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If This is Thursday, This Must Be Belgium

President Donald Trump’s first foreign trip went well enough through its first six days, with some potentially significant successes offsetting a few relatively minor if undeniably embarrassing missteps, but all along even his most ardent well-wishers had to admit to a certain nervousness about how long that would last. On Thursday Trump was in Belgium for a summit of North Atlantic Treaty Organization members, and our worst fears were largely realized.
The date always struck us as fraught with peril, as Trump had won the presidency while railing that NATO was an “obsolete” federation of deadbeat nations free-riding on America’s on America’s gullible generosity, but upon taking office he made a few steps back from that position. He declared that NATO was “no longer obsolete,” seemed unembarrassed to admit that he’d said some things before he knew much about NATO but that he knew better now, and the high-ranking foreign policy officials he’d appointed went to further lengths to reassure our alliance partners, but he’d occasionally lapse back to campaign rhetoric. During a rather awkward meeting in Washington with Germany’s Chancellor Angela Merkel he handed her a multi-billion dollar invoice for what he thought was owed for American defense spending on behalf of Germany over the past decades, which was more widely reported in the German press than in America’s, and by the time he landed in Belgium there was no guessing what he might have to say.
What he had to say when he took his turn at the podium started well enough, with kinds words for Merkel and a nod to British Prime Minister Theresa May before asking for a moment of silence of the victims of a recent terrorist attack in Britain, and he recalled how NATO had invoked it’s Article Five that an attack on one was attack on all after the terrorist attacks in Washington, D.C., and New York in 2001. After that he mostly went on about how most of the NATO nations are free-riding on the gullible shoulders of American taxpayers and he was there to demand back payments. He noted the opulence of the newly-built NATO headquarters where he was speaking, boasted that he’d promised himself not to ask how much it cost, and seemed to imply it was a nice little building they had there and it would be a shame if anything happened to it.
Trump was undeniably correct in noting that the vast majority of NATO’s members hadn’t spent their promised 2 percent of gross domestic product on defense spending, and his most ardent admirers thus have a plausible argument that he’s staking out an ingeniously outrageous opening bargaining according to the art of the deal. This should prove convincing to that 25 percent or so floor of public support that Trump enjoys no matter what, but it’s a harder sell to the rest of both the left and the right. The same left that wanted  to surrender in the Cold War is suddenly talking tough about Russia, while the establishment right that navigated the conflict to a favorable conclusion is fuming that the NATO alliance needs to be dealt with behind the scenes rather than in pubic speeches. That 2 percent of GDP rule was gently pressed behind the scenes even by the administration of President Barack Obama, our NATO partners have been upping the ante ever since, and although thy were coming around at this point it’s hard to see how Trump’s public scolding will urge them along.
Trump’s most ardent admirers will admire his forthright America First stand, but all the international footage shows the heads of state of our NATO allies looking decidedly less enthusiastic about it, and they’re all accountable to British and French and Belgian and other local opinions that have not yet succumbed to Trumpism. The art of the real estate deal and the art of diplomacy are decidedly different, and although we wish him well we can’t help thinking that Trump doesn’t know the difference.The video footage of our NATO allies was far less ebullient than Trump with his Sunni Arab friends from a few days before, and Trump had a few more of the embarrassing missteps on Thursday, including some footage of him seeming to shove his way past the head of state from newly-joined NATO partner Montenegro to get his way to the front of a a photo op, and a couple of awkward handshakes with the French President whose Vichy-derived opponent Trump had more or less endorsed, and all in it all it added up to another bad news cycle.
Meanwhile, back in the states, the news cycle was no kinder. The lead story on most of the network news was that Trump’s son-in-law, the 36-year-old Jared Kushner who has been charged with negotiating Middle East peace being the go-between in our dealings with China and ending America’s opioid crisis and reinvent its federal government, was also the focus of a federal investigation into the Trump campaign’s ties with Russia. Russia was no doubt pleased by Trump putting the squeeze on America’s NATO allies, and those looks on our NATO allies’leaders faces, and how those NATO negotiations are likely to go from here. The Republican congressional candidate who was arrested for assaulting a reporter on election eve wound up winning a special election in Montana, possibly because most of the votes were cast before it happened, but that probably won’t help much in the rest of the world and its opinion polls.
As much as we’re rooting for America and its established principles of foreign policy, we can’t shake a certain nervousness about how Trump is negotiating this darned convoluted art of diplomacy. We’ll continue to regard all those sudden Cold Warriors on the left with suspicion, but neither do we trust that the president or his son-in-law is truly putting America or anybody else first.

