pafret Loc: Northeast

"MAGA: Mission Accomplished?"


"MAGA: Mission Accomplished?"
by Bill Bonner

POITOU, FRANCE – "Well that was easy! After less than two years in office, Trump says it’s “mission accomplished.” A p**********l tweet: "I have already MADE America Great Again, just look at the markets, jobs, military – setting records, and we will do even better."

Hey, hey… we used to think a nation was made great by its hard-working people… its sturdy institutions… its capital formation… its art and culture… and its vernacular of unwritten rules and manners. But now, we see how all it takes is one man…one genius… one brave patriot… one tireless advocate for all that is great.

Poor Herbert: Poor Herbert Hoover. What went wrong for him? If a great man can single-handedly make America great, how come Hoover – who took office shortly before the 1929 stock market crash – failed? Unlike Mr. Trump, who inherited a fortune from his father, Hoover was orphaned at nine years old. He got himself through Stanford by working odd jobs… and became a mining engineer with projects in Australia, China, Russia, and South Africa.

While in China, he and his wife learned the language, and later used it to have private conversations in the White House. In China, too, he was besieged in the Boxer R*******n. Mrs. Hoover used a .38 caliber pistol to fight off the insurgents. In Burma, Hoover survived malaria.

In less than 20 years, Hoover rose to become a very wealthy man, helping to put in place major new innovations in metallurgy in his mining interests all over the world. He gave lectures at Columbia and Stanford, wrote a textbook on mining, and even t***slated the 16th century classic, "De Re Metallica," from Latin.

During World War I, he managed the food program in the U.S. and the food relief program for victims of the war in Europe. After the war, there was mass starvation in Russia, naturally, after the Bolsheviks had taken over. Working 14-hour days from an office in London, Hoover met the challenge as he always did, as unstoppable in his public service career as he had been in business. Rejecting appeals from Congress to let the Bolshies die, he replied: "Twenty million people are starving. Wh**ever their politics, they shall be fed!" And fed they were.

So if there was anyone who could Make America Great Again after the Crash of ’29, it was the man in the White House, President Herbert Hoover. He promised as much (but did not presume to be able to do it by himself): "We shall soon, with the help of God, be in sight of the day when poverty will be banished from this Nation."

Alas, even Herbert Hoover could not do the trick. The Great Depression began on his watch. It did not end until World War II. Maybe Mr. Trump is smarter, more dynamic, or just luckier… Possibly. But the gods lay traps for those who think they are… and laugh at them later. But let’s do as we have been bid to do. We will look at markets, jobs, and the military.

Inflating Employment: First up, jobs… Our colleague and President Reagan’s budget advisor, David Stockman, writes that, while the official unemployment rate has gone down, the number of full-time, “breadwinner” jobs in America, as reported by the Bureau of Labor Statistics in July, was 73.83 million. When the century began 18 years ago, the number was 72.73 million. Only 1 million decent new jobs have been created – while the U.S. population has grown by 48 million people! Almost all the rosy jobs numbers are traceable to 1) people dropping out of the workforce, 2) low-paid, part-time jobs in the leisure and medical service sectors, and 3) inflation.

More than 50 years ago, a sharp French economist, Jacques Rueff, noted cynically that the reason inflation seemed to boost employment was that real labor costs declined as the currency depreciated. Labor was cheaper; employers bought more of it. In other words, it was a way to rob the working stiffs without them realizing what was going on.

That is what is happening now. The inflation reading for July was 2.9%. Officially, wages are said to be increasing by about 2.8%. This means the typical worker is now getting poorer. His main asset – his time – is losing value. How does that make America great again?

Extra Sugar: Next up, the military. When America really was great – the 1950s – President Eisenhower was cutting military spending, not adding to it. As a soldier himself, Eisenhower knew the Pentagon operated like every other Deep State bureaucracy – gathering power and money to itself… while neglecting its core mission. Trump’s extra sugar for the military will make America poorer… and weaker.

Finally, the markets. To cover some old ground… the Fed is predictable. It is always making one of three mistakes: Mistake #1: lending too much for too little for too long… Mistake #2: raising rates to try to correct Mistake #1… or Mistake 3: cutting rates in a panic after Mistake #2 causes a crash.

