If you’ve just signed up for the MWF 5AM Indivisible email written by Jerry LeClaire, you’ve arrived at the right place.
This website is a work in progress. It serves as an archive of my writing. I send an email between 4:45 and 5:15AM each MWF. Depend on it. If you’re signed up to receive it and it doesn’t appear in your inbox check your Spam folder and your Promotions folder. If you still cannot find it please let me know at email@example.com. I’ve learned that email is not the sure thing I once thought it was.
Notables of the Republican Party meet this weekend in Orlando, Florida, in their annual showcase of conservatism, The Conservative Political Action Conference, CPAC. In keeping with the latest Republican buzz-phrase, “cancel culture,” the theme for CPAC2021 is “America Uncanceled.” Judging by the offerings on this year’s CPAC Agenda “Uncanceled” is code for Republican whining that Trump’s Big Lie that the election was stolen from him isn’t accepted as God’s truth by the entire populace. The forces “cancelling” his Big Lie consist of some sinister cabal of a Deep State that happens to include Republican-appointed judges, Republican Secretaries of State, and pedophilic, baby-eating, and, worst of all, socialist Democrats. I’ve never been a fan of CPAC, but at least in its early years (founded in 1974), back when featured speakers included the like of Ronald Reagan, there were ideas expressed from the podium, not just grievance at having been shunned by reasonable people.
If you are puzzled by “Why [it’s] ‘cancel culture’ when Josh Hawley loses his book contract after cheerleading an insurrection, but not when Colin Kaepernick gets drummed out of the NFL for protesting racism?” then I strongly recommend reading Doug Muder’s article, “Why You Can’t Understand Conservative Rhetoric.”
Ted Cruz’s talk is titled “Bill of Rights, Liberty, and Cancel Culture.”
Deroy Murdock of Fox News will speak on “Voting is Democracy: Why we Must Protect Elections”
Congressman Mo Brooks of Alabama will join a panel on the subject “Protecting Elections: Other Culprits: Why Judges & Media Refused to Look at the Evidence”
Fox News’s Jason Chaffetz’s talk is titled “The Left Pulled the Strings, Covered It Up, and Even Admits It”
Radio talk show host Ben Ferguson will “emcee” a session titled “The Left’s Assault on a Free People: How Government, Big Tech, and Media are Colluding to Deprive Us of Our Humanity.” Matt Gaetz and Charlie Kirk will also be part of this session.
Florida Senator Rick Scott’s talk is titled “The Way Forward: Unlocking Our Churches, Our Voices, and Our Social Media Accounts.”
Donald Trump Jr. will give a speech titled, “Reigniting the Spirit of the American Dream.”
Former New York City police commissioner Bernard Kirk will be part of a session titled “Same Badge, Different Beat: To Protect and Serve Or Socialist Social Workers?
Two Congressman, Mark Green and Jody Hice, will be part of a session titled “Who’s the Boss, Where’s My Applesauce? Who’s Really Running the Biden Administration?”
Devin Nunes will be featured in a session titled “California Socialism: Promising Heaven, Delivering Hell”
Utah congressman Burgess Owens will be part of a session titled “In the Left’s Own Words: ‘Disrupting the Nuclear Family.”
Kevin McCarthy will be part of a session titled “Winning Back America”
Several attorneys will be part of a session titled “Did Your Vote Count? Ask the Experts”
California congressman Darrell Issa will be part of a session titled “The Only Thing We Have to Fear is…Neera, Herself: How to Block a Tyrannical Administrative State.”
Someone named Jeff Brain will lead a session titled “So You’ve Been De-Platformed–What Now/
A session titled “Failed States” will focus on the election results in Pennsylvania, Georgia, and Nevada. The Conservative Political Action Conference (CPAC) was founded in 1974 by the American Conservative Union (itself founded in 1964) and Young Americans for Freedom (founded in 1960). William F. Buckley Jr. (1925-2008) features prominently in the founding and intellectual underpinnings of these two organizations and of the last 70 years of American conservatism. A Yalie (like several articulate and some inarticulate conservatives, think GW Bush), Buckley was also the founder of the National Review in 1955, a magazine that became the intellectual flagship of American conservatism. To understand Buckley is to understand the trajectory of the Republican Party for the last 70 years. Throughout his life Buckley managed to hold off the extremists upon whom the Republican Party now depends. Buckley had a falling out with Robert Welch, the founder of the John Birch Society in the 1950s over Welch’s assertion that Dwight D. Eisenhower (a Republican) was part of a communist conspiracy. Until Buckley died of a coronary in 2008, he succeeded in keeping the John Birch Society and like-minded conspiracy theorists at arms length from the Republican Party. It is more than a little telling that only two years after Buckley’s death, in 2010, one of CPAC’s sponsors was the John Birch Society–and now the Republican Party under Trump is rife with lies and conspiracy theories.
“Shea [until January 2021 the Republican State Representative from LD4, Spokane Valley north to Mt. Spokane], who chose not to run for re-election after an investigator concluded he had engaged in “domestic terrorism” by assisting the Malheur occupation in Oregon, has stepped into Peters’ former spot at the head of Spokane’s Covenant Church and continued his role as the rock star of the American Redoubt, serving up big, steaming bowls of alternative-universe gruel.“
Alex Jones style whacko conspiracy theory runs deep in Pastors Peters and and Shea. Matt Shea featured prominently in the “Freedom Force Red Pill Expo Conference”, held in Spokane at the Convention Center, June 17-26, 2018. (The Red Pill Expo will be held this year in Rapid City, South Dakota. Check out their website for some flavor.)
Evangelical (Fundamentalist) Christians seem especially susceptible to conspiracy theories at which most of us would shake our heads in dismay. Perhaps subscription to a belief system that pins one’s understanding of the future on cryptic writing dating from the Roman Empire (the last book of the Bible, Book of Revelation) primes one to delight in interpreting Q’s bizarre posts.
