Feb. 13, 2024 ⚜ Mardi Gras, a looming financial crisis, and some head-scratching Super Bowl ads
Plus: Israel bombs the last safe place in Gaza, King Cake capers in New Orleans, Trump tells Putin to invade Europe, and Toronto is overrun with raccoons
Happy Mardi Gras, Current Affairs readers! In addition to the actual parade you’ll hopefully get to enjoy, we offer a parade of news from our regularly scheduled briefing. In addition, we’ve sprinkled in some of our favorite Mardi Gras jokes and articles from years past!
Laissez les bons nouvelles rouler!
STORIES THAT SHOULD BE BIGGER
IS ANOTHER FINANCIAL CRISIS AHEAD?
In the Financial Times this week, we find two stories that have generated almost no attention in the wider press—but which suggest that things are going seriously wrong in the U.S. banking sector. In the first, journalist Stephen Gandel informs us that U.S banks now owe more than $1 trillion to “shadow banks.” The concept of a “shadow bank” is a bit complicated, but essentially they’re private financial institutions—including “hedge funds, private equity firms, direct lenders and others”—that lend money like banks, but aren’t technically banks, and thus aren’t subject to the same level of regulation. As Gandel explains, traditional banks lend money to these “shadow” institutions, who turn around and lend it to “a range of risky borrowers” which the banks themselves wouldn’t typically be allowed to do business with. Shadow banks have been around for a while, but they’ve started expanding rapidly in the last few years. In 2023 alone, lending to these “alternative” institutions rose by 12 percent, while overall loans increased by just 2 percent, making shadow banks “one of banking’s fastest-growing businesses.” Speaking to the Financial Times, Michael Hsu—the acting Comptroller of the Currency, and one of the country’s most important banking regulators—warns that shadow banks are creating a “race to the bottom” as traditional banks use them to take on more and more low-quality, high-risk investments.
We’ve heard this story, or a version of it, before: banks and other financial institutions pushing further and further into a form of investment they know to be inherently unstable, until eventually the whole financial system collapses around them. Back in 2008, the shady financial instrument in question was subprime mortgages. Now, it may be shadow banks. But that’s not the only story that should be ringing distant alarm bells this week. Also courtesy of Stephen Gandel (and coauthor Joshua Franklin) in the Financial Times, we learn that the profits of the entire U.S. banking industry dropped by 45 percent in the last quarter of 2023. At the risk of stating the obvious, that’s not supposed to happen. The steep decline was a long-term consequence of the “regional banking crisis” that wiped out Silicon Valley Bank, Silvergate Bank, and Signature Bank in the space of a few days last year. As Gandel and Franklin tell it, those banks’ failures “heavily depleted” the FDIC’s Deposit Insurance Fund, causing the government to collect a “special assessment” from the country’s largest banks to replenish it—to the tune of roughly $16 billion, which accounts for much of the fall in profits. This alone would be unusual, but more worryingly, there are signs the “regional banking crisis” might not be finished. As the Financial Times notes, Truist Financial—the “country’s seventh-largest lender”—suffered particularly bad losses in the last quarter of 2023, amounting to nearly $11 billion. And if it—or another mid-sized bank like it—suddenly goes under the way Silicon Valley Bank did, it’s unclear if the already-strained safeguards in place would be able to cover it.
In 2018, Matt Taibbi—the single most important journalist to cover the 2008 crisis—warned that “Ten Years After the Crash, We’ve Learned Nothing.” Well, it’s now 16 years, and that headline couldn't have been more accurate. Right now, the entire liberal political establishment is hell-bent on convincing us—and themselves—that “Bidenomics” has been a triumphant success, and that there’s nothing fundamentally wrong with capitalism. But quietly, in the dusty pages of the financial press, you can hear the rickety architecture of the whole system start to groan and warp under its own weight. When something load-bearing finally snaps—and it really is a question of when, not if—a lot of people won’t be ready for the fall.
