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NCUA a trial run to fire Jay Powell?

President Trump has been itching to fire fed chair Jerome (Jay) Powell. Although he appointed Powell to the post in 2018, Trump has found that he cannot publicly shame Powell into bending to his will. Right now Trump wants Powell to lower the Fed funds rate much like the European Central Bank lowered rates in response to Trump’s tariffs. Trump tweeted “Powell’s termination cannot come fast enough!” He also tweeted Powell “should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now!” Mind you the ECB lowered rates because Trump imposed high tariffs on them. Presumably, Trump wants Powell to lower rates because the response of the Europeans is to raise tariffs on US goods in response. However, some surmise that Trump wants lower rates to reduce the cost to the government of financing its maturing $9 trillion debt.

Regardless, Powell is resisting Trump, saying that it had to guard against Trump’s tariffs not triggering inflation. Lowering rates in an increasingly inflationary environment could lead to the dreaded stagflation. Here Trump’s tariffs would lead to decreased demand, increased unemployment along with the increased prices. Lowering rates in that case would be like adding kindling to a fire. To quote the Bank of Canada, “Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war.” But Trump is unrepentant and is not pleased.

The question is whether the president can fire the chairman of the Fed. That issue is only going to be resolved by the Supreme Court. Powell is insistent that he cannot be fired. The law says that persons appointed by the president and confirmed by the Senate to serve fixed terms can only be removed for cause (and the cause isn’t “I don’t like him”). Powell reasserts the Fed’s independence and says “We’re never going to be influenced by any political pressure. People can say whatever they want. That’s fine. That’s not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors.” I wonder how Trump feels being called an “extraneous factor”?

However, Trump is testing the waters. He has fired several appointees who were confirmed by the senate to fixed terms. Several are suing. The latest firings  just occurred at my old agency, the National Credit Union Administration, where President Carter appointed me to its first board in 1978. Trump fired the two democrat board members leaving only the republican in place. NCUA has three board members and must be bipartisan. Traditionally, two of the three board members are of the same party as the president in power. When Trump was inaugurated, the NCUA chair, Todd Harper a democrat resigned as chair but not as a board member. Trump fired him although ironically it was Trump who had nominated him to the NCUA board in 2018. Trump also fired the other democrat, Tanya Otsuka. Harper’s term expires in 2027 while Otsuka’s expires in 2029. Harper said “This ill-conceived and politically motivated decision to fire me before the end of my term upsets that important regulatory balance and will harm consumers.” Otsuka said “yet another attempt to undermine the rule of law and blatantly ignore Congress and our democratic values.” Both were notified of their firing via email. Neither has indicated if they will contest the firings. I guess if they had resisted, the Feds would have showed up and forcefully removed them from their offices.

Naturally White House spokesperson Karoline Leavitt said “President Trump is the chief executive of the executive branch and reserves the right to fire anyone he wants.” But the question remains, does he? The Supreme Court case in point is Humphrey’s Executor v United States. Briefly it deals with the Supreme Court barring Franklin Roosevelt from firing a republican member of the Federal Trade Commission without cause. The vote was unanimous. However Trump and his supporters disagree. The Roberts court has supported Trump’s firing of an appointee who is the single administrator of an agency rather than one in an agency administered by a multiperson board. However, Justices Thomas and Gorsuch appear to support the president’s authority to fire those in a multiperson board. A Justice department attorney in a letter to Dick Durbin (D-IL) said that the department  believes that federal laws that protect members of multimember commissions are unconstitutional. Since the case now before the Supreme Court was brought by a person fired from the National Labor Relations Board, we will soon see if the firings of Harper and Otsuka along with all the others are deemed legal. 

If the court so rules then Trump can indeed fire Jay Powell, whose firing will cause ramifications in financial markets worldwide. What would the reaction be to a new Fed chairman whose every move would be interpreted as being dictated by the White House? What happens to the other Fed governors? Will Trump fire them too and replace them with his own people? Would any dare assert their independence if they can be fired? Scott Bessent is one of the few in Trump’s inner circle trying to get him to temper his comments on firing Powell. But the question is if Trump can fire Powell, will he?

Kristi Noem and Donald Trump the new president of Harvard?

