#go back to negotiation tactics 101 class

[milkmynk]

I love, love, love Maomao as an FL so much. The girl's got goals and dreams, and being in love doesn't even feature within the top 100 of 'em

[the-wraiths-wife]

I write a fanfiction about Kaz having a sister in Wattpad, named Adjala Brekker. And I just got the craziest idea. Kaz is always the baby sitter for Adjala's kids so why not write headcannons?

So I just made a few headcannons about Kaz babysitting his niece Jordan, and his two nephews Johannes and Kaz jr.

( Everytime you see a mom approved, it means the kids' mother approves of the activity )

1. "Uncle Kaz's House of Schemes": Kaz turns babysitting into a series of elaborate games and puzzles for the kids. It's like a mini heist every time they visit, complete with clues and riddles to keep them entertained. (Mum approved)

2. Kaz's version of "nap time" is "quiet planning time": When it's time for the kids to take a nap, Kaz uses this opportunity to quietly plan his next big scheme. He's convinced they're the perfect cover for his brainstorming sessions. (Mum approved)

3. Candy heist training: Kaz teaches the kids the fine art of candy heists, complete with disguises, diversion tactics, and a secret candy stash. They're the most resourceful trick-or-treaters in Ketterdam. (Mum not approved)

4. The "Ingenious Bedtime Routine": Kaz has a knack for getting kids to bed without fuss. His secret? He tells them thrilling stories about his heists until they're too excited to stay awake. (Mum approved)

5. Tiny suits and dresses: Kaz insists that the kids wear tiny suits and dresses, just like him, when they go out together. It's a comical sight seeing them dressed as miniature versions of him. (Hehe definitely mum approved)

6. Teaching the art of negotiation: Kaz imparts his negotiating skills to the kids, coaching them on how to haggle with street vendors for the best deals on toys and treats. They quickly become savvy little traders. They negotiate with daddy alot too, and their daddy always falls for this (Their dad hates this, so mum approved)

7. The "Kaz Jr. Inheritance Fund": Kaz secretly sets up a savings account for each of the kids, earmarking it as their "inheritance." He insists they learn about managing their finances from an early age. (Uncle Jes and Mumma approved)

8. "The Kaz Bunker" (my fav) : In the event of a "Kaz-sized emergency," he's built a secret bunker (a well-fortified blanket fort) in the living room. It's the perfect hiding spot for epic pillow fights and strategizing. (There's photo evidence -Inej) [mum approved - Kaz's sister]

9. Poker night (ft. Uncle jes, Daddy and uncle Wy) : Kaz introduces the kids to poker night, using candies as chips. It's all in good fun until Jesper's uncanny ability to bluff leaves Kaz Jr and Johannes with an empty stash of candy, while Jordie has a whole lot to herself. Wylan always gives his candy to Kaz jr in the end. Elijah (the kids' dad) sits their and sticks his tongue out to his brother in-law whenever he wins, only to me met by the Lethal Brekker sibling glower. (The mother doesn't aprove of this, their dad does tho)

10. Lessons in lockpicking (childproof, of course): Kaz teaches the kids the basics of lockpicking, with a set of child-friendly locks and tools. They think it's just a game, but it's secretly a life skill. (The parents don't aprove since candy is always being stolen from the kitchen)

11. Kaz and naps : when the kids' parents get back from date night of smth, they see uncle Kaz and the kids in the Kaz Bunker fort, or all of them on the ground, surrounded my toys and Kaz is laying flat on his stomach and Kaz jr is snoozing on top of him and Jordan and Johannes are snoozing in the corner. This, ladies and gentlemen, is how the bastard of the barrel gets his sleep. (Inej has photo evidence) [Daddy and mumma approved]

12: Lifeskills (ft. Uncle Matty, aunty 'nej and aunty Ninny) : so Kaz gets his gang together to preach Lifeskills to his nephews and niece. Uncle Matty adores the mini demjins. Aunty 'nej takes them in sea trips (Aunty ninny brings the snacks) [ pappa and mumma approved]

13. Shark stare classes 101: in which Kaz teaches his little trainees the signature bombastic side eye and shark like stare, along with the lethal Brekker glower, which always has the kids' dad running for the HILLS, cuz they look like his scary wife and terrifying brother in law. (Daddy and Mumma approved ladies and gentlemen)

A fanfic for this :

I'm tagging a few of the biggest SoC enthusiasts I know : @she-posts-nerdy-stuff @ell0ra-br3kk3r-writes @marsconer

[ishkah]

On The Far-Left, Effective Activism & Violence

Introduction to what it means to be on the far-left

So first off, as socialists & anarchists, we know we are far outside the Overton window. We know even if left-wing policy positions are more popular than right-wing, most people are still going to be biased to what they’ve grown up with and what’s familiar to them.

But, we also know we can shift the Overton window from the radical fringe: [1]

The most important thing about the Overton window, however, is that it can be shifted to the left or the right, with the once merely “acceptable” becoming “popular” or even imminent policy, and formerly “unthinkable” positions becoming the open position of a partisan base. The challenge for activists and advocates is to move the window in the direction of their preferred outcomes, so their desired outcome moves closer and closer to “common sense.”

There are two ways to do this: the long, hard way and the short, easy way. The long, hard way is to continue making your actual case persistently and persuasively until your position becomes more politically mainstream, whether it be due to the strength of your rhetoric or a long-term shift in societal values. By contrast, the short, easy way is to amplify and echo the voices of those who take a position a few notches more radical than what you really want.

For example, if what you actually want is a public health care option in the United States, coordinate with and promote those pushing for single-payer, universal health care. If the single-payer approach constitutes the “acceptable left” flank of the discourse, then the public option looks, by comparison, like the conservative option it was once considered back when it was first proposed by Orrin Hatch in 1994.

