with several participants, Atkins criticized a key provision of RegNMS–the so-called “trade through rule” that prevents the execution of a trade on one exchange when a better price is displayed on another. Atkins favors elimination of the rule.

This rule is the keystone of RegNMS, and its removal would reshape the equity exchange environment as thoroughly as the regulation did 20 years ago. Indeed, its elimination would signal that the entire experiment was ill-conceived.

As I wrote in my Regulation Magazine piece, the trade through rule was the “centerpiece” of RegNMS. Its very purpose was to cause a fundamental restructuring of equity trading in the US. And it did.

As I phrased it, the purpose of the rule was to “socialize order flow.” That is, eliminate–or at least sharply circumscribe–the control that an exchange had over the order flow directed to it. The objective of this was to make the exchange landscape more competitive, and specifically to reduce the market power of the NYSE and NASDAQ. At the time of RegNMS’s passage, the NYSE executed 80 percent of the volume of shares listed on it.

Evaluated against its stated objective, RegNMS was a . . .

The equity trading landscape looks nothing like it did in 2005 or before. More than half of trades are executed off exchange. The remainder is divided among 12 exchanges, with the largest having a 10 percent market share:

But to Atkins and the critics of the trade through rule, this represents not great success, but great failure. To the critics, this fragmentation is deleterious.

That is, one man’s competition is another man’s fragmentation.

The post-RegNMS environment has clearly seen dramatic improvements in liquidity and declines in trading costs. This is plausibly, though not definitively, materially the result of increased competition. Moreover, the exchanges have adopted different order types, pricing rules (e.g., taker-maker/inverted v. maker-taker), and trading infrastructures. This means that heterogeneous market participants can choose among heterogeneous platforms, thereby achieving a better match than a one-size-fits-all system would.

The main disadvantage of fragmentation–and a major source of discontent–is that brokers and traders must connect to a variety of platforms, and crucially, must buy data from each. As I wrote some years ago, this creates strong complementarity among the data streams that exchanges provide, which as Cournot demonstrated two centuries ago creates considerable market power which inflates prices. Data is expensive, and economics implies it is too expensive.

What would happen if the trade through rule is abolished? I predict that by effectively re-privatizing order flow it would lead to a massive consolidation of trading venues, and a return to a market structure resembling that of 2004 and before. Less fragmentation, but less competition. Those are essentially two sides of the same coin.

The busy Mr. Atkins has also weighed in on the issue of the frequency of corporate reporting, favoring (fast-tracking, actually) the elimination of the quarterly reporting requirement. Since Trump proposed the same, of course this has led to shrieks and wails–which have been markedly absent when Warren Buffet mooted the idea.

Here’s another issue where I support letting the market decide, as is typically the case when there are trade-offs. Reporting frequency has costs and benefits. A company that provides too little information largely internalizes the cost, in the form of a lower stock price. That is to say, its shareholders internalize the cost. Yes, agency problems mean that managers who make disclosure decisions may act against the interest of shareholders and disclose too little or too infrequently, but that is a problem that is inherent in the corporate form (and the consequent “separation of ownership and control”) that manifests itself in many ways that are not the subject of government mandates and intricate regulations. It’s hard to see why corporate disclosure should be different. Yes, punish false disclosures, but don’t dictate how often companies must avoid lying.

One concern in recent years has been the large number of companies deciding to go private or remain private (rather than IPO’ing). There are myriad reasons companies make these choices, but one of them is the cost of being subject to the reporting obligations imposed on public companies. Easing those obligations somewhat would nudge more companies toward going/remaining public, meaning that the amount of information available to investors and the opportunities available to them might increase if the Trump/Atkins proposal goes into effect.

Overall, Atkins is a welcome relief. Though anyone probably would have been, after Gensler’s Reign of Error (and Terror). I’m ambivalent about his hostility to the trade through rule, but on non-market structure matters he is moving in the right–and pro-market–direction.

Trump declared Antifa a terrorist organization. Which–I hope you are seated before you read this–sent Democrats into paroxysms of rage. Because Antifa doesn’t exist!

