Recently in Economics Category

Life in the United States

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Pretty good actually - two headlines:

You do not get hired as CEO at Chase if you are stupid and innumerate. Bernie would never make the grade.
Moore is no slouch either:

Stephen Moore is a senior fellow at the Heritage Foundation, an economic consultant with FreedomWorks and a contributor.

Laissez les bon temps roulez

So true - socialists and food production

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Yes, they are just that unaware:


Yikes - some numbers

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They simply can not be serious about this - it would be political suicide. Are they living in a bubble? The answer should be obvious. From Yahoo Finance:

The Democratic plan for a 42% national sales tax
If you’re a Democrat who supports “Medicare for All,” pick your poison. You can ruin your political career and immolate your party by imposing a ruinous new sales tax, a gargantuan income tax hike or a surtax on corporate income that would wreck thousands of businesses.

This is the cost of bold plans.

Supporters of Medicare for All, the huge, single-payer government health plan backed by Bernie Sanders, Elizabeth Warren and several other Democratic presidential candidates, say it’s time to think big and move to a health plan that covers everyone. Getting there is a bit tricky, however. A variety of analyses estimate that Medicare for All would require at least $3 trillion in new spending. That’s about as much tax revenue as the government brings in now. So if paid for through new taxes, federal taxation would have to roughly double.

A long but well researched article - basically, to pay for what the Democrats are promising, we would need to raise taxes that much. Taxing the ultra-welathy simply would not generate enough money to fully fund their plans. Bill Whittle and Iowahawk ran the numbers back in 2011 and their research is still accurate - nine minutes of your time:

The money to impliment these plans simply is not there - the Democrats need to be honest and show their math.

From Western Journal:

Mike Rowe Brilliantly Sums Up Lunacy of Democratic Primary Fight
In the countless words and column inches that have been spilled on the Democratic primary process so far, author and former television host Mike Rowe has offered one of the most succinct descriptions yet.

And it more or less perfectly sums up the inanity — and inherent hypocrisy — of the gaggle of demagogues vying to become the next Democratic nominee for president:

“You’ve got millionaires arguing with millionaires over who hates the millionaires the most,” Rowe said Wednesday in a “Fox & Friends” interview.

Meanwhile, the middle class is getting more and more prosperous and the poor are pulling themselves up.

San Francisco in the news - from Market Watch:

This 57-year-old said ‘screw this’ to San Francisco — and retired to ‘delightful’ Albuquerque, where she slashed her expenses by 70%
When Roberta Reinstein moved to the Bay Area roughly 30 years ago to go to law school, it felt to her like a different place than it does now.

“It was possible for a student to live there…it was filled with artists,” she says. But Reinstein, 57, watched as real-estate prices skyrocketed (in just the past decade or so, home values have nearly doubled, according to Zillow) and many artists and less wealthy people had to move out. Nowadays, “San Francisco is only for the wealthy — the super wealthy — unless you’re willing to live with five roommates,” she jokes.

A bit more:

Though it’s perhaps best known for its annual hot-air balloon festival and being the setting for AMC’s hit show “Breaking Bad”, ABQ — which has a population of roughly 550,000 — has a lot more going for it than that. “Albuquerque is a delightful, quirky hidden gem,” says Reinstein.

It’s an artsy spot — there are hundreds of galleries and art studios; monthly art crawls, and a robust performing-arts scene — and a city where outdoor enthusiasts flock to. That’s helped along by the miles of hiking and biking trails in the adjacent Sandia and Manzano Mountains, as well as the roughly 300 days of sunshine. (Though January average lows are in the mid-20s, and July highs hit the low 90s.) And Reinstein tells MarketWatch she loves that it’s a diverse city with its own unique cuisine and celebrations.

Yeah - a nice small-ish city. I enjoyed my time there. Went there to visit the Trinity Site and take in some of the nuclear museums.

Great quote - people v/s the state

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"Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone."
--Frederic Bastiat

Party like it's 2008 - financial crisis

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Looks like the home mortgage market is going to go pear-shaped AGAIN... From Wolf Street:

Fuel for the Next Mortgage Bust?
For a moment this morning, I thought I was back in 2005 or early 2006, when I listened to a dazzling radio show, hyping cash-out refinancing of your mortgage.

The show was funded by a shadow-bank specializing in mortgage lending. They were promoting their efficient service, that didn’t involve the normal hoops to jump through, and it was a fantastic deal, to not only refinance your mortgage to capture the lower mortgage rates currently available – the lowest since November 2016 – but also to use the home as an ATM once again to cash out the equity that the home had accumulated, due to years of sharp price increases.

That this date of November 2016 keeps popping up is interesting by itself, because on November 10, 2016, according to Freddie Mac data, the average conforming 30-year fixed rate mortgage had an interest rate of about 3.6%, same as now. But six weeks later, December 22, 2016, that average mortgage rate had jumped to 4.3%. That was a jump of three-quarters of a percentage point in just six weeks. Mortgage rates can get very jumpy when the market figures out that they’d been mispriced.

The promo this morning acknowledged this jumpiness and pushed listeners to act now on a cash-out refi at these ultralow mortgage rates, or miss out forever.

