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A $200 billion here, a $200 billion there. Rate hike?

Hey what’s a measly little $200 billion?

Trump wants $200 billion for his war on Iran. Didn’t Trump also say that we have won the war? “I think the war is very complete, pretty much — they have no navy, no communications, they’ve got no air force, their missiles are down to a scatter, their drones are being blown up all over the place including their manufacturing of drones — if you look, they have nothing left.”  Well if his war is won, I guess he just needs the $200 billion to replace the munitions used and buy more jet fuel. Right?

Well lots of luck getting the congress to authorize that. I don’t know if he can even get that through the House but probably would have more luck in the Senate. But Senate Majority Leader John Thune (R., S.D.) said it “remains to be seen” whether the funding package would pass in the Senate. Sen. Ron Johnson (R., Wis.) said he would support more funding for the war, “but I’ll try and insist we pay for it.” I guess that means he would want an offset so as not to add to the deficit. But “The problem with supplementals is if you vote for it, you’re basically authorizing the war” said Sen. Tammy Duckworth (D., Ill.), an Army veteran who lost both legs in the Iraq war in 2004.

“It takes money to kill bad guys” said Defense Secretary Pete Hegseth. “So we are going back to Congress and our folks there to ensure that we are properly funded for what’s been done, for what we may have to do in the future.” No doubt the US is burning through munitions for thousands of missions. U.S. Central Command said it had struck 7,800 targets, damaged or destroyed more than 120 Iranian vessels and flown 8,000 combat flights.

Of course, Chuck Schumer is opposed: “Let’s be clear: If Trump wants $200 billion, that means he believes we might be in a war with Iran for a very, very long time.” Even the republicans in the House are not entirely on board. Georgia’s Rep. Andrew Clyde usually a MAGA cheerleader said “I need to know what it’s for and it needs to be justified.” All this translates to bad news for the administration. The democrats will all vote no. Thomas Massie will be one republican in the House to vote no. And if the MAGA-types aren’t doing their usual cheerleading, then it is a distinct possibility that the president won’t get his $200 billion.

Rate hike, hold or decrease?

Fed governor Michelle Bowman says that she has penciled in the possibility of two rate cuts in 2026. She may be by herself in that prediction. Chairman Powell says that any rate cut will depend on what happens to inflation and that seems to be the sentiment for most of the Open Market Committee. Of course, Trump is hoping that his nominee Kevin Warsh will soon replace Powell as chairman. But there is no guarantee that even Warsh will support a rate cut after confirmation. Market yields on longer term securities are edging up in anticipation of more inflation. Foreign central banks in Canada, Japan and Australia are moving toward raising their rates. Regardless of what Trump wants, the Fed has shown that what Trump wants Trump may not get. US markets are actually anticipating no rate increase the rest of this year and problematic about increases for the first of 2027. The Fed targets the price index of personal-consumption expenditures which shows inflation at 2.8% in January and core inflation which excludes food and energy, at 3.1%. Recall their target inflation is 2 percent. What will be the impact of Trump’s tariffs and now the price of energy because of the war? Seems to me that if Trump really wants a rate decrease then he could help things by rolling back his tariffs to zero. Lots of luck with that. What happens to the price indices that include food and energy because that is where most of the price increases will be? What will the Fed do then? Raise rates? BTW, diesel prices have jumped more than $2 a gallon? It now costs me $200 a tank for my Ford F-250. When my other half and I went to a local restaurant, the prices were $5 per entrée more than they were last week. Sorry but her chicken tenders are not worth $21 and my bowl of soup and Caesar salad were not worth $19. We won’t go back because eating out for us is price elastic.

I still wonder if Powell will leave the Board once his term as chairman expires. I wouldn’t. I’d stay just to tick Trump off after all the vindictive that Trump has leveled at him. Staying on would deny Trump another appointment to the Fed. Currently, there are Bowman, Waller and soon Warsh if ever the silly “Justice” Department harassment goes away. Another appointment will have Trump’s nominees constituting four of the seven seats at the Board. Some think that this will enable Trump to have his way with the Fed for the remainder of his term. But that is doubtful. Even now Waller and Bowman are not sure things for the president since they were passed over for the chairmanship. If Trump loses his fight to fire Lisa Cook, the other members will feel freer to continue to express their independence and likely will do it. Of course Trump knows this. Remember he said that in the interviews he is told what he wants to hear but once confirmed by the Senate the nominees mostly go their own way.

Robert Mueller. Rare Earth. Big bad China.

Robert Mueller RIP

Robert Mueller just died. The former head of the FBI led the Russia-Trump investigation (hoax). The president, his usual companionate self said “I’m glad he is dead.”

Rare Earth

All this talk about rare earth reminded me of the band of the same name which was one of the few white acts on Motown – “I just want to celebrate”.

Speaking of rare earth (the collective name for 17 essential minerals used in modern technology) the US led the world in the production of rare earth minerals until the 1980s. All of a sudden the government started piling on regulations of all sorts from EPA to safety and now it takes 10 years to get the permits necessary to operate. It now takes a whopping 29 years from discovery to production. No wonder rare earth mining went elsewhere. Jumping through all the government hoops adds $1 billion to the costs in the development of the mining project. There is one mine project started in 1980 slated to open in 2028. This is ridiculous. 

The government is now investing in companies that operate mines. There are abundant supplies of rare earths in the western states and Alaska. Why not just waive all the rules and impediments in the way of opening the mines? Then rare earths won’t be that rare at all.

Speaking of China

It is getting so now that I am skeptical that much of what I read is the truth. Two cases in point are information on Trump’s war on Iran and anything about China. I don’t believe any data reported by the Chinese on China. Much like I doubt the data now coming out of the Bureau of Labor Statistics and the Commerce Department, the Chinese have an incentive to lie. It is in the Chinese best interest to puff itself up to the rest of the world. And sure there are those in the western media who love to put down the west and thereby amplify all the propaganda from China. But much of China is a Potemkin village.