Evangelical Christianity is no monolith, however. John Fea, a published and respected author [check out Amazon for confirmation], is a professor of history at Messiah University in Mechanicsburg, Pennsylvannia, thirty miles north of Gettysburg. (Like all such Evangelical educational institutions, you will find no mention of a course in geology or anything touching on evolution among the academic offerings, proof of the University’s Fundamentalist bona fides.) Professor Fea writes a prolific blog, The Way of Improvement Leads Home. Professor Fea’s February 19th blog post, Patriot Churches, copied below, helps bring us up to date with the activities of Spokane’s export, Pastor Peters:
This extended NPR piece does a nice job of covering the divisions in the evangelical community right now. The GOP is not the only group that is divided in the wake of the Trump era.
You can listen to the Knoxville “Patriot Church” service (January 10, 2021) referenced in this NPR piece (“Onward Christian Soldiers”) here.
The pastor of the Knoxville Patriot Church, Ken Peters, introduces the service wearing a “Rigged 2020” T-Shirt. He tells his congregation that Antifa stormed the U.S. Capitol on January 6, 2020 and describes Mike Pence as “evil.”
The main speaker, Sharam Hadian, a former Muslim and pro-Trumper, tells the audience that “this is the time to run toward the battle.” He says anyone who walked away from the U.S Capitol during the insurrection is not a “good Christian soldier.” He adds, “there comes a time to overturn the tables of the temple” and “put the fear of God” in those trying to stage a coup on the government of the United States. The senators in the Capitol on January 6, Hadian preaches, have betrayed America. He refers to Mike Pence as “Pontius Pence” and claims that the former vice-president has “betrayed his anointing.”
Hadian tries to separate the true Trump followers in Washington D.C. from the insurrectionists, but I am not sure that many of the Christian nationalists who stormed the Capitol on January 6, 2021 really understand this difference, especially when they are constantly fed this militant language.
This entire service is a conspiracy theory baptized with Christian praise music, Bible quotations, and prayer.
On January 13, 2021, Peters holds a “men’s discipleship” meeting at the Patriot Church. They are discussing David Gibbs‘s, One Nation Under God: Ten Things Every Christian Should Know About the Founding of America. Gibbs They are also reading David Barton’s (Wallbuilders) Christian nationalist book The American Story.
Peters starts with a lesson on the Pilgrims and the Mayflower Compact. He has a “Rigged 2020” baseball cap on as he teaches. He talks about how “God cleared out the Indians with plagues” in order to allow the Pilgrims to claim the land and build America. Notice how this Christian revisionism is shaping the day-to-day life of evangelical churches. “When you discover that America was founded on Christian principles, by Christian men…it makes you want to fight for it, Peters says. He adds: “if America was a totally pagan country I wouldn’t have the love for it that I do.”
This is classic Christian nationalism. But what if this history is wrong, or at the very least more complex? The entire Christian nationalist movement is built on a distorted view of American history. It rests on the work of pseudo-historian David Barton and this Wallbuilders organization.
Peters then moves into providential history and Christian Zionism. “I believe that America was a move of God for the sake of Israel, protecting Israel, helping Israel get established.” At this point, Peters references an interview he did with CBS News. I am familiar with this interview because CBS also interviewed me for this story–a forthcoming video piece on Christian nationalism. I am told it will be out soon.
Peters’s “men’s discipleship class” then moves into a discussion of Trump’s second impeachment: “It reminds me of what the world did to Jesus.” There is definitely “discipleship” going on here, but I am not sure if it is Christian discipleship.
On January 14, 2021 Peters wrote on the Patriot Church-Knoxville Facebook page: “The left is going to use the Capitol incident to try and destroy me and others who have taken a stand. They will spin and deceive. They are absolutely evil and bent on our demise. Don’t fall for. It. Satan is a liar.”
On Sunday morning, January 17, 2021, Shahram Hadian was back to finish his sermon from the week before. He warns the congregation not to believe the “lie” that the Left wants “unity” or “peace” when they really “want to destroy us.” The Church, he adds, cannot “sit at the table with demons.”
In this speech, preached on the evening of January 17, 2021, Hadian tells the congregation that the 2020 presidential election was a “deep state coup” orchestrated by Satan. Now that Trump is out of office, Hadian says, we can expect “the rise of Islam, globalism and ecumenicalism converging to a one world government, one world religion and the coming of Anti-Christ system!” The coming of this new world order is directly connected to digital chips in the COVID-19 vaccine and “digital passports.” In other words, the pandemic is “paving the way for the mark of the beast.” And that is just the beginning.
I’ll keep my eye on this Patriot Church movement.We in Spokane, as exporters of the like of Ken Peters, would do well to keep the same watch. This is the sort of conspiracy theory rot within American Evangelicalism that led to the January 6th insurrection. It needs to be spotlighted and called out for what it is.
Keep to the high ground, Jerry
P.S. If the Patriot Church movement looks inconsequential to you, consider that the 1996 bombing and bank robberies in Spokane Valley were inspired by the distorted theological writing of one twisted “Christian” author, Richard Kelly Hoskins. (See Phineas Priesthood Parallels.)
Senator Lisa Murkowski (R-AL) and Susan Collins (R-ME), along with five other Republican Senators, voted to convict Donald Trump of incitement to insurrection in Trump’s second impeachment trial on February 13. The vote to convict was not only a 57-43 majority, but also the most bi-partisan vote to convict a President in our nation’s history. (The Constitution requires a 2/3 supermajority vote of those present to convict, in this case, 67 votes.) In the three prior presidential impeachment trials, those of Andrew Johnson, Bill Clinton, and Donald Trump (1), Mitt Romney (R-UT) stands out, up to now, as the only member of an impeached President’s party ever to vote for conviction, even on a single article of impeachment.
