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Random Thoughts #68

DDE’s asking why the EU do not buy US cars made me reminisce. I don’t buy them either. My first car was my Dad’s 1964 Mercury Monterey that he gave me when I got my master’s in 1968.  It proved too big to fit in parking spaces near the Ohio State campus so I bought a 1968 fastback Toyota corolla. It fit but had terrible brakes. Then I bought a 1970 Fiat 124 coupe, I think the spyder was the convertible. I loved that car which is why a bit later my then wife wanted it during divorce proceedings. So I bought a Saab Sonnet which I wish I had kept. To date I have never owned another American car after Dad’s Mercury. But a progression of American SUVs and pickups have followed until my mother’s death when I realized that I had always wanted a Mercedes GLS 450 and my time was getting short. So out went the Chevy Traverse. However, I had an F-150 as a farm truck which morphed into an F-250 diesel when we started towing 5^th wheel toy haulers so we could take the motorcycles with us when we went camping.

When once I said that we camped, I was asked “in a tent?” Hardly, it is in a fifth wheel with two flat screen tvs, two ACs, three burner stove with an oven, refrigerator, microwave, stereo system and an electric fireplace. Home away from home. I once remarked that the only way you could get black people in a tent was to draft them into the army – or attend a revival.

When Trump’s tariffs are declared illegal, do all the importers get a refund?

The drama continues with the NCUA board. Recall that the president fired the two democrat members and had them barred from their offices. They sued and were reinstated because their legal structure was the same as the Fed’s board and the Supreme Court had ruled that the president could not fire a Fed governor (without cause). The two democrat NCUA board members returned to work – probably to the consternation of the sole republican member who had declared himself a quorum of one. The Department of “Justice” appealed and a Federal appeals court just paused the two democrats’ reinstatement while the appeal is heard. Out they go again. The court said that the administration’s request was granted to “give the court sufficient opportunity to consider the emergency motion for stay pending appeal and should not be construed in any way as a ruling on the merits of that motion.” Why is this important? Because it bears on the administration’s ability to add the Fed to the list of agencies in which the president has the authority to fire its members despite their being confirmed by the senate. I thought what was interesting is that unlike the Fed, NCUA’s board must be bipartisan by law. I thought that the president would fire one of the democrats so that the republicans could have the majority of members. But perhaps that would have been too subtle a move for this president. Stay tuned.

Trump says that he has fired Fed governor Lisa Cook who says he can’t fire her. There is no word that Trump will sic the FBI on her by invading the Fed building to oust her physically. Cook, in turn has sued the president (just like the NCUA board members). Cook says that she will stay on the job until the courts rule. Like NCUA this one is destined for the Supreme Court. What is interesting is that the president says that he will nominate someone to take Cook’s seat. You mean that the Senate will hold hearings when the vacancy may not be a vacancy? What if the person is then confirmed? What happens next? Do they share an office and a vote since the Board can have only seven governors.

At last, some of the president’s sycophants have gathered up enough nerve to vocally oppose one of his actions. Pursuing his American socialism, the president is having the government inject itself into private business – mining, Intel, US Steel. Commerce secretary Lutnick says that they are considering having a stake in defense contractors. Larry Kudlow who to date has been a Trump apologist and Stephen Moore who put together some comical charts to give credence to the president’s charge that the BLS jobs numbers were rigged to make him look bad actually can’t find it in themselves to endorse Trump’s turn toward socialism. Moore was on Kudlow’s show on Fox and was asked “How about the U.S. government owning 10 percent of Intel?” Moore said

“I hate corporate welfare! That’s privatization in reverse! We want the government to divest of assets, not buy assets! So terrible, one of the bad ideas that’s come out of this White House.” Kudlow concurred: “I am very, very uncomfortable with that idea.” Now if only the republicans in the House and Senate had the guts to just say “no.”

Note that neither Kudlow nor Moore could bring themselves to say the “S” word. Hey, but Bernie Sanders likes it and interestingly Gavin Newsom doesn’t. Politico reports the following: Gavin Newsom said that people would be “outraged” if Joe Biden had done the same deals that the Trump administration did with Intel and Nvidia. “This is outrageous. It’s reckless. If Joe Biden tried to nationalize Intel, if Joe Biden did a deal to send to H20 chips to China. “People would be outraged. Are you kidding me?” Newsom then said “It sickens me to the core.”

Isn’t it interesting that Newson is “sickened to the core” but we have heard nothing from the so-called Freedom Caucus? The republican leadership in the Senate (John Thune) and in the House (Mike Johnson) have been mute. No Chip Roy, no Andy Biggs, no Andy Ogles or our Tim Burchett. No Marsha Blackburn either. Of course she is running for Tennessee governor and wants Trump’s endorsement. Ogles and Burchett want her senate seat so they have turned into yes-men too. I guess the only principled members with guts come from Kentucky in Thomas Massie in the House and Rand Paul in the Senate who called the move a “terrible idea” and suggested that the government owning a stake in Intel is “a step toward socialism.”

It is.

More mortgage fraud, goodbye AJC, hello socialism and other thoughts

The mortgage fraud allegation just hit Ken Paxton, Texas’ attorney general who is looking to unseat incumbent senator John Cornyn. So now Paxton joins Adam Schiff, Letitia James and of course Lisa Cook in what some people say is rather common but seldom prosecuted. But what strikes me is that the clamor is only for Lisa Cook to be fired. You would think there would be demands for James to step down, for Schiff to resign his senate seat and for Paxton to leave the Texas race. But no. Why not? Seems to me that there should be pressure on all to resign not just Cook.