This is Negotiating 101.

So our hope is that our ideals and passion can be admired by some, like risking prison to sabotage the draft for Vietnam, so some peoples sons aren't conscripted into fighting an evil war. [2] Then any moderate left policies might look reasonable in comparison which makes them the tried and tested policies of the future.

We should also openly acknowledge that the ideal future we would like to see is empirically extremely unlikely to come about in our own lifetimes in the west, as there are still so many hills to climb first in pressuring workplaces over to a more co-operative flattened hierarchy of workplace democracy.

To quickly summarise, the direction the far-left would like to head in, is going from; a two party system, to... a multi-party coalition through preferential voting, to... some local government positions being elected by sortition, to… the majority of society being so content with worker-co-ops and syndicalist unions that we transition from representative democracy to direct democracy. So, a chamber of ministers to federated spokes councils.

Now I might be the minority in the far-left on this, but I would want people to have the option of going back a step if people aren't ready for that level of direct democracy, where the choice is disorganization and suffering or slightly less suffering under a repressive system of governance again. You could relate this to the position Rosa Luxemburg was in in lending support and hoping some good would come of the Spartacist uprising, whilst also wishing they could have been convinced to hold off until they were more prepared.

This is why it’s so important to build the governance model slowly enough to match expertise, so as not to falter with people pushing for ideals before having adequately put them to the test. So as not to cause a whiplash effect, where people desire a reactionary politics of conformity, under more rigid hierarchy of just the few.

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As anarchists & socialists who desire a more directly democratic society, what tactics should we use if we want to be effective at moving society in that direction?

Electoral politics - We need to get really well educated on how even the baby step policies toward the left would be an improvement on where we are now, we need to learn the internal politicking of government and get good at having friendly arguments with comedy to appeal to friends and acquaintances basic intuitions.

The goal being that we can talk the latest news and (1) Win over conservatives to obvious empirically better policies on the left, and (2) Win over liberals when centre-left parties are in power to feel dismayed at the slow pace of change, and so acknowlege how much better it would be if there was a market socialist in the position willing to rally people to demonstrate and strike to push through bills.

Mutual aid – We should put the time into helping our neighbours and volunteering, for example on a food not bombs stall, to get people to see the positive benefits of a communalist caring society.

Theory – We should be educating ourselves and helping others know what work and rent union to join, what to keep a record of at work, how to defend yourself from rapists and fascists, how to crack a squat and how to write a press release, etc.

Campaigning – We should look for the easiest squeeze points to rack up small wins, like the picketing of a cafe to reclaim lost wages, so that word spreads and it creates a domino effect.

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What tactics should we or shouldn’t we generally avoid in our political campaigns?

Civility as an end in itself

They’re not lies, they’re “falsehoods”; it’s not racism, it’s “racially charged comments”; it’s not torture, it’s “enhanced interrogation.” For years, U.S. media has prioritized, above all else, norms and civility.

Mean words or questioning motives are signs of declining civility and the subject of much lament from our media class. However, op-eds explicitly advocating war, invasion, sanctions, sabotage, bombing and occupation or cutting vital programs and lifelines for the poor are just the cost of doing business. What’s rhetorically out of bounds - and what isn’t - is far more a product of power than any objective sense of "civility" or “decency.”

Where did these so-called norms come from, who do they benefit, and why is their maintenance–-even in the face of overt white nationalism––still the highest priority for many liberals and centrists in U.S. media? [3]

This is so important to challenge, and yet incredibly nuanced. So, it is obviously a great success that the rate at which people would go around hurling racist insults looks to have dropped in favour of more political correctness.

It is also true that in pursuit of political correctness and an ethic of care, we can look for simplistic niceness, to the detriment of being able to identify systems of oppression.  We need to be able to refuse the emotional labor of treating our bosses as friends when we have no desire to be friends with them. [4]

Similarly in our everyday interactions, we need to encourage our friends to accept us for who we are or not to accept us at all, so as to create deeper connections which builds stronger communities: [5]

It can be annoying or hurtful when others presume they know everything about you. But rather than assert their wrongness and make them defensive, you can acknowledge it as a common human failing and find creative ways to hold a mirror up to what life experiences they’ve had that lead them to jump to those conclusions.

One way is a kind of playful authenticity, telling a lie about a lie, to get back closer to the truth. So don’t outright challenge the idea, but don’t live up to it either, in fact live down to it. Playfully undermine the idea by failing to live up to the glamour of what it would mean to be that person, then find a way of revealing that it was a misunderstanding all along, so they needn’t worry about it applying to you.

Media Chasing – We shouldn’t chose our actions for the primary purpose of provoking conversations because it is insincere to ones own desires to materially affect change and it’s recognised as such by those who hear about it.

Transparency – We should be transparent with our supporters in all we hope to achieve and how successful we are being at achieving that task, so as not to attract funds for labor we haven’t and aren’t likely to be able to do.

Civil Disobedience – Whether it be breaking the law without causing any damage or economic sabotage and political violence which we’ll talk about later, anarchists hope to chose the right actions to provoke conversations and materially challenge unethical industries and actors, so as to push electoral politics towards direct democracy and eventually consolidate our gains in a revolution.

Fascists will also use tactics from civil disobedience to political violence, and tend toward violence against people for people holding ideas as the things they hate, rather than the lefts systemic critique of material conditions. All in the hopes of pushing society towards a more authoritarian constitutional republic, before seizing power in a palace coup and attempting to rule as a sequence of dictators for life.

It is up to the left to try and counter this violence by doxxing, making their rallies miserable, etc. And it is up to everyone to decide which government to vote in, to enact what degree of punishment to bring down on people breaking the law on either side.

Any direction the society goes in for either not controlling or bowing to which protesters demands is still the moral culpability of the government and those who participated in the party political process.

