Free money for banks and not-so-free money for everybody else isn't such a crowd-pleaser.
In fact, it seems like welfare for the wealthy. It doesn't take much financial acumen to make a profit when you can get money for nothing from the Fed and lend it back to the government for a few hundred basis points. How can normal people get in on this? That's what former FDIC chief Sheila Bair asked in a recent tongue-in-cheek piece calling for the Federal Reserve to give everyone interest-free $10 million loans.
But there is nothing special about zero interest rates.
The below chart plots the difference between the 10-year Treasury yield and the Fed funds rate over the past 30 years. In other words, it's the profit that banks can make from lending risk-free. See if you can spot when the Fed pushed interest rates down to zero.
Short-term interest rates hit zero in December of 2008. The risk-free spread banks could earn jumped up then -- but it wasn't any higher than it had been in the past.
That makes sense. Long-term interest rates depend on expected short-term interest rates. When the economy looks bad, the market expects short-term interest rates to stay low -- which means that long-term rates do the same. The difference between short and long-term rates doesn't get much out of whack, even when rates are zero.
But Fed critics do have something of a point. The reason zero interest rates feel like such a giveaway is that lending standards have gotten much tougher for most everyone else. If you're not the government or a Fortune 500 company, it's hard to get a loan nowadays.
There's not great data on small business lending, but junk bond yields are a decent proxy. Here's the difference between those yields and the Fed funds rate.
Spreads skyrocketed when the crisis hit and have been slow to come down since. That the banks get free credit when everyone else is struggling to get any credit makes it galling. But it's not a "secret bailout" as some call it. The reality is more mundane: It's banks tightening credit standards -- probably too much -- after they were too loose during the bubble years.
There are plenty of things to be mad at the big banks and the Fed for over the last few years. But criticizing banks for lending for more than they borrow for, like Bair does, is triffling. That's just the definition of banking. Zero interest rates don't really change this. Our limited supply of outrage is better directed at actual outrages.
One hundred years ago, a retail giant that shipped millions of products by mail moved swiftly into the brick-and-mortar business, changing it forever. Is that happening again?
Amazon comes to conquer brick-and-mortar retail, not to bury it. In the last two years, the company has opened 11 physical bookstores. This summer, it bought Whole Foods and its 400 grocery locations. And last week, the company announced a partnership with Kohl’s to allow returns at the physical retailer’s stores.
Why is Amazon looking more and more like an old-fashioned retailer? The company’s do-it-all corporate strategy adheres to a familiar playbook—that of Sears, Roebuck & Company. Sears might seem like a zombie today, but it’s easy to forget how transformative the company was exactly 100 years ago, when it, too, was capitalizing on a mail-to-consumer business to establish a physical retail presence.
Five days after Hurricane Maria made landfall in Puerto Rico, its devastating impact is becoming clearer.
Five days after Hurricane Maria made landfall in Puerto Rico, its devastating impact is becoming clearer. Most of the U.S. territory currently has no electricity or running water, fewer than 250 of the island’s 1,600 cellphone towers are operational, and damaged ports, roads, and airports are slowing the arrival and transport of aid. Communication has been severely limited and some remote towns are only now being contacted. Jenniffer Gonzalez, the Resident Commissioner of Puerto Rico, told the Associated Press that Hurricane Maria has set the island back decades.
E!’s 10-year-anniversary special celebrating its flagship family was surprisingly honest and strangely tragic.
On Friday, as Puerto Rico contended with the aftermath of a hurricane that had left much of the island without power, and North Korea threatened to detonate a hydrogen bomb in the Pacific Ocean, the internet-gossip complex grappled instead with the momentous news that an unmarried 20-year-old reality star was pregnant. Kylie Jenner, TMZ reported, the youngest scion of the Kardashian family, had been telling friends that she and her boyfriend, the rapper Travis Scott, were going to have a baby. Unidentified family friends promptly confirmed the news to People. And some fans began to wonder—had Kylie’s mother, Kris Jenner, leaked the news herself to boost the ratings for E!’s Sunday night 10-year-anniversary special of Keeping Up With the Kardashians?
The foundation of Donald Trump’s presidency is the negation of Barack Obama’s legacy.
It is insufficient to statethe obvious of Donald Trump: that he is a white man who would not be president were it not for this fact. With one immediate exception, Trump’s predecessors made their way to high office through the passive power of whiteness—that bloody heirloom which cannot ensure mastery of all events but can conjure a tailwind for most of them. Land theft and human plunder cleared the grounds for Trump’s forefathers and barred others from it. Once upon the field, these men became soldiers, statesmen, and scholars; held court in Paris; presided at Princeton; advanced into the Wilderness and then into the White House. Their individual triumphs made this exclusive party seem above America’s founding sins, and it was forgotten that the former was in fact bound to the latter, that all their victories had transpired on cleared grounds. No such elegant detachment can be attributed to Donald Trump—a president who, more than any other, has made the awful inheritance explicit.
