Extreme volatility in a highly leveraged financial system inevitably results in liquidity issues. Hence, recent instability is generating mounting signals that liquidity is becoming scarce. This is most evident in the sharp increase in risk-free Treasury yields over the last week. Before the yield surge, liquidity problem warnings appeared in lesser-followed places like Treasury basis trades and interest rate swap spreads.

As we have learned repeatedly, the Fed will take extensive emergency measures if it perceives liquidity problems. Even above their Congressional mandated objective of managing employment and prices, the Fed's top priority is preserving the banks. Accordingly, following markets that can provide early notification of liquidity problems will go a long way toward foreshadowing the Fed’s next action and ultimately effectively managing wealth during this volatile period.

We start with a quick synopsis of Treasury basis trades. From there, we present interest rate swaps and what negative spreads tell us.

Treasury Basis Trades

Futures contracts let traders buy or sell an asset at a specific price for a future settlement date. Conversely, traders can buy or sell an asset for same-day or next-day settlement in the more popular spot/cash markets. The difference, or basis, between spot and futures prices is a function of borrowing costs and coupons or dividends on the spot security (cheapest to deliver instrument). Any difference not attributable to those factors creates an arbitrage opportunity. The arbitrage is guaranteed to return to fair value by maturity, if not much sooner.

In a liquid environment, the ability to arbitrage non-fair value basis opportunities easily should result in the basis normalizing quickly. That is not occurring today. To appreciate the current circumstance, we share a simple example.

Assume the price of the cheapest-to-deliver spot bond trades one basis point (0.01%) below the futures price after adjusting for borrowing costs and coupons. A  hedge fund noticing the differential might buy the Treasury bond and sell futures. To make the small potential gain worthwhile, they use leverage. The leverage, which could be over 20x and possibly up to 50x, boosts potential profits but introduces risk.

Now, assume the basis, or difference between the bond and futures contract, moves to five basis points the next day. The lender of the leverage to our hedge fund, likely a large bank, would demand enough collateral to cover the current loss and protect its interest. The hedge fund can supply cash or collateral to the bank. If not, it must sell some or all of the trade.

Liquidity And The Basis

If the basis moves further against the hedge fund, the potential arbitrage profit becomes more enticing. Accordingly, other hedge funds will put the same trade on if liquidity is plentiful, pushing the basis back to normal. However, in periods of illiquidity, few traders are willing or able to put the arbitrage trade on. Thus, margin calls can widen the basis and, in a circular fashion, force more hedge funds out of the trade.

Basis Trade Systematic Risks

There are two predominant risks with the Treasury basis trade going awry. First, highly leveraged hedge funds are active basis traders. Some of the hedge funds involved in these trades are massive. For example, Citadel, believed to be a prominent basis trader, has approximately $65 billion of assets under management. Moreover, it's estimated that they have an implied leverage of about 9x on that amount. If they were to fail, it could pose significant damage to their investors, including many large pension and endowment funds and sovereign wealth funds.

The second risk is to the banks lending to the hedge funds. Given that the leverage can be 20x or more on basis trades, a 5% loss can result in a 100% loss on the trade. Thus, banks exposed to hedge funds are indirectly on the hook. Furthermore, if a hedge fund were to default due to a basis trade, not only would the basis trade loss impact the bank, but also many other non-related trades that would likely get forcibly wound down in adverse market conditions. If the hedge fund were big enough, we could be talking about another Lehman moment.

Does this sound far-fetched? In 1998, this situation brought the giant hedge fund, Long Term Capital Management (LTCM), to its knees and required a Fed-arranged bailout to save many large banks from substantial losses.

As we wrote in From LTCM to 1966:

LTCM specialized in bond arbitrage. Such trading entails taking advantage of anomalies in the price spread between two securities, which should have predictable price differences. They would bet divergences from the norm would eventually converge, as was all but guaranteed in time.

LTCM was using 25x or more leverage when it failed in 1998. With that kind of leverage, a 4% loss on the trade would deplete the firm’s equity and force it to either raise equity or fail.

