Tag Archives: Trump

Trump One Step Closer to Quitting

Reference:

I believe Donald Trump will quit the Presidency of the United States. I forecasted Trump would win (see April 2016: Trump Will Eat Clinton Alive), and in that article last Spring I suggested that he would quit. He will quit due to the inability for politicians in Washington to be rational and negotiate. He will quit with acrimony and bolshiness. About the only thing that will prevent this situation from taking place is tax reform.

Let me first state that I think that Obamacare was the wrong tool for the job. It was a rushed, Ill-focused, partisan and socialist effort to undermine the best parts of America. Its namesake and his supporters suggested that the Affordible Care Act (ACA) it helps those that need most help (the uninsured), and it does (in some way) but at a system-wide cost that is unacceptable and unaffordable.

The free market is anything but that; regulation is like a strangling vine; prices remain untouched and high; big pharmaceutical remains unfettered; patient outcomes remain anathema to healthcare. This country continues to spend ever more on healthcare, more than any other developed nation per capita, and yet our outcomes and their improvement reman poor and lacking, even on a good day. Obamacare was the wrong tool for the job.

The bad news is the Republican approach to Obamacare has split its own party. Worse, the repeal and replacement was in their reach. Yet last week the chance for correction was thrown out.  

There were even votes against the Republican policy from folks like Ron Paul who didn’t want the ‘Obamacare Lite’ but who wanted a full repeal. So he withheld his support. The Freedom Caucus, apparent fiscal hawks, had a chance to budget-fence Medicaid, yet they withdrew support in the mad hope of a perfect policy sometime in the future.  

This is madness. This is political suicide. The Democrats have been handed a free ticket and Trump must be mad. This is Washington at its worst. There will likely never be a perfect policy or time enough to develop it.

Now the movement shifts to tax reform. If an overhaul is not executed Trump will feel like quitting and he may yet do so. The Republicans need to realize that they have a rare opportunity but only if they unite. If they play party politics and splinter again, change will not be forthcoming. The Democrats, not in power of any sort, will be in power in all but name.

Obama won on the promise of change and socialists alike all rammed through their left-leaning, redistributive, anti-business and anti-free market policies. We are slowly bleeding to death now under the weight of ignorance and self feeling. Our polices cannot be paid for without printing money since we are all too happy to free-ride the masses and garrote the rest. The rest who are free and employed folks who work for a living, who want to improve their lot with their own blood, sweat and tears, not from hand-outs from Uncle Sam.

Trump also won on an argument for change. Alas the Republicans have forgotten how to govern.    

Better the Trump We Think We Know

These last weeks have been exasperating. In my attempts to keep abreast of what’s is going on, I have virtually lost faith in TV and radio channels. The constant flow of information from the President, often via Twitter, is at a speed and of a form that we can hardly keep up with.   See The First Digital President.  Pundits are mostly out of date and irrelevant. Universally they suggest that President Trump’s style is outrageous and not presidential. The use of Twitter is new, but is Trumps’ combative style really that new?

I found an Opinion piece in this weekend’s US print edition of the Wall Street Journal that seems spot-on in capturing the current dynamic. The article, The Method in Trump’s Tumult, by Christopher DeMuth, a distinguished fellow at the Hudson Institute, suggests that Trump’s methods might look odd and different to those of us used to the monotonous dogma of political rhetoric subscribed to by politicians in recent years.  But really his methods are not new at all.  They are provan and well trod by previous Presidents.

“President Trump may be rediscovering a venerable method of leadership that has been forgotten in our era of ideological messaging. Rather than viewing disagreements as a problem, previous American leaders wielded it as a tool. The surrounded themselves with highly accomplished, strong minded advisers, and used vigorous debate among them to generate fully considered options for confronting the intractable problems of the day.”

Given that his political enemies suggest his methods create disarray, Mr. DeMuth’s ideas make a lot of sense since this disarray might be a means to an end – not the end itself.  His article explores multiple examples of past President’s (including Washington) and how they surrounded themselves with folks who often spoke out and at odds with each other. After reading the article one is left with the feeling that Trump’s lack of political experience and rich management flora, resulting in this behavior, is refreshing. It is, but it seems to be misunderstood and at odds with his detractors. Maybe the left-leaning press will grasp this eventually and start to analyze policy, rather than pick and snipe at Tweets.

The First Digital President: Trump and his Tweets

This article will not discuss the pros or cons of any of President Trump’s policies.

This blog will discuss the fascinating impact of a President that tweets his feelings, inclinations and possibly inferences to his policy preferences. In a nutshell we are not ready, we are not even able, to cope with the speed with which information is coming from the presidents Twitter account.

Several times a day a new Tweet is posted and literally the world is turned-over again. Before Trump came to office we would all have to wait for the press briefing. We would wait to browse the headlines of our favorite news site. We might wait for the 6 o’clock news. We might even browse the newspapers.  

But now, three or more times day, everything turns upside down. You could even subscribe to the presidents Twitter feed and join in the turmoil. Media outlets, political junkies, other nations are all on edge as every nuance and implication is explored with outdated tools and perspectives as one tweet follows another. The use of big data, reportedly a key to Obama’s first victory was a digital innovation. Trump and his Tweets is another.

