Category Archives: Economy

Trump’s Economic Siren Song

Siren Song The words “Trump” and “plan” should really never be used in the same sentence. Witness the speech to the Detroit Economic Club.  Here’s what the Reuters News Service gleaned from Trump’s speech:

“Republican presidential nominee Donald Trump on Monday proposed tax breaks for working families and for corporations as he outlined economic plans in an effort to regain momentum lost during a damaging spate of controversies.

Trump said his plan would include imposing a temporary moratorium on new federal regulations and a reduction to the tax burden on working parents with childcare costs.

He proposed cutting the number of federal income tax brackets from seven to three and reducing the top rate to 33 percent from 39.6 percent. He had previously said he would drop that rate to 25 percent, an idea many tax experts said would dramatically reduce government income and balloon deficits.”

First, notice in the second line of the article quoted above that Mr. Trump “outlined economic plans,” NOT offered any specifics —  those will come later, just as every other suggestion made by the Republican nominee will come later, if at all.  If ever.

The Rich Get Richer and 88.7% Get Nothing

Secondly, those “tax breaks for working families” aren’t for all working families just some of them – even the Wall Street Journal noticed:

“It wasn’t clear how such a tax break might be structured and whether it would be available to tens of millions of families that don’t pay income taxes because they have lower incomes. Making child-care expenses fully deductible would provide much larger benefits to the wealthiest families that have larger tax bills.”

Nice.  However, we can clarify this to some extent.  The Tax Policy Center offers this information about working families, tax bills, and who needs the help the most:

“Only 11.3 percent of households in the bottom income quintile will pay federal income tax in 2015. In contrast, 59.3 percent of households in the lowest income quintile will owe payroll taxes. Combined, 60.3 percent of households in the lowest income quintile will owe federal income or payroll taxes.

In many cases, low-income households owe no income tax. That’s because, in 2015, a married couple with two children can exempt $28,600 from income using the standard deduction and personal and dependent exemptions. Generally, smaller amounts can be exempted from smaller households and larger amounts from larger households.”

The arithmetic is simple. Only a bit over 11% of households in the bottom income quintile owe federal income taxes – and these are the ones which would benefit from Trump’s “deduction.”  What the other 88.7% of the families in that quintile get from Mr. Trump’s “plan” is nothing.

Deregulation

We’ve heard this song before.  More specifically, a campaign aide told the Wall Street Journal, this means Trump wants to slash EPA regulation on carbon pollution, and halt the preservation of wetlands and waterways.  Nothing new here.  It’s the same GOP rhetoric of old, conflating all regulation with EPA and conservation rules.  This, while 1/3rd of the residents of California still lived in areas as of 2014 which did not meet Clean Air standards. [LA Times]

Reporters slid by deregulation of the financial sector (read: Wall Street Casino) However, this past May the Republican candidate called for dismantling the Consumer Finance Protection Bureau, and reversing the regulations in the Dodd Frank Act.  [Fortune]  There’s nothing new here either, just more generalized GOP talking points.

Jolly Little Trade Wars?

“At the same time, Mr. Trump has promised to aggressively use executive power to renegotiate trade agreements, to label foreign countries as currency manipulators and to apply tariffs and other penalties to trading partners.”  [WSJ]

Lovely.  First, China is our Number One import partner.  Mexico is second, and Canada third.  [Census FT]  We’ve imported $212.2 billion worth of stuff from China thus far this year; $145.2 from Mexico; and, $137 billion from Canada.  Not surprisingly these three are also our top three export partners, in order: Canada, Mexico, and China. [Census FT] Is Mr. Trump truly suggesting that we get into economic battles with our top three economic partners?  Are we really going to benefit from practicing Hoover-ian Protectionism in relation to our top three partners?

Trump said:

“At the center of my plan is trade enforcement with China. This alone could return millions of jobs into our economy.

China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable. China engages in illegal export subsidies, prohibited currency manipulation, and rampant theft of intellectual property. (65 66) They also have no real environmental or labor protections, further undercutting American workers.”

