Trump, trump, trump, trump, trump, trump, trump, trump....

[ruffrecords]

Well there is eggs and trump, eggs bacon and trump,  eggs, bacon, sausage and trump,  trump, sausage, bacon and trump,  trump, eggs, trump, trump, and bacon.

Perhaps we could create a generic version of the Lumberjack song ......  "I'm a President and I'm OK" etc

Cheers

Ian

 

[volker]

The U.S. president made 132 false claims last week, 19 per day, almost five times his average. That shatters his previous record of 103 false claims in a week, which he set in June.

More here. Considering that he spent roughly one third of his time as president on golf courses and vacation resorts, does that mean the Commander of Cheese is trying to improve his work ethic?

 

[JohnRoberts]

More here. Considering that he spent roughly one third of his time as president on golf courses and vacation resorts, does that mean the Commander of Cheese is trying to improve his work ethic?

Thanks for the news update, I have been without my daily newspaper all week so haven't been seeing the box scores.

JR

 

[Matador]

So apparently Cohen is now cooperating with prosecutors, and possibly pleading guilty to campaign finance violations, money laundering, and bank fraud. The Manafort jury is still deliberating, and seems likely to be returning guilty verdicts on some counts and possibly acquittals on others.  This marks the 7th person tied to the Trump campaign (and 27th identified amongst US citizens and Russian nationals) that has either a) pled guilty to crimes, or b) being found guilty of crimes, mostly (if not all) related to the campaign.

However let's talk about something more long term:  it seems that polling has proven that even these events aren't moving the opinions much...Trump supports are still supporting him (which begs another question:  is there anything that could happen that could change this?), anti-Trump people are still anti-Trump, most of the others that are in the likely voter pool either aren't participating in polling, or are waiting until voting day to go on the record with their support or lack thereof.

So let's game theory this:  let's assume the 'best' case for the Democrats, the Dems take control of the House *and* the Senate.  They can lock Trump's agenda up through 2020, as they won't have enough voltes in the best case to override a veto, so essentially we'll have Democrats teeing up legislation that get's veto'ed by Trump.

Let's assume again that Trump is defeated in 2020, and assume that Dem's maintain control of both Houses, and maintain 60 reliable votes in the Senate.  What happens then?  Maybe we get Medicare for All, some kind of college stipend more like other countries, maybe even immigration legislation.  President Warren reverses all of the reverses of Trump's executive actions, reinstates the EPA and the CFPA, etc.

Then the Tea Party rises again, or maybe the Alt-Right, just like in 2006.  Conservative radio hammers the 'socialist takeover' line 24/7 starting in 2020.  We get to see Sarah Palin talking about death panels and how President Warren is meeting with ISIS to sell baby parts through Planned Parenthood.  The outrage whips into a frenzy and Dem's loose the House again in 2022, but keep the presidency in 2024, meaning another 6 years of stalled legislation (sound familiar)?

Rise and repeat.  Each successive administration tries to erase the previous from history.

What stops this cycle?

 

[Bo Deadly]

So apparently Cohen is now cooperating with prosecutors, and possibly pleading guilty to campaign finance violations, money laundering, and bank fraud. The Manafort jury is still deliberating, and seems likely to be returning guilty verdicts on some counts and possibly acquittals on others.

You need to get your facts straight. Cohen has plead guilty. There are no money laundering charges. The Manafort trial is done after they returned a guilty verdict on 8 counts. He was not acquitted on anything. The jury was deadlocked on the remaining 10 so the judge declared a mistrial on just those 10 counts resulting in a "partial verdict". But it doesn't matter that much because everything can be considered by the judge when sentenced later.

 

[Matador]

Yeah...that news broke literally as I was typing my earlier post.  I'm behind several projects, but if I can get my Delorean re-tubed I'll go back and redo my mistake.

 

[Bo Deadly]

Yeah...that news broke literally as I was typing my earlier post.

No worries. Sorry for being blunt but this is the age of disinformation so I feel it's important to call people out even if it costs me some karma.

 

[JohnRoberts]

I'm shocked... 

JR

 

[dmp]

Bad day for Trump.

