Aaron Mate on New #Russiagate Bombshells, Plus More From the Stupid Bay of Pigs | Useful Idiots

Aaron Mate of the Grayzone and ‘Pushback’ joins the show to talk recent developments in #Russiagate, how it’s helping Trump, plus Matt and Katie continue to dive into the Stupid Bay of Pigs

Escape from Florida: My 2,400-km drive back to the sanity of Canada

Stephen Maher: In Florida, the beaches were open, people filled bars, and many just couldn’t seem to grasp ‘why everyone is panicking’

Two weeks ago I was fixing up an old sailboat on the Gulf Coast of Florida when I realized that the coronavirus might be bad enough that I would have to return to Canada.

I told the man I had hired to help me fix the troubled diesel engine of the old boat that I might go home because I was afraid the virus was going to get worse.

Ron (not his real name), a funny, hard-working, good-natured guy in his 60s, had let me know that he was a Donald Trump supporter. He suspected that, as a Canadian, I was not, and we had exchanged strained but polite comments about our political differences. As a visitor, I felt I shouldn’t express my opinion of the American president.

I slipped, though, when I let him know that I might be going home early.

“I am worried about the virus,” I said. “I know that Trump thinks it’s not a big thing, but it is.”

Well,” he said, pausing, likely biting his tongue. “We don’t see it that way.”

At the time, Trump was still minimizing the risk posed by the virus, and Fox News was broadcasting segments suggesting that criticism of the president over the issue was an attempt to impeach him. But it seemed obvious to me that the facts were bad and would get worse.

On March 12, a day after the World Health Organization declared a global pandemic, I texted Ron to ask about a family trip he had planned to Disney World in Orlando the next day.

“Are you still going to Disney?”


“Wash your hands a lot,” I texted. “Stay away from the buffets. Not that you asked my opinion. I am researching this virus for work and am getting freaked out.”

He didn’t reply, and, as it turned out, Disney decided to close its parks that day.

I was researching the virus for a Maclean’s article, and had become alarmed at a webinar with University of Toronto epidemiologist David Fisman, where he described the way that the virus could spread rapidly, undiscovered by medical officials, until there were deaths, at which point officials would learn there were hundreds of cases.

As the horrible news from Italy started to register in Canada, and authorities started to take action, I was disturbed by the inaction around me in Florida.

The Gulf Coast of Florida, where I had come to buy an old sailboat, is full of retired white people. God’s waiting room, they call it. The average age in Charlotte County is 2016 was 58, in comparison with 40 in Ottawa, where I live.

READ MORE: How Americans underestimate the threat of the coronavirus

White American seniors are strongly pro-Trump, and so Florida is Trump country. In 2015, Charlotte County voted 62.5 per cent for him, and only 34.7 per cent for Clinton. Many trucks, lawns and boats have Trump flags or bumper stickers. One day, a power boat went back and forth along the waterfront with a huge flag flying in the wind: Trump 2020: No More Bullshit.

Ron, and all the other Trump-supporting, Fox-watching Floridians had been told repeatedly that the virus was nothing to worry about. Bars and restaurants remained open. The Irish pub in Punta Gorda continued with St. Patricks Day celebrations. The beach at Clearwater was packed.

As I researched an article about problems with public-health information at Canadian airports, I was observing people around me act as if nothing had changed. In the bars on the waterfront at Punta Gorda, the party kept going. I could hear the Baby Boomer dad bands rocking past midnight as I lay on my boat, trying to sleep, fretting about the virus.

Alarmed, imagining the virus spreading undiscovered, I isolated myself, stopped going to restaurants or visiting the marina. I wore gloves when I went to a pharmacy to buy a thermometer, but otherwise hid on my boat. I didn’t get ice for my icebox, drank my beer warm, went so far as to do my laundry by hand instead of going to the laundry room.

I am not generally a fearful person. I have travelled to some of the most dangerous places in the world, because I thought it was worth the risk. But I saw no reason to risk getting sick if I might avoid it by sticking to myself.

I consulted with friends and relatives and reluctantly decided that I had to go home. I didn’t want to stop fixing up the old boat so soon, but I was afraid of getting infected in Florida, where I might run up huge debts if I needed to be hospitalized, and where I would have nobody to look after me. And I was worried about the state of the hospitals.

Florida was slow to react to the virus, and the population is old, so it was easy to imagine it turning into Lombardy, the region of northern Italy where the disease is so widespread that exhausted doctors have been forced to ration ventilators by age.

