Saturday, August 14, 2021

Biden is making the wrong call

My good friend Nuni Cademartori was nice enough to create this cartoon for your viewing pleasure while we enjoy the beach. It's particularly apt with Congress set to vote in the coming month on mega-spending atrocities the likes of which have never before been seen in the wild. At a time when the economy's main problem is dealing with pent-up demand on top of supply and labor shortages, throwing a few more trillion around could make things considerably worse. And it's doubtful whether the Fed would be willing to tighten in the face of a new spending storm. Fiscal overreach and rising inflation are thus the twin monsters threatening our economy right now.

Our economy needs to be free right now, as in free from government meddling. It most certainly does not need more debt!


JJ said...

I'm curious about your opinion. Most of the spending as I can tell is about infrastructure. The American Society of Civil Engineers rates our infrastructure at C- and that it will cost over $2.6 billion to bring it to B. From my perspective, it seems this spending is more targeted and beneficial to the economy that what we have seen in some time

Scott Grannis said...

From what I've seen, 25% of the spending is on supposed "infrastructure." Not much if any of that will translate easily into a healthier, more efficient economy. Spending on public transport is notoriously inefficient. California has flushed tens of billions of dollars down the bullet train hole. Demanding that federal spending projects pay prevailing union wages is not going to make the economy more productive, since it artificially inflates the costs of the project. The bulk of the spending will go to pet Democrat consituencies and projects and subsidies. Why are we subsidizing electric vehicles? There's no way in h*ll that is going to make a difference to global climate. Big spending projects always involve graft and corruption. Obama's infrastructure spending is a good example, in which less that 20% of the money actually went to "shovel ready" projects.

In any event, there is no way the federal government can fix infrastructure in 50 states. That has to be a local decision. Washington should not be involved. You don't trust locals to fix their own infrastructure? By what logic will bureaucrats in DC do a better job? I could go on and on.

Benjamin Cole said...

You think the federal government can't build a nation?

But look at our successes in Vietnam, Iraq and Afghanistan.

randy said...

I was a little too young to be aware during the fall of Saigon. So Afghanistan is the most awful foreign operations outcome in my lifetime. Depressing to watch it unfold in real time. Good arguments whether we should have pulled out or not, or whether we ever should have stayed from the beginning. But no matter that - the failure to plan a more orderly withdrawal, protecting who we needed to protect, assets we needed to protect - is unconscionable. Perhaps Trump would have done no better, but he wasn't running the shit show that is happening. This administration is a bigger mess than I imagined possible. I've got a good imagination.

Benjamin Cole said...

Biden-schmiden, Afghanistan, Schmafganistan.

S&P now double---double!---March 2020 lows.

I am no fan or Biden. If there is a less important country on earth to US prosperity than Afghanistan....

Johnny Bee Dawg said...

Kyle Bass claims one province in Afghanistan has the single largest known deposit of Lithium on Earth.
“The Tigress & Euphrates of the world's lithium supply, which is key in Joe Biden's Green New Deal and his coming Electric Vehicle mandates".
“Afghanistan is another important notch in China’s “Belt & Road Initiative. Key to their plans to dominate world trade.”
JBD sez: US citizens will be buying tons of Afghan Lithium from China for batteries to power Joe’s new coal-powered electric cars.

Meanwhile, Joe took a victory lap yesterday in his big speech, blaming everyone but himself for the disastrous exit and abandonment of our ally. Then he literally RAN away from the shouting press to go on vacation.
2 observations:
That is the first press corps I’ve seen raise its voice that angrily at a DEMOCRAT President in decades.
That was the fastest Joe has run since chasing his dog naked after the shower.
No wonder Jen abruptly took the week off!

Biden voters should take a gander at the videos appearing on the internet of Taliban taking children from homes to give as presents to leadership. And then executing everyone else from the homes in the streets. Very non-chalant. There’s another video of Taliban riding around hundreds of dead bodies in the streets on their new motorcycles. And of course they are uploading videos where they catalogue piles and piles of their new US weapons. JACK allows the Tainan to maintain their Twitter account, while banning the former POTUS.
Could you even make any of this up?

CNN Reporter: “The Taliban is chanting ‘Death to America’, but they seem friendly at the same time.”

JBD sez: Americans in this New World don’t care what Politicians do to them or the Constitution, as long as the Federal Reserve drives their stock market to all-time highs. Stock Market is the soothing balm for Modern Man.
Oh, it’s already time for your “booster shots”. Your last one is wearing off.

Fred said...

What's more terrifying is the probability that the Covid virus was engineered in Wuhan to be more transmissible in humans and mutate so as to escape vaccines. Accidental leak or intentional? Of course the Left keeps telling us that President Xi has only peaceful intentions and doesn't really think China should rule the world. And there was nothing to his decision to restrict Wuhan residents' movements domestically but allow them to travel internationally in the early stages of the pandemic. But don't worry- all of you who absolutely had to kick Trump out of office are happy now that we have such a competent leader in Joe Biden. He'll kick China's ass right after he takes care of the Taliban.

The Cliff Claven of Finance said...

If president Biden, or whoever calls the shots,
WANTED to ruin the nation,
I don't see how he (they) would have to change
anything he (they) are doing.

From high inflation to open borders
to the Afghanistan debacle to social media
censorship to massive election fraud
to vaccine mandates to critical racist theory.

It seems like a plan developed by Red China
to weaken our nation.

Benjamin Cole said...

Call me optimistic, but I think the worst is over for inflation.

Commodities acting soft...and broad commodity indices are about there they were 10 years ago.

The one-offs, like used car prices, are coming back to earth.

Unit labor costs are under control.

Housing remains a monster, a very serious national problem. Both parties are jibber-jabbering about everything except how to sharply ratchet up new housing supply. Yes, there is terrible inflation in rents and house prices.

Inflation subdued in China, Japan, Europe. Thailand, Indonesia.

Moderate inflation in India. Some in US.

wkevinw said...

Benjamin Cole- on housing.

Yes, there is a structural gap in housing and all durable goods (+ industrial production).

Housing is a difficult one because households are smaller now (smaller "families"), and housing units now provide more sq ft/person. So, it's a mixed bag.

An economy that has declining durable goods for 3 decades and flat industrial production for 2 decades is hard to call healthy. Housing is part of that.

Benjamin Cole said...


You mean offshoring the capacity the build anything has unintended consequences?

But the globalist think tanks have theories to explain all the upsides....

wkevinw said...

If you are interested in an academic study about manufacturing decline in the US, see:

Understanding the Decline of U.S. Manufacturing Employment, Susan N. Houseman
Upjohn Institute for Employment Research

Without the computer industry, there is no prima facie evidence that productivity caused manufacturing’s relative and absolute employment decline. This paper discusses interpreting labor productivity statistics, which capture many factors besides automation, and cautions against using descriptive evidence to draw causal inferences. It also reviews the research literature to date, which finds that trade significantly contributed to the collapse of manufacturing employment in the 2000s, but finds little evidence of a causal link to automation.

Benjamin Cole said...

Worthwhile to look at.

See also

So Europe runs a persistent goods trade surplus with Japan, but the US runs a persistent goods deficit.

Sure. Comparative advantage explains it.

Unfortunately, macroeconomic theorists inhabit a parallel and imaginary world....

Benjamin Cole said...

Nasdaq: another all-time record high. Forward looking?