Trump’s secretary for homeland security, Kristi Noem seems to want to focus attention on herself. She has showed up at Immigration and Customs Enforcement raids in full makeup for obvious pho-ops leading some to call her ICE Barbie. She has tweeted out sensitive information. “Live this AM from NYC. I’m on it,” she posted on X on January 28 at 4:43 a.m. She visited the prison in El Salvador for a photo op wearing tight provocative clothing in front of gang members behind bars. She is also accompanied everywhere in the company of Corey Lewandowski (Trump’s ex campaign manager) amid rumors of a romantic affair (both are married to other people). The rumors have been around since 2021 and have rekindled when Lewandowski emerged as a nonpaid staff volunteer to Noem. What is interesting is that Trump nixed Noem’s desire to have Lewandowski as her chief of staff because of bad optics. One wonders what he thinks of the current “volunteer” arrangement. Regardless, Noem should know better.

Trump is also trying to make himself president of Harvard – I guess chairman of the Kennedy Center is not enough. His administration has sent Harvard a series of letters demanding certain actions to supposedly address their antisemitic behavior. He has terminated over $2 billion in grants and threatened to end $9 billion more. He has demanded that they discipline students who engage in antisemitic actions and wants Harvard to “shutter all diversity, equity and inclusion” programs, under “whatever name,” that violate federal law. I am not a lawyer but I presume that the administration has this authority under federal civil rights laws. But then the administration demands that Harvard reduce “governance bloat, duplication, or decentralization” seem over the top. Moreover, it wants Harvard to “ensure viewpoint diversity” in “each department, field, or teaching unit” and to search for plagiarism among its faculty. Huh?

Also the university must hire “a critical mass of new faculty within that department or field who will provide” that diversity and admit “a critical mass of students” to provide the same. These are akin to the demands made of Columbia which included the banning of masks and the appointing of a “senior vice provost with broad authority to oversee the department of Middle East, South Asian, African Studies and the Center for Palestine Studies. Now don’t you think this is a bit of an overreach?

Unlike Columbia which caved to the administration’s demands, Harvard resisted telling the administration to pound sand. Harvard rightly contends that the administration’s demands exceed its authority, impinges on academic freedom and basic rights guaranteed by the constitution. Indeed, The Supreme Court has ruled that the government may not use federal benefits or funds to coerce parties to surrender their constitutional rights. Isn’t this what Trump’s people are trying to do?

Speaking of Kristi Noem, she sent Harvard a “scathing” letter demanding that Harvard turn over records of foreign students who have been involved in illegal or violent activities. This is from the Harvard Crimson:

“The Department of Homeland Security sent Harvard a letter on Wednesday threatening to revoke its eligibility to enroll international students unless it submits information on international students’ disciplinary records and protest participation.

In a Wednesday press release, the DHS wrote that it had also canceled two grants worth $2.7 million to Harvard.

The letter threatening Harvard’s authorization to host international students, which was signed by Secretary of Homeland Security Kristi Noem, accused Harvard of creating a “hostile learning environment” for Jewish students.”

(American universities may host international students on student visas only if they have certification under the Student and Exchange Visitor Program.)

Noem’s press release also said “Harvard bending the knee to antisemitism — driven by its spineless leadership — fuels a cesspool of extremist riots and threatens our national security.” Wow! Sic em Kristi!

Trump has also asked the IRS to look into revoking Harvard’s tax-exempt status.

Harvard is resisting. Its new president Alan Garber has stated that the administration’s demands violate “Harvard’s First Amendment rights and [exceed] the statutory limits of the government’s authority. No government — regardless of which party is in power — should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.” Garber also said that “The University will not surrender its independence or relinquish its constitutional rights.” Moreover, Garber said The University’s objectives in fighting antisemitism will “not be achieved by assertions of power, unmoored from the law, to control teaching and learning at Harvard and to dictate how we operate,” Garber said. “The work of addressing our shortcomings, fulfilling our commitments, and embodying our values is ours to define and undertake as a community.”

Again, Trump is seeking to define the limits of the power of the executive in all that he does. The Supreme Court is going to have a docket full of Trump related lawsuits. But in the meanwhile, all hail the new president of Harvard University, Donald J Trump.

Creamed corn and tomato sandwiches

I saw an article about growing up Southern and grandmother’s creamed corn. Well I grew up southern – in Georgia – but neither one of my grandmothers made creamed corn. Dad’s mother lived in the south Georgia town of Americus while Mom’s lived on a farm near Gray. Both took a knife, scraped the corn off the cob and fried the kernels in bacon fat. I think the only creamed corn we ever ate came out of a can and I thought it was a terrible waste of good corn. Maybe they only put the bad corn in the creamed stuff to mask the taste. Good corn should be fried, preferably in a cast iron black skillet.

