Showing posts with label Dan Dickers. Show all posts
Showing posts with label Dan Dickers. Show all posts

Monday, March 16, 2020

The Fed's 1% Interest Rate Cut Doesn't Address The Shutdown So Will Not Avert The COVID-19 Recession

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"The Federal Reserve is now officially spent.  Saving the U.S. economy from this point forward is now up to others.".  Greg Ip, WSJ, 'Don't Look To The Fed. It's Others' Turn Now'.

It's always sad in a movie when the 'good guy' is pinned against the wall with only one round left in the chamber of his six gun, and the bad guy approaches - say with a bigger weapon.  Then when you see the good guy fire the round to no effect, you know it's all over but the dirges.  The same transpired yesterday when Fed Chair Jerome Powell - desperate to halt the sordid economic effects of unseen enemy - fired off the last round in his chamber. I am talking about the rate cut of effectively 1 percent (down to 0- 0.25%) which will leave nothing in his chamber when the full COVID-19 recession takes off.

As I'd written before, none of these monetary moves work given the nation is in a shutdown - with millions of workers soon forced to stay home either out of choice or necessity (if they get the virus or their kids do).  What they need and badly - is money to tide them over when they can't collect a paycheck. In other words, paid leave. (See my post from yesterday).

Will Powell's rate cut get commercial aviation, now facing a $113 b hole (WSJ, March 14, p. B4) earning again?  Will it fix the supply chain problems all around, including meds from China?  Will it bolster the energy sector- now facing a demand drop from the virus as well as oversupply problems? Hell no, which is why you can expect the markets to tank today. They know the only thing the Fed and Powell have done is to appease Trump. (The dope actually expected the DOW to soar today.)

Most ordinary, e.g. non - financially inclined citizens, still have no clue regarding the economic cyclone about to strike the U.S.   This is the case because they've no inkling of the knock -on effects of prolonged shutdowns or terminated supply chains.  This is apart from the residual core of congenital morons who insist it's "all media hype"  and - to quote one asswit :"If we can't deal with a little bug then we're all a bunch of pansies.".  In regard to either of these denizens I want to hear what either says - assuming they can communicate at all- once they get this "bug" and have to be intubated in an ICU at the nearest hospital.   

The commonality with all these low IQ mutts who try to spread the memes that "it's just a flu" or "no biggie" is: i) They are incapable of doing exponential math, and ii) they have no conception of the limited margin for error we have in terms of our health care system capacity: ICUs, beds, ventilators, medical staff,  i.e. being inundated by a flood of critical care patients when existing resources are at a premium.

Many of these dimwits look at current fatality stats, say 60-odd in the U.S. and are unimpressed, not realizing there are literally thousands backing up in ICUs across the U.S. right now fighting for their lives on ventilators - with loved ones hoping they aren't added to the death toll. You never hear about these cases unless you plow through different newspapers of different cities, say like New Orleans. Where you learn about the current plight of 45 -year old  construction litigator Mark Frilot, now in critical care, and isolated and sedated (using paralytic drugs) on a ventilator.  His wife Heaven said their physician informed them that COVID-19 was likely circulating for a while before Mark got it, and also before the testing kits arrived. That means hundreds may have been spreading it and displayed no symptoms themselves.

The distaff side is that in rural (say red state) areas, we behold a proud populace who fancy themselves above the fray.  As reported in yesterday's Colorado Springs Gazette, many - like in Baca County, or Montrose - see the social distancing measures in cities as "over reaction."  They themselves have no idea how close to perdition they are if the virus hits their little burgs, many with only 1,700- 2,500 people.  But consider this: most of their little community hospitals have only 5 ventilators (ibid.) If the virus strikes a town of 2,000 and 1,000 cases erupt with 200 critical (respiratory failure like with Mark Frilot) they will have 195 citizens who will have to be triaged, or die.  Like the 'no biggie' dimwits they have no clue but for a different reason.