One under the radar thing to be aware of is that Trump may be hoisting himself on his own petard (I’ve always wanted to say that). The saying is from Hamlet and means that Trump may harm himself by his actions to bring harm on others. Consider that Trump is boasting that he will soon have control over the Fed with four of the seven governors being his nominees. For the sake of argument, let’s assume that this is true. If so, I guarantee that the bond market will react with higher yields and a lower value of the dollar. The higher yields would be the opposite of what Trump wants. Recall that he wants lower rates in order to be able to keep spending more at a lower cost of borrowing. But most of the Treasury issues are no Treasury bills but longer term notes and bonds. So Trump controlling the Fed would likely lead to higher, not lower, borrowing costs.

The Atlanta Journal-Constitution is eliminating its print edition at the end of the year. Its print circulation has fallen from 600,000 to 40,000 so they are going digital only. I grew up with that newspaper. Its editor Ralph McGill was a moderate and sane voice during the turbulent civil rights times in Atlanta.  For a time he was the only white editor who covered the civil rights movement and was an outspoken opponent of segregation. He was vilified, threatened, crosses were burned in his yard and his shots were fired at his house. He never wavered. He was called all sorts of names and branded a communist. But in those days any threat to the status quo of segregation was called a communist. After he retired, the AJC morphed into a typical left wing media voice of the democrat party and I recall once writing a letter to the editor saying that a particular stance by the paper would have McGill rolling in his grave. Still I would buy the Sunday AJC on my trips to see my Mom. I still have visions of my Dad picking up the paper and always first reading the comics. RIP all.

I subscribe to both the print and digital editions of the Wall Street Journal. I enjoy the print edition more.

Speaking of which there was a story in the Journal with the headline “Higher prices are coming for household staples.” Well I guess people will have to use paper clips instead.

Trump’s stake in Intel dilutes stockholder’s value. I wonder if any Intel stockholder would sue? I know I would.

Has there ever been a successful government assisted private business? Typically government involvement means less competition, less innovation and less consumer value. All the while there is cronyism, favoritism, kickback, graft and bribes. What’s not to love?

The amount that companies spent on lobbying expenditures has jumped 277 percent since Trump has been in office. I bet if you follow the money you will see all the carve outs that have occurred and are occurring under the guise of negotiations and dealmaking. The number of registered lobbyists has increased from 89 to 212 in the same period. Not surprisingly the firm most closely aligned with the president has profited the most. Ballard Partners revenue has tripled since Trump became president. Its clients are all large corporations giving further evidence that Trump’s policies favor bib business and the impact may well be anti-small business.

Isn’t it interesting that while Trump is bringing more socialism to America, the erstwhile socialist countries in Latin America are throwing out their rulers and are electing more market oriented leaders. First there was Argentina. The media scoffed when Milei was elected president of Argentina. But he has slashed inflation from over 200% to under 2 percent. Poverty rates have fallen as well and there is less ridicule for Milei than before. Bolivia has just thrown out its socialist government. Ecuador, a country where I have spent a bit of time, has also gone from socialist to a more market oriented leader in Daniel Noboa. Elections are coming in Chile and Honduras with candidates right of center favored to win. This leaves only Cuba, Venezuela and Nicaragua as bastions on the far left. This would be a wonderful time for Trump to scrap the tariffs on these countries moving away from socialism and enter into free trade agreements to help bolster their economies and to end their previous leaning toward China. But alas, I won’t hold my breath.

Who is afraid of AI?

I am not AI proficient. But some of my readers are and I salute them. Elon Musk has apparently banned me from using Grok. Chat GPT and I don’t quite communicate right now. There is the AI that appears sometimes when I google and it is okay. A friend of mind sent me a podcast where a group of AI engineers were talking. They were predicting a massive displacement of workers and the need for a guaranteed annual income for all those thrown out of work. I told my friend that “those who do not know history are doomed to repeat it as well as those who do know history but are still doomed to repeat it.”

The AI engineers either do not know history or think that somehow this time will be different. Every major innovation has caused disruption and displacement followed by higher standards of living and new jobs that few dreamed of. The agricultural revolution threw people off the land and into the cities. There was awful poverty. The industrial revolution did the same. Recall poor Ned Ludd who lost his job as a weaver when the auto looms displaced him. Ludd responded by trying to burn down the textile factory and was hanged for his troubles. But the term Luddite lives on for those who resist change. What about Henry Ford? The automobile displaced the horse industry throwing out of work most of those associated with it. Some said that our national security was threatened as we were losing the cavalry. What were we going to do with so few horses? Transportation and the movement of goods were predicted to be impacted resulting in fewer jobs and a lower GDP. When I was in graduate school, my then wife got bored and took a job as a telephone operator. Do they still exist today (telephone operators not ex-wives)? My grandfather never quite got used to a rotary telephone, being so used to picking up the receiver and saying “Hey Hazel.” My Dad’s father drove a coal truck and one of his brother’s was a milkman. Dad once was a postal clerk for railway mail, sorting letters as the train traveled from town to town. All those jobs are gone and yet unemployment is low. A great depression from technological job loss we do not have.

