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The Administration and the GOP are now heading for tax reform. They want to cut taxes. I read that to mean:

  1. Lower taxes for the rich and Trump’s cronies
  2. Burden the country with more debt to account for those tax cuts
  3. Give the middle-class a one-time check of a few hundred dollars that is enough to pay for one trip to Costco – just to make them feel good.

Trump supporters want lower taxes, and they believe their hero that those couple of hundred dollars (IF THAT) is their fair share.

To support this initiative, Trump tells his supporters that the United States has one of the highest tax burdens in the world. That is simply not true whatsoever.

Trump lies.

It takes about 5 seconds to google and see the reality:

[click to enlarge]

Source: Taxfoundation.org. Check this site for a wealth of more information.

This shows that the United States is actually below average.

I am not saying that paying taxes like they do in Belgium or Germany is good. I am just saying that Trump lied to his followers, whom he obviously considers too lazy or stupid to look up the facts for themselves.

Trump wants to cut taxes for billionaires. And the middle-class, the unemployed coal miners, “the milk people,” the Carrier workers that just lost their jobs in Indiana, they are still supporting Trump.

Trump is raiding this country for himself, his clan, and his cronies in the fossil fuel business, and the Russian mob, and the American people are blind to it and somehow think this is good for them.

One day, after 2018, or after 2020, we will all wake up with massively more national debt, less jobs for the lower and middle class, less education for all, and we’ll realize we have been duped. That is if we’re not in some new massive war with a new adversary like Iran or North Korea that he starts just to crank up the military industrial complex.

Trump is Making America Stupid Again.

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Well, you know, we’re going for 15 [percent]. We’re going to see, and we’ll see. But, you know, I don’t want to say anything about negotiation. I mean, we are asking for 15 percent, and we think we’re going to grow tremendously. So I deal with foreign countries, and despite what you may read, I have unbelievable relationships with all of the foreign leaders. They like me. I like them. You know, it’s amazing.

So I’ll call, like, major — major countries, and I’ll be dealing with the prime minister or the president. And I’ll say, how are you doing? Oh, don’t know, don’t know, not well, Mr. President, not well. I said, well, what’s the problem? Oh, GDP 9 percent, not well. And I’m saying to myself, here we are at like 1 percent, dying, and they’re at 9 percent and they’re unhappy. So, you know, and these are like countries, you know, fairly large, like 300 million people. You know, a lot of people say — they say, well, but the United States is large. And then you call places like Malaysia, Indonesia, and you say, you know, how many people do you have? And it’s pretty amazing how many people they have. So China’s going to be at 7 [percent] or 8 percent, and they have a billion-five, right? So we should do really well.

But in order to do that — you know, it’s tax reform, but it’s a big tax cut. But it’s simplification, it’s reform, and it’s a big tax cut, 15 –

— Donald Trump, Wall Street Journal, July 25, 2017 in the Oval Office – Read the full transcript here.

This shows how well Trump understands how economies work. How that man got rich is beyond me. Was it all money laundering, stiffing contractors, and walking away from failing projects?

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After pulling out of the Paris Climate Accord, Trump and Pruitt have been announcing that this would create lots of American jobs.

On Meet the Press on Sunday, Pruitt said that since the fourth quarter of last year to most recently, we have added almost 50,000 jobs in the coal sector.

This statement is completely wrong. There are only about 51,000 jobs in the entire coal industry in the U.S. Last month, 400 coal jobs were added. The entire U.S. mining sector added 7,000 jobs last month or 50,000 since the 4th quarter of 2016. Perhaps that was the figure Pruitt was quoting, but he carefully misquoted it so the numbers were vastly inflated.

Trump and Pruitt seem to be building up fossil fuel industries as massive job creators, which is just flat wrong. In comparison, just look at Tesla, just one company, which has over 1,800 job openings in the U.S. right now. Tesla is not known for its exciting benefits and great wages, but their high-pressure jobs in factories must be at least as good as coal mining jobs. If you had to pick a job, working in a coal mine or working for Tesla, which would you pick?

