Blog

More Random thoughts #52

Josh Hawley wants a credit card rate cap. Didn’t Trump say the same?  Trump talked about capping credit card interest rates on the campaign trail in the fall of 2024. And now Hawley along with Bernie Sanders, recently proposed legislation that would cap credit card interest rates at 10 percent. Bad idea. Interest rate caps turn out to be anti-poor, harming the people that it is meant to help. People with poor credits will not get loans. They won’t get credit cards either. The left knows this. I was at a hearing once where one advocate said that she would rather the poor not ever borrow if they have to borrow at “predatory” rates.

If Bernie approves of Trump’s pivot toward Putin, he’s not saying. I wonder why?

What’s next? Wage and price controls?

Threaten the auto companies not to raise prices? Sounds like Kamala Harris wanting to enact a federal ban on “price gouging.”  

.Trump is a mercantilist not a capitalist.

The media – including the Wall Street Journal – is after Pete Hegseth. First the Signal snafu which some accounts say was Michael Waltz’s responsibility but somehow Hegseth is targeted instead. Then the Journal says that Hegseth’s wife is traveling with him and is attending high level meetings. Certainly Hegseth knows better. Of course, the media was silent when Jill Biden was chairing cabinet meetings. Then there are the accounts that Hegseth’s brother is along for the trips too. While it seems like there is some nepotism it turns out that Phil Hegseth is senior advisor to the secretary of Homeland Security and liaison with the defense department. But Hegseth needs to tread lightly. Doesn’t he know that each thing he does will be closely scrutinized? 

Should a country retaliate to Trump’s tariffs? Of course, that is the natural reaction. But why should a country punish its own citizens by imposing tariffs on imports? I wouldn’t. Supposed Canada did nothing. In the US, the cost of energy would increase. The housing industry would suffer due to the increased cost of lumber. How would Americans react when their gas prices go up 50 cents a gallon? How would Americans react when what they buy at Walmart  and the price of automobiles go up?

Part two of Trump’s tariffs is the reciprocal part. Here there is some complicated formula to determine what that tariff is for what good in what country. Or maybe it is an overall tariff? Regardless, I would guess that most countries will kiss Trump’s ring assuming that if they lower their tariffs they will not be subject to the overarching 25% rate. But is that true? Lowering their tariffs or matching that of the US will not eliminate trade deficits. The only way to lower trade deficits will be for the US to cut its imports to match the other country’s exports, not matching their tariffs.

I just want to know Trump’s end game. He says he wants all that we import from Canada to be produced in the United States. What about Mexico? What about the rest of the world? He hates trade deficits and yet reciprocal tariffs will not eliminate them. Personally I would like to see all tariffs and quotas eliminated worldwide. Most tariffs are simply stupid. And by the way, the country with the highest tariffs is Bermuda. Who has the lowest? Hong Kong.

Baseball is back but unfortunately the Braves haven’t got the message, getting swept by the Padres and are now 0-4.

Liberation Day?

Trump calls April 2^nd “Liberation Day”. That is when his tariffs go into effect. I guess it is obvious why he did not pick April 1^st. Liberation is defined as “an occasion when something or someone is released or made free.” So what are we being released from or made free from?

Trump is putting a 25% tariff on all automobiles imported into the country. That matches the duty on pickup trucks imposed by Lyndon Johnson in 1964 that is still in effect today. I thought that he would cut BMW a deal since their largest plant is in South Carolina. But no. The company has announced that in the short run it will eat the tariff. Its popular M3 is made in Mexico and the average tariff on it will be $10,000. Trump has threatened the automobile makers not to raise the prices of their vehicles. Yet the increased costs of the tariffs will be greater than the profit made on cars sold. Would they then stop importing vehicles from Canada and Mexico because you can’t make up those loses on volume? The tariffs will wipe out both Ford and GM’s profits. Oops.

Trump’s tariffs obsession makes me wonder about his business acumen. He said that the automakers should be grateful for the elimination of Biden’s pivot to electric vehicle production. Yet the automobile industry embraced electric vehicles (both Ford and GM) because it eliminated a large portion of the workforce and would ultimately reduce the cost of producing vehicles because of fewer moving parts. Trump also said that they would benefit from the tariffs because of bringing manufacturing back to the U.S. Huh? Tariffs are generally used to keep the competition out, not encourage them to come into the country. Then Trump got really delusional when he said “You’re going to see prices going down, but it’s going to go down specifically because they’re going to buy what we’re doing, incentivizing companies and even countries with companies to come into America.” Huh? The automakers left the country because of high costs. Bringing all auto production into the states will raise the costs of cars, not lower them.