There simply is an obvious legal and moral difference between for example victimless civil disobedience on the left aimed at all people being treated equally in society like collecting salt from the sea or staying seated on the bus, to the type of violence you see on the right, like Israeli settlers throwing people off their land with arson attacks, stealing another country’s resources against international law.

But again, it is true that to whatever degree anarchists chose bad targets optically, we do to some degree bring the slow pace of change on ourselves by handing the right an advocacy win.

Graffiti & Culture Jamming – Whether it be an artistic masterpiece that no one asked for or altering a billboard to say something funny and political, instead of the advert that was there before pressuring you to consume more and more, most people can be won over by this as a good form of advocacy. Just don’t practice tagging your name a million times over every building in town.

Hacking – Obviously most people agree whistle-blowing war crimes is a yay. Selectively releasing documents to help conservatives win elections however, is a nay.

Sabotage – We should chose targets which have caused people the most amount of misery, for which people can sympathise most, like the sabotaging of draft cards I wrote about at the beginning. So causing economic damage to affect material conditions and make a statement.

We also need to carefully consider the difference between property which is personal, luxury, private, government owned and co-operatively worker owned.

So, it could be seen as ethical to chose material targets of evil actors in order to cause economic damage and make a statement, so long as in the case of personal property, the item has no sentimental value and can be replaced because the person is wealthy. Or is a luxury item that was paid for through the exploitation of others labor. Or is private property, meaning the means of production which should be owned collectively anyway.

It’s an expression of wanting to find an outlet for legitimate anger against that which causes us suffering. For example, if taking the risk to slash slaughterhouse trucks’ tires in the dead of night is how you develop stronger bonds with a group of people and gain the confidence to do amazing things like travel the world and learn from other liberation struggles.

Fighting – First off, I think propaganda by the deed, physically hurting people for the purpose of making a political statement is evil, as it runs counter to our philosophy on the left that material conditions create the person and so we should make every peaceful effort to rehabilitate people.

However, to the extent that some current institutions fail to rehabilitate people and the process of seeking justice through these institutions can cause more trauma, then personal violence to get to resolve feelings of helplessness in the face of evil acts can be an ethical act.

For example survivor-led vigilantism: [4]

“I wanted revenge. I wanted to make him feel as out of control, scared and vulnerable as he had made me feel. There is no safety really after a sexual assault, but there can be consequences.” -Angustia Celeste, “Safety is an Illusion: Reflections on Accountability”

Two situations in which prominent anarchist men were confronted and attacked by groups of women in New York and Santa Cruz made waves in anarchist circles in 2010. The debates that unfolded across our scenes in response to the actions revealed a widespread sense of frustration with existing methods of addressing sexual assault in anarchist scenes. Physical confrontation isn’t a new strategy; it was one of the ways survivors responded to their abusers before community accountability discourse became widespread in anarchist circles. As accountability strategies developed, many rejected physical confrontation because it hadn’t worked to stop rape or keep people safe. The trend of survivor-led vigilantism accompanied by communiqués critiquing accountability process models reflects the powerlessness and desperation felt by survivors, who are searching for alternatives in the face of the futility of the other available options.

However, survivor-led vigilantism can be a valid response to sexual assault regardless of the existence of alternatives. One doesn’t need to feel powerless or sense the futility of other options to take decisive physical action against one’s abuser. This approach offers several advantages. For one, in stark contrast to many accountability processes, it sets realistic goals and succeeds at them. It can feel more empowering and fulfilling than a long, frequently triggering, overly abstract process. Women can use confrontations to build collective power towards other concerted anti-patriarchal action. Physical confrontation sends an unambiguous message that sexual assault is unacceptable. If sexual violence imprints patriarchy on the bodies of women, taking revenge embodies female resistance.

Other examples we can think of are personally desiring to fight fascists in the street to block them from marching through immigrant communities. To pushing your way through huntsman to save a fox from getting mauled to death by dogs.

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Political killing

I’ll work through hypotheticals from circumstances relevant to the past, present and future, then talk through the ethics of each.

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Past possibilities

Most people agree anyone who took it upon themselves to assassinate Hitler a day before the break out of WW2 would be seen as committing an ethical act, no matter who follows, because throwing a wrench into the cult of personality spell built around Hitler would be a significant set back for the fascist state’s grip over the people. And given all the evidence pointing to the inevitability of war, such an act could easily be seen as a necessary pre-emptive act.

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Present possibilities

Most can sympathise with quick revolutions against dictatorships where the result is a freer society, like the Kurdish uprising in Northern Syria which took power from a regime who had rolled tanks on demonstrators and outlawed teaching of their native language.

But, even there, there are key foundations you need to work from, like the probability you won’t just give an excuse for the oppressor committing even worse horrors as was the case with the Rohingya militants who ambushed a police checkpoint, resulting in army & citizen campaign to burn down many villages, plus murder and rape those that couldn’t get away.

As well as a responsibility to put down arms after winning political freedoms and a majority are in favour of diplomacy through electoral politics, like in Northern Ireland today.

Under representative parliamentary systems, the sentiment of most is that even if it could be argued that a war of terror against the ruling class was the easiest route to produce a better society, that it would still be ethically wrong to be the person who takes another’s life just because it’s the easiest way. Since regardless of manufactured consent or anything else you still could have worked to build a coalition to overcome those obstacles and change the system slowly from within.

And I agree, it would be an act of self-harm to treat life with such disregard when you could have been that same deluded person shrouded in the justificatory trappings of society treating your behaviour normally. I don’t think the way we win today is treating a cold bureaucratic system with equally cold disregard in whose life we had the resources to be able to intimidate this week. Time on earth is the greatest gift people have, to make mistakes and learn from them.

