America's financial system came close to the brink

This seems to be in direct contradiction to the other story we’re told repeatedly by DNC leaders that the reason they can’t get anything done when they are the majority is because of those “obstructionist” republicans. One has to wonder how the GOP is so successful in obstructing the DNC but the reverse is not possible.

The minority parties may be less powerful, but the US government was set up to make “tyranny of the majority” hard to accomplish. So what has gone wrong?

The Republicans have shown this to be superbly untrue when they were in the opposition.

The Senate should be hellbent on delaying and disrupting. The House should be constantly throwing a spanner in everything.

Governors? Arrest the DOGE kids for breaking state law. Arrest the ICE agents defying court orders. They’ll be released, eventually. But you’ll buy time until the midterms. Ban Tesla FSD and promise to pardon people who non-violently cross the line. Ban the law firms who struck deals with Trump from state business for 20 years. Fight like the Republicans do; laws and republics don’t survive if the side defending them lays down its arms.

So for instance, groups that were nominally from 2 different parties could elect leadership that planned to work with the groups, rather than whichever party had the nominal majority.

This is kind of an abstract point, but it's useful for reasoning about things. The so called "centrist" members of a given party are actually aligning themselves with the most extreme members, not some 'center'.

Don't forget the "let's all hold little signs up and make frowny faces" strategy from actual elected Democrat Congresspeople. What a joke!

This is a normal relationship. The financial system has leverage. When liquidity dries up and sellers dominate, volatility rises which feeds back into valuable risk metrics and realize portfolio volatility. That causes participants to downsize their exposure to keep the same risk. In these cases the participants don't necessarily have extra liquidity to deploy until after volatility and uncertainty settles.

>For a while, even gold went down, which is also highly unusual during a market crisis.

During a true crisis this is actually not that uncommon. In the trading space, you saw what you can during these events. In extreme circumstances where correlations all go to one even the safe havens get sold off to raise cash. The gold liquidation was a sign of pressured margin metrics and very high stress. You can see how quickly gold recovered after the peak stress, confirming that situation.

>One reason that is frequently cited now and also in this article is because some hedge funds have specialized on the so called "basis trade", which I never heard of before. It basically means buying large amount of treasuries and speculating on their futures.

The basis trade is more of an arbitrage than a speculation. The global eurodollar system (not currency, global offshore dollars) is about 20 trillion dollars in size. The basis trade is essentially a method in which regulated US financial markets are exported to The world at large to be used in the global, emergent financial system. Instead of buying a treasury directly, one can use the futures/eurodollar market, and the basis traders will arbitrage the difference and keep everything in line.

>At some point, the FED would normally intervene and buy treasuries.

The issue that the FED is facing isn't so much their balance sheet capacity but the tariff-driven inflation outlook and how it interacts with their mandate. That said, they did clearly communicate today that they would be willing to step in if there were severe signs of systemic instability. The reality is... if tariffs really do cause an inflation wave, yields at 5% may be relatively low...