The U.S. Senate was conceived by the framers as an august deliberative body of senior statesmen relatively insulated from the voting masses. Not only were Senators given a six year term (unique among federal elected officials), but the Constitution specified they were to be selected by state legislatures, thereby removing them an additional step from the voters. It was not until the 17th Amendment, ratified in 1913, that Senators were elected directly by the people of the states they represent. (Click the link for the story.) Furthermore, the framers did not plan on the rise of political parties or the role such parties would play in backing their partisans and demanding loyalty, but political parties arose early in our history and play an significant role in the calculations of most elected officials. It can be argued that today’s Senators are more answerable to voters and, therefore, potentially less independent and deliberative as statesmen than the framers intended.
Each of the Republicans who voted in favor of convicting Donald Trump in his second impeachment trial is in one way or another relatively isolated (for a while) from Republican electoral backlash an isolation that allows them to hear the overwhelming evidence of Trump’s guilt. Only one (see below) will face the voters in 2022.  (See Why Seven Republican Senators Voted to Convict Trumpfrom the NYTimes, February 14th, for more detail.)
Ranked Choice Voting plays a role for two of the seven, Lisa Murkowski (R-AK) and Susan Collins (R-ME). Alaska and Maine have recently changed their electoral rules by adopting a version of Ranked Choice Voting (RCV), an electoral method currently under consideration in the legislature here in Washington State. There is good reason why Lisa Murkowski (R-AK) is alone as the only one of the seven Senators who must stand for re-election in 2022. By passage of an initiative in the November 2020 election, Alaska became the third state with jungle primaries  for all statewide races (like Washington and California), the second state with ranked voting (along with Maine), and the only state with both. Alaska’s new system is unique in that the jungle primary advances the top four vote getters to the general election regardless of the party preference of the candidates. In the general election the winner among the four is determined by ranked choice voting. If one of the four takes more than 50% of the vote they win outright, but if none of the four reaches that threshold then then second choice votes of the lowest vote-getter are re-allocated. With the passage of the 2020 initiative in Alaska the parties no longer control access to the general election ballot, something many feel reduces the chance that an extremist faction will be able to advance a candidate “to primary” an incumbent. Lisa Murkowski adds this reassurance from Alaska’s new voting system to an impressive electoral history: Ms. Murkowski was appointed to her seat to replace her father, Frank Murkowski, in 2002, when the senior Murkowski resigned his seat to become Governor of Alaska. She won elections in 2004, 2010, and 2016. In 2010 she was successfully“primaried” by a Republican Tea Party candidate but went on to win the general election on a write-in vote campaign, only the second U.S. Senator ever to win on a write-in vote. Lisa Murkowski has certainly earned her independent streak.
Senator Susan Collins (R-ME), also from a state recently converted to a form of Ranked Choice Voting, was re-elected in 2020. Maine retains partisan primaries, but, unlike Alaska, uses Ranked Choice Voting in the general election and the primary. In 2020 Ms. Collins had a weak primary challenger; in the general election Collins garnered 50.99% of the vote. That greater than 50% vote avoided triggering the re-assignment of 2nd choice votes under ranked choice voting rules. In the impeachment vote Senator Collins was insulated from party backlash by her new six year term and, perhaps, by the knowledge that if she were to face a far right primary challenger in 2026 the new ranked choice primary might work to her advantage.
I highlight the potential role of Ranked Choice Voting in the electoral calculation that Senators Murkowski and Collins undoubtedly made, to point out that the details each state’s voting system matters. Ranked Choice Voting offers a chance for campaigns that are more civil, attract a broader array of candidates without fear of being a “spoiler,” and result in more equitable representation. HB1156, currently under consideration in the Washington legislature, would modify Washington law to offer local Washington jurisdictions the chance to try Ranked Choice Voting in local elections. The path to state level RCV in Maine was not a straight line. It took years. HB1156 is a first step here in Washington. Keep it in your sights.
Keep to the high ground, Jerry
 A jungle primary (aka a “nonpartisan blanket primary”) is a primary election in which all candidates for a political office run against each other at once, instead of being segregated by political party. Multiple winners are selected and become the contestants in the general election, in a two-round system.
 Of the seven Republicans to vote for conviction only Lisa Murkowski (R-AK) plans to stand for re-election in 2022 (see above). Two others, Richard Burr (R-NC) and Pat Toomey (R-PA) would be up for re-election in 2022, but have announced plans not to run. Mitt Romney (R-UT) faces the 2024 election, but seems secure as a maverick in Mormon Utah. The other three, Ben Sasse (R-NB), Bill Cassidy (R-LA), and Susan Collins (R-ME) don’t face re-election until 2026, completing a picture of relative immunity to being “primaried”.
P.S. Since the U.S. Constitution left the details of voting up to the states, each state has cobbled together its own rules. This makes understanding election strategy in any one state a complex task–and grasping more than the basic rules in two or more states a massive challenge–a challenge typically taken on only by dedicated strategists looking for an edge. It is time we pay more attention.
In the last half year the Spokesman has published articles on the re-sentencing of the four domestic terrorists claiming allegiance to the “Phineas Preisthood.” The four men were convicted of bombings and armed robberies in Spokane Valley in 1996. Bombs were detonated at the Spokesman-Review’s Spokane Valley office and at a Planned Parenthood clinic in the valley. A U.S. Bank branch was robbed at gunpoint. It is something of a miracle that no one was maimed or killed. All four men were caught, tried, and sentenced to lengthy prison terms in 1997. At the time of the bombings in 1996 the men ranged in age from 37 to 50. Now, after 24 years in prison, they range from 61 to 74. The latest article covering the series of re-sentencings appeared on January 25, 2021, and concerned the re-sentencing of Charles Barbee, one of the four. The re-sentencings from the original life sentences were made necessary by a U.S. Supreme Court decision in 2015 holding that some of the federal laws under which these men were convicted was unconstitutionally vague.