Governor Ron DeSantis, who owes his position to a key endorsement from Trump, has been reluctant to close beaches or order the kind of shutdown that other governors have ordered. Young people partied hard during spring break, leading to new infections. There is reason to worry that the virus may have already spread, undetected.

It is hard to know yet, because Florida has been slow to test its population. By 11 a.m. on March 23, Canada had run 102,803 tests. Florida, with about half of our population, had only run 11,063 tests.

READ: These charts show how our fight to ‘flatten the curve’ is going

When I decided to return to Canada, I called Ron to let him know I was putting the boat away.

“Our government is telling us to come home,” I said.

“And you do what your government tells you, not like us,” he joked.

It’s true. I noticed in my months in Florida this winter, that the level of trust, in government and media, is lower there than it is in Canada. There’s a kind of natural cynicism, a distrust of authority, in American civic culture. For Trump supporters, with this virus, that means there is a deep reluctance to accept the situation. Polling shows Americans are divided along partisan lines in their view of how serious it is.

I arranged for the boat to be stored in a boat yard until I can return, next year I hope, to finish fixing it up and get it out of Florida.

As I hurriedly cleaned and prepped the boat for a long layup, I stopped to chat with two grey-haired guys chatting in the yard about the virus. I told them I’d been researching it, talking to epidemiologists, and they asked me a few questions.

One of the guys—a trim, dapper man in his early 70s, wearing a checked shirt with a pack of Marlboros in the breast pocket—looked troubled. He kept turning to look away, shaking his head.

“How much worse is it than the flu?” he asked me.

I told him I’d read estimates that it killed 10 times as many people as the flu, and told him Florida risked becoming like Italy, where they had to tell old people they wouldn’t get ventilators.

He kept shaking his head.

“I don’t get it,” he said. “I don’t get why everyone is panicking.”

He said that twice, with the air of a man struggling to piece together facts that did not want to go together.

He was still shaking his head, staring in the distance, trying to work it out, when I bid him good day and went to finish wrapping up my boat.

I wanted to avoid airports, so I rented a car and stocked up on fruit and nuts and bottles of cola, so that I could avoid drive-throughs, and headed for the border. I listened to audiobooks as I drove — first The Plague, by Albert Camus, then The Stand, by Stephen King. Occasionally, I took breaks to listen to NPR newscasts, which were like chapters from the novels.

It was three days, 2,400 kilometres, from palm trees to snow, past many golden arches and Exxons, up Florida, through Georgia and the Carolinas, around Washington DC, then up through Pennsylvania and New York state.

I tried to be careful. I didn’t want to get infected at a gas station on my way home.

I wore disposable gloves when I filled the tank and discarded them before I got back in the car. I avoided restaurants and bathrooms. When it got cold, in upstate New York, I parked at the edge of a truck stop and changed my clothes in the darkness of the parking lot.

At first, there were a lot of RVs, trucks hauling boat trailers, snowbirds heading home. In Florida and the Carolinas, the parking lots in the malls and roadside barbecue joints were full. The further north I got, the more seriously people seemed to take the virus. In Pennsylvania and New York state, the digital highway signs—the kind that usually warn of congestion ahead—all had warnings about the virus.

A highway warning sign from somewhere near Syracuse, N.Y. (Stephen Maher)

A highway warning sign from somewhere near Syracuse, N.Y. (Stephen Maher)

At a pharmacy in Ogdensburg, where I stopped before crossing the border, the middle-aged cashier was plainly preoccupied with the news, speaking of how Governor Andrew Cuomo was going to order a lockdown, a dramatic contrast to carefree Florida.

Hertz wouldn’t let me drop off my car in Canada. “The system won’t let me do that,” said the woman I pleaded with at the Hertz call centre.

I had to get rid of the car in Ogdensburg and take an expensive cab drive across the border and up the highway to Ottawa.

The border agent was wearing a mask. She asked me where I had been, whether I had symptoms, which I didn’t. She didn’t bother asking about what I was bringing with me, as they always do in normal times. She told me I had to self-isolate for 14 days, and waited for me to confirm that I would. Then she told me that I could cross.

I was shocked, as we crossed, to find myself fighting the sudden urge to cry tears of relief.

I know it was easier than the journeys that many other Canadians made to get home in the past week, but it was stressful enough for me.

It was a reminder that my country is a relatively sane place, that I am at home here in a way I could never be in Florida. I am glad that, if worse comes to worse, I will get treated in a hospital, not because I can afford to, but because I am a resident of Ontario, and every resident of Ontario has the right to health care.

I am glad I live in a place where the beaches are closed, where there are no lineups at gun shops in troubled times.