When he began taking a knee during the National Anthem, earning the attention of the president and the entire press was the best outcome he could possibly have desired.
Friday morning, things didn’t look great for Colin Kaepernick.
The former San Francisco 49er had made headlines around the world last season for kneeling during the National Anthem. The offseason had seen a raging debate about the fact that he hadn’t been signed from free agency, which boiled down to whether teams were justified in deciding that his controversial protest outweighed his talent. Despite some comically atrocious performances by quarterbacks on NFL rosters in the first two weeks of the season, Kaepernick remained unsigned. A few fellow players said publicly that he deserved a roster spot somewhere, and some had taken up his protest, but it remained a niche question, and the cause to which Kaepernick wished to draw attention—police brutality against people of color—had faded a bit from the headlines, overwhelmed by the onslaught of Trump-related news.
As Trump grieves for the passing of a more violent NFL, the league's players demonstrate a new ideal of manhood.
First, the good.
In a shirtless locker-room interview yesterday, Miami Dolphins safety Michael Thomas was asked about Trump’s “son-of-a-bitch” condemnation of players protesting state violence.
Thomas first shot back a smile as if trying to brush it off.
Addressing Trump: “It just amazes me that with everything else going on in this world, especially involving the United States, that’s what you’re concerned about, my man?”
His tone shifted.
“As a man, as a father, as an African American who’s one of those ‘sons of bitches,’ yeah, I took it personally. But at the same time, it’s bigger than me. I got a daughter. She’s going to have to live in this world. I’m going to do whatever I got to do to make sure she can look at her dad and be like, ‘Hey, you did something. You tried to make a change.’”
The scale of this advertising buy is mysterious. In an election where billions of dollars were spent, why even bother to spend $100,000? It seems like a drop in the bucket, but also more than nothing. For comparison, in 2015 and 2016, all campaigns directly paid Facebook a collective $11,313,483.59 across all races, according to Federal Election Commission numbers. The Trump campaign paid Facebook $261,685 directly for ads. But those numbers are only lower bounds for the amount of money spent on Facebook because many campaigns pay consultants, who then purchase ads on their behalf. (For example, Cambridge Analytica, which worked with the Cruz and then Trump campaigns, took in $15.4 million during the cycle, including $5 million in one payment from the Trump campaign on September 1.)
“The truth is, I am kind of done with politics for now!” the former Fox News host told a cheering studio audience, before launching into an hour that was entirely about them.
“The truth is, I am kind of done with politics for now.”
That was Megyn Kelly, on Monday morning, talking to her studio audience during the live debut of her new NBC morning show, Megyn Kelly Today. In response to the declaration, the people gathered within the airy, brightly lit set roared with approval. “Right? I know!” the host continued, her tone breezy and conspiratorial. “You know why! We all feel it. It’s eeeverywhere. It’s everywhere.”
Pleasingly apolitical, relatably indignant, preternaturally glossy: It’s a brand Kelly has been working to cultivate throughout her television career, but particularly within the whirl of publicity that has led to today’s morning-TV debut. In Kelly’s 2016 autobiography, and in glowing profiles with headlines like “Blowhards, Beware: Megyn Kelly Will Slay You Now” and “After Fox, Megyn Kelly Aims To Be a Force for Good,” the former Fox News Channel host—having moved, earlier this year, to NBC—has made a point of emphasizing her conviction that politics is a choice one can make, a topic that can be cordoned off from all the others, and, as such, willfully avoided. “Megyn Kelly Doesn’t Want to Be Political” was the headline of an interview Kelly gave to Elle magazine’s Mattie Kahn, its publication timed to coincide with Monday’s premiere of Megyn Kelly Today. The conversation went in part, like this:
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
NFL athletes are protesting on behalf of America’s founding values––and Donald Trump neither loves nor understands them.
Donald Trump, who has a disturbing history of praising brutal dictators, possesses no better than a Twitter troll’s understanding of what it means to be an American patriot. He spent the weekend trolling the NFL over the players protesting police violence during the national anthem, though any other president would have been attending to the millions of fellow citizens suffering in Puerto Rico; and the NFL athletes who defied him by taking a knee Sunday in solidarity with protests against police killings had the high ground, as good students of American history will understand.
When the Founding Fathers affixed their signatures to the Declaration of Independence, the first act of political courage in United States history, the American flag as we know it did not yet exist. And it would be more than a century before the Star Spangled Banner was adopted as the national anthem. Yet the Founders were not deficient in love of country for lacking the Stars and Stripes. In bravely dissolving political bonds with Britain, Thomas Jefferson set forth the premise of the United States, the core ideas around which his countrymen rallied: “that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”