 

[boji]

So let's game theory this

Mistaken facts or not, as a nation we are primed for blowback.  Even if impeachment proceedings do not move forward the market will respond to the potential of losing its second term golden boy. Consider as well that housing and corporate debt is at an all time high, almost like we are in under a collective amnesia regarding the 2008 crisis. I get the sense what we need most to calm the coming partisan frenzy is a centrist, but what we will get will be the exact opposite.

 

[CJ]

sanity is slowly being restored to the white house.

 

[JohnRoberts]

Mistaken facts or not, as a nation we are primed for blowback. 

markets don't go up in a straight line. We are about in the longest bull market since WWII (3,400+ days). That said the economy appears healthy with low unemployment and earnings growth so it is hard to predict a reversal anytime soon.

Even if impeachment proceedings do not move forward the market will respond to the potential of losing its second term golden boy.

yes the mid term matters, I've been wrong in the past so won't predict the vote this time.

Impeachment doesn't mean removal (recall Bill Clinton). And even if they could make him step down VP Pence is an actual conservative.  Of course the calculus is about 2020 and VP Pence is not expected to be as electable as President Trump.

The market would respond to a return to democratic control and policy.

Consider as well that housing and corporate debt is at an all time high,

mortgage debt has just returned to pre-crisis levels (generally considered a positive). Automotive debt is up 60% since 2008, student debt is more than 2.5x 2008.  The other non mortgage household debt is not broken out separately but up too, a sign of consumer confidence.

Corporate balance sheets cash to debt ratio is better than in the past, but one possible future drag on earnings will be the need to refinance short term debt in a rising interest rate environment. The liquidity tide is slowly going out so rising interest rates  will have an effect in the margin (same thing for government debt that will cost more to service.)

The immediate unsustainable debt concern is in China, but the government there tends to bail out state backed enterprises so who knows how that ends up or affects markets outside China.

almost like we are in under a collective amnesia regarding the 2008 crisis.

Our central bankers are still unwinding the historic liquidity injection made after the "great recession", and so far so good.  I am seeing evidence of problems in weaker international markets that were buoyed up by the western liquidity injections that are fungible. As that liquidity tide goes out, their weakness is revealed.

I get the sense what we need most to calm the coming partisan frenzy is a centrist, but what we will get will be the exact opposite.

I suspect the partisan angst could get worse before it gets better, but eventually reality will be recognized and accepted (one reality or the other reality).  8)

JR

PS: I saw one promising article about a few universities working to improve civil discourse between students with different opinions. For now they are starting with small informal groups as easier to manage.

 

[Gold]

I am no financial expert but I predict soon we will hear the word "inflation" for the first time in 40 years.

 

[dmp]

Mistaken facts or not, as a nation we are primed for blowback.  Even if impeachment proceedings do not move forward the market will respond to the potential of losing its second term golden boy. Consider as well that housing and corporate debt is at an all time high, almost like we are in under a collective amnesia regarding the 2008 crisis.

The high levels of debt (housing, corporate, student loan, auto etc) are a result of the gov interventions (QE, 1st time buyer $8k credit,  TARP, etc...) to soften the hard landing in 2008.
The extreme interventions of the government & fed softened and delayed the inevitable debt collapse but I agree with you that there will be another collapse. It can't be put off forever, and debt cannot grow indefinitely. The floor in interest rates is going to cause a hard landing eventually. We've had 30 yrs of a refi supported binge. Next time I expect the extreme partisan divide and general resentment to the wealthy, tax evading elites (i.e. Manafort) will make it politically difficult for the gov to respond to stop the bleeding. and the unwind will be much worse. It could still be years or decades off - I don't know.
But with such a corrupt and scandal ridden administration, uniting to bail out the banks again would be ridiculous. 

I get the sense what we need most to calm the coming partisan frenzy is a centrist, but what we will get will be the exact opposite.