[…] Trade has big benefits, and I am in favor of trade. But I want great trade deals for our country that create more jobs and higher wages for American workers. Isolation is not an option, only great and well- crafted trade deals are.” [Time]

Yes, Chinese manufacturing policies are heinous.  However, what Mr. Trump has on offer IS protectionism and isolation; no matter how politely it’s phrased.   Or how vaguely it’s expressed, as on Trump’s website explanation.  Missing from the Detroit address and the website mentions are the 35% tariffs Mr. Trump proposed last May. [National Review]

Further, Mr. Trump appears to be operating on the happy delusion that simply declaring China to be a currency manipulator will force them to re-negotiate our trade deals.  Not. So. Fast.  Manipulation is in the eye of the beholder.

“Reasonable people can and do disagree about how countries conduct their monetary policies: what price should the central bank fix, or at what pace should that fix evolve. But to label as manipulation the conduct of monetary policy itself betrays a fundamental confusion about the operation and goals of central banks. If Zhou Xiaochuan,governor of the People’s Bank of China, is a currency manipulator, then Janet Yellen is an interest-rate manipulator.” [WSJ]

As is becoming all too noticeable, Mr. Trump’s understanding of the monetary policies involved is essentially shallow. The Wall Street Journal continues:

“Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries.

The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy.”

Sorry, Mr. Trump, it seems as though a bit more sophisticated understanding of exchange rates is necessary – and, no, merely declaring China a “currency manipulator” isn’t likely to do much, and certainly not much in terms of wages for American workers.  It really would do Mr. Trump some good if he’d check out the article by the Dean of the Tuck School of Business at Dartmouth in the WSJ. [ Also WPO Blog, CFR, and then of course there are the Federalists]  Little wonder Republican economists are jumping ship.

Bottom Line Towards the Bottom of the Barrel

It isn’t hard to summarize Trump’s “Economic Plan,” – first, it’s not a plan.  It is an aspirational outline of economic ideas, none of which are anything new. Romney suggested declaring China a “currency manipulator” during his campaign, and the anti-regulation rhetoric goes back to the 1971 Powell Memo. It’s rather more a laundry list of Republican wishes – deregulate, repeal the Affordable Care Act, bash China, and ‘act strong.’   In this, Mr. Trump seems to be unable to differentiate between acting and posturing.  The speech was all pose in bad prose.

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Filed under Economy, Politics, Republicans

Wage Discrimination is an Economic, not just family, Issue

Rosie Riveter

Consider the following report from the Institute for Women’s Policy Research:

“Women are almost half of the workforce. They are the equal, if not main, breadwinner in four out of ten families. They receive more college and graduate degrees than men. Yet, on average, women continue to earn considerably less than men. In 2015, female full-time workers made only 79 cents for every dollar earned by men, a gender wage gap of 21 percent. Women, on average, earn less than men in virtually every single occupation for which there is sufficient earnings data for both men and women to calculate an earnings ratio.”

DB’s ranted on about this before: (2013)

“Women are having a tough time in the present economy, and the situation isn’t made any better by the wage gap.  NPWF reports: ” In Nevada, on average, a woman who holds a full-time job is paid $35,484 per year while a man who holds a full-time job is paid $41,803 per year. ” (pdf)  This has some very real economic consequences for the state since 125,402 households in Nevada are headed by women. In 32,479 of those households the income is below the poverty line.  Thus 25.89% of those households are barely getting by.”

And on the GOP filibuster of the Paycheck Fairness Act (2014).  However, it really is necessary to broaden the discussion – equal pay for equal work is not just a “woman’s issue,” nor is it a “family issue.” It’s an economic issue.

Once more, let’s look at the reality of what happens when men and women aren’t paid equally for equal work.

In the state of Nevada right now, the average annual wage for a food service manager is $62,160. Pay ranges from $18.51 per hour to $46.97 per hour with a mean wage of $29.89/hr. [NDETR calc]  Let’s keep all the variables such as experience, tenure, and specialization, the same, and concentrate solely on what would happen if two people of the same level of experience, expertise, and skills were to be paid based on gender.  Let’s have our hypothetical male food service manager paid the annual average of $62,160 per year.  This means that our hypothetical female food service manager would receive 79% of that, or $49,106.

If both our male and female food service managers were being paid $62,160 per year, and if both were in the same household then the household income would be $124,320.  Now, here’s why this is an economic issue and not merely a “gender” one.

If our male and female food service managers are paid along the lines of the 79 cents for every dollar that holds nationally, then the total household income is reduced.  That $124,320 in total household income drops to $112,266, a reduction in income of $12,054.