Of these four domestic terrorists, the youngest, Brian Ratigan, a former U.S. Army sniper, now age 61, was released from prison in June 2020 in recognition of good behavior and the 23 years he had already served in federal prison. The Spokesman articles were not specific enough about the crimes of which each of the four was convicted to understand why Ratigan was released even as the three others were re-sentenced to prison terms that condemn them to spend the rest of their lives in prison. Combing through the four articles that describe the re-sentencing of each of these men one thing stood out: three of them (including Ratigan) had given up the beliefs that had led them to commit their crimes. Those three had been model prisoners. A recently retired prison employee even came to court and testified that Charles Barbee had become a model citizen during his time in prison. For what little picture one can glean from the coverage in the newspaper articles, one is left feeling a little sorry for Charles Barbee and Robert S. Berry. Despite their leaving behind the malignant belief system that once motivated them, each of them was re-sentenced to the equivalent of life imprisonment. Mandatory sentencing guidelines for the particular crimes of these two removed the option of leniency from the judge’s toolbox.
The fourth terrorist, Verne Merrell, now age 74, stood out from the rest. The Spokesman article (somewhat vague) quotes Merrell as saying at his re-sentencing that the crimes he committed almost a quarter century ago were meant to make people aware of “the degradation of our Constitutional system.” To that he added, “It [the awareness] just didn’t happen.” He had not been a model prisoner. Re-sentenced to 58 more years in prison, it seems likely that Merrell will die still believing in his righteousness as a “Phineas Priest.”
So what is the belief system to which these men once subscribed? Here’s where things get interesting–and disturbing. The Spokesman articles don’t flesh out the story for their readers. The articles mention these men were “members” of something called the Phineas Priesthood, as if the Phineas Priesthood were an isolated, shady organization that held meetings somewhere and actually had a card-carrying membership. The truth is much darker–and instructive for our present day travails.
Recall the 1990s. In 1995, the year before the bombings in Spokane Valley, Timothy McVeigh (since executed for his crime) and Terry Nichols, a pair of Army buddies from basic training at Fort Benning, killed 168 people, many of them children, with a truck bomb detonated at the Murrah Federal Building in Oklahoma City. Also in the 1990s just north of Hayden, Idaho, Richard Butler and his Aryan Nations were still in full swing, annually hosting white supremacists from across the nation for confabs at Butler’s compound. Published in 1990, Vigilantes of Christendom: The Story of the Phineas Priesthood, was conceived in the toxic mind of Richard Kelly Hoskins. For forty years Hoskins had written (and sometimes self-published) pro-Nazi, white supremacist, anti-semitic, and blatantly racist literature, but Vigilantes of Christendom found fertile ground in the minds of 1990s white supremacists. The book was found among the effects of the Spokane Valley bombers, who self-described as “Phineas Priests.” Not only was the book the inspiration for the Spokane Valley bombers but was also found among the effects of Buford O. Furrow, Jr. a man hailing from Lacey, Washington, made infamous by the Los Angeles Jewish Community Center shooting in 1999. The “Phineas Priests” Hoskins detailed in his book are exhorted to take solo or small group “Phineas action.” Such action is biblically based in the story of Phineas, a Hebrew man who, according to the Old Testament book of Numbers 25:6, was rewarded by God for killing an interfaith couple (a Jewish man and Medianite woman, a worshipper of idols) with a single spear thrust that pierced both of them. (For me it was worth noting that in the 1960s Hoskins became a member of the Southern Baptist Church, inspired by attending Jerry Falwell’s church, possibly the basis for Hoskins later biblical meanderings.) Hoskins suggests in his book that any righteous man is automatically ordained into the Phineas Priesthood merely by seeking to destroy God’s enemies, including race-mixers, homosexuals, abortionists and Jews. (Read more about this sickening man’s life and work here.)
Richard Kelly Hoskins spent a lifetime of pushing ideas that clearly inspired violence, some in our own community, and yet I only recently learned of his existence. Has he paid for his incitement of violence in any way? Well, no. A simple google search suggests that he remains alive at age 92 at 2111 Link Rd, Lynchburg, Virginia, the city of his birth. You can download his most famous, and, arguably, his most vile and consequential work, Vigilantes of Christendom, for free from the internet or you can purchase a vintage copy as a keepsake (gag) from Amazon for around $300.
This putrid underbelly of American culture has always been around, but most of us choose to look away, preferring not to imagine the bile that spews forth from these people. The ideas put forward by “thought leaders” like Hoskins still fuel the simmering and twisted hate and sense of victimhood nurtured by the pastors of the Covenant Church in north Spokane, organizations like Northwest Grassroots in Spokane Valley (discussed in my post, Spokane’s White Supremacists), and the Marble Community in northern Stevens County. Equally twisted is the cloaking of these ideas and organizations in the mantle of Christianity, Christianity that has gone off the rails like that of Hoskins’ Phineas Priesthood, a Christianity thoroughly wedded to a warped idea of Patriot piety and the righteousness of parading with assault weapons, a warped Christianity that has burrowed itself firmly into the rightward side of the local Republican Party.
The local Republican Party, like many Republican members of the U.S. Congress, now express horror at the violence displayed in the U.S. Capitol on January 6th. Earlier they stoked the fires of Trump’s baseless assault on our elections systems and now expect to escape from the consequences of their own inflammatory rhetoric. Richard Kelly Hoskins, flying largely under the radar, escaped responsibility almost entirely.
It is a shame that many Christian Evangelical Republicans have been so poisoned against anything with the word “Democrat,” “liberal,” or “progressive” attached to it. Were they not poisoned in that way, were they more clearly aware of the perversions of the Christianity that fester on their right flank, rather than being lulled by the term Christianity itself, they might recognize that real Christian values better flourish to their left.
P.P.S. I occurs to me there might be a reason that so many of the followers of QAnon, Hoskins’ Phineas Priesthood, various “Patriot” groups, and followers of the conspiracy theories of the ilk of Trump and Alex Jones seem to share warped, far right interpretations of Christianity. If one’s worldview, before all else, depends on the absolute and literal truth of the entire Bible, then accepting something like Hoskins’ interpretation of Numbers 25:6 in deriving the “Phineas Priesthood” is only a small step away. Reining in warped interpretations of the Bible leading down these roads depends on which interpreter catches the imagination of the listener. I am by no means suggesting here that all Evangelical (Fundamentalist) Christians go down these paths, only that their worldview is fertile ground for manipulation.
