Washington [is] a lot more broken than President Trump thought that it was.
— White House Budget Director Mick Mulvaney
SÃO PAULO, BRAZIL – On Friday, the much-hyped Trump/GOP Obamacare reform sank into the swamp. If anything keeps us from national bankruptcy, it won’t be entitlement reform. Not under Donald J. Trump.
A collection of swamp victims who haven’t paid attention… didn’t they know that Dracula can’t be killed?
Caesar: The Ides of March are come.
Soothsayer: Ay, Caesar, but not gone.
— Julius Caesar, Shakespeare
GRANADA, NICARAGUA – Today, we stop the horses and circle the wagons. For 19 years, we have been rolling along, exploring, discovering. We began with the assumption that we didn’t “know” anything – so we kept our eyes open. Now we know even less.
Famous people who knew nothing and were not shy to admit it: Sergeant Schultz (left), Socrates (right)…
Heresy or Truth?
RANCHO SANTANA, NICARAGUA – In the fifth century, Christian scholars counted 88 different heresies. Arianism. Eutychianism. Nestorianism. If there was a way to “offend” God, they had a name for it. One group of “heretics” argued that there was no such thing as “original sin.” Another denied the trinity. And another claimed Jesus was not divine. Which one had the truth?
Depiction of the first Council of Ephesus in 431 AD, convened by Emperor Theodosius II. It was the third ecumenical council (after the Council of Nicaea in AD 325 and the Council of Constantinople in AD 381). The patriarchs Cyril of Alexandria and Nestorius of Constantinople clashed over church doctrine at Ephesus. The synod ended with Nestorius and Caelestius and their supporters being condemned as heretics. The council precipitated the first major church schism (called the Nestorian schism), which led to churches in the Sassanid Empire separating from the rest of the church. The Roman Catholic Church and the Assyrian Church of the East finally laid their dispute to rest in a common Christological declaration issued in 1994 – a full 1563 years after the first Council of Ephesus.
Photo credit: Philippe Alès
A Truly Sucky Century
BALTIMORE – What an awful century! Worst we’ve ever seen. Household incomes are down. Employment is down, with 7 million people in the U.S. of working age without jobs. Productivity growth is down. GDP growth is down – to only about 0.5% per capita last year. Even life expectancies are down. Drug overdoses are up. Suicides are up. One out of every eight children lives in a family getting food stamps. One of out every eight adults takes psychoactive drugs .
Death from drug overdoses is back in fashion – big time. Club of Rome Malthusians can only dream of such effective population control. The picture to the right illustrates the the adventurous lifestyle of many 21st century junkies. Contrary to many of their contemporaries, these young men are not weighed down by a great many possessions, and they do get a lot of fresh air. Before you decide on a career change to join these rugged outdoorsmen though, you should consider that they do have a bit of a life expectancy problem – click to enlarge.
BALTIMORE – The Dow, the S&P 500, and the Nasdaq remain near record highs and are up about 10% since Election Day. Fed officials say they could raise interest rates “fairly soon.” Blah… blah… blah…
One of these days… sooner rather than later… as soon as the data permit…
Cartoon by Bob Rich
Ranting and Raving
LOVINGSTON, VIRGINIA – The public spectacle continues… There are so many ways to look at it, we scarcely know whether to laugh or gasp. A week ago, President Trump took the sound and fury up a notch by way of his Twitter account:
The FAKE NEWS media (failing @nytimes, @NBCNews, @ABC, @CBS, @CNN) is not my enemy, it is the enemy of the American People!
The president in fighting mode.
Photo credit: David Becker / Rezters
LOVINGSTON, VIRGINIA – Amid all the sound and fury of the Trump news cycle, hardly anyone noticed. There is a specter haunting this economy. It is the specter of inflation…
See, if you want to whip inflation now, you don’t need to do any of the really difficult things, such as printing less money… or God forbid, return to honest, market-chosen money (shudder!). All you need is intelligent nutrition!
Image credit: Marshall Astor
To Unleash or Not to Unleash, That is the Question…
LOVINGSTON, VIRGINIA – Corporate earnings have been going down for nearly three years. They are now about 10% below the level set in the late summer of 2014. Why should stocks be so expensive?
Example of something that one should better not unleash. The probability that a win-lose proposition will develop upon meeting it seems high. It wins, because it gets to eat…
Image credit: Urs Hagen
Regret and Suffering
BALTIMORE – Victoribus spolia…
So far, the most satisfying thing about the Trump win has been the howls and whines coming from the establishment. Each appointment – some good, some bad from our perspective – has brought forth such heavy lamentations.
Oh no! Alaric the Visigoth is here! Hide the women and children! And don’t forget the vestal virgins, if you can find any…
Monster or Mozart?
BALTIMORE – Investors seem to be holding their breath, like a man hiding a cigarette from his wife. It’s just a feeling, and it’s not the first time we’ve had it… but it feels as though it wouldn’t take much to send them all running.
BALTIMORE – The Dow is back above the 20,000-point mark. Federal debt, as officially tallied, is up to nearly $20 trillion. The two go together, egging each other on. The Dow is up 20 times since 1980. So is the U.S. national debt. Debt feeds the stock market and the swamp.
What’s not up so much is real output, as measured by GDP. It’s up only 6.4 times over the same period. Debt and asset prices have been rising three times as fast as GDP for 36 years! Best bet: Sell stocks and bonds (debt). Buy GDP. How? To be addressed in due course.
SGG! The “something’s gotta give” chart: total US credit market debt, federal debt, the Wilshire Total Market Index an GDP. Unless something gives, we will need a microscope in a few years in order to detect GDP on this chart. Consider also that GDP has been “upgraded” numerous time in recent decades, most recently less than two years ago (these upgrades involve adding hundreds of billions of dollars to economic output no-one has ever spent or received – they are merely statistical artifacts. It is slightly different with debt; we can simply count that) – click to enlarge.
A Simple Formula
MIAMI – How do we know if new programs will make the economy better… or worse? Here’s a simple formula:
W = rv (w-w – w-l)
That is, wealth is equal to the real value of win-win exchanges minus the loss from win-lose exchanges. Yes, dear reader, it’s as simple as that. Like a whittler working on a piece of wood, we’ve shaved so much off, there is nothing left of it… except the essential heartwood.
When devising a win-win, be careful not to let it go bad-bad.
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