NY Representative and all around scumbag Daniel Goldman’s take is representative:

Name one member of “Antifa.”

If it “explicitly” calls for the overthrow of the USG, where can I find that statement?

Trump is trying to suppress opposition by labeling anyone who dissents as a “domestic terrorist.”

Do not be fooled: This is lawless and unconstitutional. https://t.co/KmPYrAQew8

— Daniel Goldman (@danielsgoldman) September 23, 2025

But of course Goldman is just one in a long line of Dems who have denied Antifa’s existence, and claimed that Antifa is merely an idea. These include Joe Biden, Jerold Nadler, and Christopher Wray among many others. (And yes, I definitely peg Wray as a Democrat).

Of course Antifa exists. It was on the streets of Eugene, Oregon yesterday:

Breaking: Antifa has surrounded the federal building in Eugene, Oregon, to protest ICE.

The domestic terrorist group is posted up at the entrances/exits, pounding on doors and windows.

Sources inside say employees are having to find alternative exits. pic.twitter.com/T4guyJDVzZ

— Katie Daviscourt ? (@KatieDaviscourt) September 23, 2025

There’s even a handy “handbook”:

(That by the way is another scumbag, Keith Ellison, Attorney General of the People’s Republic of Minnesota).

In the aftermath of Trump’s announcement, there has been much chin pulling over how it is possible to attack Antifa without violating rights of association. (Unasked is how people are associating in something that doesn’t exist). Or how it is even possible to attack an idea, something that does not have corporeal form.

This isn’t hard. Although the Democrats may hate the comparison, Antifa bears marked similarities to the Ku Klux Klan. Indeed, Antifa and the KKK are doppelgängers. The horseshoe of domestic terrorists.

The United States government aggressively attacked the KKK twice. If the USG can legally and Constitutionally dismantle the KKK, as it did, twice, it can dismantle Antifa.

There were basically three iterations of the KKK: during Reconstruction (“KKK 1.0”), during the 1910s-20s (“KKK 2.0”), and during the 1950s-60s (“KKK 3.0”). KKK 1.0 and 3.0 were identical to today’s Antifa in all relevant dimensions.

From Wikipedia (yes, I know, but this is accurate):

 The Klan sought to overthrow Republican state governments in the South, especially by using voter intimidation and targeted violence against African-American leaders.The Klan was organized into numerous independent chapters across the Southern United States. Each chapter was autonomous and highly secretive about membership and plans. Members made their own, often colorful, costumes: robes, masks and pointed hats, designed to be terrifying and to hide their identities.

The only real difference is that Antifa “costumes” are rarely colorful. They are almost always black. But the two groups have “highly autonomous,” “secretive,” and “[hiding] identities” in common. Also common to them is “targeted violence” aimed at government overthrow.

You could say that KKK 1.0 was the reificaton of an idea–the idea of white supremacy and white control over state and local governments in the South. Antifa differs only in what idea it reifies–communist revolution, rather than white supremacy.

Klan 3.0 was very similar to its post-Civil War antecedent. Like KKK 1.0, it consisted of “local chapters with little or no central direction.” Like KKK 1.0, thse local chapters relied on secrecy and terror to commit local violence to achieve similar outcomes throughout the South.

And of course the US government targeted the Klan during Reconstruction. In 1871 a federal grand jury found that the Klan was a “terrorist organization” and handed down hundreds of indictments. President Ulysses S. Grant used the powers granted by the Civil Rights Act of 1871, commonly referred to as the “KKK Act,” to suppress Klan 1.0. Historian Eric Foner states: “By 1872, the federal government’s evident willingness to bring its legal and coercive authority to bear had broken the Klan’s back and produced a dramatic decline in violence throughout the South. So ended the Reconstruction career of the Ku Klux Klan.”