The article also mentioned tomato sandwiches. That is something completely alien to me. Tomato sandwiches are a summer southern staple? News to me. I can’t imagine a sandwich of nothing but white bread (which we used to call light bread), tomatoes and mayonnaise. Was this poor folk’s food? Didn’t the bread get soggy? Were they too poor to have meat?

My mother was an awful cook so I did not have a favorite meal growing up. My mother’s best dish was potato salad. But Dad liked her cooking. They often joked about the first meal my mother made when they got married. It was chitterlings. Dad loved chitterlings but said that Mom’s slid around the plate and were so tough that he could not cut them with a knife. He said mom was crying and he was trying to console her. He then picked up a morsel and swallowed it whole. Turns out that Mom did not know to boil them for the requisite number of hours – or pressure cook them. Afterwards, when she had leaned to cook them she boiled them, rolled them in flour and fried them. Dad loved them but my brother and I refused to eat them. 

My Dad’s mother’s cooking was also less than memorable. However, my mother’s mother used to cook fried rabbit (that my grandfather had shot), gravy, biscuits and grits to die for. I also liked her “dog bread” which was corn meal mixed with buttermilk, fried in bacon fat. It was called dog bread because it was served to the dogs mixed with table scraps and pot likker (that’s the southern spelling of liquor). She would give me a piece of the bread and let me sop it in the pot likker – leaving out the table scraps. Those were lucky dogs. But my mother was appalled. Occasionally I now make myself dog bread using turkey bacon. I even use a black cast iron skillet. Its good but not as good as I remember my grandmother’s who insisted on being called “Mary” much to the chagrin of my parents.

My brother was clearly my family’s favorite. I didn’t mind. He was my best friend. But when we visited the farm Mary would put her arms around me and say “this is my boy.” I loved her. We were outside one day and she was helping me ride my bike when she suffered a massive stroke and died. It was April 12, 1951. In those days, the funeral home sent her back to the farm to lie in state in the parlor. I insisted on sleeping in the parlor with her so they put a cot in the room. I was five years old. I never left her side until they took her to the church and buried her in the family cemetery. I always pay her a visit when I go back to Gray. I sure miss her and her fried rabbit and dog bread.

Deer Steaks and the Right Sock

I am a deer hunter or given last year it may be more appropriate to call me a deer observer. I can process the deer myself. In the basement at the farm I have a set of butcher’s knives, a meat saw, a metal table and a refrigerator with meat hooks. Despite all of this, each time I decide to process a deer, I end up saying that its worth paying the processor. He charges me $80 and I pay him. That means I have a trade deficit with my butcher. It is highly unlikely that my account will ever be zeroed out or even in surplus, since to date he has not needed a bank consultant on director duties a fair lending analysis. Yet my trade deficit has not made me worse off. Quite the contrary, it has made be better off. Rather than having unsightly chunks of meat I have neatly packaged steaks, roasts and ground and he has $80 for his labors. BTW, my uncle used to process his own deer. He labeled them “dear stakes.”

I could also not call a plumber when I my septic system backed up. I could not have called an electrician when my circuit breakers kept triggering. I could have gone up on my roof to fix the leak last summer. However, I call folks who are specialized in each one of those areas and paid them. That meant I did not flood the driveway. I did not set the house on fire and I did not have call 911 after falling off the roof. Rather I expanded my trade deficits and again I became better off rather than worse off. In economics, we call this comparative advantage. Trump thinks comparative advantage is a bad thing if the advantage lies with foreigners. I guess the patriotic thing to do is ignore foreign comparative advantage, pay more for goods and be worse off. Again, Wharton should rescind Trump’s degree. 

I have a hole in my sock, darn it! I am reasonably confident that I could also get the material and make my own socks. But why do this when it would be cheaper to just go buy the finished product? The Chinese city of Zhuju is the sock capital of the world. It has 300,000 workers producing over 25 billion pair of socks per year. The socks are about 25 cents a pair. Thirty percent of them are shipped to the US or should I say, were shipped to the US. With the 145% tariff on all Chinese goods – except those sold by Tim Cook – the socks bound for the US would be sold at a loss by the importer. So the sock makers have to find other markets. I may be forced to start darning my socks, wearing mismatched ones or even trying to make my own. But under no circumstance will I resort to wearing no socks like some of my white friends did in college. Do they still make Bass Weejuns?