That $12,054 is money NOT spent at the grocery store, or at the furniture store, or the clothing store, or at the restaurant, or the automobile dealership, or the carpet center, or the movie theater. It is NOT spent on educational expenses, books, and Internet service. It is NOT spent on sporting goods, family entertainment, or automobile parts and service.  It is NOT spent at the florists’ shop, or the cabinet-maker’s store, or the barber shop, or the beauty salon.  It can’t be spent because they don’t have it.

The only way to avoid talking about this simple arithmetic is to prattle on about “Job Creators” and the Trickle Down Economics Hoax. “Supply side economics” is a theory in search of statistics – it doesn’t work in the real world, and it never has.   If there is no demand for goods or for a service, there will be no jobs created.  And, there will be no demand IF people don’t have the money to spend for those goods and services.

Once more, here’s the First Law of Personnel Management:

First Law Personnel ManagementHow are businesses in this country supposed to SUSTAIN demand for goods and services if the female employees in the country, who are doing the same jobs as their male counterparts, aren’t able to contribute the same amount to the family’s disposable income?

So, tell me, how do we grow the economy of the United States of America, an economy based in no small part of consumer spending, if we artificially limit the amount of income contributed to family coffers by women?

There are 123 million women ages 16 and above in the United States, and 72 million (58.6%) are working or looking for work. Women are now 47% of the total U.S. labor force, and they are projected to account for 51% of the increase in the total labor force between 2008 and 2018.  73% of employed women are working full time, while 27% are employed on a part time basis. [DoL]

We are no longer talking about the “little woman” working outside the home for some ‘pocket money.”  We are talking about two-income families, both incomes being necessary to move toward the middle class life style or to maintain it.   If a family of four, with an annual income of $112,266 lives in the Las Vegas metropolitan area, their income is comparable to 56% of those adults in that area. That’s the middle. [Pew Calculator] Diminish the second income and we diminish the whole.

Diminish the whole and we diminish the potential for economic growth.  Equal pay for equal work is simply dollars toward a stronger economy and old fashioned common sense.

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Filed under Economy, labor, Nevada economy, Politics, sexism, women, Women's Issues

And They Voted To What? House GOP wants to drop the new fiduciary rule

Money Pile 2

The Republican leadership of the U.S. House of Representatives did try to do some business in the midst of the Democratic representatives’ sit in, and a miserable bit of business it was.

“House Republicans on Wednesday failed to muster the two-thirds majority needed to block the Obama administration’s controversial standards for financial advisers.  The House voted 239-180 to block the fiduciary rule, well more than 40 votes short of the total needed.

Wednesday night’s vote came as Democrats staged a sit-in on the House floor, starting around nearly 12 hours earlier, to push for a vote on legislation to prevent terror suspects from buying guns.”  [TheHill]

There’s a little story about priorities herein.  While the Democrats were trying to get the leadership to schedule votes on gun safety legislation, the Republicans were trying to make it easier for financial advisers to rip people off. [TP]

Let’s try to make this as simple as humanly possible.  “Fiduciary” /fəˈdooSHēˌerē,-SHərē/, “ involving trust, especially with regard to the relationship between a trustee and a beneficiary.”   Think of that pile of money in the graphic above as your savings. You have trusted a financial adviser to tell you the best investments you can make to get a good return on your savings, especially for your retirement account.   You are trusting that what your investment and/or financial adviser is telling you is in your best interest.

The Department of Labor has drafted a rule to require your financial adviser to act in your best interest regarding your investments – and not to give you advice on financial products that will do more for the investment advisers than they will do for you.  In short, it’s a matter of trust —  you should be able to trust what your financial adviser is telling you. You should be able to trust that the advice isn’t intended to feather the nests of the investment advisers instead of yours.

So, what have the Republicans been doing?  Return with us now to the Senate side of the Capitol building.  On May 24, 2016 the Republican controlled Senate voted to kill the Labor Department rule. [vote 84]  The vote was 56-41, obviously not sufficient to over-ride the promised veto.  And, who voted along with other Republicans to kill the rule? None other than our own Bankers’ Boy, Senator Dean Heller (R-NV).