This is nothing new.  What about all the stories that the Chinese economy was going to surpass the US? What about all the stories that the Chinese yuan was going to supplant the dollar as the world’s reserve currency? Well those stories were just that – stories. BTW, when I was growing up for some reason my parents forbade us from saying the word “lie” instead we had to say “story.” Well then we have been told a continuing stream of stories about China’s economy. I have not bought any of it. I have been saying for years, that with a population four times that of the US (1.4 billion to 343 million), the Chinese economy should be labelled an embarrassment. Its GDP is a paltry $19 trillion while the US is $31 trillion. In nominal terms the US is 63 percent bigger with fewer people. And to think we have fools that want to emulate China.

China is the poster child of the failure of socialism, state planning and industrial policy. Its real estate sector is a drag on the economy and much of its productive capacity is dependent on state subsidies. This cannot go on forever. Those chickens are going to come home to roost and the results won’t be pretty. Its disastrous one child policy is causing its population to shrink. Its economy is shrinking despite its trade surplus now over $1.2 trillion. That trade surplus is a byproduct of China subsidizing its export manufacturers. China is a world leader in EVs, ship building, robots, solar panels and a bunch of other stuff. But subsidies essentially are another way of saying “producing and selling at a loss.” We all know that you can’t make that up on volume. 

The Chinese have always produced lofty statistics on its rate of growth. They are saying their economy will grow 4% but in reality the Chinese economy is shrinking. China’s share of world GDP peaked at 18.5% in 2021 but is 16% now, despite the trillion dollar trade surplus. DOES DONALD TRUMP KNOW ABOUT THIS? If China is growing at 4 percent and the US is growing at 2 percent, the Chinese number is bigger because its base is smaller. For instance, would you rather grow at 100 percent or 5 percent? Most would say the former. But if you start at one and grow to two, you grow 100 percent. But if you are at 10 and grow to 15, wouldn’t you be better off at the slower rate of growth? The same is true when comparing the Chinese numbers to the US.

I am waiting for the Chinese asset bubble to explode. Its real estate market is on life support. There are enough empty apartments to house its entire population of 1.4 billion people. I doubt if they have an “affordability” issue in housing! In fact, some localities are demolishing new buildings. Can you imagine the financial burden of having to finance empty buildings? The truth of the matter is that there are not enough investments in the Chinese economy that produce what we in finance call positive net present value. That is, net present value measures the value of a series of cash flows over the investment horizon, discounted back to the present. If you sum all future cash flows adjusted by a discount rate it gives you the NPV. If positive, the project is expected to be profitable. If negative, it suggests a loss. Much of the investments in China are negative NPV and would not even be undertaken here.

As a result, investment money flows out of China not into it. Last year net foreign investment fell by around $170 billion. In contrast net foreign investment in the US was $292 billion. Don Boudreaux constantly points out that the positive net foreign investment is also a result of our trade deficit – that is our dollars spent abroad flowing back into the country. Isn’t it weird that Trump wants as part of his tariff deals more foreign investment in the US when we get precisely that because we run a trade deficit? BTW, foreign investment increases the trade deficit. Trump envies China’s trade surplus. Why?

Strait jacket. Where’s the beef? Processed, ultra-processed, raw?

Open the Strait!

Word has it that Iran as part of a settlement wants to exact tolls for navigating the Strait of Hormuz. The strait is an international water so that should be a nonstarter. However, what would it take to guarantee that Iran will never block the strait again? You would have to take away the threats from drones, missiles and mines. Does that mean you have to put marines in the islands in the strait to clean out all the armaments including the missiles? Then you would have to station the marines there permanently. That may not be far fetched since it would just be another permanent installation in the Gulf. You would also have to station the navy there as well as with A-10 warthogs and Apache helicopters to stop any naval threat and prevent mines from being laid. Despite all the US and Israeli attacks Iran is still has a vast stockpile of mines, cruise missiles and hundreds of undamaged boats in hidden facilities with deeply dug tunnels along the coast and on islands. Seems to me that to ensure safe passage through the strait, the US will have to put boots on the ground. While a full blown invasion of Iran would simply be a stupid logistical nightmare, taking over the coast along the strait and the islands might be the only choice or else the danger of small, unmanned boats carrying explosive charges or airborne drones would present an ever present danger. Still taking control of the coast and the islands will not eliminate the threat of cruise missiles being fired from hundreds of miles away. Is this what is referred to as a “strait jacket?”

A modest suggestion: One way out is just to leave. Since we don’t need energy from the Gulf (so says Trump), the only economic reason we are there is fertilizer where we get about 13 percent of our total supply. We could probably make that up elsewhere. So why have all the installations and all the troops? We have 8 permanent bases and 11 access sites in 19 countries in the Middle East with 50,000 troops. So if there is no real economic reason for us to be there, why are we there? Are we there just to keep Iran from getting the bomb? Not likely. Are we there to keep ISIS and terrorist groups in check? Do we really need 50,000 troops to do that? Why don’t we just say that we will show up every now and then to make certain Iran does not get nukes and tell our Gulf “allies” that its their responsibility to provide their own security. Certainly they have the resources. So degrade Iran’s military and let those countries in the Gulf and those dependent upon Gulf oil and LNG keep the Strait of Hormuz open and keep Iran in check. I am sure that China, India, Japan and South Korea can work things out. Oh and yes I know we are abandoning those mostly young Iranians who hope for a regime change, but why is that our responsibility?

Where’s the beef?