— Bud Norman

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Meanwhile, Back in the Economy

You might not have noticed, given the lack of attention paid by most of the media, but the great Obama economic boom came to an end last week.
After all the gloating that followed the relatively robust 5 percent growth in gross domestic product in the third quarter the fourth quarter numbers came in at at a disappointing 2.6 percent, and when you add in the negative first quarter that was blamed on cold weather and the increased Obamacare spending that was actually a drag on the economy but was counted as a boon and transferred to that reputedly roaring third quarter, along with the lukewarm rest of the year, it all comes out to a mere 2.4 percent growth for the year. It’s not recessionary like the last months of the Bush administration, but nothing to brag about, despite all the bragging that the president and a few of our more liberal Facebook friends were doing after that 5 percent figure hit the news, which probably explains why so little attention has been paid by the media.
The occasional stories that have appeared take care to quote economists who predict the coming year will at last achieve that elusive 3 percent GDP increase, which was considered treading water during past Republican administrations but is now regarded as a miracle on par with a Soviet five-year plan, and they tend to point out that 2.6 percent growth would be considered a godsend in Europe and offer the excuse of China’s slowing growth, but we doubt it will convince anyone that America’s economy is roaring along. Nor do we expect that the Democrats who have long championed European and Chinese style governance will reap much political benefit from the uptick, which can more plausibly explained by the oil boom that the administration has resisted, a point that will be unavoidably highlighted after Obama’s expected veto of an expected bill that would hasten construction of the XL Keystone pipe, and to Republican restraints on governmental control of the economy in general.
The president will continue to insist that his policies of higher taxes on the wealthy and increased government spending for the rest have delivered that tantalizing 2.6 percent growth rate, and will surely surge past that elusive 3 percent figure this year, and much of the media will be eager to reiterate the message. Anyone old enough to recall the 7 percent figures of the Reagan years will be skeptical, though, and even the youngsters will wonder why the country isn’t doing better. As much as we hate to bad-mouth the American economy, even during a Democratic administration, we don’t expect that Hillary Clinton or anyone else the Democrats might put up will be able to run on the party’s economic record even in the far-off year of ’16.

