The President of the United States is an idiot. There, I said it. I'm not saying "I disagree with him", or even "I think his policies are harmful", but that he is an idiot, that he has no understanding of how things work, and doesn't care. Some of his idiot supporters applaud his bull-in-a-china-shop approach, reasoning (I am using "reasoning" quite loosely) that the government needed shaking up by an outsider who didn't play by the old tired rules. No, Dotard Donnie's approach is analogous to a the owner of a repair shop deciding that internal combustion is just an attempt by the "Deep Garage" to make him look bad and that any car that comes into his garage will have its engine replaced by windmills. His mechanics patiently explain why this plan won't work, but he decides that no one knows more about cars than he does and goes ahead with the plan.
No, it's not that Trump is boldly implementing new approaches to governance, it's that he doesn't even understand the basics of economics, global trade, tariffs, military alliances or the functioning of a free press. The newest unveiling of ignorance regards bonds.
While stocks, put simply, are ownership shares of a company, with the price fluctuating based on the perception of value of a company, bonds can be viewed as a loan to a company or a government. In order to turn a profit from a stock, you have to sell it at a higher price than what you paid for it. Bonds, on the other hand, have a prescribed maturity date, 2 years, 10 years, 30 years, 30 days - there are multiple varieties. In general a $100 bond is purchased for $100, but may pay a predetermined annual interest rate to the bond holder. However, bonds may be bought and sold at prices that differ from the face value. Just like with any other commodity, high demand for a bond may cause it to be traded at higher than face value (a premium) or with lower demand or perception of high risk, at less (a discount).
Donnie has been complaining lately that what we need to do is issue negative interest rate bonds, like Germany is doing. He takes the simplistic view that if an investor is paying more for a bond than what is going to be paid out, the issuer (in this case the Treasury) is making a profit. He can't understand why The Fed won't lower interest rates to below zero so we can make a profit this way. It's not simple, however. Popularity of bonds that yield less than what was paid for them is a sign that investors feel that just parking their money somewhere is the safest bet in a volatile economy. Not only is it a sign that simply warehousing cash is the prudent option, but they're locking into these bonds now in the belief that the market will sink lower.
Now, what you have just read is a very simple explanation. It is by no means complete. But that's the point, it's very complex and has difficult-to-predict consequences. Everything about economics is complex, it's a chaotic system with countless variables, yet Donnie tries to paint it as simple, with obvious solutions. When he implements his "solutions" and the inevitable chaos ensues, he then refuses to acknowledge that he may have been wrong and flails about looking for scapegoats: the press, the Democrats, the Federal Reserve, the "Deep State". A prime example is his "easy to win" trade war with China that he continues to escalate. It is having a negative effect on the economy, costing US importers and consumers money and harming businesses, yet he continues to deny the obvious.
Many people rationalized their vote for Trump in 2016 as a pragmatic vote for a "successful businessman" when even a cursory look at his career would suggest quite the opposite. Trump was mainly successful at securing a big paycheck for himself at the expense of businesses that he bankrupted and contractors that he didn't pay. He was a genius at one thing: marketing himself as a successful businessman and playing one on television. It was obvious during the 2016 campaign that he was ignorant and would certainly be incompetent, and time has confirmed it.
Sunday, August 25, 2019
Tuesday, August 20, 2019
Now? Do You See It Yet?