AROUND THE STATES
❧ This Mardi Gras, a serial King Cake thief (or possibly multiple) runs amok in New Orleans! Last week, more than a hundred of the colorful, infant-adorned confections were purloined from the King Cake Drive Thru, a van-based bake shop that offers cakes from more than a dozen local bakeries according to Nola.com. Before that, another King Cake caper occurred at Bittersweet Confections on Magazine Street—the marauder broke in late at night and stole a stack of seven cakes and a case of Tito’s vodka to wash it all down. The culprit(s) with the sticky, green, yellow, and purple fingers remains at large. One social media user jokingly claimed responsibility, saying “It was me...I’m holding all 7 babies hostage until I get a lifetime supply of King Cakes from you every year.” They may want to tread lightly, lest they be paid an angry visit by this man, who we hear has been deputized by the NOPD to crack down on King Cake kleptomaniacs:
PAST AFFAIRS
Happy Mardi Gras from Current Affairs!
To celebrate New Orleans’ favorite holiday, take a look at two special articles by editor-in-chief Nathan J. Robinson:
Mardi Gras in Theory and Practice
I leave the first parade stunned. Never have I seen so much effort put into the production of something so fleeting and purposeless, something that exists entirely to provide a temporary burst of joy. So much work is put into constructing floats that will roll only once. Millions of dollars have been spent on an event in honor of—what, exactly? That’s a bad question, though: there’s no “because” to the parade. The parade happens because it happens. That’s how traditions work: they aren’t “justified,” they just evolve. We do what we do on Mardi Gras because it is what we do on Mardi Gras. But my God, what a thing to do.
The Greatest Piano Player You’ve Never Heard Of
James Booker deserves to be as acclaimed and widely known as Beethoven. The fact that he isn’t may have something to do with the fact that Booker did not play in the royal courts of Vienna. He was a gay, Black heroin addict who played New Orleans dive bars, and never had a hit record (though he played on the hits of others, including Ringo Starr, the Doobie Brothers, and Fats Domino). Booker wasn’t just a piano virtuoso capable of flooring Arthur Rubinstein. He was also an innovator who fused classical music with R&B to create a totally unique sound that was entirely his own.
❧ California now has a statewide union for fast food workers. The organization is the first of its kind in the United States, and an affiliate of the influential Service Employees Industrial Union (SEIU). Among other workplaces, the Washington Post reports that the California Fast Food Workers Union already has members at “McDonald’s, Pizza Hut, Jack in the Box, Carl’s Jr. and Subway,” each paying a monthly membership due of $20. Coincidentally, $20 an hour is also the new California minimum wage for fast food workers, which takes effect in April after long years of labor organizing. Despite this important gain, California is still one of the most expensive states to live in as a low-wage worker, and there are concerns employers will try to keep labor costs low—and profits high—by cutting hours to a bare minimum, eliminating benefits, and taking other anti-worker measures. As it grows, the new union will be an important source of leverage to prevent that. It also has progressive goals, including a further 3.5 percent raise to the industry’s minimum wage over the next three years, and increased protections against being fired without a valid cause. Speaking to the Post, one McDonald’s worker explains the urgent need for a union:
“We’re forming this union for the generations of fast-food workers that come after us so that they don’t have to deal with the many injustices that happen to us on the job,” Angelica Hernandez, a McDonald’s worker in Monterey Park, Calif., said in Spanish. After 19 years on the job, Hernandez makes $18.19 an hour as a crew trainer, which she says is not enough to survive in the Los Angeles area without going hungry sometimes.
There’s reason to believe it’s that bad in all 50 states, with a 2020 report commissioned by Senator Bernie Sanders (I-VT) showing that McDonald’s had at least 8,780 workers relying on food stamps to afford their groceries—something Sanders called “morally obscene.” If it spreads beyond California to the entire United States, the new union could be an important first step toward correcting that state of affairs.