So then, an easy statement to make on life under representative parliamentary systems is; outside of absurdly unrealistic hypotheticals, I could never condone purposefully killing others when campaigning against such monoliths as state and corporate repression today.

Breaking that down though; what do I mean by an unrealistic hypothetical? For example the philosophical thought experiment called the trolley problem, where you have a runaway trolley hurtling towards 5 people tied to a track, and you can pull a leaver so the train changes tracks and only kills 1 person tied to a track. Or you can change it to 7 billion to 1 even. Or 7 billion of your average citizens vs. 1 million unethical politicians, police and bosses, to make it political.

Now what do I mean by purposeful, well we can think of for example the most extreme cases of post-partum psychosis which has mothers killing their babies. But more nuanced than that, the rape victim who gets worn down by their abuser for years until they have a psychological break and kill.

That does still leave a lot of lee way for people knowingly taking risks with others lives, not intending to kill, but who are reckless in their actions, such as with some forms of economic sabotage. And I agree such a reckless act would bring up feelings of revulsion for all kinds of reasons like questioning whether the person was really doing it to help people or for their own ego-aggrandizement. All that can be hoped is a person makes a careful accounting of their ability for human error and weighs it against the outcomes of doing nothing.

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Future possibilities

We can hypothesise the unrealistic case of 99% of society desiring a referendum on a shift from parliamentary representative system to a federated spokes council system and the MPs dragging their feet, the same way both parties gerrymander the boundaries to make it easier to win despite it being the one issue most everyone agrees is bad, and people needing to storm the halls of power to force a vote to happen.

More likely though, an opportunity for revolution might arise from such a confluence of events as climate refugees and worker gains forcing the state and corporations into trying to crack down on freedoms in order to preserve their power and enough people resisting that move, who are then able take power and usher in radical policy change, with either the army deciding to stand down or splitting into factions.

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References

1. Beautiful Trouble: A Toolbox for Revolution - Use your radical fringe to shift the Overton window P. 215.

2. The Camden 28 - The Camden 28 were a group of Catholic left anti-Vietnam War activists who in 1971 planned and executed a raid on a Camden, New Jersey draft board. The raid resulted in a high-profile criminal trial of the activists that was seen by many as a referendum on the Vietnam War and as an example of jury nullification.

3. Citations Needed Podcast - Civility Politics

4. Slavoj Žižek: Political Correctness is a More Dangerous Form of Totalitarianism | Big Think

5. A Love Letter To Failing Upward

6. Accounting for Ourselves - Breaking the Impasse Around Assault and Abuse in Anarchist Scenes.

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[theliberaltony]

via Politics – FiveThirtyEight

I argued in a piece published earlier this week that the “Super Progressive” bloc of the Democratic Party was largely losing its fights with the party’s Progressive Old Guard wing. Big ideas pushed by more liberal Democrats like Rep. Alexandria Ocasio-Cortez — such as the Green New Deal, the impeachment of President Trump and single-payer health care — just aren’t getting much traction right now in the House, which Democrats control.

In particular, it seems like the most progressive wing of Democrats is not as influential under Democratic control of the House as the Freedom Caucus — the bloc of the most conservative House Republicans — was when the GOP controlled the chamber. So why are the Super Progressives struggling? I don’t think that there is one simple explanation. But here are a few theories, based on my own thinking and that of some congressional experts.

The Democrats’ base is more moderate than the GOP’s

The number of Democratic voters who identify as liberal has been increasing for some time, but the party is still about equally split between people who call themselves “liberal” and people who call themselves “moderate” or “conservative.” In the GOP, by contrast, people who say they’re “conservative” outnumber liberals and moderates. And you can see this difference in how elected officials behave. Polls suggest that more aggressively liberal positions (like impeachment) garner a fair amount of opposition1 among Democratic voters. This makes it easier for House Democratic leaders like Speaker Nancy Pelosi to sideline those ideas.

Instead, Pelosi is pushing forward proposals that are nearly universally popular among Democrats, such as allowing Americans to register to vote on Election Day.

“Progressive media and activists would not reward the most aggressive tactics,” said Gregory Koger, who is a political science professor at the University of Miami and studies Congress. “In 2013, there were conservative groups and media arguing sincerely that they could repeal the ACA by shutting down the government. If a super-progressive House member tried to argue on MSNBC or on Daily Kos that the House Democrats could force the Republicans to overturn the 2017 tax cut if Nancy Pelosi had the ‘courage’ to hold the debt limit hostage, he or she would be heckled.”

The Democratic moderate wing is powerful too

The Congressional Progressive Caucus is bigger than ever; it boasts 96 of the 235 Democrats in the House as members. But the New Democrat Coalition, a bloc of more moderate members, is bigger than ever too, and it now includes 101 members. Many of those members are not particularly excited about single-payer health care, the Green New Deal or other lefty stances. And while most of these members don’t have the same national profile as rising liberal stars such as Ocasio-Cortez, they have the same one vote that she does. Perhaps more importantly, many of these members are in swing districts — and Pelosi is focused on making sure these members can get re-elected in 2020.

“Pelosi is clearly keeping her eye on the prize of a Democratic Congress and White House,” said Matthew Green, a political science professor at Catholic University who specializes in congressional politics. “Her strategy is very similar to the one she followed as speaker in 2007 and 2008 — bring up bills popular with the base that also force moderate Republicans to break with their party, while staying clear of polarizing issues that could galvanize the opposition or alienate moderate voters.”

Green predicted that, if Democrats have control of the House, the Senate and the presidency after 2020, Pelosi might be willing to push more liberal goals, as she did in 2009 in embracing Obamacare and a cap-and-trade environmental bill.