We have a higher level of social trust in Canada—56 compared to 49 in the United States in one ranking—a quality that makes people more likely to observe quarantine advice, believe their media and public health officials during a crisis.

Canadians are divided, politically and geographically, but compared with our neighbours, our divisions are trifling. I have been impressed with the way governments of different political stripes have handled this crisis in this country. There are disagreements, as is proper in a democracy, about the best course to take, but the virus has not been turned into a political weapon, as it has in the United States, where attitudes about the illness sharply diverge on partisan lines.

I am afraid that partisan division, fuelled by a narcissistic, attention-seeking president, is going to cost the Americans dearly.

I suspect that when we have eventually run this virus into the ground, and we try to understand what worked and what didn’t, we will find that societies with high levels of social solidarity did better than societies where citizens mistrust one another.

Social solidarity—the sense that we are all in this together—is what makes retired nurses volunteer to go back to work in the frightening hospitals, and what makes healthy young people stay home to flatten the curve.

I think social solidarity is why the curve is so flat in traditionally collectivist East Asian societies, and rising so sharply in the United States.

In South Korea, Taiwan and Japan—modern, free-market democracies—governments and populations quickly pivoted to change behaviour. (Cultural norms around mask wearing and lower levels of obesity are likely also important factors in reducing infection and death rates in Asia.)

I think we can see the same thing in Canada. Quebec, which has a stronger sense of social solidarity than other provinces, has been quicker to act decisively, and thus may be spared the worst of this illness. But all of Canada has handled this well, at least in comparison with our neighbour.

Consider the contrast between Justin Trudeau, who self-isolated but didn’t get tested when he learned he might have been exposed to the virus, and Rand Paul, the libertarian U.S. senator who got tested but didn’t self-isolate, exposing countless others at the gym and the pool. Paul is a rugged individualist, an Ayn Rand enthusiast, an articulate advocate for small government, but not the kind of guy you want to see at the gym.

The United States ought to be able to beat this virus more easily than any other country. The U.S.A. is Number 1 in the Global Health Security Index, which measures “functional, tested, proven capabilities for stopping outbreaks at the source.” Canada measures Number 5. South Korea, which has beaten the virus back, is at 9. But the shifting case count does not reflect those rankings. The Americans are not flattening the curve, and already Trump is talking about getting everyone back to work, which is madness.

With catastrophic leadership and a lack of social solidarity, the United States looks like it is going to get hit hard, which is tragic, because it has the resources to stop the virus in its tracks. What it doesn’t have is the leadership, the will, the social solidarity, to get equipment to health-care workers and convince everyone to stay home for a few weeks.

Almost a million Canadians came home last week from around the world as the news about this nightmare pandemic reached the snowbirds and backpackers.

We face an uncertain future, locked down with no idea when we will be free to resume normal lives, awaiting grim news from our hospitals, but we are home, in a good, well-organized place, where we can be sure that however bad things get, we will do our best to get through it together, even as we keep our distance.

It is another reminder, for anyone who needs one, that we are lucky to call this country home, and that we ought to do what we can to make sure it remains the kind of place where people look out for one another.

The Next Coronavirus Financial Crisis: Record Piles of Risky Corporate Debt

A fast-growing market in junk-rated leveraged loans is showing severe strains, a sign of a looming credit crunch that could stifle future economic growth

Serious strains are starting to appear in the $1.2 trillion market for loans to high-risk companies, which have borrowed record sums in recent years as investors chased bigger yields.

The market, which survived the 2008 financial crisis, has become overstretched since then, say regulators and economists, who worry that it is now so big and risky its problems could amplify any economic damage caused by the coronavirus crisis.

“What I’ve always worried about is that the existence of overleveraged corporations will exacerbate a downturn that occurs for any reason,” said former Fed Chairwoman Janet Yellen in an interview.

Years of low interest rates and easy credit have allowed companies across the board to borrow big, building a record $10 trillion mountain of debt. Lenders expect the vast majority of that money to be repaid on time.

The epicenter of risk involves a subset of that total: $1.2 trillion in leveraged loans, junk-rated debt secured by corporate assets much like mortgages are backed by homes. The market has exploded, ballooning by almost 50%—or $400 billion—since the start of 2015, as investors desperate for the high interest payments these loans provided threw cash at borrowers.

Private-equity firms fueled a lot of the growth, borrowing billions at a time to buy brand names including Dell Technologies and Staples Inc. Smaller but relatively stable public companies like car supplier American Axle & Manufacturing Holdings and electrical supply maker Atkore International Group Inc. also took out leveraged loans to fund share buybacks and acquisitions.

