Tuesday, September 29, 2015

Optimism, Vigilance, and Trump

Please take a look at these short articles by Alexander Green:  

Here is my response:

Dear Alex,
In your recent articles about Donald Trump and the American economy, you seem to indicate that we are on the right path and most things are hunky-dory. Your only qualifier was your dissatisfaction with some of the “shenanigans” going on in DC. Shenanigans seems a pretty weak description.

I have read your books and given them as gifts. But these articles overlook or gloss over some very important facts and present a Utopian view of what’s happening in our country. 
You challenged your readers to refute any of your “facts” and stated we should “put on our dome-shaped hats and go stand in the corner” if we did. You expressed astonishment at how many of us dunces “cannot tell the difference between fact and opinion”. Pretty harsh and, I think, wrong.

I mostly agree with you on the Donald, though I am not sure you understand why he is so popular. I think conservatives are sick of Republicans’ “rollover and play dead” strategy and surrendering without a fight to Obama. And we are sick of political correctness and the whiners who constantly look for some word or phrase to offend them. It’s keeping us from discussing important issues facing this country. 
Let’s take your facts one at a time:

The dollar is the world’s reserve currency.

Correct, but it is under attack from China and there is the possibility, however remote, that situation could change. Some experts believe it is China’s intent to displace the buck.

The US military is the primary defender of the free world.

Correct, but our ability to continue in that role has been severely diminished during the Obama administration. Our military is now at pre-WW II levels, and in some cases, WW I levels. Real warrior leaders have been replaced with politically correct ones who toe the White House line.

We now face the largest mass migration since the days of Hitler and possibly in world history.

We have just negotiated (one can hardly describe what the inept Obama/Kerry and their minions did as negotiation—capitulation is a better description) an egregious, arrogant, and dangerous agreement with the world’s leading sponsor of terrorism. And we got virtually nothing in return.

China, Russia, and Iran appear to be moving to squeeze us out of Europe and the Middle East and Putin is clearly trying to splinter NATO. Russia has taken over Crimea, is in the process of taking Ukraine, is building military bases in Syria, and sold defensive weapons to Iran to limit our military options.
And then there is China with its cyber attacks, building islands in the South China Sea, buying up our debt.

Our allies no longer trust us and our enemies no longer respect us. And let’s not forget North Korea, with nukes we paid for. And what about our inept attempts to defeat ISIS?

Our banks have never been stronger.

Many pundits said the same thing just before the 2008 crisis. You name only big banks in your analysis, without mentioning the negative impact of Dodd-Frank on community banks. None have been started since 2011. And many big banks took huge chunks of bailout money from taxpayers. 

The U.S. economy grew at 3.7% in the most recent quarter. That’s twice the rate of growth in Europe and four times that of Japan.

Have you noticed that the numbers we are fed on GDP are often revised downward with little mention in the press? And 3.7% is not all that strong after seven years of tepid growth and certainly not strong enough to handle our enormous debt. Comparing it to the dismal numbers of Europe and Japan seems to prove nothing except that those two nations are in deep economic turmoil. And aren’t their weak economies bad news for America, too?

Unemployment is at a seven year low.

The U-3 measure of unemployment is meaningless. The press should be ashamed for ever quoting it. U-3 does not count folks who have quit looking for a job (given up) in the four weeks before the data are compiled. How does one determine if a person has given up? Answer: you can’t. Is he still unemployed? Answer: yes. The U-6 measure is more accurate and is still above 10%.

An even more important number is the labor participation rate. It’s at a four decade low. Almost 40% of our workforce is not working. The number of people dependent on the government for subsistence (welfare, food stamps, etc.) is at an all time high and growing at an unsustainable rate.

The federal deficit as a percentage of GDP is at its lowest level in eight years.

That is a one-year statistic. I assume you know that the deficit measures the excess of expenses over revenues for a single fiscal year. Comparing it to GDP during a period begun when we were mired in a deep recession makes it virtually meaningless and certainly nothing to boast about.

The important number is the total debt. I’m one of those old-fashioned accountants that measures debt by our ability to pay it off.  We’re close to $19 trillion now—an all-time high. This president has now run up more debt than all other presidents combined.

