Recently in Economics Category

This guy is so wrong on so many things I still find it stunning that he was awarded a Nobel Prize in Economics.
From the NY Times of 03/16/2020:

Step Aside for Powell and Pelosi
Republicans, it turns out, can’t do economic policy

America’s catastrophically inadequate response to the coronavirus can be attributed largely to bad short-term decisions by one man. And I do mean short-term: At every stage, Donald Trump minimized the threat and blocked helpful action because he wanted to look good for the next news cycle or two, ignoring and intimidating anyone who tried to give him good advice.

OK - we get it. Orange Man is BAD. Seriously, his Trump Derangement Syndrome is getting worse as time goes on. He needs to think about getting treatment  before it is too late. President Trump's second four years of winning is going to send poor Paul over the edge.

 - yadda - yadda - yadda -

Trump disbanded the National Security Council’s pandemic response team in 2018, although he now, with his characteristic refusal to accept responsibility for anything, says that he knew nothing about it. And he has in general staffed his administration with obsequious toadies who never tell him anything he doesn’t want to hear.

BZZZZTTT!  Absolutly wrong. The team was re-organised, not disbanded. The FAKE "story" was started by one person from the team who lost their job in the re-org. It was picked up by Jeff Bezos' Washington Post in 2018. Fast forward to today where they recant their story - from Red State:

WaPo Opinion Piece Debunks Another False Story: No, Trump Didn’t ‘Eliminate’ the Pandemic Response Office
Democrats and media have told multiple lies about the response by the Trump administration to the Wuhan coronavirus. They falsely claimed that Trump cut the CDC when the budget was actually increased. Democrats including Joe Biden claimed that he was muzzling scientists from talking about the virus response even as those same scientists like Dr. Anthony Fauci were very visible giving advice and information in press conferences.

Perhaps one of the biggest lies was saying that President Donald Trump had called the virus a hoax when in fact he said no such thing. What he said was their lies about his response, like the ones I just mentioned in the prior paragraph, were a “hoax.”

But there was another story that has gotten a lot of traction and really wasn’t debunked until today, although it should have been debunked by media earlier, if they had really been concerned about accuracy – that is that the Trump administration eliminated the “pandemic team” from the NSC in 2018.

One place in which it was pushed was the Washington Post, who pushed the claim in an opinion piece on Friday by Elizabeth Cameron, who ran the office under President Obama.

The person promoting the FAKE NEWS was the person who ran the org under the Obama administration and who was shown the door during its reorganization. No agenda there. The WaPo owned up to it a few days ago with this "opinion" piece.

Back to Mr. Krugman:

What’s now becoming clear is that when it comes to dealing with the economic fallout from Covid-19, the situation may be even worse. There are still some competent professionals holding senior positions at federal health agencies, who could give Trump good advice if he were willing to listen. But serious economic thinking has effectively been banned from this administration, if not the whole Republican Party. As far as I can tell, the Trump team is utterly incapable of formulating a coherent response to the gathering economic crisis.

And from here on, poor Paul goes off the rails. This is pure narrative. When you have no facts, push the narrative. They have nothing except the narrative and they are refusing to learn. They are shutting their eyes and ears and just wishing that the Bad Orange Man will just go away. Guess what, there are a lot more Bad Orange Men stacked up behind President Trump wanting our America to be out of the hands of the progressive globalists. The pendulum is swinging back again and our Nation is becoming better and stronger.

Go and read the rest of it if only from morbid fascination.

Buy cheap, sell dear

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Meanwhile, as the Wuhan Virus is occupying people's thoughts, there is an oil war going on. President Trump is on it.
From Breitbart:

Trump Orders Department of Energy to Replenish U.S. Strategic Petroleum Reserve in Coronavirus Era
President Donald Trump announced during his press conference on Friday on the coronavirus outbreak that the United States will be replenishing its Strategic Petroleum Reserve (SPR) to ensure the nation’s energy security.

“Based on the price of oil, I’ve also instructed the Secretary of Energy to purchase at a very good price large quantities of crude oil for storage in the U.S. strategic reserve,” Trump said at the press conference in the White House Rose Garden.

“We’re going to fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry [and furthering] that wonderful goal — which we’ve achieved, which nobody thought was possible — of energy independence,” Trump said.

Trump’s announcement follows market turmoil in the international market when Russia and Saudi Arabia’s negotiations recently broke down and the Saudis announced they were increasing production.

The Saudis do not like that the US is now a net exporter of oil so they are artificially lowering their price to below what it costs our frackers to produce. Fortunately, our government has stepped in with cheap loans - this war is not sustainable for anyone and the Saudis have to blink sometime. Meanwhile, we are taking advantage of the glut of cheap oil to top off the tanks. National security is a fantastic thing...

From the Washington Examiner:

Economy defied early coronavirus fears in February with 273,000 new jobs, unemployment ticked down to 3.5%
Employment growth in February beat expectations, as 273,000 workers were added to payrolls, the Bureau of Labor Statistics reported on Friday. The unemployment rate was 3.5%, versus 3.6% in January.

Forecasters had expected about 175,000 jobs.

The job growth numbers for December and January were also revised up, by a combined 85,000.

Under the previous administration, unemployment numbers peaked at 10%. Yes, he inherited the housing bubble but still, President Trump's turn-around could have been accomplished ten years ago just as easily. All it took was the ability to see outside the Washington D.C. bubble and to have some business experience.

Because - experts

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From The New York Times - 2016

Paul Krugman: The Economic Fallout
It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.

Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.

Under any circumstances, putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news. What makes it especially bad right now, however, is the fundamentally fragile state much of the world is still in, eight years after the great financial crisis.

And today - three years later. From CNBC:

Trump stock market rally is far outpacing past US presidents
President Donald Trump’s stock market stacks up well against the majority of his presidential predecessors.