The banks that make such loans rarely hold on to them now because of regulations passed after 2008. Instead they sell the debt directly to money managers or repackage it into complex securities that are marketed to investors around the world.


Should the government rescue investors who made leveraged loans to high-risk companies? Join the conversation below.

When prices of the loans drop, or they fall into default, the losses hit pensions, insurers, and scores of mutual funds and hedge funds, some of which react by selling out, exacerbating market swings.

In addition, investors become less willing to buy new loans and the banks that arrange such deals stop making new ones. That can be compounded by sharp losses in the complex securities Wall Street repackaged many of the loans into, causing credit markets to seize up and leave already indebted companies without access to fresh cash. The consequences could cascade: A wave of defaults and bankruptcies, forcing job cuts and amplifying the economic slowdown.

The impact will likely be long and drawn-out. Most loans don’t start coming due until 2022 and the hardest-hit sector—energy—is a small component of the market. Still, loan prices can fall sharply well before companies run out of cash, hurting investors who own the debt. And as business dries up for some companies, they may not be able to stay current on their existing loans.

Leveraged loans suffered their worst run since the financial crisis this month when a widely tracked index lost about 16% of its value. Prices for loans to 24 Hour Fitness Worldwide, which operates a chain of gyms, fell to about 44 cents on the dollar this week from 80 cents in February, according to analytics firm AdvantageData Inc. Prices of loans to airlines such as United Airlines Holdings Inc. and American Airlines Group Inc. declined about 10% in the first two weeks of March, more than any full-month loss since October 2008, according to S&P Dow Jones Indices.

Repackaging loans into bundles called “collateralized loan obligations” became popular in the 2000s, alongside similar techniques employed to market mortgage-backed bonds. Unlike mortgage bonds, very few CLOs defaulted in the 2008 financial crisis. That record and their high yields have made CLOs popular in recent years, but they are susceptible to violent price swings and have been one of the worst-performing debt investments this month.

Loan investors remain hopeful that the virus will subside and that its aftershocks will be brief. But with the amount of loans outstanding about twice as large as in 2008, according to data from S&P Global, a recession will likely trigger a larger wave of defaults and heavier losses on their debt than the dot-com bubble or the financial crisis, analysts say.

Companies that borrow in the junk loan market now are far weaker financially than those in that era. Borrowers with loans Moody’s Investors Service rated at the lowest rungs of the junk-debt ladder—B3 or lower—made up 38% of the market in July compared with 22% in 2008.

“Investors will probably be surprised by the extent of their losses on loans compared with their historical losses,” said Oleg Melentyev, a strategist at Bank of America Corp. He calculates that about 29% of outstanding leveraged loans will likely default cumulatively in the next credit downturn, compared with an average of about 20% by junk-rated companies during the 2007 to 2009 period. Worse yet, investors will likely recover less money: about half of their original investment, compared with 58% back then.

The storm is rocking even well-established leveraged-loan borrowers like hotel chain Hilton Worldwide Holdings Inc. The company took out a $2.6 billion loan in June to refinance debt left over from when Blackstone Group bought it over a decade ago, according to data from LevFin Insights.

Prices for the loan, stable at 100 cents on the dollar in late February, have now fallen to about 83 cents on the dollar, according to data from IHS Markit. The company has borrowed more in recent days on a $1.75 billion revolving loan—basically a line of credit—to build cash as tourism and travel plummet. Prices of the revolver have fallen to around 79 cents.

Other companies won’t have the same access to cash. “The real risk is in those incremental borrowers, the borrowers who need access to capital that could dry up,” said Frank Ossino, senior loan portfolio manager at Newfleet Asset Management, which holds about $2 billion of leveraged loans in the $10 billion of investments it manages.

Cracks appeared in the market last week as businesses sent workers home, travel slowed, sports leagues halted play and predictions about the virus’s economic impact grew increasingly dire.

A terminal of Reagan National Airport in Arlington, Va., on March 17.


Moody’s downgraded Cirque du Soleil Inc. on Wednesday to a credit rating “in, or very near, default” after the company, which employs 4,000 people, suspended its shows in Las Vegas. Prices of about $700 million in loans the circus operator mostly borrowed for its purchase by private-equity firms in 2015 fell to 68 cents on the dollar from around 94 at the start of the month, according to data from IHS Markit. Officials for the company couldn’t immediately be reached for comment.