At the university there were vast numbers of women in the typing pools, typing the manuscripts of faculty and administrators. Where are they now? The desktop computer displaced thousands of middle managers. Are they on the unemployment lines? What happened to the people who used to come by your house to hook you up to utilities? Where are all the Walmart cashiers? Yes there has been job loss. American manufacturing’s job loss is blamed on the Chinese but it was actually caused by technology. We simply did not need that many workers making stuff. Just like once we had 60 percent of the workers in agriculture, now it is only 2 percent. No one says that the Chinese “stole” those jobs. We all know it was technology.

The best – and likely the most complete – article on technological displacement is by Frank Glassner’s “Your Vanishing Career: A Houdini History of Jobs.” https://blog.veritasecc.com/your-vanishing-career-a-houdidni-history-of-jobs?utm_campaign=78730990-Blogs&utm_medium=email&_hsenc=p2ANqtz-8kUFDYm1P_ODOPoRmCMaipX6ZRN5zPe3AHi6dmw8jTl4pTeLhXS1mA0-LQbswpTISp9hBKVfrTgvEzMESiVpqU9JrNWnikGVKR8kOufDaG9J9mycw&_hsmi=12854812&utm_content=12854812&utm_source=hs_email

I told my friend that the AI engineers with their doom and gloom were a repeat of when I was at Georgia of a group of social scientists from “elite” universities who called themselves the Ad Hoc Committee on the Triple Revolution. They sent an open memorandum to President Lyndon Johnson in 1964 concerning the increasing use of automation, the nuclear arms race, and human rights. Of the three they were mainly concerned with what they called the “cybernation revolution” of increasing automation. This is from Wikipedia: The committee claimed that machines would usher in “a system of almost unlimited productive capacity” while continually reducing the number of manual laborers needed, and increasing the skill needed to work, thereby producing increasing levels of unemployment. It proposed that the government should ease this transformation through large-scale public works, low cost housing, public transit, electrical power development, income, union representation for the unemployed, and government restraint on technology deployment. Our AI engineers likely would endorse all of the above as would Bernie Sanders and AOC.

Yet they all forget history. Each major leap in innovation has fostered new jobs, less drudgery and more prosperity. We are an innovative ingenious people and that won’t stop with AI. As a matter of fact I am optimistic of my grandchildren’s future. I firmly believe that AI will create wonders that will make their lives better and more productive. When I was working on my dissertation I had a carel in the library stacked with books and journals. I typed the draft of the dissertation on a selectric typewriter having to change the balls when I wanted to type scientific symbols. I punched my own IBM cards and lived in the computer center with its mainframe but also cots and cafeteria. I would submit a job and with a few hours hoping to get hundreds of pages of printouts only to realize that I had made an error somewhere because the output was only a scant couple of pages. Research was slow and tedious. Yet by the time I retired all had changed. I was much more productive with my desktop (I didn’t even know where the computing center was), all the on-line databases and google scholar. I didn’t even need to go to the library anymore. Are there still graduate student carrels?

But just think of all the hundreds of workers who once toiled at the university that are no longer employed there. Shouldn’t we have provided all the things suggested by the Ad Hoc Committee since they would not only be unemployed but would be unemployable? And what about that guaranteed annual income? What about income redistribution? By the way, if everyone is unemployed where does the income that is to be distributed come from?

The Wall Steet Journal had an article on the new Hyundai plant in south Georgia. It is really spooky seeing all the robots welding, assembling cars and doing what were once dangerous tasks performed by humans. The plant does employ 1,450 people who do the work that the robots can’t. I wonder if one day robots will do those jobs too.

https://www.wsj.com/business/autos/hyundai-factory-georgia-automation-jobs-6d7d4e5d?mod=Searchresults&pos=1&page=1

There is one current academic paper on whether AI will displace a significant number of workers. The paper itself uses AI to crunch ‘anonymized data on millions of employees at tens of thousands of firms, including detailed information on workers’ ages and jobs, making this one of clearest indicators yet of AI’s disruptive impact.” The finding? That “AI can help people in their work, rather than replace them, employment among young people is improving.” Big whoop! They crunched millions of numbers to come up with that?

So be not of despair – unless you were one of the ones hoping for a free ride on guaranteed income while playing video games and looking at Tik Tok.

Why don’t Europeans import more of our cars?

DDE (famous initials) says “Even the EU won’t take our cars…..”. That got me thinking because I am certain that DDE doesn’t mean that the EU bans our cars much like we do Chinese EVs (we impose a 100% tariff and ban their hardware and software). Governments can assess tariffs on cars but private companies import them. So the question arises whether the EU places punitive tariffs on US cars to keep them out of the country. The answer is no. “The European Union charges a 10% tariff on cars imported from the United States. But 85% of cars assembled in the United States and sold in Europe are exempted because they contain European parts. The United States charges a 27.5% tariff on cars imported from Europe.” This US tariff may go down to 15% provided the Europeans agree to lower some tariffs on selected US goods. So we charge a much higher tariff on European cars than the Europeans charge on ours. Is that what Trump meant when he said that we were being cheated by the EU?

Thus, the BMWs assembled in South Carolina and shipped to Europe are not subject to tariffs by the EU. Last year 225,000 BMWs were exported to Europe. Volkswagen and Mercedes also export vehicles from the US to Europe.

