May 23, 2020
DEBT AND THE ECONOMY
Trump’s lasting legacy will be his national debt explosion. He has always claimed to be the king of debt, although he has had 4 bankruptcies, numerous business failures, and caught cheating on a charity. Anyone cheating on all of his wives, at golf, and a charity and has never asked forgiveness, has no conscience or empathy and has no leadership qualities, is qualified to be president? The party of stupid thinks so.
Here is how Trump thought his 2018 tax cuts would work to lower the corporate tax rate to 21%, which is below most of the developed countries rate. The actual rate, is significantly below the average of 15%, with some large international and domestic companies paying 0%. This tax move was meant to draw in foreign investors and discourage offshore flight of capital, benefiting the U.S economy. The actual effect was stock buybacks and stock dividends that only benefited the higher income levels. 2018, when the tax break occurred, had a record high buyback of stocks and the trend continued through 2019. This buyback buoyed the stock market indices, however, it did nothing for the normal underlying rise in stock prices based on efficiencies and earnings. Like I’ve said previously, since the market is easily manipulated and the only true picture of the economy is GNP/GDP.
All prior tax cuts came when the economy needed a stimulus to awaken the sleeping giant. Trump however, decided he would infuse a trillion dollars of debt into a booming economy, in lieu of what a prudent person would do, which is to pay down loans (debt) in the good times, after all when else can you pay them off?
The desired effect of foreign investment, due to lower tax rate, did not materialize. This is due to the uncertainty Trump has created with his deteriorating relationships with the world bodies such as the UN, NATO, and the European Union. The only exception Trump makes is with the dictators of the world. This uncertainty was highlighted by his trade war with China.
China is unlikely to follow through on promised purchase of soybeans in the quantities desired by Trump. China has been hit by the virus, and the tariffs will make it less likely to make purchases equal to prior years. Combine these facts with Trump’s insistence on blaming China for his own inaction, which continues and has been detrimental to good relationships.
So why did Trump give a boost to the economy at, or near, the top of the business cycle and incur 1 trillion in debt? Was it to have a dramatic increase in the market indices? Is this so he can point to the market and say, “see what a great job I’ve done for you, while your children will be burdened with the debt!”.
This foolish relationship between the health of the economy, based on the stock market, has exacerbated the pandemic. Trump was forewarned of the impact to the economy and wished the problem away with magic, stating it would disappear in April. All to keep the market from crashing, by trading lives for dollars. This philosophy continues to this day with his mantra to open the country prematurely. Today he is encouraging, and has stated, he would demand that the CDC open Religious services this week, calling the services an essential service. What could go wrong?
His newly appointed spokespeople (millions of dollars awarded) for the CDC are the ones conflating test types, to support the numbers of tests required to begin opening the economy. This has only had one unhelpful purpose, to show that there are enough tests to open. Albeit they are not the quantities or types that are required to open. What could go wrong? Trump’s policies continue to make the economic impact and the recession worse. In order to solve the economic crisis, you need to solve the health crisis.
Consumers are not as dumb as Trump thinks (only his tribe is in line). The public is not going to flock back to an unsafe environment despite Trump rhetoric. There are 36% fewer job openings than last week. The unemployment in the LA, Orange, and San Diego counties hit 30% last week. Total jobless is 38.6 million people, with an increase of 2.4 million last week and with only 160 million employed at the start of the pandemic. I would calculate the national rate now close to 25% unemployed.
Economists say that as many as 4 million jobs will not return to the economy and that will remain through 2021. This is partially to the bloated service economy.
OTHER NEWS
Trump stopped all naturalization, with the pandemic as the blame? This is to suppress voters? Does Trump think if someone is naturalized they will automatically vote democratic? What is this, a xenophobia’s story or a legitimate excuse?
It’s dirty trick season so look out for the unexplained, weird and unusual to draw your attention to carnival barkers and snake oil salesmen.
Two additional studies concluded that the use of hydroxychloroquine in patients with coronavirus, can cause death and had no effects on the virus.
Study showed that 69% of families with students from K-HS were not currently willing to send their kids back to school at this time. 73% of Americans said there were not enough tests. It was found that 8% of Americans will not wear a mask (part of the party of stupid?).
Trump has made plans to destroy another treaty for his own vanity. Below comes from wikiapedia.
“ Treaty on Open Skies entered into force on January 1, 2002, and currently has 35 party states. It establishes a program of unarmed aerial surveillance flights over the entire territory of its participants. The treaty is designed to enhance mutual understanding and confidence by giving all participants, regardless of size, a direct role in gathering information about military forces and activities of concern to them. Open Skies is one of the most wide-ranging international efforts to date promoting openness and transparency of military forces and activities. The concept of “mutual aerial observation” was initially proposed to Soviet Premier Nikolai Bulganin at the Geneva Conference of 1955 by President Dwight D. Eisenhower; however, the Soviets promptly rejected the concept and it lay dormant for several years. The treaty was eventually signed as an initiative of U.S. president (and former Central Intelligence Agency Director) George H. W. Bush in 1989. Negotiated by the then-members of NATO and the Warsaw Pact, the agreement was signed in Helsinki, Finland, on March 24, 1992”
This treaty is not related to the civil-aviation open skies agreements.
I’m sure now, that we do not have the security of knowing what evil lurks in the world as a result of Trump, pulling back from this vital security tool I will feel safer? Was there an attempt to renegotiate? Why did he all of a sudden withdraw? Is this another attempt to withdraw from the entire world and become totally isolated?