After the crash of ’08–’09, it made the biggest Mistake #3 ever: pumping nearly $4 trillion into the credit markets through quantitative easing in order to get interest rates down to zero. Real rates (after inflation) were even lower. And even after being in “tightening mode” (Mistake #2) for the last two years, the fed funds rate – the rate at which banks lend money to each other – is still below the level of inflation.

The biggest Mistake #3 of all time produced the biggest stock market rally of all time… which finally peaked out on January 26 of this year. Since then, we’ve been waiting to see how and when the stock market will get down off the ledge.

So far, it has failed to take the leap. In addition to the Fed’s negative real rates, buybacks – when a company buys its own shares and “erases” them from the board – have held it back. Goldman Sachs says buybacks will hit $1 trillion this year. A stock buyback is an odd thing in a great economy. It suggests that the managers of companies can think of nothing better to do with company money than buy their own shares. Buying your own shares makes your business look more valuable… But it doesn’t increase sales or profits. And it doesn’t add jobs, productivity, wages, or anything else that might really make America great.

Capital investment – building new factories, offering new jobs, doing more training, research and development… is what brings home the bacon. But capital investment has been in decline for 50 years. In 1968, the U.S. dev**ed 24% of its GDP to capital investment. In 1988, the figure was 22%. In 2008, it was 20%. And now, it’s about 17%.

By most measures, stocks are way overpriced. And sooner or later, we should see the kind of crash that wrecked Hoover’s reputation. Then, we’ll see what it does to Mr. Trump’s reputation, such as it is."
- https://bonnerandpartners.com/

Floyd Brown Loc: Milwaukee WI

All in all I would say that is what we are seeing happen.

buffalo Loc: Texas

Excellent, pafret! Bonner is spot on. It is coming, just a matter of how long they can put it off and the longer the worse it will be. It will most certainly be put off long enough until the well connected wealthy can position themselves to profit from insider trading and market manipulation just like in 1929. Joe Kennedy comes to mind...Hmmm...

lpnmajor Loc: Arkansas

It's a movie entirely computer generated, like the LEGO movie. Can't wait to see the trailers.

woodguru

I'm seeing all of the myriad of things he is doing that have longer term effects, his tariffs aren't even beginning to hurt yet, although we can see that they will.

Gas prices are going up, that is something people feel every time they fill up, yet as they go up businesses who rely on vast amounts of fuel see profits decline well before they start adjusting their prices to reflect their costs, airlines, UPS, FedEx, Trucking companies that deliver everything we touch. Prices on gas goes up and a year later everything starts hitting people, winter comes and propane and heating oil costs send a shock wave through those barely getting by.

Comment Loc: California

Mr. Bonner is really spun out. Almost all of the trash paper is just trash. I know intimate knowledge of what caused the financial crash of 08 and it was not Bushes causing; but Jimmy Carter's and Billy Boy CLINTONs. I dare say to U Mr. Poster that U have no knowledge of the "Redevelopment and Reinvestment Act" of 1977. Nor do U have any knowledge of "Redlining." Maxine Bigmouth Waters stood on the house floor and said, " Every body should be able to buy a house." Stupid decisions of congress and Democratic presidents under the pressures of the "discrimination hysteria" of the time, almost brought down the financial system of the United States. Look out for what you look for U could likely find something else entirely.

Floyd Brown Loc: Milwaukee WI

Now if we could get a grasp on just who or what really starts the rise in costs. I think we would know better what to do in controlling cost.
Even if you say it is the market place,.
Some one is always first.
Others follow in in rapid order.
Or is it a group of people that get together & say it is time to raise prices.

pafret Loc: Northeast

So, enlighten us. Simple statements of what I do not know are useless; there are so very many things I do not know and it is impossible to list them because I do not know them.

At what point does an incumbent President have to stop blaming his predecessors and assume responsibility for the nation as it stands? If the points you mentioned are historically significant what should the Leader of this nation do about rectifying those issues?

Telling me that I am ignorant does not advance or illuminate the discussion. If you have intimate knowledge then tell us.