— Bud Norman

The Chill and the Boom

There’s no way to stretch out the holidays any further, and unless you’re lucky enough to occupy a high government office it’s time to get back to work and the long, hard grind through winter. For us that means resuming our reading of the news, among other things, although with all those high government officials still on vacation there’s not much there except the miserable weather.
Last year around this time the weather was just as miserable, but many of the media were eager to use that as an explanation for the upcoming miserable data showing a quarterly contraction in the economy. This time around the same media were disappointed that the holidays distracted attention from a robust 5 percent in the gross domestic product over the past quarter, and don’t seem eager to speculate how the frigid temperatures prevailing just about everywhere north of the Florida keys might slow the long awaited Obama boom. This is no time to be touting the president’s, so they’re filling the news hole the airtime with talk of that GDP figure and the the recent decline in gasoline prices and the slow but steady growth in the jobs market and the record highs in the stock market. Except for the college and professional football playoffs and the usual internecine Republican squabbles and the miserable weather there’s not much else, so their giddiness is understandable.
They won’t want too much attention paid to the economic news, of course, lest the public notice how the rosy reports differ from it own frost-bitten reality. The smart guys at Zero Hedge always manage to find the dark cloud within any silver lining, and they noticed that much of that 5 percent growth last quarter was achieved by an increase in consumer spending on higher health insurance premiums that was supposed to be counted in the contracting winter quarter that the government had already written off and was instead added to the far most robust report they’re now crowing about. Such Chinese-style statistical legerdemain is by now a common feature of the long awaited Obama boom, as is the apparent assumption by many of the media that paying higher health insurance premiums rather than the lower ones promised during the Obamacare sales job is a benefit to the economic well-being of the nation, and has thus gone largely unmentioned by many of the media.
That slow but steady growth in the jobs market has not raised the labor participation rate from the lowest level since the ’70s, largely because the number of legal and illegal immigrants has increased at a slightly faster and just as steady rate. The president’s extra-constitutional to confer amnesty on millions of illegal immigrants and thereby invite millions more is being touted by many of the media as part of his remarkable comeback after the mid-term election shellacking, along his with extra-constitutional agreement with the Chinese to combat global warming, but they probably won’t too much attention paid to that.
Those plunging gasoline prices are hard to ignore while shivering next to the pumps, but it will take a lot of doing by many of the media to make anyone think that the president’s policies have anything to do with it. The same president who made a campaign promise of skyrocketing electrical rates and appointed an Energy Secretary who openly pined for European gasoline prices and has denied drilling permits on federal land deserves no credit for America’s frackin’ oil boom, and any attempt he makes to claim credit will only make him seem all George W. Bushy and diminish his standing with the environmentalists of his party. The happily deflationary effects of lower gasoline prices will only encourage the Federal Reserve to keep up the money-printing that has fueled those bubbly record stock market indices, however, and somehow the president will get credit for that without losing his standing among the Wall Street-hating socialists of his party.
Nor will many of the media wonder if the Republican obstructionism and gridlock they’ve decried the past four years have anything with those rosy numbers they’re touting. Since the Republicans gained control of the House of the Representatives after two years of complete Democratic control of the Congress and presidency, and the officially reported deficits have gone down and government spending as a percentage of the Gross Domestic Product has also declined, both which conservative economic theory considers a spur to economic growth, but better to report on those crazy conservatives’ challenge to the relatively timid House leadership. No use pointing out that most of the nation’s economic growth has occurred in states controlled by Republicans, either, especially when the governors of the most successful of them are among the contenders for the ’16 presidential race that is already affecting the reporting of many of the media.
Judging by the miserable weather forecasts we probably won’t be getting out of the house until then, and although the question seems of little interest to much of the media we can’t help wondering what effect it will have the economy if the rest of the country is similarly to get out to the store, but at least we’re back on the job and following what there is the of the news.

