Recently in Economics Category

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:

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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.

Indeed...

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.”
__ https://www.bbc.com/news/business-46941932

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:

About
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:

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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

From The Washington Times:

April was best month in history for U.S. budget, according to CBO figures
The federal government took in a record tax haul in April en route to its biggest-ever monthly budget surplus, the Congressional Budget Office said, as a surging economy left Americans with more money in their paychecks — and this more to pay to Uncle Sam.

All told the government collected $515 billion and spent $297 billion, for a total monthly surplus of $218 billion. That swamped the previous monthly record of $190 billion, set in 2001.

CBO analysts were surprised by the surplus, which was some $40 billion more than they’d guessed at less than a month ago.

Analysts said they’ll have a better idea of what’s behind the surge as more information rolls in, but for now said it looks like individual taxpayers are paying more because they have higher incomes.

Overall tax income is higher despite the tax cuts - Arthur Laffer first wrote about this when he developed his famous Laffer Curve

The product is slick but they lose money with each one sold - they depend on government handouts subsidies to survive. From Soverign Man:

More hilarious facts about Tesla from a hedge fund manager who’s short the stock
A few weeks ago, we shared a note about Tesla from the hedge fund Vilas Capital Management. The firm, which is short the shares, said “Tesla is going to crash in the next 3-6 months.”

I received an update from Vilas this morning explaining why they’re even more bearish on Tesla today. The firm pared its short positions after the recent selloff. And Telsa now comprises about 98% of their short book.

Clearly Vilas thinks Tesla’s reckoning is imminent.

Spiffy product - they definitely catch the eye when you see one but still, our taxpayer dollars at work. Time for the market to level things out a bit.

From Bloomberg:

A Stalled Las Vegas Resort Is Now a Go Thanks to the Tax Overhaul
For New York developer Steven Witkoff, the tax overhaul signed today by President Donald Trump will have an immediate effect: he’s plowing ahead with his plan to develop the stalled Fontainebleau resort in Las Vegas.

“Now, we’re not going to be patient,” Witkoff said in a phone interview. “We’ve basically pressed the ‘go’ button to do everything necessary to finish design on the project and take down a construction loan.”

As soon as it became clear to Witkoff that the bill had a good chance of clearing both houses of Congress, he began seeking financing for as much as 60 percent of the estimated $3 billion in development costs, he said. He plans a resort with 4,000 rooms, a casino and a restaurant on the property, purchased for $600 million in August, more than seven years after billionaire Carl Icahn acquired it out of bankruptcy. The project will create 6,000 hotel jobs and 5,000 construction jobs, Witkoff said.

Emphasis mine - trickle down works. It has before and it will again. The nattering elites just need to get the fsck out of the way as the economy comes roaring back to life...

To every thing there is a season

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UPDATE BELOW

It is interesting spending time in Seattle. I lived here for about 20 years but moved out to my farm 15 years ago. Now, the city has changed so very much and the traffic and congestion reflect this. Property values are way up - really wish I had kept my property in Seattle and gotten a loan for the farm - oh well...

It seems that some cities are shrinking in size - and it is not just the progressive cess-pits like Detroit or Baltimore. From Time Magazine:

These Cities Have Already Reached 'Peak Millennial' as Young People Begin to Leave
Millennials flocked to U.S. cities over the past decade, but in some places, the migration appears to be reversing. After years of growth, the population of millennials in Boston and Los Angeles has fallen since 2015, with more young people leaving the cities than arriving last year, according to the latest Census data. And millennial growth has slowed in large hubs like Chicago, New York and Washington, D.C.

Dowell Myers, professor of demography at the University of Southern California, first suggested in 2015 that cities would begin to see declines in millennials. With the largest birth group turning 27 this year, Myers says it’s only a matter of time before millennials head to the suburbs for more space.

To see which cities have reached “peak millennial” — a term Myers coined —we analyzed a decade of Census data through 2016. We found that while tech hubs like San Francisco and Seattle are still drawing young people, large East Coast cities, like New York and D.C., are fast approaching peak millennial, with plateauing populations of those born between 1980 and 1996. And then there are cities like Boston, which already appear to have reached their peak. Boston lost roughly 7,000 millennials in 2016, after a record high of 259,000 the previous year.