Trump wants all the automobile companies to move their manufacturing to the US. First, they will have to build the plants which will take a few years even with Trump putting them on a fast track. Second, they will have to find workers. Third, will BYD and Polestar be allowed to build the plants in the US that they were planning to build in Mexico? Fourth, if they shut down the plants in Mexico, the automakers may have to get special work visas to bring the workers in from Mexico to work in the new plants.

I guess they didn’t teach comparative advantage at Penn. That tells us that if Trump were successful in cajoling manufacturing back into the US that the final products will be more costly being produced here than abroad. Consider the apparel industry that has seen a shrinkage in employment from about 925,000 workers in 1990 to less than 84,000 today. BTW, what happened to the displaced workers? Did they all go on unemployment and stay there? Of course not. Regardless, can Trump’s tariffs bring this industry back from Southeast Asia? Doubtful. But what if he did. Would apparel cost the same or more? Consider the t-shirts made by US-based American Giant are sold at Walmart for $12.99 while t-shirts from Southeast Asia are sold for $4.98. The foreign t-shirt can be manufactured abroad and shipped to the US and still cost one-third of the same shirt made in the US. The difference is labor cost which is 3 times more. The same will be true with autos. If Honda decides to make its Civic hybrid in Indiana rather than Mexico or if other car makers move their production into the US, automobiles will cost more. This will lower the real income of the American consumer. 

The avocado industry moved from California to Mexico because of labor. Once that labor flowed freely across the Mexican border to harvest avocados. Then the US tightened up its immigration enforcement stopping the flow. As a result, the workers were forced to stay in the US making them illegals or remaining in Mexico and trying to sneak across the border. The result was a dearth of agricultural workers forcing the companies to move their production into Mexico. Now Trump’s tariffs won’t bring the industry back to California unless he reinstitutes the rules allowing for the free flow of migrant workers. Now won’t that be ironic? Forcing production back into the US and having to import workers from Mexico.

Again I thought with all the business people in Trump’s cabinet that he would not go through with this nonsense. But I guess its more important to some to just go along with the boss in order to be in the Cabinet. They probably know that manufacturing leaves developed countries and is not necessarily related to trade deficits – like Trump thinks. Consider that in Germany between 2000 and 2024, manufacturing jobs fell while the country went from a trade deficit to a trade surplus. Likely they are too afraid to tell this to Trump. 

Trump says that we will get a lot of money from the tariffs. Again he didn’t learn this from his economics courses. The increase in the price of goods will mean that the quantity demanded will fall. Economics says that if demand is elastic then total revenues will be lower. Trump is assuming that demand will stay the same at the higher prices resulting from the tariffs. They taught this at Penn? He needs to talk to Art Laffer. No wonder consumer confidence is falling. No wonder the stock market is moving into correction territory. No wonder the dollar is depreciating in foreign exchange markets.

Liberation Day? Hardly, more like liberation from reality.

Slotkin remains in the House and lovely Qaanaaq

Trump just pulled Elise Slotkin’s nomination for US Ambassador to the United Nations. Privately, I bet she is relieved. The reason given is the republican’s razor thin margin in the House of Representatives. I don’t know if this means that Trump was worried about Slotkin’s New York district electing a republican or not. It could well be that he is afraid that one or two republican house votes might flip and he would not be able to pass his legislation. Another possibility is that he is worried about losing one or more of the open seats created by his picking congressmen to be on his White House team. The seat vacated by Michael Waltz in Florida is running closer than expected. Trump won the district by 30 points but the democrat is within 5 points of flipping the seat. A state senate seat in Pennsylvania in a district Trump won by 16 points just flipped to a democrat. I know that all politics is local but Trump will be soon feeling the heat caused by his inane tariffs and the reaction to his spending cuts.

As to Slotkin, Trump tweeted “We must be unified to accomplish our Mission, and Elise Stefanik has been a vital part of our efforts from the very beginning. I have asked Elise, as one of my biggest Allies, to remain in Congress.” Slotkin agreed saying that she was a team player saying “This is about stepping up as a team, and I am doing that as a leader, to ensure that we can take hold of this mandate and deliver these historic results.” Personally, I think she probably rethought her decision to be US Ambassador and decided it would be better to remain in the congress where one day she might be speaker. The UN is a dead end, nothing position. Anyone can be ambassador but not someone so vital to the party.