If you haven’t yet, go find your ballot in that pile of junk mail, vote YES on the Spokane Public School’s (District 81) replacement levy and either get it in the mail today or deposit it a ballot drop box. Your ballots must be in by or postmarked by (no guarantee there) Tuesday, February 9 at 8PM. For more of my thoughts on the subject see Republicans, Schools, and Taxes.
Puzzled by the news blip around the run-up in stock price of a company called “GameStop”? I was. Judd Legum in his Popular Information on January 28th puts it all in context in his The merry adventures of Robinhood. I’ve copied it below. There are echoes in this piece of the outrage many felt surrounding the crash of 2008 and the bailouts that followed. I have little sympathy for those who make vast sums of money taking bets with other people’s money. Some of them seem to be getting their comeuppance in the current melee. The story is entertaining, satisfying–also disquieting and worrisome in a world that already feels unsteady:
Hedge fund manager Gabe Plotkin is ridiculously wealthy. In November, Plotkin purchased a $32 million mansion in Miami with “nine bedrooms, twelve full bathrooms and four half bathrooms.” To preserve his privacy, he also paid $12 million for the house next door. Plotkin also recently bought a “large chunk” of the Charlotte Hornets.
How did Plotkin get so rich? The hedge fund he founded, Melvin Capital Management, has generated fantastic returns. Since its start in 2014, Plotkin’s firm has averaged returns of 30% per year. Melvin Capital Management now has more than $12 billion under management and Plotkin collects 30% of the profit as his fee.
Plotkin generates huge returns by taking big risks. One of Plotkin’s strategies is short selling stocks he believes will decrease in value. The way you short sell a stock is by borrowing it from someone else, selling it and, hopefully, repurchasing it at a lower price later. When the short sale works out, the drop in share price becomes profit for investors like Plotkin.
Short sales can be very profitable, but the strategy comes with extra risk. When you purchase a stock for $100, the worst that can happen is that it goes to zero and you lose all your money. When you execute a short sale for a stock at $100 and instead the price increases to $300, it will cost you another $200 to close out your position.
Plotkin and his colleagues in the industry had no problem with these risks when they were generating enormous profits. But 2021 has presented challenges. On January 22, the Wall Street Journal reported that Plotkin’s firm had lost 15% of its value in the first three weeks of the year. The losses were a result of the firm’s extensive “short book, or array of bets against companies.” Then things got much worse.
A particular problem for Plotkin and other investors was short selling GameStop, the video game retailer. GameStop sells video games and related equipment in retail stores. Many hedge funds and others bet against GameStop because modern gamers are more likely to download their games and shop online. The pandemic hasn’t helped GameStop’s business prospects.
But the bets against GameStop, which turned a profit and reduced its debt load in 2019, were very heavy. There were more GameStop shares sold short(71.2 million) than total shares available (69.7 million). This is possible for technical reasons, but the volume illustrates just how many people were betting on GameStop’s situation to get worse.
2020 has seen a boom in retail trading, especially from no-cost apps like Robinhood. Some of these traders congregate on a Reddit forum called r/wallstreetbets. Users of that forum began buying GameStop stock. Some believed in Cohen’s vision, some wanted to stick it to the Wall Street short sellers, and some just wanted in on the fun. Late last week, GameStop stock was trading at under $40. On Wednesday, the stock closed at nearly $350.
How did some people hanging out on Reddit drive this kind of increase? Their stock purchases are only one component of GameStop’s dramatic rise. When a stock that is sold short rises dramatically, lenders start to ask for their stock back. That means short sellers have to buy GameStop to close their position, driving the stock up further. Also, some of the buyers from Reddit and elsewhere were not directly buying GameStop stock but were buying call options — the right to buy GameStop stock at a higher price. But as the stock goes up, the firm on the other side of these trades purchases more GameStop stock to hedge its position. All three of these factors created a feedback loop that caused GameStop’s meteoric rise on Tuesday.
The dynamic was not limited to GameStop. Other stocks targeted by short sellers, including AMC and Blackberry are seeing large gains. The dynamic has panicked the Wall Street establishment, which began taking steps on Thursday to curtail the trading of Redditors and other retail investors.
Ostensibly, these actions were done to save small investors from themselves. But is that what’s really going on? Or do Wall Street titans just not like it when regular people use tactics normally reserved for “experts” to make money?
Plotkin went quickly from running one of the best-performing hedge funds in the industry to serious financial peril. But he was rescued with a $2.75 billion cash infusion from two other hedge fund titans, Steve Cohen and Ken Griffin. Cohen was Plotkin’s former boss at SAC Capital Management. SAC shuttered after the firm pled guilty to insider trading and paid $1.3 billion in fines. Cohen was not personally charged. Griffin runs Citadel LLC, a hedge fund which he found in 1990. Longtime Popular Information readers may remember Griffin for purchasing the most expensive home in America.
In exchange, Citadel and Point72, the successor firm to SAC, own an undisclosed stake in Melvin Capital Management. The companies now all have an interest in Plotkin getting out of this jam and resuming his work of bringing in massive profits.
The trio appears to be getting some help.
Schwab and TD Ameritrade restrict retail traders
On Wednesday, Schwab and TD Ameritrade, two large retail trading platforms with a common owner, took the highly unusual step of “restricting trading” on GameStop, AMC, and other stocks. TD Ameritrade said it was acting to protect its customers and itself. “In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME [GameStop], $AMC and other securities. We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” TD Ameritrade said.
Limiting trading of these stocks may make it easier for hedge fund managers like Plotkin — and his new investor Griffin — to navigate out of this predicament. Less buying of GameStop stock or call options will put downward pressure on the stock, making it easier for short sellers to unwind their position.