We should factor in the nature of which such digital communication is being used. It would seem that the tweets themselves are not carefully, developed and totally thought through messages. Equally they are not random thoughts of a madman. Whatever they are (and some of you will assume they are rants of a mad man or deeply held beliefs and policy guidelines), the speed with which such communications protrude from the White House are breathtaking.

The entire political and press establishment are running at a hundred miles a hour 24×7. And I mean 24×7 since Trump might tweet at 2am. I actually love his energy and enthusiasm. But can our systems survive this onslaught?

I find now that watching the TV in the evening a waste of time. Channels that lean left or right are out of date. They try to analyze (if we are lucky) the day’s news yet a new tweet reverses everything. The radio channels are as out of date and as unable to keep up. Newspapers are getting to be very boring. 

The torrent and speed of new information is not yet displacing channels and reporters from the past era. But perhaps we need to rethink the system. Even the briefing room of the White House seems to be a circus. They spend their time trying to understand a tweet and are missing the real news. It really is a major challenge.

Maybe we need a new digital news system that leaves televisions and traditional media sources behind. Maybe we need a purely digital platform that can parse tweets and merge them into the panoply of policy and White House edicts. We need news reporters to report the news with a big (data) lens.  

As it stands few are able to understand let alone put a tweet into perspective. The result is the left and right spend their time arguing over trifles and nothing is actually analyzed or concluded before the next tweet arrives and the dance starts anew. It’s breathtaking, and getting boring. The problem is not with the tweets: it is just a medium. The problem is with our news reporting system of press briefings, television and media pundits: they and it are out of date and not able cope with the new medium.

Whatever your feelings concerning President Trump, you have to acknowledge he is effecting change on many levels.

Healthcare under TrumpĀ 

Healthcare’s Bipartisan Dilemma” in today’s US print edition of the Wall Street Journal  details several ideas and alternatives being discussed that might replace the ACA. Every example considers tweaks to the current system that abuses the market based approach. As with the ACA, the costs to cover sick folks is mashed together with the larger population of healthy people. The result, as with the ACA, is massive price and market distortion. In fact the very essence of risk (with respect to insurance and premium) is undermined. As such the free market is a monster.

There is a different way that should be considered yet it is not (yet) in the news. Literally, return the market to where it was: remove the entire ACA and permit risk to be priced into he market as it was.  

For those that fail to get insurance, offer a subsidized state-health insurance. This is the equivalent of the UK’s National Health Service but at a state level. Federal funds and state taxes would be used to pay for the service. This idea was floated in the run up to the ACA being signed and this represents a simple subsidized pool. It would be transparent and visible. The costs of this aspect of healthcare would be clear.

Finally another issue in healthcare needs to be addressed at the same time: costs. Additional efforts need to be enhanced to shift the reward system for healthcare, public (Medicare, Medicaid etc) and private. Rewards need to be explicit and focused on health, not piece-rate and work. Visits to the doctor and specialist are not relevant; results are. This program needs to be led by business people in Washington, not politicians.

Along with this is a revamp of regulations to help reduce the risk of insurance against negligence. This part of the industry puts too much of a burden on costs and needs to reduced.   

Trumponomics is About to go Global

The critics were wrong and we know this now. On election market futures tanked on the hint that Clinton would lose and Trump might win. They and their pundits assumes that mediocrity and continuation of the Obama polices would permit the investor class to get richer so Trump represented change and risk. Not five hours later the market reverses and streaks ahead.  

Today the market continues to charge ahead. Trump’s election promises of lower taxes, less regulation, less government, seems to be recognized for what it is- a growth agenda. But more importantly, Trump’s winning will result in the export of his policies abroad.

The dollar was already strong against all other currencies. The Fed has no choice but to seek to get to normality with interest rates, and soon. The more the US economy morphs towards higher GDP growth, the more US interest rates will rise. This is a good thing. We need to return to the old normal or an approximation for it.  

But as rates rise so the dollar will surge alongside GDP. As the dollar surges imbalances in exchange rates will lead to two cycles:

  1. Liquidity will center on US and emerging markets and other developed marked will contract as money seeks yield. This will starve other regions of cash. At the same time US exports will be hampered (not overly important to US national economy as a percentage) and for other nations, exports will balloon as their currency is cheaper. The result will be that the US trade deficit will itself balloon again. Inflation will get a fillip due to increased US demand (note that inflation is already showing signs of stability) and as a result, trade partners will suffer greatly under either the weight of their new economic normal (zero rates, no inflation, high relative tax rate, loose monetary policy) being inconsistent with a resurgent US or lack of capital.
  2. As a result, trading partners will need to raise their own interest rates to help stabilize currency markets. This will alleviate some of the dollar’s strength. But if this is the only policy followed, those trading partners will sink into the abyss of stagflation. They will therefore need to emulate many other of Trump’s polices in order to ‘keep up’. So deregulation, lower taxes and more devolved government (perhaps focused on education improvements and local healthcare) will follow.