Speaking of useless positions, how about being consulate to Greenland? The current consul is Monica Bland who has been in the position since 2013. She is a career foreign service person who speaks Danish, Russian and Serbian. Trump will probably get around to replacing her with a republican that has nothing better to do. This is one of the totally useless jobs littered all over the federal government. Seriously, why would anyone of value be the consul to Greenland? Yes I know that Trump wants to annex it but that is still not reason enough to post someone useful to lovely Nuuk. BTW, the lovely building in the picture is the consulate in Nuuk. I think that speaks volumes about the importance of the position.

Did you know that the US base in Greenland is a Space Force base? The base is ice locked for nine months out of the year. The nearest town is lovely Qaanaaq, population 646, 75 miles away. JD Vance and his wife Usha visited the base, perhaps to console the troops exiled there. A dogsled race was part of the itinerary. The visit was hardly warmly welcomed. Greenland’s Prime Minister Múte Egede said “the upcoming and subsequent private visit of the wife of the United States Vice President and the United States President’s highest security advisor cannot be seen only as a private visit. After closer consideration, however, we have now informed the consulate that we do not want her visit.” Methinks, Mr Egede views the visit as a provocation. Indeed, Danish Prime Minister Mette Frederiksen denounced US plans to visit the Arctic Island uninvited and called it an “unacceptable pressure” on Greenland and Denmark.

Trump must not like Usha Vance.

The 18 percent solution and saving Social Security

The 18 percent solution

Scott Bessent, the secretary of the Treasury, in a recent interview almost endorsed my 18 percent solution. He said that the country does not have a revenue problem it has a spending problem – something that many of us have been saying for years. He noted that tax receipts stay around 18 percent while spending had increased from 21 percent to 25 percent of GDP during the Biden years. He wanted to get spending back down to 21 percent. But that insures a deficit of 3 percent forever. So why not spending at 18 percent? I have long suggested that changes in spending not exceed the previous year’s change in GDP unless the president declares a national emergency and the congress approves by two thirds majority.

Why doesn’t Trump just tell his cabinet to propose a budget whose total does not exceed 18 percent of last year’s GDP? He could still sic Musk and DOGE to ferret out fraud and waste within the dollars being spent – although that should be the job for the inspector generals at each agency.

Saving Social Security

Some experts, a lot smarter than me, are saying that the solution to the Social Security “crisis” is a simple one. Just index it to prices rather than wages. One expert says that price indexing will remove 80 percent of the unfunded liability gap over the next 75 years. Here is the reference “How to make Social Security a winning campaign issue” by David C. Rose https://thedailyeconomy.org/article/how-social-security-reform-can-be-a-winning-campaign-issue/

Here is a lightly edited quote from the article

Had price indexing [rather than wage indexing] been implemented, Social Security would have run surpluses every year from 1982 to 2023, except for 2021. There would have been temporary shortfalls starting in 2024, but by 2044, Social Security would have been running surpluses again. Surpluses in Social Security could permit a reduction in the tax rate or allow some of the revenue raised from payroll taxes to support Medicare, which is also running large deficits.

This sounds like a much more reasonable fix than Trump’s idea of exempting Social Security from taxation which would make the problem worse. Lutnick and Bessent are supposed to be smart guys so do it!

One of my ideas is for parents to establish a tax free account for their children at birth. This would be like a 529 plan which is used to help parents pay for college expenses. The monies put in such plans are tax-deferred and the withdrawals are tax free when used for education. Similarly, my idea is to have such a plan for the child’s retirement. The parents would put tax-deferred payments into the plan and when the child joins the workforce, they would continue to put into the plan until they retired. They would never be covered by Social Security. They would never pay into Social Security and never receive a Social Security benefit. The returns from these accounts would be significantly higher than those from Social Security. What if the parents did not establish such an account? They would have to pay into Social Security but would still have IRAs to supplement any Social Security “benefits.”

Bessent is also talking about a sovereign fund starting with proceeds from the sale of Fannie Mae and Freddie Mac. The fund would be added to from proceeds from tariffs and other government funds. The monies would be invested and not used until a certain future date and would be designated to fund unfunded liabilities. Australia has such a fund and not surprisingly, demands are being made to use the monies for purposes not originally intended. Such is always the danger when there is a pool of money laying around.

The emptiness of faculty offices. The emptiness of young minds.