Needless to say, there are two issues at play:

#1) - there is much more at the site. Go and read the whole thing if you are thinking about this  -and-

#2) - the 'folks' offering you this great deal are blowing smoke up your ass and calling it magic.

In those immortal words: "caveat emptor"

Great quote - Milton Friedman

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"The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another."

Milton Friedman was an economist. Won the Nobel Prize for it - he was that good. Big fan of Capitalism.

That last link for Capitalism has a great quote:

"As socialists, we are opponents of the Jews, because we see in the Hebrews the incarnation of capitalism, of the misuse of the nation’s goods." -- Joseph Goebbels

A nation does not have "goods". A nation has people. People have "goods". Yes, the Nazi's were pure and totally socialist. Their very name is: Nationalsozialistische Deutsche Arbeiterpartei or National-Socialist German Workers' Party
'Nuff said...

Two political paths: Lurching towards socialism and heading towards capitalism. Two news stories:

First, from Associated Press:

Economic twilight zone: Bonds that charge you for lending
Imagine lending money to someone and having to pay for the privilege of doing so. Or being asked to invest and informed of how much money you’ll lose.


On Wednesday, for the first time ever, the German government sold 30-year bonds at a negative interest rate. The bonds pay no coupon interest at all. Yet bidders at the auction were willing to pay more than the face value they would receive back when the bonds mature.

I could see short-term loans at negative interest. Great (if expensive) place to stash some cash but 30 year bonds? Not a lot of consumer confidence there...

Second, from The Telegraph:

Sterling soars as Brexit deal hopes rise: as it happened
Undoubtedly, there’s been some good money made on the currency markets over the last week. Short interest in the pound dropped last week, and anyone who cashed out a bet against sterling should be feeling smug now.

The pound is riding high against other currencies — marginally up, and probably worth a few euros if you’ve waited until the last minute to take a trip to the continent this summer.

What is good for business is also good for the nation. Go Brexit!

Question the messenger

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Shot - Fox News:

'Great Recession' to hit US, jeopardize Trump's reelection hopes: Peter Schiff
The U.S. economyOpens a New Window. is heading into a free fall that will be worse than the Great Recession of 2008, according to Euro Pacific Capital CEOOpens a New Window. Peter Schiff.

The economic forecaster is predicting the Federal ReserveOpens a New Window. will cut interest rates to zero and launch quantitative easing, a monetary policy where the central bank purchases Treasuries from financial institutions to stimulate the economy.

“The dollar is going to go through the floor and it’s going to take the bond market with it and the next crisis, it’s not subprime mortgages, it’s going to be in the Treasury market,” he said on “After the BellOpens a New Window.” on Wednesday.

Chaser - Foundation for Economic Education:

5 of the Worst Economic Predictions in History
Uncertainty makes human beings uncomfortable. Not knowing what’s going to happen in the future creates a sense of unrest in many people. That’s why we sometimes draw on predictions made by leading experts in their respective fields to make decisions in our daily lives. Unfortunately, history has shown that experts aren’t often much better than the average person when it comes to forecasting the future. And economists aren’t an exception. Here are five economic predictions that never came true.

And closing the list at #5:

5. Peter Schiff and the End of the World
Financial commentator Peter Schiff became famous in the aftermath of the 2007-2008 Financial Crisis for having foreseen the housing crash back in 2006 (even a broken clock is right twice a day). Since then, he has been predicting economic catastrophes every other day, with very limited success. There are many examples of failed predictions from which to draw upon. For instance, in a 2010 video (see below), Schiff foretold that Quantitative Easing (the unconventional monetary policy undertaken by the Fed between 2008 and 2014) would result in hyperinflation and the eventual destruction of the Dollar. Unfortunately for Schiff, the average inflation rate per year since the onset of QE has been 1.68%, slightly below the 2% target of the Fed.

And Schiff is keeping some great company in this list - go and read four more spectacular failures.

Schiff gets on the air because he promotes the narrative: Orange Man Bad. His track record is actually lousy.

Building skills at home

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Better jobs - great news from FOX Business:

US manufacturers pledge to train 1.2M workers amid skilled labor shortage
Manufacturers are promising to upskill nearly 1.2 million workers, a major training commitment that comes as U.S. companies prepare to try to fill millions of open positions over the next decade amid a labor shortage.

The National Association of Manufacturers, which counts Caterpillar, Merck, Salesforce and Boeing as members, is poised to make the announcement during an event at the White House on Thursday.

“Manufacturers proudly make this pledge to the American worker: we will continue to invest in our workforce and provide 1,186,000 Americans with the opportunity to receive training and development that will enhance their skills and prepare them for the next step on their career journey,” said CEO Jay Timmons.

No need to go deep in hock for a useless degree. Learn a skill or improve the one you have. Your potential to earn a living wage goes up substantially. I am going to a local college for some specific welding classes this fall. Looking forward to it.