AROUND THE WORLD
❧ Chinese activist Ai Weiwei says Western censorship is “sometimes even worse” than China’s. A prolific blogger, artist, and documentarian, Ai is one of the most famous critics of the Chinese government in the world. In a series of recent interviews, though, it’s the state of free speech and expression in Western democracies that he’s concerned about. Referring to the recent suspension of NYU professor Tomasz Skiba, who criticized the United States for “taking our money and paying for a genocide” in Gaza, Ai told Sky News that “in universities, in the media, political sector, everywhere—you cannot talk about the truth,” saying that the situation in countries like the U.S. is “sometimes even worse” than what he saw growing up under Mao Zedong. Last November, Ai’s own art exhibitions in London were also delayed indefinitely over his comments on Palestine, in which he criticized “the annual $3bn [£2.4bn] aid package to Israel.” Speaking to the Art Newspaper, he explains his views on censorship further:
Unlike traditional authoritarian regimes that directly target individual speech, censorship in the West manifests itself more subtly within the framework of so-called democratic politics and the broader concept of so-called freedom of speech. Criticism and dissenting thoughts that diverge from the established values and corporate interests are often subjected to censorship to varying degrees. While individuals may still voice their opinions, their impact on shaping societal ideology is often minimal. That's why I think Western censorship operates in a more concealed, solid and enduring manner. This poses a greater threat as people are lulled into believing in the absence of censorship in the West.
❧ Speaking of censorship, Iran’s Ayatollah Khameini has been banned from Facebook and Instagram. The decision was handed down last Friday by Meta’s corporate leadership, who told The Guardian that they deleted the Ayatollah’s accounts for “repeatedly violating our Dangerous Organizations and Individuals policy.” They didn’t elaborate beyond that, but it’s fairly easy to deduce what the violations were. In recent months, Khameini has been vocal about his support for Hamas’ October 7th attack on Israel, posting that “God willing, the cancer of the usurper Zionist regime will be eradicated.” Harsh stuff! But although Khameini is a murderous dictator, he is nevertheless a world leader, and it’s concerning that a tech company like Meta has the power to banish him from public discourse with the push of a button. As Branko Marcetic wrote for Current Affairs last year, even the writings of terrorists like Osama Bin Laden provide important context for their actions and are necessary to read if you want to fully understand world events. By banning Khameini, Meta has taken away millions of peoples’ ability to read his words and judge his perspective for themselves. As U.S. political leaders continue to push for war against Iran, that’s probably not a good sign.
❧ Americans who watched the Super Bowl Sunday were treated to multiple ads by the Israeli government attempting to sell them on the war in Gaza, which has entered its fourth month. Two ads that hit screens centered on the hostages still being held in Gaza after being taken captive by Hamas on October 7. “In a roaring stadium, their silence is deafening. 136 people are still being held hostage by Hamas,” said one ad, which ended with cheers of “Bring Them Home.” Another showed videos of fathers playing with their children: “For all the dads held in captivity by Hamas, we vow to bring you home.”
Bringing the hostages home has been the most common public justification Israel has used to defend its ongoing bombardment of Gaza, which has killed nearly 30,000 Palestinians. (We wonder how many of them were also fathers.) We share in hopes that everyone currently being held hostage is returned home as soon as possible. But it should be abundantly obvious at this point that the continuation of this war has nothing to do with freeing the hostages. Just days before Israel aired its ads imploring us to bring the hostages home, Netanyahu’s government rejected a deal offered by Hamas that would have brought every single hostage home in exchange for a 45-day ceasefire, the removal of Israeli troops from Gaza, and the return of Palestinians being held in Israel. Many of Netanyahu’s staunchest critics are former hostages themselves and the families of those still being held in captivity who implored him to accept the deal to bring their loved ones home. Pausing the conflict has been by far the more effective strategy for freeing hostages. During the four-day ceasefire that occurred in November, Hamas released 105 hostages home to Israel. Over the four-month war, the Israel Defense Force has rescued a grand total of three. The IDF has also killed at least three Israeli hostages and likely more than that.