I made a mistake coming out of retirement to teach one section of financial markets and institutions. First there is the cultural divide. None of the students were alive when Bill Clinton was president. They were in the second grade when I retired in 2011. In the main, they have little knowledge and no intellectual curiousity. Don’t get me wrong there are several very strong students in this class of 59 but as a group, not so much. After the first exam, 17 students failed to pick up their exams. Consistently there are around 40 students who regularly attend. So I thought the other 19 had dropped. Then I gave the second exam and the room was again full. WTF? I said “Where did all of you come from?” Then in the class when I handed back the exam, 16 did not pick it up (one had dropped). Maybe it is because the lectures are recorded, that those students do not see the need to attend class. Nevertheless, I had given all the exam takers and extra 5 points because their previous scores were so low and I took those points away from those who cut the class. One whined that since I didn’t take attendance it was unfair to punish him. I told him “tough”. I make the class entertaining. I relate the dry text to everyday events. We are covering international financial markets and Trump’s tariffs are perfect lecture material. They now can make sense out of what is going on. How can that be boring?

Their attendance or lack thereof is what’s happening in our society today. When Trump’s appointees arrived at their offices, they found that most of the employees were missing – working from home. They were ordered to return. But millions of feet of office space sit empty and those who are paying rent are wasting their money. The same is true at the university. When I go up to the finance department offices to pick up exams and quizzes, I have never seen one faculty member or one office door open. I remarked this to the secretary and she said that the faculty seldom come in. The courses are now online. All the students have laptops. Professors all give multiple choice true false exams because its so easy to import questions from the test bank into the exam. The computer gives the test, monitors the test and grades the test. So why should a professor spend all weekend grading papers (like me)? As a result, the students don’t understand anything. They just recognize stuff. 

For the first time that I can remember, I am actually depressed. I could not work in that environment. When I was working I never had a bad day. I was surrounded by smart people doing smart things. Being around smart people made me smarter. I knew every faculty member and co-authored with several of them. Students would come by sometimes to talk about class but often just to pick your brain on some topic of interest. It was always stimulating. I generated more ideas that I could exploit. Doctoral students would ask if they could see my idea cache. When I gave papers in our seminars, one faculty member asked me where did I get my ideas. I loved it. Now all that is gone. Everyone is working from home – or so they say. There is no faculty interaction. There are no students in the halls. Nothing. I now feel like a stranger in a strange land. All of this reminds me of Asimov’s Naked Sun and Caves of Steel that I read in high school. I am going to re-read those novels in which everyone is isolated from everyone else and conduct relationships via what would now be the internet. I would miss the interaction between faculty and between faculty and students. I believe that this exacerbates the lack of intellectual curiosity amongst the students. I guess I can understand that they have never heard of Paul Volcker, Milton Friedman and Gladys Knight and the Pips but Ron DeSantis, Scott Bessent and Elizbeth Warren? What rock are they living under?

Never again. Come Spring I am going to read, write my blog, have lunch and breakfasts with interesting people, go to the farm, smoke cigars, hunt, fish, ride motorcycles, camp and generally chill.

I had once said that there are three types of people in the world: the 3 percent that make things happen, the 7 percent who know what’s happening and the 90 percent who haven’t a clue what’s happening. I thought that the availability of free information would move many in the 90 percent into the 7 percent. I was wrong. Those percentages seem to be immutable regardless of information available. Malcolm X once said “A mind is a terrible thing to waste.” This generation would likely ask “Who is this X person? Does he work for Elon Musk?” If the purpose of education is to replace an empty mind with an open one, then we have failed.

Tattoos and the Sweet 16

Did you see where the families of some of the Venezuelans deported to El Salvador said that they were not gang members but just had face tattoos? Huh? Maybe it is just a cultural thing in Venezuela, much like wearing pants below the butt like convicts in the US. But why would anyone have their face tattooed if it is a symbol of gang membership?

Speaking of tattoos, they are prevalent enough amongst the college basketball players but I was watching highlights of an NBA game while on the treadmill. It was unwatchable because of the all the wild hair (which we used to call girlie hair) and abundant tattoos (again the convict influence on today’s culture). It looked like a pickup game between Venezuelan gang members – albeit absent the face tattoos. OK maybe I am old fashioned but all that excess body paint is off putting. I tell my students that I will not write a letter of recommendation for anyone who has a visible tattoo, regardless of their grade. One very good student asked me if I was serious. I was and still am. I told him that when the CEOs of the S&P 500 started tattooing their arms and necks, then I might consider revising my policy. Not!