HJ Res 88 Senate Vote

Now, let’s return to the House side of the Capitol Building.  HJ Res 88, “ On disapproving the rule submitted by the Department of Labor relating to the definition of the term “Fiduciary,” on passage, the objections of the President to the contrary notwithstanding… [vote 338] And who from the great state of Nevada voted to kill the rule?  Representatives Mark Amodei (R-NV2), Cresent Hardy (R-NV4), and Joe Heck (R-NV3).  Who as a member of Nevada’s congressional delegation did NOT vote to allow financial advisers to act in their own best interests rather than yours – Representative Dina Titus (D-NV1). The attempt to overturn the Labor Department rule failed 239-180.  The Republicans needed a 2/3rds majority to get rid of the rule, and thanks to Representative Titus and 179 other members of the House they didn’t get it.

In spite of the Republicans’ best efforts – your financial adviser will now have to offer investment advice based on what is in YOUR best interests – and not peddle financial products that will garner fees, kickbacks, and other “revenue enhancement” for the advisers.

And, THIS is what the Republicans thought was more important than scheduling votes on gun safety in America.

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Filed under Economy, financial regulation, Heck, Heller, Nevada politics, Republicans

Senator Heller’s Choke Point

Heller Amendment Operation Choke Point

One thing in life is almost more certain than death and taxes – if there is legislation that the banking industry wants then Senator Dean Heller (R-NV) will be quite happy to sponsor it, carry water for it, vote for it, and then remind anyone who is still listening how he’s a Man for the Consumers because he once voted against the “bail-out.”   To see Senator Heller’s latest foray into playing the Banker’s Boy one needs to dig a bit, unearthing S.Amdt 4715 to S.Amdt 4685 amending HR 2578, the Commerce, Justice, Science and Related Agencies Appropriations Act of 2016.

Senator Heller has teamed up with Senators Vitter, Crapo, Paul, Lee, and Cruz to insert the following: 

Sec. __.  None of the funds made available in this Act may
    be used to carry out the program known as “Operation Choke
    Point”. [Cong.gov]

What is Operation Choke Point and what was it intended to do?  The Department of Justice was disturbed by reports that fraudulent merchants had found a way around federal banking regulations and once they inserted themselves into the banking system they could team with payment processors to initiate debit transactions against consumer’s accounts and have the amounts transmitted to their own accounts.

Even more disturbing, the Department’s investigations revealed that some third party processors knew that the merchants with whom they were working were frauds but they continued to process their transactions in direct violation of federal law.  [Harris pdf]

So, for example, Quickie Check Instant Lending could get a customer to sign a loan agreement for some outrageous amount of interest, and then hand the item over to a payment processor.  With some cooperation from the bank (usually garnered by providing a handsome fee thereto) the payment processor would have the bank make automatic debits to the person’s account.  Or, say, the Fast Weight Loss Pill Factory got an order from John Q. Public, and the payment processor + bank would insure that John’s bank account was regularly debited for the fraudulent product, or for products not delivered, or whatever scam was being run.

The idea behind Choke Point was to gather information from banks which appeared to be engaged in fraud, or might have evidence of fraudulent conduct by others. Subpoenas were issued, and indeed there were some banks doing some rather obnoxious business.  [See Fair Oaks Bank]  The Fair Oaks Bank had received hundreds of notices from consumers’ banks that the people whose bank accounts were being charged had NOT authorized the payments; had evidence that more than a dozen merchants served by the payment processor had “return rates” over 30% and one had a “return rate” over 70%; and, Fair Oaks had evidence of efforts by merchants to conceal their real identities.

One of the obvious targets are payday lenders who were operating in violation of state regulations regarding the amount of interest that could be charged to a customer.  As the New York Times explained back in January 2014:

“The new, more rigorous oversight could have a chilling effect on Internet payday lenders, which have migrated from storefronts to websites where they offer short-term loans at interest rates that often exceed 500 percent annually. As a growing number of states enact interest rate caps that effectively ban the loans, the lenders increasingly depend on the banks for their survival. With the banks’ help, the lenders that typically work with a third-party payment processor that has an account at the banks are able, authorities say, to automatically deduct payments from customers’ checking accounts even in states where the loans are illegal.”

The object of Choke Point was to cut the insidious relationship between the banks, the processors, and the fraudsters – or choke it off.  If one wanted to promote the interests of the payday lenders, third party processors, and banks willing to turn a blind eye toward the nature of these transactions – there are fewer ways much better than to hamstring the Department of Justice’s investigations into these kinds of transactions.  However, that is precisely what Senator Heller is proposing.