The world-renowned hedge fund fell victim to the surprising 1998 Russian default. As a result of the unexpected default, there was a tremendous flight to quality into U.S. Treasury bonds, of which LTCM was effectively short. Bond divergences expanded as markets were illiquid, growing the losses on their convergence bets.

Further in the article:

Per Wikipedia: Long-Term Capital Management did business with nearly every important person on Wall Street. Indeed, much of LTCM’s capital was composed of funds from the same financial professionals with whom it traded. As LTCM teetered, Wall Street feared that Long-Term’s failure could cause a chain reaction in numerous markets, causing catastrophic losses throughout the financial system.

Given the potential chain reaction to its counterparties, banks, and brokers, the Fed came to the rescue and organized a bailout of $3.63 billion. A much more significant financial crisis was avoided.

Interest Rate Swaps

Before discussing interest rate swap spreads, we provide context for this market, which forms the foundation for all financial markets.

The graph below, courtesy of the International Swaps and Derivatives Association (ISDA), shows that interest rate swaps are the predominant type of OTC derivative, with an approximate notional value of $575 trillion.

For a proper framework, the approximate total market cap of the U.S. stock market is $50 trillion, and the global stock market, including the U.S., is about double that. Furthermore, the global bond market is approximately $133 trillion. The graphics below, courtesy of the Visual Capitalist, provide more details on both markets.

The notional value of all outstanding interest rate swaps is about twice as large as the combined value of the global bond and stock markets!

Therefore, when the swap market talks, we listen!

What Are Interest Rate Swaps?

An interest rate swap is a derivative instrument, meaning its pricing is derived from another asset. Specifically, they are contracts in which two counterparties agree to swap streams of cash flows on a set schedule over a defined period.

The most common type of swap is where one party agrees to make periodic payments at a fixed interest rate and, in return, receives floating-rate payments. The other party receives the fixed payments and pays the floating rate. These swaps, often called plain vanilla or fixed-to-floating swaps, are the focus of this article.

Swap Market Are Grumbling

To appreciate the current warning eminating from the interest rate swap markets, we start with a quote from Bloomberg in its article, Tariffs Turbocharge Collapse of Favored Hedge-Fund Rates Bet:

But the unraveling picked up abruptly in recent days as the intensifying trade war darkened the outlook for Corporate America, leading banks to sell Treasury holdings to raise cash to meet clients’ liquidity needs, traders say. At the same time, the lenders have been adding swaps contracts to maintain exposure to interest rates in the event of a bond rally. The result is that swaps have massively outperformed Treasuries, pushing swap rates far below Treasury yields.

In simpler terms, banks are forced to sell Treasury securities to raise needed capital, i.e., increase their liquidity. Doing so creates a duration mismatch between their assets and liabilities. Therefore, to manage interest rate risks, they enter into interest rate swap agreements to maintain the duration of their assets.

As the demand to receive the fixed rate mounts, the swap rate (rate on the fixed-rate leg of the swap) trades lower. Today, it sits below Treasury rates, thus at a negative spread to Treasuries.

Given that Treasury securities are risk-free, such an event is odd. The graph below shows that swap spreads are now more negative than during the initial days of the COVID crisis and preceding it in 2019 when the Fed cut rates to address liquidity issues.

The negative spreads inform us that cash bonds are likely being sold to raise cash, and swap agreements are being entered to maintain their long-duration exposure. Banks and others are selling bonds at higher yields to receive lower-yielding swap payments. Again, that is not a worthwhile trade unless you need liquidity and or capital relief.

Given the complexity of interest rate swaps and their importance to the plumbing of the entire financial system, we will discuss them further in a coming article.

Summary

If you recall, the Fed reduced the monthly amount of QT at the last Fed meeting. Even then, before the tariff volatility started, they sensed that liquidity was potentially becoming dear. We have little doubt the Fed is paying close attention to the sudden surge in bond yields and the basis trades and interest rate swap spreads we discuss.