There is a study done in Sweden that links high meat consumption to lower risk of dementia. “Meat consumption and cognitive health by APOE genotype” is the study.

https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2846712#google_vignette

Here is the finding:

“In this cohort study among 2157 older adults without dementia, higher total meat consumption was associated with slower cognitive decline and a reduced dementia risk among older adults with APOE ε3/ε4 and ε4/ε4 genotypes. Interactions by APOE genotype were observed for trajectories of global cognition and episodic memory.”

Meaning: “These findings suggest that higher meat consumption than conventionally recommended may be associated with benefits in a genetically defined subgroup comprising approximately one-quarter of the global population.”

The study also showed that a lower proportion of processed meat in total meat consumption was associated with a lower risk of dementia regardless of APOE genotype. So much for deli meat! Do you think that by my eating only the meat that I kill myself has helped to ward off dementia? Now if I can only remember where I put those new broadheads.

Processed meats?

RFK, jr is going to attack processed foods. I guess that includes processed meats. The only processed meat I eat is the peppered turkey breast at Kroger’s. I don’t eat fast foods. I don’t buy anything with sugar added and look for low sodium foods. And I don’t eat a whole lot of processed foods – depending on how you define processed. Is half and half processed milk? Guilty. Is oatmeal processed oats? Guilty. What about organic cereal? Guilty. What about canned vegetables? Guilty. Or frozen vegetables? Guilty. BBQ sauce? Guilty! Publix fried chicken? Guilty! Stouts and porters? Guilty! So what we need is a definition of “processed” and especially a definition of “ultra-processed.” Is pimento cheese processed or ultra-processed? What about “American” cheese – whatever that is. Isn’t anything that isn’t raw processed?

Kennedy on Joe Rogan’s show said that a definition of ultra-processed foods is forthcoming, with a nutritional label. I am sure that certain additives, dyes and the like will be highlighted. But the question is will it do any good? Will you read the label and will it change your food preferences? Don’t we know that Twinkies are ultra-processed? What about sourdough bread? Essentially, I can’t define it but I know it when I see (or taste) it.

What about the labels on cigarettes? I know the incidence of smoking has decreased over time but is this because of the labels? As study says “no.” In the “Effect of graphic warning labels on cigarette packs on US smokers’ coggnitions and smoking behavior after 3 months” the authors find “This ranndomized clinical trial found that graphic warnings decreased positive perceptionBehavior After 3 Months” the authors find in “This randomized clinical trial found that graphic warning labels decreased positive perceptions of cigarettes associated with branded cigarette packs but without clearly increasing health concerns. They also increased quitting cognitions but did not affect either cigarette cessation or consumption levels.”

https://pmc.ncbi.nlm.nih.gov/articles/PMC8339936/

I have the feeling that first the nutritional labels, then the graphic label with a gut microbiome, then the bans.

Processed? Ultra-processed? What about raw?

I know a couple that has been on a raw diet for at least 30 years. Both are rail thin but say that their diagnostics show that they are incredibly healthy. They eat everything raw, fruits, vegetables, nuts, grains and even raw fish and meat. Your basic sushi/tartare diet! The idea is that heating food destroys its nutrients and natural enzymes, which is bad because enzymes boost digestion and fight chronic disease. In short: When you cook it, you kill it. Remember the post on gut microbiome? Well a raw diet insures a healthier gut microbiome.  Does cooking really make food toxic? This couple would say so. I have been at receptions and dinners where they were in attendance and their strict dietary regimen was met. I somewhat admire them for their strength of conviction and sheer will power (or won’t power). Now let me see if I can give up Publix’s chocolate trinity ice cream and Jelly Bellys for a month.

Confessions of a non-athlete

I am a non-athlete cursed to grow up in a neighborhood of good if not great athletes. When people ask me if I played football I tell them I was cursed with the four “eses”. I was too slow, too short, too sorry and too scared. I was a horrible basketball player. I couldn’t jump, couldn’t shoot, couldn’t defend and couldn’t dribble. Other than that I was great. When we played pickup games, I wouldn’t even be picked. “We’ll play three on four.” In football I was so slow that they wouldn’t even tell me to go long. My brother, although he never played organized sports was a decent half-miler. The boys I grew up with included an all state football player, an all state catcher, two basketball brothers who got HBCU scholarships and two track stars one who was the only person to beat “Bullet Bob” Hayes in a 100 yard dash in college. I wasn’t even the smartest in the bunch. OK my brother was a genius but the two basketball players became engineers, the catcher got a doctor of divinity from Harvard and another got a Phd in mathematics. Part of my problem was I was the youngest of the bunch by a couple of years but that was only an excuse. I used to say that at least my feet were athletic.

So I go to the University of Georgia where we were required to take two years of sports. I decided to take ones that we didn’t play where I grew up like golf, tennis and volleyball (white folks sports). I also played intramural softball and flag football. Lo and behold! I found out that I was pretty good at golf and tennis. Prior to my arrival in Athens, golf was taught at the Athens country club where the golf team also practiced and hosted matches. No more. They took one look at me and we got banished to the intramural practice fields. The golf team had to find another club and the university was forced to build its own course. It is gorgeous! When the golf coach gave me a tour some years later he remarked that the course should be named the Harold A. Black Memorial course. Well I don’t know about the memorial part. I also discovered that I was not so terrible an athlete after all – I just was terrible compared to the kids in the neighborhood. I still was lousy at basketball but I turned out to be an above average baseball player and the quarterback on our flag football team. My friends joked that I was the first black quarterback in the SEC. I guess I needed some white neighbors in my all-black neighborhood. I can’t sing or dance either.