The DoJ’s investigations were also reviled because some of the ammosexuals among us got the idea that if pawn shops couldn’t use the untraditional routes for payment, therefore the whole operation was one giant gun grab. Senators Cruz and Lee bought this horse and have been riding it for some time now.  One quick visit to Politifact will demolish the SunTrust Bank/Brooksville Pawn shop story that made the rounds in 2015.

“SunTrust announced in a Aug. 8, 2014, press release that the bank had “decided to discontinue banking relationships with three types of businesses – specifically payday lenders, pawn shops and dedicated check-cashers – due to compliance requirements.” The bank still works with firearms dealers, according to the release.” [Politifact]

Hence, the policy decision made by SunTrust was no more “anti-gun” than it was anti-jewelry, anti-guitar, anti-CD, anti-work out equipment, or anything else  in a pawn shop.

There are some salient features of this story – once again Senator Heller who delights in his description as a “moderate,” has teamed up with some of the most radical members of the GOP in the U.S. Senate (witness his previous alliances with Senator Jim DeMint (R-SC).  Once again Senator Heller has sided with the payday lenders against any action taken to regulate their relationships with their customers. And, once more Senator Heller has demonstrated his willingness to carry any water in any bucket the American Bankers’ Association wants him to transport to the Senate floor.

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Filed under banking, Economy, financial regulation, fraud, Heller, Nevada politics

Bluster and Blather: Trump’s Questionable Business Credentials

Trump Airlines

No surprise, with economic concerns topping the list for the upcoming election there’s a residual belief that Republicans are better at business.  Gallup polling found that respondents believed Trump would be better (53%)  at “handling the economy,” than Clinton (43%).  Once riveted into the American consciousness the Myth of GOP Economic Acumen is extremely hard to dislodge.  First, there’s no reason to believe that Mr. Trump would do any better than his Republican predecessors:

Dems Econ PerformanceThe only Republican who beat his immediate predecessor in average quarterly GDP growth percentage was Ronald Reagan, and that not by any spectacular amount.  Mr. Trump is no Mr. Reagan.  The Obama Administration has managed to outperform the Bush II Administration in the wake of a devastating Wall Street Debacle and Recession, and later in the face of unprecedented Republican obstruction in Congress.   Imagine, for example, what our growth might have been had we enacted the National Infrastructure Reinvestment Bank?  The legislation had the support of both the AFL-CIO and the Chamber of Commerce.  The most recent incarnation of the National Infrastructure Bank idea came in the form of H.R. 3337 which was relegated to the House Subcommittee on Energy and Power – never to be seen again.  Thus much for Congressional Republican interest in national economic development.

If his party has demonstrated no particularly deep and abiding interest in national economic development what of Mr. Trump’s business credentials?

Trump may be a businessman, but he’s not been exactly an illustration of an ethical or successful one.  Senator Warren’s comments on point:

“Donald Trump was drooling over the idea of a housing meltdown because it meant he could buy up a bunch more property on the cheap,” Warren said. “What kind of a man does that? Root for people to get thrown out on the street? Root for people to lose their jobs? Root for people to lose their pensions? Root for two little girls in Clark County, Nevada, to end up living in a van? What kind of a man does that?”  [HuffPo]

The answer may well be: The kind of man who is more of a speculator than an investor, and more of a wheeler-dealer than a job creator.

  • Item: Trump’s confused, and confusing statements on how to reduce the national debt.  No, perhaps he was not talking about discounting sovereign debt, but yes the government could reduce the debt by buying back Treasuries IF interest rates rise… [Politico] When pressed to provide specifics on how to implement debt reduction he returned to his default position: Reject the criticized elements of his proposal and then maintain he was “misconstrued” by a maleficent media.