Griffin, through Citadel, does a lot of business with retail trading platforms. When retail investors make a trade, it is frequently handled by Citadel. The Financial Times reported that “Citadel Securities accounts for 40 of every 100 shares traded by individual investors in the US, making it the number one retail market maker.” Specifically, Citadel is “a big buyer of customer trades from the leading US retail brokerages such as Charles Schwab and TD Ameritrade.” Citadel pays companies like Charles Schwab and TD Ameritrade tens of millions of dollars for the right to handle this “order flow.” Citadel, in turn, profits from the “spread” — the difference between the price to buy and sell the stock.
CNBC freaks out
On CNBC, many people were freaking out about the Game Stop situation. Host Scott Wapner, for example, said that the rise in GameStop’s price was evidence of problems with the “integrity of the system.”
Investor Chamath Palihapitiya pushed back. “Just because you were wrong, doesn’t mean you get to change the rules. Especially because when you were wrong, you got bailed out the last time. That’s not fair,” Palihapitiya said.
Palihapitiya did not say who he was talking about, but he could have been talking about Griffin. In 2008, when the financial crisis hit, Citadel had massive exposure as a securities lending counterparty with AIG. If AIG went under, Griffin would be out hundreds of millions of dollars. But that never happened. AIG received a $182 billion taxpayer bailout. As part of this, AIG was able to pay counterparties full value for its otherwise worthless contracts. Citadel ended up with a $200 million cash infusion.
Citadel benefited even more from the massive bailout of lenders it relied on to stay liquid. Griffin admitted that, one Friday during the crisis when he left work and realized that if Morgan Stanley did not open on Monday, Citadel would go under. But Morgan Stanley did not go under because it received a $100 billion bailout from the federal government.
But now, twelve years later, we are told it is retail investors that are irresponsible and do not understand how things are supposed to work.
P.S. The news that appeared after I wrote this disclosed that the platforms that were being used to bid up the share price of GameStop (and thereby punish some hedge fund managers like Mr. Plotkin had clamped down on small investors taking part–and that produced a general uproar and shouts of “Unfair!” This story is not over…
Always remember that the U.S. Senate is the most anti-democratic institution in all of our governance. The fifty Republican senators collectively represent 41,549,808 fewer Americans than the 50 Democratic senators (out of a total population of 328,239,523). Mitch McConnell, the outgoing Senate Majority Leader and obstructionist-in-chief, represents only 4,467,673 Kentuckians, while wielding immense power. McConnell, you will recall, working from this minority base, first stonewalled the nomination of Merrick Garland to Supreme Court and then jettisoned the Senate filibuster rules (as applied to the Supreme Court) to place three Federalist Society justices on the Court for life. The Supreme Court, thanks to McConnell’s machinations, is now also a minority-controlled institution based on the populations represented by Senators who approved their nominations.
Now McConnell, even as he shifts from Majority to Minority Leader in the Senate, is using his remaining leverage in an attempt to extract a promise from Democrats that they will not exercise “the nuclear option” and take the final step to rid the Senate of the even greater minority stranglehold on Senate business offered them by the Senate filibuster, aka the “cloture rules.” McConnell wants Democrats to negotiate away the very power that McConnell himself exercised in his minority takeover of the Supreme Court. McConnell’s demand should provoke outrage. The prospect that Democrats will jettison the filibuster is an important tool (as is the threat of adding justices to the Supreme Court). Neither action is currently contemplated. To take either action would require solid agreement among the 50 Democratic Senators and Kamala Harris. Such agreement [think Joe Manchin (D-WV) and Kristin Sinema (D-AZ)] is currently lacking, but what of that agreement after eight or ten months of continued Republican minority obstructionism that blocks each and ever Democratic legislative effort? To give up those threats would be like asking Democrats to voluntarily neuter themselves.
So what is this filibuster, anyway? What is its history? In an impeccably timed new book, “Kill Switch: The Rise of the Modern Senate and The Crippling of American Democracy,” Adam Jentleson lays out the Senate filibuster’s history current use. An interview with Mr. Jentleson entitled “The Racist History Of The Senate Filibuster” on Terry Gross’s Fresh Air is available in your browser or as a podcast. It is a lesson in civics and the anti-democratic nature of our governance. (The discussion of the book starts at 8:17 in the program, if you’re pressed for time. At least in the browser version you can see the text of the interview by clicking the rightmost icon [parallel horizontal bars] in the blue “40 minute listen” line.)
Here’s the bare-bones summary: The Senate filibuster arose out of the efforts starting in the 1830’s by Sen. John C. Calhoun, a flagrantly white supremacist southern Senator, for the purpose of blocking anti-slavery legislation. None of the founding fathers ever spoke of or advocated for a filibuster. By the time Calhoun pushed for it the founders were all dead. The filibuster has no roots in the U.S. Constitution. For the 87 years between the end of Reconstruction and 1964 the filibuster was only used to block civil rights legislation. The modern filibuster has become so routinized that all it requires is for one senator to send an email invoking it, a mechanism that assures McConnell of the ability to block nearly all legislation and bring the basic legislative function of Congress to a standstill. This is a blocking power that McConnell has used more than any other Senate leader. I still recommend the podcast and the book. You will emerge armed with facts–and angry.
What is McConnell’s negotiating strategy for trying to extract this promise from Democrats? It’s complicated. With Kamala Harris as the deciding vote, Democrats have a 51-50 majority in the U.S. Senate, but already Mitch McConnell (R-KY) is blocking the work of Senate, trying to extract a promise from Democrats to keep the Senate filibuster intact in its current form. How does this work?