On my last visit with family, I got into a polite political discussion with my 85 year-old mother. I had vowed to avoid arguing politics with her because (1) She's my mom & I love her (2) She's an old lady [sorry mom] (3) There's no way that she's going to change her mind based on anything that I say. But she kept bringing up! During one discussion over coffee and the local diner one night, she suggested that Dotard Donnie was doing a good job "because the economy". And I hear this a lot from Trumpists: the economy is doing so well, better than ever, because of Trump. It's not an unusual sentiment, self interest. I'm doing okay, so I'll ignore the bad things. And if you're going to support Donnie because you think the economy is doing well, you have to ignore or rationalize away the hate speech, the accommodation and encouragement of racism, of hatred, of misogyny, of xenophobia. You have to be okay with the constant lying, not just your usual butt-covering lies that politicians tell, but lies about everything, lying about what we all heard him say five minutes ago. You have to be okay with the appointment of cabinet secretaries who either have no knowledge of the departments that they are tasked with overseeing or are hell-bent on dismantling or neutralizing the mission of those departments. You have to be okay with the utter incompetence and ignorance of the basics of governance. It's one thing to cheer on an outsider who shakes up a moribund system, but we have laws that constrain what our elected officials can do, but he doesn't seem to understand that. He has no concept of how laws are made. He is completely ignorant about economics, economic concepts that a first year college student has mastered are a mystery to him. You have to be okay with his antagonizing our allies while cozying up to dictators, calling them his good friends. You have to be okay with his reneging on international agreements that took years to negotiate. You have to be okay with the daily Twitter rants, often attacking American business or individuals that disagree with him. You have to be okay with the garden variety evidence that he's nuts...buy Greenland?
But, hey, the economy is doing great!
Until it's not.
We're starting to see some signs that some problems are appearing on the horizon. A healthy economy in large part depends that people believe that it's a healthy economy. The lower yields on ten-year bonds is a direct result of lower confidence of investors. Foreign investment is down and domestic companies are starting to slow their investment because Donnie's unpredictable "policies" create uncertainty, and if there's anything that businesses hate, it's uncertainty.
So what will the Trumpists do when the economy starts to tank? Will they abandon him? No, they'll do what their cult leader is already doing: blame The Fed (which they don't understand), blame the media, blame the Democrats, blame the "Deep State".
There's no convincing them, stop trying. There just needs to be more of us than them next election day.
But, hey, the economy is doing great!
Until it's not.
We're starting to see some signs that some problems are appearing on the horizon. A healthy economy in large part depends that people believe that it's a healthy economy. The lower yields on ten-year bonds is a direct result of lower confidence of investors. Foreign investment is down and domestic companies are starting to slow their investment because Donnie's unpredictable "policies" create uncertainty, and if there's anything that businesses hate, it's uncertainty.
So what will the Trumpists do when the economy starts to tank? Will they abandon him? No, they'll do what their cult leader is already doing: blame The Fed (which they don't understand), blame the media, blame the Democrats, blame the "Deep State".
There's no convincing them, stop trying. There just needs to be more of us than them next election day.
Senator Warren
Was Senator Warren’s claim to have some Native American
ancestry insulting to Native Americans? Was her apology sufficient? Was she a
racist for these actions? I will leave it to Native Americans themselves to
decide those questions. As the latest cliché goes: that’s not in my lane. There
are, however, facts, and here are a few of them:
- Senator Warren’s family talked about having an unspecified ancestor a few generations back who was a Cherokee
- The young Elizabeth Warren believed this family lore and was proud to count Cherokee as one part of her ancestry
- Unless you’re part of some country’s royal family, it’s not likely that you will have accurate records going back more than a few generations & family myths may be the only “history” that you have
- People like to emphasize aspects of themselves that are unique and different. If you’re surrounded by white people, mentioning some Native ancestry might seem “cool”
- Probably NOT cool to appropriate a culture that’s not yours, but people aren’t always rational
- Senator Warren never used her claim of Native American ancestry to advance her career, notwithstanding her filling out “Native American” under “race” on a bar association card
- Senator Warren was used by Harvard University to claim that they had a diverse faculty
- Other than a few instances in her early career, there is no record of Senator Warren emphasizing her belief that she had Native American ancestry, and certainly no instance of her using this belief in her political career (her opponent in the first Senate race brought it up & Trump jumped on it)
- Elizabeth Warren at no time benefited from quotas or affirmative action by claiming Native American ancestry
The DNA test was perhaps a boneheaded move, aside from the
fact that these tests don’t have a solid scientific basis, they don’t address
cultural or identity issues. They don’t have anything to do with Tribal
affiliation/enrollment, which Senator Warren never claimed. Warren also made
the mistake of trying to engage Trump using Trump’s rule-book; she was never
going to get him to back off, even if birth certificates (ha!) or other records
were produced to prove a recent Native American forebear.
