Blog Archive

Tuesday, August 20, 2019

Are U.S. interest rates indicating a declining economy?



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Much has been made of the fact that interest rates on long term rates had a lower yield than short term rates. It has been stated that every previous recession was preceded by an inverted yield curve. While this may be true, what has not been stated is that not all inverted yield curves have resulted in recession.

This hullabaloo is a knee jerk reaction without exploring the facts of why this has occurred. When the U.S. reduced corporate interest rates to be competitive with the rest of the world, it changed the economic balance in the western economies. Our rates were not made lower than theirs, just put in line, so U.S. corporations did not have a built in handicap. There also were reforms of oppressive regulations. 

We have since witnessed a resurgence in the U.S. economy, unemployment at all time lows, U.S. savings rate has increased to 8% from a number that was near 0. Growth has been steady in the 2.5 to 3% range. The biggest obstacle for U.S. companies is finding enough qualified employees to grow their businesses. Wages, especially at the lower income levels has been rising at over 3%. Many of these wages were flat for the last decade.

The economies of western Europe on the other hand are struggling to keep from declining into recession. They are continuing with the same old policies of reducing interest rates to stimulate their economies. There is very weak demand in all those countries. Take a look at their present interest rates.

Central BanksCurrent Interest RateNext MeetingLast Change
Reserve Bank of Australia1.000 %9-3-2019 - 04:307-2-2019 - 04:30
Federal Reserve2.250 %9-18-2019 - 18:007-31-2019 - 18:00
Swiss National Bank-0.750 %9-19-2019 - 07:301-15-2015 - 09:30
European Central Bank0.000 %9-12-2019 - 11:453-10-2016 - 12:45
Bank of Japan-0.100 %9-19-2019 - 02:001-29-2016 - 03:00
Reserve Bank of New Zealand1.000 %9-24-2019 - 21:008-7-2019 - 02:00
Bank of Canada1.750 %9-4-2019 - 14:0010-24-2018 - 14:00
Bank of England0.750 %9-19-2019 - 11:008-2-2018 - 11:00

So, if you were an investor, would you be more inclined to purchase U.S. bonds or European bonds with either 0 or possibly negative return. Switzerland, Denmark and Sweden all have negative returns of up to -.75. Denmark has just introduced 10 year mortgages with a negative interest rate. Sounds like crazy desperation.

So what we have is a rush to shift assets to the U.S. both in the bond market and the stock market, because returns in most of the developed world are very poor indeed. The U.S. federal reserve will soon be forced to lower their rates, not because of a week U.S. economy but because of a strong economy and too much of a difference between rates.

 This has also increased the value of the dollar compared to other currencies making imported goods cheaper for U.S. importers, but making it more difficult for U.S. exporters.

 The federal reserve also needs to scrap their link between increased wages and inflation. If they are going to raise rates to keep wages low that is not in the best interest of workers or the country. 

When they do reduce rates we will hear the back benchers in the media and the dems declare that the economy is failing, it is not true.

Western Europe needs to rethink their fiscal policy, why not reduce taxes and regulation rather than interest rates? This will be hard for them to swallow as their goal has always been more government control.

There has been an organized effort by Democratic candidates and some in the business world who are fearful that real free trade will cut into their profits. They are used to buying very cheap in China and selling into our strong consumer market. They have pushed policies that would subsidize displaced workers with things like guaranteed incomes,so that consumers could still have resources to buy their products without experiencing the dignity of work. Democrats live on dependent, vulnerable people, if the whole country would prosper it would be severe threat to their power.

So, we can expect to see an attempt to to talk down the economy, to attempt to convince people they should forgo future spending and hope they can engineer a slow down for political purposes. There is no limit to how low they will go in their quest for power.

Friday, August 9, 2019

Universal background checks, Registration by another name



Image result for gun control

The recent shootings in El Paso and Dayton have triggered the calls for passing more gun control legislation. Of course, it has to be done quickly and irrationally to maximize the emotional anguish of the country.

Both of the perpetrators of these acts had passed background checks, did not have criminal records, and none of the proposed legislation would have made any difference. It seems that the urge to do something, even if really not effective, is the motive for more legislation. 

The current objective of the gun elimination crowd, is Universal background checks. At present all transaction with a licensed firearms dealer have a background check, this applies to both new and used firearms. All transactions conducted over the internet require that weapons be shipped to a licensed dealer in the buyers state, who conducts a background check on the purchaser. Sales at gun shows by dealers are checked.These laws have a very high rate of compliance because they are readily enforceable. The record keeping requirements are very strict and audited routinely.