Although parts of the law allowing the Federal government to prosecute for murder and assault were found unconstitutional, other parts remain in effect and have been codified into US law. Moreover, the USG has legal means that allow criminal prosecution of the parts declared unconstitutional in 1872. For example murders or attempted murders of federal officials (like ICE agents), destruction of Federal property, and the like can be prosecuted under US law.

The US government used these powers to crush Klan 3.0. As a result of this aggressive campaign, it is a pathetic shadow of its former self.

What it comes down to is that the Federal government can prosecute individuals who commit violations of Federal law. It can focus its efforts on organizations or associations whose members commit such violations, or are highly likely to. It cannot prosecute members just for being members, but it can prosecute them for crimes they commit, and indeed, it can prosecute them under Federal conspiracy statutes. Such prosecutions can cast a wide net that catches many members of an organization.

Historically the Federal government has focused on the KKK, used myriad means to infiltrate its various autonomous entities, and prosecuted those who commit crimes under its banner. (NB: Antifa literally has a banner). It has twice, nearly a century apart, crushed the Klan.

It can do the same with Antifa–if it decides to. It can use the exact same playbooks it has employed against the Klan and other groups–if it decides to. All Trump is saying is–he has decided to.

What is striking is that previous administrations decided not to, and did so quite deliberately. And indeed, they claimed that there was nothing to go after, despite the evidence of Antifa’s existence and malignity that was in plain sight.

This raises the question of why, and the answer is most likely a disturbing one. And again, there are echoes with the Klan.

Foner wrote: “In effect, the Klan [1.0] was a military force serving the interests of the Democratic party, the planter class, and all those who desired restoration of white supremacy.” The same was true of Klan 3.0. A colorable case can be made that today one can substitute “Antifa” for “the Klan,” and the statement holds with equal force today. Another way in which the Klan and Antifa are doppelgängers.

If you find this comparison over the top, then riddle me this: why is the Democratic Party so determined to shield Antifa from attack by Federal law enforcement, and so hell-bent on denying its very existence? Perhaps people like Daniel Goldman don’t actively conspire with Antifa, but their efforts to defend it strongly suggest that Antifa serves their interests. It is useful to have around, so they want to protect it.

An article in the Washington Examiner compared the Provisional IRA and Sinn Fein to Antifa and the Democratic Party, respectively. The comparison is an apt one. The Provisional IRA was a terrorist organization that shared political objectives with the political organization Sinn Fein.

I think the administration should play up the Antifa-Klan comparison. The similarity in methods and structure justify action against Antifa: if the threat posed by the Klan justified a concentrated Federal effort to destroy it, the similar threat posed by Antifa does the same. Further, making the Klan comparison is a simple way of demolishing the various objections that have been raised to the feasibility of targeting Antifa. And it puts the Democrats in the position of trying to deny that Antifa exists even in the face of the evidence that an aggressive campaign against it will inevitably produce.

But of course that is what they will do. Deny. Gaslight. Obfuscate. And let them. That will only cement in the public’s mind the connection between Antifa and the Democratic Party, just as their pathetic objections to more aggressive prosecution of crime cements the connection between them and criminality.

The annual UN poseurfest is currently underway in New York. The main event is various Lilliputian leaders like Macron and Starmer announcing that their nations will recognize a “Palestinian state.”

Just what are they recognizing, exactly? Usually, recognition refers to a government. For example, in 1979 the US recognized the PRC as “the sole legal Government of China.” In the 1930s the US recognized the government of the Soviet Union.

So what government are these diplomatic giants bravely recognizing? The Palestinian Authority (PA), a corrupt, terrorist-adjacent (at least), autocracy? Hamas, about which nothing need be said?

And what are the borders of this “state”?

Details, details.

These initiatives are a direct response to the war in Gaza. If Manny and Two Tier Keir are recognizing the PA, it is utterly irrelevant–because the PA holds no sway in Gaza, having been eliminated from it by Hamas with extreme prejudice years ago. If the latter, they are recognizing a murderous terrorist regime.

Meaning that these stunning and brave initiatives are actually stupid and bullshit gestures.

For his part, Starmer adamantly denies that Britain’s recognition extends to Hamas. How principled!