There’s a lot of misinformation, “fake news”, if you will,
about this subject. A lot of mocking and faux-outrage from the right wing. If
Senator Warren becomes the Democratic Party presidential nominee she will have
to deal with it all – the racist, insulting nickname from Trump as well as the
twisting of the facts from the rest of the MAGA brigade. The way she handled
this causes me to suspect that, despite my belief that policy-wise she’s the
strongest of Democratic candidates, she will be unable to stand up to Trump
head-to-head. I hope I’m wrong.
Sunday, August 18, 2019
Presidential Addresses vs. Campaign Rallies
By now we've all heard about the speech that Dotard Donnie gave at the Shell plant in Pittsburgh the other day. The speech was supposed to be about U.S. energy independence and the importance of manufacturing jobs. In any other administration, this wouldn't have been a big deal. Presidents in recent years have regularly made appearances to talk up important sectors of the U.S. economy, or showcase an administration's signature programs. This isn't normally a problem...normally. This, however, isn't a normal presidency. Normally, while a president in a similar situation might discretely pat himself on the back for his administration's accomplishments, he would usually refrain from overtly partisan statements, would refrain from attacking political opponents and stay on topic. This abnormal president did all of those things, including exhorting the attendees to vote for him, and if their union leaders did not endorse him, "vote them the hell out".
It's bad enough that Donnie spends significant parts of each and every day attacking his real and imagined enemies, it's bad enough that he spends virtually every weekend golfing, but apparently it was too much to expect that he would stay on topic and not turn this visit into just another campaign rally. After all, he turns visits to military bases into rallies on a regular basis, indulging in his paranoid recitation of grievances.
Once again, he has mistaken the office of the presidency for a platform for promoting his own ego.
It's bad enough that Donnie spends significant parts of each and every day attacking his real and imagined enemies, it's bad enough that he spends virtually every weekend golfing, but apparently it was too much to expect that he would stay on topic and not turn this visit into just another campaign rally. After all, he turns visits to military bases into rallies on a regular basis, indulging in his paranoid recitation of grievances.
Once again, he has mistaken the office of the presidency for a platform for promoting his own ego.
Crowd Size
Once again those of us who follow Dotard Donnie on Twitter are treated to another series of boasts about crowd size. In the latest installment of "Mine is the Biggest", Trump brags about beating Elton John's previous record for filling the arena in New Hampshire where the rally took place. Supposedly a local Fire Marshal verified that the crowd had about 200 more people than Elton John's concert. Fake Fire Marshals have been trotted out before, and it seems like everything that Trump does, he claims is "the biggest", "the best", "never seen before", "record setting", so excuse me if I'm a bit skeptical of his claims this time.
The question to ask, however, is "Why is this important?".
There is no doubt that a lot of people attend the Dotard's rallies. There is no doubt that the arenas that they are held in are pretty full. There is no doubt that, other than the occasional protester who slips in, the attendees love Donnie and swallow his bullshit with nary a dissenting thought.
The answer is that it's important to Trump, no one else cares, no other politician has made crowd size such a central yardstick of not only popularity, but of legitimacy. Even back during the 2016 primaries, Trump saw popularity as a substitute for competence. This isn't discussed much, since the serial dumpster fires that have been the Trump presidency tend to obscure things more than a few weeks in the past, but throughout the primaries, Trump would say the equivalent of "Look, these other people voted for me, they think I'm the best, so therefore I am the best, so you should vote for me". After a while his shtick evolved into the more familiar "Only I can solve these problems" that we all know and love.