Perhaps what DDE means is that cars and trucks other than those made for export are banned from the EU. But that is not the case either since the EU doesn’t restrict the import although some individual countries might for specific vehicles. For example, the cybertruck is banned from import into many European countries. In the UK it is banned due to its weight and size (my F-250 is also too big), its sharp edges, the rigidity of the truck in case of a crash and other reasons. For these reasons and others the cybertruck is viewed as a safety hazard in much of Europe and will be so until its design is changed. Also the cybertruck is so heavy that many European countries require a truck license to drive it if it is imported.

What about other vehicles? One of the perhaps dated guiding principles of automaking was that the factories be close to the market to reflect tastes and reduce transportation costs. Tesla makes cars for the European market in Berlin, Germany rather than importing them from Fremont, California. Once Ford and GM had factories in Europe. GM made Opels and Vauxhalls and owned Saab. It lost $20 billion and sold its European operations to Peugeot-Citroen. Ford has factories in Germany, Romania, the United Kingdom, Turkey, Belgium, and Spain. Ford once owned Jaguar, Aston Martin and Land Rover. But Ford is losing money. It is closing its plants in Spain and laying off workers at other plants. The company has announced that it is moving from passenger vehicles toward concentrating on EVs and commercial vehicles. Yet in the UK, a Ford is the best selling car. It is the Puma. Built in the UK for the UK. But Ford has stopped making the Fiesta, Mondeo and its MPVs.

So what do DDE and Trump mean by saying “Europeans don’t take our cars” when clearly they do – with exceptions. First, our tastes in vehicles and economic circumstances differ. European vehicles more economical than ours. Our cars are on average larger and heavier with poorer gas milage. European gas prices are much higher. We pay about the same per gallon as they do per liter and there are 3.8 liters to a gallon. Their streets are much more narrow than ours meaning smaller vehicles as well. When I was living in Germany, I remember the biggest car I saw was a Camaro winding its way through the narrow streets of Konstanz. Just like the “Smart” car did not appeal to most Americans, neither would an Expedition SUV to most Europeans. The top sellers in Europe are the Dacia Sandero and the Renault Clio, both rather small cars. The best selling vehicle in America is the Ford F-150. The Europeans even consider the Toyota Camry a “big” sedan. It sold 345,310 vehicles in 2024 in the US but only 6,137 in Europe. And this was with no restrictions on its import.

Our markets are different as are our tastes. That’s why our cars and trucks are not imported into Europe. It is not the EU government that is restricting the cars but the private importers because they won’t be able to sell them. Mind you, I am not saying that governments don’t play a role in reducing importing American cars and trucks. European safety and fuel economy regulations are much stricter than those in the US with US fuel regulations getting ever laxer under Trump meaning bigger American vehicles and fewer EVs.

But the bottom line is that the Europeans do not buy our cars but not because they prohibited from doing so. They have smaller wallets (along with the smaller streets), higher gas prices and different tastes.
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Some more random thoughts #67

More on the “firing” of Lisa Cook

Trump said “you’re fired!” Cook essentially said “go pound sand – you can’t fire me you big bully!.” The drama unfolds. When Trump fired the two democrat members of the NCUA board, he did not give a reason. They were not fired “for cause”. They were fired “because” – because they were democrats. The FBI showed up at NCUA headquarters and escorted them from their offices leaving the remaining (republican) board member to conduct agency business as a quorum of one. The two ousted board members sued and were reinstated by the courts. That was anticipated because NCUA’s board is legally similar to that of the Fed’s. Their members can only be fired “for cause” or impeached by the senate. As to Lisa Cook, Trump insists he can fire her “for cause” but Cook says it is “because” and that she is not going anywhere. Will Trump have the FBI invade the Fed’s headquarters to escort Dr Cook out? I think the odds are positive but low. What is interesting is that the president didn’t ask his chief minion in the senate Bernie Moreno to institute charges of impeachment. With majorities in the house and the senate maybe he could dislodge Dr Cook that way. I also have cautioned Fed governor Philip Jefferson to watch his back. You know that the president has his people digging for stuff on Jefferson and we all know that a determined prosecutor can find something to indict on regardless of the odds of a conviction.

Trump now says that he may nominate Cook’s replacement soon. Well that woulld be interesting wouldn’t it?

Elon hates me. 

Obviously I have done something to tick off Elon Musk. I may be the only person on the planet who cannot create either an X account or a Grok account. Every time I try regardless of email accounts (I have several) or device (iphone, ipad, macbook or imac) I get the “Oops something went wrong. Try another time.” Ok Elon, so I thought the regulatory credits were a boondoggle. So I said that the cybertruck was weird and needed pimping. So I said the whole EV thing would be on life support were it not for all the subsidies. So I said that Tesla had a look that only a mother could love. So I said that Tesla owners were a cult. So I questioned the safety of the vehicles in a crash. So I asked that with the lithium batteries was it safe to take a Tesla through a car wash. So I said the whole DOGE thing was not necessary because of better alternatives. Did you get upset because I said the open door to the South African Boers was a bad look? So I said that you didn’t know how to build cars with all the recalls and defects. So I questioned why you would allow your young son to pick his nose on camera in the White House. Are any of these the reasons why I am banned from X? Well since my father drilled into us that we should never apologize (only pledge to do better next time) I am not sorry for anything that I have said about you. However, I do admire your genius and ability to do stuff. So is that enough to get me on X?

Nope.