The Fed will react if needed. Since the problem is liquidity and is not necessarily economic, the Fed would likely introduce a program allowing traders to offset basis trades with the Fed. This is similar to other programs that have been used to provide liquidity. Given the uncertain inflation outlook, we doubt they would cut rates unless necessary. They could end QT, but starting QE is doubtful unless the situation worsens significantly.

The post Swaps And Basis Trades Warn Of Mounting Liquidity Problems appeared first on RIA.

Bruce Charlton raises an important objection to professedly Traditionalist Christianity in the contemporary world, “Traditionalist” here meaning a faith accepted on the authority of Tradition and its ecclesial representatives rather than accepted as the outcome of individual discernment. The objection is not that such a faith is undesirable but that it is impossible. People in the world today are exposed to multiple live religious options, and even when one picks a particular Church, one finds that it is divided into factions and that its leaders have more-or-less assimilated to the global liberal order and made authoritative proclamations which more-or-less directly contradict their historical teachings. One must choose which Church, which faction and clergy within that Church, which of conflicting Magisterial statements one should credit, and this can only be done by individual discernment. (“Individual” here means both “personal” and “case-by-case”, i.e. individual subject, individual objects) Traditionalists who deny this are being dishonest, and the dishonesty completely undermines the Traditionalist’s argument to the extent that he recommends Tradition precisely as the way to escape private judgement.

Naturally, this opposes my argument that religion must offend us and challenge our understandings. Mine is clearly an argument for Traditionalist Christianity, what I consider the strongest argument. My criticism of using some purported “main idea” of the Gospel to dismiss more particular claims of Scripture or dogma is a critique of liberal Christianity but also of Romantic Christianity, and Charlton is right to respond to it as such.

If it is true that I must use my private judgement to evaluate each religious claim, this means that my prior understanding and intuition provide a filter for beliefs, that it is impossible for my religion to truly challenge me. I may say that I am accepting offensive claims in docility, but more honestly I have chosen these claims because they seem right to me or because I relish accepting claims that offend the liberals I despise. When evaluating arguments, we usually ignore psychological blemishes of their proponents, but in this case it would invalidate the whole Traditionalist argument, which recommends itself precisely for avoiding individualist pick-and-choose. The stakes are high. Furthermore, I grant most of Charlton’s factual claims about the contemporary situation: all the Churches, including mine, have factions, have sold out at the highest level to an anti-Christian globalist secular order, and have made magisterial declarations which flatly contradict each other. It would seem I am arguing from a weak position.

On the other hand, I win the argument if I can find just one doctrine of faith which I accept on authority but genuinely dislike, find intellectually or morally distasteful, would not accept if it were not enjoined upon me by authority. Doctrines I think have compelling arguments or find intrinsically beautiful don’t work here; neither do doctrines I accept because I am indifferent to them. It is not the usual work of an apologist to point out doctrines of his own creed that he finds distasteful, but here we are. If I can identify such doctrines in my case, I can investigate my own thought process. How did I identify these as dogmas I am required to accept. That I have done it shows that it can be done, so there must be a way by which it was done.

The demonstration is psychological: I needn’t convince anyone that my way of recognizing authoritative dogmas is correct, only that it is sufficiently coherent and unambiguous to make unpleasant demands on me. Nor need my way work for all cases. There may, for example, be some statements of my ecclesiastic superiors whose binding power is unclear to me, so that I must fall back on discrete acts of private discernment. These grey zones might be vexingly big, but they can’t constitute the entirety of my faith if it is to have the proper offense-capable objectivity.

Okay, here are some doctrines of the Catholic Faith that I accept on authority that offend my reason or sensibility.