❧ Israel, meanwhile, spent the evening of the Super Bowl bombing the last declared “safe zone” in Gaza. More than 1.7 million people have been forcibly corralled into Rafah, the city in Gaza’s southernmost tip—in an area of just 63 sq km which once housed just 250,000 people. Earlier in the war, Israel gave explicit orders for people in other parts of Gaza to evacuate to Rafah under threat of death. But in a series of strikes over the weekend, they turned that safe area into a slaughterhouse, killing more than 100, including many women and children according to the Red Crescent Society while the IDF says it rescued two hostages. Even with vanishingly few habitable places remaining in Gaza, the Biden White House appears to have greenlit an Israeli invasion into the packed enclave, which will surely lead to countless more dead. Mustafa Barghouti, General Secretary of the Palestinian National Initiative, told Al Jazeera:
“Rafah is the only area that is not destroyed completely in Gaza. Israel never gave up on its plan to ethnically cleanse the Palestinian population into Egypt. That's what the US president should have opposed. But he doesn't.”
CROOKS vs. SICKOS (or, “What’s going on with our politicians?”)
❧ In his latest bizarre and unsettling rant, Donald Trump said he’d let Russia “do whatever the hell they want” to European countries who didn’t pay him enough. Speaking at a rally in South Carolina, Trump said that “NATO was busted until I came along,” and vowed that he would “absolutely not” honor the alliance’s collective-defense agreement, unless member nations paid whatever he feels is the appropriate amount—even if those nations faced invasion by Russia:
“No, I would not protect you,” Trump recalled telling [a European leader.] “In fact, I would encourage them to do whatever the hell they want. You got to pay. You got to pay your bills.”
This is, to put it mildly, an outrageous thing to openly admit. Of course, there are plenty of legitimate criticisms of NATO as an institution, from its reckless expansion into Eastern Europe to its role in neo-colonial violence in Africa. Trump isn’t even wrong that the United States pays a disproportionate amount of the group’s defense costs, something Barack Obama also complained about. But it’s not as if the U.S. does that benevolently, as an act of charity. Instead, like everything else in U.S. foreign policy, it’s a calculated move to secure power and influence. What Trump is proposing instead is a glorified protection racket, where Vladimir Putin serves as the “bad cop” threatening to invade European countries, and he’s the “good cop” who demands a ransom to prevent war from breaking out. It’s an arrangement that would benefit nobody except the two oligarchs in question, one on either side of the ocean. We’ll only have a more peaceful, stable world when people like them are removed from their positions of wealth and power altogether.
❧ Independent presidential candidate Robert F. Kennedy, Jr.’s Super PAC ran a $7 million Super Bowl ad on Sunday night, cashing in on what is without a doubt his most valuable asset: his name. For the thirty-second spot, the American Values 2024 PAC borrowed one of the most famous campaign ads of all time, his uncle Jack’s relentlessly catchy “Kennedy Kennedy Kennedy” jingle, which he used in his victorious 1960 run for president. (Side note: the presidential campaign song is a lost art that we should absolutely bring back… the closest thing we have now is Forgiato Blow.) Other than shortening it to fit the compact time slot, they left the ad basically unaltered from the original, with one key modification: swapping out the late JFK with his less impressive nephew.
It was something that any half-decent video editor could probably have pulled together in about an hour. As such, it included some hilarious oversights: For instance, they didn’t change the sign from the original ad which reads “Vote Democratic,” even though RFK, Jr. is running as an independent. They also included the line “someone who’s old enough to know and young enough to do,” which applied well to the 43-year-old John Kennedy, but is quite a leap for the 70-year-old RFK, Jr. (Though, he is somehow still considerably more youthful than the 78-year-old Trump or the 82-year-old Biden). The ad probably evoked a lot of nostalgia from Boomers and their parents, who salivate whenever they hear the name “Kennedy.” However, the ad was met with backlash from other members of the Kennedy family. Many have already distanced themselves from Robert over his anti-vaccine activism and general crankery. They found Robert’s shameless attempt to coast off the legacy of the family name distasteful, leading him to issue an apology and clarify that he had no part in creating the ad (Super PACs, by law, cannot coordinate with the campaigns they support). That apology is undermined somewhat by the fact that RFK Jr. still had the ad as his pinned Tweet.