The nation has been becoming more polarized over the past 30 yrs, but the extreme polarization accelerated dramatically during Obama's 8 yrs.  The Republican party has moved far right, while the left moved towards the center (with Clinton), but in my opinion it reached a breaking point with Trump and the 'centrist' contingent in the Democrats is going to lose ground to the further left.
The center is falling out.
Obama actually tried to be a centrist President - many disagree with this - but the fact that he is so strongly criticized by the right AND the left demonstrates it, imo.  He worked harder to win over his critics than cater to his believers. He saw what a threat gridlock, obstruction, and extreme partisanship was to the country.
The Republican party in there extreme partisanship has been winning, however, and it's not lost on the left.
Tax cuts for the rich, extreme conservative judges, etc...
This article is long but describes the partisanship over judges really well and the collapse of compromise.
https://www.nytimes.com/2018/08/22/magazine/trump-remaking-courts-judiciary.html

I am no financial expert but I predict soon we will hear the word "inflation" for the first time in 40 years.

The inflation in housing and other assets (stocks, etc) has been really significant.
I don't expect consumer goods to really start showing signs of inflation because 50% of the country is still broke and the next 40% are just doing OK. It's only the top 10% that are really doing well.  But i have been seeing retailers  reporting strong sales (i.e. Target) so perhaps I'm wrong and consumer goods are going to pop.

 

[JohnRoberts]

The inflation in housing and other assets (stocks, etc) has been really significant.

Yes and it was done on purpose to bail out all the underwater house mortgages. House prices were the immediate target of the forced inflation, but the stock market and all other hard assets went along for the ride. 

Arguably it would have been prudent to realize the underwater mortgage losses quickly to get it over with, but politicians don't provide painful solutions to millions of voters. So instead we have an economy distorted by excessive liquidity for a decade now.

Good luck to us all...

I don't expect consumer goods to really start showing signs of inflation because 50% of the country is still broke and the next 40% are just doing OK. It's only the top 10% that are really doing well.  But i have been seeing retailers  reporting strong sales (i.e. Target) so perhaps I'm wrong and consumer goods are going to pop.

Few industries have the luxury of no competition and charging whatever the market will bear***... consumer products are about the most aggressive for price competition. Inflation and wage increases will drive up input costs, but only incrementally.  Almost everywhere we look we see new cheaper options. Remember what blade razors used to cost?  Another consumer trend is a cultural shift toward accepting generic goods as equivalent to brand names. This too will erode consumer goods pricing power.

I have long been skeptical of an easy soft landing for withdrawing all the QE we pumped into the economy, but so far it looks like the pain is being felt by other countries not the US.  It is good to be cautious but perhaps for other reasons than I am hearing cited here.

JR

*** Speaking of lack of price competition, I read about a hospital finally investigating their true cost for performing knee replacement surgery  (something I have personal interest in). These typically bill out around $50k per knee. This hospital discovered that their actual cost was in the range of $7,000 to $10,000 with room for improvement below that. I don't expect the US medical community to drop their prices for knee surgery 80% any time soon, but it is an interesting data point.

 

[Gold]

*** Speaking of lack of price competition, I read about a hospital finally investigating their true cost for performing knee replacement surgery  (something I have personal interest in). These typically bill out around $50k per knee. This hospital discovered that their actual cost was in the range of $7,000 to $10,000 with room for improvement below that. I don't expect the US medical community to drop their prices for knee surgery 80% any time soon, but it is an interesting data point.

If the free market isn't working to the consumers benefit perhaps some regulation is order?

 

[dmp]

Yes and it was done on purpose to bail out all the underwater house mortgages. House prices were the immediate target of the forced inflation, but the stock market and all other hard assets went along for the ride. 

Arguably it would have been prudent to realize the underwater mortgage losses quickly to get it over with, but politicians don't provide painful solutions to millions of voters. So instead we have an economy distorted by excessive liquidity for a decade now.

Good luck to us all...

I think the real contagion threat of 2008 was the highly leveraged investments based on mortgages. These investments made the assumption that mortgages were a 'safe' investment (housing prices do not decline). Then leveraged them up until they made a good return. Say you can earn 1% a year on an investment based on mortgages.  Not too impressive - but then leverage it 10x and you are making 10%  (i.e. borrowed money to increase the investment). But if the return ever drops, you lose big. A loss can lead to a margin call, which forces further sales, which depresses prices more. Markets can become unstable.
So, yes there were regular people with underwater mortgages, but many of those were foreclosed on without getting help from uncle Sam. The big contagion threat was on Wall Street and that's where the bailout went.
A long term decline in house values was also prevented, which would cause all kinds of distress in the housing market. Arguably it would be a good thing though as it would make houses more affordable for young people as older people were forced to sell at more reasonable prices.  Of course the older generations (Boomers) would not stand for that, as they are doing everything they can to live life to the fullest and saddle the younger generations with their excess and irresponsibility. The recent tax cut and spending bill are looking to create trillion dollar deficits soon in a economy at full employment. Not going to end well. And Republicans are already starting to talk about having to cut entitlements due to the fiscal imbalance (of their own making). I expect they will propose something that keeps entitlements at the same level for Boomers, while decreasing it for younger people. Not cool at all.

