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March 29, 2018 | Donald Trump: Miracle Worker

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

GUALFIN, ARGENTINA – We live in an age of miracles, to be sure. Even here in the remote Andes, we can turn on our laptop computer and get messages from all over the world – with photos!

If we wanted, we could even tune into reruns of Stormy Daniels’ Sunday interview or watch one of her many charming movies.

We can get in our air-conditioned truck and drive, too, without having to worry about wind or weather… and, after a couple of hours, pull into a decent restaurant where they serve fish brought all the way from the Pacific Ocean.

 

 

Unwelcome Prices

And here’s a miracle for you. For thousands of years, the best price was discovered by willing buyers and sellers. It was messy. It was unpredictable. And they always got it wrong, because they changed their minds by the minute.

Well… now, a group of academic economists thousands of miles away has come up with a better way.

When stock prices plunged in January 2000, for example, they knew that those prices were incorrect – or at least, unwelcome. So they went to work to change them.

Then again, in 2008–2009, they knew better than all the world’s stock analysts, traders, and investors… They knew that stocks should be trading at higher prices. And within a few months… they were!

Miracle!

And now, they know – to two decimal points – how much borrowers should pay for funds.

No kidding.

They’ve got a whole program underway designed to raise interest rates. By the end of the year, they’ll be dumping bonds at a rate of $600 billion per year – to get prevailing yields back to where they know they ought to be.

They know, too, how much consumer prices should move… and in what direction.

No kidding, again.

They say the inflation rate should be 2% per year. Not minus 2%. Not 2.2%. Two percent. That’s it.

Miracle!

And along comes the Trump Team, piling on more miracles. How is it possible for a reality TV star, aided and abetted by a crackpot economist (Navarro) and a vulture investor (Ross), to know where Americans should buy their steel – Canada, okay… China, no – and how much they should pay for it?

Another miracle!

 

 

Bad Old Days

Back in the old days, buyers and sellers would be stuck making the best deal they could. But now, in come the geniuses… offering a better deal. At least, better for someone.

And how about the people who buy cars and trucks?

In the bad old days, they just had to work it out themselves. The buyer would look for the best available deal… and take it.

But in come the miracle workers. Forbes reports on the Trump administration’s trade deal with South Korea:

The actual deal has not been released, but per reports:

  • The United States will maintain its 25% tariff on light trucks for an additional 20 years, with full phase-out by 2041.
  • South Korea will increase its annual quota for cars that meet U.S. safety standards, but not Korean standards to 50,000 per manufacturer, from 25,000 per manufacturer.
  • South Korea will limit its steel exports to 70% of the annual average from 2015 to 2017.

Over thousands of years of experience, people learned that they can’t do better than old-fashioned win-win deals. But that was before the Age of Miracles. Now, we have a better deal.

Neither the theory nor the practical evidence of this has yet been offered to us… but that’s what makes this so miraculous.

Nobody knows how it is better. Nobody knows why it is better. And everybody who has bothered to think about it for more than two seconds thinks it is worse.

But that’s the thing about miracles… like the Virgin Birth or the Mets’ 1969 victory over the Baltimore Orioles, they don’t have to make any sense.

 

 

Deep State Party

We should add the latest “ominous” federal budget to the list of miracles, too.

For generations, people believed that the best government was one that governed modestly, that did not spend money it did not have… and that benefited from the two-party system.

Each party served to restrain the other, forcing each other to compromise… to make concessions… to cut out unnecessary programs and justify spending the public’s money.

But now… we have another big step forward for mankind. Now, in Washington, we have what is effectively a one-party system: the Deep State Party.

No need for concessions. No need for compromises. And don’t worry about restraint.

The latest “ominous” spending bill includes big increases for both parties’ boondoggles. As near as we can tell, there was not a single program so goofy and so woebegone that it did not find favor in the eyes of Republicans, Democrats, insiders, the elite, the Deep State, and Mr. Trump.

Even the agencies that Trump promised to cut are still there… and getting more money!

We turned to our trusty research chief, Joe Withrow, for evidence:

A list of the most ridiculous and wasteful government programs is put out every year, usually by one of the senators from Oklahoma. They call it the federal “Wastebook.”

Here are some ridiculous items to get you started from the 2017 “Wastebook.”

  • In 2017, the National Endowment for the Humanities (NEH) provided $74,851 for a university to utilize 3D technology to create electronic versions of puppets so viewers can “manipulate and play” with them. The funding will be used to scan up to 15 puppets into a system that will enable viewers to control puppet functions and facial expressions either on a desktop computer or virtual reality device.
  • In 2017, the National Science Foundation (NSF) issued a $40,000 grant to a project seeking to catalogue the public services provided by the government of Iceland to Syrian refugees fleeing to the country.
  • In 2017, the National Archives issued a $100,000 grant to digitize 250 hours of New York theater video taken back in the 1970s. Costco said it could have done the job for $26,000.
  • In 2017, the Department of Defense (DoD) reported that it is unable to track $1 billion of equipment, including small arms, mortars, and Humvees, that were purchased for Iraqi security forces in 2016. The DoD does have a record of the equipment being transported to the region, but there is no record of what happened to it upon arrival.
  • In 2006, the U.S. Citizenship and Immigration Services (USCIS) launched a program to update its IT system. The Government Accountability Office (GAO) recently reported that the USCIS is on pace to finish its IT upgrade in 2019… at a total cost of $3.1 billion.
  • In July 2017, the National Endowment for the Arts (NEA) issued a $20,000 grant to fund an adult summer camp for “artists and scientists investigating the issues surrounding climate change.” It turns out that this $20,000 grant was part of a $755,000 NEA spending package for “artist housing.”
  • In 2017, the Government Accountability Office (GAO) audited the Department of Defense’s program for giving away excess equipment, including night-vision goggles, simulated rifles, and simulated pipe bombs, to other federal agencies, state and local governments. The GAO found that the DoD gave away $1.2 million in equipment to people claiming to represent fictitious federal agencies. It is not known what happened to the equipment.
  • In March 2017, the National Science Foundation (NSF) issued a $203,424 grant to study the grammar and tone of the Seenku language of Burkina Faso, a country in west Africa. Later in 2017, the NSF issued a $150,382 grant to study the Domaaki language of northern Pakistan.…

Cut Some of This Grease

The spending bill was 2,300 pages long. Naturally, it was written by lobbyists, careerists, insiders, and elite carpetbaggers. We doubt that a single member of Congress – and certainly not Donald J. Trump – read it.

As for the president, this is a miraculous turnaround. He campaigned on a “drain the swamp” platform… We doubt that he really meant a word of it.

Still, it is remarkable that he didn’t at least veto the measure… and toss it back to Congress.

“Cut some of this grease,” he might have explained in a tweet. “Balance the damned budget. It’s YOUR JOB!!!.” He would have been a hero – at least, to us.

Instead, when chief-of-staff Kelly reminded him that if he vetoed the bill, he would have to give up his golf weekend at Mar-a-Lago, he may have replied:

“Aw… the hell with it; deficits don’t matter.” And signed.

Paris was worth a mass to Henry IV, who converted to Catholicism to take the crown of France. America’s solvency, apparently, is no longer worth 18 holes of golf.

That must count as some sort of miracle, too.

Regards,

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Bill

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March 29th, 2018

Posted In: Bill Bonner's Diary

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