Thank Bonespurs and his spurious maladministration for their colossal failure in implementing the critical testing. (See again Frilot's case described above)

Now, for some hard economic facts for those with IQs over 100:

Mark Zandi of Moody'a Analytics has already projected a $120 b loss by the end of March and has the U.S. effectively in recession now. JPMorgan Chase said Thursday that it expected the U.S. economy to contract in the first two quarters of the year, which would meet a standard definition of a recession. A survey of prominent academic economists, also released Thursday, found that a majority thought the outbreak was likely to cause a “major recession.”  

“Coronavirus will cause a recession deeper and more severe than the Great Recession,” Noah Smith, a Bloomberg Opinion economics writer, also predicted.

This will be the case, btw, no matter what manipulations Jerome Powell and the Fed pull with the interest rates (cutting them down to effectively zero yesterday).  None of it will work because what is required now is not any monetary fix but a massive injection of at least a trillion bucks.  This would most expeditiously done via  gov't checks of $1,000 each sent out directly to families hunkered down, like Gee Dubya Bush did back in 2008-09.  (As WSJ columnist Greg Ip related to the CBS a.m. anchors last week)

 In addition we need lots of federal money to support subsidies for hundreds of small businesses to enable them to give paid leave to their sick or secluded employees, without going into the red.  All of which will do far more to keep the economy afloat - and at least avoid the worst potential recession- than the Fed's interest rate gimmicks. 

All of this is needed to support a credible Coronavirus response package - as opposed to that piece of  compromised crap I wrote about yesterday. Or more Fed interest rate cuts (including toward negative interest rates) which don't do a damned thing otherwise than provide cheap crack to the markets.  Which can't avoid crashing anyway if the demand side is basically frozen up, consumers not spending to go out etc.

Measures of consumer sentiment fell sharply in early March, and indexes of business conditions have since cratered. Airlines, ports, hotels and other directly affected industries have already announced layoffs or employee furloughs. In Barbados, docked cruise ships have disgorged passengers mid-voyage who must now try to find air transport back to their homes.  All those cruise companies are now shut down and they didn't even give passengers a heads up. (See, e.g., 'Cruise Business Comes To A Halt', WSJ,  March 14-15, p. B3)


Postings for restaurant jobs were down 26 percent last week compared with the same week a year ago, according to data from the job marketplace ZipRecruiter. Job listings in catering were down 39 percent and those in aviation down 44 percent.

 As energy specialist and pundit Dan Dickers has noted,  lot of this has to do with the U.S. shale oil business being over-leveraged for the past five years at least. Thus, "tons of debt" (Dickers' parlance) has been issued with some $600 b "in triple B bonds or B minus bonds".    Given this, it's little wonder U.S. shale drillers can't beg, borrow or steal any credit now - say from the banks - to support their activities. (See e.g. 'Shale Drillers Face Fight For Survival As Prices Plummet', WSJ, today, p. B1).  Indeed Scott Sheffield (Pioneer Natural Resources CEO) estimates (ibid.):  "50 percent of public E&Ps will go bankrupt over the next two years."

Dickers estimated as much as $2 trillion could be out there with U.S. banks holding a lot of it (one reason the bank stocks were "murdered" in the bloodbath yesterday).   All of which points to mammoth liquidity problems in many ways analogous to what presaged the credit crisis 10 years ago.   Worse, "the Fed is now out of quivers".  

Trump has been able to hold up his fake economy - and overextend the life of the Bull (which Dickers insists is 3 years beyond terminal) -  by gimmicks such as tax cuts, deregulation and bullying Jerome Powell's Fed to cut interest rates- as they did again yesterday. But this is  about to end because of the COVID-19 pandemic upends markets everywhere, from sports, to energy, to  entertainment (theaters), restaurant industry, airline industry and banking. As Dickers put it to Hayes:

"The coronavirus will be the straw that broke the camel's back of the global economy."