Another interesting metric is the U Haul cost to go from one city to another and back again - often quite different dollar values. I talked about that here back in August of this year.

UPDATE: Just read this story from The Idaho Statesman:

Idaho officially earns the title of nation’s fastest-growing state, Census Bureau says
Idaho’s population increased enough in the past year to earn us the title of nation’s fastest-growing state, according to data released Wednesday by the U.S. Census Bureau.

Writing at his blog:

The Darkest Hours
The Tax “Reform” bill working its way painfully out the digestive system of congress like a sigmoid fistula, ought be re-named the US Asset-stripping Assistance Act of 2017, because that’s what is about to splatter the faces of the waiting public, most of whom won’t have a personal lobbyist / tax lawyer by their sides holding a protective tarpulin during the climactic colonic burst of legislation.

Sssshhhh…. The media has not groked this, but the economy is actually collapsing, and the nova-like expansion of the stock markets is exactly the sort of action you might expect in a system getting ready to blow. Meanwhile, the more visible rise of the laughable scam known as crypto-currency, is like the plume of smoke coming out of Vesuvius around 79 AD — an amusing curiosity to the citizens of Pompeii below, going about their normal activities, eating pizza, buying slaves, making love — before hellfire rained down on them.

Whatever the corporate tax rate might be, it won’t be enough to rescue the Ponzi scheme that governing has become, with its implacable costs of empire. So the real aim here is to keep up appearances at all costs just a little while longer while the table scraps of a four-hundred-year-long New World banquet get tossed to the hogs of Wall Street and their accomplices. The catch is that even hogs busy fattening up don’t have a clue about their imminent slaughter.

The centerpiece of the swindle, as usual, is control fraud on the grand scale. Control fraud is the mis-use of authority in applying Three-Card-Monte principles to financial accounting practice, so that a credulous, trustful public will be too bamboozled to see the money drain from their bank accounts and the ground shift under their feet until the moment of freefall. Control fraud is at work in the corporate C-suites, of course, because that is its natural habitat — remember that silver-haired CEO swine from Wells Fargo who got off scot-free with a life-time supply of acorns after scamming his account-holders — but their errand boys and girls in congress have been superbly groomed, pampered, fed, and trained to break trail and cover for them.

Much more at the site - Kunstler is a bit of a muck-raker but his economic chops are first-class. The Bitcoin bubble is just one of many bubbles out there. Time to be very conservative and hold your cards closer vest. Sure, there is money to be made but the gamble is just too great - the markets are too volitile.

Betting the farm house - Bitcoin

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It's a bubble folks - now this is just plain stupid. From CNBC:

People are taking out mortgages to buy bitcoin, says securities regulator
Bitcoin is in the "mania" phase, with some people even borrowing money to get in on the action, securities regulator Joseph Borg told CNBC on Monday.

"We've seen mortgages being taken out to buy bitcoin. … People do credit cards, equity lines," said Borg, president of the North American Securities Administrators Association, a voluntary organization devoted to investor protection. Borg is also director of the Alabama Securities Commission.

And from Tyler Durden at Zero Hedge:

It's Official: Bitcoin Surpasses "Tulip Mania", Is Now The Biggest Bubble In World History
One month ago, a chart from Convoy Investments went viral for showing that among all of the world's most famous asset bubbles, bitcoin was only lagging the infamous 17th century "Tulip Mania."

One month later, the price of bitcoin has exploded even higher, and so it is time to refresh where in the global bubble race bitcoin now stands, and also whether it has finally surpassed "Tulips."

Conveniently, overnight the former Bridgewater analysts Howard Wang and Robert Wu who make up Convoy, released the answer in the form of an updated version of their asset bubble chart. In the new commentary, Wang writes that the Bitcoin prices have again more than doubled since the last update, and "its price has now gone up over 17 times this year, 64 times over the last three years and superseded that of the Dutch Tulip’s climb over the same time frame."

That's right: as of this moment it is official that bitcoin is now the biggest bubble in history, having surpassed the Tulip Mania of 1634-1637.

It will crash - we do not know when but it will crash. T and I have been talking about investments and financial strategy for our future - Bitcoin is nowhere near the picture.