We are now on to the Sweet 16. First off there are no Cinderellas this year. The only double digit seed is Arkansas, a 10^th seed. But no mid majors this year. All four number 1’s and three of the number 2’s are still alive, The only number 2 to lose was St John’s which lost to Arkansas. I hope UT gets to the Final Four and Rick Barnes finally wins a national championship. He is the coach with the most victories that does not have a championship. That was why Texas let him go to Tennessee’s everlasting gratitude. I don’t understand the Texas ADs. They keep firing coaches that get to the tournament but fall short of winning it all. They fired Barnes and hired Shaka Smart who was fired and they hired Chris Beard who they fired to hire Rodney Terry who they fired to replace him with Sean Miller who was at Xavier after being at Arizona where he had incredible talent but always fell short. Expect Texas to fire Miller after 2-3 years.

Maybe, just maybe, winning a basketball championship is hard. Barnes could not win with TJ Ford and Kevin Durrant! In this year’s tournament, of the 68 coaches only 6 had won a championship – John Calipari, Tom Izzo (who I think is the best coach coaching), Bill Self, Scott Drew, Dan Hurley and Rick Pitino. Drew’s Baylor team was the only non-bluebood in the group. Only Hurley and Calipari have won two even though Calipari had one vacated. So shouldn’t an AD just be happy with having a successful season and making the tournament? This year only Calipari and Izzo made it to the Sweet 16 and it is doubtful that Arkansas or Michigan State will hoist the trophy. If Barnes doesn’t win then I am pulling for Kelvin Samson who like Barnes has never won a championship. Barnes has only been to one Final Four. Samson has been to two.

The SEC coach of the year is Bruce Pearl – who has cheated everywhere he has been. Now since players can be paid, Pearl no longer has to cheat sub rosa. However, the coach of the year should have been Mark Pope at Kentucky. Pope inherited the mess that left by Calipari, had no returning starters and yet beat Tennessee twice and is now in the Sweet 16. Pope should have been the choice not Pearl.

Speaking of Pope, his old school BYU is in the Sweet 16 and is a very dangerous team. Watch out Alabama! BYU presents the NCAA tournament committee with an interesting challenge. Since BYU will not play on Sundays, the committee has to put them in a bracket that never plays on Sundays. I am sure that wreaks havoc with the seeding and placement of teams.

Connecticut is the only school to have both the men and the women win in the same year. This year their women are in the Sweet 16 but the men fell short losing to Florida. Now Maryland, Tennessee, Duke and Ole Miss are the schools with the chance to hoist both trophies. Fat chance. Duke is men’s favorite and South Carolina is the women’s favorite especially given the injury to USCs JuJu Watkins. I hope beyond hope that UT gets by the other UT. But if not, I am pulling for Duke’s women because of Kara Lawson.

Trump vs the judges. Trump vs the world

Activist Judges

Further evidence that justice is not blind comes from Chuck Schumer who said “The good news here is, we did put 235 judges, progressive judges, judges not under the control of Trump, last year on the bench, and they are ruling against Trump time after time after time.” The republicans have for years bemoaned the “activist” judges. But the law is open to interpretation. If not, then all the rulings from the Supreme Court would be unanimous. Indeed, in the 2023-2024 term, 67 percent of the court’s rulings were unanimous – and this court is supposed to be one that is sharply divided. I wonder if this is a decided effort on the part of the Chief Justice? However, some issues like abortion and gun control will never find unanimity. It will be interesting to see whether we get a spate of 6-3 rulings on the appeals by Trump’s lawyers on the limits of executive power.

Trade

I wish Trump would get his figures straight. In almost every case involving trade he misspeaks. He always inflates the trade deficits. He said that the deficit with Canada was $200 billion. Actually, the trade deficit is half that and when the capital account is added – which accounts for services – the deficit falls to around $54 billion.

In fact, Trump always ignores the capital account and focuses only on the current account which tabulates goods imported and exported. Yet this country has transitioned from primarily a manufacturing economy to a services economy. Trump knows this but chooses to ignore it. Ironically manufacturing has maintained its percentage of GDP but doing so with fewer workers. Much like agriculture, technology is displacing workers. Yet unemployment in the once heavily manufacturing states has not significantly changed with the loss of manufacturing. The national unemployment average is 4.1%. In Pennsylvania it is 4.8%, 4.6 percent in Ohio but 3.3% in Michigan. Yet Colorado is 4.7%, California is 5.4% and Nevada is 5.8 percent. Who knew?

