Trump at Long Last Considers a New Haircut

Presumptive Republican presidential nominee Donald J. Trump has long been notorious for paying his creditors less than promised and threatening  lawsuits more costly than the remainder if they objected, and while bragging about his untold and undocumented wealth has on four occasions resorted to bankruptcy filings to pay out mere pennies on the dollars owed for his failed casinos and strip joints. We’re told by his so-loyal-he-could-shoot-someone supporters that such ruthlessly unscrupulous business practices are precisely what’s needed to deal with those duplicitous Democrats and “establishment” Republicans and wily Chinamen and assorted other foreigners to make America great again, but even as we contemplate the horrible alternative of presumptive Democratic nominee Hillary Clinton becoming president we do not find the argument at all persuasive.
With our government already $19 trillion in debt and the shortfalls on all its grandiose entitlement promises rapidly approaching all-the-money-in-the-world levels, Trump has already proposed several you-can-believe-him-they’re-great solutions. He told The Washington Post that he could entirely eliminate the national debt within eight years with no tax increases just by renegotiating all of the country’s trade deals in a really great way, believe him, and then a couple days later he told Fortune Magazine that he’d never said he could eliminate all the debt within 10 years and only expected to reduce the debt a “percentage,” because of all the other great things he plans to do about infrastructure and such, and when asked what percentage he replied “It depends on how aggressive you want to be,” and that “I’d rather not be so aggressive.” More worrisomely yet, he also told the CNBC cable news network that he’d handle the debt of the casino and strip joint that America has lately become by the same means that have worked out so well for himself in the past, by asking the country’s creditors to accept less than what was promised.
Asked by his stunned interlocutor if he was really talking about renegotiating sovereign bonds already issued by the government of the United States of America, Trump replied in typically un-parsable English that “I don’t want to renegotiate the bonds, but I think you can do discounting, I think, you know, depending on where the interest rates are, I think you can buy back — you can — I’m not talking about with a renegotiation, but you can buy back at discounts.”
The presumptive Republican presidential nominee’s typically un-parsable English allowed him much wiggle room as he inevitably walked back his comments, as the notoriously straight-talking truth-teller so often does, so the very next day he was on CNN assuring another national television audience that “People said I want to go and buy and default debt, and I mean these people are crazy. This is the United States government. First of all, you never have to default because you print the money, OK?” None of which is at all reassuring.
Call us crazy, but our best reading of Trump’s earlier comment suggests that at least in one particular moment in time Trump was actually talking on national television about paying the country’s creditors less than was promised but somehow achieving this feat without a renegotiation. This is what’s known in economics as “crazy talk.” Any debt that is paid at less than what had been contractually promised has most certainly been renegotiated, whether acknowledged or not, the entirety of the financial and political world would surely regard it as a default by the world’s biggest-or-second-biggest-economy-depending-on-the-accounting-methods, and although this method has previously worked out to the benefit of Donald J. Trump there is simply no explaining how it might work out to the benefit of America or the rest of the world. Given the chance to print his own money, just as President Barack Obama has done during the past seven-and-a-half years or so while doubling the national debt, we aren’t at all certain that the failed casino-and-strip-joint owner would avail himself of the opportunity. It didn’t work out well for the Weimar Republic or Zimbabwe or any of the other casino and strip joint countries that tried to inflate their way out of debt, but we’re assured by his so-loyal-he-could-shoot-someone supporters that the oft-bankrupt Trump is such an exceptionally shrewd businessman that this time will surely be different.

Which is not to say, alas, that the most likely alternative is any better. The presumptive Democratic nominee has also pledged to keep her hands off those entitlement programs that are driving the country toward inevitable bankruptcy, which would involve a fight that neither of these self-described fighters have the stomach for, and unlike her most likely rival she’s not only ambiguously open to negotiations on taxing the public to keep the economy limping along even if those tax increases hinder economic growth and wind up reducing public revenues but is enthusiastically for them, so we take care not to endorse either of them. We’re still  looking around for some third  or fourth option that might be more appealing, and although haven’t settled on any yet,  and although we admittedly don’t hold out much hope that there is one, be assured we’ll keep trying.