Well, as the saying goes, possession is nine tenths of the law. And Hamas possesses Gaza–unless and until Israel extirpates them, that is. So what, exactly, will Britain’s recognition do to end the war in Gaza, which is supposedly the point of this political onanism?

For his part, Macron says that it is imperative to end “Israel’s war in Gaza.” Last time I checked, it takes at least two sides to have a war. Just whom are the Israeli’s fighting, exactly? Hamas could have ended the war they started months ago. By surrendering, thereby saving all those Gazan lives that Macron supposedly cares so much for.

They didn’t. So the beat goes on.

Macron has proposed that France will lead a multi-national effort that will disarm Hamas “gradually.”

I have read idiotic things before, but this is in the running for the most idiotic. Given their conduct in the last decades, who could possibly believe that Hamas would agree to be disarmed, and even if they did so in taqiyya fashion, they would actually follow through? And what is the point of disarming them if they are not combatants, meaning it is not “Israel’s war”? And doesn’t the necessity of disarming them imply they are not a legitimate government, and are in fact the cause of the war? Who is going to rule Gaza after they are disarmed? Islamic Jihad? And if they should be disarmed, why gradually? Is this like military methadone, slowly weaning Hamas off murder? And are we supposed to believe that France would follow through after the inevitable attacks, suicide and otherwise, on its “peacekeepers”?

The fact is that the only way that Hamas is going to be disarmed is when the Israelis pry Hamas’s weapons from their cold dead fingers.

The reality here is that Macron and Starmer et al are political eunuchs domestically who, unable to do anything at home, are strutting about the world stage. It is particularly pathetic in Macron’s case. France is a basket case right now, and his popularity ranks right up there with chlamydia. The chutzpah of this political Munchkin (who imagines himself to be Jupiter) lecturing the world on its moral duties is off the charts.

The other reality is that both Macron and Starmer are afraid of their restive Muslim populations. Better to throw a bone to les banlieues than deal with riots in them, eh, Manny?

Telling indeed was Manny’s meltdown over US ambassador Charles Kushner’s letter criticizing France’s feckless efforts to combat anti-semitism in the country. Just who are the most dangerous anti-semites in France? Its Arab Muslim population, obviously. Kushner (and hence Rubio and Trump) was essentially accusing Macron of cowardice for failing to address the source of the problem. Which hit Macron where it hurts.

Meaning that you cannot understand any action Macron takes with respect to the Muslim and Arab worlds without acknowledging its roots in one of Thucydides’ drivers of human behavior–fear.

Against the background of Macron’s posing and his hissy fit directed at the US, this is hilarious:

Priceless: Police in New York stops Macron's car, because the street is closed for Trump's convoy.

Macron calls Trump to allow him to pass, but Trump humiliates Macron and tells him to walk instead, which he does ?

pic.twitter.com/K1cnWUOBrB

— Dr. Eli David (@DrEliDavid) September 23, 2025

Maybe this was just a SNAFU due to a miscommunication between Macron, the US government, and the NYPD. But maybe it was Trump trolling:

(Macron is Henery Hawk to a “T”).

Regardless, it demonstrates just what standing Macron has in the US. Which, in turn, demonstrates that all his posing will get him nowhere, and earn him even more ridicule.

So go home, Manny. You might need to choose another prime minister.

Though he’s not really worth the pixels, the hue and cry over the suspension (not firing–yet, anyways) of the beyond execrable Jimmy Kimmel compels me to respond. A reply is warranted primarily because of the alleged hypocrisy of those who criticized (and criticize) cancel culture yet called for and applauded his current hiatus (again, apparently temporary). This implicates issues far more important than the fate of a single media twat. It is essentially an attempt to beat back a social revolution that threatens those who occupy the commanding heights in media, academia, and government.