Capitalism in the news - India

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From The Hindu:

India lifted 271 million people out of poverty in 10 years: UN
India lifted 271 million people out of poverty between 2006 and 2016, recording the fastest reductions in the multidimensional poverty index values during the period with strong improvements in areas such as “assets, cooking fuel, sanitation and nutrition,” a report by the United Nations said.

The 2019 global Multidimensional Poverty Index (MPI) from the UN Development Programme (UNDP), the Oxford Poverty and Human Development Initiative (OPHI) was released on Thursday.

The report said that in the 101 countries studied — 31 low income, 68 middle income and 2 high income - 1.3 billion people are “multidimensionally poor”, which means that poverty is defined not simply by income, but by a number of indicators, including poor health, poor quality of work and the threat of violence.

Some numbers:

In 2005-2006, the population in India living in multidimensional poverty stood at about 640 million people (55.1%) and this reduced to 369 million people (27.9%) living in poverty in 2015-16. India saw significant reductions in number of people who are multidimensionally poor and deprived in each of the 10 indicators over this time period.

India reduced deprivation in nutrition from 44.3% in 2005-06 to 21.2% in 2015-16, child mortality dropped from 4.5% to 2.2%, people deprived of cooking fuel reduced from 52.9% to 26.2%, deprivation in sanitation from 50.4% to 24.6%, those deprived of drinking water reduced from 16.6% to 6.2 %.

Further more people gained access to electricity as deprivation was reduced from 29.1% to 8.6%, housing from 44.9% to 23.6% and assets deprivation from 37.6% to 9.5%.

Cutting the number of poor people in half in just ten years. Socialism would never do that - it requires a large central government. What we are seeing is capitalism spread throughout the entire system. The corner store, the cook with a food cart, the shoemaker getting a new sewing machine. The rising tide floats ALL boats.

From CNBC:

Deutsche Bank will exit global equities business and slash 18,000 jobs in sweeping overhaul
Deutsche Bank announced Sunday that it will pull out of global equities sales and trading, scale back investment banking and slash thousands of jobs as part of a sweeping restructuring plan to improve profitability.

Deutsche will cut 18,000 jobs for a global headcount of around 74,000 employees by 2022. The bank aims to reduce adjusted costs by a quarter to 17 billion euros ($19 billion) over the next several years.

The German bank’s decision to scale back investment banking comes just two days after investment banking chief Garth Ritchie stepped down by “mutual agreement.”

Deutsche expects its restructuring plan to cost 7.4 billion euros by the end of 2022. The German bank may report a net loss of 2.8 billion euros in the second quarter of 2019. It will release second quarter results on July 25.

18,000 jobs is massive - almost a quarter of their workforce gone. Poof. Actual percentage is 24.32% to pick nits.

Wonder what is up over there - the German economy was supposed to be solid...

A nice perspective from Leslie Eastman at Legal Insurrection:

U.S. plans to refine its way out of potential “rare earths” crisis
There was once a time that the American economy was threatened by OPEC (Organization of Petroleum Exporting Countries) because we were an importer of petroleum products.

The Americans got busy, started frackingbuilding pipelines, and developed new technologies. We are now producing “molecules of freedom” in abundance.

Now, after China threatens to cut our supply of rare earth elements essential for certain products, American entrepreneurs are coming to the rescue.

Rare earth elements are used every day. They are metals that are used in everything from cell phones to cars, televisions, military jet engines and medical devices.

However, the tit-for-tat trade Opens a New Window. war between the U.S. and China, Opens a New Window. may present a challenge to the industry which heavily relies on China. The retaliatory tariffs from China on $60 billion worth U.S. goods goes into effect this weekend.

Blue Line Corp., a chemical company based in Texas, is the first and only company outside of China that can process small batches of rare earth. They just partnered with Australian rare earths mining company Lynas to build a processing facility in the U.S.

According to a 2019 minerals commodity summary, approximately 80% of the nation’s rare earth elements and compounds were imported from China.  A view of this situation is summarized by the US Geological Survey:


China is going to rue the day they decided to use rare earth minerals as a bargaining chip. They need a reliable flow of hard cash into their economy and that was a major one.

Yay - Art Laffer gets recognition

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From the New York Times:

Trump to Give Arthur Laffer, Tax-Cut Champion, the Presidential Medal of Freedom
President Trump will award the Presidential Medal of Freedom, the nation’s highest civilian honor, to the economist Arthur Laffer, whose tax-cutting enthusiasm has shaped decades of Republican policymaking, including Mr. Trump’s.

The White House, which said Friday that it will convey the award on June 19, called Mr. Laffer “one of the most influential economists in American history.”

Mr. Laffer, 78, was an adviser to Mr. Trump’s 2016 presidential campaign, helping to craft the candidate’s tax plan, and a co-author of the recent book “Trumponomics,” which is a celebration of the president and nearly all of his economic programs.

Good - Laffer's idea have proven correct time and time again. The Presidential Medal of Freedom is the country’s highest civilian honor.

I was there (Mt. Vernon, WA store) yesterday before dinner and noticed a major reset of the checkout lanes. I forget the exact numbers but they had over 20 checkout lanes and maybe 10 self-service stations.

They now have nine manned checkout lanes and 26 self-service stations.

