Speaking at a rally in Nebraska (NYT), regarding the Iranians:
“They could take out a city,” he said. “Let them take — Let them take out Los Angeles. Let them take out San Diego.”
One could take this as just further random ruminations, but it strikes me that the president has in principle access to the entire output of the US intelligence community (even if he doesn’t seemingly heed the warnings).
At a time when counterterrorism resources have been redirected to immigration control, or reduced, this event is troubling to me.
Off topic – more credit headlines:
I know I’ve been piling in with credit-market headlines, but it the deterioration in credit conditions seems pretty important.
Commercial mortgage defaults jumped in September, to the highest rate since November 2020:
https://www.trepp.com/trepptalk/cmbs-delinquency-report-sept-2026
Five big defaults account for most of the rise.
In comments to the prior post, I noted Treasuries doing badly in response to bad economic news, the rotten performance of the giant new Paramount debt issue and a doubling of French credit default swap rates. This is absolutely the stuff of a debt-driven shock, and its not at all surprising that it’s happening.
Here’s the thing… You can find occasional commentary about how interest rates are still not high by historical standards, so no big deal. That’s naive. For new projects, low borrowing costs are realy important – it’s a rate-of-return thing. For outstanding debt, the change in borrowing cost when rolling over debt is far more important – it’s a budget thing. If a business had a $5 million annual interest cost before rolling over and a $7 million cost after rolling over, it doesn’t much matter that the roll-over took place in an historically low interest rate environment.
Government debt in the G20 is high relative to GDP. Corporate debt isn’t so bad, which helps. AI, however, is the big U.S. investment driver, and is likely to prove very senstive to interest rates. Households are covered up in debt, and the housing sector is showing signs of strain.
If only there were some policy we could change that would lower inflation and lower government’s need to borrow. If only some stable genius could think of such a policy…