1. Anything to do with bodily resurrection, the Ascension of Jesus, and the Assumption of Mary. If there are bodies in Heaven then it is neither a spiritual reality nor a state of mind but a physical place, and one cannot avoid the awkward question of where it is in or off of our spacetime; the only possible answers are science-fictiony and ridiculous-sounding. I disagree with the widespread disparagement of Platonic/Cartesian dualism and of an incorporeal Heaven, which I find philosophically superior to Hebrew materialism. If the soul is the form of the body, then it perishes with that body just like any other material form, and God’s resurrection of me at the End Times is in fact the creation of a new being, a copy of me. See Aquinas’ treatment of this question (which devolves into thought experiments regarding fingernails and cannibals), and see if you don’t agree that the great schoolman is defeated by his own Objections. That the Blessed Virgin Mary to whom we pray is not now a spirit pervading all space–although functionally she must be that since I can say a Hail Mary anywhere and presume I have been heard–but is also an embodied being sitting somewhere, perhaps in outer space, seems an unnecessarily burden of belief, but I have no doubt that we must believe it; the Magisterium is clear.
2. The Perpetual Virginity of Mary. I don’t care much about this, but while the Gospels don’t ambiguously settle the question either way, the Protestant reading (that after the birth of Jesus, Mary gave Joseph more children) feels to me like the more natural reading. Then there is the point that Mary is sinless, and spouses are ordinarily obliged to render the marriage debt. One would find it odd to hear that the Blessed Virgin was too holy to do housework, so how is this different? On the other hand, I’m convinced that my intuitions are wrong because so many holy saints were doggedly attached to this doctrine and see a necessity and fittingness to it that eludes me. The overall sense of the faithful, of pious opinion, also seems quite clear. On this matter I should surely defer to those closer to God than me.
3. God’s excessive preference for the Jewish people. Christians shy away from this, but Jesus is pretty clear about having come just for the people of Israel. Saint Paul adds that because the Jews rejected their Savior, God has given the Gentiles a chance, and He’s holding off on wrapping things up until His first choice finally comes around. As a proponent of particularity, I approve of God showing some unmerited partiality toward His favorites, but this takes it to an offensive degree. Still, although we may not be God’s first choice, He still loves us, right? Well, I can’t help but think of human analogies. Scarlett O’Hara loves Ashley Wilkes, but she can’t have him, so she agrees to marry Charles Hamilton. Do you think Scarlett really loves Charles? Anyway, I don’t like it, but when Scripture is clear–as, contrary to what many Catholic apologists would have you believe, it often is–I must believe.

There you go. I know some Catholic readers have been souring on the Orthosphere, and I hope I haven’t just soured them further. Remember, this is all in service to Tradition. I can only know I’m a docile Catholic if there are doctrines I don’t like. That I don’t like them no doubt indicates something wrong with me. God often uses our ignorance and insensibility to test our obedience and promote our spiritual growth. I have written extensively on Catholic beliefs I find beautiful and compelling. See here.

How did I distinguish valid doctrines I don’t like from proclamations I dismiss as invalid? For example, recent popes have been pretty insistent that Catholic moral doctrine opposes the death penalty. I think this is ridiculous. How could something be a matter of the apostolic faith and yet believers had no inkling of it for almost two millennia? For that matter, Scripture, the writings of many doctors of the Church, and the practice of Catholic countries seem to assert the exact opposite. If popes can just invent doctrines out of nowhere, how can we have any confidence that we even know the content of the faith we claim to believe?

I just gave what sounds like a historical reasoning, but maybe I’m fooling myself. I’m a party man, not a historian, after all. Maybe it’s just that I joined the conservative faction of Catholicism, they’re not so hot on opposing the death penalty (which sounds vaguely liberal), and I just uncritically conformed to my clique. For the purposes of my argument, that’s just as good. It means I have an authority outside of myself. I chose that authority, of course, but all Traditionalists grant this. One must use private judgment to decide what is the true faith, but having done that, one must accept everything it teaches.

The point is that one doesn’t choose beliefs one-by-one. Rather, one accepts a package. The full contents of the package are generally not known when one accepts the package, but after the acceptance these unexpected contents are pre-approved as they become known. How one comes to accept a package, whether by study, by inheritance, or by partisanship, really doesn’t affect the possibility of a submission of faith as I have described it.