That is one way to deal with the rising labor costs... Wonder where those extra cashiers are working these days?

Those Chinese tariffs

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Speaking truth to power at Economics website Market Watch:

The media is lying to you about Trump’s China tariffs
Are you kidding me?

I’m used to partisan, inaccurate drivel from all sides these days, but the media’s coverage of President Trump’s tariffs and the so-called “trade war” takes some kind of cake.

More - with a little bit about the author:

I write this, incidentally, as someone who is no fan of the president. But I remember when politics was supposed to stop at the water’s edge.

And, anyway, facts are facts. Most of what the public is being told about these tariffs is either misleading or a downright lie.

I’ve been following the coverage all weekend with my jaw on the floor.

And the numbers:

Uncle Sam benefits
Yes, tariffs are “costs.” But they do not somehow destroy our money. They do not take our hard-earned dollars and burn them in a big pile. Tariffs are simply federal taxes. That’s it. The extra costs paid by importers, and consumers, goes to Uncle Sam, to distribute as he sees fit, including, for example, on Obamacare subsidies.

It wasn’t long ago the media was complaining because Trump was cutting taxes. Now it’s complaining he’s raising them. Confused? Me too.

And the amounts involved are trivial. Chicken feed.

President Trump just hiked tariffs from 10% to 25% on about $200 billion in Chinese imports. In other words, he just raised taxes by … $30 billion a year.

Oh, no!

The total amount we all paid in taxes last year — federal, state and local — was $5.51 trillion. This tax increase that has everyone’s panties in a twist is a rounding error.

Tempest in a teapot. We import much more from China than China imports from us. President Trump is trying to balance that out a bit. Carrot and stick.

Say no more:

From Don Surber who writes:

Let the Neocons rant. No one cares because unemployment just slid to 3.6%. Wages now average $27.77, which is more than $57,000 a year. Inflation is low. The economy is growing at 3%-plus.

The experts all said no one wins a trade war, and yet Americans are doing their best since the 1960s. Things have not been this good since the Beatles broke up.

We have an American president who puts America first.

The people in the media and the federal government cannot stand him.

What does that tell you about those two institutions? Maybe we should ship them to Red China where they would be happier.

But I would rather ship to Red China steel made in Pittsburgh. Thanks to President Trump that may happen some day.

Speaking truth to power...

The welfare trap

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Great essay on why progressivism / socialism never works. It sounds good and a lot of people push a narrative instead of facts but... From the Mises Institute:

How Countries Fall into the Welfare Trap
People like the welfare state because they suppose that it comes at no costs and provides many benefits. If people knew how much the present consumption of social benefits entails less prosperity in the future, the population would have a critical attitude towards the welfare state and politicians would have a harder time selling their fraud. Just as a society that ranks security over liberty loses both, a society that attributes a higher value to social benefits than to wealth creation ends up with neither wealth nor benefits.

A short-term perspective is intrinsic to modern democracy. It is run not by the people but by political parties. Such a political system promotes the redistribution of the cake and neglects that the goods must be produced before they can be consumed. Without production, however, there can be no distribution. The illusion is widespread and propagated by the political machinery that production is independent of its distribution so that one could redistribute without weakening production. Yet how the product is distributed affects its future making.

A long read but a very very good one. This is what I consider to be the key difference between the liberal and the conservative thought process - the liberal mind seeks out a narrative, a story. Many of the failed liberal policies started because they sounded good without people looking at the consequences. In philosophy, this is called rhetoric. The conservative mind looks for numbers and analysis. This sounds good but what if? This is dialectic - not to be confused with Karl Marx's appropriation of this word for his own fuzzy-headed scribblings.

Interesting that the Greek Philosophers had this all figured out in 700AD

Quote of the day

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From Economist Ludwig Von Mises

Government is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink.

Von Mises was a chief proponent of the Austrian School of economics which is (in my own mind) the best model for running a modern economy. More here: Mises Institute

And craze it is - socialism has never worked. From economist Mike Shedlock writing at  Mish Talk:

Ben Bernanke - The Father of Extreme US Socialism
Writer David McWilliams penned an excellent article in the Financial Times: Quantitative Easing was the Father of Millennial Socialism.

McWilliams notes that Fed chairman Ben Bernanke's "cash for trash" QE scheme drove up asset prices and bailed out the baby boomers. The cost of course, was pricing millennials out of the housing market.

Unorthodox policy penalizes the asset poor
What assets do millennials have? Hardly any. Instead they are saddled with mountains of student debt which, thanks to president George W. Bush, could no longer be discharged in bankruptcy.

The Bankruptcy Reform Act of 2005 would have better been called the Debt Slave Act of 2005.

Then, when the Great Financial Crisis hit, the Fed came along bailed out the banks, bailed out the bondholders, bailed out Fannie Mae, and bailed out the asset holders in general, leaving millennials mired in debt unable to afford a house.

Simmering Stew of Anger
The irony in this simmering stew of anger is people blame Trump, not the Fed.

But socialism, even AOC's radical socialism is not about Trump, at least directly.