When I went to graduate school at Ohio State I kept playing golf about once a week and ended up being a bogey golfer. I had to stop while I was writing my dissertation and years later had to stop for good because of a bad back. For the last couple of years in graduate school all time was devoted to the dissertation. I completed it in the year I spent at the University of Konstanz am Bodensee and when I went to Florida as an assistant professor of economics I weighted 235 pounds (and have pictures to prove it). Working hard to get tenure and raising a young family didn’t lend itself to losing weight. However, the stress was too great for our marriage and we got divorced (I got custody of my son). I moved into an apartment where the great marathoner Frank Shorter and his wife lived. Shorter would go out in the mornings on a leisurely 20 mile run accompanied by his wife on her bicycle. Shorter probably weighed 140 pounds and I asked him how could I best lose weight. He told me to start walking, then jogging a bit before running. I did that and eventually worked my way up to 10Ks, half marathons and full marathons. When I came to UT in 1987 I weighed 165 pounds. I used to go to the gym, run 5-10 miles and still go teach my 8 o’clock class. I ran 6 days a week.

When I lived in Washington, I ran with the DC Roadrunners. I may have been the slowest of the bunch and in my first marathon I got passed at mile 22 by a race walker. I became a 9 minute a mile runner but my best marathon time was 4 hours and 15 minutes. I wanted to break 4 hours to qualify for Boston and all I had to do was to shave off those pesky fifteen minutes and average 9 minutes and 9 seconds per mile over the 26.2. Piece of cake! So I trained with a professor in the law school at UNC who was a 3 hour 30 minute marathoner. We ran sprints some days and did 20 milers on the weekend running around the Chapel Hill city limits. Confident I could break 4 hours we then ran the Norfolk Beach marathon choosing one that was flat. We went through the 20 mile mark comfortably under 9 minutes a mile. The next thing I remember was waking up in a tent with an IV in my arm. The good Lord had sent me a message and I never ran another marathon sticking to halfs and 10Ks.

About 10 years ago my knees gave out. They are arthritic and I have to get steroid injections to keep the pain and discomfort at bay. I now walk on the treadmill early each day without fail. When the injections start to be ineffective and I still have to wait another month for another shot and walking up and down stairs even one at a time is painful. But I can still walk on the treadmill without discomfort. Afterwards, I can go up and down the stairs for an hour or so without pain and then its back to hobbling up and down like the old man that I am.

There are not many things I regret, but not being able to run early in the morning is one of them.

Our angry president

The president is perpetually p—-ed off and it is wearing me down. All the threats. All the CAPITALIZED TWEETS! All the bellicosity. All the name calling. All the demeaning comments. All the saber ratting. All the tariffs. All the me, me, me. The misguided industrial policy. All the lashing out. All the bruised ego. All the turning against supporters. “Activist judges”, “RINOs”, traitors and petulant whinings that sound more like a loser than a winner. Doesn’t it seem like as we go through time that the president’s attacks are getting worse and more vengeful? Is that even possible? Or is it just me exhibiting TRFS (Trump Related Fatigue Syndrome)?

But it feels like I am being hammered to death. The president doesn’t seem to be content with being a winner but instead sounds like a loser despite all his successes. His attacks on everyone, democrats, fellow republicans, journalists, judges, universities, allies – everyone it seems but Putin and Xi. All this has rolled over to members of his administrations who hit back a those who dare question the president. Press secretaries, cabinet members, “Justice” department attorneys and other Trump apologists have gotten snippy at those who question the president’s actions and policies. It has gotten to be hand-to-hand warfare. Members of the administration engage in shouting matches and trade insults with members of congress at hearings in confrontations that we have never seen before in DC. Open hostility is now de rigueur in the nation’s capitol. 

Charges and accusations keep escalating. Remember the six members of congress who released that stupid video calling on active duty servicemembers to refuse “illegal orders”? The president’s reaction was classic Trump: off-with-their heads! He called their message “seditious behavior at the highest level” and said the Democratic lawmakers should be punished “by death”. I would think that the president’s advisors would tell him to cool it down a bit and that his tanking poll numbers might be related to his escalating fury. I have written before that he at times seems to be out of control and many are calling into question his mental stability. Yet, every time that happens, his reaction is to go off the rails even more. 

Polls say that many of the president’s policies are doing more harm than good. Democrats are winning elections in republican districts and there is a general lack of confidence in the president. Affordably – which the president calls a “hoax” – food, rent, mortgage rates, insurance, healthcare, domestic policy, foreign policy, fights with allies, ICE, and now the Iran War have all hurt the president who persists in blaming Biden for all his problems. His allies haven’t helped either. Pam (Blondie) Bondi is acting like Trump’s personal lawyer rather than the country’s attorney general. Scott Bessant is always on the defensive translating what Trump really meant. Kristi (ex-Border Barbie) Noem was a disaster. Stephen Miller comes across as pure evil. Robert Kennedy Jr looks like he is intent on destroying the public’s confidence in the government’s health apparatus. 

It is as if they have gotten their marching orders to attack and seek to destroy any who question any action taken by the president. Domestic policy seems incoherent. Americans are uneasy with the attacks on the boats in the Caribbean and with the president’s seeming to favor Putin over Zelenskyy in Ukraine. The president asking our allies for help in the Straits of Hormuz looks like a miscalculation and his lashing out at them for failing to get involved sounds petulant. He even blasted the Supreme Court calling it “a weaponized, and unjust Political Organization” tweeting “This completely inept and embarrassing Court was not what the Supreme Court of the United States was set up by our wonderful Founders to be. They are hurting our Country, and will continue to do so.” Pardon me but this is outrageous and the president has sunk to a new low – if that is even possible.