Puerto Rico - an idea for rebuilding

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Great idea - from Benjamin R. Dierker writing at the Foundation for Economic Education:

How Puerto Rico Can Rebuild and Become the Hong Kong of the West
After a particularly devastating hurricane season, Puerto Rico has an uncertain future. Already mismanaged and saddled with debt, the island territory now faces the virtually insurmountable task of rebuilding its infrastructure and economy. But amidst the rubble and heartache lies one of the greatest opportunities in the modern era not just to rebuild, but to reimagine the possibilities for economic and political freedom.

Two simple but powerful steps taken by Congress could hasten recovery and redefine the trajectory of the island’s future. First, the United States should assume all of Puerto Rico’s outstanding bond debt. Second, in exchange for debt assumption, the federal government should establish the island as an Economic Freedom Zone. Within a year, these reforms would help rebuild Puerto Rico; within a decade, they could rebuild our conception of the free market in the Western Hemisphere.

Benjamin talks about Economic Freedom Zones and what they can do:

The second step of the proposal is the establishment of an Economic Freedom Zone, which would set off an explosion of growth. The zone would flatten or suspend numerous taxes and regulations, prompting an immediate increase in productivity. The less restricted environment with more available resources would open the doors to investment and real estate development. Velocity of money would increase at the same time as new money is infused and invested into the economy, as relatively wealthier locals combining with aide workers, construction crews, and business investors spend on the island economy.

Suspending or streamlining environmental regulations would allow expedited construction on essential infrastructure projects, and needless economic hindrances like the Jones Act would finally be dissolved. Serving as a case study on microeconomics, the federal minimum wage would be suspended to allow private actors to negotiate their wages during the rebuilding effort. The government would no longer rob the worker of his bargaining power by mandating a price floor on labor.

Taking inspiration from Hong Kong and Singapore, governance from a lean, honest, and efficient local government, combined with openness to international investment and trade, will allow Puerto Rico to capture business that would be regulated away in the States – if they were allowed to get off the ground at all.

Sounds like a win/win scenario. The US 'enjoys' one of the highest corporate tax rates in the world. We need to change this.

Nothing much on the intarwebs

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Been surfing around the usual places but nothing catches my eye tonight except for this:

20170911-debt.jpg

Yes, I realize that 20,000,000,000,000 is just another big scary number. I was just as worried when it was at 19 Trillion for so long.

To give you an indication of the size of this number. If you were given 20 Trillion dollars and you had to spend $10,000 every second of every day, it would take you 3,805 years to accomplish this. Government spending is out of control and this debt will simply be passed on to our children and grand children. They will be pissed at us and for every reason.

Turns out the classical economists (Austrian School) were right all along - raising the minimum wage kills jobs. From Axios:

Study: Higher minimum wages bring automation and job losses
As of the start of the year, 19 U.S. states had raised minimum wages, dramatizing a long simmering debate: Do minimum wages kill jobs, and make the working class worse off in the end? Or do they simply make them a little richer, with little or no loss to overall employment?

In a new paper, economists Grace Lordan of the London School of Economics and David Neumark of UC Irvine parse 35 years of census data and come down on the worse-off side: For lower-skill jobs like bookkeepers and assembly-line workers, they say, higher minimum wages encourage employers to automate — according to their calculations, a $1 increase can cost tens of thousands of jobs nationally.

Minimum wage was never intended to be a sustainable income. It is the responsibility of the worker to improve themselves and make themselves more valuable to their employer. Then, the employer will be justified in paying them more money. It is as simple as that.

One of the key problems with the Democrat party is that they spend their life in a bubble and deal with perception, optics and narrative. This is why they had their collective asses handed to them last November. Seven months later, this is the best they have come up with. From Axios:

Dems want to rebrand as the economic party
Senate and House Dems, after an intensive process spanning seven months, on Monday will unveil a new economic agenda, Axios has exclusively learned, meant to counter the perception that Democrats are only the anti-Trump party, with no message of their own.

Top Dems see the new message as the key to turning things around after their losses in the presidential race and this year's House special elections.

An opening theme/frame: "excessive corporate power and its impacts."