Trump should realize that manufacturing leaving developed countries for less developed ones is a trend that is historic. Manufacturing was once in the industrial northeast and migrated to the southern states. That trend still continues yet Trump has made no effort to stop companies from leaving New York, Illinois and California for Tennessee, Texas and Florida. But it is the same phenomena. If Trump really wanted to increase employment he should be doing all he can to stop the job killing and investment stifling regulations in many states. That will grow more jobs and create more investment than his tariffs ever will.

Trump rails about “unfair” tariffs. He points out the ones on dairy in Canada are 270%. But that only applies after US exports reach a certain limit set under the “free” trade agreement. Here is what Trump said during his first term “Fair Trade is now to be called Fool Trade if it is not Reciprocal. Tax Dairy from us at 270%.” In actuality Canada allows 64,500 metric tons of fluid milk into the country before it imposes the high tariff. That total has rarely been exceeded. Yet it makes for a good talking point. Yes I know that if Canada lifted the quota that the total would probably exceed the old limit. But that is an empirical question.

But still Trump conveniently ignores the capital account which is in surplus and concentrates on the trade account which is always in deficit. Makes for good political theatre. Now he is saying that the country will impose reciprocal tariffs. I am waiting to see how this is going to be done. The US tariff book lists over 17,000 items subject to tariffs. Is Trump going to go line by line or with just an average? When US tariffs are higher – like on pickup trucks where there is a 25% tariff – will they be lowered? And what is the end game? If it is “unfair” then reciprocal tariffs will eliminate that argument. If it is to eliminate the trade deficit, then no efforts, even zero tariffs, will address that problem given the size of the US economy vis a vis any country in the world.

Trump wants the EU to buy more American vehicles and agriculture. Yet most US vehicles are not compatible with European streets. As to agriculture, the Europeans do not trust our food which contains more artificial colorings and hormones than the Europeans allow. They have rejected our GMO produce and meat products. I remember when I was living in Germany and saw what they told me at the market was a chicken. It looked liked a shriveled up rabbit. So unless we can get them to eat unhealthy and clog up their streets with oversized vehicles all of Trump’s tariff threats won’t move the needle.

Net Zero, ESG and DEI

I am neither anti-ESG nor anti-DEI. However, like the democrats always seem to overplay their hand, same is true with most of the ESG and DEI crowd. ESG stands for “environmental”, “social” and “governance” and is pushed by the left to force corporations and financial institutions to go green. The Davos crowd and the UN are enthusiastic proponents. The UN’s Net Zero Banking Alliance is “committed to aligning their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050”. Its members are 131 of the world’s largest banks from 44 countries and $50 trillion in assets. Banks like Barclays, BNP Paribas, Deutsche Bank, HSBC and Lloyds are members. The US banks in the group were Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo. These banks pressure their clients to move their activities toward net zero. Some banks have been accused of debanking fossil fuel companies. Canada’s new prime minister Mark Carney is a true believer and pressured banks to join the Alliance. 

In 2022 eleven republican AGs demanded that the US banks turn over information regarding their ESG activities saying that there was collusion that may violate antitrust laws. That investigation along with the election of Donald Trump motivated the US banks to leave the alliance. Thank goodness for the republican AGs!

The companion organization to the banking group is the Net Zero Asset Managers Initiative. Larry Fink of Blackrock was one of this groups leading cheerleaders claiming that climate risk is investment risk and pledged to navigate clients to transition to net zero. The Initiative’s objective is for its asset managers to “assess material climate-related risks” and to commit to a goal of net zero emissions. The 87 members comprise most of the world’s largest asset managers committed to pressuring companies to adopt net zero goals or creating investment funds focused on ESG. Again the republican AGs to the rescue! They threatened to pull their pension funds from Blackrock, Vanguard and others contending that the returns on those portfolios were smaller due to the ESG objectives. Moreover, ESG funds had higher fees. Larry Fink blinked and withdrew Blackrock from the initiative. Blackrock also shut down many of its ESG funds. State Street, JP Morgan, Morgan Stanley, Columbia and Vanguard soon followed. However, the Europeans are still committed to net zero despite the damage it is doing to their economies.

In the US, there are 50 exchange-traded funds that focus on ESG with a combined $70.4 billion. Mind you, I am not opposed to ESG funds. I do oppose asset managers investing their clients’ monies in such funds to the detriment of earnings. I also do not mind that individual corporations incorporate ESG into their objectives, so long as they are open to their customers and stockholders. However, Blackrock and other asset managers were openly supporting shareholder petitions to force ESG into corporations. Blackrock has since announced that it will no longer do so. The top ESG rated firms include Microsoft, Caterpillar, Motorola, Nvidia, Mastercard and surprise surprise Marathon Petroleum. Again, if their stockholders endorse ESG it is fine with me. 

