Nel's New Day

August 25, 2019

Recession Looms, Unconstitutional Demand

Filed under: economy — trp2011 @ 10:15 PM
Tags: , , , ,

The use of “dictator” for Dictator Donald Trump (DDT) may be a misnomer.  He approvingly retweeted a comment from a radio host that “Jewish people in Israel love him like he’s the King of Israel. They love him like he is the second coming of God…” He followed that by saying “I am the Chosen One” while looking meaningfully up at the sky. He was supposedly talking about tariffs on China. Earlier in the week, he accused Jews who vote for Democrats (79 percent of them in 2018) of showing “either a total lack of knowledge or great disloyalty,” meaning to Israel as if U.S. citizens swear fealty to a foreign country.   

DDT panders to evangelical Christians because Jews don’t believe in the second coming. Evangelicals refer to Jews as “uncompleted Christians,” that they still need to come to Jesus.

One response:

“Matthew 24:24 – ‘For there shall arise false Christs, and false prophets, and shall shew great signs and wonders; insomuch that, if it were possible, they shall deceive the very elect.’”

Self-identified evangelical Jay Lowder did call equating Trump with God “blasphemous and sacrilegious.” He added that the “antagonism” toward evangelicals will increase if they support a double standard for DDT’s “actions, policies, or behaviors” and will be forced “to do the same with the next president.”

DDT’s accelerated tariff fight caused the stock market to go on a roller-coaster ride, the Dow Jones down almost 400 points last week after dropping over 600 points on Friday. The volatility came as DDT increased tariffs onto China, China increased them on the U.S., and DDT ordered private companies not to deal with China. After the stock market closed Friday, DDT again increased the tariff percentage on Chinese goods.

Earlier, DDT delayed new tariffs on Chinese goods from September 1 to December 15 but will raise tariffs on $250 billion in Chinese imports from 25 percent to 30 percent starting Oct. 1. In addition, tariffs on $300 billion worth of other goods would increase from 10 percent to 15 percent on the December 15 tariff. DDT decided to punish China by withdrawing from the 192-member Universal Postal Union that set international postal rates for over 150 years. If nothing changes by DDT’s deadline in October, mail service will be disrupted for U.S. voters living abroad and cost them $60 to return their ballots.

DDT excluded some tariffs as favors to his base: no bibles although books are fined; no Chinese processing of salmon and cod caught in Alaska although pollock is not protected; no chemicals used for fracking; zirconium for airplanes, even civilian ones; aluminum oxide for steel manufacturers already protected by earlier tariffs on imported steel; shipping containers for big companies like J.B Hunt and CSX. These items were exempted for “health, safety, national security and other factors (aka favoring his voter base).” Legally, DDT can put tariffs on products only for the reason of “national security,” yet his first tariffs were on washing machines to protect “national security” for Whirlpool. Meanwhile U.S. Steel is laying off hundreds of workers the week after DDT bragged about how he had made the company strong.

After 13 failed trade war talks with China, DDT’s Friday tweets were particularly vicious:

“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Trump also “ordered” the U.S. Postal Service and private companies like FedEx, Amazon, and UPS to search packages from China for fentanyl and refuse delivery. DDT claims that he has the power to force private companies to change their business practices because of the 1977 International Emergency Economic Powers Act that targets rogue regimes, terrorists, and drug traffickers in commerce regulation. Earlier this year, he threatened tariffs on Mexico with the same law because of southern border crossings. By today, he said he had no plan to call a national emergency. (DDT’s Trump Organization has business ties with China; both he and daughter Ivanka Trump have multiple trademarks in China.)  

In its editorial, the conservative Wall Street Journal wrote: 

“Somebody should tell Chairman Trump this isn’t the People’s Republic of America.”

The tariff situation became more confusing today when DDT said that he may be second-guessing his tariff attack on China. Five hours later his press secretary Stephanie Grisham wrote he DDT “regrets not raising the tariffs higher.” G7 Summit leaders reported on DDT’s disastrous trade war, but he said, “Nobody’s told me that.”