Bye Bye erstwhile democrats (flip floppers)

Despite their media dominance democrats lost 2.1 million registered voters between 2020 and 2024. Republicans gained 2.4 million. I think that all the embracing of the wrong side of issues is driving voters to leave the democrat party and that the republicans are the only place for them to go. If all these folk came over to the republicans with this president imagine all the shift if the republicans had a president that embraced free trade, entrepreneurship, free markets, capitalism and government with a small “g”. But the electorate is fickle having flipped from Bush to Clinton to Bush 2 to Obama to Trump to Biden and back to Trump.

Hi Intel, I’m from the government and am here to help you

What does the government do well? Precious little and running a chip company is not one of them. As a matter of fact, running any company is beyond the competence of the federal government. I presume that the stake in Intel is in exchange for the “grants” awarded by the CHIPS legislation. Intel reminds me of IBM, getting fat, happy and complacent and letting upstarts clean their clock. What is the government getting for its stake? A voice in management? That would be a joke. Is the government’s stake just to bolster the company with no strings? Not likely. But if the government has a $37 trillion debt burden what’s another little old $10 billion?

I thought Trump was taking a whack job to federal employees. Isn’t he going to have to greatly expand those who deal with tariffs? Accountants, border officials, and everyone else involved in counting importing goods, assigning the right tariff for each country and each imported good and all the other stuff involved need to be added to the federal payroll. His former Commerce secretary said “there undoubtedly would be a need to hire more customs people, because if you’re having dozens and dozens of more products, and those products have hundreds of thousands of elements to them and 40 or 50 or 100 jurisdictions from which they’re coming, you’re going to need more customs people.” Do tell? Well that will at least keep the jobs numbers high

The Cracker-less Barrel-less logo

Confession: I am no fan of Cracker Barrel. We are not restaurant patrons and only stop at them when we are on the road. We stopped once at a Cracker Barrel for breakfast and left when I found out they did not serve omelets. A breakfast menu without omelets? Guess they think we want waffles and beer. Say it ain’t so.

Why did Cracker Barrel change its logo.? Taking out both the barrel and Uncle Herschel makes the new denuded logo look bare and just plain weird. Out goes the barrel and dare I say out goes the cracker too? Forty-three percent of Cracker Barrel’s customers are over 55 while only 22% are under 34. In contrast Applebee’s (my least favorite restaurant) 80% are under 55. But Cracker Barrel’s sales are flat and the demographics don’t look good with older customers dining out less and younger customers not quite buying into the country thing. Cracker Barrel’s stock has dropped by 70% over the past 5 years. It ousted the CEO and hired one from Taco Bell (another least favorite “restaurant”) to change its image and attract a younger clientele. So Uncle Herschel in his bibb overalls had to go (did you know that bibb overalls originated at Bibb Mills in Macon, Ga – near Gray?) and the interiors had to change from that cluttered country look to something more modern chic. Will it work? I doubt it The older clientele will be turned off and the younger ones won’t come. The younger folk like Starbucks (not exactly a restaurant), Chick-fil-A (not exactly a restaurant) and First Watch (must be the avocado toast). Well good luck morphing into something that you are not Cracker Barrel. But then the new nude logo says that you are no longer “Cracker Barrel”. Seriously how about Cracker-less Barrel-less?

I’ve got an idea: didn’t Hooters go bankrupt? How about a merger of Cracker Barrel and Hooters? Wouldn’t that lower the age of the average Cracker Barrel customer? We could put a Hooters girl in bibb overalls on the logo with a chicken wing instead of Uncle Herschel and the barrel. Cracker Barrel’s CEO came from Taco Bell and aren’t in some locations Taco Bell share a building with KFC? So why not Cracker Barrer and Hooters? Just saying.

Lastly, why do attractive women like Jasmine Crockett and Kristi Noem wear all that eye makeup and hair extenders?

 Control at the Fed and other thoughts

Is Powell losing control of the Fed?

Breaking news: Trump says that he has fired Fed governor Lisa Cook. However, Cook says that she is not going anywhere. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” said Cook in a statement late Monday. “I will not resign.”If she continues to resist, it will make an interesting case in finding out what constitutes “for cause.” Her attorney says that the president’s action “is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.” We will see if Trump tries to prevent her from physically staying at the Fed by sending in the FBI to evict her from her office. That would be messy to say the least. I suspect that Cook will get an injunction to prevent her removal until adjudicated by the courts. Of course, Trump wants to replace Cook. With a term becoming vacant in January and with the possible departure of Powell after his term as chairman expires, the president would have nominated four of the seven governors. He has rather loudly said that he will only nominate those who will vote to lower rates (a rather dumb thing to say). I guess he means under the economic environment of the past few months – ignoring the uptick in inflation.

Regardless of what happens with Dr Cook, I think that Powell is losing control of the Fed. Previously only the Fed chairman served as spokesman. Alan Greenspan ran a very tight ship. When interviewed the governors talked a lot but said nothing. Seldom if ever was a reserve bank president quoted. Things loosened up a bit under other subsequent chairmen but not like this. All of a sudden, Governors Waller and Bowman have been vocal about wanting to lower rates. Mind you there voted to hold the Fed funds rate steady until Trump kept browbeating and threatening Powell. Both would like to be named chairman replacing Powell when his term expires in May so they are now kowtowing to please Trump. The reserve bank presidents are all of a sudden chiming in. I saw an article where four of the ones on the Open market Committee were interviewed about rates. Only the New York Fed president – who ironically is the most important one – was not quoted. One said that rising prices would cause her to keep rates the same while the other said that the slowing labor market might cause her to consider a lowering of rates. But it is still significant that more and more members of the Fed’s hierarchy are feeling free to talk to the press. Once that would have signaled a loss of control by the Fed chairman but lately it seems that I am the only one who sees it. Is it because today’s reporters are too lazy to research history?