Trump and his ‘buddy’ Yellen will together export Trumponomics around the world. And it will likely start by the middle of 2017 as the first increase in interest rates in Japan, Europe and/or in some emerging market is triggered.  

The real question though, the real conundrum, concerns China. China is still in a massively debt-fueled growth period and its currency continues to fall against the dollar. Trumponomics will push the Yuan down further and faster, helping Chinese exports to the US. But China will need to raise rates internally, or sell US treasuries (to buy yuan) or buy selling dollars from its massive foreign exchange reserves. Any and all of these will force the Fed to raise treasury yield and rates. Thus the entire cycle that has kept the world economy down for six years will reverse and little will stop it accelerating quickly. It could easily overheat within two years.  

Italy’s ‘No’ to Renzi is Not Like Brexit or Trump – They are all Different

It suits the press, a machinery that is benefited by the establishment, to associate Sunday’s referendum results in Italy as a rejection of establishment and so a similar vote as Brexit and then Trump. This is incorrect and a disservice to Italy.
Look at Renzi’s polices:

  • Less regulation
  • Increased labor flexibility
  • Lower taxes

As such he is as much Trump as he is Cameron or a May. And Renzi is pro-Italy and not so keen to follow along with rules set by Brussles designed to favor the Euro at one’s own expense. So on paper the result is akin to what happened in the UK and US. But let’s look at the data in more detail.

Brexit was not even a fair vote. Maybe none are but it really was an extreme case of bait and switch. The politics excelled over economics; and yet even if you looked at the facts, a vote for Brexit didn’t lead to the imminent disaster sworn by leaders at the time.  In fact, if one understands the situation of the euro, it was a smart move.  

But all the rhetoric concerning immigration turned the vote into a sham. Thus the UK voted for the right outcome but for the wrong reason.
Trump was, to that point, the first and real anti-disestablishment vote, pure and simple. It so happens that it seemed to look like Brexit which happened to appear as a vote against orthodoxy. But Trump’s victory was no fluke whereas Brexit was. The Trump underpinnings to victory were seeded long ago by a mutual debasement of the political class by left, and right, in the US.

Renzi’s referendum is a vote by Italy to remain Italian and avoid changing the political class system. The very constraints that lead to a stagnant economy and political system with uneven distribution of wealth was maintained. This was therefore not a vote against the establishment at all. It was a successful defense of it. Yes, the right-wing anti-EU Beppa Grillo party gains, but that is a by-product of the actual referendum structure due to Renzi foolishly linking his position to the result and is subsequent decision to resign. Even the Economist questioned the whole structure of the referendum last week.  

In today’s US print edition of the Wall Street Journal someone from an Italian lobby and public affairs group Pedesta is quoted as saying that “The antiestablishment feeling is stronger than the desire to reform.” This is classic Italian as it is jargon. Antiestablishment is about reform, massive reform. So establishment was thus assured! He goes on, “There is a reluctance to change, an innate conservatism in Italy.” Italy is not conservative; such policies have just been rejected.  

The other thing that happened was that Renzi was marginally pro-EU and he suggested that his polices would help Italy and so help the EU. He also foolishly tied his position to Sunday’s results, as if his own popularity was enough to sway the establishment. It was not. So his announced resignation opens the door for disruption and even the comedian-cum-politician. But it is not as if Italian’s were voting against Renzi. They were voting to protect the status-quo.

France’s and Germany’s elections are different. They either may undo the EU at a strike. If either in-office party looses to an extreme left or right, we might end up with a whole new ball game. 2016 may have been the unscrewing of Pandora’s lid. 2017 could well be the opening up of it.
And don’t think Greece is out of the picture. More loans are coming/needed yet some counties have already said no more. See Greece, Creditors Get Back on a Collison Course.

   

Worst Week Reading The Economist

I have read and loved the Economist form over 25 years. It has been a constant source of (classic, not modern) liberal, free market, small government advise and lens on an increasingly (modern, and so progressive) liberal, socialist, pedantic world. But this last week I have seen a change.

In the run up to the US election the newspaper would respond to Trump’s spoken word as if it were gospel. As such the newspaper ridiculed him and suggested he was not fit to be president. Yet that same newspaper would ignore what Clinton has done in office and privately and wrote about her as if she were a conservative member for Finchley! And a good presidential candidate, too.  

This was and is all upside down. Both candidates were bad options. Both are walking disasters. But the way in which the newspaper seems to favor Clinton of Trump has lessened my faith in it.

Now, the next edition after the election, the paper continues to write about Trump as if his campaign rhetoric should equate to policy. Is the Economist that naive?  Even listening to the news it is clear that president-elect Trump is very different to Trump the campaigner.

The wall with Mexico might not be a wall, all the way. No kidding. Tariffs are about negotiation. Of course. Immigration will look at the 2m criminals, not the 11m, for possible deportation. NATO is key. Right.

The economist seems to not like Trump. Or maybe it seeks to present itself with holier-than-though credentials. I really cannot tell. 
I still love my weekly economist but I did not like multiple articles this week. They clearly write from a one-sided and illogical perspective. I hope that next week’s copy is more realistic and up to date.