I don’t think that the sock makers of Zhuji are going to move their factories and 300,000 workers to the US – do you? Sure we can get our socks from Honduras and El Salvador.  We may have to pay a bit more. We may have less to choose from and we may even see empty racks in our stores. I don’t think that Premier Xi is going to bow to Trump to keep some sock producers from going out of business. More likely, the Chinese government will subsidize the affected companies – just like Trump says he will subsidize American farmers who will lose their Chinese soybean markets.

Do you know that if you first put on your socks on the left foot, the other sock will always be on the right foot?

Trump’s billionaires, Wherefore art thou?

Much has been written about all the billionaires in Trump’s cabinet. But there are actually only three and one wonders if any of them knows anything about running a business. They are Howard Lutnick, Secretary of Commerce, net worth: $3.2 billion, source of wealth: finance CEO of Cantor Fitzgerald, a financial services firm; Linda McMahon, Secretary of Education, net worth: $3 billion, source of wealth: wrestling; and Kelly Loeffler, Head of the Small Business Administration, net worth: $1.3 billion, source of wealth: wife of Jeff Sprecher, CEO of Intercontinental Exchange;

Note that none of the above built their wealth in manufacturing. The Wall Street Journal remarked regarding Lutnick, that it is too bad that the secretary of commerce knows so little about commerce. Scott Bessent, Treasury Secretary has a net worth of “only” $500 million. His source of wealth is Key Square Group, a macro hedge fund destroys wealth as often as it enhances it. Only Doug Burgum, the Interior Secretary whose net worth is a paltry $100 million started a small business, a software firm, Great Plains Software which Microsoft bought for a billion dollars in 2000. (What happened to the other $900 million?) Burgum then ran a real estate development firm and venture capital company. The one influential Trump advisor who is involved in manufacturing, Elon Musk, has been the only one who has publicly strayed from Trump’s obsession with tariffs. But Musk is not in the cabinet.

BTW, a macro hedge fund is one that places bets on wide swings in the market rather than picking individual firms and stocks. So these funds short or go long in stocks to take advantage of political upheaval or movements in economic activity. One such fund had taken positions in anticipation of a Trump-induced market crash and was rewarded with a 6% gain in the market downturn following “Liberation Day.” However, that same firm lost some of its gains when the market bounced back when Trump suddenly rescinded his “reciprocal” tariffs. Another macro hedge fund sold stocks in its highest volume in 12 years. The Wall Street Journal reports that the ratio of bets on asset prices rising to bets on asset prices falling is at a five year low. No doubt that all the sell offs by hedge funds contributed to the volatility in the market.  One fund is heavily into Treasurys and lost when investors dumped Treasurys as stocks plummeted. This is the world of Scott Bessent who probably advised Trump to cool it lest his hedge fund buddies take severe losses and upset their well heeled clientele.

I am not convinced that hedge funds add value. Yes they have made some of their managers like Bessent and Scott Ackerman very wealthy but most funds do not add value and collect high fees for churning portfolios. Nonetheless, their clients are generally wealthy and their hedge fund investments amount to little more than gambling money which constitute very little of their wealth.

If Trump had real businesspeople in his cabinet, maybe the path for the economy would be different than the haphazard zig zig route that we are now on. The MAGA crowd has been trying to convince me that Trump knows what he is doing. They have faith. Let’s hope that that faith is justified.

Erratic Trump. Erratic Iamaleava. Who?

I had wondered why congress would not assert its authority over tariffs and claw back Trump’s actions. The answer is that the republicans are afraid. First they are afraid of Trump and second they are afraid of the political ramifications of them opposing the leader of their party. The democrats in the House are content to sit back and see this play out. They probably know that if the tariffs go fully into effect then the result will be a recession and possibly inflation but surely chaos is global and domestic financial markets. In the Senate, Elizabeth Warren has introduced a resolution to claw back tariffs from presidential control and return them to the Senate. That may pass. Chuck Grassley, Mitch McConnell, Susan Collins, Thom Tillis, Rand Paul and Lisa Murkowski are all likely to support it. However, Trump will veto it.