More at the site - very good analysis of one of the biggest clusterfscks in our economy. Bernanke has managed to keep his name clear of the mud but his policies are what caused the great recession of 2008 and are what is driving the horrendous "real" inflation we are seeing today.

Basic economics - Bernie Sanders

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Great comeback to a tweet from Commie Bernie:


Tip of the hat to Billlls Idle Mind

Two headlines from the New York Times

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ShotThe $15 Minimum Wage Is Here. Why We Need $33 an Hour.

ChaserAfter Winning a $15 Minimum Wage, Fast Food Workers Now Battle Unfair Firings

The actual minimum wage is $0.00 - it is the job of the employee to improve themselves to the point where they bring value to the employer. Anything else distorts the economics of the business.

From the Los Angeles Times:

Albuquerque’s $133-million electric bus system is going nowhere fast
Shortly after being elected in 2017, Albuquerque Mayor Tim Keller stood on one of the passenger platforms for ART, the city’s ambitious new $133-million all-electric bus line that cuts through a 10-mile stretch of the city.

“Drivers waved and cheered, ‘Congrats to the new mayor!’ ‘I voted for you!’ ‘Go get ’em!’ ” said Keller. “And then in the next breath, they would lay on the horn and give the giant ART sign the middle finger out the car window.”

Civic leaders had initially pitched Albuquerque Rapid Transit as a way to revitalize the city’s former stretch of Route 66 and make the community a national leader in sustainable mass transit. Instead, the ART project resulted in parts of what’s now Central Avenue being ripped up to host dedicated lanes for the electric buses, which are currently out of commission and have so many problems that Keller freely calls them “a bit of a lemon.”

Another "Gang Green" fever dream crashing on the wall of numbers. Does not work. Besides, in that area, electricity is generated by coal burning at Four Corners - even if those buses ran, they would be coal burning.

High speed trains - Europe and the USA

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The progressives are in love with the European system of high-speed railroads and want to implement them here despite the cost and low ridership. Warren Meyer writes at Coyote Blog and offers some real numbers:

A Reminder: Why the US Rail System Is At Least as Good As the European System if You Care About Energy Use
In an article about the French railroad SNCF, Randal O'Toole makes a point I have screamed to the world for years:

Meanwhile, French trains carry less than 11 percent of freight, as more than 86 percent of freight is transported on highways. Those numbers are in sharp contrast to the U.S., where at least a third of freight goes by rail and less than 40 percent goes by truck (and I suspect a bad model has erroneously exaggerated the role of trucks).

American railroads are a model of capitalism, one of the least-subsidized forms of transportation in the world. They are profitable and do far more for the national economy than Europe’s socialized railroads, which mainly serve narrow elites.

Most of the intellectual elites and nearly all the global warming alarmists deride the US for not having the supposedly superior rail system that France and Germany have.  They are blinded by the vision of admittedly beautiful high speed trains, and have frittered away billions of dollars trying to pursue various high speed rail visions in the US.

Warren then comes up with some actual numbers:

First, consider the last time you were on a passenger train. Add up the weight of all the folks in your car. Do you think they weighed more or less than the car itself? Unless you were packed into a subway train with Japanese sumo wrestlers, the answer is that the weight of the car dwarfs that of the passengers it is carrying. The average Amtrak passenger car apparently weighs about 65 tons (my guess is a high speed rail car weighs more). The capacity of a coach is 70-80 passengers, which at an average adult weight of 140 pounds yields a maximum passenger weight per car of 5.6 tons. This means that just 8% of the fuel in a passenger train is being used to move people -- the rest goes into moving the train itself.

Now consider a freight train. The typical car weight 25-30 tons empty and can carry between 70 and 120 tons of cargo. This means that 70-80% of the fuel in a freight train is being used to move the cargo.

Now you have to take me on faith on one statement -- it is really hard, in fact close to impossible, to optimize a rail system for both passengers and freight. In the extreme of high speed rail, passenger trains required separate dedicated tracks. Most rail systems, even when they serve both sorts of traffic, generally prioritize one or the other. So, if you wanted to save energy and had to pick, which would you choose -- focusing on freight or focusing on passengers? Oh and by the way, if you want to make it more personal, throw in a consideration of which you would rather have next to you on crowded roads, another car or another freight truck?

A lot more at the site and some interesting comments.

Obama killed steel. Trump brought it back

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This is Don Surber's headline to this post:

No Trumpenfreude today. Sorry. Instead, enjoy the announcement from U.S. Steel that it has resumed construction of a 21st century electric arc furnace steel-making facility at its Tubular Operations in Fairfield, Alabama.

"U. S. Steel previously initiated construction of the EAF in March 2015 and suspended construction in December 2015 due to unfavorable market conditions," the company said.

Obama's socialism versus President Donald John Trump's capitalism. No contest.

U.S. Steel reported, "The investment to complete the EAF, which includes modernization of the existing rounds caster, is expected to be approximately $215 million and add about 150 full-time employees. The EAF will have an annual capacity of 1.6 million tons. Construction is expected to begin immediately and the furnace is expected to produce steel rounds in the second half of 2020."