And speaking of Pelosi …

Pelosi is a powerful speaker

The Freedom Caucus — perhaps because they are more closely aligned with GOP voters than the Congressional Progressive Caucus is with Democratic voters, and because Fox News and Trump are able to galvanize the party’s activists — was often able to run roughshod over the speaker, overpowering John Boehner or forcing Paul Ryan to bend to its will.

Pelosi, in contrast, seems fairly willing to ignore her party’s left wing — and as the speaker, she ultimately has the power to determine what bills come up for votes in the House. But Green argued that Pelosi’s power does not come just from her role as speaker.

“I don’t think Pelosi’s formal power alone explains why she is more immune to her party’s extreme wing than Boehner or Ryan, who also had substantial formal power. Her informal power is probably more important. She commands the support of committee chairs, whom she had substantial say in appointing,” said Green.

The Super Progressive bloc may be too big

You would think having more members would make a congressional bloc more powerful, but its broad membership might be having the opposite effect. “The Congressional Progressive Caucus is far larger than the Freedom Caucus, making it harder for them to reach agreement on strategy,” Green said. (The Freedom Caucus does not publicize its membership, but estimates in 2017-18 put its number at around 30.)

The progressive bloc includes some members of Congress who are more closely allied with Pelosi than with Ocasio-Cortez, for example. Indeed, she has floated the idea of creating a smaller, closer-knit group outside of the formal Progressive Caucus. I think that might be a more effective way for the most liberal members to pursue their goals.

The Super Progressives won’t blow things up

Cohesiveness aside, though, the Freedom Caucus members were influential in part because they were willing to engage in very aggressive tactics (opposing must-pass bills to fund the government and to increase the nation’s debt ceiling, for example). That approach gave them a lot of leverage. There is no indication at this point that the Democrats’ liberal wing will take similar steps — they are part of the pro-government party after all.

“The ties that bind the Freedom Caucus together seem to be more ideologically-oriented or value-oriented than to be about specific policies,” said Jennifer Victor, a political science professor at George Mason University. “The fact that the Progressive Caucus is more policy-oriented suggests they may be more willing to negotiate within their party than the Freedom Caucus was.”

Add all this together, and you get a Super Progressive bloc of Democrats that, at least so far, is struggling to push the Democratic Party to the left. I’d emphasize so far, however. Remember that in 2009 it was considered a fairly left wing position to propose including a public option — a Medicare-style plan Americans could opt into — as part of the health insurance choices offered through the Affordable Care Act. Now, the public option is considered a more centrist position, and many Democrats are going a step further and backing single-payer health care (in which Americans would get their coverage through a government-run system). So the progressives may, over time, push the party left. But the first months of 2019 suggest that progressives won’t be successful immediately — and maybe no one should have expected them to be.

[terrancedkennedy]

Why is LIBOR Moving Higher?

Indeed, volatility is back. BTD may not be dead, and as I have mentioned here, I’m not convinced the bull market is dead and spoos are heading back to 2000 (yet). However, the systematic gamma sellers have taken a serious beating--and one that doesn’t seem to want to let up.   

Beyond a couple of bullet point sized comments, I’ll again leave it to the peanut gallery to advance the discussion on where markets are going in the next couple of weeks. My take on the steel tariff move by Trump is that it is not a game changer for the economy at large but was designed by the administration’s trade negotiators as a tactic to make them look more serious in negotiations with China and NAFTA.  

A lot of people ask me, “As a bond trader, what do you do?”  Well ok, I guess nobody has ever asked me that. If fact, I find that most friends and family are pretty happy to not know what I do at all.  But in the US fixed income world, one of the big asset classes is LIBOR spreads.

These trades can take on all kinds of forms, where you can bet on (or hedge) the spread between LIBOR and OIS, LIBOR and Treasury rates, or the individual components of LIBOR (1mo vs. 3mo, or 3mo vs. 6mo fixings, etc.). The people looking to hedge are often banks with various tenors of floating loans they want to match up, or asset managers that want to switch their liabilities from one benchmark (say, LIBOR) to another (like OIS).

Theoretically, LIBOR rates are the rate at which banks lend to each other, but nobody really does that any more. Today this rate is often set by bankers with an algorithm that takes into account various credit-driven short-term funding markets like repo, commercial paper and cross currency swaps. When credit tightens up, bank balance sheets contract, and/or capital leaves the market at large, these rates move higher relative to OIS, which is and overnight rate indexed to the fed funds rate that is more or less controlled by FOMC policy.   

If the market is really scared--to the point where there is some question about the viability of the banks that are holding all of this credit risk and collateral for clients, LIBOR blows out to extreme levels. This is what happened in 2008-2009 and 2011-2012 during the GFC and European sovereign debt crisis. More prosaic spread widenings have occurred recently around the taper tantrum, China deval in 2015 and early 2016, and Brexit in 2016.

By contrast, these spreads contract when the market believes there will be more money to lend, which drives down interest rates. This is exactly what happened after Trump’s victory in the US election. After years or tightening balance sheets in reaction to Dodd-Frank regulations and a variety of Basel II reforms designed to increase bank capital, banks had less free capital to lend. When Trump won, his pronouncements about cutting regulations were seen as freeing up capital for banks to start lending again.

“Risk on” and tightening credit spreads didn’t hurt either. In mid-2017, the spot 3mo LIBOR/OIS spread went from the mid-30s to the teens, while forward spreads fell by 10-15bps too.

(Source: JP Morgan data; note: I used a 5-day MVA here to make the chart less noisy) This trend reversed in style starting in December, when LIBOR fixings started to trend higher, taking all of the forward basis levels up with it. What happened?