Trump reminds me of the old saying that “the boss may be wrong but the boss is the boss.” I hope that Trump declares victory at some point and recalibrates his “reciprocal” tariffs. But he is just stubborn enough to leave in place his global 10 percent tariff. Let’s hope that he removes them from countries that have zero tariffs and those with a trade surplus with the US. It will be interesting to see the effect on prices of the 10 percent tariff given that the American average tariff was 2.5 percent. If the 10 percent has minimal impact on consumer prices and brings in a couple of billion dollars, will Trump be satisfied? 

Businesses are inclined to wait things out. Trump’s behavior has been erratic and seems to change on a whim. Markets like certainty and the volatility in money and capital markets speaks to the uncertainty caused by Trump’s actions. Maybe he is on an ego trip showing how he can roil markets and disrupt the world’s economies. Regardless, no major investments are likely to happen until there is some certainty back in the markets.

Speaking of erratic, Trump’s carve out exempting smartphones and other electronics from the tariffs is a bad look. Apple, Samsung and Nvidia are heavyweights with stacks of cash, high paid lawyers and lobbyists and direct access to the White House. Small businesses who sell stationery, socks and paper products do not. Small businesses which are the engine of employment and growth in this country are suffering with no relief in sight. I said during COVID that Trump was anti small business with his overt favoritism toward larger retailers while enforcing the closure of small ones. That bias is again evident.

Speaking of erratic, Trump was actually displaced in the Knoxville news by Nico Iamaleava, the erstwhile University of Tennessee quarterback who held out to get more money from his NIL deal and got fired. It may have been a relief to many Vol fans who had long given up on trying to pronounce his name and were reduced to just calling him “Nico” but the greatest surprise was the overwhelming support of Vol Nation to show him the door. The university or rather the booster group that finances NIL refused to renegotiate his deal when he became the first holdout of the NIL era. Tennessee coach Josh Heupel said that no player was bigger than the team or the program. Even though it leaves the Vols without a first line starting quarterback in the brutal SEC, the fans are going to do a first – actually support the team even if it suffers from a losing season. I think Nico and his people miscalculated his value. He will now go through the transfer portal and may find a home. But he has missed spring practice and will be not likely to be ready to start this season. I doubt if any school will be willing to pay $2+ million for Nico to sit on the bench. Also any team that signs him will have to deal with a fan base that will not likely embrace Nico. Some experts have linked him to a desperate UCLA which had a losing season and lost many of its best players to the transfer portal. Others have mentioned Colorado which only makes sense if Coach Prime decides that Liberty transfer Kaidon Salter and freshman Julian Lewis (from my home state of Georgia) aren’t good enough to compete in the Big 12 and at some level Iamaleava’s ability is close to that of his son Shadeur. Regardless, given the lack of demand, I would be surprised if Nico’s new deal was better than the one he walked away from at Tennessee. So with Nico, caveat emptor. 

Does Trump really want a return to the good old days?

I saw a recipe “Preparing poached lobster with morels and favas”. Shouldn’t it be illegal to poach lobsters?

Trump’s exempted smartphones from his Chinese tariffs. I’m sure that Apple’s Tim Cook’s $1 million donation to the inauguration had nothing to do with it. Right?

Here are the countries with whom we have a trade surplus. Why then are they still hit with Trump’s 10 percent tariff? Trump should immediately rescind his tariffs with these countries.

December 2023 Trade Surpluses ($ billions)

Rank	Country	Surplus
1	Netherlands	43.7
2	Hong Kong	23.6
3	United Arab Emirates	18.3
4	Australia	17.7
5	Belgium	15.8
6	Panama	10.7
7	United Kingdom	9.8
8	Dominican Republic	6.0
9	Brazil	5.7
10	Argentina	5.0
11	Guatemala	4.9
12	Bahamas	3.8
13	Peru	3.3
14	Chile	3.2
15	Qatar	2.6

On “Liberation Day” Trump said “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” the president said on Liberation Day. “American steel workers, auto workers, farmers and skilled craftsmen—we have a lot of them here with us today—they really suffered gravely.” That, of course, is pure hyperbole. If Trump were correct then the states that “suffered” from manufacturing loss would be worse off. None of them are. In fact they are all better off economically with low unemployment rates.