Huge investment in infrastructure and 150 new well-paying jobs. Plus, all of those trickle-down new jobs too. The new employees are going to buy cars and recreational vehicles - more people will be needed to service and maintain them. New restaurants, new dry cleaners, new grocery stores.

This is called Capitalism and it works very very well. All other forms of government pale by comparison.

A picture is worth 1,000 words

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Labor v/s Capital in 3:39

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Great explanation from Ben Shapiro:

Kid needs to move to Venezuela. Fit right in.

The elites at Davos and climate change

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They certainly do not act as though there was any emergency. From the UK Guardian:

Record private jet flights into Davos as leaders arrive for climate talk
David Attenborough might have urged world leaders at Davos to take urgent action on climate change, but it appears no one was listening. As he spoke, experts predicted up to 1,500 individual private jets will fly to and from airfields serving the Swiss ski resort this week.

Political and business leaders and lobbyists are opting for bigger, more expensive aircrafts, according to analysis by the Air Charter Service, which found the number of private jet flights grew by 11% last year.

“There appears to be a trend towards larger aircraft, with expensive heavy jets the aircraft of choice, with Gulfstream GVs and Global Expresses both being used more than 100 times each last year,” said Andy Christie, private jets director at the ACS.

This is partly due to the long distances travelled, he said, “but also possibly due to business rivals not wanting to be seen to be outdone by one another”. Last year, more than 1,300 aircraft flights were recorded at the conference, the highest number since ACS began recording private jet activity in 2013.

The last paragraph is especially interesting as this sort of peacocking is not sound business judgement and reinforces these numbers from The Economist:

And after all the inflated expenses and egos, what has been the fate of the companies that sent delegates at least three times in the past five years? Those 104 firms underperformed both the S&P 500 and MSCI World Index. Time to get back to work.


The world economy - China

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A very thoughtful observation from al fin next level:

China’s Decline Hits Positive Feedback Territory
Chinese economic growth continues to decline and it is feared China might even suffer a major recession because of the continued economic problems.
__ Source

Positive Feedback Decline in China?
Slower growth in China means slower growth for the rest of the world…. with the headwinds from cooling global growth China’s economy is likely to weaken further before growth stabilizes in the second half of the year.”

You see the cyclic nature of China’s predicament: A slowing economy in China causes a slowing of economies in the rest of the worldAt the same timea cooling of the global economy is likely to further weaken China’s economy. A simple, straightforward positive feedback cycle of decline.

Read the whole thing - China needs us more than we need China. The trade war is working.

Well crap - restaurant closing

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Not just any restaurant - my very favorite one in Boston. Durgin Park
From the Boston Business Journal:

Durgin-Park to serve last customer
One of Boston's most historic restaurants is closing its doors.

Right now, Durgin-Park in Faneuil Hall is still open for business. There are no signs the place is closing. But the workers have been told their last shifts will be next week, and now, many disappointed customers are trying to get in their final meals.

Like an under-cooked steak, long time customer Jonathan Berg says the news is leaving a bad taste in his mouth.

"This is another passing of a great institution," said Berg.

Rachelle Mazzone is Durgin-Park's bartender and says dozens of long-time workers were told the restaurant would be closing next weekend. She was told it's no longer profitable.

A bit more about the place:

Outside, the restaurant's slogan proudly hangs above the entrance, reading, "Established Before You Were Born." Inside, it's a blast from the past. The menu has traditional "Yankee cooking," like prime rib, clam chowder, Boston baked beans and shepherd's pie.

Since 1827, the business attracted faithful diners and tourists to its Faneuil Hall location, winning several culinary awards. And the wait staff was always encouraged to be rude — in a good way.

"When you saw the same people everyday, you were like, 'Joe, eat your beans. Harry, eat your hot dog, get away from me.' Nothing offensive, though," said Mazonne.

You read that correctly - it opened its doors in 1827 and was owned by the same family until they sold out in 2007. I went to college in Boston (Boston U - Marine Biology) and dropped out when personal computers became a thing. Durgin Park seated you at long tables and I was sitting next to a couple who were discussing their work with an IP21 photomultiplier tube (a very sensitive light detector). I was taking some astronomy classes and had been working with the same RCA IP21 tube (PDF) and I introduced myself and we had a wonderful conversation. Turns out that the guy worked for New England Aquarium and asked me if I was interested in volunteering and helping him out with his project. Got hired full-time soon after and had a wonderful five years there.

Durgin Park was about five blocks from the Aquarium so I had lunch there often. It is another victim of the higher minimum wage movement as well as the gentrification of what was once a working district. Really sad to hear this.

The falling stock market - not ours

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The DOW has been tanking recently - this is a bear market and we need to suck it up and ride it out. These happen. Turns out that this is not just us - from the South China Morning Post:

Shanghai’s stock index ends 2018 as the world’s biggest loser as trade war, slowing Chinese economy weigh on confidence
Shanghai’s stock benchmark ended 2018 as the world’s worst market performer for a second year, falling 24.6 per cent over 12 months as an unprecedented trade war between China and the United States weighed on the Chinese economy and crimped corporate earnings.