Every two years we hold a national election (like the one last November) that changes the composition of Congress seated at the beginning of the following January, two months later. With each new two year Congress (this new one is the 117th), both houses start the session by voting in a new set of rules (the “organizing resolution”). Unless new rules are established, the House and Senate would carry on under rules established at the beginning of the last Congress. Usually the organizing resolution is done mostly within the majority party, the changes are perfunctory, the legislative body passes the resolution by majority vote within its chamber and off they go. The process of rules change is seldom newsworthy, but with Mitch McConnell negotiating nothing is ever easy. This is only the fourth time the U.S. Senate has been evenly divided, so there isn’t a lot of precedent. (The other three times this happened the even split was short-lived. There are a lot of old people in the Senate. They become ill and die. Sometimes they switch parties.)
Incoming Democratic Majority Leader Sen. Chuck Schumer and outgoing Republican Majority Leader Mitch McConnell will have to agree on a set of rules, known as an organizing resolution, which governs how the Senate works. The organizing resolution determines everything from committee membership and staff budgets, to who gets the best office space.
Even with Harris’s tie-breaking vote, Schumer will need McConnell’s support: passing the organizing resolution requires 60 votes. As a result, Republicans will likely end up with much more power than a minority would usually hold.
The last time the Senate was split 50-50, in 2001, lawmakers agreed on an organizing resolution that allowed both parties to share power. Under that deal, the parties agreed to split committee memberships and staff equally and changed the rules, making it so that if a tie vote prevented a measure from moving out of committee, either the majority or the minority leader could bring the bill to the Senate floor.
Schumer and McConnell may take a cue from that 2001 agreement, but Senate observers note that, in these hyper-partisan times, agreeing on even the rules of the road may be tricky. “As partisan as it was in 2000, things have become even more partisan,” says Sarah Binder, a senior fellow in governance studies at the Brookings Institution.
The prospect of ditching the filibuster
In theory, Senate Democrats could change the cloture rule—and, with it, the need for 60 votes. They could, in other words, kill the filibuster.
There are two ways that Democrats could do that. The first is by holding a vote to change the Senate’s standing rules. The only problem is that a vote to change the rules requires a two-thirds majority. So, as has happened many times in the past, Senators can simply filibuster the attempt to eliminate the filibuster.
The second way to kill the filibuster is known as the “nuclear option.” That would mean that Senate Democrats vote to establish a new precedent in the chamber, which can require only a simple majority: the 50 Democrats plus Harris. The nuclear option has been employed twice in the past decade—once in 2013 by Democratic Senate Majority Leader Harry Reid and then once in 2017 by McConnell—to make it easier to confirm executive and judicial nominations.
Offering a promise not to exercise “the nuclear option” and ditch the Senate filibuster would hand McConnell and immense victory for his obstructionist tactics. Without the threat of the nuclear option hanging over the heads of Senate Republicans, McConnell could wield the filibuster to clamp down on nearly all legislation sponsored by Democrats just like he did the last four years. Faced with Republican blockage what could Democrats accomplish? Only three avenues are open:
1) Early in Trump’s reign there was a flurry of Republican legislation to roll back Obama’s executive orders under the “Congressional Review Act,” a sneaky piece of Republican legislation that avoids the filibuster and allows a simple majority of both houses to roll back administrative rules finalized late in the previous presidency–and block similar rules from being re-imposed. Democrats could (and should) use this tool. Republicans will surely attempt to run down the clock so that fewer Trump administration regulations are subject to the Democrats exercising the CRA.
2) “Reconciliation” can be used to pass legislation related to the budget and spending with only 51 votes. Reconciliation can be used only once a year and its use is complicated. In 2017 Republicans shoehorned their attempted repeal of the Affordable Care Act into the Reconciliation process–and famously fell short of even getting the needed 51 vote majority with Sen. John McCain’s dramatic thumbs-down.
3) Finally, McConnell, in his zeal to place Federalist Society judges on the Supreme Court, used the “nuclear option” to blow up the filibuster as it pertained to Supreme Court nominations. As a result, if a Supreme Court seat were to become vacant, Democrats would certainly fill it using a simple majority vote.
Obstructionism serves McConnell and his Republicans well. The Party of “No” doesn’t need to legislate, except to pass tax cuts, and that can be done under the Reconciliation rules they used to pass the Tax Cuts and Jobs Act of 2017. That McConnell now wants Democrats to negotiate away their final “nuclear option” should be viewed with derision.
The filibuster is a hideous anachronism, an obstructionist tool from our roots in slavery and racism that serves only to give Senators representing a minority of Americans veto power over all legislation. We need to be prepared to pitch it out.
Keep to the high ground, Jerry
Update: Late last Monday, January 25, hours after I wrote this, McConnell recalculated. Apparently, he decided that holding up Senate business over a demand for a promise to retain the filibuster was costing him in the court of public opinion. McConnell relented, but not before contacting and being reassured by Joe Manchin (D-WV) and Kristin Sinema (D-AZ) that they would not vote to abolish the filibuster–with a 50-50 break the voters of Manchin and Sinema would be required to get a majority to exercise the “nuclear option.” For an excellent overview of McConnell, his thirst for power, and his “deal with the devil” read Jane Mayer’s article in the New Yorker, “Why McConnell Dumped Trump.” Much of the same material is available without a paywall in an interview with Jane Mayer on NPR, “Sen. Mitch McConnell’s Post-Trump Posturing.”
The Northwest was a haven for white supremacy before the area was divided into states. The territorial government over land that later became the State of Oregon passed the Oregon black exclusion laws that simultaneously outlawed slavery and prohibited black people from settling in the territory. Admitted as a state in 1859, the Oregon State Constitution contained a whites-only clause. The last of these laws weren’t repealed until the 1920s. After the Civil War the Northwest became a haven for Confederate soldiers fleeing the defeated Confederacy as the south struggled with Reconstruction. After all, in an all-white bastion, the issue of racial slavery could be left behind. With black exclusion laws and little industry looking for labor, the Northwest never become a destination for black people migrating northward in search of a better life as they fled share-cropping and Jim Crow in the South. [See African American Great Migration(s) for more.]