Personally, I think that Trump imposed those tariffs to help him politically in Pennsylvania, Michigan and Ohio. Ironically, although those states suffered displacement under NAFTA they actually benefitted. Those who talk about job loss forget to mention the jobs gained. Studies find that job losses were offset by gains. Yes manufacturing jobs in the US have declined but trade caused only about 20 percent of the job loss while technology accounted for 80 percent. Michigan is estimated to have loss around 220,000 manufacturing jobs due to NAFTA. However, the Congressional Research Service finds that overall there has been a net gain in jobs. Michigan now has over a million jobs directly linked to international trade and workers in trade intensive industries earn 18 percent more than in other industries. A politician railing about job loss should first address why those jobs left in the first place. Mexico has more than 40 free trade agreements than the United States giving a company more duty-free access than if it were in the US. So the lack of free trade agreements is also costing the US jobs.

Trump hated NAFTA and replaced it with the US Canada Mexico Agreement. Then Trump reneged on his own agreement hitting Canada and Mexico with 25 percent tariffs under the guise of a national “emergency.” Why would any country believe that whatever deal Trump makes will be adhered to?

Yes trade causes disruptions in the labor force but accounts for only about 5 percent of the 20 million Americans who change jobs involuntarily yearly due to layoffs or plant closures. Technology imposes a larger threat to American jobs. Over 50 percent of American jobs are vulnerable to technology. I guess Trump should now start imposing tariffs on companies that displace workers due to technological change. Ned Ludd lives!

Trump may be a short timer but if JD Vance succeeds him – which I doubt – his industrial policy will continue. Vance, too, believes that free trade agreements destroyed middle class jobs in the Rust Belt and decreased wages. Again, this is not true. If the middle class decreased it was only because they moved up rather than down the economic ladder. Factory towns are gone because fewer workers are required to make the same output. American manufacturers now operate more efficiently, use fewer natural resources, require less backbreaking labor, produce less pollution and employ more highly educated people than ever. No tariff or trade restriction is going to reverse those trends. China and Mexico did not kill factory jobs, technology did. The share of households earning more than $100,000 has tripled over the past five decades, and the share earning less than $35,000 fell by 25%.

So do you think that there are bunches of unemployed people out there pining to work in factories? Apparently Vance and Trump think so, although in reality they probably don’t. The manufacturing workforce is typically men without a college education. Today domestic manufacturers cannot find enough workers to fill job vacancies. February’s jobs report from the Bureau of Labor Statistics showed 7.6 million vacancies. Is Vance – or more importantly Trump – going to admit more immigrants in to the country to fill those jobs? Not likely.

So all this posturing about job loss due to trade and bringing manufacturing back to the US is nothing but a ruse. Labor intensive manufacturing jobs left the US because of labor costs and the manufacturing that remained is mostly tech heavy. One firm just announced that in order to hire a person, managers have to document that the job could not be done by AI (no Linda McMahon, that’s not the steak sauce). The company is now going to use an AI system to automate the storage and retrieval of inventory. Instead of needing several facilities with 50 or so employees it will need only one with 4 people and they’re all technicians.

It is highly unlikely that either Trump or Vance will change their tune but as my father used to say “Harold that sounds good – if you are interested in sounds.”

More random thoughts

Wall Street, not congress, seems to have been the checks and balances for Donald Trump.

He still has support with the MAGA crowd but for how long?

Kamala Harris is exploring the possibility of “establishing an institute for policy and ideas” as a fund raising vehicle to finance her political future which makes sense given her deep knowledge of the issues and her ability to articulate complex thoughts.

Merchants are now putting a “Trump Liberation Tariff” on their bills. Much like some put a credit card usage fee on sales slips.

Trump says any pain in the U.S. from tariffs will be offset by long-term gains in jobs and investment. Does he really think the American public after a 24% rise in prices under Biden will stand for a similar or greater rise under Trump?

Trump says that manufacturing will miraculously reappear because of tariffs. But factories are not built in a day, companies say that even if they did they couldn’t find the workers. 

It doesn’t make sense for companies to rush to make big investments because of Trump’s tariffs because he is erratic and is a short timer. Case in point, he just exempted cell phones, computers, hard drives, memory chips, flat panel television screens and semiconductors from his “reciprocal” tariffs on China. So why should Apple, Samsung and the rest spend billions to move production and disrupt their supply chains? This time Trump really blinked. What’s next?

Southeast Asian economies are built on exporting goods – mainly to the US. Economists call this comparative advantage. Twenty million jobs in Chinese factories and the Vietnamese economy are geared towards making stuff for the US market: apparel, homeware, toys, the electronic and other consumer products.