First, the criticism is a pitch perfect example of the “no punchbacks,” “no fair mommy, he hit me back!” mentality of the left. Deferring to this mentality out of fear of being called hypocritical is a recipe for submission to abuse into the infinite future. In a repeated prisoners’ dilemma, which accurately characterizes politics generally and current American politics specifically, tit-for-tat (i.e., punchbacks, and bigtime) is an evolutionarily successful strategy. Always cooperating in the face of defection (i.e., bending over when your adversary screws you) is a strategy that ensures extinction.

This mentality–strategy really–of the left can be devastatingly effective if one’s opponent falls for it. And alas, too many on the right are doing so. Hence the left is currently turning it up to 11. Smart by them, dumb by those who fall for it.

Instead, the appropriate reaction is the late, lamented Andrew Breitbart’s:

Say it loud. Say it proud.

Second, the most egregious aspects elements of High Cancel Culture involved the employment of government coercion to silence dissenting voices on social media. (Cf., The Twitter Files). For this reason, it was beyond wrong–and beyond stupid–for FCC Chair Brendan Carr and Trump to threaten revocation of ABC’s license if it did not do something about Kimmel, and indeed to threaten generally the revocation of licenses of broadcast outlets (that unlike cable, social media, etc.) that subject to “public interest” licensing conditions if they air things the administration doesn’t like.

Meaning that these were unforced errors that made Kimmel et al martyrs. Further, do not unsheathe a weapon that is likely to be in your enemies’ hands someday. Especially when that enemy has no compunctions whatsoever about punchbacks.

The public outcry over Kimmel’s false, slanderous, and disgusting remarks was likely sufficient result in sufficient market pressure on Disney to cause it to get rid of him. By opening their mouths, Carr and Trump (whom I know can’t help it) created countervailing pressure. Moreover, they have distracted attention from the odious content of what Kimmel said, and what far too many others on the left had said.

In other words: Never interrupt your enemy while he is in the middle of making a mistake. Carr and Trump have done exactly that.

Relatedly: Pam Bondi needs to STFU about “hate speech.” That insidious concept has been the primary means by which free speech has been undermined, and by which non-leftists have been silenced on media, social media, and especially college campuses. This, combined with the “Epstein files” fiasco, suggests that Bondi is hell-bent on validating blonde jokes.

Third, Disney/ABC provided Kimmel a platform to express his views and paid him to do it. He has no right to that platform and pay that allows him to say anything he wants. If those views–lies, in this instance–displease his employers, they are perfectly justified in terminating him, thereby denying him that platform. He can go out and find another platform. (Hello, Substack!). Meaning that absent the Carr/Trump own goal discussed above, there would be no question about infringing Kimmel’s rights.

Fourth, this gets at an issue that pervades the entire cancel culture debate: Rights vs. right. First Amendment rights protect the people against the government. Put crudely, the government cannot censor or punish speech (with exceptions like making threats of imminent harm). But with the exception of things like the Biden administration suborning Twitter, Facebook, MSM, etc., most of cancel culture does not violate Constitutional rights. (Censorship by public primary and secondary schools and public universities arguably would. Censorship by most private schools arguably would as well, under Grove City). It is an exercise of social coercion, not government coercion.

It is therefore an issue of whether it is right to object to, and in some cases sanction or even suppress, speech. And here the difficulty is that like almost everything in life, categoricals are counterproductive. There are trade-offs. Judgments must be made.

That is, the costs of some kind of speech exceed the benefits. The question is deciding when that occurs–and crucially, who decides. And that is the real issue.

The reality is that as the result of its successful march through the institutions, the left has achieved a near monopoly on deciding. And it has decided that speech that deviates from (today’s!) leftist orthodoxy is unacceptably costly, and that virtually any action (not just spoken or written words) that conforms to that orthodoxy is sacrosanct. “Your speech is violence! My violence is speech!” With “your” being conservative/right, and “my” being progressive/radical/left. And it enforces this decision with myriad coercive means. Social ostracism. Intense harassment. Deletion from social media. Expulsion from school. Loss of job and income.