Here is what Peter Baker – certainly no fan of the president has written:

Anger defines Mr. Trump’s decade on the political stage. Anger at foreigners who come to this country and change its nature. Anger at allies who take advantage of America. Anger at Democrats who cross him. Anger at Republicans who cross him. Anger at appointees he deems insufficiently loyal. Anger at prosecutors, F.B.I. agents, judges, journalists, law firms, elite universities, cultural figures, corporate leaders, pollsters, central bankers and the Norwegian Nobel Committee. – Peter Baker

Baker is correct. Donald Trump is just another president who is snatching defeat from the jaws of victory. He was elected for three distinct reasons: stop the open border policy of Joe Biden, curb Biden’s inflation and stop Biden’s wokeness from tearing the country apart. He has essentially succeeded. The border is secure, inflation is down from the Biden years and wokeness has been dismantled. But then in every instance he has gone overboard. ICE now looks like a terrorist organization, legal immigration has been curtailed, Trump keeps yelling at Jay Powell and siccing his “Justice” department on him with trumped up charges, and vital research has been ended on the pretense that it is DEI.

I know that the Trump apologists will say that its only tit-for-tat. That the president is lashing out at those who hate him. But that is not true as he turns on his own supporters like Majorie Taylor Greene who only wanted the Epstein files to be released. Trump tweeted “The only reason Marjorie ‘Traitor’ Brown (Green turns Brown under stress!) went BAD is that she was JILTED by the President of the United States (Certainly not the first time she has been jilted!). He then called her “a low IQ traitor.” As to others who wanted release of the files he said “And my PAST supporters have bought into this ‘bulls***,’ hook, line, and sinker. They haven’t learned their lesson, and probably never will,” Trump then called them “weaklings” and said “I don’t want their support anymore!” Good grief.

The president acts like an insecure brat. He wants his name on everything. He loves to be flattered with gifts and trinkets that look awfully like bribes. He wants to control everything. He also is dramatically increasing his wealth while questioning that of Nancy Pelosi, Iilan Oman are other members of congress. Then there is his hatred of trade and love of tariffs. All in all this is a volatile mix stirred by a volatile president. And it has only been one year. By year four we will all be an emotional wreak – if we are not already. 

Should Teachers Carry?

The recent killing of an ROTC instructor at Old Dominion University by an Islamic terrorist pointed to several interesting facts. First the shooter was a US citizen, Mohamed Bailor Jalloh, a former national guardsman who had served a prison sentence for aiding ISIS. Jalloh was said to have become radicalized while in the US and not before he immigrated. Second, the victim was Lt. Col. Brandon Shah who was of Middle Eastern heritage. Third, Jalloh was killed by a student who stabbed him with a pocketknife. Fourth, guns are banned from the ODU campus (like the University of Tennessee). Fifth, since knives are also banned does this mean that the student who killed Jalloh is going to be prosecuted and/or expelled from ODU? Sixth, Norfolk’s Commonwealth attorney who proposed tighter gun restrictions in the wake of the shooting is named Ramin Fateh. One would think he would have instead proposed lifting the ban on guns on the ODU campus.

Whether teachers should have training in firearms and be allowed to carry in the classroom is a controversial subject that invariably arises from these incidents. Remember Uvalde? There even armed security was slow to act. This was in contrast to the security guards at the synagogue in Michigan where an Islamic terrorist named Ayman Ghazali drove his incendiaries-laden truck into a synagogue and got stuck in the hallway where he was confronted by security. There were over 100 people in the synagogue at the time and none were hurt. Two security guards engaged Ghazali in gunfire and he then killed himself. Interestingly, the guards at the synagogue had completed a gun training session with the FBI only weeks before. Prudence demands that synagogues must protect themselves because when help arrives, it will be too late to save lives. Putting armed security in all the public schools and universities is impractical and cost prohibitive. The question is then whether teachers and professors should be trained and allowed to carry.

Tennessee has responded in the affirmative. After the deadly shootings at the Covenant School in Nashville where three children and three adults were killed by a former student, the Tennessee legislature over the objections of the teachers’ unions, passed a bill in 2024 signed by Governor Bill Lee to allow teachers to carry firearms. The individual schools make the decision. Teachers and staff are permitted to carry concealed weapons provided they have the approval of law enforcement, undergo a background check and have gun training.

So the question for me is not whether there will be shoot-outs in the halls of our elementary schools, but whether they will be fewer shootings because the potential shooter knows that the teachers and staff are armed. Similarly, if shooters know that synagogues have armed security, will there be fewer attacks? That is the empirical question.

Conflict of interest? Disarray at HHS. Brics. Who needs trade. Kenyans.

Conflict of interest?

The president cannot be convicted for conflicts of interest and the president and his family are taking full advantage of that fact. The Trump family fortune increased by $3.9 billion in 2024 and $7.3 billion in 2025. In addition, they have reportedly received $1.8 billion in cash and gifts since the election. Trump’s family continues to enrich itself. Jared Kushner, the president’s son-in-law while acting as the “peace” envoy to the Middle East is also raising billions of dollars for his private equity fund. Meanwhile Don, Jr and Eric Trump are investing the in drone industry which their father has helped turn into a growth industry. Kushner was also involved in Paramount’s successful bid to by Warner Bros. Discovery. The president himself had purchased stock in the company. Now the president and his family partially own CNN which the FCC’s Brendan Carr threatened to revoke its license over a less than flattering report on Trump’s war with Iran.

Surely there could not possibly be any conflict of interest as Kushner’s dealings have resulting in his becoming a billionaire. Could there? Kushner has denied any conflict (wink, wink) and Karoline (Lying) Leavitt calls any charges of a conflict are “frankly despicable.” 

This is from the Times of Isreal: “Kushner founded Florida-based Affinity in 2021, with much of its funding coming from foreign sources, particularly the Middle Eastern governments he’d worked with. Saudi Arabia’s Public Investment Fund (PIF) gave $2 billion in 2022. The Qatar Investment Authority and Abu Dhabi-based Lunate Capital together gave around $1.5 billion in 2024, Kushner said on a podcast last year. Kushner’s firm now manages $5.4 billion.”