The city’s key stock index closed the year at 2,493.90, while the benchmark on the smaller Shenzhen bourse fell 33.2 per cent during the period to 1,267.87. The combined capitalisation of the two exchanges fell by US$2.4 trillion to 43.3 trillion yuan (US$6.3 trillion) during the year, overtaken by Tokyo as Asia’s largest equity market.

Bear markets are just an adjustment and the only thing you can do is to ride it out.
Software developer John McAffee said it best a month ago:

General Motors decline - an analysis

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Interesting insight into GM's slide into oblivion from Investors Business Daily:

GM Layoffs: A Tragedy Caused By Embracing Government Subsidies, Not Markets
General Motors' decision to close four U.S. plants and lay off 14,700 workers, 15% of its domestic workforce, is an economic tragedy. And it might have been avoided if GM had listened to the market, rather than the Obama administration.

During and after the financial crisis, GM decided to do the government's bidding in exchange for billions in subsidies. At one point, the federal government owned more than 60% of its shares, costing it more than $50 billion. By the time it sold the shares in 2013, U.S. taxpayers had an $11.2 billion loss.

How's that working out for GM now? Not very well.

GM's CEO Mary Barra, who took over the company in early 2014, reshaped the company's offerings to please the Obama White House's leftist auto czars, as did her predecessor. Barra has bet the company's future on electric cars and other less-popular offerings, instead of what people want.

Much more at the site - the author takes an honest look at electric coal burning automobiles and why they simply are not selling except for those who want to virtue signal. The article also mentions this:

Gov't Failure
It never works as expected. It can't. The government, despite delusions to the contrary, can't possibly know what people want and need. Yet, a perpetual leftist dream remains an economy run and funded by government "experts."

We see that in the Obama administration's decision to subsidize GM during the financial crisis by investing tens of billions of taxpayer dollars in its stock and propping up money-losing operations. By ignoring the supply-and-demand signals of the marketplace, it only made GM's problems worse.

More specifically, it led to GM committing itself to the unprofitable electric car market, one of President Obama's pet projects. At one point, Obama even vowed to buy a Chevy Volt when he left office. He didn't.

A good read and a cautionary tale for those who advocate big centralized government.

Reading the market - the Chevrolet Volt

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Looks like General Motors is hitting the skids. They should read their customer base better to see what people are buying instead of trying to "nudge" us to purchase vehicles that fit the narrative.

From Breitbart:

Watch: Six Years Ago Obama Promised to Buy a Chevy Volt. Now It Is Dead
Six years ago, President Barack Obama promised to buy a Chevy Volt after his presidency.

“I got to get inside a brand-new Chevy Volt fresh off the line,” Obama announced to a cheering crowd of United Auto Workers activists. “Even though Secret Service wouldn’t let me drive it. But I liked sitting in it. It was nice. I’ll bet it drives real good. And five years from now when I’m not president anymore, I’ll buy one and drive it myself.”

Now it looks like Obama will not get his chance to make good on the promise. General Motors announced Monday that it would cease production of the hybrid electric plug-in Volt and its gas-powered sister car the Cruze. The announcement came as part of a larger restructuring by the car company as it seeks to focus production around the bigger vehicles in favor with U.S. consumers.

The Volt and the Cruze were two of the signature achievements of the partnership between the Obama administration and General Motors following the auto-industry bailout. Although the Volt was long-planned by GM executives, it received a lot of support from the administration. Obama described the Cruze as “the car of the future.”

Both cars reflected the policies of the Obama administration but never really caught on with the car-buying public. They initially enjoyed a brief bout of enthusiasm from consumers but this was short-lived. Particularly after the price of oil fell dramatically, American consumers moved on to larger vehicles such as SUVs.

Heh - follow the narrative instead of the numbers and you will get burned. Always. I love my Toyota Highlander and my Ford Truck.

Looks like the stock market is making an overdue correction - four headlines this morning - clickable links to the stories:

It's called a bubble. These form, grow beyond sustainability and pop spectacularly. Nothing new.

John McAfee sums it up with this wonderful tweet:

Light rail in New Mexico

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Light rail works in dense urban areas - Seattle, New York, Boston, San Francisco. Less dense areas like Portland and Albuquerque, New Mexico? Not so much. It is a very visible public works project and has a certain "cool" cachet but it is a money pit. From The AntiPlanner:

Riding the Rail Runner
After speaking about Romance of the Rails in Albuquerque Friday night, I took advantage of a day off between engagements to ride the New Mexico Rail Runner to Santa Fe and back. This train is costing the state close to $800 million in capital costs including interest (which works out to annual payments of about $30 million a year) plus another $30 million a year in operations and maintenance costs, while it is bringing in slightly more than $2 million a year in fares. The federal government also recently gave the state another $30 million to install positive train control.

I love it - $60 million dollars spent each year and it brings in $2 million of income. What doofus signed off on that? A bit more:

Average weekday ridership in 2017 was 2,825, which means 1,413 round trips. Ridership peaked in 2011 and has declined by 37 percent since then. This compares with Albuquerque bus ridership, which peaked in 2012 and has since declined by 25 percent, and transit ridership nationally, which peaked in 2014 and has since declined by 8 percent.

