Bad Economic Choices – 38

The new tax policy was designed to punish blue states because they have higher local and state taxes. Corporations get permanent and big tax cuts that only benefit the rich. Repatriation of overseas corporate wealth will go towards stock buybacks, C-level bonuses, and shareholder dividends. Decisions to invest in R&D and hire more employees are business decisions that are made because of business conditions and not on-hand liquidity. These tax cuts will result in a tax revenue shortfall of 1.5 trillion dollars or more. Trump is counting on big growth to cover the tax cuts that will not likely happen because of his policy choices.

Trump’s administration leads in the highest administration turnover in history. financial markets need stability to thrive. Trump has introduced unprecedented instability in peacetime.

https://www.wsj.com/articles/trump-white-house-saw-record-number-of-first-year-staff-departures-1514457002

A new presidential administration takes a year or two before their policy has an effect on financial markets and the economy. The boom in stocks for 2017 was thanks to the Obama administration. Maybe there was hope that a businessman turned president could carry the torch and make America prosper. Sadly I see only future economic downturn based on Trump’s policy, so far. Obama inherited a banking crisis, housing bubble, and pending global financial collapse. He turned it around, at great cost – the national debt grew tremendously. But everyone in both the Presidential administration and congress did what they had to do to save the USA and the world from the brink of economic catastrophe. I feel that Obama is an unsung hero here.

Trump wants to build a wall and deal with mass shootings by adding security to schools. This not only fails to solve the problem at a fundamental level but will cost the USA hundreds of billions of dollars a year.

Trump wants to deport as many illegal immigrants as possible to appease his racist and xenophobic base. This will cost the USA economy a tremendous asset – immigrant workers do the work Americans refuse to do such as farm-work, hospitality, construction, landscaping, food processing, and much more. American business will be hurt by this and there will be domestic economic fallout like price spikes in retail and services, and businesses going under.

The trump administration has clamped down on travel of Muslim dominant countries. This is a mistake because a quick Google search will show that the countries he imposed the travel ban on are not the ones where the 911 terrorists came from. The ban is irrational and has no foundation in cause or data to back the decision. A lot of STEM workers come from those countries and others, workers needed to fill the shortfall that employers have in the USA. Also, other countries are beginning to boycott the USA and not travel here for vacation or to come here for work. We have many unfilled jobs that will go unfilled because we lack the talent. We have lots of unemployed steel and coal workers, too bad they don’t go back to school and get trained in STEM fields, and too bad the government doesn’t sponsor some program to help displaced American workers re-educate, but that would be labeled socialism and government spending, so it isn’t done. Sad!

Remember that the USA is riding a 10 year bull market. The markets run in cycles. It’s time for a correction and everyone sees it coming. The economic policy Trump is choosing assumes a bull market and growth. I fear because of his choices America is being positioned for a hard fail.

The worst choice Trump has made recently is Tariffs. I saw no negotiations leading up to the tariffs. A tariff war is a worst case scenario. Everyone loses in a trade war. Like it or not the new era of economics is globalism. It always has been most advantageous for all parties concerned to trade and expand the market to the largest extent possible. Trump’s policy of nationalism is very bad for the USA and the globe. Protectionism is a losers game. Rather than that, we need to innovate. Look how Microsoft, Apple, Facebook, Google, and Amazon have prospered by looking outward and doubling down on globalization. To hide in your house rather than go outside and participate is a losing strategy. Trump pulled out of TPP and is looking to end NAFTA, and the truth is we stand to benefit from these agreements. We certainly won’t benefit from being left out of them. Which is exactly what is happening. Germany and China have stepped up to take the role of world leader. How does the USA stand to win with that strategy? If history repeats itself then we will probably end up in a large scale war because that is exactly what isolationism leads to.

China is playing the smart game. Sure they are playing dirty. If we can’t out smart them we will lose. I am surprised Trump chooses to retreat inside our borders rather than out-wit and out maneuver the other global powers in an economic game of chess. This leads me to believe he is not nearly the business man he played himself out to be. Sad!

By |2018-03-17T10:30:32+00:00March 12th, 2018|movies and music, Podcast, Politics|0 Comments

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