Coal is dead. It’s a dead industry, and no amount of deregulation is going to bring it back. Trump and the EPA can do whatever they want, we’re going to be buying less and less coal, and coal jobs will continue to disappear. The people are deciding, not Trump.

It’s all bluster.

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I saw this post by a “Bob Clark” on Facebook today. I don’t know him. But his point struck me.

He is completely wrong on his facts. But he writes them as if they were facts. The stock market went from 7,949 to 19,827 under Obama, and now to 21,206 under Trump in his first five months. Averaging this out over eight Obama years, this is not a rally, it’s just the continuation of Obama’s slope.  How Trump can take any credit for this is beyond me. How Trump supporters bolster their arguments is dumbfounding.

June 2, 2017: 21,206 – Today under Trump

January 20, 2017: 19,827 – day Obama left office

January 20, 2009: 7,949 – day Obama took office

The DOW more than doubled under Obama. When Obama took office, it was in freefall. We were worried about total economic collapse. Remember?

Now Bob Clark is acting like Obama left an economy like Bush did. Seriously?

Here is the graph:

This looks to me like the slope of the graph has simply continued the way it was going under Obama.

The current rally in the stock market is mostly due to tech stocks, like Amazon and Apple. I am not seeing any rise in oil or coal, but granted, defense contractors, like Lockheed and Boeing are going to see bumps from the Saudi arms sales.

So I don’t know what Bob Clark’s ticker looks like between 2008 and 2017, but here is mine.

And calling Trump a racecar?

Really?

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Here is Trump rolling back progress in keeping our federal lands protected, our air clean, and our heritage intact. And he is proud of it, telling the coal workers behind him that they’re getting their jobs back. This makes no sense to me whatsoever.

First, as the Washington Post article suggests, the action will not make any difference in the number of coal jobs. Coal production and consumption in the United States has gone from about 820 million tons in 2000 through about 2007, and have steadily declined to below 600 million tons long before Obama’s freeze on federal coal leasing in 2015. Demand has been well below supply for the last 15 years. Trump’s ceremonial undoing of Obama’s regulation will not make any difference in this trend. We’ll burn less coal, and that’s a good thing.

Trump and his cronies paid by the coal industry are reveling in the admiration of the coal workers.

COAL WORKERS, for heaven’s sake! Coal is one of the dirtiest industries. There is no such thing as clean coal. Not only does it pollute the environment, our water, our forests, coal mines are ugly and leave scars upon the land that will be there for millions of years. Coal workers get sick and die years, sometimes decades earlier than their contemporaries. Read Sons and Lovers by D.H. Lawrence and then tell me you want to work in a coal mine! But Trump and his billionaire cronies think they are doing these coal workers a favor by sending them back into mines. And the coal workers seem to be lapping it up. This is so wrong.

The coal workers should be going to school and learn about solar power. That’s where the money is. That’s where the jobs are.

source: Forbes

This chart shows there are more than four times as many jobs in the solar industry as there are in the coal industry. Even wind energy jobs are more plentiful than coal.

When coal demand goes down to 400 million tons in the next ten years, those are the skills they will need.

Trump will ride into the sunset of his life then, much richer, living in his golden tower, and the miners will still be unemployed, dreaming about working in coal mines, and admiring their billionaire benefactor.

This makes no sense to me at all.

 

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I for one do not agree with your military spending, and the need for increasing it. We spend way too much on the military, and from THAT program, we’re not getting the results we expect. Taking meals from seniors and school children to pay for another fighter jet is ludicrous, despicable, and immoral.

It was immoral under Reagan, under Bush, under Clinton, under Bush, and under Obama.

It is still immoral under Trump.

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Back in June of 2011 I predicted that the once popular Todai Sushi Restaurant in Mission Valley would go out of business. Here is the blog entry I wrote then.