China runs an almost $1 trillon goods surplus to the world. Given Trump’s logic this should mean that China’s economy should be humming along, vibrant, the biggest in the world and rapidly growing – none of which is true. Et tu Donald?

Howard Lutnick says that Trump’s tariffs will eliminate China’s “army of millions and millions of human beings screwing in little, little screws to make iphones” so they can be built in America by robots. Is this a racist comment? Regardless, Lutnick either knows better or is a fool. I guess the robots will be imported from China.

China is a bad actor.  It has admitted that Beijing was behind a widespread series of alarming cyberattacks on U.S. infrastructure. I would have hit them – and only them – with tariffs until they stop their sword rattling, stealing of intellectual property and cyberattacks.

Repeal the so-called Inflation Reduction Act. All it did was to hand out billions to the green industrial complex. The typically low original cost of $400 billion is now over $1 trillion. But of course some republicans want to keep those parts that give pork to their districts.

Didn’t Trump say he believes in fair trade? But to him, “fair” means a trade surplus with tariffs, not merely as a means to an end, but as an end in themselves. Again, Trump see China.

China has put its minerals on a watch list to limit their sale to the US. China makes 80 percent of EV batteries. If China stops exporting rare earths, what would be the impact on the US? China dominates 90% of the global rare earths markets which are essential to the defense, energy and electronics industries. Trump might say “mine, baby mine.” But It takes an average of 29 years to go from mineral discovery to production in the U.S while in China, with few environmental regulations and state subsidies it can take months rather than years to bring a factory on line.

Trump is now bragging that we are now raking in the money from tariffs. He is ignoring the firms that are laying off workers, firms that are delaying production and firms that are going out of business. He is also ignoring that the net impact of the first Trump deficits in his first term was negative. This time it will be worse unless of course he continues to blink.

JD Vance – Trump’s Hit Man

Has JD Vance been assigned a role by Trump? Currently the only specified duty of a vice president is to preside over the Senate. No wonder Vance went to Greenland. Imagine having to spend your days listening to Chuck Schumer. But it is clear to me that Vance is Trump’s hit man. First he went to Europe and chastised the Europeans at being wimps. Speaking at the Munich Security Conference Vance chided the Europeans. He was confrontational accusing the Europeans of censoring free speech. He said that they feared their own people. He dismissed the role of Russian interference in the politics of the continent. Rather he said that the greatest danger was from within rather than without. Vance said “The threat I worry the most about vis-à-vis Europe is not Russia, it’s not China, it’s not any other external actor. What I worry about is the threat from within, the retreat of Europe from some its most fundamental values, values shared with the United States of America.” Moreover, Vance said that Brussels had shut down social media over hateful content, criticized Germany for raids against its own citizens for posting anti-feminist comments, Sweden for convicting a Christian activist, and United Kingdom for backsliding on religious rights. 

Hum. Sounds like the Biden administration to me. Not surprisingly those in Europe hit back. “Vance’s attack on European democracy in Munich, perversely twisting the language of democracy itself should leave no doubt whatsoever that the aim of this administration is to destroy the EU and its liberal democracies.” Of course, Vance would not have said any of this without Trump’s blessing. 

Then came the meeting with Zelenskyy, Trump let Vance be the attack dog in provoking Zelenskyy to counter attack. Remember “Do you think that it’s respectful to come to the Oval Office of the United States of America and attack the administration that is trying to prevent the destruction of your country?” Vance said. “Have you said ‘thank you’ once?” “With respect, I think it’s disrespectful for you to come into the Oval Office and try to litigate this in front of the American media.” I don’t think that Zelenskyy – like any foreign leader – took too kindly to the impudence of only a vice president and reacted accordingly.

Then Vance proceeded to belittle the Chinese in the midst of the trade war by saying that the U.S. borrows “money from Chinese peasants to buy the things those Chinese peasants manufacture.”  Naturally, the Chinese were offended by the use of the term “peasants” much like black men take offense at being called “boy”. There is no doubt in my mind that Vance deliberately chose a racist term to intentionally provoke the Chinese. And of course they responded. “To hear words that lack knowledge and respect like those uttered by this Vice President is both surprising and kind of lamentable.” This was their diplomatic way of saying F-you. Again, Vance would not have uttered this insult without Trump’s approval.