Due in part to low ridership, the Rail Runner uses more energy and emits more greenhouse gases per passenger mile than driving an average SUV. This is typical for most commuter-rail lines that started up in the last two decades or so.

They could sell off the land and the equipment and still come out multiple hundreds of millions of taxpayer dollars in the hole. Way to go bureaucrats!

The AntiPlanner is a great website. From their About page:

Welcome to the Antiplanner, a blog dedicated to ending government land-use regulation, comprehensive planning, and transportation boondoggles.

The end game of socalism

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A couple of headlines - they link to the stories:

Naaaa Nicky - it is not Colombia. It is not 'financiers' in the US. It is the failure of socalism - the end game and your citizens have had enough. SImply that - they have had enough of your incompetent management.

Venezuela used to be the richest nation in South America. It has excellent crop lands and used to export food. Now it has to import food. It has the world's largest known reserve of oil but, since Maduro nationalized the oil business, the ability to pump and refine oil seems to have slipped through their fingers.

The Vezuelan Bolivar used to be about four to one with the US Dollar. Take a look - this is what socialism brings:


You spend everything and then, when you run out, you run the printing presses and spend that not knowing that this act will cause inflation. We are seeing the results of inflation on the order of what happened in the Wiemar Republic before WW-II.

Never underestimate a businessman. President Trump seems to be winning the trade war with China after only a few weeks. From India's Focus World News:

Chinese Economy: China Dethroned By Japan As World’s Second Biggest Stock Market
NEW DELHI: China just lost its ranking as the world’s number two stock market.

After a Thursday slump, Chinese equities were worth $6.09 trillion, according to data compiled by Bloomberg. That compares with $6.17 trillion in Japan. The US has the world’s largest stock market at just over $31 trillion.

China’s stock market overtook Japan’s in late 2014, then soared to an all-time high of more than $10 trillion in June 2015. Chinese equities and the nation’s currency have taken a beating this year amid a trade spat with the US, a government-led campaign to cut debt and a slowing economy.

“Losing the ranking to Japan is the damage caused by the trade war,” said Banny Lam, head of research at CEB International Investment Corp. in Hong Kong. “The Japan equity gauge is relatively more stable around the current level but China’s market cap has slumped from its peak this year.”

Much of their GDP is based on export. Curtail that and they will come to heel very soon. Make America Great Again!!!

Say goodbye to Dodd-Frank

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One of the most pork-laden poor excuses for legislation to ever get voted into law. The Dodd-Frank bill was 2,300 pages long and was brought into being after the financial melt-down of 2007. It replaced the Glass-Steagall act of 1933 which prevented public banks from offering investment (risky) services to their customers and vice versa - brokerages were not allowed to act as banks. It was 37 pages long! The passing of the 1999 Gramm–Leach–Bliley Act (GLBA) pulled the teeth of Glass-Steagall and was the root cause of the 2007 financial meltdown.

Today, no more - excerpted from President Trump's statements yesterday:

Remarks by President Trump at Signing of S. 2155, Economic Growth, Regulatory Relief, and Consumer Protection Act

. . . 

Since its passage in 2010, Dodd-Frank has dealt a huge blow to community banking. As a candidate, I pledged that we would rescue these community banks from Dodd-Frank — the disaster of Dodd-Frank — and now we are keeping that commitment, and all of the people with me are keeping that commitment. Incredible group of people.

Dodd-Frank’s complex and costly regulations gave large banks an unfair competitive advantage at the expense of neighborhood banks all over the country. Since Dodd-Frank’s passage just eight years ago, 20 percent of small banks have been put out of business — they’ve disappeared — while banks that were considered “too big to fail” — we’ve heard that many time, “too big to fail” — had the resources to comply with Dodd-Frank’s brutal maze of costly regulations. And maybe we’re going to have to start looking at that also for the larger institutions because they also are put at a disadvantage in terms of loaning money to people wanting to open up businesses. So perhaps we’ll be taking a look at that. Many small banks were forced to shut down.

He also touched on the overall economy and unemployment in general:

Today’s legislation is the next step in America’s unprecedented economic comeback. There’s never been a comeback like we’ve made. And one day, the fake news is going to report it. (Laughter.) But that’s okay — you’ve been very nice, actually today. You’ve been extremely nice.

Republicans in Congress passed the biggest tax cut and reform in the history of our country. We passed and signed a record number of bills terminating job-killing regulations. In the history of our country, no President — whether it’s four years, eight years, or sixteen years, in one case — has ever passed more regulation cuts. And these were necessary cuts, because we’re leaving necessary regulations. Regulation is fine, but it’s got to be reasonable. And that’s what we’ve done.

Unemployment has reached its lowest level in nearly two decades. African American unemployment has reached its lowest level in history. And the same thing for Hispanic unemployment — lowest level in history. Women — lowest level of unemployment in 19 years. Small business optimism has never, ever been higher, according to polls and charts.

As a small business owner, I am seeing the results of this Presidency and am really liking what I see. MAGA

November 2019

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