 

  • Item: Trump’s record with casino operations and  management.  Time reported:

“Donald Trump’s gambles don’t always go as planned. Especially when that gamble is gambling itself. In February 2009, Trump Entertainment Resorts Inc. filed for Chapter 11 bankruptcy protection for the third time in a row — an extremely rare feat in American business. The casino company, founded in the 1980s, runs the Taj Mahal, the Trump Plaza and the Trump Marina. All three casinos are located in Atlantic City, N.J., where the gambling industry has faced a decline in tourists who prefer gambling in Pennsylvania and Connecticut instead. Trump defended himself by distancing himself from the company, though he owned 28% of its stock. “Other than the fact that it has my name on it — which I’m not thrilled about — I have nothing to do with the company,” he said. He resigned from Trump Entertainment soon after that third filing, and in August of that year he, along with an affiliate of Beal Bank Nevada, agreed to buy the company for $100 million. The company reported it emerged from bankruptcy in July 2010.” (emphasis added)

The Taj Mahal is now operated by Tropicana Entertainment, and owned by an Icahn subsidiary, the Trump Plaza is expected to be closed for at about 10  years. [NJ.com]  Once again, there appears to be a pattern here: Disavow affiliation with anything that’s going south, and put the onus on others for his mistakes.

  • Item: Trump Airlines.   There are several case study points one could make in a post mortem of Trump’s handling of what might have been a successful venture.  Once more, from Time:

“In October 1988, Donald Trump threw his wallet into the airline business by purchasing Eastern Air Shuttle, a service that for 27 years had run hourly flights between Boston, New York City and Washington, D.C. For roughly $365 million, Trump got a fleet of 17 Boeing 727s, landing facilities in each of the three cities and the right to paint his name on an airplane. Trump pushed to give the airline the Trump touch, making the previously no-muss, no-fuss shuttle service into a luxury experience. To this end, he added maple-wood veneer to the floors, chrome seat-belt latches and gold-colored bathroom fixtures. But his gamble was a bust. A lack of increased interest from customers (who favored the airline for its convenience not its fancy new look) combined with high pre–Gulf War fuel prices meant the shuttle never turned a profit. The high debt forced Trump to default on his loans, and ownership of the company was turned over to creditors. The Trump Shuttle ceased to exist in 1992 when it was merged into a new corporation, Shuttle Inc. No word on whether the gold-plated faucets survived the merger.”

Somewhere some business school has a case study in what happens when a re-branding of a product or service doesn’t mesh with what made the pre-existing business successful in the first place?

Here’s a summation of one of the foundational rules of business operations:

“People choose your business for a reason. It may be convenience, service, quality, the “in” thing to do, or a combination. Knowing why your customers choose your company and how they want to be served is critical to creating a sustainable growth strategy. Without this knowledge, your marketing can do little more than fire shots in the dark.” [MultiChan]

The pre-existing business, in this instance Eastern Shuttle, was successful because the customer base wanted a quick and cheap way to make short trips.  This interest is not enhanced by such things as “he added maple-wood veneer to the floors, chrome seat-belt latches and gold-colored bathroom fixtures.”   But that wasn’t the only thing that grounded his little airline.

Notice the part in which Trump’s airline was heavily in debt from the outset.  There were cautionary tales at the time.  The People Express buying spree (and resulting debt) ultimately brought down that no-frills airline service in June 1986. There was a message there, and one repeated by  Western Pacific which operated from 1995 to 1998, but was undone by increasing gate expenses and books too feeble to attract a buyer.

There’s a message herein, that remains relevant today – those airlines that are not heavily leveraged can sustain themselves during fuel price increases, and are in a position to do well when fuel costs decline. [Aviation Week]  But,  Trump the “King of Debt” was – leveraged.  He missed the part about identifying and catering to his customer base, and he missed the section about not getting into so much debt that his operations could not sustain variations in expenses.  His was not exactly a demonstration of acute business sense.

  • Item: Unpaid bills.   USA Today unloaded on Trump about 18 hours ago.  3,500 lawsuits later —

“The actions in total paint a portrait of Trump’s sprawling organization frequently failing to pay small businesses and individuals, then sometimes tying them up in court and other negotiations for years. In some cases, the Trump teams financially overpower and outlast much smaller opponents, draining their resources. Some just give up the fight, or settle for less; some have ended up in bankruptcy or out of business altogether.”

Trump sought to discredit the claims by saying he’d not pay for inferior work, but in at least one instance the vendor was appalled to find that Trump was not going to pay his bills, BUT offered the same vendor future contracts.

Not to put too fine a point to it, but what the Republican Party is setting forth as the candidate of the future – and of future American prosperity – is an individual who (1) benefits from 50 years worth of GOP propaganda about being “pro-business” and (2) displays a tendency toward personal aggrandizement and impersonalized detachment from his failures.  It’s bluster and blather, indebtedness and default, delay and obfuscation – what it isn’t is Good Business.