The answer lies in deep in the plumbing of the financial system. Back in December, two big things happened to impact short term funding markets:

Trump and congress passed the tax reform bill. This gave many corporations with dollar assets offshore the incentive to repatriate those dollars and use them for share buybacks, dividends or M&A. The loss of that supply of dollars to lend out caused lending rates to increase,

In the same tax reform, and in the subsequent budget deal with Democrats, the US decided to borrow more money. A lot more money. This will cause a big increase in t-bill supply, which will have the end effect of crowding out private borrowing--or at least causing the demand curve to shift to the right, also leading to higher borrowing rates.  

For most of 2017, 3mo t-bill rates had been stable around 10bps tighter than OIS. Since the budget deal, that spread has moved 10-12bps wider. LIBOR has moved even wider, essentially taking in the impact of both the t-bill supply and the corporate foreign earnings repatriation.

We’ve seen the impact in commercial paper and repo rates as well:

(Source: JP Morgan data)

We’ve seen cross currency basis (the deviation between covered interest rate parity and where one can borrow or lend in USD in currency forward markets) has tightened as well, although not dramatically. The sum impact of these factors means LIBOR fixings are moving higher not because of any stress to the banking system, but because there is a greater shortage of USD funding, and fears of greater supply are forcing treasuries to cheapen.

In the end, I see the funding factor (offshore profit repatriation) and the supply factor (more t-bills) each having widened short-term funding rates by roughly 10bps--other measures that indicate pure (or more pure, anyway) expressions of bank credit risk (like 3mo/6mo LIBOR basis) are showing very little movement, despite the pullback in equity markets the past few weeks. That tells me this move is all about USD supply and t-bill issuance.

Where do these markets go from here? Here is a cleaner look at the LIBOR/ois forward markets relative to “spot”:

Put another way, the market is pricing a significant tightening in the LIBOR/OIS spread one year forward. 1y1y LIBOR/OIS is trading 5-8bps higher than it was for most of 2017. (Note also here that the market was set up for part of this move--presumably the offshore profits repatriation, but was caught with its pants down in the budget deal.)  That order of magnitude looks about right to me--clearly hedge funds stepped into this trade in size this week. From these levels, I would look to pay forwards 2-3 years out  vs. receiving front-end FRA/OIS (the short-term version of this trade in eurodollars), on the idea that 1) inversions in this curve are very rare, 2) there is no sign of credit stress, 3) short-term funding can subside, but 4) the long-term fiscal impact of the t-bill supply will likely be ongoing, and maybe worsen if the economy slows down and/or if credit markets weaken.

If you made it this far, you are either a basis junkie or you win the medal for getting through Professor MacroShawn’s Funding Markets 101 class. Either way, kick back with a Friday afternoon happy hour beverage of your choice. You deserve it.

Have a good weekend!

ShawnTeamMacroMan2@gmail.com

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The Shouters Win Town Hall Battles, Lose the War

(Image: Thinkstock)

I spent part of last week following a congressman around the sun-baked precincts of West Texas. I watched Will Hurd meet with constituents, deliver his stump speech, and wax lyrical about the Dairy Queen Blizzard.

I listened to voters tell me how much they admired Hurd, a moderate Republican in the only competitive district in Texas. I also watched the folks who don’t admire Hurd stand up and heckle to interrupt his stump speech. I wondered: “Why are you doing this?”

(Related: Wells Fargo Prevails Over Raucous Shareholders)

I had spoken with a couple of them before the event, so the answer should have been easy. They were nice people — middle-aged, middle-class and passionate about politics. One of them was a lifelong Democrat, another a former Republican who parted ways with the GOP after the Tea Party began to rise. Both were Democratic precinct chairs. I heard their issues, which were about what you’d expect: health care, Planned Parenthood, immigration, and the man sitting in the Oval Office. Given my criticisms of the Republican health care efforts, and my own qualms about Trump’s presidency, I found it easy to sympathize.

But understanding someone’s goals doesn’t necessarily mean you understand the tactics they’ve chosen to reach them. I might sympathize, but not everyone there did. And the more aggressive their questioning got, the less sympathy there seemed to be for their views.

The town hall was being held in a Dairy Queen southwest of San Antonio; the crowd was largely white, and judging from their reaction to the repeated interruptions, largely conservative. There were rolled eyes; there were people calling “You asked your question.” The audience began to murmur as the back-and-forth wore on. The next day, at a coffee shop in Castroville, more protesters arrived, and the heckling got more intense. So did the reaction. The crowd in Castroville seemed to be more liberal, more sympathetic to the protesters — but nonetheless, a soft-spoken man who had recently moved to Castroville turned around, laid a finger over his lips, and issued a fierce “hush!”

These San Antonio suburbs are quiet, polite places; it seems unlikely that these tactics changed anyone’s mind. Nor did they provide new information to Hurd, who addressed his interlocutors by name and was clearly familiar with their stance on the issues. Which brings us back to the question I asked above: What is the purpose of these tactics?

That’s a question that I find myself asking a lot these days. The antifas setting fire to Berkeley … Black Lives Matter blocking highways … these demonstrations certainly carry a message. And because it’s showy, it’s more likely to end up on the evening news (or in a Bloomberg View column). Unfortunately, it’s no good getting publicity for your message if the result is people hating the message and the messenger.

I don’t mean to suggest that interrupting a congressman is somehow morally equivalent to breaking windows and setting fires. Vigorous debate is a proud part of our democratic tradition, and those Democratic precinct captains had every right to confront their representative with their disagreements.

But what this tactic does have in common with more extreme forms of protest is that interrupting violates a social norm. It’s on the other end of that spectrum from breaking windows and setting fires. But it’s still a violation, however minor, and norm violations make other people uncomfortable.

(Photo: Thinkstock)

So all norm-breaking protests, no matter how mild, run the risk of hurting your cause more than they help. It’s possible that there’s a silent majority for your view, who will be heartened by seeing you say what they’ve been thinking for a long time. But it’s just as likely that your audience disagrees with you, and more likely that they just don’t care very much either way. Those people are going to be somewhere between irritated and outraged by your display, no matter how justified it is.