As Niall Ferguson pointed out in his WSJ op-ed  ('Network Effects Multiply A Viral Threat', March 8, .A17):

"Network effects are the reason it is anything but dumb to worry about this novel coronavirus.  Not only is it spreading much faster than most Americans realize, it is also disrupting global manufacturing supply chains as well as all the economic activities that depend on travel and proximity."

The even more somber specter hanging over the markets is the degree of  ordinary leverage, beyond the already referenced over-leveraged oil markets.  This is the degree to which disproportionate debt underlies the purchase of ordinary stocks, shares. One pundit on CNBCs  'Squawk Box' the day of the 9.9% crash observed that currently for every $1-2  an investor uses to purchase a share -  say for $10  - the balance is appropriated via leverage or going into hock.  Hence, a paper $6 trillion loss in a major sellout could actually turn out to be $50 trillion. 

This warning is not new. Two years ago, we read in the April 17, 2018 Financial Times ('IMF Sounds Alarm On Excessive Global Borrowing') :

"The world's $164 trillion debt pile is bigger than at the height of the financial crisis a decade ago, the IMF has warned, sounding the alarm on excessive global borrowing.  The fund said the private and public sectors urgently need to cut debt levels to improve the resilience of the global economy, and provide greater firefighting ability it things go wrong."


True, in much of the nation the economic hurricane remains invisible, as offices, restaurants, bars remain open - and for now day to day life appears relatively normal.   But in places like Seattle where the virus is now widespread we behold the worst effects as mitigation proceeds to try to flatten the infection curve.  There the downturn is well underway and it will get worse and hit the rest of the nation as testing ramps up and the infected numbers double, triple and quadruple.  For those blinded by stupidity or inability to do exponential math this will be "hype" -until they and theirs also get ill-- from reckless behavior owing to indulging in too much FOX watching.  What we know now, as one economist put it, is that shutdowns and recessions are the way to stop the spread of a virus for which there is no immunity.   As Dr. Anthony Fauci put it, we have a narrow window to act  - especially given Trump blowing the lead time we did have - and if we blow it again now with mitigation (social distancing) then the medical system will be overrun.  We will see a replay of what's happened in Italy but with far more catastrophic consequences.

The workers who are feeling the effects of the pullback first are the ones least able to afford it: low-wage, hourly employees, many of whom aren’t paid if they miss work. Only one-third of leisure and hospitality workers have access to any paid time off, according to data from the Bureau of Labor Statistics.  

Meanwhile, Dotard Donnie Bonespurs clearly feels proud of himself after he managed to bully lapdog Fed Chair Powell into lowering interest rates a full point. He did this by a day earlier speculating that he'd be able to "demote" him.  Btw, do I believe he really tested negative for the belated COVID-19 test he finally took? Hell no! I believe he tested positive and ordered his lapdog doctor to cover for him.  After some 17,000 lies why believe anything Trump or his circle of sycophants claims, or says?  I don't.










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Tuesday, March 10, 2020

Long Term COVID-19 Risks To The Economy And The Resulting Need To Recalculate One's Financial Security

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The 'bloodbath' in the stock market yesterday may only be a harbinger of what is to come, not that Captain Dotard T. Bonespurs and his crew of idiots and lackeys would know.  They have continued to flaunt their utter incompetence in not only dealing with the novel coronavirus but with the economy as well. 

Meanwhile, the market shock yesterday (DOW plunging by 2, 013 pts.) , based also partly on the oil prices bottoming out to $31 a barrel, shows how unprepared too many are for the year - hell years- ahead.  Oil-energy specialist Dan Dickers -interviewed by Chris Hayes last night on 'All In' conceded the coming recession could be as bad or worse than the credit collapse 'great 'recession 10 years ago.

A lot of this has to do with the U.S. shale oil business being over-leveraged for the past five years at least. Thus, "tons of debt" (Dickers' parlance) has been issued with some $600 b "in triple B bonds or B minus bonds".    Given this, it's little wonder U.S. shale drillers can't beg, borrow or steal any credit now - say from the banks - to support their activities. (See e.g. 'Shale Drillers Face Fight For Survival As Prices Plummet', WSJ, today, p. B1).  Indeed Scott Sheffield (Pioneer Natural Resources CEO) estimates (ibid.):  "50 percent of public E&Ps will go bankrupt over the next two years."