Pollster Geoff Garin writes in a memo kicking off the project: "[T]he Democratic policies related to curbing excessive corporate power that are being highlighted in the first day of the rollout have real resonance with voters and are strongly supported by a significant majority of Americans."

The agenda's big idea: "Too many families in America today feel that the rules of the economy are rigged against them. Special interests have a strangle-hold on Washington — from the super-rich spending unlimited amounts of secret money to influence our elections, to the huge loopholes in our tax code that help corporations avoid paying taxes."

"If the government goes back to putting working families first, ahead of special interests, we can achieve a better deal for the American people that will raise their pay, lower their expenses, and prepare them for the future."

It would be good to remember that these are the morons who caused the nation debt to skyrocket over the last eight years. Two things:

  1. - the national debt is paid either by us or by our children. The Federal government makes little money outside of tax revenues.
  2. - In only six months, President Trump has added about four trillion dollars to our economy.

Tell me again, who is good for the economy and for working families?

Quote of the year

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What with all of the fake news and other narratives being spun by the left and their handmaidens, the mainstream media; this bears a mention:

"There is no better means of reducing a fallacious variety of thought to absurdity than to let it live itself out completely."
-- Carl Menger

Carl Menger was a very interesting person - he founded the Austrian School of economics. His thesis: On the Origin of Money torpedoes Karl Marx's central tenet - that there is a fixed pool of capital in the world and that social inequities arrive from this pool being inequitably distributed.

In reality, capital (and its proxy: money) is fungible and can be created and destroyed.

An analysis of minimum wages

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I don't think that these researchers were looking for this data - from Zero Hedge:

Harvard 'Shock' Study: Each $1 Minimum Wage Hike Causes 4-10% Increase In Restaurant Failures
A 'shocking' discovery was made when a pair of researchers at Harvard Business School decided to analyze the impact of higher minimum wages in San Francisco on restaurant failures...hint: they went up.

Entitled "Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit", this latest study on the devastating consequences of minimum wage was conducted by Dara Lee Luca and Michael Luca and concluded that each $1 increase in the minimum wage results in a roughly 4-10% increase in the likelihood of a restaurant going out of business.

In this paper, we investigate the impact of the minimum wage on restaurant closures using data from the San Francisco Bay Area. We find suggestive evidence that an increase in the minimum wage leads to an overall increase in the rate of exit.

This paper presents several new findings. First, we provide suggestive evidence that higher minimum wage increases overall exit rates among restaurants, where a $1 increase in the minimum wage leads to approximately a 4 to 10 percent increase in the likelihood of exit, although statistical significance falls with the inclusion of time-varying county-level characteristics and city-specific time trends. This is qualitatively consistent but smaller than what Aaronson et al. (forthcoming) find; they show that a 10 percent raise in the minimum wage increases firm exit by approximately 24 percent from a base of 5.7 percent. Differences in sample and specifications may account for the differences between our study and theirs.

Much more at the site - anyone who was surprised by this data needs to leave the confines of their bubble and experience real life for a while.

Raise taxes beyond a certain point and say goodbye to your revenue creators - it is that simple. From Farm and Ranch:

Kubota moves headquarters to Texas
Kubota Tractor Corporation unveiled its new North American headquarters building in Grapevine, Texas, today in a special ribbon cutting ceremony with Governor Greg Abbott, Masatoshi Kimata, President and Representative Director of the Kubota Group, along with State and local officials and supporters from the Grapevine community who all helped to usher in a new era for the company.

The company’s move to Texas from Torrance, Calif., is the most significant change it has undertaken in its successful 45-year history in the U.S., where it has introduced over the years a full line of iconic orange tractors, construction equipment, lawn and garden equipment and utility vehicles.

“Today is an important day for Kubota as this new building is both a testament to our commitment to the future growth of our business in the U.S., and our pledge of being a socially responsible corporate citizen and active business partner with the great state of Texas and the City of Grapevine,” said Mr. Masato Yoshikawa, President and CEO of Kubota Tractor Corporation, at today’s ceremony. “As a new employer to the area, our hope is to continue to attract talent from the local community with this open environment, state-of-the art workplace and continue our long-term growth strategy to strengthen the Kubota brand in the U.S.”