Debt has a tipping point. Ask Donald Trump. He had four corporations to pass that tipping point. 
And what about our unfunded liabilities? Many economists say they are close to $180 trillion. That’s about $1.5 trillion per taxpayer. Nobody really knows because the government does not book such debts as liabilities. But they still have to be paid.

Since the 2008 financial crisis, stocks have nearly tripled.  

There you go again, using historical lows to measure gains. When you start low, it is easy to garner some impressive stats. I will grant you that the stock market has performed well (until recently). I am still invested. I used to tell my clients that I am always right about the markets, I just may be off by a decade or two, or three.

Why am I invested when I see America headed in the wrong direction? Because it is the only place where one has the best chance of generating income. Investors are forced to take risks they would rather not take during retirement years because our central bank has kept interest rates at historic lows and effectively taken away most investment options other than the stock market.  

I also believe that the market is no longer primarily driven by fundamentals. It is driven by interest rates and high-frequency trading. The days of studying a company’s financials, its history, its products or services, its place in the industry, and its management can be screwed up by a few wet-behind-the-ears stock jockeys who are more interested in where the stock is going in the next thirty seconds than in the next five years. Don’t believe that? How else can you explain the panic caused when the Fed mentions a mere quarter point rise in rates?

Perhaps when you a little older with a shorter time horizon, you will better understand those of us (as well as many Trump supporters) who want to change the direction of our country now, not ten years down the road. We’re tired of political elites who seem to believe that you must control both the White House and Congress to get anything done. History belies that silly notion.

Educational attainment in the country has never been higher.

I am not sure how one would go about measuring that and am not sure even of the definition. However, I am deeply concerned about what our young people are being taught in schools and colleges. Think socialism, class warfare, and forced income redistribution. And SAT scores are on a steady decline.

There are no class distinctions or caste systems to hold citizens back from economic success.

Using the eight years you like to compare, class and race divisions have taken a radical turn for the worse.

Americans have never been richer. Last week, the Federal Reserve reported that U. S. household net worth hit another all-time record of $85.7 trillion.

Ah yes, the ultra-secretive, unaudited Fed again. Having prepared hundreds of personal financial statement for clients, I know it can be a laborious process. How does the Fed know, for example, my net worth? I know technology has changed the world, but hopefully, some things are still secret.  Also, even if net worth is at an all time high, average income for the middle class is down.

In 2013, the U. S surpassed Russia to become the world’s largest oil and gas producer.  

That is definitely good news. However, because of the government, we still have restrictions on our ability to take full advantage. We have restrictions on finding, transporting (Keystone?) and exporting energy to compete with OPEC and Russia and take our earned place as an energy superpower.

Inflation is negligible.

How about those billions of dollars the Fed injected into the economy? Will that increase the money supply? Isn’t one of the indicators of inflation too many dollars chasing too few goods?

And the way we measure inflation has been changed so often that the reported stats are no longer trustworthy (they no longer includes "luxuries" like food or fuel, for example, because they keep showing pesky increases). If something we buy goes up too much to satisfy their politics, the bureaucrats just take it out of the equation.  For example, the battery in my Jeep failed recently. I bought it six years ago for $69 with a six year warranty. The replacement battery cost $140 with a three year warranty. That’s 34% per year increase for half the battery life. Is that inflation? And if you think that’s an anomaly, better think again. Inflation is when things go up, and virtually everything I buy has gone up by 8-10% per year for a decade.

Gold has spent the last four years looking like the last flight of the Hindenberg.

Using your own analogies about the future of stocks, wouldn’t that be a strong indicator to buy gold?

And then, finally, you quote two technology gurus (your description) and they say:
Violence is at an all time low and personal freedoms at a historic high.

“All time” indicates forever, I suppose, but are they talking about America or the world? The Economic Freedom Index shows America on a steady decline, dropping to number twelve. Even Canada and Chile surpass us. And violence—tell that to people in Chicago and most of America’s largest cities.

Groceries cost thirteen times less today than in 1870.

