All in Economics

Tariff Man Breaks Windows

Boehm points out that the 300 hundred jobs came to life after “American companies have paid about $690 million in tariffs to the federal government.”  That works out to $2.3 million per job we know about or $300,000 per possible job.

The Trouble with CoCo

CoCos are similar to trust preferred debt that community banks in the U.S. stuffed balance sheets with in the early 2000s.  While trust preferred was debt, the terms were so liberal, banking regulators allowed banks to count the debt as equity.

Optimism Abounds, Dark Clouds Circle

The economy is great we’re told.  Vote Republican and get more of it. “It” being--winning.  However, the KBW Bank Index hit a 52-week low today.  The index of small bank stocks is getting hammered. The index of European bank stocks continues to be bludgeoned by the market. And, the home builder’s index peaked in January, with big builders Lennar and DR Horton now making 52-week lows.  

The Real Rialto

However, that’s not what Rialto is (or was) at all.  Rialto Capital Advisors conducted  day-to-day management and workout of 3.05 billion in loans the Federal Deposit Insurance Corporation (FDIC) received after it closed down banks during the financial crash.

Dimwit Minimum Wage Logic

If Bernie were paying attention, there is a minimum wage experiment going in real time in Venezuela right now.  Sure, there’s some serious money printing going on there and plenty of socialist schemes to keep the shelves empty.  However, the fact there’s nothing to buy hasn’t kept Venezuelan president Maduro from hiking that country’s minimum wage 24 times since 2013 when he took office.  

Tariffs to Socialism

Trade wars create winners and losers, at home and abroad.  American consumers lose, as the prices are hiked while capital and labor are misallocated. This makes everyone, over time, poorer--even the tier two real estate developer.

Trump Channels Tricky Dick

There’s plenty of blather that Trump is breaking with presidential norms by criticizing Jerome Powell’s rate hikes, but, the Donald is merely channeling Richard Nixon.  When Nixon appointed Arthur Burns to be Fed Chair in October of 1969, Burns was soaking up the applause during the announcement of his appointment when Nixon broke in, saying, “You see, Dr. Burns, that is a standing vote of appreciation in advance for lower interest rates and more money.” Later, in private, Nixon told his new Fed Chair, “You see to it: no recession”

Tax Evasion: Goooooaaaallll!

Ronaldo and Messi take elaborate steps to keep money they’ve earned away from the government of Spain. Bagus and his colleagues point out the benefits of their actions.  “Lacking a removal or reduction in tax levels, evasion will allow for an at least partial reinstatement of individuals’ rights of association, with resultant improvements in ethical considerations as well as economic efficiency.”

Merger Malinvestment

The primary problem is size itself. Ludwig von Mises explained that socialism doesn’t work because there was no market to determine prices and thus calculate how resources should be used. Behemoth companies are no more immune than government bureaucracies.  

Tariffs: Stealing Entrepreneurs' Profits

Consumers decide what they will pay and determine value.  Tariffs, the use of political force, determines where the buyer’s proceeds end up. Favored industries receive more and the entrepreneurs receive less, lowering their profits and making them less likely to take future risks in a similar political climate.   As a real estate developer, the President should know better.

Trumping to Serfdom

Hayek wrote that psychopaths, er politicians, have to “weld together a closely coherent body of supporters”...appealing “to a common human weakness. It seems to be easier for people to agree on a negative programme – on the hatred of an enemy, on the envy of the better off – than on any positive task.”