The Mess at HHS

Have you noticed that virtually all the chaos at HHS is in the “health” part and not the “human services.” Saying that the FDA is in disarray is an understatement. The same is true with the CDC and the NIH. Robert Kennedy is fast becoming one of the most unpopular members of the administration and the White House has finally taken notice. The Administration has apparently seen the polls saying that Kennedy’s actions, particularly regarding vaccines, are increasingly unpopular. Now the White House wants more focus on eat healthy initiatives and trying to lower drug prices – things it views as winners – and less on vaccines and approval of new drugs. Also the quitting and firing of staff members, the cutting of funding for what some consider important research have damaged the agencies public image. Kennedy remains a Trump favorite however and is in little danger of being ousted.

Brics has laid a brick

Brics, that group of eleven countries that formed an economic bloc in 2009 to counter the US and the EU has been mostly invisible. Did you know that Iran is a member? I haven’t seen any rush by any other member to come to Iran’s assistance economically. Yes, China and Russia are supposed to supply Iran some intelligence and strategic tools. But the rest of the bloc has been mostly quiet. Iran has even been firing drones at the UAE, a fellow Brics member. Meanwhile, India has not even criticized Israel much less the United States. In addition to China and Russia only South Africa has voiced criticism of the US – but that is to be expected given the simmering feud between that government and Donald Trump. As a whole, Brics has been ineffective and ineffectual. I guess it just provides another avenue for diplomats to fly around the world, stay in swanky hotels and act important while accomplishing nothing but running up expensive tabs for others to pay.

Who needs trade?

We have a trade representative who hates trade. Jamison Greer, the US Trade Representative made the following idiotic statement when he was discussing the administration’s plans to levy more tariffs on our 16 largest trading partners: “Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically. This overproduction displaces existing U.S. domestic production and harms American manufacturing as a result.” Adam Smith just turned over in his grave. Greer obviously rejects the notion of comparative advantage. What does he think about American “overproduction?” Don’t farmers produce “more goods than they can consume?” Is this a bad thing that they ship their produce abroad? What about domestically? Are farmers supposed to grow only what they can consume? What happens to the rest of us – Mr Greer? Am I hurt because I cannot – or will not – grow my own food? Or make my own clothes, furniture, shoes and the rest? Without trade, I would be a lot thinner, more threadbare and a whole lot poorer as would be the rest of the country. Why is this evident to everyone except the president and those on his payroll?

But let’s be kind and assume that Mr Greer is only talking about foreign production hurting American companies. Over half of what we import are intermediate goods. Let us suppose that we stopped importing those goods. Maybe we could produce them, but likely at a much higher cost leading to fewer goods for American consumers. I guess we could make do without any imports of food as well. Bananas, coffee, avocados, seafood, flowers and other stuff could be grown domestically or we could simply do without. Who needs French wines when we have California anyway? This would apparently be ok by Mr Greer – who I presume doesn’t own, buy or consume anything foreign-made. It was said that the president would scribble the words “trade is bad” in the margins of speeches that he makes. So let’s completely shut down all trade and see what happens.

And who needs a trade representative who hates trade – especially one who seems to be an idiot.

No more Kenyans to the Ukraine

Lastly, the Kenyan government must read my blog. After the post about the Kenyan soldiers recruited by the Russians to fight in Ukraine, the Kenyan government and the Russians reached an agreement that Kenyans would no longer be enlisted in the Russian military after bilateral consultations between Kenya’s Foreign and Diaspora Affairs Cabinet Secretary Musalia Mudavadi and Russian Foreign Minister Sergey Lavrov in Moscow on March 16^th.

Boasberg vs Trump. Trump vs Massie

Boasberg vs Trump: Round 2

A federal judge threw out Trump’s baseless, vindictive and childish “Justice” Department’s subpoenas against Fed chairman Powell. Trump wants Powell out at the Fed and will go to any depths to make it so. The charge was laughable – that the renovation of the Fed headquarters was $2.5 billion rather than the estimated $1.9 billion. In DC, a cost overrun that small is within budget. Mind you Trump’s own renovation project – blowing up the East Wing to put in his ballroom went from $200 million to $400 million. Is Trump going to subpoena himself?

It was evident that Fox’s Jeanine Pirro, Trump’s US attorney for the District of Columbia really likes her job. Not only did she not have the guts to tell Trump that this dog won’t hunt, she actually blasted the judge for his ruling saying that the judge “has neutered the grand jury’s ability to investigate crime.” She also said “The American public is fed up with public monies that seem to go into a black hole, especially in D.C., where no one is held accountable.” She could have been referring to the president. She then called the ruling “outrageous” and “the antithesis of American justice” and said her office would appeal. Whoa there! This is nonsense and she knows it – or at least I hope she does – and is putting on a show to stay in the president’s good graces. Someone needs to remind her that if she appeals, the senate will not have hearings on Kevin Warsh as the new Fed chairman. North Carolina’s Thom Tillis has said that as long as Powell is being investigated that there will be no hearings. If Judge Jeanine isn’t embarrassed, I am embarrassed for her.

What really makes the case interesting is that the judge was Chief US District judge James Boasberg who may be Trump’s least favorite judge – if that is possible. Pirro called him an “activist judge.” Trump has called him worse. Of course an “activist” judge is now any judge that issues a ruling against Trump’s expansion of executive power. Isn’t an “activist” judge one who rules based on personal and political beliefs rather than the Constitution (re: Sotomayor or Brown Jackson)? Boasberg seems to be operating within the limits of the Constitution – but that is my view and of course I am not a Constitutional lawyer.

Boasberg did speak the truth in his ruling about the harassment of Powell which said in part “The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President.” I had speculated that if it went to a grand jury, the charge would have been found baseless. I actually find comfort in knowing that the judge did not let it even waste the government’s money by allowing this joke of an investigation from proceeding. But what I found interesting was that the judge’s opinion was 27 pages when it could have been one paragraph.

