I Don’t Love Joe Biden
October 20, 2022
But should we blame him for our current economic malaise?
When I was a young pup, I remember Uncle Cal frequently referring to certain elected officials as “a Horse’s Ass”. Back then, I didn’t know what he was trying to infer, but it sure sounded good!
Uncle Cal is long gone, but it seems the supply of Horse’s Ass elected officials has expanded significantly and I’m frustrated, angry and simply miserable as I watch and listen to ‘broadcast journalists’ and various political pundits who seem to have no grasp of economics as they explain current economic conditions to an audience of [potentially] economic illiterates. Thus, the origin of my current ‘rant’:
Stock Prices, Inflation, Recession & Economic Cycles
Economic cycles – also known as business cycles — are a reality, and they can be tracked over time.
They generally are predictable, although not in precise time frames. Economic cycles consist of four identifiable phases or stages: (a) Expansion; (b) Peak; (c) Contraction; and (d) Trough.
Every economic cycle includes a period of euphoria and exuberance marked by a sustained period of economic growth; followed by a period of uncertainty and lethargy linked to a period of economic decline.
The Great Recession officially ended in June 2009. By the time Donald Trump took office in January 2017, he inherited an economy in its 91st month of economic expansion.
That expansion continued into 2020, becoming the longest period of expansion on record, peaking at 128 months in February 2020.
Donald Trump has never failed to speak his mind. During the campaign leading to the 2020 presidential election, Trump proclaimed, “If (Joe Biden) is elected, the stock market will crash!”. [In 2018, Trump said, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” In late January 2020, Trump also said, “We have it (coronavirus) totally under control. It’s one person coming in from China. It’s going to be just fine.”]
Facts are facts:
- Five years ago (October 20, 2017) the S&P 500 closed at 2,575; it closed today (10/20/2022) at 3,666, an overall 5 year gain of 42%; an average of 7.3% per year.
- Ten years ago (October 2012), gasoline sold for $3.62 per gallon in Florida. AAA shows the current Florida price per gallon at $3.38.
- Case-Shiller reported a ten year 288% price increase for housing in the Tampa Bay area (where I currently live) from Mid-2012 to Mid-2022. This is partly due to (1) recovery from the Great Recession; (2) stimulus due to artificial below market interest rates (Fed Policy); and (3) supply/demand imbalance primarily due to local and regional housing policy decisions over time.
- The most recent CPI-U release from BLS reflects an annual inflation rate of 8.2 % through September 2022, the highest in four decades. Yet, if we look back to 2012, we can see the average annual rate over that decade computes to about 2.5% annually, with near zero periods during the Pandemic.
What’s really going on? There are a number of pieces to this puzzle, including:
- The lingering effects of a Pandemic;
- The Russian invasion of Ukraine;
- Aftershocks (direct and indirect) from draconian tariffs enacted beginning in 2018;
- Ongoing ripple effects from the 2017 Tax Cuts and Jobs Act (TCJA); and
- Various supply chain issues, both domestic and international.
The root cause of our current intersection of inflation and stock market volatility likely traces back to 2010, when the Fed launched “QE2” – quantitative easing – essentially increasing liquidity in the domestic economy to stimulate economic growth. One of the outcomes from QE is a decrease in bond prices due to falling interest rates, combined with a run-up in stock prices as investors search for yield.
When the Fed announced its QE2 plan in November 2010, 30-year mortgages were at 5%; and the S&P 500 index was 1,200. Over the course of the next few years, rates on 30-year mortgages dropped as low as 3.3%, while the S&P 500 index inched toward 2,010 (which it reached in September 2014).
Meanwhile, the CPI from 2010 to the end of 2020 remained relatively calm, reflecting the lagging effects of the economic recovery which began in mid-2009.
It is relatively easy to look into the rearview mirror now to observe that the Fed’s responses to (a) the Great Recession; and then (b) impacts of Covid on our economy helped to create an environment which fueled the inflation we are facing today.
In March 2020 — in addition to a promise to inject a Trillion dollars into the U.S. banking system — the Fed cut the federal funds rate to a range of 0% to 0.25%.
The rapid and aggressive response by the Fed likely saved our economy from implosion, but also helped inspire a dramatic run-up in both stock prices and home prices: The S & P 500 index rose from 3,000 in early March 2020 to reach 4,700 in November 2021 as investors chased phantom returns on investment. (Stock prices were further bolstered by massive stock buybacks inspired by the 2017 TCJA).
Home mortgage interest rates are a critical determinant of purchasing power for most borrowers. As far back as 1971, 30 year fixed-rate mortgages had never been offered below 7%; they moved up to 9% in 1974; climbed to 11% in 1979; and reached a peak of 16.6% in 1981.
Our economy is a long game. The few months when home mortgage interest rates were at or below 5% is an aberration enabled by Fed policy. Now that long-term mortgage rates have settled into the 7% to 9% range [which seems rationale and appropriate based on history], home prices will also stabilize.