Few industries have the luxury of no competition and charging whatever the market will bear***... consumer products are about the most aggressive for price competition. Inflation and wage increases will drive up input costs, but only incrementally.  Almost everywhere we look we see new cheaper options. Remember what blade razors used to cost?  Another consumer trend is a cultural shift toward accepting generic goods as equivalent to brand names. This too will erode consumer goods pricing power.

I have long been skeptical of an easy soft landing for withdrawing all the QE we pumped into the economy, but so far it looks like the pain is being felt by other countries not the US.  It is good to be cautious but perhaps for other reasons than I am hearing cited here.

JR

*** Speaking of lack of price competition, I read about a hospital finally investigating their true cost for performing knee replacement surgery  (something I have personal interest in). These typically bill out around $50k per knee. This hospital discovered that their actual cost was in the range of $7,000 to $10,000 with room for improvement below that. I don't expect the US medical community to drop their prices for knee surgery 80% any time soon, but it is an interesting data point.

There's debate on how inflation happens. There is a supply side and demand side theory. Wages can push up production costs, which means a company would need to charge more to maintain the same profitability (supply side). But then there is the demand side argument, where higher wages mean consumers have more to spend, and companies can charge more due to more competition for purchasing the products. In reality it is both in a complicated system with many moving parts and individual actors.  But in both cases, higher wages are thought to stimulate inflation. Thus we have a government policy that acts to restrain wage gains. 

The inflation crisis of the '70s has been studied a lot and though I'm not sure it is definitively understood, I think the scenario is so different now that it is unlikely to repeat.
In the '70s the government regulated with a MUCH heavier hand - i.e. price controls. And Unions had a much stronger position and even had wage adjustments guaranteed in contracts tied to price indexes, so inflation caused a vicious feedback cycle with wages. 

Also, let's remember QT has barely started. The Fed's balance sheet has declined by only about 5%. The fact that EMs are already in turmoil is not a good sign.

 

[JohnRoberts]

Of course the older generations (Boomers) would not stand for that, as they are doing everything they can to live life to the fullest and saddle the younger generations with their excess and irresponsibility.

:

I would write a longer point by point refutation, but it seems we've had this exact same discussion multiple times over the last decade, so nah.
=====

Life is short and I need to get back to my excess and irresponsibility.

I wish you were kidding, like I am. 

JR

 

[dmp]

:

I would write a longer point by point refutation, but it seems we've had this exact same discussion multiple times over the last decade, so nah.
=====

Life is short and I need to get back to my excess and irresponsibility.

I wish you were kidding, like I am. 

JR

Generational criticism does not mean every individual is responsible.  I know many people in that age group that did not support the political changes of the last 30 years that have been irresponsible. People who supported lower taxes but higher benefits for themselves and created a debt for the next generation deserve some criticism. I'm not sure how to word it to get the point across but not have it seem a individual attack on anyone in the age group. I'll try going forward though because it seems easily dismissed in the discussion.

How do you think voters age 50-70 would feel about reducing SS and Medicare benefits? Trillion dollar deficits are not sustainable. And the idea that the tax cut and spending increases of GWB and DJT during full employment and strong economies would pay for themselves is clearly not going to happen.

 

[DaveP]

The USA took a major wrong turn after the war regarding healthcare.

The government left it to employers to provide it, which has the built in flaw that the jobless and disabled are without healthcare.  (or get a lesser version of it)

If Great Britain could provide universal healthcare whilst on its knees financially after WW2, then I'm sure that the US could have done the same.  This is where ideology and doctrine have over-ruled common sense.  I guess it would take 10 years to unravel the mess you are in, even if you started today and you had the vested interests on side, which you have not.

DaveP