Boasberg had incurred the wrath of Trump over the deportation of the hundreds of Venezuelans to an El Salvador maximum security prison despite the order that he had issued hours before they were deported. He ordered them returned. Boasberg ruled that the court had found “probable cause” to move on criminal contempt proceedings against the Trump administration for failing to return the migrants to U.S. soil, citing what he described as the administration’s “willful disregard” of the court. Also recall that Kristi (ex-Border Barbie) did a photo-op at the prison wearing provocative clothing in front of the prisoners photographed behind her. Again if Boasberg is an “activist” judge show me the receipts.

Trump vs Massie

Disclosure: I like Thomas Massie and wish we have more politicians like him in both parties.

Trump’s least favorite US representative is probably not Omar but Kentucky’s Thomas Massie, the sole House republican that has the guts to consistently oppose the president on principle. Massie – like Kentucky’s Rand Paul – is a libertarian and seldom strays from those basic tenets. He clashes with the president who is certainly no libertarian or economic conservative. Massie consistently opposes wasteful government spending and executive overreach. He is also against Trump’s incursion into Iran without consulting the congress. Trump wants him gone. The Trump-linked MAGA-KY PAC has spent over $3.6 million in negative ads to get him ousted. Trump even went to Massie’s district to campaign with Massie’s primary opponent Ed Gallrein. Predictably Trump did not mince his words, “Thomas Massie is a disaster for our party,” Trump said. “We got to get rid of this loser, this guy is bad. He’s disloyal to the Republican Party, he’s disloyal to the people of Kentucky, and most importantly, he is disloyal to the United States of America, and he’s got to be voted out of the office as soon as possible.” Typical Trump verbiage. 

Trump is always mad at Massie, lately for his role in forcing the “Justice” Department to release the Epstein files. Massie co-sponsored the bill with California’s Ro Khanna that passed in the House to release the files. Trump agreed to release the files after figuring out that it was likely that the bill would also pass the Senate. Massie has easily defeated challengers before, winning his district by 75% of the votes. Massie is agrarian and a farmer in his part of rural Kentucky. He doesn’t identify with his constituents because he is one of them. He always explains that he is doing and why it is right even if it goes against the president. As one of his supporters says “He’s got that trust with people. We know that he doesn’t always go with the party, but he usually has a good reason.”

On a personal note, I admire Massie for his courage of convictions. He is one of the few politicians that is refreshingly open and honest. I believe him when he says “My dream is not to be a politician. My dream, I’m living it here on my farm already and that is marrying my high school sweetheart, building our small castle with our own resources on top of a hill. This is actually the farm my wife grew up on. And to be raising a family here and teaching them values

like self-sufficiency, that’s my dream.” How can you not like this guy?

Repeal the Humphrey-Hawkins Act

The Fed’s Open Market Committee meets today and tomorrow and will not change its Fed funds target rate. Since Stephen Miran is no longer visiting the Board and has gone back to his day job at the Council of Economic Advisors, the vote to hold should be unanimous. At the meeting the dual mandate of full employment versus price stability will be front and center. Of course the president will want a rate cut as the economy is sputtering. But inflation is growing.

Job growth is turning out to be an oxymoron with jobs actually shrinking, so the Fed should lower rates, right? However, inflation is growing putting pressure on the Fed to raise rates. What to do?  It is time to have the Fed ditch its dual mandate of full employment and inflation that was dictated by the Employment Act of 1946.  That act also created the Council of Economic Advisors and the congressional Joint Economic Committee. Congress was unhappy with how the Fed was doing its job and In 1978 Congress passed the Full Employment and Balanced Growth Act also known as the Humphrey-Hawkins Act to amend the Employment Act of 1946. Humphrey-Hawkins (yes that Humphrey) specified explicit unemployment and inflation goals. Within five years, unemployment should not exceed 3 percent for people 20 years or older and inflation should be reduced to 3 percent or less. By 1988, the inflation rate should be zero, provided that pursuing this goal would not interfere with the employment goal. 

Obviously, the Fed has failed to reach and maintain the goals dictated by Humphrey-Hawkins. But the Act is still on the books and essentially the suggestions regarding the employment and inflation goals are simply ignored. The Fed now simply chooses which goal is more politically expedient and seeks to implement policy changes to achieve less pressure from the congress and the president unless those pressures are deemed to lead to more economic troubles. That was the case with this first year of the Trump presidency where the lower rates demanded by the president were deemed to be too inflationary.

But isn’t it time to repeal the Act which has turned the Fed into a political animal when it should be concentrating solely on monetary affairs? I favor doing having the Fed only concern itself with inflation. That is the variable that it has some influence over but not employment where at best the Fed can try to lead the horse to water. Paul Ryan – remember him – tried to get Humphrey-Hawkins repealed to concentrate solely on inflation. Mike Pence and Tennessee’s Bob Coker were senators who were working with Ryan for repeal. 

The dual mandate has been responsible for quantitative easing and the enormous buildup in the Fed’s portfolio that has been so disruptive in financial markets. It has made the Fed an even more political animal as it is mucking around in fiscal rather than only monetary policy. Now the chairman and the Fed governors pretend they can be economic saviors able to rescue workers and business from the consequences of failed fiscal and regulatory policies thereby incurring the wrath of irresponsible politicians who blame the Fed for their own political follies. All this led Alan Greenspan to ask the congress to repeal Humphrey-Hawkins.

Nothing was done post Greenspan especially since Ryan, Coker and Pence left the congress. But the dual mandate has probably done more to damage the reputation of the Fed than any since piece of legislation. If I were Fed chair I would simply ignore the employment statistics and concentrate solely on inflation. I would cite Fed independence and that inflation is the most debilitating economic variable rather than unemployment. Seriously, Jay Powell has shown the Fed’s independence in Trump’s attempts to force the it to lower its Fed funds target rate. Isn’t it about time to really assert Fed’s independence for the benefit of the economy by ditching the dual mandate? What will Kevin Warsh do as chairman? As Bob Coker once said “Monetary policy should not be bipolar.”