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Filed under Economy, Politics

Numbers of the Day

Barn Door Closing 1,205: The number of corporate entities subject to a request for information regarding a “Resignation of Registered Agent” inquiry as representatives of Mossack-Fonseca.  [LVRJ]  Translation: The number of companies associated with the Panama Papers operations of Mossack-Fonseca.  But, here’s the kicker:

“Corporate filings are administered by the secretary of state’s office, although laws governing their oversight are enacted by the Legislature. Nevada and states such as Delaware and Wyoming have some of the most liberal corporation laws in the nation. They do not require proof of identification when setting up a company, a task that can be accomplished in a few hours by paying only a few hundred dollars.”  [LVRJ]

The Secretary of State announced she’s putting together a “working committee” to review statutes pertaining to business registration – How about requiring some identification? To registered agent requirements, and concerning “the maintenance of related records.”

It’s nice to be “business friendly,” but it would also be nice to know that Nevada isn’t being used by tax evaders, swindlers, hucksters, money launderers, and other frauds as a “friendly place to do business.”

Gee Whiz Graph 1 9: The number of graphs tweeted out by Donald Trump to “prove” the Obama Administration’s a failure.  0: The number which are accurate and not misleading. [Washington Post]

 

 

Curiel 1953: The year Judge Gonzalo Curiel was born in Indiana.  The judge hearing the Trump University case has come in from some anti-immigrant bashing from Mr. Trump. Interesting because Curiel’s father came to the U.S. in the 1920’s while Mr. Trump’s mother didn’t get here until the ‘30s and didn’t become a citizen until 1942. [TPM]

Starbucks 2: The number of African Americans associated with Seattle University who were racially assaulted in a Starbucks by a man spitting and yelling racial epithets. 0: the number of restaurant patrons who protested against the assault. 1: Restaurant manager who assisted in the filing of a police report. [C&L]

Unemployment BLS

The unemployment rate declined by 0.3 percentage point to 4.7 percent in May, and nonfarm payroll employment changed little (+38,000). Employment increased in health care. Mining continued to lose jobs, and employment in information decreased due to a strike.” [BLS]

Yes, 38,000 is not a major indicator of job creation, but take a look at what was happening during the Recession 2006-2009. 

Blackburn 3: The number of entities (two Planned Parenthood facilities and  StemExpress Inc. who are being investigated by Rep. Marsha Blackburn’s committee for violations of HIPAA requirements.

“These accusations are the latest step in an investigation that has never had any reason to exist. The House panel was formed after the Center for Medical Progress, an anti-abortion group, released deceptively edited videos purporting to reveal that Planned Parenthood sold fetal tissue for profit. Since then, repeated investigations have found no evidence that Planned Parenthood did anything wrong, and members of the Center for Medical Progress have been indicted for their activities.” [NYT]

Enough.

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Filed under abortion, Economy, Nevada, Politics

The Media Was Warned: Trump Campaign is one giant Gish Gallop

Gish Gallop Trump

“Trump’s incessant barrage of outrageous pronouncements is reminiscent of the Gish Gallop strategy of argumentation: keeping your opponent on their heels and unable to debate effectively by throwing out so many false and misleading statements that it becomes too difficult to address any single one of them or make your own case. It’s a common creationist tactic, and a common tool of hucksters and swindlers everywhere.” [Washington Monthly, November 22, 2015

Three ways to spot a swindle:

Number One:  High pressure sales pitch.  Those who would have you part with the contents of your wallet will tell you that “time is short!” “Act now.” “This is a limited time offer!”  Hogwash. In order for me to pull off a swindle on you it is necessary for you to feel the “urgency” of my pitch.  If I were trying to pitch an investment swindle, I’d tell you that the economy is in terrible shape (it isn’t) and if you don’t act now to protect your retirement fund (which is probably fairly safe where it is) you’ll be in Dire, I say DIRE straits down the line. Notice I didn’t tell you where that line was drawn.

Trump’s pitch, and it’s more Pitch than a stump speech, is that voting for him is necessary to Save The Country; Yes, Save It Immediately – from what?  The leading economic indicators forecast a modest growth rate in the early part of 2016. [MarketWatch]

What part of this chart indicates to any sentient person that there’s a horrible unemployment rate problem in this country?