Gone under the radar are the reserve bank presidents. Trump has just been yelling and screaming at the Board of Governors but the reserve bank presidents play an important role also. The presidents are selected by the board of directors of the reserve banks and approved by the Fed Board for a five year term. All the terms for all the presidents expire at the end of February in years ending with a 1 or a 6 making 2026 very important. I don’t know of a president who did not have his term renewed by the governors but it might be possible if Trump or his successor could control the governors. For instance, the presidents of Atlanta and San Francisco are both liberals and likely would not have their terms renewed by a Trump-leaning Board of Governors. Mind you, the Atlanta Fed president is a friend and a co-author of mine that I have known for 20+ years but his political views run counter to those in the MAGAverse.

The Feds raid John Bolton’s home

The FBI raided John Bolton’s home ostensively looking for classified documents. FBI director Patel tweeted “No one is above the law.” Well they got practice raiding Mar-a-Lago when Biden’s FBI raided Trump’s home for classified documents while Biden kept his safely secured in his garage in Delaware. Maybe Trump can get the garage raided now that he is president, just for a little payback. Recall that once Bolton and Trump were buds. Bolton was Trump’s national security advisor during reign number one. Bolton is a loud and forceful hawk often branded as a neocon. But I think that term is too mild for him. He is ab advocate of regime change and military action if not intervention in a slew of countries that are hostile to US interests.

Bolton and Trump had a major falling out and parting of the ways. Bolton wrote a book that was called “scathing.” The book, “The Room Where It Happened,” portrayed Trump as grossly ill-informed about foreign policy and said he “saw conspiracies behind rocks, and remained stunningly uninformed on how to run the White House, let alone the huge federal government. Naturally, Trump then called Bolton a crazy war-monger who would have led the country into World War Six. Bolton was one of the former officials who had his security clearance revoked and was on FBI director’s Patel’s list of members of the executive branch deep state. No wonder he was raided as a signal to all those who vocally object to Trump and this administration. Patel tweeted “No one is above the law.” To paraphrase Bill Clinton, “I guess that depends on how you define ‘law’”.

Send the Chinese students home?

Did you see Mike Gallagher’s piece “Send Harvard’s Chinese Students Home”? https://www.wsj.com/opinion/send-harvards-chinese-students-home-national-security-risk-research-2e43313d

In it Gallagher states that it makes little sense for Harvard to be educating the next generation of our Chinese enemies. He wants Chinese students not to be educated at Harvard and other universities. Gallagher is afraid that the Chinese students will steal our secrets and use them against us. It is probably with no sense of irony that he then quotes Meta’s chief of AI, Alexandr Wang, who “has argued that the rate of AI progress may be such that you need to prevent all of our secrets from going over to our adversaries and you need to lock down the labs.” Doesn’t Gallagher know that Wang’s parents are Chinese immigrants who were physicists at the National Labs in Los Alamos? In fact, Gallagher even says “Expand the Biden-era law banning Chinese citizens from national labs like Los Alamos.” Oops.

Of course we have to be careful and suspicious. But such a ban is a bit much. I have always wondered how Chinese students can come here and study and then return to the oppression that is China. I know some will point to the relative freedom and luxury living of the Chinese elite but there is always the image of Jack Ma to show the limits of that freedom. Yet could having that million or so students from China lead to an undermining of communist party control and eventually make China free? Let’s hope.

Gallagher says “Blindly embracing academic cooperation with a geopolitical rival is absurd. Nobody suggests we should train Iranian nuclear physicists or Russian ballistics engineers.” I don’t know about Russian ballistics engineers but once Iranian students were a fixture on our college campuses. I bet that we did train some of their nuclear physicists. Anyway, if they don’t come here, the Chinese will go elsewhere. To me this is an indictment of higher education in China. It is a statement that although US primary and secondary education suck, our research universities remain the best in the world. Ironically, in large part it is due to the foreign (dare I say Chinese) graduate students who aid in research. Again the number of American born students in STEM graduate programs is woefully low. Gallagher should realize that if we close our borders we will lose our edge in scientific research. Of course, Trump is accomplishing that already with the cutting off of research funds to higher education. Granted some of the projects approved under Biden were ridiculous but Trump is literally throwing the baby out with the bathwater.

Thanks to DDE for bringing this us. I am not going to expound on the benefits of free trade even if it is unilateral because it has been done before from Adam Smith to David Ricardo (the father of comparative advantage) to the sainted Milton Friedman and thinkers lime Pierre Lemieux and most reently Don Boudreaux.

I forgot to mention that Donald Trump has given us an empirical test of unilateral free trade. All of the announced deals feature a US tariff of 15 percent on imported goods with our trading partners assessing a zero tariff on American goods. Let’s see how this turns out.

As to the Chinese theft of property rights (and their hacking) I have long advocated that we should impose severe penalties on them for doing so and sanctions on US firms that allow the Chinese to demand intelletual property as a condition for doing business. Didn’t Tesla tell them to pound sand when the Chinese demanded access to Teslas’s technoloty when they wanted to build a plant in China?

I have posted before on digital sales taxes being imposed on our tech firms by Canada, Britain and the EU.