The counterrevolution against cancel culture is driven by a deep conviction among a large number of people that this monopoly of social force and the means it employs are wrong and must be overthrown. They are wrong because they enforce an Animal Farm all-animals-are-equal-but-some-animals-are-more-equal-than-others hierarchy that violates the equality of citizens, and the equality of human beings. It is wrong because it is fundamentally coercive, and applies this coercion to behavior that those who are not ideological leftists strongly believe is not only not harmful to others, but is in fact in many cases is quite beneficial both to individuals and society. (Religious devotion and speech are examples of the latter).

In brief, the beef is “who died and made you God?” At root, it is an argument about social equality–of which equality before the law is only a part.

Thus, in the end it comes down to what is beyond the pale, and who decides what is beyond the pale. Vast swathes of people who have not been privileged to be deciders, and who have been persecuted by those who are so privileged, have taken it upon themselves to decide that what Jimmy Kimmel said about Kirk’s murder and responsibility for it is far, far beyond the pale. And that what all too many doctors, “educators” (gag), government employees have said is far, far beyond the pale. And that they should pay a price for these transgressions.

The hypocrisy charge thus comes down to a category error. That error being that “if you objected to the pale before, you cannot insist on a pale now.”

No. The argument has always been about where the pale lies, who establishes it, and who enforces it. And the “Fuck you Jimmy Kimmel–War!” response is a revolt against where it was drawn, who drew it, and who enforced it.

It is, in short, a social revolution. A challenge to the social order, rather than to government per se.

The irony is that leftists usually fetishize revolution–except when they are in power. And since they are in power in virtually all institutions–academia, government, media of all types–this revolution horrifies them. And that reaction is precisely what shows that this revolution is a righteous one.

There is no symmetry between the evil lord in a castle exercising the power of coercion, and the peasants with pitchforks and torches storming the gates to overthrow him. Our evil lords are trying to get us to disperse by appealing to a sense of fairness based on an assertion of just such a (false) symmetry.

Don’t get fooled again.

Needing a break from the social sickness displayed so prominently in recent days, I will distract myself with a post on economic policy, specifically, Federal Reserve independence and Lisa Cook.

I get the point about Fed independence. But the sacralization of it in recent days by commentators of virtually all stripes ignores the flip side of independence: accountability.

A Fed that is totally independent of political influence, or influence by other interests, is also totally unaccountable. And unaccounability has its own costs. Indeed these costs can be large.

The Fed is not immune to error. Indeed, the history of the Fed is riddled with colossal errors. I am an intellectual grandson of Milton Friedman (my PhD advisor being a Friedman student), so that fact is burned into my brain.

Indeed, even some of what are widely considered the Fed’s shining moments–e.g., Bernanke’s interventions during the GFC–were necessitated by its previous errors. Should you get credit for putting out the fire you threw gasoline on earlier?

What are the feasible mechanisms for identifying and correcting such errors, and more importantly, for preventing them? That is a hard problem, but complete freedom from accountability ain’t one of them.

The Fed likes to portray itself as a wizard-like entity. Well it is. The problem is, the wizard it most resembles is Oz.

That is, lack of accountability is the flip side of independence. Imperfect people and institutions that are not accountable are prone to make major mistakes, and to persist in making them even when outsiders identify them.

In other words, like all things human, there are trade-offs. Those clutching pearls at Trump’s Fed-bashing abdicate from grappling with those trade-offs.

The potential for Fed F-ups is amplified by another matter of current controversy swirling about Trump, also related to administrative agency independence. Specifically, the wretched record of the Bureau of Labor Statistics in its unemployment/employment statistics.

The huge revisions of the reports originally made in 2024 and early-2025 testify to the potentially wildly misleading nature of these statistics. Of course, Trump being Trump, he ascribes dark political motives to the overstatements of job creation under Biden. But regardless of the motive, the performance is appalling.

Meaning the BLS has to be held accountable. Those bewailing the firing of the agency head are objectively supporting the principle that it should not be so held.

This is of course relevant to the discussion of the Fed, because the Fed touts that its policies are “data driven.”

Garbage in, garbage out, anyone?