This is Human Nature 101. So why do we see so many of these risky displays? Well, for one thing, while such tactics are lousy ways to recruit people to your cause, they are terrific ways to build solidarity among the people who already agree with you (which is why the Tea Party — which ultimately mobilized a groundswell of existing sentiment against the stimulus and Obamacare, did so well by asking angry questions at town halls).

All three of the examples I’ve offered have something in common: they are demonstrations of power over a space. To state the obvious, people like feeling powerful. They are more likely to stay involved with a movement that gives them opportunities to feel powerful. Why did white supremacists organize a demonstration in Charlottesville? To look and feel powerful. Why did the counterprotesters organize en masse in response? To look and feel more powerful.

The more transgressive an action is, the more powerful it feels. Asking a question and then politely sitting down after the representative gives you a suitably mild answer is neither noticeable nor particularly empowering. Publicly arguing with the congressman, on the other hand, feels like noble battle. Shutting down a highway is more powerful still, especially if you can get away with it without getting arrested. And setting fires or breaking windows … well, you can practically hear the war-movie soundtrack running through your head. (In our minds, we always play the good guys.)

And yet, as I’ve already noted, these tactics backfire unless you’ve already got a critical mass of support. If you still need to build support, then resorting to them loses you more than you gain. The Dairy Queen where I watched the heckling did not seem to be the right venue. And there’s really never a good venue for vandalism.

Of course, the people who choose those tactics might argue that persuasion is the wrong goal, and it’s worth the cost in public opinion to make a powerful statement. But at the end of the day you can’t get much done in any society, least of all a democratic one, unless your neighbors are somewhat willing to go along. Moreover, the protesters may not even be making that sort of semi-rational cost-benefit analysis. A recent paper suggests that protesters often choose these tactics because they actually think they help mobilize voters to their side. It’s all too easy to confuse visibility with effectiveness.

With protest getting more frequent, and less polite, it may be that this confusion is becoming more widespread and bipartisan. There could be any number of reasons for this, but one possibility is that as the memory of the 1960s fades, people are simply forgetting why the left abandoned these tactics in the first place. And of course, since the 20th century protest culture was largely left wing, the nascent right-wing protest movement doesn’t have any old-timers around who can say “Yeah, we tried that 20 years ago, and it didn’t work.”

If I’m right, then we can look forward to a period of angrier protest, and increasing factionalism. People who think they’re winning hearts and minds will violate social norms in order to get attention for their cause — while actually driving more of the public to oppose them. Eventually, someone will probably notice it’s not working. But in the meantime, we can expect a lot less politeness and a lot more shouting.

—-Read Top Negotiator Offers Tips for Dealing With Clients on ThinkAdvisor. 

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The NFL's Growing Class Divide Could Undermine a Potential Player Strike

Richard Sherman is right. There's only one way for NFL players to get guaranteed contracts—or really, any other concessions—from league owners. And it doesn't involve asking nicely.

"If we want as the NFL, as a union, to get anything done, players have to be willing to strike," the Seattle Seahawks cornerback told ESPN on Wednesday. "That's the thing that guys need to 100 percent realize.

"You're going to have to miss games, you're going to have to lose some money if you're willing to make the point, because that's how MLB and NBA got it done. They missed games, they struck, they flexed every bit of power they had, and it was awesome. It worked out for them."

If this sounds like Bargaining 101 for Dummies—use the leverage you have to force the outcome you want, duh—well, that's how power works. Heading into its next round of collective bargaining, the NFL Players Association will be exactly as strong—or as weak—as the ability of its members to stand together, withhold their labor, shut the sport down, and take one on the financial chin so that owners, advertisers, and broadcasters take one, too.

Given what happened the last time the union struck a deal with the league, Sherman and his peers may be severely hamstrung. They've been put in a position where the haves and the have nots might not find common ground.

Look, walking out on work is hard. Especially for football players. They play a brutal sport, and typically have a short window of time to earn what they can before their brains and bodies break. Forming a picket line means giving up money they'll never get back, all so somebody else can make more in the future. It's not particularly surprising that the NFLPA historically has been lousy at it.

That said, the league's current Collective Bargaining Agreement likely makes a potential future strike even tougher. How so? Start with the bottom line. Under the previous agreement negotiated by former union head Gene Upshaw in 2006, players received 59 percent of annual NFL revenues minus a roughly $1 billion set-aside that went directly into owners' pockets; under the current deal negotiated by NLFPA executive director DeMaurice Smith in 2011, players receive 47 percent, minus a similar set-aside.

In other words: players took an 12 percent haircut that former player Sean Gilbert estimated would cost players $10 billion over the 10-year life of the agreement. Former NFLPA executive committee member Sean Morey told VICE Sports that amount could be closer to $15 billion. Whatever the final number ends up being, every dollar clawed back gives owners more resources to ride out a possible work stoppage when the current CBA expires in 2020—and more importantly, saps the union's ability to fill a war chest of its own, something players will need if they're foregoing paychecks.

But that's not the most union-busty thing about it.

It's one thing to end up with a smaller slice of the money pie; sometimes that happens. It's quite another to agree to divvy up that slice in a way that weakens—albeit inadvertently—your own position. And that's what the CBA seems to do, primarily by fostering what former Tampa Bay Buccaneers general manager Mark Dominik told Kevin Clark of The Ringer is "a have-and-have-not league" in which a small number of star veterans earn big bucks while the rest of the labor pool becomes increasingly younger, cheaper, and more disposable.