Kubota has invested more than $50 million in the three-story, environmentally-friendly office building, which totals 193,000 square feet, and includes an onsite research and development facility, and is designed to maximize work efficiencies and conserve resources in alignment with Kubota’s global brand statement, “For Earth, For Life.”

Buttercup the Tractor is a Kubota. I also own several other pieces of Kubota equipment and love them all - well engineered and well built. Glad to see them escaping the socialist hell-hole of California.

Unclear on the concept - Jerry Brown

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California officials to unveil huge transportation deal, new fees
California drivers would face higher prices at the pump and new vehicle registration fees under a $52 billion plan announced Wednesday by Gov. Jerry Brown and California legislative leaders to repair the state’s aging roads and bridges and improve public transportation.

Saying the deal isn’t perfect but long overdue, Brown insisted that California cannot keep ignoring its transportation infrastructure or continue borrowing money to fix it.

Some more:

The deal was more than two years in the making and could be voted on by the Legislature as soon as next week. It would raise $5.2 billion a year for 10 years by increasing the vehicle registration fee by $25 to $175 depending on the value of the vehicle, hiking gas and diesel taxes, and creating a fee on zero-emission vehicles.

The sales tax on gas wouldn’t change, but the excise tax on distributors — a cost passed down to drivers — would rise. Under the deal, the state’s gas excise tax, which is currently 18 cents, would increase by 12 cents per gallon to 30 cents.

Additionally, the excise tax on diesel fuel, used by the commercial trucking industry, would increase by 20 cents a gallon to 36 cents. The diesel sales tax also would rise to 5.75 percent from the current 1.75 percent.

Electric and hybrid-vehicle drivers, meanwhile, would pay a new $100-per-year fee beginning in 2020.

So in other words, Governor Brown is adding incentive for businesses to move from California to more tax-friendly states. And no word about defunding his precious little choo-choo train:

California's bullet train is hurtling toward a multibillion-dollar overrun, a confidential federal report warns
California’s bullet train could cost taxpayers 50% more than estimated — as much as $3.6 billion more. And that’s just for the first 118 miles through the Central Valley, which was supposed to be the easiest part of the route between Los Angeles and San Francisco.

A confidential Federal Railroad Administration risk analysis, obtained by The Times, projects that building bridges, viaducts, trenches and track from Merced to Shafter, just north of Bakersfield, could cost $9.5 billion to $10 billion, compared with the original budget of $6.4 billion.

Time to check the U-Haul index again:

20170331-s-to-d.jpg20170331-d-to-s.jpg

Yup - exactly twice as expensive. There are so many more U-Haul trucks departing California than arriving, the market makes the rental that much more valuable - plus, they have to keep shuttling the trucks back for more people to rent.

Our National Debt

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Great if unsurprising news - from Joe Hoft writing at The Gateway Pundit:

In First 2 Months in Office: Trump Reduced Debt by $100 Billion – Obama Increased Debt by $400 Billion
On January 20th, the day of President Trump’s Inauguration, the US Debt stood at $19,947 billion. As of March 16th, the most recent date for US debt reporting, the US Debt stands at $19,846 billion. President Trump has cut the US Debt burden by over $100 billion and 0.5% in the first two months since his inauguration!

By comparison, under President Obama, the US Debt burden increased by more than $400 billion after his inauguration through March 19th 2009, his first two months in office. Obama increased the US Debt by 3.9% during this time period and signed the trillion dollar ‘Stimulus’ bill which is widely considered a colossal failure and waste of US tax dollars as well. The failed ‘Stimulus’ was the major piece of legislation in Obama’s first year leading to Obama’s first year deficit of $1.4 trillion. Overall Obama doubled the US Debt during his Presidency and set records for highest deficits and the largest debt increase by any President ever.

An excellent start - get that puppy under control so our children will not have to deal with our profligate overspending.

California - circling the drain

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That they are even considering this is just plain nuts - from California's Los Angeles Times:

Here's what would it take to give California students a debt-free college education
California could help students get through college without debt — but at a hefty potential cost of $3.3 billion annually, a new state report says.

The report by the state Legislative Analyst’s Office laid out different ways the state could help students at the University of California, California State University and California Community Colleges cover both tuition and living expenses.