On the 5th of April in the year of Jesus Christ’s reign, 1419, St. Vincent Ferrer went to his eternal reward. His feast was ten days ago. It is remarkable how little this wonder-working saint is known in the Church, since he worked some of the greatest miracles that have been seen since the time of the Apostles. From the recent article by Matthew Plese: The Old Catholic Encylcopedia…

Source

April 15 Provides A Wonderful Lesson On How Government Conditioned Americans To Tyranny

Paul Craig Roberts

https://www.paulcraigroberts.org/2025/04/09/april-15-provides-a-wonderful-lesson-on-how-government-conditioned-americans-to-tyranny/ 

The American Whore Media Shames Itself Again

The presstfitutes went berserk  over the deportation of illegal alien Kildare Abrego Garcia, falsifying the story in every way possible.  But the US Supreme Court ruled 9-0 that the dumbshit Democrat district judge had no authority to instruct the President how to exercise his Article II powers.

Do watch the video at the end of the post on X.

https://x.com/EricLDaugh/status/1911774232435962344 

Hungary Follows the Two Gender Only Policy of the US and Russia

https://www.rt.com/news/615757-hungary-two-genders-eu/ 

Antoni Gaudí, known as “God’s architect,” declared Venerable

Despite, or actually because of, the recent market turmoil, many large banks and brokers reported better-than-expected earnings. Market volatility provided a nice boost to trading revenue, which helped offset weakness in other business lines. Goldman Sachs, reporting earnings on Monday, said their equity trading revenue rose 27% from the prior quarter. JP Morgan and Morgan Stanley reported a 21% and 17% boost to trading revenue, respectively.

The benefits of wider bid-offer spreads and more trading volume are higher trading revenues in larger banks and, thus, a more diversified income statement than smaller banks. At times, as first-quarter earnings highlight, the revenue boost from volatility was a helpful revenue hedge against poor market conditions and weaker activity in more traditional banking. For instance, Goldman Sachs reported its highest quarterly revenue ever despite investment banking revenue falling 8% compared to last year.

The graph below, courtesy of FinViz, shows that the earnings boost due to market volatility has helped JPM decently outperform smaller regional banks like Truist and PNC. However, it's not all gravy for the larger banks. The large banks and brokers tend to provide more capital for hedge funds. Therefore, they expose themselves to significant risks if hedge funds fail due to extreme volatility.

What To Watch Today

Earnings

Economy

Market Trading Update

As discussed yesterday, the correction process is still well entrenched, so this is not the time to try to be a hero. Risk management remains the key for now, as many investors were "trapped" in the recent decline and are looking for an opportunity to exit. However, with that said, Sentimentrader.com had a great note out yesterday regarding the recent "risk-off" move in the markets.

"The Sentimentrader Risk On/Risk Off indicator combines 21 of our best measures of investor mood to objectively designate overall investor behavior as "risk on" (i.e., investors are aggressively buying) or "risk off" (i.e., investors are aggressively selling)."

Here is a sample of some of the indicators. As you will notice, all of them are trading at rather extreme "risk-off" levels.

When those 21 indicators are combined into a single indicator, it gives readings of when markets are trading at more extreme bullish or bearish levels.

As we have discussed previously, extremes in either direction generally indicate when market turns tend to occur. As Sentimentrader.com notes:

"Historically, declines in the Risk On/Risk Off indicator below 35 have been associated with volatile periods in the market involving significant declines. "Playing defense" during these periods can, at times, help investors avoid some of the financial and psychological pain of riding significant drawdowns to the bottom fully invested. However, this indicator has gone so far to the unfavorable extreme that it might be "so bad that it's good."

Historically, when indicators reach such extreme levels, most of the previous advances or declines are likely to be complete. However, it does not mean that markets can not go even further into extremes before reaching a bottom. As Sentimentrader.com concluded:

"The good news is that - on a standalone basis - the signal and performance highlighted above make a compelling favorable case for stocks. The bad news is that we would never advise basing portfolio decisions on any one indicator or indicator signal. The proper message from the results above is NOT "All clear for stocks, and happy days are here again." The proper message is "Ignore the bearish noise, manage risk, and keep an open mind to the potential for better results moving forward - but especially manage risk."

We agree.