So it was that when, in the 1970s, Richard Butler planted his flagrantly racist and anti-semitic ideas in the Aryan Nations compound north of Hayden Lake, Idaho, his militant brand of racial and religious hatred found fertile ground. Butler’s beliefs were cloaked in a malignant form of Christianity, the Church of Jesus Christ-Christian  The names Church of Jesus Christ–Christian and Aryan Nations were legally put to rest by the lawsuit that bankrupted Butler’s compound in Hayden Lake in 2001, but Christian Identity ideology continues to percolate in plain sight on the edge of Sandpoint, Idaho, in the form of America’s Promise Ministries on GN Road. The soft links of this church to racist violence and the nationwide Christian Identity movement are striking.
In Spokane County white supremacist ideology is alive and well, thinly cloaked in claims of “Christian” ideology or free speech and intellectual inquiry. In Spokane County this stew of far right, old testament Christianity admixed with white supremacy can usually be linked to two sources, the Covenant Church on Princeton Ave in north Spokane or Northwest Grassroots based in Green Bluff. Northwest Grassroots was founded and is still run by John and Cecily Charleston (aka Cecily Wright, former chairwoman of the Spokane County Republican Party). Their political reach is based both on Cecily’s former prominence in the Spokane County Republican Party and the couple’s hosting of “Movie Night” on the second Tuesday of every month for nearly ten years, an opportunity to share movies like “Hillary’s America” and “ShadowRing” with a like-minded audience of a hundred or so. The location of “Movie Night” is no longer revealed to any but the inner circle but was once routinely held at Darcy’s Restaurant and Spirits near Sprague and University in Spokane Valley. Some flavor of these gatherings can be had in a preserved internet link to an article in Gem State Patriot News from May 14, 2016. (Northwest Grassroots webpage is no longer functional. Their Facebook presence is now rather guarded and paranoid.
Politicians and far right agitators linked to the Covenant Church and Northwest Grassroots have recently been much in the local news. Each article in the following text is worth a read on its own merits, and it helps to recognize their multiple linkages through Covenant and NWGrassroots. Ken Peters, the former pastor and founder of Covenant, was one of the true believer’s present at the Trump rally in Washington D.C. on January 6. Shawn Vestal details Peters’ involvement in “Pastor who organized anti-abortion rallies in Spokane helped rally Trump supporters in D.C.” The revolving door between the Spokane Republican Party’s politicians and the Covenant Church is vividly illustrated by domestic terrorist and former LD4 (Spokane Valley north to Mount Spokane) Matt Shea’s becoming the Pastor of Covenant after Peters’ recent departure to spread his malignant ideology in Nashville, Tennessee. (Matt Shea also makes a cameo appearance in the Gem State article on NWGrassroots. I suspect he is frequent flyer at NWGrassroots when he is not out promoting his theocratic “Liberty State” and right wing militias.)
Shawn Vestal in “As one Trump conspiracy dies, James Allsup returns to offer another” covers the fevered subsequent meanderings of this Charlottesville tiki-torch-carrying Christian Identity Republican warmly hosted at NWGrassroots by Cecily Wright in 2018. Allsup was introduced to that gathering as a victim of “label lynching,” a fatuous construction, given that Allsup has amply demonstrated the applicability of his label as a white supremacist and anti-semite.
Then the crowning glory: “New state Rep. Rob Chase hires former Spokane County GOP chairwoman who resigned after defending white nationalist” informs us that Rep. Rob Chase (recently elected Republican State Rep, LD4, essentially the replacement for Matt Shea and devotee of NWGrassroots ideology) has chosen none other than Cecily Wright (of John and Cecily [Wright] Charleston, founders and guiders of NWGrassroots) to be his legislative assistant. Chase is quoted as saying he has know Cecily “for about twelve years.” Small wonder, NWGrassroots is the swamp out of which his political ambitions have grown.
Probably none of the politicians and pastors and right wing folk mentioned today would preach white supremacy openly (apart from James Allsup), but the roots and associations are there, all wrapped up in a twisted form of non-denominational Christian Fundamentalism, 2nd Amendment rights, anti-choice activism, states’ rights, the evils of Democrats, and co-opted words and phrases like Freedom, Patriotism, and “preserving the Constitution.” It all points to the insurrectionists that attempted an armed takeover of the U.S. Capitol Building on January 6, as Shawn Vestal points out in “The Capitol takover was foretold, time and again, in the patterns of Northwest extremism.”
Learn the names and associations. Keep them in mind so as more stories unfold you can draw the associations: Matt Shea, Cecily Wright, Rob Chase, Ken Peters, the Covenant Church, Northwest Grassroots, and a few local associates I did not mention in this post: Rod Higgins (former Mayor and current member of theCity of Spokane Valley City Council, and occasionally featured speaker at NWGrassroots) and Caleb Collier (former City of Spokane Valley Council member, member of the John Birch Society , and frequent flier at Covenant). The Spokane County Republican Party depends on the voting numbers of these people to maintain their electoral grip in the region. The remaining traditional conservative Republicans coddle these people at their peril.
Keep to the high ground, Jerry
 The Church of Jesus Christ-Christian was founded in 1946 by Ku Klux Klan member and former Methodist minister Wesley A. Swift, in Southern California based in the American version of the Christian Identity movement that formed a “christian” religious foundation for Nazi ideology in Europe in the earlier 20th Century. Swift’s father was a minister in the Methodist Episcopal Church, South, the part of the Methodist Episcopal Church that was centered in the south and broke away over the issue of slavery before the Civil War. Most (but not all) of the MEC,S reunited with the rest of Methodism to re-form the Methodist Church in 1939. (Only in 1968 did the current name, the “United” Methodist Church arise when the Methodist and Evangelical United Brethren [EUB] merged.) I was brought up and confirmed in the Methodist Church. Like most churchgoers I was, until now, mostly unaware of the doctrinal disputes around slavery and white supremacy that had rocked the foundations of my church in the recent past. For those interested in the historical fluidity of Christian belief systems, the weird foundational stories told, and the twisted ideas that have sometimes spun off, I recommend browsing the links in this paragraph.