What about DEI? There is currently a case before the Supreme Court that some observers on the right contend will be the death knell of DEI. One right wing outlet said the case “will kill DEI.” Not so fast my friends. It will only affect how some parties apply DEI. The case involves a straight white woman who was passed over for promotions by a gay boss who promoted a gay man instead. The lower court said that she did not have standing even though the evidence was on her side because being straight and white meant she was not in a protected class! Huh? You mean that equal protection under the law does not apply to straight white folk? Apparently not in that court. The Supremes appear to be going to rule unanimously in favor of the plaintiff. Justice Kavanaugh said “Discrimination on the basis of sexual orientation, whether you are gay or straight, is prohibited. The rules are the same whichever way it goes.” Even the three liberal justices seem to agree prompting Justice Gorsuch to say “We’re in radical agreement on that today.”

Apparently the 6^th District appeals court applies a standard that will be struck down. Even the Ohio solicitor general who argued the case for the state said that “Ohio agrees it is wrong to hold some litigants to a higher standard” because of their identity” and that the plaintiff in this case, “should have the same burden” as a gay plaintiff who made a similar allegation of discrimination.” Slam dunk. Case closed. It is curious that the right leaning media would think that this case will kill DEI. It won’t. It will simply mean that straight whites have the same rights under the law as the so-called protected groups. In the words of Chief Justice Roberts “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” The same applies to race and sexual preference.

I keep reading where the democrat party is dead. Wistful thinking. So what if the congressional democrats have an approval rating of 29 percent. What does that mean? Is the 29 percent happy with the dems or angry? Since the overwhelming majority of congressional democrats have voted against almost everything Trump does the 29 percent approval mean that the other 71 percent disapprove of what the 29 percent approve of? Unlikely. As long as the republicans in the House are united (hello Thomas Massie) there is little that the dems can do. Over in the Senate they can filibuster certain bills and stop the republicans who won’t be able to muster up 60 votes for cloture. So much like the republican AGs suing to rein in the excesses of the Biden Administration, the democrat AGs and liberal organizations like the ACLU are suing the Trump Administration at every turn. Here the dems are relying on the leftist judges appointed by Obama and Biden to slow down Trump. Thus, both parties are relying on a kritarchy – rule by judges – to determine the limits of executive power. It should come as no surprise that over ninety percent of the rulings against Trump have come from democrat appointed judges giving further credence that justice is not blind.

Of course Trump being Trump called for the impeachment of the judge that he is sparring with over deporting to El Salvador members of a Venezuelan gang. Despite a rebuke from Chief Justice Roberts, some republicans in the House filed articles of impeachment against the judge and four others. At least the democrats never tried to impeach right leaning judges that overturned some of Biden’s excesses. However, one of the important questions is whether a single judge has the jurisdiction to issue an overarching ruling that applies nationwide. Understand that there are 677 federal judges ad 179 appellate judges spread over 94 geographic districts. Surely plaintiffs can find one that will support their suit to enjoin whatever it is that Trump is doing. Trump’s legal team claims that the rulings of the judge in the deportation hearings are themselves unconstitutional. If so, they need not be obeyed. Understand that the courts do not have a monopoly on interpreting the Constitution and that a president is not obligated to carry out an unconstitutional ruling from a judge.

Again I am not a lawyer but deporting illegals without a hearing was bound to be enjoined. I would guess that even illegals cannot be denied due process. That Trump had to find a 1798 law to do so may be viewed as an overreach. This judge may stop the deportation of other aliens but I seriously doubt if he orders the return of the illegals that Trump will comply. Trump likes Andrew Jackson (who I despise) and may take his cue in defying a court ruling. I think in the main Trump will just appeal the unfavorable rulings of lower courts and hope for vindication from the Supreme Court. It remains to be seen if Trump would – like Biden and Jackson– defy a Supreme Cout ruling.