Dickers estimates as much as $2 trillion could be out there with U.S. banks holding a lot of it (one reason the bank stocks were "murdered" in the bloodbath yesterday).   All of which points to mammoth liquidity problems in many ways analogous to what presaged the credit crisis 10 years ago.   Worse, "the Fed is now out of quivers".  

Trump has been able to hold up his fake economy - and overextend the life of the Bull (which Dickers insists is 3 years beyond terminal) -  by gimmicks such as tax cuts, deregulation and getting Jerome Powell's Fed to cut interest rates. But this is  about to end because of the COVID-19 pandemic (a term I use even if the WHO still refuses to).  As Dickers put it to Hayes:

"The coronavirus will be the straw that broke the camel's back of the global economy."

Here it is well to grasp the risks of this virus to the U.S. economy and indeed to the global economy which Ian Bremmer (TIME) even predicted would see the end of globalization.  These risks are mainly to the supply side and include:

- Cessation of commercial air travel in major areas as well as layoffs, hiring freezes, unpaid leave and reduction of flight schedules  (United has already asked a number of workers to take at least 6 months of unpaid leave, cf WSJ today, 'Fear of Flying Spawns Fresh Crisis For Airlines'', p. A1)

- Closures of restaurants, entertainment and sports centers as a result of lack of attendance.   Many of these rely on discretionary spending and foot traffic which will be at risk in the event of mass quarantines such as implemented in Italy. (As companies retrench, it affects workers and suppliers, which then have to tighten their own belts.Layoffs rise; wages decline. Consumers spend less. More businesses shutter.  A vicious circle.)

-  Collapse of energy-oil prices  leading to  bankruptcies and further mass layoffs in that sector. Especially major losses in shale fracking - which has been propelled in large measure by leveraging debt to continue flooding a world already glutted by oversupply  (Crude prices notched the largest one day decline since the great recession yesterday when Saudi Arabia went 'nuclear' by producing more oil after Russia failed to agree to cut production)

All the above aspects factor in what we call "network effects".  The scale of this - still underappreciated- is determined mainly by the virus' R-nought value. If then, as many Americans catch COVID-19 as caught the H1N1 Swine flu in 2009, the death toll could exceed 440,000 by the time it's over.  As Niall Ferguson points out in his WSJ column yesterday (p.A17):

"Network effects are the reason it is anything but dumb to worry about this novel coronavirus.  Not only is it spreading much faster than most Americans realize, it is also disrupting global manufacturing supply chains as well as all the economic activities that depend on travel and proximity."

The even more somber specter hanging over the markets is the degree of  ordinary leverage, beyond the already referenced over-leveraged oil markets.  This is the degree to which disproportionate debt underlies the purchase of ordinary stocks, shares. One pundit on CNBCs  'Squawk Box' yesterday morning observed that currently for every $1-2  an investor uses to purchase a share -  say for $10  - the balance is appropriated via leverage or going into hock.  Hence, a paper $6 trillion loss in a major sellout could actually turn out to be $50 trillion. 

This warning is not new. Two years ago, we read in the April 17, 2018 Financial Times ('IMF Sounds Alarm On Excessive Global Borrowing') :

"The world's $164 trillion debt pile is bigger than at the height of the financial crisis a decade ago, the IMF has warned, sounding the alarm on excessive global borrowing.  The fund said the private and public sectors urgently need to cut debt levels to improve the resilience of the global economy, and provide greater firefighting ability it things go wrong."

Much of this arose from leveraging debt to purchase stocks,  the new game in town since the recession as played by the Street's  'wise guys' and 'masters of the universe'.   The FT piece went on to point out:

"World borrowing is more than twice the size of the value of goods and services produced and 225% of global gross domestic product. This is 12 percentage points higher than the peak of the previous financial crisis in 2009." 