High Volatility Bodes Well For Markets

Yes, high volatility may be a good thing. Today, that statement may be hard to fathom. Moreover, it's likely that stock returns over the coming weeks and months will be poor. However, as we share in a table courtesy of Charlie Bilello, since 1990, when volatility spikes above 50, longer-term returns have always been good. The 75 instances following the VIX spiking above 50 have consistently produced positive returns over the next 1-5 years. This bodes well for those able to shut their eyes and ignore markets. However, for the rest of us, there are risks. For example, you will see many dates below from the fall of 2008. During the Lehman bankruptcy and related financial market carnage, volatility spiked. Markets didn't set the ultimate low until March of 2009. Those that bought on the spikes above 50 faced a gut-wrenching decline, but if they held, they ultimately did well.

The point is that today's volatility will likely result in good returns, but better buying opportunities may soon emerge, producing even better returns.

Transports Continue To Languish

Interestingly, the sector likely to be directly impacted by tariffs the least is and continues to be the most oversold sector. As the SimpleVisor table below shows, transportation stocks have the most oversold relative score. The scatter plot on the right shows that the sector has been "orbiting" over the last seven weeks in the lower left quadrant. This quadrant represents a situation where the absolute and relative scores are oversold.

The second graphic provides a deeper dive into the transportation sector. The sector's largest holdings are rental car/ride services, airlines, and shipping companies. While direct tariffs on these companies may be less than others, they are susceptible to slowing economic activity. These stocks may likely continue to underperform if the economy does enter a recession. However, if the economy can sustain itself as tariff deals get worked out, these stocks may be the ones to watch, as they are certainly due for a period of outperformance.

Tweet of the Day

“Want to achieve better long-term success in managing your portfolio? Here are our 15-trading rules for managing market risks.”

Please subscribe to the daily commentary to receive these updates every morning before the opening bell.

If you found this blog useful, please send it to someone else, share it on social media, or contact us to set up a meeting.

The post Volatility Boosts Bank Bottom Lines appeared first on RIA.

Never mind that “without faith, it is impossible to please God” (Heb 11:6)…

Catholic Answers: God Can Choose to Save Atheists!

The California-based non-profit organization Catholic Answers, which aims to explain and defend the Vatican II religion in full communion with ‘Pope’ Francis, is becoming a parody of itself.

One of the many things published on the Catholic Answers web site is a brief post with the intriguing title, “Can atheists be saved just by acting charitably?” The truly Catholic answer would have been fairly simple — something along the lines of, “Of course not; for ‘without faith it is impossible to please God’ (Heb 11:6).” … READ MORE

In the past couple of months, thousands of students from across the country began courses offered by new schools of “civic thought.” These new institutions have found homes at some of America’s most highly respected and elite public universities: UNC–Chapel Hill, UT-Austin, and the University of Florida, among others. The growth and spread of these schools has taken on a somewhat revolutionary character.

Several state legislatures have taken a direct role in efforts to reshape American higher education by diverting taxpayer dollars to the creation of new, autonomous academic units capable of hiring faculty and setting their own curricula. But despite their growing popularity, these institutions have prompted criticism from media outlets seeking to expose their supposedly partisan character and their allegedly obscure Western-minded curriculum. In response to these claims, defenders have argued that this is instead a renaissance of civic thought and a good-faith effort to return higher education to standards of excellence that all Americans should embrace.   

The Path from Civic to Liberal Education

In May of 2023 I graduated from the first iteration of this new kind of school: The School of Civic and Economic Thought and Leadership (SCETL) at Arizona State University. It set forth an unconventional kind of education that allowed me to study a variety of subjects, including politics, law, grand strategy and political philosophy—all within the same department. Despite slanderous claims about an alleged right-wing political slant—false allegations that SCETL has faced since its inception in 2018—I felt very early on that there was something quite free, perhaps even liberal, about the breadth of our study, especially when contrasted with my experience in other departments.  