This is what it looks like today:

todai-graffiti todai-graffiti

It has obviously been out of business for a few years. I read that someone recently bought the property, is cleaning it up now in order to launch a new restaurant venture.

It was Lehr’s Greenhouse Restaurant and Florist between 1980 and 1987, and I remember going there once for a Sunday brunch sometime in 1986 for some memorable event, like a birthday or Mother’s Day.

Ruins now but memories remain.

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social-security-trust-fund

Ok, I disagree with Bernie. This makes no sense to me.

We have talked about income taxes. I agree that taxes should be proportional. A person with $10 million salary a year should pay the same proportion in taxes as a person making $50,000. Well, if you take away loopholes, and shelters, and tricky accounting, and fraud, the person with the $10 million salary is likely paying a higher rate than the person making $50,000 already.

Social Security is not a tax. It’s meant to be a fund you pay into during your working life to get a pension later. It makes sense. The only argument conservatives often have is that people should be allowed to save their own money and then use that later. Why trust the government with it?

Well, I can honestly say that if I hadn’t had to pay Social Security all my life, I would not likely have saved the same amount. So I think, at least in my case, it worked. I paid in.

When I reach the correct age, I can start withdrawing based on what I paid in. If I had made $10 million a year, and paid in $1 million every year, would I get out several million a year in “Social Security” now? Of course not.

What Bernie is suggesting here is making Social Security just another tax.

That makes no sense to me. I don’t want rich guys to pay so I can have Social Security benefits. I paid in all my life, and entrusted the government with my money. The government now owes me that money. It is my money. It is not an entitlement. The government has no right to touch it — even though I know it did, and that’s why it wants to play shenanigans with it now.

No, Bernie, I am not with you.

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Here is a breakdown of the California economy by sector:

california-economy-2008

A lot of people trash California for its liberal values, and they trash the governor. The fact is, the economy is doing great. It’s a model to the rest of the country. California is a thriving, exciting state to live in. Yes, it had its ups and down, just like other states, but it always comes back. Business and people love California.

There is this conception that most of its income is from agriculture. That’s not true at all. Only 2% of the GDP is from agriculture. Mind you, 80% of its water use goes to agriculture. But that’s a subject for another post.

Smaller than expected, with 9% of the GDP, is the Professional and Technical Services sector. That’s where my company has contributed over the last 30 years.

And now you know more about the segments of the 7th largest economy with its $2.31 trillion GDP in 2014.

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Job Growth Numbers

Our rambler-in-chief said this about jobs a few months ago:

“Don’t believe those phony numbers when you hear 4.9 and 5 percent unemployment,” Trump said at a rally nearly a year ago. “The number is probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.”

— Donald Trump

Definition of Unemployment Rate:

The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

Here is a chart of the unemployment rate published by the Bureau of Labor Statistics:

chart-of-unemployment-rate

As you can see, it was fairly low at the beginning of 2007, under Bush, but it the final Bush years it skyrocketed. This was accompanied with the real estate crash. The economy was in free-fall. That’s what Obama inherited.

Through a series of measured steps, with the assistance of Congress, Obama was able to pull the world economy out of the dive and avert disaster. It worked.

We never gave Obama the credit he deserved for that. Instead, the Republicans always blasted him for the growth being too slow or too small. But still, I say it was growth, which is way better than what had happened during the Bush years.

On the flip side, we increased the debt by another $10 trillion or so. That’s what it cost. And we blame Obama for the debt.

There is no denying that the unemployment rate dropped steadily during the Obama years. But his critics would always say that the numbers were “fake” and the “real unemployment rate” was much higher. Just glance back up to the Trump quote to see an example.

I never did understand that criticism. The Bureau of Labor Statistics has done this for decades. They didn’t just start faking numbers in 2011 when the Republicans didn’t like that a Democrat’s policies actually reversed their disastrous economic results. If there were “hidden unemployed” in the public, are they saying they really were not there before but when Obama came along, suddenly they all stopped looking for work and became closet unemployed?