Big crowds are something tangible that Donnie can point to and say "see, all these people love me". It's an area where he can control the narrative, exclude anyone who disagrees with him and lie without consequence, in fact, lie with extreme positive feedback. He can't even do that on Twitter, where thousands correct, contradict and mock him every day. The big crowds allow him to dismiss the polls that show him lagging behind various Democrats as "fake polls", to label any reporting that criticizes him as "fake news" and to brag that he has accomplished more than any other president despite having only one significant legislative achievement. The crowds allow him to live in his fantasy world where he is popular and effective, when in reality he is neither.
The question to ask, however, is "Why is this important?".
There is no doubt that a lot of people attend the Dotard's rallies. There is no doubt that the arenas that they are held in are pretty full. There is no doubt that, other than the occasional protester who slips in, the attendees love Donnie and swallow his bullshit with nary a dissenting thought.
The answer is that it's important to Trump, no one else cares, no other politician has made crowd size such a central yardstick of not only popularity, but of legitimacy. Even back during the 2016 primaries, Trump saw popularity as a substitute for competence. This isn't discussed much, since the serial dumpster fires that have been the Trump presidency tend to obscure things more than a few weeks in the past, but throughout the primaries, Trump would say the equivalent of "Look, these other people voted for me, they think I'm the best, so therefore I am the best, so you should vote for me". After a while his shtick evolved into the more familiar "Only I can solve these problems" that we all know and love.
Big crowds are something tangible that Donnie can point to and say "see, all these people love me". It's an area where he can control the narrative, exclude anyone who disagrees with him and lie without consequence, in fact, lie with extreme positive feedback. He can't even do that on Twitter, where thousands correct, contradict and mock him every day. The big crowds allow him to dismiss the polls that show him lagging behind various Democrats as "fake polls", to label any reporting that criticizes him as "fake news" and to brag that he has accomplished more than any other president despite having only one significant legislative achievement. The crowds allow him to live in his fantasy world where he is popular and effective, when in reality he is neither.
Were We "Fighting Nazis" During World War II?
Were we fighting Nazis during World War II? The obvious answer is yes, the United States was at war with Germany, whose ruling party was the Nazi Party. We see a lot of memes in social media comparing present day resistance to white supremacy (and actual Nazis) to our soldiers fighting Nazi Germany in World War II. But is that how the soldiers at the time saw themselves?
A cursory look at the events leading up to our involvement in World War II shows that we were a bystander in the first two years of that war. Apparently the actions of the Nazis against their own people didn't move us, nor did their aggression against their neighbors. The United States was firmly isolationist.
Until Japan attacked our military base in Hawaii, we were not involved. Once we joined the war against Japan, Germany declared war on the United States, which began our involvement in the European war.
How did the typical American soldier view their part in the war? Were they fighting the German army because Hitler was exterminating Jews, Roma, Communists and gays? I doubt the average G.I. thought about it in those terms, if he was even aware of what Hitler was doing internally. Once we were in the war, it was us (the good guys) against them (the bad guys) without a second thought about what the bad guys were doing to their own or to people in occupied territories. Perhaps those who eventually were part of the liberation of the death camps got their eyes opened, but I doubt the front line soldier saw that aspect of the enemy.
And then there's the behavior of those soldiers when they returned home. Returned home to a country that was still a segregated society, where black Americans and other minorities were discriminated against with impunity. How many of them were actively involved in racist actions? How many of them cheered on the dogs and the fire hoses and the lynchings?
This is not to disparage the bravery of those who fought during World War II, or any other war. This is not to suggest less than noble motives of those who served. This is to question the declarations that standing up to White Supremacy, Nazism, and other forms of bigotry and hatred was something that the so-called Greatest Generation did 75 years ago.
A cursory look at the events leading up to our involvement in World War II shows that we were a bystander in the first two years of that war. Apparently the actions of the Nazis against their own people didn't move us, nor did their aggression against their neighbors. The United States was firmly isolationist.
Until Japan attacked our military base in Hawaii, we were not involved. Once we joined the war against Japan, Germany declared war on the United States, which began our involvement in the European war.