And yet critics, from the outset, claimed that liberal education had no place at SCETL. They denounced the school because of its origins in government intervention, and because they believed a focus on the history and thought of Western civilization apparently prevented it from considering “diverse political theorists.” True liberal education, critics claimed, could only occur in the “real” humanities majors or in the university’s already established departments of Political Science and Justice Studies. Only there could students actually come to shed their partisan commitments on behalf of a newfound faithfulness to a vague conception of human rights and equity, established through cold, hard, unimpassioned empirical science and analytical philosophy.  

Nevertheless, at my freshman orientation, professors made a compelling case for a new kind of broad, interdisciplinary education that would take its bearings by the question of the ideal American citizen. The school’s curriculum, in order to prepare us to confront and even revive perennial questions about the American democratic republic, would go beyond a mere survey of the founding documents. Our education, they told us, would reach to the philosophical roots of the American experiment by examining the Founders’ various treatments of questions concerning the human condition, the basis of law, and the natural limits of politics.

Yet, because the Founders did not all agree as to the conclusions of these treatments—and insofar as we were interested in attaining a vantage point from which to critically reflect on the basis of the American experiment—our education would need to venture beyond mere civic education. To better grasp for ourselves the character of the discord present at the American Founding, we would have to initiate our own encounter with the same texts and thinkers that inspired the Founders’ most significant reflections. 

By not merely taking the Founders at their word regarding uses of philosophical authorities, leaving open the possibility that these authorities had something to say beyond what the Founders attributed to them, we crossed over into the realm of liberal education. In my own case, the additional depth of our inquiry granted me an awareness of how the American citizen might be viewed as the Founders’ earnest attempt to solve what they believed to be the greatest problems posed by the Western tradition. For this reason, it became clear to me how—and why—a liberal education could contribute to students’ civic reflection by deepening their understanding of the rights and duties that characterize their citizenship. Less clear to me, though, was how a civic education could or should contribute to a liberal education. 

A Reconsideration of the Requirements for Liberal Education

A year later I declared a second major, this time in the Department of Political Science. Between my experience there, and in elective courses alongside many students from other humanities majors in the College of Liberal Arts and Sciences, I found SCETL’s education much less partisan and far less narrow than the alternatives offered by ASU. It eventually became clear to me that the cold, hard, and unimpassioned empiricists and political scientists—who bred a body of students with the opposite dispositions—put the cart before the horse. They sought to build before laying the foundation on which to build. 

While the kind of liberal education they taught—or what they conducted in its name—did offer exposure to a variety of laws, norms, cultures, and ideologies, it took for granted students’ preparedness to look harsh facts in the face unflinchingly. In failing to distinguish for students the attempt to understand these subjects on their own terms and the attempt to understand them through the latest flavor of twentieth century liberalism, the departments in question prepared students for a total detachment from the American political tradition. Residual imprints that the American story might have left on their souls, or lingering effects of having been reared in the Western world, had to be identified and discarded.

Ironically, this attempt to detach students from the complicated, and at times morally objectionable, tapestry of American political history leads students to be far less reflective about the very basis of their education and their freedom to pursue the truth. It has the effect of leaving students stranded at sea, without knowledge of the very tradition and history that thoroughly articulated the basis for their freedom to depart—however unknowingly—from that tradition and history. That articulation in part comprises the many historical experiences we have of confronting obstacles to the sound application of law and justice, and it supplies the basis for the free and open inquiry that our institutions of higher education can (at least in principle) enjoy today. 

Secondly, but perhaps more importantly, students who never cultivate a reflective admiration or love for the American experiment run the risk of adopting a disposition that regards any theoretical or practical departure from the American political tradition as trivial. I refer to the tradition that originated in the first conscious attempt to realize democratic republicanism on a continental scale, and which never took for granted the problems that such scale posed to the task of protecting the natural rights of man. Yet today, when it comes time for the students described above to give a defense of these rights in the political sphere, they either find themselves unprepared to earnestly confront the alternatives to American democracy, or they take a position that unconsciously sacrifices institutional and cultural safeguards that were regarded as crucial to democracy by the political tradition. 

