Ganging up on the Donald

PARIS – Poor Donald Trump. Everybody’s against him.

Jeb Bush says he’s “unhinged”…

…Chris Christie says he has “no idea what [he’s] talking about”…

…John Kasich accuses him of “outrageous divisiveness”…


loveThe Donald – in reality, they love him…


…and Marco Rubio describes him as “offensive and outlandish.”

And those are just his fellow Republicans!

“Reprehensible… prejudiced…” adds Hillary Clinton.

Piling on, Martin O’Malley says Trump is a “fascist demagogue.”

Can a man with enemies like these really be bad? More below…


New Low for Oil

U.S. stocks slipped yesterday. No big deal. The press looked around for something to pin it on. All it could find was falling oil prices. The price of the black goo fell below $38 a barrel to its lowest level since the depths of the global financial crisis.


1-WTICWTI crude oil retests its late August low on slightly lower volume, waylaid by a warmer than expected autumn and OPEC’s inability to turn off its spigots. We have added a small Elliott Wave count of the most recent moves since the August low, and one question that suggests itself to us is: is there anyone left who is not bearish on crude? Even before the most recent wave of selling, the optimism index for crude had declined to its lowest level in more than 14 years – click to enlarge.


You’d think cheaper energy would be a good thing. Don’t company profits – outside of the oil patch – go up when the cost of fuel goes down? Don’t households have more money to spend? Shouldn’t other things be looking up when oil is looking down?

Oil is the biggest expense of the transportation industry. Lower prices should drop right to the bottom line as extra profits. But the problem is not the cost side; it’s the revenue side.

As we reported yesterday, rail and truck shipping in the U.S. is slowing – signaling a slumpy economy with weak demand. And corporate profits are on the way down, too… dragged down by the energy sector. The whole kit and caboodle seems to be funking up.


Under the Hood

Which is just what you’d expect – partly because central banks’ “stimulus” measures were a sham (about which we’ve written more than enough) – and partly because every expansion comes to an end after a few years.

The National Bureau of Economic Research studied the U.S. all the way back to 1854. It found that the typical economic expansion lasts 39 months. This one began in 2009. By our count, that makes more than 75 months without a breather. On that basis alone, you’d expect a little more caution on the part of investors.

But there is one supposed exception to this somber picture… a bright light coming from the shiny bumpers of the auto industry. Rail shipments are down for everything – except autos. And “strong auto sales” are said to be proof of a healthy consumer economy.


2-Car loansAn explosion in motor vehicle loans – click to enlarge.


Uh… that is, once again, if you don’t open the hood. The industry has been so corrupted by cheap credit that it is misleading even to talk about auto “sales.” The typical loan period has stretched to 67 months, as the industry reached for more marginal (read: sub-prime) buyers.

The proud new owner reports to his friends that he has “bought a new car.” But at a 5% interest rate, reports Bonner & Partners researcher Nick Rokke, that means the buyer only gets 1/77th of the car when he allegedly “buys” it.


3-subprime car loansRelative growth rates of sub-prime car loans vs. car loans to people with strong credit scores – click to enlarge.


Readers who are quick with numbers will notice that the length of the average sub-prime auto loan, the length of the current business expansion, and the length of time that the Fed has maintained its zero-interest-policy are all clustering around 70. Perhaps this is more than a coincidence.

But back to the big news…


Looney Leanings

Donald Trump brought the wrath, ire, and contempt of the mainstream political establishment down on his head yesterday. He called for a “total and complete shutdown on Muslims entering the United States.”

Most commentators quickly condemned him, pointing out that such a ban would be unconstitutional and completely against the principles on which the nation was founded.


Hair questionsAlien anchor hair discovered…


But in a spirit of pure mischief (a blustery billionaire hardly qualifies for our customary support for die-hards, lost causes, and underdogs), we rush to the defense of “The Donald.”

Yes, his proposal is reckless, stupid, unworkable, unfair, and un-American. But it might not be unpopular. Give the man credit. He’s running for president. To win, he needs the votes of people who are at least as block-headed as he is.

In that respect (perhaps the only respect) his latest proposal may not be a bad idea. Also, making preposterous and outrageous proposals hardly disqualifies you for the White House.

Some of our “best” presidents – at least, according to historians and the public – were those who did the looniest things… things that were completely at odds with the Constitution, the spirit of liberty, and their own policy goals.

President Lincoln told the crowd at Gettysburg that his war against the South was in line with the Declaration of Independence, which clearly asserted the right of a people to choose their own government.

The war would determine, he said, whether “that nation, or any nation so conceived and so dedicated, can long endure.” The answer was “no.” And he made sure of it.


ColDemands12wContemporary cartoon of Lincoln attack him over the human toll of the Union war effort. Columbia, wearing a liberty cap and a shirt made of an American flag, demands, “Mr. Lincoln, give me back my 500,000 sons!” At the right, Lincoln, unfazed, sits at a writing desk, his leg thrown over the chair back. A proclamation calling for “500 Thous. More Troops,” signed by him, lies at his feet – click to enlarge.

Image credit: Joseph E. Baker


President Wilson did the same thing for foreigners – invading more countries than any other president… while proclaiming the right to self-determination. Elections were fine, said Wilson, as long as they chose “good men.” If he didn’t like the men chosen… he sent in the troops.

By the standards set by Lincoln and Wilson, Donald Trump has the capacity to be one of our greatest leaders.


wilsonVote for Woodrow Wilson “who kept you out of war” (and didn’t saddle you with a Federal Reserve…)

Image credit: Punch



It doesn’t really matter who wins the race for the White House, because the Deep State already controls just about every aspect of American life. From health care, to education, to the food on our tables, to the never-ending war on terror, the Deep State is pulling the strings.


Charts by stockcharts, St. Louis Fed, WSJ


Image captions by PT


The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.



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