Universal background checks would require all transactions between neighbors, family, friends and relatives to submit to a costly transfer and background check. You can bet all this information would be kept and would be in effect create a gun registration system. This would open the door to the possibility of confiscation in the future. While confiscation would be unlikely today, it is the goal of the ant-gun enthusiasts.

While enforcement of the present background check system is readily enforceable, a universal check would primarily be an unenforceable law. I am sure there would be cause for making examples of those who would be found to have not obeyed the law, but there would surely be a high degree of noncompliance. At present most gun laws are supported and complied with, passing laws that require good faith compliance would be a step in the other direction. 

The other call is for the banning of so called assault weapons, which the last time this was applied in 1994 the definitions of such weapons was that they had a flash-hider and pistol grip, the sale of the functioning same weapons continued just the appearance changed. The banning of magazines that hold large numbers of rounds have been banned in some states, mostly unenforceable and not complied with.

There is much frustration and helplessness with the possibility of a deranged or hopeless individual committing acts of mass murder. This is understood by all, but will legislation including the banning of all weapons eliminate this possibility? No. There is also the concern that passing oppressive and unenforceable laws will possibly increase future disregard of the law in general.

We are in the midst of the greatest divide in this country since the civil war. We have two diametrically opposed camps concerning the future of the country. There may be no peaceful resolution possible. Legislation will not bring about a peaceful resolution. 

It appears that some do not want a peaceful resolution. We see an organized effort to disregard many of the laws that we now have. We see the organized effort to disregard, humiliate and diminish the police. We see calls for public humiliation and harassment of public officials. We see physical assaults on opposition political supporters. We see groups like Antifa attack and assault opponents in public, without repercussion or arrest. How long will it take for someone to reciprocate in a very violent way. Is that the hope of some to cause a violent response and then label and use it as a political weapon? It appears that is the plan.

The calls for and passing of gun control laws since the 1990's has created the biggest demand and stockpiling of weapons and ammo in our history. Why has this demand been so great? Many people feel threatened by their government's actions and disintegration of social norms. We see the public disregard of our immigration laws, the public announcements of some cities to no longer prosecute minor theft crimes, to not cooperate in enforcing federal law. Yet at the same time asking for more regulation of the law-abiding. Does anyone believe that justifying their fears is a step in the right direction.

The country needs a common goal and needs to pass legislation with a strong bi-partisan support. We cannot keep ramming through major legislation by 1 vote or with deals with lawmakers that does not have the support of a large majority, whether it is healthcare, or any new legislation, nor do we need to gore the other parties supporters as spoils of victory. Sadly we don't see anything like that in the foreseeable future.

Friday, July 26, 2019

Time for U.K. to start trade talks with U.S.



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Boris Johnson should hit the ground running and openly endorse opening free trade talks with the United States.This could possibly be opened up to include other friendly allies. This would send a clear message to the EU that the U.K. is moving forward with Brexit whether there is a deal with the EU or not.

The U.K has more of a strong position then the former leaders understood. It is likely when the EU sees that they may be not only loosing a valuable part of their Union, but also now a competing trade block is possible, they will have to make a big decision. Do they want to be left on the outside or negotiate an agreement that is acceptable to all?

As far as Ireland and Scotland. Does anyone believe they would rather be aligned with the EU than a U.K, U.S. agreement? Let them debate and make their decision.

The U.K was once a leader of the world. They need to stand up and show all they they are willing to do what is necessary to preserve their independence and freedom and regain control of their own destiny.

They need to focus on the opportunities possible for their own future. They are in a strong and unique position to be the the financial and economic link to the world. It is now time to go forward without fear.

Thursday, July 25, 2019

Some Democrats think impeachment is only hope of getting rid of Trump.



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As time goes on we see that much of government is run by career bureaucrats. We see this in our foreign policy which has been managed and manipulated by non-elected people for decades. We see this on trade, which has been formed by bureaucrats who often have a political agenda. This is not to disparage many well informed and talented people in government, but we have elections to keep America a dynamic and responsive government.

Bureaucracies seem to get into a rut of continuing to do the same thing even when it is not working. We see this in education and in most of government. Yes, sometime if it is not broke it should not be fixed, but lets face it,  much needs to improved and changed in an continually changing world.

The resistance to the changes that Trump has tried to make has been a continual fight even when it is clear that changes need to be made. It is clear that the accusations and resistance to Trump is rooted in that bureaucracy that is a self perpetuating and self protecting entity.

After watching Mueller's testimony it is clear that Robert Mueller was the captain of this ship, but rarely got out of his wardroom. It appears he allowed others to select his team,  that he deferred to his team to make decisions, write up indictments and his final report. It appears to all be a product of a self perpetuating bureaucracy. The goal of this whole investigation has been to destroy Trump, either to force him to resign, or possibly impeach and remove him from office. 