If they have yet to understand the American order on its own terms, how can we trust that they will both critique and defend it with the proper care? Moreover, how can we expect them to bear the weight and significance of assessing any alternative to liberal democracy, as is required of students who pursue a true liberal education? It follows that for liberal education to have its greatest impact, it must be taken up by students who hold neither a childish love toward their country nor an outright indifference to it. An analysis of how civic education might contribute to a liberal education ought to begin along these lines. 

My own education at SCETL began with two lower-division core requirements for the major. The first was an introduction to political philosophy, and the second was a study of the great debates of the American political tradition, taught by Professor Zachary German. In the latter course, we spent a significant part of the semester hashing out the competing arguments surrounding the abolition of slavery; and through insights I gained in the introductory political philosophy course, I was better able to reflect on both the timeless and the historical character of a few key questions that have permeated the Western tradition.

In returning to a well-known debate concerning the nature of justice, recorded by Plato, I was able to see most clearly the crux of the disagreement between Stephen Douglas and Abraham Lincoln. Through Douglas’s proposed local democratic solution to the problem of slavery, his constituency of Northern Democrats and former Whigs, great in number and in strength, would be permitted to preserve the institution of slavery. For Lincoln, no fact of strength or number could be permitted to deny the natural rights of man embodied in the Declaration of Independence. The character and problem of justice, then, seemed to require more than the principle of “one person, one vote.”

In a course I took with the then-director of SCETL, Paul O. Carrese, we engaged in a comparative study of Abrahamic, Hindu, and Confucian philosophy and theology. The adverse reaction that large branches of the Islamic tradition had to the idea of democracy became a central focus of study for much of the semester. Examining the prospect of liberal democracy from democracy-skeptical Muslim perspectives helped me to see more clearly than I had ever before the requirements of liberal democracy, the peculiarity of the basis of our rights, and the historical novelty of the American system that separated church and state. 

The Function of Schools of Civic Thought

Institutions like SCETL rightly see American citizenship and the American political tradition as the proper starting point from which to begin a practical education in law, statesmanship, and grand strategy. Through civic education we can retrace the character of that liberal education sought out and applied by the Founders in the design of our democratic republic, keeping an eye on the subtleties they identified in the human condition and on the enduring questions they posed about our nature. Schools of civic thought such as SCETL therefore also prepare us to zoom out from the particular in search of universal truths in a manner that is more conscious of potential obstacles to clear thought and sound judgment. This blend of civic and liberal education keeps the question of our own citizenship in the forefront of our minds, and for that reason it will better prepare us for the task of reassessing the potential of democracy and the health of our society. 

Furthermore, the highly practical nature of this education will prepare students for law school, for work in federal and state government, for organizing civil associations, and for leadership in the private sector, among other roles in public life where we are in desperate need of better leadership. Students will learn how to read, write, and speak with a certain prudence attainable only through a deep study of the American political tradition and Western civilization.   

These new schools of civic thought will continue to “teach critical minds and to puncture complacency” while urging students “to be both proud of genuine greatness and humble about human imperfection.” As Americans begin to familiarize themselves with this new front in higher education—one that can no longer be marginalized or dismissed out of hand—it is my hope that wrongheaded media criticism will eventually give way to the clear positive impact that these schools are having. I challenge the critics to meet these schools on their own terms—that is, as institutions supporting genuine diversity of thought and intellectual rigor.

Image by Wangkun Jia and licensed via Adobe Stock.

The Globe and Mail report on April 12 emphasized that Poilievre will not expand euthanasia, in March 2027, to include people with mental illness alone.

The Euthanasia Prevention Coalition opposes all euthanasia deaths, but we recognize that stopping the expansion of euthanasia is necessary.

On April 1, 2025 I published an article titled: Elections have consequences. Vote for candidates that will oppose further expansions to euthanasia.

This is an important election for Canadians who oppose killing people.

• Repeal Track 2 Medical Assistance in Dying (MAiD), including the 2027 commencement of Track 2 MAiD for persons whose “sole underlying medical condition is a mental illness”;
•  Not support proposals for the expansion of MAiD to include “mature minors” and through advance requests;