The S&P 500 has returned more than 50% since Trump was elected, more than double the 23% average market return of presidents three years into their term, according data from Bespoke Investment Group dating to 1928.

The bellwether index gained more than 28% this year, well above the average 12.8% return of year three for past U.S. presidents.

Krugman won the Nobel Prize for economics but he has never been right in any published prediction. He does toe the narrative line though - useful for that.

From CNN:

CNN Poll: US economy receives its best ranking in nearly 20 years
As 2019 comes to a close, the US economy earns its highest ratings in almost two decades, potentially boosting President Donald Trump in matchups against the Democrats vying to face him in next year's election, according to a new CNN poll conducted by SSRS.

Overall, 76% rate economic conditions in the US today as very or somewhat good, significantly more than those who said so at this time last year (67%). This is the highest share to say the economy is good since February 2001, when 80% said so.

And there is the 2020 election wrapped up with a pretty bow for you. I'm good with that.

Good news from FORD

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Always liked Ford - driven their trucks, currently own one of their vans. From The Detroit News:

Ford gets incentives to invest $1.5 billion in Metro Detroit, add 3,000 jobs
Ford Motor Co. CEO Jim Hackett's vision for a mobility corridor stretching along Michigan Avenue from Detroit's Corktown neighborhood to Ann Arbor is growing to include the production of future vehicles.

The Dearborn automaker on Tuesday received approval for up to $35.3 million in incentives from the state of Michigan to invest more than $1.45 billion in Wayne County manufacturing facilities that would add 3,000 jobs — a piece of the $6 billion, 8,500-job commitment Ford made in its contract with the United Auto Workers ratified last month.

The investments into the manufacturing of new vehicles, including the Ford Bronco SUV, autonomous and electric vehicles — and their battery packs — will complement research being done in those sectors at Ford's future Corktown campus anchored by Michigan Central Station and its Dearborn headquarters, which is set for a redesign, officials said.

"This solidifies Ford’s presence in Michigan for both the electrification of their future vehicles as well as their autonomous vehicle operations," said Jeff Mason, CEO of the Michigan Economic Development Corp., whose governing body approved the state incentives. "We think it was critical to make Michigan the center of that."

FORD was the one manufacturer to not take the Obama government bailouts. They are a well-run company and make a good product and were not in need of them. Love my Highlander but I think my next vehicle will be an Explorer.

Excellent excellent observation

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From the Master:

"Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all."
--Frédéric Bastiat

I have never had a problem with people getting a hand up in life - food, some money to get a car, stuff like that.

My complaint is that this needs to start at the grass-roots level with community groups, then maybe the city. Then maybe the individual state and only then, the federal government. The idea that the federal government can manage any number of interlinking agencies that hand out money to someone who claims poverty is just asking for gross negligence and inefficiency. We see it time and time again but we still keep doing it. Keeps the unelected bureaucrats in power.

They don't want anyone messing around with their rice bowl.

It's the economy

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From Brickmuppet:

A Few Christmas Anecdotes
I've been an employee at U.P.S. for 27 years. In all that time I've never seen a Christmas like this one. I've seen it get heavy, but I'd never seen every day for over a week be higher than our peak day last year, nor heard the belts grinding from too much volume all day for three days. I have never, ever, until Tuesday, seen a 53 foot trailer come onto our lot bulging like a can with botulism. The other day one of the drivers from one of the big sort hubs came in to help after dropping off a load. He said that the hub was so packed that it took him 25 minutes to get from the bay door where the trailer was parked to the guard shack at the gate.

I honestly don't think I've been this sore every day since basic training.

Frankly, this is not any failure on the company's part, we're just experiencing the biggest Christmas EVER and our physical plant wasn't designed for an economy this good. It does bring a smile to my face to see all the Amazon packages coming through though. It seems that after declaring that they didn't need us and were never going to ship with us again...well... it looks from my modest vantage point that the Bezos brigade completely choked, as we've been getting trailer upon trailer of Amazon boxes that Amazon couldn't handle, and, despite this unexpected surfeit of cardboard, at least at my building, we haven't rolled anything over to the next day yet. Everything's gotten delivered. The hours are quite insane though.A few years ago I worked some double shifts and still didn't make as much overtime as I have this week. Today was odd, we actually finished early, however, as a result Monday's start time has been moved up to Sunday.

Monday's gonna suck.

On the other hand, I've lost 13 pounds and my pants are threatening to fall off.

Sights and sounds of a very good and very strong economy. Thank you President Trump and Merry Christmas to you and your family.

So true - wealth redistribution

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In one meme:


Strong economy - black friday

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From CNBC:

Shoppers have already spent a record $5.4 billion online on Black Friday: Adobe Analytics
Consumers aren’t waiting until Cyber Monday to shop online this holiday season.

Spending online on Black Friday, as of 9 pm ET, hit a new record of $5.4 billion, up 22.3% from a year ago, according to data pulled from Adobe Analytics, which measures transactions from 80 of the top 100 U.S. online retailers.

This comes as foot traffic appeared to be lighter at shopping malls across the country on Friday, a day that traditionally has been reserved for people to line up outside of big-box retailers and department stores to score doorbuster deals.

Total spending online on Black Friday is still forecast by Adobe to hit $7.6 billion, which would make the day the second-biggest online sales day ever, after Cyber Monday in 2018, where $7.9 billion was spent.

However, Adobe is still expecting spending on Cyber Monday this year to hit an even bigger record $9.4 billion, an 18.9% jump from a year ago.

Two factors - #1) - people have more money and #2) - people think that the future is going to bring more of the same. There is no uncertainty so they are not hoarding their money against a future downturn.

Thank you President Trump for this.

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.


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