1870? Really? Is that a meaningful stat? How about compared to 2008? Been shopping lately?

Poverty has declined more in the last fifty years than in the previous 500.

Poverty has increased in the last fifty years, not declined, largely due to the War on Poverty. And were we keeping poverty records in 1515? And if we were, wouldn’t most people be considered poverty-stricken by today’s measures?

I suppose your article garnered so much attention because Donald Trump was in the title and you tried to discredit his negative views on the economy. Trump is a product of John Boehner, Mitch McConnell, Barack Obama, political correctness, and what an open border policy is doing to our great country. Americans are hungry for anyone who will speak truth to power and be willing to take the slings and arrows sure to come their way (Trump, apparently can dish it out but can’t take it).

If you are giving advice to Trump supporters, you would have been better off to mention that he believes single payer healthcare works when it clearly does not, or that he was in favor of the disastrous 2008 bailout. Or maybe you could highlight the four corporate bankruptcies.  A lot of very competent people have declared personal bankruptcy or headed corporations that declared it. But four times in the same industry?

Trump even boasts about his timing and expertise in taking advantage of bankruptcy laws while employees and debtors took it in the shorts. Only a narcissist would boast about that, and we have had a narcissist as president. How’s that working out? Narcissism is a dangerous trait for the leader of anything.

Statistics are strange things. Much of what I stated here is my interpretation of stats or facts. The difference is that I admit it. You did not. You stated unequivocally that your statements were facts, when in many cases they were your interpretations of facts.

I applaud your optimism, but it seems to suggest complacence. If Thomas Jefferson did not say, “The price of liberty is eternal vigilance”, he should have. Many of us like a little vigilance mixed with our optimism. Or maybe you were just "drinking that sweet bubble-up and eating that rainbow stew".

Tuesday, September 22, 2015

Try Me, Lord

During twenty-plus years of writing, the question of “Why?” comes up pretty often. Folks understand the business books I wrote in the beginning, but friends don’t understand why a guy who spent most of his career dealing in numbers would decide to try his hand at novels. 

Most of the time, I ask that question of myself. I have tried ad nauseam to explain to myself why I write. As Clayton Delaney told his young protégé Tom T. Hall about a career in music, “Ain’t no money in it. It’ll lead you to an early grave.”  

I have written quite a bit about my admiration for songwriters. They can tell a story in a single page that often takes a novelist a whole book to tell. One of my favorite songwriters is Kris Kristofferson. He can’t sing too well and is a mediocre actor, but he is one heck of a songwriter. 

Who doesn’t hum when someone mentions Help Me Make It Through the Night, or Sunday Mornin’ Coming Down, For the Good Times, or Me and Bobby McGee? What most don’t know is that his best- selling song was Why Me, commonly known as Why Me, Lord?. 

I could sing along with most of the lyrics to the song, but I never really paid much attention to the meaning of the words until about a year ago. I don’t remember why or exactly when I began to concentrate on the lyrics and their meaning. All I know is that usually means I was just meant to do that. 
I focused on these:
Try me, Lord, if you think there's a way
I can try to repay all I've taken from you
Maybe Lord, I can show someone else
What I've been through myself, on my way back to you

If that isn’t a good description for why I write, well, I don’t know what is. I focused on those words as I wrote the Believing in a Grand Thing section in A River of Stories. I have used the lyrics in a few presentations to writers and readers.

One recent Sunday morning (coming down?) wife Jan brought out her smart phone to the deck and showed me a video of the story behind the song. Someone had posted it on her Facebook page. It brought tears to my eyes as I heard Kris tell the story. Made me wonder why I did not look it up before. It’s short, so you can watch it here

Then, a week or so later, we attended a Festival at the Caney Creek Cowboy Church near Grand Saline. Old friend Don Edwards was performing.  Those of you who read A River of Stories may remember the tale of The Bard and the Balladeer. Don, of course, is the Balladeer. 

Guess what his second song was at Caney Creek? I had never heard him sing Why Me, Lord before. Sorry Kris, but his rendition is better than yours. After Don’s performance, I told him that he needed to outlive me, so he could sing that song at my funeral.

I love it when God winks.