It seems convenient for some to blame Joe Biden for (a) high gasoline prices; (b) rapidly rising consumer prices; (c) a stock market ‘meltdown’; and (d) even for supply chain dysfunctions.
A quick look at history confirms that there is a rather significant lag between the point when policy is affirmed and enacted; and the future point when we begin to see and experience results from those actions.
The Biden White House has pledged to fight against inflation, and has stubbornly refused to blame the Fed for our current economic symptoms.
Although there seem to be plenty of contributing factors, the real truth is: We relied almost entirely on monetary policy to steer the ship for more than a decade, and that approach brought us to this moment, not 24 months of Democratic control in the White House.
And, if the Fed would just slow down their relentless and uncompromising initiatives to raise interest rates to the point of choking off the economy as they attempt to rein in inflation, we might experience a smooth correction, and a gentle return to the economic expansion phase we all want to see.
An existential threat to America
September 5, 2022
September 2022 Fallout From Philadelphia
President Joe Biden addressed our nation on September 1 to express his deep concerns that American equality and democracy are under assault. He said, “There is no place for political violence in America. Period. None ever.”
“Too much of what is happening in our country today is not normal… There’s no question the Republican Party today is dominated, driven and intimidated by Donald Trump and the MAGA Republicans, and that is a threat to democracy… Donald Trump and the MAGA Republicans represent an extremism that threatens the very foundations of our republic”.
Many of us have been concerned about this very issue for several years now.
We have witnessed firsthand some alarming dangerous attitudes and behaviors by far-right “MAGA” radical groups beginning around 2016.
One of the shibboleths of the current MAGA movement occurred on June 1, 2020
when then-President Trump orchestrated a near-riot in Washington, D.C. After walking from the White House, across Lafayette Square, to St. John’s Church, he staged a photo-op with a Bible in front of the Church, inspiring those who prefer fear, hate and anarchy to reject honest debate.
These most recent alarming attitudes and dangerous behaviors have much in common with:
- The second “Red Scare” which began in 1947, and reached its peak between 1950-54 under the leadership of U.S. Sen. Joe McCarthy;
- A period of extreme antisemitism which emerged in the 1930’s, inspired by Father Charles Coughlin (and others) who spread various conspiracy theories, creating a robust underground movement which spread fear that Jews were working for the destruction or replacement of white Americans and Christianity in the U.S., together with (false) allegations which accused “the Jews” of dominating Franklin Roosevelt’s administration, of causing the Great Depression, and of dragging the United States into World War II.
- The ‘race riots’ of the late 1960’s, which included Birmingham (1963); Harlem (1964); Watts (1965); Chicago (1966); Newark (1967); MLK, Jr. Riots, 125 cities (1968); and the list goes on and on….
- Post 9/11/01, we witnessed an irrational groundswell of anti-Muslim sentiment. The al-Qaida terrorists who attacked the Twin Towers and the Pentagon represent a very rare and extremist sect of Islam. Despite that reality, many Muslims, as well as other Arab Americans, became the targets of anger, racism and hate crimes, continuing to this day.
Biden’s recent remarks ring true. He loudly and clearly reminded us that not all Republicans are MAGA Republicans.
Look back to the early 1930’s when Father Charles Coughlin’s radio show was extraordinarily popular, with a weekly audience estimated to be around 30 Million. His theme centered on an isolationist, anti-Semitic and conspiratorial viewpoint that resonated with many listeners at that time.
Yet, we know that not all Catholics were Isolationist or anti-Semitic. Sound familiar?
The Big Question remains: Who or what is creating false narratives today? Who is spreading hate speech, nurturing and encouraging intolerance in the U.S., empowering the narcissistic blamers who feel marginalized to go off on a compound rage comprised and triggered by: anti-Semitism, Islamophobia, skin color, nationality, gender, sexual orientation, religion, and an unidentifiable myriad of other perceived irritations?
Think of the last time you attended an orchestra performance. The orchestra Conductor led and guided the various sections to complement each other resulting in a rich and complex sound which was pleasing to the audience.
Now, imagine if that orchestra performance was infiltrated by some musicians who refused to allow the conductor to lead.
Within the wind section, the brass instruments would play out of sync with the woodwinds.
Although the string musicians are mostly in harmony, the harpist occasionally takes his lead from the woodwinds, creating periods of discord.
The percussion instruments are off in a zone of their own, just doing what they want, totally out of touch with the conductor or any of the other musical sections, angry that they aren’t in charge.
- Although relatively small in number, the renegade percussion section has sufficient noise to create complete and destructive cacophony, driving off the audience as well as the other musicians.
A recent report from AdWeek (TVNewser) shows Fox News – in particular, Tucker Carlson at 8 PM – leading the networks in viewership in both total viewers, and in the coveted 25-54 Demographic.
Translation: Tucker is a money machine. Advertisers are begging to support his daily hour of glory.