Now back to whether the democrat party is dead. Two things. First, the town halls show that many democrat voters are displeased with their representatives and senators with all the screaming and shouting. But what can those elected officials do other than yell and scream themselves – see Jasmine Crockett? But this shows that the party is not dead but impotent. These districts are not going to flip to the republicans. If there are competitive primaries the likely result will be that establishment incumbents will lose to younger more radical folk who will be just as impotent. Second, the Bernie and AOC “Fight Oligarchy” tour is drawing great crowds.  Sanders says that he wants to have “real discussions across America on how we move forward to take on the Oligarchs and corporate interests who have so much power and influence in this country.” Of course he means the republican oligarchs and not democrat ones like Georg Soros and Michael Bloomberg. Well you can always count on Bernie to lie to the gullible masses that make up the democrat base. This is another indication that the party is not dead just frustrated. Yet it is strange to see that two of the least impactful members of congress (except for the green new deal) are out there yelling to resist. It is also interesting that oligarchy is rule by the few and that is exactly what occurs under socialism. So why is their tour named “fight oligarchy”?

Bye bye Department of Education – for now

Trump has signed an executive order “eliminating” the Department of Education.  He said “The Department of Education is a big con job… we spend more per pupil than any other country in the world, but we’re ranked 40th.

That means something’s really wrong, right? I say send it back to the states.” 

Of course, Trump would know a con job when he sees one. Naturally, all the republicans are voicing their support while all the democrats are pretending to be aghast. Chris Van Hollen (D-Md) said this was an “outrageous, illegal scam. Trump and his Cabinet of billionaires are trying to destroy the Department of Education

so they can privatize more schools. The result—making it even harder to ensure that ALL students have access to a quality education.” Van Hollen is lying and knows it. Even he knows that privatizing schools will improve education. But he has a toney education – Swarthmore, Harvard, Georgetown Law. Where did he send his kids to school? Certainly not the public schools in PG county.  But democrats see their buds getting less money and could care less about the kids’ education that they so suddenly have passion for. So spare me all the crocodile tears.

The department is not eliminated. Only congress can do that but Trump can zero it out of the budget, terminate its employees and route its “essential” functions to other departments. Although republicans in the House and Senate are proposing bills to officially get rid of the department those efforts will fail. No way will they get 60 votes in the Senate. The department did nothing to raise proficiency in our schools. But was that ever its intent? That chore lies with the local school districts not with the federal government. Thus the failure is local not federal. The Department of Education like most of the federal departments exisst to funnel tax payers monies to special interest groups and not to effect change. In that the Department of Education was successful.

But the department was low hanging fruit. What about the Department of Energy? Hasn’t it been as spectacular a failure? Do we really need a department of commerce, of labor, interior, agriculture, transportation, veteran affairs and housing and urban development? Maybe you can justify defense, attorney general, state and health and human services but the others? Really? Just show me how federal intervention in any of these areas benefits the public writ large rather than a chosen few.

I admire Elon Musk. He knew that the left would go after him and after Tesla. Yet he has not wavered. Some critics are saying that the savings found by DOGE are miniscule. An $11 million savings was reported on canceling leases for some empty IRS office space. Piddling? To be sure but Musk is confident that he can find $1 trillion in total savings. Remember “How do you eat an elephant?” One bite at a time.

Has any democrat spoken out against the Tesla terrorism going on in the country? They either are cheering it on or afraid to criticize it for fear that they themselves will be torched. Who is the nazi now?

Speaking of Musk. I have written about the poor built quality of Teslas, their awful frequency of repair record and yet their fiercely loyal customer base. Well that may be changing especially with the left’s targeting Teslas, dealerships and charging stations. Now all the cybertrucks have been recalled as well. Musk is brilliant. Perhaps he is hanging on to Tesla because he is stubborn. Yet it may be time to sell Tesla and concentrate on his other businesses.

More evidence that the left hates Musk is the lack of praise for bringing home the stranded astronauts. It is really sad to see the demise of NASA. But then again, this may show the public that private enterprise can replace the government. Now to do it in education.

Randi “Whine”garten head of American Federation of Teachers is beside herself as is Becky Pringle head of the National Education Association. Both see their gravy train going away. Weingarten says that Trump’s plan is to “voucherize and privatize our public schools, we know what they’re doing. They want to dismantle public education in this country, and we know that public

education is the foundation of this or any democracy.” She also says “So, billionaires—kids of billionaires—they have it, they go to private schools. “Everyone else, 90% go to public schools. Don’t take away their opportunity.” I guess she overlooks the fact that many of her union officials and teachers send their kids to private schools She also overlooks that vouchers and charter schools, which she vehemently opposes, can be part of publicly funded education. I only wish she and Pringle were so animated and passionate about educating children rather than protecting their half million dollar salaries.