RACCOON FACT OF THE WEEK
Toronto is Raccoon city!
Today’s animal fact comes courtesy of beloved Current Affairs writer and editor at large Yasmin Nair, who recently learned that two of her friends in Toronto, among thousands of others, lost electricity after a raccoon “made contact with [Hydro One] equipment.”
After learning of the raccoon’s activities, Yasmin began searching for media coverage, only to find that:
“There has been at least one such incident every single year, for a long while. It turns out that the city has had a really, really big raccoon problem since 1925, when the first raccoons were sighted, reports Amy Dempsey (with Andrea Lange and Rick Sznajder) in the Toronto Star. Then, the general response was to politely entrap and release them into the presumed ‘wild’: the surrounding forests. But the raccoons had other ideas, for world — or at least Toronto — domination and by 1965, they had taken over the city: perhaps they felt their distinctive bandit markings were a kind of karmic destiny in need of fulfilment. Whatever the reason, things got so bad that one woman, after 13 months of trying to get rid of the raccoons on her property said wearily, ‘Though we may seem to be laughing, it’s only to keep from getting hysterical.’
In that same year, raccoons took over a 60-metre-long attic space that ran through the tops of ten connected houses in Little Italy, a common area that was nevertheless too small for humans to use. The raccoons ‘had clawed their way in and were holding wild parties, fights and races in the night.’ It’s unclear what might count as raccoon parties, fights, and races — they are raccoons, after all. Did their human neighbours expect them to come home, take off their shoes, put on silken house slippers, and snuggle into armchairs with some nice port before retiring to tiny beds? The humans endured sleepless nights, terrified that the animals would drop through the ceilings and onto their heads, convinced that they would soon face a home invasion. Like unruly teens left without adult supervision over the longest weekend, the raccoons banged on….”
“…For years, raccoons went around blithely tipping over garbage bins in their forages for food, leaving messes everywhere for their human minions to clean up. In 2018, Toronto proudly announced the arrival of special green bins that were explicitly designed to be “racoon-resistant” (the city kept calling them “raccoon-proof” but as the manufacturer Rehrig Pacific pointed out, “you just never know”). The $31-million contract yielded half a million bins, and the immediate response was surprising: after having groused and grumbled about their city co-habitants for decades, Torontonians were suddenly overtaken by regret, sadness, and worry — at the thought that the raccoons might now be forced to go hungry and starve to death…
City residents were reassured by animal behaviourist and raccoon expert Suzanne MacDonald, who pointed out that Toronto raccoons, reputed to be the fattest among their urban brethren, have developed a fondness for roasted chicken and Thai takeout, plentiful in sources like dumpsters and other trash receptacles. The bins were equipped with a special lock that required opposable thumbs, and, hence, supposedly, impervious to raccoon attempts at break-ins.”
Yeah…about that:
Writing and research by Stephen Prager and Alex Skopic. Editing and additional material by Nathan J. Robinson and Lily Sánchez. Fact-checking by Justin Ward. This news briefing is a product of Current Affairs Magazine. Subscribe to our gorgeous and informative print edition here, and our delightful podcast here.
Current Affairs is an independent left media organization supported entirely by its readers and listeners. We offer a beautiful bimonthly print and digital magazine, a weekly podcast, and a regular news briefing service. We are registered with the Internal Revenue Service as a 501(c)(3) nonprofit organization with EIN 83-1675720. Your gift is tax-deductible to the extent allowed by law. Donations may be made through our website, via wire transfer, or by sending us a check. Email help@currentaffairs.org with any questions.