Should the Fed be held blameless for failing to identify and call out systemic failings in the production of the data on which it relies? Mightn’t it be better to spend billions on creating independent data sources, rather than, say, building Jerome Powell’s Taj Mahal?

I should also note that Fed independence will not survive a fiscal crisis in the United States. Listening to Treasury Secretary Scott Bessent, rather than Trump, I get the sense that it is fiscal and budgetary issues that lie at the heart of the administration’s hostility to Powell.

Meaning that the Original Sin here is American fiscal incontinence. Arguing about Fed independence focuses on a symptom, rather than the real problem.

As for the issue that has driven the latest “Oh My God Trump is Threatening the Fed!!!” panic–the firing of Fed Governor Lisa Cook–it is also really about competence and accountability.

Lisa Cook is utterly incompetent and unqualified for the position she holds. Full Stop. She is not a macroeconomist–not that that alone should be disqualifying, but it is relevant. She has credentials as an economist–but that is neither necessary or sufficient to demonstrate competence or qualification, especially for a job as vital as Fed governor.

Let me be blunt: she is an embarrassment to the economics profession. She plagiarized. Her CV is laughable. Her most widely cited paper–and the one she is most proud of, regarding the alleged causal role of lynching in stifling innovations by blacks–is so bad that I doubt I am capable of doing justice to its awfulness. She got hired at, and tenured at, Michigan State University. Yeah, and we know how that happened.

In a nutshell. If a la William F. Buckley you open the directory of the American Economic Association to a random entry, the person on whom your finger lands would be more qualified to be a Fed governor than Lisa Cook. Indeed, that would be true of you performed this exercise N times, with large N.

I will also point out that she is a nasty piece of work. Poor, poor pilloried Lisa was front and center in the efforts to cancel (persecute, really) an actually talented economist, Harold Uhlig, over his wrongthink in the George Floyd frenzy.

Which makes it particular disgusting that “450 prominent economists” have rallied around her.

450 prominent economists rally around an embarrassment to the economics profession. She is a plagiarist. Her CV is worse than a joke. Her most cited publication is a farce. The travesty here is not that she has been fired. It is that she was appointed in the first place. https://t.co/A3GSJF75M5

— streetwiseprof (@streetwiseprof) September 2, 2025

Probably an outbreak of Malcom Gladwell-ism by cowardly academics.

Think you are being unfairly attacked, Lisa? Well, karma is a bitch.

The real travesty here is that Lisa Cook was appointed to her august position by a mentally incompetent, race card dealing president, and the Senate confirmed her.

And so we have an indisputably incompetent person on the Fed. Fed independence is so sacred that error cannot be addressed? (Would that there were a way of making the Senate and “Biden” accountable).

As for the pretext for her removal, incompetence should be sufficient “for cause.” Given that’s probably too difficult and too precedential to get courts to buy, credible allegations of mortgage fraud will do.

And that is another testament to her incompetence, and the Senate’s failure of due diligence. She, through arrogance or stupidity or just plain dishonesty, gave Trump the means to remove her.

In addition to the screeching about “independence,” there are also wails about lack of due process.

FFS. you don’t get a trial by jury with a presumption of innocence for everything. The amount of process due depends on the context.

If you are an at-will employee, your due process is basically bupkus. If you can be fired “for cause,” the due process is typically a senior decision maker evaluating your conduct and determining whether sufficient cause exists.

If you are a financial regulator, yes, credible allegations of violating financial laws is pretty much a drop-dead cause. Caesar’s wife, etc.

Note that she has never denied that she lied on multiple mortgage applications. So she’s not even denying the cause. Just saying that it is not sufficient.

Well, what would be then?

Siding with her renders the entire concept of for cause termination null and void. Which would further immunize the Fed from accountability.

In sum, the whole Fed independence battle has been framed in typically Manichean terms, with Trump, as always, cast in the role of Demiurge.

That’s BS. It’s not good v. evil. It’s about difficult trade-offs. If you don’t take that seriously, I won’t take you seriously.