Unemployment chart trend The President noticed the Gish Gallop from Trump quarters in a recent speech:

“But he largely defended his record and sought to tell voters about the stakes in this November’s election.

Improved economic numbers don’t mean “folks aren’t struggling in some circumstances, and one of the things I’ve emphasized is that there’s some long-term trends in the economy we have to tackle,” Obama said in the PBS town hall. “So we’re going to have to make sure we make some good decisions going forward.”

“The notion that somehow America is in decline is just not borne out by the facts,” Obama said. “But it resonates. It resonate with aggrieved people who are voting in big numbers for Donald Trump.” [NBC]

No, we’re not “in decline,” and NO we don’t need to make America great again, it’s already the strongest nation on this planet.  But that isn’t going to impress the devotees of the Gish Galloping Trump; they are listening for the second element of the perfect swindle pitch.

Number Two: It’s too good to be true.  Again, if I were to launch a swindle in your direction I’d promise outcomes like a 25% increase in your investment, in some ridiculously short amount of time.  And, should you hesitate I’d shower you with misinformation, disinformation, and pure south bound product of a north bound bull, all the time pointing to the Bright Blue Sky (to which MY bank account is headed if I can only get you to play along).

If, IF, you will invest with me all your troubles will be long ago and far away.  I’ll “build a wall,” I’ll “get a better deal,” I’ll “get you a better job,” I’ll “fight the Chinese currency manipulators,” I’ll “turn the water on.”…..

This will work, if you don’t do two things: Check my facts, and do some Critical Thinking.  If I can get you to avoid these two activities, then I can effectively initiate the third element of a good swindle pitch.

Number Three: Downplay the risks.  Galloping right along… Here’s Mr. Trump with a classic example: “We have been too afraid to protect and advance American interests and to challenge China to live up to its obligations. We need smart negotiators who will serve the interests of American workers – not Wall Street insiders that want to move U.S. manufacturing and investment offshore.”

Unfortunately, for those who know how to use the Google, downplaying the risk of getting into a trade kerfuffle with the Chinese is a matter of taking on the wrong target for the wrong reasons.  

The Chinese “currency manipulation” charge is a set piece of conservative attacks on our trade policy.  First, let’s agree that setting nominal interest rates is something that central banks DO.  The U.S. Federal Reserve sets its sites on the federal funds rate; the European Central Bank focuses on the marginal lending facility, and the Chinese central bank fixed the yuan-US dollar rate along with a “basket” of other currencies. [Wall St Journal]  Message to Mr. Trump: “Currency devaluation of revaluation is a common exercise of sovereign monetary policy.”

With this understood we can get down into the weeds, and again look closely at what the Wall Street Journal had to say about focusing on the “currency manipulating:”

“Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries.

The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy.”

[…] Today more companies operate in global supply networks—in which trade and investment link different stages of production across different countries. Because these networked companies incur both revenues and costs in many currencies, their trade competitiveness tends to vary little with the movement of any one currency.” [emphasis added]

Thus, NO, Mr. Trump, waving the “Currency Manipulation” banner like some kind of red flag obscuring the more complex nature of international trade forces and trends, doesn’t come anywhere near explaining the issues involved in international trade and the related currency valuations thereof.  What Mr. Trump is saying is a rather vapid “I’ll get a better deal.” Without, obviously, introducing any of the real factors associated with international trade policy.  However, in Trump’s campaign, waving this banner is just one more piece of the continuing Gish Gallop.

Before the third element of the perfect swindle pitch is successful, it’s time to remind ourselves of H.L. Mencken’s famous line:”

“There is always an easy solution to every problem – neat, plausible, and wrong.”

It isn’t like the Trump Gish Gallop hasn’t been spotted already – Blue Virginia caught it back in March 2016, the Democratic Underground wrote of it in January 2016 – proposing to call it the “Trump Trot,” and the media was warned, as noted previously, by the Washington Monthly in November 2015.

Gish Gallop 2

Those still confused by the combination of Gish Gallop and Word Salad emanating from the Trump Campaign may note with some trepidation that Mr. Trump can lie faster than the fact-checkers can keep up.  Prevaricate he will, as he pours forth his high pressure sales pitch, promising that which is too good to be true, and downplaying the risks of his preposterous proposals.

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