All to protect the bureaucracy from being reformed or changed.

So, after watching the hearing, it appears the Democrats had an orchestrated plan to coax Mueller to give them ammo for their impeachment inquiry. They will undoubtedly have numerous clips and sound bites to justify their plan.

Many Democrats know the truth concerning this whole investigation and would like to just use it as a tool to win the next election. Their less informed, inexperienced or more rabid haters of Trump want to impeach him and humiliate him.

It would be interesting to see a vote on impeachment in the house. The Democrats have the votes to do it. It would also be very interesting to see a trial in the Senate. A trial where Trump would have a defense team and the ability to subpoena and question witnesses on national TV. It would be the reality show of the century and could you see the list of those who would be called to answer under oath on national TV. 

While I sincerely believe that it would be a disaster for the Democrats, I also believe it would rip the country apart even more than it now is. 

This whole saga is not over, I would predict it is just the first or second act and the climax may be a year away.

Tuesday, July 16, 2019

Democrats are obsessed with race.



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In the 2012 presidential campaign the Obama campaign publicly admitted that they had come to the conclusion that they could win without the support of white men. Their campaign then went about tailoring their campaign to ensure a large black turnout at the polls. They also focused on the women vote. This with their coalition of LGB supporters, government unions and any other groups of disaffected were targeted with the old policy of stoking fear and greed to gain voter support. Fear of the police and white people and promises of more benefits and free government programs.

The fear and anger in the black community was encouraged with pumping high profile cases, beginning with the Zimmerman case in Florida. The administration with the help of their allies in the media, NBC actually edited the 911 call by Zimmerman to enhance their effort. This was followed by the Brown case in Missouri, with the rioting and pillaging that lasted for weeks. This was all hyped up to create hatred and division to encourage minority votes. The media was of course a willing accomplice in stoking the division.

This was followed by organized protests by left wings groups like," Black lives Matter ", Antifa, "Move on.Com" etc. Mostly railing about the injustices endured by blacks, perpetrated by white men and white society. Of course all this was portrayed as a civil rights issue, Social Justice was a new phrase, which really meant redistribution.  "White privilege", was another which was just a racist term that was used to encourage white guilt. All this was no more than psychological warfare in a quest for political power.

It worked, Obama won re-election and the framework was embraced by the Democratic party to ensure political power for the foreseeable future.

The same strategy was foisted on poor Hillary Clinton in 2016, the only problem was, she was not black and she was running against Donald Trump who was willing to engage and push back against the whole social justice, white privilege and the racist labeling of white society as evil and the cause of any misfortune endured by any group, whether black, women, LGB, Hispanic and now Muslim. 

This was outrageous, that someone would have the audacity to not be shamed into doing their will by labels of Racism, Bigotry or Xenophobia.  It was just not right that attempts at evoking shame and guilt did not work anymore.

The whole civil rights movement was begun with the idea of making race a non issue in all things, whether employment, housing, personal relationships, but it has now become a psychological and political weapon to push down and crush anyone who resists doing their will.

It seems their will is to transform the United States from a country that ensured opportunity for all to do the best they can with the gifts that they have to a mediocre existence of government guaranteed minimal, but equal, quality of life.

This would be accomplished by a transfer of wealth from those who have striven for generations to improve the lives of themselves and their descendants by providing a stable home life and working hard for the long term.

The new promise is, we the government, will tax and confiscate from those that have to provide for those who do not. Any resistance will inevitably be enforced by shaming or the bayonet when necessary. This is not the philosophy this country was founded on and prospered with, but is the same old Marxist philosophy that has cost the lives and created suffering for millions.

Wednesday, July 3, 2019

Iran situation is not Trumps creation.



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The history of Iranian and U.S. relations is long and complicated. There have been policy mistakes by many U.S. administrations. The Iranian people have generally been friendly to the the United States. It seems that Trump is unwilling to ignore any potential threat to the country.

The Iranian nuclear freeze deal engaged in by the Obama administration was imperfect from day one, both for the U.S. and Iran. Iran should have realized that any deal that is not voted on and passed by the U.S. congress is not a binding deal. 

While the nuclear deal was possibly a step in the right direction, it allowed Iran to become a nuclear power in 10 years. 

We could say that the deal was a trial run for Iran and they failed to pass the test. They may have lived up to their agreement to limit nuclear bomb material enrichment, but they continued to sponsor unrest and terrorism in the middle east. The have refused to exit from Syria, they have aided the civil war in Yemen, they have funded Hezbollah, that is in effect in control of Lebanon. They have provided rockets and arms to be used against both Israel and Saudi Arabia.