As to “even the EU won’t take our cars” I will blog on that a bit later as well as the case of agriculture.

Again thanks DDE. I hope this helps and again I welcome all points of view because they help me with mine.

Milton Friedman on unilateral trade

https://fee.org/articles/in-1970-milton-friedman-called-for-unilateral-free-trade-rather-than-retaliation-we-still-haven-t-learned-that-simple-lesson/

Pierre Lemieux on unilateral trade

Free Trade Agreements v Unilateral Free Trade

Here is what my old friend Don Boudreaux has to say about Chinese dumping.

More On Alleged Chinese Dumping

My rant – not quite the impact of a presidential one

First I want to say that I support (somewhat) what President Trump has done to close the open border, purge DEI and CRT, scuttle the green new deal and stop the Biden Administration’s attacks on the country’s foundations. I support the deportation of criminals – although I rather lock them away in our prisons. I wholeheartedly support the purging of antisemitism from our educational institutions even if I do not favor some of his methods. I support the deportation of those here on student visas who break the law and who pursue antisemitic activities. I like Trump’s deregulatory bent but I do not like that he is anti-market and his tariffs are anti-small business. I like his ending the funding of PBS, NPR and especially Planned Parenthood. I like his purging of wokeness from the government – even if just for his short time in office. I wish he voiced greater support for alternatives to our government schools and moved to decertify the teachers’ unions. I am glad he is again pursing energy independence. He doesn’t like windmills which is a good thing. I wish he had a more aggressive nuclear agenda. Approve more pipelines. End the silliness with the Canadians and utilize to the fullest their energy sources. Open up the vast Alaskan territories. I am overjoyed that he terminated the CAFÉ fleet milage nonsense and terminated the silly regulatory credits that were helping prop up the EV-only makers. I am glad that he is striving to end the trans agenda in our schools. Yes, he has done much that is positive. But he has done much that is negative as well.

I hope that within my lifetime there will be a president that will strive to make America truly great again. We are an immigrant nation and most of our immigrant ancestors came to America seeking a better future. My African ancestors were the exception: captured, caged, shackled and forced into slavery, they had little choice. But the American dream turned their freed descendants into success stories that would make them proud. Regardless of what the well-heeled naysayers bemoan, America radiates exceptionalism. The relative lack of trade barriers has enriched the country. The freedoms enshrined in our country by the brilliance of the Founding Fathers have allowed us to prosper. 

I have a close friend who always says that republicans have a winning message but they are awful at messaging. That entrepreneurship, opportunity and capitalism not only preached but demonstrated would resonate with Americans not tribalism, xenophobia, state capitalism (American socialism), trade barriers, increasing deficits, industrial policies and all that we have seen from the last two administrations. 

Whatever their differences, Biden and Trump are strikingly similar with regard to pursuing an industrial policy. Both are anti-market armed with government directed industrial policy. Biden’s industrial policy favored the climate scare embodied in the green new deal. Subsidies flowed in that direction. Biden wanted to alter the social fabric of the country with his policies on gender, sex, marriage and abortion. Biden made it a point to try to eradicate anything and everything associated with his predecessor, Donald Trump. Biden turned the country into a banana republic with its persecution of Trump and his allies and with his harassment of conservative organizations, Christian organizations and pro-life groups. He opened our borders and created a crisis of major proportions. Yes, people wanting to make their lives and the lives of their children walked across the border but so did thousands of undesirables. This will disrupt our lives for a generation. Most importantly, Biden and his allies in the teachers’ unions set out to destroy our educational system. Gone were the basic building blocks of education. No more fundamentals. Little Johnny may not know how to read, may not know how to add, may not know geography, may not know civics but he knows Critical Race Theory. He knows gender dysphoria. He thinks that there are 72 genders. Little Johnny may be part of the most intellectually lazy generation of our time.

When Donald Trump was re-elected mainly due to the democrats making him a sympathetic figure, it was payback time. Like Biden before him, Trump set out to eradicate anything and everything associated with Biden. Gone are all of the Biden initiatives and in the place of Biden’s state capitalism picking winners and losers we now have Trump’s state capitalism (American socialism) picking different winners and losers. Trump has brought back mercantilism, long dead and discredited. Up go the trade barriers. Our once friendly trading partners are all depicted as evil characters preying on a gullible, weak and helpless America. Now we are falsely depicted as the weakling with no manufacturing, making nothing ourselves and being dependent upon dishonest trading partners who take advantage of us. A trade deficit is now somehow a threat to national security. So in order to make America great again we must severely limit the amount of goods flowing into the country while maximizing the outflow. Mercantilism lives! Yet mercantilism is based on a zero sum world. What one gains is equal to another’s loss. Americans should know better. Look at the wealth that market capitalism has produced. Market capitalism has lifted billions from poverty including my people in America. Find another people that one day wake up and find that they are free, but have pitifully few positions, most have little skills and none have even a last name. Yet today are mostly so well off that their poor would be rich in much of the world. Look at our relatives in the Congo. Look at those in Sudan. Whine all you want about white supremacy but the evidence is that white supremacists are a bunch of incompetent yahoos. Find me a mass of people flourishing under socialism if socialism is superior to capitalism. How many people have they extracted from poverty? China have succeeded somewhat but is still a failure. Only a demagogue would preach that China is a success story and only a delusional person or a fool would believe it. Our economy is 50 percent larger than China with its 1.5 billion people and we receive most of the world’s direct foreign investment. Why isn’t that money flowing to China? Investors aren’t all crazy.