CLOs are highly susceptible because they use borrowed money to buy leveraged loans, boosting the yield, and the risk, of the investments. CLO managers issue bonds to buy bundles of leveraged loans, then use cash flow from the loans to pay interest and principal on the CLO bonds, pocketing the difference.

When downgrades and defaults mount, CLO managers stop making payments on their most junior bonds, prices plummet and the market for new CLOs shuts down. Lower-quality CLO securities were the worst performers this month out of 29 types of debt measured by Citigroup Inc. analysts, losing 22% through March 13.

“CLO formation has come to a grinding halt,” said Alex Jackson, chief investment officer for Nassau Corporate Credit, which manages six CLOs and had planned to launch more this year. “It does feel like the market accelerated into a panic over the course of the week.”

Pain TradeLeveraged loan prices are plummeting,punishing investors who piled into the debt inrecent yearsS&P Global Leveraged Loan IndexSource: S&P Dow Jones IndicesNote: Data as of March 18
2016’17’18’19’2017501800185019001950200020502100215022002250Aug. 12, 2018×2120.52

Loan markets seized up briefly the last time stocks tumbled in December 2018, but the declines are much sharper now and many fear a more prolonged disruption. During the last financial crisis, issuance of new leveraged loans slowed to a trickle for about a year starting in August 2008, according to data from S&P Global Market Intelligence.

Also worrying, it became increasingly difficult last week to trade existing loans of large companies normally viewed as comparatively safe bets. The gap between what sellers were asking and what buyers wanted to pay for Dell loans widened to 2 percentage points last week from about a half-point normally. On March 9, too few banks were making markets in the $5.3 billion loan of fast-food chain Restaurant Brands International, which owns Burger King, to accurately price the debt, according to IHS Markit.

If trading dries up, investors and analysts hope the Fed can intervene to avoid a credit crunch. The central bank on Sunday slashed interest rates to near zero and said it would buy $700 billion in Treasurys and mortgage-backed securities to help ease stress in the financial markets.

On Tuesday, the Fed announced plans to start making loans to American companies in a bid to unclog the $1.1 trillion market for short-term IOUs called commercial paper, which companies use to finance day-to-day business operations such as payroll expense.

Eric Rosengren, president of the Federal Reserve Bank of Boston, said earlier this month that without a stronger response from Congress and the White House to combat any downturn, the Fed would need Congress to authorize new tools to spur growth, such as allowing the central bank to purchase corporate bonds and other private-sector assets.

A high level of corporate debt “is one of the negative outcomes of having low interest rates for a long time,” he said. “We’ll see how much of a problem that is for unemployment.”

Worries over the risk in the leveraged loan market have been overstated, said Lee Shaiman, head of the Loan Syndications and Trading Association trade group. The biggest industries in the market, like business services and technology, are less affected by the virus than others, he said. And lower interest rates have cut debt expenses for most borrowers significantly in the past month. Energy companies, among the worst hit in the March turmoil, comprise only 3% of the loan market, according to data from S&P Dow Jones Indices.

But low-rated companies also borrowed more against their assets than ever before, while granting fewer lender protections, or covenants. And there are signs of weakness in some technology firms, which make up about 15% of the loan market. Loans of Coral Gables, Fla.-based data center operator Cyxtera Technologies fell about 14% this month to 72 cents on the dollar, according to IHS Markit.

Cirque du Soleil Inc., which employs 4,000 people, suspended its shows in Las Vegas, leading to a credit downgrade.


Some losses will hit investors in mutual funds, which now own about 10% of outstanding leveraged loans, down from around 17% in 2018 at the recent peak of the market’s popularity, according to research by Barclays PLC. About 65% of the loans are now owned by CLOs.

CLOs have become popular with institutional investors like Canada’s government pension plan and began to show signs of weakness in November when prices of some of their securities swung wildly. The recent selloff has been far worse and newly forming CLOs, which are still purchasing loans from banks, could also get caught in the market freeze.

Some CLO managers who are struggling to sell bonds to investors have begun liquidating the loans they had been accumulating in warehouses, fund managers said. Loans in such warehouses amounted to $10 to $12 billion in early March, according to research by Wells Fargo Securities.

Populism and the Future of White Majorities

The Agenda welcomes Eric Kaufmann, an immigration expert, politics professor at London’s Birkbeck College, and author of the controversial new book, “Whiteshift,” which explores how demographical change has given rise to populism. In an age marked by cultural wars and ethnic divisions, Kaufmann says, “We need to talk about white identity.” He writes that societies need to shift their thinking and analyze how Western populations – immigrants, non-whites, whites and mixed populations – can co-exist.