The Wednesday, August 31, 2022 Tucker Carlson show on Fox News began with a review of negative allegations against Joe Biden, including: a sly attack on son Hunter; recall of Joe showering with his daughter Ashley when she was a child; and how his wife currently knows he has Dementia.
Then, a rather long diatribe on the eve of Biden’s 80th birthday and how this is a sign of incompetence; that Joe is fixated on trivial and meaningless issues such as climate change, diversity and trans rights; that he is devoid of any ‘vision’; purely a partisan seeking advantage in the upcoming elections, leading into further emphasis on the negative aspects of Biden’s age.
Carlson continued with more passion, focusing in on recent Biden public commentary related to those individuals in America who have crossed the line into realm of ‘semi-Fascism’. Mr. Carlson managed to inject a critique blasting Biden saying he is, “…the same politician who had the FBI raid the home of the man who is running against him in the next election”.
Carlson segued into a commentary on the White House Press Office. Says Carlson, “… would have been better (for the Press Office to say) that Biden had a stroke, apologize and then move on.” Carlson further denigrated the intelligence, experience and abilities of the White House communications team, stating, “Biden’s history-making publicist, the single dumbest person to ever hold that job, explained that her boss had spoken intentionally and with precision” then reinforcing the notion that Biden had made a blanket statement that Republicans are Fascists.
Those who may be interested in watching and listening to the entire broadcast are directed here: https://www.fox.com/watch/46d7f725b815fd5a7c10e1a1128558a3/
Meanwhile, enough Walrus commentary on the Tucker Carlson show of August 31.
Tucker is just one of many catalysts working on a base of angry white Christian men, keeping them stirred up by constantly reminding them that external forces have conspired to disenfranchise them.
Joined by his colleagues at Fox News, NewsMax, OAN, various podcasts and conspiracy driven social media groups, they continue to use Donald Trump as their demagogue by echoing and amplifying the ranting and raving of the Monarch of MAGA Americans toward an inevitable second Civil War.
Wind Farms in the North Atlantic
August 26, 2022
Electric Power Generation v. Commercial Fishing
On August 26, 2022, Fox News (Jesse Watters Primetime) produced and broadcast over public airwaves an attack piece on offshore wind farms. It alleges that Democrats have conspired against the private commercial fishing industry to decimate historic fishing grounds; deprive them and nearby port communities of their legacy commercial activities; and potentially destroy entire regional economies.
Background:
Wind is one of the cleanest energy sources available, and some scientists insist the U.S. is sitting next to a gold mine. A study published in 2009, “Global potential for wind-generated electricity” (PNAS: Proceedings of the National Academy of Sciences of the United States of America) firmly established wind power as the most effective and efficient means to generate sufficient electrical power to meet both present and future needs.[1]
A subsequent study conducted in 2017[2] found that wind speeds over the oceans could allow offshore turbines to generate far more energy than land-based wind farms – with the North Atlantic, in particular, theoretically able to provide enough energy for all of human civilization.
In tapping into wind as an energy source, the U.S. has lagged behind the U.K. and Europe for decades. Two of the largest offshore wind farms in the world are the London Array and the Netherlands’ Gemini wind farm.
The U.S. is beginning to catch up. The first offshore wind farm in the U.S. began generating electricity in late 2016. It consists of five, 6-MW (megawatt) Haliade-X turbines supplied by GE Renewable Energy linked through a submarine transmission cable into the New England grid. Located about 3 miles off the coast of Block Island, RI, this wind farm will generate enough electricity to power 5,000 homes on the island and to meet around 90 percent of its total electricity demand. [3]
The Current Domestic Situation: The Bureau of Ocean Energy Management was created in 2011, and it is poised to review at least 16 offshore wind plans for potential approval in the next three years, up from two total approvals since the agency was created.
The Biden administration apparently has ambitious plans to open up vast swaths of coastline in order to generate 30 gigawatts of offshore wind energy by 2030. Energy companies are stepping up: Six leases off the New Jersey and New York coasts sold for $4.3 Billion in February 2022, the most lucrative wind lease sale in U.S. history.
Among other cases, Oregon officials are asking BOEM to delay a planned lease sale next year over concerns about its potential impacts on commercial fishing.
The commercial fishing industry has real and legitimate concerns which need to be investigated and addressed, honestly and thoroughly.
Interim Conclusion: This is a very complex issue which needs input from cool heads; full transparency; and no further publicly broadcast emotional diatribes. Like most issues today, we need to allow real experts to develop and distribute a solid strategy which achieves optimum current and future outcomes for our society as a whole.
[1] This 2009 study was supported by National Science Foundation Grant ATM-0635548; the authors represent an international multidisciplinary team of scholars.
[2] “Geophysical potential for wind energy over the open oceans”; Carnegie Institution for Science, Stanford, CA 94305.
[3] Block Island Wind Farm has a peak capacity of 30 MW (megawatts) and is expected to produce around 125,000 MWh (megawatt-hours) of electricity annually.
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