— Bud Norman

Oh Yeah, the Economy

Perhaps it’s just because we’re not hanging out with a high-rolling crowd, or because baseball season is underway and the National Basketball Association’s playoffs just concluded, but nobody seems to be talking about the economy these days. All of the non-business news media seem equally uninterested, to the point that it takes another announcement from the Federal Reserve Board to get any front-page play for those poor newspaper scribes stuck on the economy beat.
We suspect this has something to do with the diocletian nature of all that boring data that the Fed went on about Wednesday. The economy isn’t quite bad enough for the Republicans to make an issue of it, and not nearly good enough for the Democrats to do any bragging, and apparently not so bad that the Fed feels obliged to again ramp up the money-printing that fueled that newsworthy stock market boom, but not so good that it intends to raise interest rates above 0 percent any time soon, and only the economics geeks understand what any of that means and none of them seem agree about it. Better to talk about baseball and basketball and whatever else might be going on, we suppose, but we can’t shake a nervous feeling that something important is going unremarked.
Perhaps it’s also because no one seems to know what to do about it. President Barack Obama’s only big economic initiative since that pork-laden “stimulus” bill and all the other debt-increasing “investments” he and his Democratic majorities in Congress foisted on the country back in the bad old days has been his Trans-Pacific Partnership free-trade deal with most of Asia, and the Republican congressional majorities that resulted from those earlier fiascos have been largely supportive, and it’s suddenly the remaining Democrats who are balking, and by now it’s more a story about our troubling politics than our troubled economy. David Brooks, The New York Times’ token “conservative” who fell in love with the perfectly pressed crease in Obama’s pants way back in ’08 and has never quite gotten over it, blames it all on what he calls the “Tea Party” faction of the Democratic party, which is wedded to labor unions and their protectionist preferences, and although he admits that Obama’s characteristic secretiveness prevents anyone without top-secret security clearance from knowing what the free-trade deal is he rightly notes that those same Democrats don’t seem to mind they have no idea about the wacky deal he’s making with the even wackier mullahs of Iran about their nuclear weapon ambitions. Our conservatism requires no quotation marks, and we’re staunchly Republican, and will grouse that the “Tea Party” analogy belies Brooks’ putative conservatism because the “Tea Party” was pretty much right about the growing debt and all the regulatory red-tape resulting from all those expensive “investments” and everything else, and we’re free-traders to our Adam Smith core, but even we are so spooked about Obama’s negotiating record and what might be hidden in that Trans-Pacific partnership that we’re willing to wait another two years or more for a better and more transparent agreement. There’s some fun in watching all the presidential hopefuls in both parties try to finesse this mess, even if the smart ones seem to understand they can simply ignore it, but otherwise we can well understand why people are following the divisional races in major league baseball and The Golden State Warrior’s long-awaited basketball championship.
Eventually everyone will be forced to pay some attention to the economy, certainly by November of ’16, and at that point it will be all about politics. The Republicans will argue that the numbers regarding jobs and household wealth and Gross Domestic Produce could have and should have been been much better, the Democrats will reply that those admittedly unimpressive numbers would have been so much worse without the president’s “investments” and resultant regulations and trillions of dollars of debt that everyone would have stopped going to work and buying groceries and falling for the latest advertised seductions and we’d all be rubbing sticks together in some cave, and that the same president’s secretiveness and lack of meaningful relationships with anyone else in government sank that Trans-Pacific Partnership that might have helped, and there’s no way way of knowing who the public will blame.
They’ll blame somebody, though, because there’s no getting around the end-of-the-month fact that economy isn’t that good. Even through the rose-colored glasses of the Federal Reserve Board the economy is expected to grow at at only 1.8 to 2 percent this year, barely enough to sustain those much-touted jobs number that haven’t quite kept up the arrival of new legal and illegal immigrants, another issue proving problematic for both Republican and Democratic presidential candidates, and on those rare occasions when people talk about the economy nobody seems to singing that happy days are here again. Whatever the economic numbers might be deep inside the business section around the next election day, we expect the Democratic nominee will be griping about the inequality of it all, which will resonate with a large resentful population of the country, and the Republican nominee will be talking about tax-cutting and de-regulating and unleashing the potential of the economy, which will resonate with the more hopeful portion of the electorate, nd the electoral numbers will decide the matter.
Until then, we’re as confused as anybody else. Zero percent interest rates don’t seem to provide any incentive for making the loans that could fuel an economic boom, and it isn’t any good for those poor old folks counting on interest-bearing retirement plans, but anything higher is likely to scare away investors in such uncertain and debt-laden and over-regulated times such as these, and that free-trade deal with a crucial foreign might or might not be a good idea, as only those with a top-secret security clearance would know, so we’ll anxiously await whatever happens. In the meantime we note that The Kansas City Royals are back on top of the American League’s Central Division and that The New York Yankees are within striking distance of the lead in the Eastern, and we’ve had a certain sympathy for The Golden State Warriors ever since they won their last title 40 years ago with that arrogant white boy Rick Barry as the star, so we’ll hope for the best.

— Bud Norman