— Bud Norman

When Winter Lingers into Summer

You might not have noticed, what with all the political scandals and foreign crises and invasions of unaccompanied minors and soccer games vying for your attention, but the American economy remains very, very lousy. According to the ultimately official numbers that were released with little fanfare this week, the American economy is lousier than it’s been since the bad old days of the ’08 meltdown.
The first and most ballyhooed estimate of the first quarter’s Gross Domestic Product was for 0.1 percent growth, which was horrible enough but at least kept alive a streak of anemic growth and could plausibly be blamed on the miserably cold winter that had afflicted much of the nation. That was more quietly followed by a revised estimate of a 1.1 percent decline, and the administration’s apologists arguing that the winter was even worse than they’d realized and it would have been more dire if not for the miracle of Obamacare causing an uptick in health care spending. Only the most nervous sorts of investors and the hard-core news junkies would have heard about the final report of a 2.9 percent decrease in GDP, which is even harsher than the past winter and includes the unsettling news that Americans actually spent less money on their health. Upon closer examination the numbers become even more dismal, with declines in private inventory investment, exports, state and local government spending, and residential and non-residential fixed investment that cannot be explained by snowy roads and falling temperatures.
Still, those ever-bullish proponents of Obamanomics in the popular press are reassuring their readers that the lazy, hazy days of summer will correct the situation. Presumably this is the time of year when a young executive’s fancy turns to thoughts of private inventory investment, and everyone will be herding the kids into the car and hitting the road to a relaxing yet economically stimulative vacation despite the gas prices rising from all those foreign crises that have nudged the economy off the front pages. Those of us less enamored of the high-tax, high-regulation, high-minded anti-caplitalist scheme that has been imposed on the American economy the past six or so years remain bearish.
The smart fellows over at zerohedge.com note that after the miserable winter even if spring and summer and fall bring the rosy 3 percent growth rates that the government has been promising it will average out to a meager 1.5 percent growth for the year. They don’t seem at all confident of that, either, noting that the past 50 years of economic history have never found two years with growth of less than 2.6 percent that weren’t followed by a recession. After a long stretch below that economic Mendoza line another quarter of contraction would force the headline writers to use that dreaded “R word,” and the economy would be once again jostling with the latest scandals at home and catastrophes abroad for news space.
Such dire news should make the stock markets happy, as it will likely force the Federal Reserve Board to keep printing up money and pushing down interest rates at least through the mid-term elections next fall, but it will have an unsettling effect on those portions of economy that make their money honestly. All those scandals and crises don’t inspire much confidence in the nation’s leadership, either, nor do they bode well for the price of energy. Perhaps that invasion of unaccompanied minors from will rescue the economy, but even in the midst of a wet and warm summer we’re still feeling those wintertime blues.

— Bud Norman

That Shrinking Feeling

America’s economy made a brief appearance in the headlines Wednesday, jostling for space on the newscasts with illegal immigrants, the latest gun-grabbing frenzy, and some predictable anti-homosexual aspersions cast during the pre-Super Bowl hype. The news was that the economy shrank by a tenth of a percentage point in the last three months of the past year, which is bad, so the media will likely let the matter drop soon.
It’s the kind of news that demands some brief acknowledgement from even the most reluctant reporters, though, so most of the press organizations immediately began spelunking for some heartening information that might be hidden inside in the dark cavern of the Commerce Department’s grim report. The decline was a “surprise” according to the headline writers, who always seem surprised when anything bad happens in the age of Obama, and the lead stories were quick to mention that it all means the Fed will continue to keep the money-printers working overtime. Most reports were also happy to prominently feature the Democrats’ view that this was the “best-looking contraction in U.S. GDP you’ll ever see.
A fellow named Paul Ashworth, the chief economist for Capital Economics, was able to make that claim without giggling because the report indicated that most of the decline was attributable to cuts in the defense budget and a decline in inventories. Both of these are a “one-off,” Ashworth contends, and thus the economy should soon be roaring back to its previously sluggish pace. The appointment of Chuck Hagel as Secretary of Defense is just the latest indicator that we haven’t seen the last of cuts to the defense budget, the drops in inventory investments and exports can’t easily be explained by any temporary circumstances, and the phenomenal 85.2 percent increase in dividend income that kept the decline from being much worse is also a “one-off” caused by investors trying to get ahead of the coming economy-slowing tax hikes, but Ashworth and his many re-Tweeters can be forgiven their incurable optimism.
If you’re not convinced by such happy talk, the Democrats have a back-up argument that it’s all the Republicans’ fault. White House press secretary Jay Carney helpfully explained that investors were frightened by the appalling spectacle of Republicans in the House of Representatives balking at the president’s prudent plan of massive tax hikes and endless deficit spending during the recent “fiscal cliff” negotiations, and he even blamed the defense cuts on those notoriously anti-military Republicans. The reason the Republicans insist on such shenanigans, Carney further explained, is to make sure that “tax loopholes remain in place for corporate jet owners.”
Carney was not asked to explain why Obama’s never-ending stimulus is still needed if the latest report indicates that the private sector continued to chug along despite a purported decrease in government spending, which is a shame, because we would have enjoyed hearing it. We’ll likely have to settle for more illegal immigrants, gun-grabbing, and Super Bowl hyperbole, and none of it will be quite so much fun.

— Bud Norman