This is incomprehensible but much of it can be blamed on the Fed with its idiotic and inappropriate rate cuts which have only fed the leveraging fever and yen for ever more derivatives (incorporating this debt).   Adding:

"Vitor Gaspar, the director of fiscal affairs at the  IMF, singled out the U.S. for criticism, saying that it was the only advanced country that was not planning to reduce its debt pile - with the recent tax cuts keeping public borrowing high.z'

Indeed, as a share of gross domestic product , and because of Trump's tax cuts and deregulation  "the deficit will be at least 4.3%  every year through 2030.  That would be the longest stretch of  budget deficits exceeding 4% of GDP since the last century."  (WSJ, 'Trillion Dollar Deficits Seen For Years', January 29, p. A3)

So how might this affect the average bloke saving for retirement or trying to?  First, forget the "4% rule" regarding spending down your nest egg, say over a 30-year timeline.  Incredibly, WSJ finance columnist Anne Tergesen, (March 9, p. B8), was still citing this now antiquated rule in her latest piece,  as if we're in totally normal financial times.  

Now, for some clarity for those not au fait with financial terms, or approaches for retirement saving.  The 4% rule was developed to give investors, prospective retirees a sense of how much they needed to save.  Hence, a person who managed to sock away $1 million would anticipate withdrawing no more than $40,000 a year, say to pay for things his Social Security won't cover.   One landmark study, I believe by T. Rowe Price, found that investors who applied it had a 95% chance their savings would last for 30 years.

But given that the 10 year Treasury note yield dipped to 0.4 % yesterday at the close, and that the U.S. Treasury yield was much higher (5-6%) when the study was conducted (1990s) this no longer applies.  Even before the stock crash yesterday, and in the wake of the Fed's earlier rate cuts, the yield had dropped below 1 % for the first time.   A rate that low (and bound to go even lower if the Fed goes to negative interest rates)  means that anyone following the 4 % rule would have a 1 in 3 chance of running out of money, say over the same 30-year horizon.  

 According to Wayne Pfau - a professor at the American College of Financial Services - quoted in a recent TIME essay ('Low rates are changing the rules for retirement', March 16-23, p. 34) you should expect to withdraw no more than 3% a year in retirement.   For the guy with the $1m nest egg that means no more than $30,00 a year withdrawn, for those like wifey and me, no more than $13,500 a year. (That is easily met given we are not big spenders and live well below our means.)

What about when this virus threat is finally over, say in 18 months, Dotard is finally out of the WH -and people find they're falling behind and fear not catching up?   There are a number of options but none are easy, or very comforting.  One could, for example, work longer, adding more earning income to what the 401(k) or IRA doesn't currently deliver.   Or - wow! - they can spend less, like Janice and I do.  Last, they can seek out higher returns via riskier assets (e.g. exchange traded funds, or emerging market funds) which I do not recommend. 

One thing nearly all proper financial advisers, from Suze Orman  to "McMillion" recommend, is keeping 12-18 months worth of expenses in cash.  (Janice and I have roughly five years' worth).   In addition, both Ms. Orman (see latest AARP Bulletin) and Prof. Pfau advise supplementing investment income with guaranteed, steady income via a fixed income annuity.  However, you have to be prepared to hand over a large cash stash to purchase the steady income, which alas, too many Americans are unwilling to do. They'd rather risk their future in the stock market casino - which as we've seen the past few weeks is not for the faint of heart. Or those who wish to know what they have coming in each month, say to buy groceries,  pay the utilities, the doctor or(and) the dentist. 

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Tuesday, May 14, 2019

Maybe Trump's Idiotic Tariffs On Chinese Goods Will Bring Down His "Great" Economy

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"Waddya want? Tariffs ain't my forte. I only graduated Wharton 'cause I cheated my way through!"