The analysis comes as concern rises over spiraling student debt, which has topped $1 trillion nationwide. Worries over college costs also have deepened among some families since UC regents approved a tuition increase last week and Gov. Jerry Brown proposed phasing out the state’s Middle Class Scholarship program for new students beginning this fall. Cal State University trustees also are considering a tuition increase.

Where is this money coming from and what is to prevent the snowflakes from squandering this boon on useless 'xxxx' Studies degrees instead of STEM

The cost of raising the minimum wage

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From Ohio's The Columbus Dispatch:

Wendy’s to install ordering kiosks in 1,000 stores this year
Last year, the kiosks were coming. It didn't take them long to get here.

Wendy's plans to install self-ordering kiosks in 1,000 of its stores — about 16 percent of its locations — by the end of the year.

And the reason:

Trimm said the kiosks accomplish two purposes: They give younger customers an ordering experience that they prefer, and they reduce labor costs.

A typical store would get three kiosks for about $15,000. Trimm estimated the payback on those machines would be less than two years, thanks to labor savings and increased sales. Customers still could order at the counter.

And some numbers:

"Last year was tough — 5 percent wage inflation," said Bob Wright, Wendy's chief operating officer, during his presentation to investors and analysts last week. He added that the company expects wages to rise 4 percent in 2017. "But the real question is what are we doing about it?"

Wright noted that over the past two years, Wendy's has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.

As labor prices rise, something has to give. Profit margins are minimal in fast food and if they raised the sale price of their food, they would see a reduction in sales.

Work - wages and nations

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Willis Eschenbach is one of the more fascinating people on the web - would love to sit down to dinner with him sometime. He posted an essay about Mexican labor and really nails it. From his website:

Work Americans Won’t Do
I keep hearing that the reason that we need workers from Mexico and Central America to pick our crops is because working in the fields is “work that Americans won’t do”. I say that that sentence is chopped off in midstream.

How do I know that’s only half a sentence? Because that was the first work I ever did. I worked summers all through high school. My first job was in 1961, when I was 13 years old and weighed about 120 pounds (55 kg) soaking wet.

I just looked it up, and at the time, the Federal minimum wage in current dollars was $8.12 per hour. The California minimum wage was $9.34 per hour. Interesting, not a lot different from today.

In current money, on my first job I made two dollars and forty-four cents an hour. I worked ten hours a day, bucking hay in the fields. It was totally illegal for me to be doing the work for several reasons. First, I was too young to be working at all. Then I wasn’t being paid overtime for over eight hours per day. Plus I wasn’t making minimum wage. I thought then, and still think, that those laws were asinine. I was overjoyed to have a job. I said screw the laws, and I took every penny I earned home and gave it to my single mother.

Read the whole thing and the comments as well. Good stuff and explains a lot.

Crap - RIP Hans Rosling

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From the Beeb:

Hans Rosling: Data visionary and educator dies aged 68
Hans Rosling, a Swedish professor of global health and well-known public educator, has died aged 68, his Gapminder foundation has announced.

Mr Rosling was diagnosed with pancreatic cancer a year ago and died in Uppsala, Sweden.

He was known for lively presentations that used data and animation to explain global development in a compelling way.

His Gapminder co-founders said that they would continue to fight for "his dream of a fact-based worldview".

Here he is talking about world poverty, immigration and gumballs:

From The Times of London:

Britain has world’s top economy
Britain ended last year as the strongest of the world’s advanced economies with growth accelerating in the six months after the Brexit vote, it was revealed yesterday.

Business activity hit a 17-month high last month, meaning that the economy grew by 2.2 per cent last year — more than the six other leading nations, including the US, Germany and Japan.

Far from slowing after the referendum in June, as predicted by the Treasury and Bank of England, growth appeared to have improved. GDP grew at 0.3 per cent and 0.6 per cent in the first two quarters of last year, compared with 0.6 per cent and an estimated 0.5 per cent in the final period.

as predicted by the Treasury and Bank of England  - sounds like they need to get some new management over there. The low-level clerks are probably fine but the top-level management seems to not be able to see the forest for the trees. Someone needs to be there who doesn't live in a bubble. The data was there, they just chose to ignore it.

Time for the rest of Europe to follow and let those un-elected bureaucrats in Brussels go back to making chocolate and cheese.

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