How did the typical American soldier view their part in the war? Were they fighting the German army because Hitler was exterminating Jews, Roma, Communists and gays? I doubt the average G.I. thought about it in those terms, if he was even aware of what Hitler was doing internally. Once we were in the war, it was us (the good guys) against them (the bad guys) without a second thought about what the bad guys were doing to their own or to people in occupied territories. Perhaps those who eventually were part of the liberation of the death camps got their eyes opened, but I doubt the front line soldier saw that aspect of the enemy.
And then there's the behavior of those soldiers when they returned home. Returned home to a country that was still a segregated society, where black Americans and other minorities were discriminated against with impunity. How many of them were actively involved in racist actions? How many of them cheered on the dogs and the fire hoses and the lynchings?
This is not to disparage the bravery of those who fought during World War II, or any other war. This is not to suggest less than noble motives of those who served. This is to question the declarations that standing up to White Supremacy, Nazism, and other forms of bigotry and hatred was something that the so-called Greatest Generation did 75 years ago.
Sunday, August 11, 2019
What is "Quantitative Tightening"?
Donnie talks a lot about Quantitative Tightening and how the
Federal Reserve Board are idiots for implementing it. He makes it sound like it's a terrible policy and that the Federal Reserve Board of Governors are idiots for implementing it. His tweets suggest that without this nefarious policy our economy, which he claims is setting records, would be doing even better. But what is Quantitative Tightening?
To understand what it is, we
first have to go back to, and define, Quantitative Easing.
In 2008, The Federal Reserve
Board (“The Fed”), in order to counter the effects of the recession, purchased
several trillion dollars of assets (explanation of “assets” to come) from
commercial banks. This had the effect of injecting several trillion dollars of cash into the economy. Cash that could then be used for investment by way of
loans. This was an unprecedented move, and was one of several by The Fed and by
the Obama administration used to get the economy back on its feet.
The assets took the form of debt that these commercial banks
held. This debt in turn usually took the form of government securities. When these
securities matured, the cash, which if the securities had been held privately would have been paid to private holders of the securities, went back onto The Fed’s balance sheet, and
out of the public circulation. It was a temporary boost to the overall national cash flow.
What The Fed is doing by “quantitative tightening” is
allowing these debt assets to mature and not buy more to replace them. In other
words, allowing things to get back to normal. It isn't so much a new policy, but allowing an old policy to expire without renewing it.
Here’s an illustration that may help:
You are 23 years old and you just lost your job. You’re able
to find employment, but at a lower rate of pay than your previous job. However, your bills
remain constant and you have a $300/month shortfall. To help you get through this setback, your parents agree to
cover your monthly car payments for you, which are $300, and do not require you
to pay them back. Two years later, you have found a new job, which pays more
than what you made at your previous job. Your parents continue to pay your car
payments for the year left on the loan. You now have a surplus, which you use
to move into a nicer
apartment. All of this is equivalent to Quantitative Easing.
Three years later, you have fully recovered from your
financial crisis and you no longer owe the bank anything on the car loan. You
decide that you would like to use the rest of the surplus that you have
accumulated to buy a new car and trade in the old one. Your parents are happy
to see you back on your feet and are glad you are not asking them to cover the
new loan. That is Quantitative Tightening.
What Donnie is asking The Fed to do is equivalent to you
asking your parents to make payments on your new car loan, reasoning that even
though you are doing so well, and have some money to put into savings, you
would be doing even better if
you had a new car and your
parents paid for it. Granted, the analogy is not perfect. In the example, you
are not selling anything, while in reality the banks are selling assets that
they hold. Donnie is asking The Fed to continue to prop up an economy that no
longer needs to be propped up.
I'd be willing to wager that Donnie has no idea what Quantitative Tightening actually is and is basing his opinion on the name, which admittedly sounds kind of scary. It took me less than a half an hour to look up the definition of Quantitative Tightening and Quantitative Easing, find examples, get opinions of various economists and get myself up to speed on the whole picture. If only we had a president who took the time to educate himself before spouting off.
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