Arms for Iran. ARMs for mortgages too.

Do we have an exit strategy?

Was it a surprise that the Iranians shut down the Straits of Hormuz? Shouldn’t there have been a strategy implemented on Day One to keep the straits open? Maybe the surprise was that after decapitating the Iranian leadership that the country didn’t fold like a house of cards. However, the Iranians were obviously prepared for war and are willing to wage it. Maybe Trump was convinced that a bombing campaign would quickly subdue the country. Let us assume that he simply didn’t know history. Never has a bombing campaign succeeded to win a war without boots on the ground except perhaps the nukes over Nagasaki and Hiroshima. But prior to that we murdered Japanese civilians by firebombing their cities. Given that their homes were primarily made of wood, the toll was horrific. We killed over 100,000 civilians and left over a million homeless. Curtis LeMay who commanded the US forces stated that if we had lost the war he would have been prosecuted as a war criminal. Yet the Japanese never surrendered until we nuked them and yet there is evidence that what motivated their surrender was the invasion by the Russians in Manchuria.

Although the president never spelled out his objectives, I am sure that nuking the Iranians was off the table. Maybe he thought it was going to be like the earlier raid in June where he would bomb a few sites and declare victory. But not in this instance. The Iranians are pursuing an interesting strategy in not attacking Israel in force but rather the US installations around the Gulf and strategically attacking our installations – but not civilians. Trump wanted the Iranian citizens to “take back their country.” But probably miscalculated. 

It would have been nice to have articulated an exit strategy but lacking that at least a strategy to keep the straits open. The longer the straits are closed then the more pressure on the US to reach an agreement with the Iranian new supreme leader Mojtaba Khamenei who is even more hardline than his late father. How can the US open the straits? It does not have the ships to escort every ship through the straits. Even if it did it would run the danger of the US ships being hit by missiles and drones. It cannot take out every missile that can hit shipping in the straits. It can’t even prevent the mining of the straits by the Iranians. Although the US navy has attacked Iranian ships and even a submarine, most of the mines are laid by frogmen operating out of small fishing vessels. BTW, The Iranians are shipping their own oil on their tankers through the straits. Why aren’t those tankers stopped by our navy? Again, unless the Iranians run out of missiles and drones (and we bomb all their production facilities) at some point Trump is going to have to declare victory. The problem is that the Iranians are going to insist that to reopen the straits that major concessions are made to them – stop the embargos and lift the sanctions. They will probably insist on restarting their nuclear program but that is a nonstarter. Life got a lot more interesting. Shutting down the Straits of Hormuz is a global economic killer. The Iranians know it. We know it too. Surely Trump knows it. The question is that this looks more and more like a miscalculation and an absence of a viable strategy of keeping the straits open.

Trump’s Karoline (Lying) Leavitt said “The Pentagon has been planning for Iran’s desperate and reckless closure of the Strait of Hormuz for decades, and it has been part of the Trump administration’s planning well before Operation Epic Fury was ever launched. The U.S. operation to wipe out Iran’s military capability “is quite literally intended to deprive them of their ability to close the Strait.” Oops! Now Trump is sending more troops to the Gulf including 2,500 marines along with the USS Tripoli amphibious battle group. Please don’t tell me he is going to put boots on the ground. I wish he would just say that the US will always seek to degrade Iran’s capability to build a nuclear weapon, declare victory and leave. Instead it looks as though he is going to dig us deeper and deeper into a hole that will be increasingly difficult to extricate ourselves. I hope not. 

At least Joe Biden is no longer president. Trump, to his credit, has stopped the green nonsense and moved to make the US energy independent. He has ended the stupid embargo on the sale of LNG, issued more drilling permits, opened up previously closed land for drilling. Alaska’s governor is touting pipelines to Japan and South Korea, two countries currently dependent on oil coming through the Straits of Hormuz. Saudi Arabia is now routing oil through its pipelines to the Red Sea. All this will mitigate to some extent the closure of the Straits on energy prices. The major concern with then be “what about fertilizer?”

The return of the adjustable rate mortgage

Mortgage rates have fallen below 6 percent but the rates on adjustable rate mortgages have fallen even faster causing an upsurge in the use of those rates by homeowners. The benefit of an ARM is that if rates fall even more, then the mortgages can be refinanced into a fixed rate mortgage. However, if rates go up then when the mortgage rates adjust, they can cause some financial stress. Theoretically, when the homeowner qualifies for an adjustable rate mortgage then they are supposed to be able to qualify even at the highest projected rate. That is what a prudent lender would do. The problem is that most mortgages are sold either to Fannie Mae or to private investors removing the default risk from the originator after a certain period of time.

One of the threats from the war in Iran is that inflation will go higher – the new data show that food prices went up 3.1 percent last month. Higher inflation means even higher mortgage rates so buyers are tempted to lock in a 7 year adjustable in hopes that the rates seven years from now will be lower. Then they would refinance into a lower fixed rate loan. 

BTW, I know this sounds like a self-promotion but I instituted the first adjustable rate loans while on the board of the National Credit Union Administration. We were faced with inflationary recession and rising interest rates. Credit union loans were all fixed rate so if loans on the books were at low rates while deposit liabilities were having to be paid higher rates, credit unions were in danger of becoming insolvent. So I proposed that we revise the language in our lending regs which read that loans had to be repaid in mostly equal installments to simply remove the words “mostly equal” thereby creating what we called a variable interest rate loan. A week later the savings and loan regulator adopted similar language calling it an adjustable rate loan. So if you get an ARM and rates go up instead of down, it’s my fault.