"The DOW is now nearly 1300 points lower than in January 2018 when Mr. Trump began his tariff offensive - despite the best 12 months of economic growth since 2005 and healthy corporate profits.... Mr. Trump seems to sincerely believe tariffs are a free lunch....But tariffs are taxes that raise the price of Chinese goods for U.S. consumers and producers."   WSJ editorial today  'The Cost of China Tariffs.'

"Every time Trump opens his mouth about tariffs he adds to economic illiteracy in America". Lawrence O'Donnell, last night on 'Last Word'.

"Not for the first time in his life, Donald Trump seems intent on taking a massive inheritance and lighting it on fire.  But this time instead of his daddy's money it's in the form of the nation's entire macro-economy.  It's worth noting the economy is doing pretty well by the traditional metrics... there is no reason Trump should do anything but watch his shows, and ride the strong economy into the next election.

But he's been crowing about how fixing trade with China will be his key.  And the same guy who managed to lose money running casinos, who lost money selling America football steaks and alcohol, seems intent on destroying the American economy too." Chris Hayes, last night on 'All In'.


The headline on the front page of today's Wall Street Journal  ('Trade Threats Hit U.S. Markets')  ought to have had  the sub-header 'Trump Trade War Threatens To Scuttle His Economy')  As the DOW tanked yesterday to the tune of 617 points, it was clear Trump's trade antics were weighing heavily on the Street.  And why not? Because even the few remaining floor traders know Trump is an imbecile on trade and his belief that the U.S. is "getting the better of China"  is bollocks. I.e. because we have tariffs on $200b of their goods compared to their tariffs on $60b of ours is  nonsense.  As oil trader Dan Dickers pointed out on 'All In' last night, "this is the simpleton's kind of view of what trade is really about."  Adding:

"He's a salesman. He sells steaks and airline rickets and hotels and what have you. So as far as he's concerned if I'm selling you more than this guy I'm winning. So that's why the trade is good for this country - according to him- because I can slap on half a trillion in tariffs on Chinese goods and they can only hit us for sixty or seventy billion. So hey I'm winning."

The other piece of flat out ignorance from the Dotard is how "China will have to pay these tariffs" unable to process it is not countries but consumers that do the paying. And in this case, U.S. consumers will be paying out the wazoo. As former Clinton Treasury Secretary Robert Reich explained last night ('Last Word') we've known how tariffs work for 130 years now. The worst case was Smoot-Hawley which "plunged us into a deeper Depression than we were already in".    Why? Because tariffs always hit the consumer as an added cost sales tax - often on essential goods. When those foreign goods, whatever they are - toilet paper or backpacks- enter U.S. ports with tariffs tagged on, the companies that pay those tariffs get their money back by charging U.S. consumers the amounts they had to pay and on each and every item,  This isn't rocket science but for Trump maybe it is.

Earlier (May 6 post),  I indicated the only way we may be able to get rid of Trump and his criminal cabal is for the economy to crash.   That prospect may now be a lot closer, given Trump has gone batshit crazy,  imposing 25 percent tariffs on $200 billion of Chinese imports and also planning to impose the same tariffs on $325 billion more.  Essentially putting a sales tax on all Chinese imported products Americans may buy.

Trump claims the payment will be on the Chinese side, but as Jill Schlesinger noted yesterday this isn't true.  Schlesinger also emphasized the problem with these new  tariffs is that the U.S. importers cannot afford to absorb the 25 % increased costs so they will have to be passed on to U.S. consumers.  A case in point as noted in the WSJ (May 10, p. A3):  More than 1,000 Chinese companies import auto parts to the U.S. Because of these new tariffs, a new car (using them) will now cost $4, 400 more. Process that!

Besides auto parts, what sort of Chinese imports are we talking about?  According to Ms. Schlesinger:

"Furniture is a big one, building supplies is a big one, shampoo, dog collars, toilet paper, art supplies, ceramic tiles, windshield glass, Christmas tree lights, backpacks, luggage, baseball gloves, leather handbags, any of the fabrics that go into fleece. There are thousands of items on this list including foods - beets, carrots, kale."

