Close But Not Quite Yet

It is extraordinarily tempting to call peak absurdity – but not quite yet..

 

James Cracknell is a two-time gold medal Olympian who engaged in this exchange:

Cracknell: “If you think of the two countries in the world who’ve got a handle on obesity, what do you think they are, which two countries?”

Talking Head: “I’m stumped there, I don’t know.”

Cracknell: “North Korea and Cuba.”

 

I suppose by that logic he can add Venezuela to his list by the end of the year?

Worth Your Time

One of the advantages of consuming quite a lot of economic information is that the really good providers of information write dispassionately of what is likely to occur and not what they wish would occur. Mauldin Economics is one of the very best at providing insight into what is likely to occur rather than what our partisan selves may be wishing will occur.

 

Their post today concerns tax reform and the Trump tax plan – worth your time to read it here.

 

Some gold from the post today

“But deficit spending isn’t really the problem. Our disease is excessive spending. Deficits and too-high taxes are merely its symptoms.

All government functions cost money to deliver; that’s why we have taxes. The real issue is, we have let government grow to a size where it now needs $7.03 trillion to get by (that’s how much federal, state, and local governments combined will make in fiscal year 2017).

Looking at the big picture, it doesn’t matter if the government funds itself with a) taxes now or b) borrowing now and taxes later. Both funding methods divert equal sums from private-sector uses that could be more productive.”

 

And this

“Governments can’t finance themselves, since they don’t produce anything—so we have to pay for them.

Ideally, we’d have a tax system that is equitable and economically neutral, but we don’t. Our system is built to encourage and discourage certain behaviors by certain groups of people. Revenue is a beneficial side effect.

It works, too. Instead of resenting this brazen effort to manipulate us, we adopt the desired behaviors in return for tax breaks.”

 

In short – do not spend your Trump tax cut quite yet.

 

 

 

Elizabeth Warren Is Right

What is broken in DC politics can be seen in the recent interview Senator Elizabeth Warren gave to The Guardian in which she said

“I think President Obama, like many others in both parties, talk about a set of big national statistics that look shiny and great but increasingly have giant blind spots. That GDP, unemployment, no longer reflect the lived experiences of most Americans. And the lived experiences of most Americans is that they are being left behind in this economy. Worse than being left behind, they’re getting kicked in the teeth.”

Make sure you are sitting down, swallow your coffee… I agree with Elizabeth Warren here. She is absolutely correct in what she said. She is absolutely incorrect in what she thinks will remedy this situation but the quote above is true. In fact she followed up with the usual hyperventilating about Republicans being tools of millionaires but interestingly alleged that most Democrats were also tools of millionaires.

Here is where the breathtaking hypocrisy of Elizabeth Warren become evident – she could of said this exact same thing two years ago or four years ago or six years ago because it was equally true at that time as well. Yet when Obama was actually in office, when these words could have actually had a positive effect – Elizabeth Warren was silent.
Let us make no mistake – Elizabeth Warren was not just silent for all those years – she was complicit.
For the eight years of Obama the United States experienced the greatest wealth transfer in all of human history – a transfer of wealth from the middle class and poor to the very wealthiest. Over the eight years of Obama more than 90% of Americans saw their real, i.e. inflation adjusted, earnings decrease. Over the eight years of Obama more than 90% of Americans saw their net worth, everything in including government debt, decrease. Over the eight years of Obama Americans saw billionaires on average double their net worth.
Elizabeth Warren is exactly right – 90% of Americans spent the eight years of Obama “getting kicked in the teeth.”
That Elizabeth Warren will speak about it now but was silent about it for eight years makes her fully complicit in the wealth transfer to the wealthy – a wealth transfer of which she received far more than her fair share of the money earned by the poor and middle class.
This is why we can’t have nice things…

Opposite World

Yesterday…

 

On a day when Kim Jong Un and his cohorts in North Korea threatened more nuclear tests, pre-emptive nuclear strikes and war – the South Korean stock market reached a record high.

 

On a day when Canada’s largest sub-prime mortgage lender suffered a bank run which depleted 75% of its’ deposits – the VIX hit a nine handle.

 

Trump says he is thinking about breaking up the ‘Too Big To Fail’ banks – bank stock go up.

 

Craziness abounds…

 

 

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