Then Vance went to Greenland on an “unofficial” visit that was unwelcomed by either Denmark or Greenland. There he said “Its cold as s — here!” Then he proceeded to insult Denmark. He accused Denmark of failing to provide adequate security against “very aggressive incursions from Russia, from China and from other nations.” He said “Our message to Denmark is very simple: You have not done a good job by the people of Greenland. You have underinvested in the people of Greenland, and you have underinvested in the security architecture of this incredible, beautiful landmass filled with incredible people. That has to change.”  Neither the Danes nor the Greenlanders were thrilled. Greenland responded by saying “We’re afraid of being colonized again. We’ve been a colony for the past 300 years under Denmark, it still feels like it. Now another colonizer is interested in us.” Greenland’s prime minister said that Vance was not showing respect for an ally. The Danish Foreign Minister appealed for an end to the hostile messaging from Washington. “Many accusations and many allegations have been made. And of course, we are open to criticism. But let me be completely honest: We do not appreciate the tone in which it is being delivered.” He then added “Stop treating us like dirt.”

The commander of the US base in Greenland, Col. Sussanah Myers was apologetic and emailed “I do not presume to understand current politics, but what I do know is the concerns of the U.S. administration discussed by Vice President Vance on Friday are not reflective of Pituffik Space Base.” Not surprisingly, she was removed from command.

All this points to Vance’s unofficial role in the Trump Administration, he is the agent provocateur, Trump’s hit man Trump’s attack dog. Sic’ em.

Random thoughts #54

I made meat loaf yesterday and I remembered the first time I googled for a recipe and Meatloaf the singer was cited in a Wall Street Journal article that referred to him as Mr Loaf.

I was talking about the Supreme Court in class and called them “The Supremes.” Turns out that not a single student had heard of them – or Diana Ross.

Trump said that he wanted iphones to be made in the US, whereupon the company said that it could but they would cost $3,500.

There is a commercial on TV for a Nissan Armada that says it costs “only” $59,000. For some reason I was bothered by that because no country on the African continent has a per capita income equal to that amount. The highest is Libya at $24,196 while South Sudan’s is $433. I bet there are no ads for the Nissan in Africa – or for that matter pizzas at $9.99.

I really need someone to explain to me why if I buy something from someone then it’s bad but if they buy something from me, its good. In essence that is what Trump keeps saying. Trade deficits are bad (we buy more from them than they do from us) while trade surpluses are good (they buy more from us than we buy from them). Again we buy more from the world than they buy from us because we are bigger than most and wealthier than all. Surely Trump knows this.

The Chinese-Trump tit-for-tat tariff spat continues. Trump’s tariffs on China are now 145% while the Chinese countered with 125%. Maybe its over since the Chinese announced that further increases serve no purpose saying “Even if the U.S. continues to impose higher tariffs, it would be economically meaningless and would become a joke in the history of the world economy.”

The Chinese are banning US movies. Too bad we can’t do the same.

Trump however has been strangely quiet when it comes to Canada which said it would retaliate the 25% tariffs that continue on aluminum, autos and steel. Didn’t Trump threaten to impose additional tariffs on countries that matched his “reciprocal” levies? So why haven’t Canadian tariffs risen to 50%?

If Trump’s tariffs are “reciprocal” then why did his National Economic Council Director say that the global 10 percent baseline tariff is here to stay? Recall that previously the average US tariff was 2.5%. Maybe Trump thinks that a ten percent tariff is not enough to seriously affect American consumer prices and industrial production while adding to the Federal coffers. Maybe.

The dollar keeps falling while the euro keeps rising. What is wrong with this picture? But doesn’t Trump want a weak dollar so that exports are cheaper and imports are more expensive? Well its working.

Bitcoin is falling and gold is rising. Isn’t this strange too?

Is Maine still defying Trump on trans athletes? I expect that he will start levying tariffs on Maine lobsters.

Trump is undoing Biden’s green war on appliances. He repealed the regulations governing the water flow of showerheads. The tankless water heater rule is next and look for repeals of the restrictions on household appliances.

The democrats have tried to frighten the public by calling DOGE as an “oligarchical techno-state” and as a “dystopian nightmare unfolding before our eyes.” Wow. Way to install fear, guys.

It was a bit weird that when Trump did his thing on “Liberation Day” I had feeling of dread. That got me thinking that this was the first time I had felt that way due to the economy. I did not feel that way when the real estate market crashed in 2007, or the dot.com crash in 2002 or even with COVID. I only recall feeling that way when after 2011 it was eerily quiet when no aircraft were flying.