They have continued to engage in their form of Islamic jihad around the middle east. They could have used the Nuclear deal to prove to the world that they want to be a member of the world community and not look to spread their will and ideology in the middle east. They could have ended their favorite refrain of " Death to America", and Death to Israel". They did not, Instead they seemed to believe that they had pulled off a win in diplomacy and were now free to continue on their path to power.

While their rival Saudi Arabia has implemented a serious effort to cut off funds to terrorist groups around the world. Saudi Arabia, possibly not the government but many wealthy individuals, has been the biggest source of funds for international terrorism. The change of leadership has severely cracked down on these sources of funding. They have agreed to engage in talks with Israel for a long term peace initiative. 

While Saudi Arabia, the gulf countries, Egypt, Russia and even Syria are open to a broad peace plan for the middle East, Iran is not.

While it is true that the U.S. has in the past not always treated Iran fairly, it is time for them to come to the table and agree to plan that could be endorsed by the U.S. congress. One that would guarantee their sovereignty in exchange for withdrawal from their meddling the affairs of their neighbors.

There are many in the U.S. government who have encouraged war with Iran, The second Bush administration was set up and encouraged in taking such action. He resisted that plan. It seems that Trump also has been pressured to use force against Iran, He has honestly stated that he does not want to go down that road.

The next move will have to be made by Iran. The Trump administration have increased sanctions to remove Iran's economic ability to support their proxies in the middle east. The plan is working. They are also offering to engage in talks to end the confrontation that has been going on for 40 years.

Most of the players in the Middle East are interested in a large plan that would bring economic development to the west bank and the Palestinian areas. It seems that much of the plan is possible, except for Iran.

Iran is now at a crossroads, they have stated that they have restarted their nuclear bomb activity. Israel is of course taking notice. Israel has been in talks with the U.S. and Russia. It is unlikely that Israel will allow Iran to acquire nuclear weapons. They believe Iran really wants "Death to Israel". 

It is no secret that some in the Iranian government believe their role in the world is to bring about the ultimate confrontation in the Middle East. It is unlikely that Israel could prevail against a serious attack by Iran without the use of nuclear weapons. It seems that many in this country are so obsessed with petty partisan politics they choose to ignore the real possibility that we are on the verge of nuclear war.

Thursday, June 20, 2019

Only point of unity is hatred of Trump



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Poor Joe Biden is now becoming the target of the rest of the democratic candidates. They almost all slammed him for reminiscing about a time in the U.S. Senate when people could disagree on issues, but continue to work together. This is now considered unacceptable by his opposing candidates. We will see if he stands his ground or decides to apologize, either response will be considered unacceptable.

It seems the Democrats are still expecting to run under the Obama strategy, which is to encourage maximum racial division to maximize the African-American vote. They must be feeling insecure about this vote as they are now endorsing a reparations plan. Trump has been touting a historic low unemployment rate. I guess reparations sounds like a better deal than a job or opportunity. Are we now going to see a bidding war by democratic candidates to see who will promise the best deal? The chances of any reparations becoming a reality are slim and the more sophisticated black voters may very well see this as a fake issue to garner their votes.

It looks like the media and Democratic establishment are already dressing up Elizabeth Warren as their back up candidate if Biden cant get it done.

The Democratic debates will prove interesting, it seems the DNC has already grouped their candidates with a warm up group on the first day and their headliners on the second day. It may get testy by the time of second debate after they weed out more candidates.

Bernie Sanders is still the best campaigner in the bunch, he may very likely get a boost after the debates. He scares the hell out of the Washington establishment. if he would actually win the nomination, watch as they try to place their candidate as vice-president.

Their most intelligent and well spoken candidate is Mayor Pete, but it is doubtful the country is ready for a first husband in the white house.

It is doubtful Biden is ready for the marathon of a presidential race, any more stumbles and he will be jettisoned by the media and the establishment. He is without a doubt the choice of the Washington establishment and the never-Trump republicans, who still exist, but have been driven underground by the Republican base.

Trump's announcement rally went off like a fireworks display, it was taken notice by his opposition both in and out of the party. This will be the wildest campaign in history. The Democratic candidate better be tough and innovative.

You can also bet that this week of Trump has also been noticed around the world. Anyone who has been listening to the ex-Obama administration people, promising to give them a better deal when they replace Trump, may be more inclined to make deals with Trump now. You can bet that Trump will be conveying to his opponents and trading partners that he may be a lot tougher in a second term.