Trump’s statement seems to indicate that. Until now.

Since Trump has been president since January 20th, he is quick to take credit for the January numbers, which could possibly only be attributable to him by about 34 percent. 66 percent of January Obama was still president.

breitbart-unemployment-tweet

Funny how Breitbart suddenly likes the numbers of the Bureau of Labor Statistics. The numbers grew like that under Obama for 8 years, but Trump takes credit after 10 days. Here are his own words:

“A couple of things happened this morning,” Trump said referring to the report. “So we are very happy about that. I think that it’s really big league. We’re bringing jobs back, we’re bringing down your taxes. We are going to get rid of your regulations.”

— Donald Trump

 

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Market is not Looking Good

market

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I am sure if I tried hard enough I could find twenty statements by Trump about what he was going to do on his first day, sometimes his first hour, in office. Here is just one such statement:

He said he would move criminal illegal immigrants out of the country:

Day 1, my first hour in office, those people are gone

— at a rally in Arizona

Well, it’s Day 2 now. Are they gone?

Here is an entire post that discusses Trump’s speech.

Obviously, Trump will tell us that statement was not to be taken literally. That leads me to conclude that most of his statements are not to be taken literally. But then let’s reflect on one action he actually took on Day 1.

In one of his very first official acts of his presidency, Donald Trump has increased taxes on a million middle-class homebuyers by reversing a scheduled cut of 0.25 percent in mortgage insurance. This action undid a last-minute Obama order.

Chuck Schumer:

“It took only an hour after his positive words on the inaugural platform for his actions to ring hollow,” Schumer said. “One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages.”

I am assuming this act has less to do with HUD or homebuyers, but with a symbolic reversal of an Obama order. However, let’s get the facts straight: Trump told the middle class of America he had their backs in the inaugural speech, and then an hour later he acted to cause middle-class families a financial burden.

His action facilitated redistribution of wealth from the middle class to corporation.

 

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We will live by two rules now: Buy American and Hire American.

— Donald Trump – Inaugural Address, Jan 20, 2017

trump-buy-american-1

Inside of a Trump Make America Great Again Hat

 

Trump China 1

Looks like the rules that apply to all of us in America do not apply for the Trumps.

I wonder if Trump has been to Sears lately, or Wal-Mart, or JC Penney, places where non-billionaire Americans shop. Try to buy one piece of clothing that’s NOT made in China. I went to look for some shirts recently, and Made-in-Jordan was the only non-China label I found. I could not buy American, I could only buy non-China.

Of course, that is Trump’s argument. For the last 20 years, our trade policies have contributed to allowing this to happen. He is right on that, but it’s not the only reason. The fact that transportation costs have gone down and manufacturing costs in the United States have gone up is another main factor. It’s a complicated world, and simple popular slogans like Buy American and Hire American at an inaugural address do not solve the problem.

We have work to do. And if Trump wanted our respect, he should have bought hats that were made in America.

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sigmar-gabriel

Germany’s Deputy Chancellor, Sigmar Gabriel – Photo Credit: Sascha Steinbach/EPA

In an interview with the German papers Bild and The Times, Trump complained that the car trade was “out of balance” with Germany.

“If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”

— Donald Trump

First of all, I just walked down Fifth Avenue a couple of days ago, and there are no houses, and there are no cars parked in front of houses. It’s midtown Manhattan. But that’s beside the point.

Asked what Trump could do to make sure German customers bought more American cars, the German deputy chancellor Sigmar Gabriel said:

“Build better cars.”

It appears that Trump does not realize or know that BMW is already employing directly and indirectly nearly 70,000 people in the United States. Seriously, Trump really thinks our relationship with Germany is a problem for the United States?

Starting a trade war with Germany does not seem a smart move to me.

 

 

 

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Below a must-read article by Bill Gross, the King of Bonds. The key words:

His tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters.