One estimate in the WSJ is that U.S. consumer will pay an additional $767 a year in higher prices for the goods they purchase, and that's on average.

When CBS' John Dickerson mentioned that Trump suggested buying goods made in other nations, Schlesinger quickly slapped that down saying all that happens is that U.S. manufacturers use the tariffs on China as an excuse to jack up their own prices. She mentioned the case of dryers being jacked up by $86 and $92 each last year from the tariffs issued then. 

Apart from that secondary vendors would pose other problems, namely inferior quality.  According to Jay Foreman, a CEO of one importing company in Boca Raton FL:  "We've all worked for more than twenty years to get the manufacturing safety levels to the highest standards"  so "cannot simply switch"  to vendors in India, Vietnam or Singapore.

Bottom line, as Jill Schlesinger put it:

"Everyone better be making more money because these things are going to cost us way more money."

But can consumers make that much more money? The average U.S. consumer did benefit somewhat from the Trump tax cuts (avg.. $355 a year) but the increased de facto tax wrought by tariffs essentially wipes that out. It also isn't sanguine that the Federal Reserve has now noted many in the so-called middle class (claimed to range from $40,000 - 85,000 income) cannot afford a single emergency expense of even $400. 

It is also a spun narrative to depict China as the singular trade "bad guy" because we have a $417b trade deficit with them.   As pointed out in the James Bacchus article 'America's Abusive Trade Practices (WSJ, May 13, p. A19)  "U.S. regulators continue to drag their feet on WTO compliance, and gravitate toward the outer edge of WTO rules - and find new ways to discriminate against Chinese imports. The prospect of ending these practices could be a powerful inducement for China to abandon its own unfair trade practices."

So, contrary to Trump's twaddle, the offenses on trade practice are not all one way on China.

Oh, another thing. Last year the WSJ's Greg Ip  answered the question of why the U.S. itself runs a continuing  trade deficit:

"Because it consumes more than it produces while its trading partners collectively do the opposite.. Another way of saying this is that the U.S. invests more than it saves while other countries save more than they invest."


Let's parse those words a bit because they may seem inscrutable or counter intuitive to many. Why not invest? Save? Aren't you saving when you invest? Well, no.  Saving means stashing money, capital into fixed income instruments like CDs, money markets (not funds), and regular bank savings accounts, as well as in immediate fixed annuities. Anything which is unlikely to be perturbed, affected or lost in a stock market correction or crash.

"Investing" means plowing money into regular stocks or into mutual funds - say as offered in your IRA or 401(k).  These stocks or funds are tied to actual products or services, say Apple Iphones, or Musk's Tesla, or even Chipotle - as incredible as that sounds.  The investor puts his or her money into investment devices and instruments which he believes will offer a return on the investment because the product will grow in share value, or in actual distribution- which ultimately leads to higher market valuations. 

But as we've seen the past week, with $1 trillion in stock market losses from Trump's trade tantrum, that doesn't translate into strict saving. No way.

At the other end of the Trump trade fracas, it's the midwestern farmers getting clobbered as they have lost a huge market (in China) for their soybeans, nuts etc.   There are actually now huge soybean crops - unable to be exported- and going down the drain. One might say they are basically operating on fumes,  and with margins so low they could face farm or home foreclosures soon. (59,000 more farm jobs are expected to be lost with this current trade face-off, according to reports on CBS this morning.)

We now know from the Congressional Research Service, that because of Trump's trade tactics, national net farm income dropped by more than $9  billion in 2018 or more than 12 percent. Meanwhile, a trillion dollars has been lost in the stock market since last weekend.

But not to worry! Trump has announced he plans another handout ("subsidy")  to the farmers....errrrr Trump voters - from the hands of U.S. taxpayers-   and to the tune of $15 billion.   To get that done without incurring more deficits he wants to cut food stamps by 750,000 recipients as well as using HUD to limit access to public housing - which could displace 55,000 children. 

This is the traitor, nincompoop and rat we have running our country right now - into the ground, along with the Constitution and rule of law.


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