All the while, we will keep spending money like it is a free good. We have so little fiscal integrity that a $9 billion recission in a $7 trillion budget is treated like winning the World Series. Congress has no shame. Trump has been economically reckless and blames others for his failures. The Federal Reserve is a convenient scapegoat but it is really really hard to conduct rational monetary policy in an environment of irrational and irresponsible fiscal policy. Trump wants there to be no adults in the room and force the Fed to bend to his wishes. Trump wants to run roughshod over the Fed like he has run roughshod over us and the world. He has Congress cowering, except for those from Kentucky. He rants and rails at the Fed because they are the only real line of resistance to his ambitions, other than the courts. I find it interesting hearing those who yelled at the Fed for accommodating Biden now yelling at the Fed to accommodate Trump. Do you really want the Fed to cut the Fed funds rate to 1 percent like Trump is demanding? Do you really think that making Americans pay more for goods while foreigners pay less is really a rational policy? Do you think the seemingly haphazard imposing of random tariffs on 193 countries and a few Artic islands is good policy? And why is Russia’s tariff zero? Even the Ukraine has a 10 percent tariff. The bottom line is that Trump wants to keep spending. He wants the Fed to pay his bills. And this is the route to economic prosperity and economic stability? I don’t think so.

Regardless of this mess, at their core we Americans know better. We know that trade is mutually beneficial else it would not take place. We know that most public schools stink so we are forcing the education system to change. We know that most immigration is beneficial so we want a rational system to oversee it. We are all capitalists at heart. We love our freedoms. Few of us want to impose them on others. We know better than any bureaucrat and government what is best for us and our children. We know private property is a main component of economic freedom and we defend it. Despite all the social and economic nonsense that have come out of the previous two administrations we know that we can do so much better. We are Americans and we will overcome.

Vince Ginn in National Review has 20 things that will make America great again. Here is the to Econ 101: A Compass for a Lost Country

Econ 101: A Compass for a Lost Country

Trump’s rant

I was going to write on Trump’s thinking that he can take over the electoral process in the states when I read a much better explanation by Jeffrey Belhar, who is turning out to be one of my favorite reads has an article in National Review with the longest Trump rant of all time. Here is some of the article but it is available at

https://www.nationalreview.com/carnival-of-fools/donald-trump-cannot-federalize-election-law-via-executive-order/

Here is the presidential rant:

I’m going to lead a movement to get rid of MAIL-IN BALLOTS, and also, while we’re at it, Highly “Inaccurate,” Very Expensive and Seriously Controversial VOTING MACHINES, which cost ten Times more than accurate and sophisticated Watermark Paper, which is faster, and leaves NO DOUBT, at the end of the evening, as to who WON, and who LOST, the Election. We are now the only Country in the World that uses Mail-In Voting. All others gave it up because of the MASSIVE VOTER FRAUD ENCOUNTERED. WE WILL BEGIN THIS EFFORT, WHICH WILL BE STRONGLY OPPOSED BY THE DEMOCRATS BECAUSE THEY CHEAT AT LEVELS NEVER SEEN BEFORE, by signing an EXECUTIVE ORDER to help bring HONESTY to the 2026 Midterm Elections. Remember, the States are merely an “agent” for the Federal Government in counting and tabulating the votes. They must do what the Federal Government, as represented by the President of the United States, tells them, FOR THE GOOD OF OUR COUNTRY, to do. With their HORRIBLE Radical Left policies, like Open Borders, Men Playing in Women’s Sports, Transgender and “WOKE” for everyone, and so much more, Democrats are virtually Unelectable without using this completely disproven Mail-in SCAM. ELECTIONS CAN NEVER BE HONEST WITH MAIL IN BALLOTS/VOTING, and everybody, IN PARTICULAR THE DEMOCRATS, KNOWS THIS. I, AND THE REPUBLICAN PARTY, WILL FIGHT LIKE HELL TO BRING HONESTY AND INTEGRITY BACK TO OUR ELECTIONS. THE MAIL-IN BALLOT HOAX, USING VOTING MACHINES THAT ARE A COMPLETE AND TOTAL DISASTER, MUST END, NOW!!! REMEMBER, WITHOUT FAIR AND HONEST ELECTIONS, AND STRONG AND POWERFUL BORDERS, YOU DON’T EVEN HAVE A SEMBLANCE OF A COUNTRY. THANK YOU FOR YOUR ATTENTION TO THIS MATTER!!! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA.

Belhar continues: “I feel utterly exhausted by all of the shouting. Trump’s punctuation has begun to resemble that of a cut-and-paste ransom note.” (I wish I had said that).

Trump announced that an executive order would indeed be forthcoming, promising “an executive order that’s being written by the best lawyers right now to end mail-in ballots.”

Fools are now arguing about whether mail-in ballots are a good thing or a bad thing. (My position: They are a thing, you cannot wish them away, so deal with them properly) But since I am not a fool, and can read Article I Section 4 of the U.S. Constitution as well as you can, I know that none of these changes can be commanded via executive order. The Constitution spells it out quite clearly: “The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the place of chusing Senators.” Under the Constitution, Congress may play a role in setting federal election laws, but the states usually take the lead. The executive branch plays no role in this whatsoever.

(By the way, “chusing” is an actual spelling in the Constitution and is the equivalent of “choosing”.)