When the unintended consequences of the CBA may be making your job harder. Photo by Mark J. Rebilas-USA TODAY Sports

Modern NFL rosters look a lot like the shifting American economy. The rich get richer. Almost everyone else fights for scraps. Consider the New England Patriots: according to the NFL salary database at spotrac.com, the defending champions have three players making more than $10 million a year, six making more than $5 million, and 53 making less than $1 million (the latter number of players will drop following training camp and preseason roster cuts). Similarly, the Super Bowl runner-up Atlanta Falcons have three players making more than $10 million, six making more than $5 million, and 61 making less than $1 million.

Why the divide? According to Clark, franchises have become increasingly adept at structuring player contracts in ways that are "eradicating the NFL's middle class and costing its lower tier much of its leverage"—mostly through language that reduces pay if players get hurt and/or fail to make their teams' 46-man gameday rosters. Former NFL player-turned-injury insurance salesman Nick Grisen told Clark that those two tricks cost players at least $48 million in 2015 and 2016.

However, the primary culprit is how the CBA treats rookies. Before 2011, incoming players were free to bargain with the teams that drafted them; today, they're subject to a wage scale, three-year renegotiation waiting periods, and team contract options that all conspire to suppress salaries. The last top draft pick under the old agreement, quarterback Sam Bradford, signed a contract worth a guaranteed $50 million; by contrast, the first top pick under the current deal, quarterback Cam Newton, received only $22 million guaranteed.

When the NFLPA agreed to limit rookie pay, the idea was that salary savings would end up in the pockets of experienced players. That's exactly what has happened—for a fortunate few. Otherwise, teams have been incentivized to avoid pricey and (presumably) injury-prone veterans, the better to load up on healthy, hungry, cost-controlled youngsters. As Ben Volin of the Boston Globe explains:

... why would a team pay big money to a free agent when it can simply draft a cheaper, healthier alternative and have him locked in to a near-minimum salary for at least three seasons?

While the CBA promises minimum salaries for veterans—$715,000 this year for players with 4-6 years of experience, $840,000 for 7-9, and $940,000 for 10-plus—many times it works against them.

"I've had teams tell me all the time, 'Your guy is a minimum-salary guy, he's too expensive,' " [an] agent said. "I have veteran players that would play for $50,000 if they could" ...

Last year, the Wall Street Journal reported that after remaining constant over a 17-year span, NFL career lengths were shrinking at an "unprecedented rate"—dropping by about two and a half years from 2008 to 2014. Clark reports that the number of NFL players age 31 or older has fallen 20 percent from a decade ago. Volin notes that in 2016, about half of the league's players were 25 or younger—which means most of them were still locked into their rookie contracts.

The overall result? A star system economy in which the NFL's on-field labor force is split into two castes:

1. A well-paid minority of recognizable veteran players, mostly quarterbacks, who through skill and injury luck have managed to become the league's equivalent of the petite bourgeoisie;

2. A poorly-paid majority of disposable, relatively anonymous short-timers who function as the league's proletariat, grinding and hoping to last long enough to make it into the upper class.

When only one of your is locked into a cost-controlled salary for the next half-decade. Photo by Bill Streicher-USA TODAY Sports

NFL income inequality isn't all bad. Nor is it totally avoidable. The league always will have superstars, as well as third-string special teams fodder.

Still, the unintended hollowing out of a healthy middle class may have severe consequences for union strength and solidarity. Imagine it's 2020. You're Smith or a player union leader, trying to rally your members for a strike—or maybe just imploring them not to cross a picket line, even though their mortgages are going unpaid and their bills are piling up.

How much motivation do star players have to fight tooth-and-nail against a league that's already taking pretty good care of them? Conversely, how many of your rookie scale players want to drag out a work stoppage in which every missed game check represents a significant chunk of all the money they'll ever be able to earn playing football?

For NFL owners, this is the sneaky genius of the current CBA—in fact, I'd be surprised if league negotiators back in 2011 didn't see probable player class stratification as a feature of the deal, not a bug. In 1999, NBA owners took advantage of infighting between star and rank-and-file union members to negotiate a CBA that limited the maximum amount of money any one player could make; in 2011, the league exploited the same divide to slash the players' share of overall NBA revenues by seven percent.

NFL owners aren't strangers to this tactic. When the league and union were battling over allowing free agency in the late 1980s and 1990s, the NFLPA used group licensing revenue to fund a series of antitrust lawsuits against the NFL. In response, a clever league marketing executive named Frank Vuono devised a plan to undercut the union's efforts: convince top quarterbacks to stop assigning their licensing rights to the NFLPA, and instead partner with the league in order to make more money for themselves.

Vuono called his concept "the Quarterback Club." He promised players between $20,000 and $100,000 of extra annual income, cash they wouldn't have to share with their fellow union members. Most of the game's biggest stars—John Elway, Dan Marino, Troy Aikman, and Phil Simms among them—bought in. (As Matthew Futterman notes in his book Players: The Star of Sports and Money, and the Visionaries Who Fought to Create a Revolution, Joe Montana never joined, but only because he wanted to be paid more than anyone else). The QB Club and the union's licensing arm, Players Inc., sparred on and off for the next decade, and it wasn't until the NFLPA bought the QB Club from the league in 2002 for a reported $4 million that the players were "made whole again."

The lesson? Divide and conquer works. Which brings us back to Sherman, and the upcoming CBA negotiations. Could players actually exercise maximum show-stopping leverage, either by striking or credibly threatening to do so? It's possible. They know they got walloped on the last deal; they're openly envious of the big-money guaranteed contracts being handed out in the NBA; they're increasingly tired of commissioner Roger Goodell and the league handing them Ls on everything from player discipline to marijuana use to brain trauma protection. On the other hand, it's difficult to maintain solidarity when your credit card is being declined, or when rocking the boat might cost you a yacht. A financial house divided cannot stand—and as NFL players spoil for a 2020 fight, they would do well to look a little less like Dowton Abbey.

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