Populism Takes a Wrong Turn – by Bill Gross

The Trumpian Fox has entered the Populist Henhouse, not so much by stealth but as a result of Middle America’s misinterpretation of what will make America great again. Not having voted for either establishment party’s candidate, I write in amazed, almost amused bewilderment at what American voters have done to themselves. An Election Day Survey (Reuters/Ipsos) of 10,000 voters revealed the extraordinary fury of the American populist movement. Almost 72% agreed that “the American economy is rigged to the advantage of the rich and powerful”. Count me among them, yet in voting to deny Hillary Clinton the Henhouse, they “unwittingly” (lack of wit), let Donald Trump sneak in the side door. His tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters. They were the force for Trump’s flipping the Midwest into a Republican Electoral College victory. But while the Fox promised jobs and to make America great again, his policies of greater defense and infrastructure spending combined with lower corporate taxes to invigorate the private sector continue to favor capital versus labor, markets versus wages, and is a continuation of the status quo.

For example, Republican pleas for tax reform are centered around the argument that America has one of the highest corporate tax rates in the world at 35%. Not so. Of the S&P 500’s largest 50 corporations, the average tax rate (including state, local and foreign regulations) is 24%. U.S. corporations rank among the world’s most lightly, as opposed to heavily, taxed. Trump policies also appear to favor the repatriation of trillions of dollars of foreign profits at extremely low cost under the logic that the money will be spent for investment here in the U.S. Doubtful. The last time such a “pardon” was put into law in 2004, no noticeable pickup in investment took place. Of the $362 billion that earned a “tax holiday”, most went to dividends, corporate bonuses, and stock buybacks. Apple or any other large U.S. corporation can borrow the money they need here in the U.S. at historically low interest rates to fund investment. A few have, but over $500 billion annually in recent years has gone to the repurchase of corporate stock and the increase of earnings per share, instead of earnings and GDP growth. Why would they need to repatriate anything for investment in the real economy?

Could a Clinton Administration have done much better? Probably not. Both the Clinton Democrats and almost all Republicans represent the corporate status quo that favors markets versus wages; Wall Street versus Main Street. That’s why the American public and indeed global citizens will continually take a wrong turn in their efforts to neuter the establishment and to regain several decades’ lost momentum in real wages versus real profits. Neither party as they now stand has bold policies beyond the reach of K Street Lobbyists. To my mind, there are better solutions than either party’s election platform, such as a Keynesian/FDR job corps or a Kennedyesque AmeriCorps that puts people to work helping other people. Such programs were never emphasized by either candidate. Let’s supplement welfare with a patriotic “Help America” jobs program, even if government organized. Would it be as efficient as a corporate-led effort? Of course not, but corporations are fighting structural headwinds, such as demographic aging, technological displacement of jobs (robotization), deglobalization, and overleveraged balance sheets. They focus on the bottom line as opposed to the public welfare. Government must step in, not by reducing taxes, which will only increase profits at the expense of labor, but by being the employer of last resort in hopefully a productive way.

Populism is on the march and a Trump victory will do little to halt its advance in future decades. If anything, it is demographically baked in the cake. Investors, as The Economist astutely pointed out, face a possible no-win situation. Unless the worker’s share of GDP reverses its downward trend, and capital’s share peaks, then populists worldwide will reject establishment parties in almost every future election – initiating in some cases growth-negative policies revolving around trade, immigration, and yes, in Trump’s case, lower taxation that may lower GDP growth, not raise it. Global populism is the wave of the future, but it has taken a wrong turn in America. Investors must drive with caution, understanding that higher deficits resulting from lower taxes raise interest rates and inflation, which in turn have the potential to produce lower earnings and P/E ratios. There is no new Trump bull market in the offing. Be satisfied with 3-5% globally diversified returns. The Wall Street, finance-led hegemon is fading. The Populist sunrise has barely broken the horizon.

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