The volatile stock market leads to fears of a recession although DDT denies the possibility. He said, “Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.” Yet 39 percent of people in the nation don’t have enough cash to cover an unexpected $400 expense. DDT sent Larry Kuklow and Peter Navarro to Sunday talk shows with the intent of misrepresenting the current economic situation and railed about how, despite the facts, a possible recession is a conspiracy against him.  

DDT claims he has a strong, “powerful” economy, but he proposed steps for an extremely weak economy. White House officials first considered a cut in payroll taxes for Medicare and Social Security to make up for the tax cut for wealthy and big business that DDT will use to eliminate Medicare and Social Security. Other ideas which might also require Congressional approval were a currency transaction tax weakening the dollar (currency manipulation), rotating Federal Reserve governors to check Powell, and lowering the corporate tax rate to 15 percent to spur more investment. DDT also went back to badgering Powell for a one-percent reduction in interest rates, calling him the same kind of enemy as China’s president Xi Jinping. DDT would save millions of dollars in lowered interest rates. He has already benefited from the decrease in July’s Fed Reserve interest change.

After the Labor Department accurately revised job gains from April 2018 to March 2019, DDT lost over 500,000 jobs. Average monthly job growth dropped to 170,000—9,000 less per month in 2017—with the biggest losses in leisure/hospitality, professional/businesses services, and retail. According to the Federal Reserve Bank of New York, the probability of a recession within a year is the highest since the last financial crisis.

Other recession indicators are the skyrocketing deficit (higher even than expected), GDP drop to 2.1 percent in the second quarter, dropping tax revenues, and consumer confidence at a seven-month low. Wealthy buyers are pulling out of expensive housing markets, and RV sales are down over 20 percent. Car sales are drastically dropping, bankruptcy filings are steadily increasing, major retailers shut down more stores, tech companies are cutting costs, and U.S. freight shipment volume has fallen during the past 8 months, threatening a negative GDP by the end of the year. Both credit card debt and late payments are on the rise. The U.S. manufacturing purchasing managers’ index (PMI) fell to 49.9 in August from 50.4 in July, the first time it was below 50 since September 2009, and exports sales fell at the fastest pace since August 2009. Falling exports cause reductions in inventories, cuts in productions, and loss of jobs. The problems ripple across the economy because manufacturing affects every part of it—business services, distribution, transportation, etc. The fall in manufacturing output during the first six months of 2019 entered a “technical recession.”

The Dow looks good, but DDT’s percentage of increase at 32.2 percent is below that of Democratic presidents at the same time of their first term—Clinton at 39.3 percent and Obama at 45.2 percent. DDT’s only accomplishment is a low unemployment rate, but it was headed there when he was inaugurated. A look at DDT’s chaotic response to the financial problems he caused, and a comparison of the DDT and the Obama economy in 15 charts. 

DDT thinks that dropping interest rates will get him re-elected, but they will damage savings and be devastating for blocking a recession. Buying a year or two with lower interest rates would create a massive credit bubble like the subprime mortgage crisis over a decade ago. The current risk comes from huge corporate debt, especially high-yield bonds. Dumping these at one time at low prices would culminate in a disaster, especially if lenders bought corporate bonds with low-interest loans, and lenders may be forced into more debt. With the weak expansion, sellers may have no buyers, and companies won’t be able to service debt.

DDT started out with a solid economy, and everything he does is designed to ruin it. He is damaging not only U.S. economy but also that in other countries with conservative leadership. UK’s Brexit vote preceded DDT’s election by a few months, but Boris Johnson is pushing the nation into disaster with half Britain’s farms poised to fail. Brazil’s new DDT-style leader, Jair Bolsonaro, has made no reforms to pension and tax systems that undercut economic growth. Italy’s enormous debt and annual deficit led to the collapse of its government and the resignation of Prime Minister Giuseppe Conte after his election 14 months ago—the second election in 18 months.

Frank Rich wrote an excellent article on DDT’s panic about the economy and its destruction because of DDT’s policies. Future generations in the U.S. will have nothing, and DDT cares about nothing except getting re-elected. 

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