That Ford Lincoln Plant, Trump Appointees, Icecaps Melting, And So Forth

First, you may be hearing that Donald Trump has already saved a Ford Lincoln plant from moving to Mexico.  The reality of the matter is a bit different.

Secondly, if you hear that businesses are having trouble getting access to credit due to restrictions on the financial sector (Dodd-Frank specifically), ask yourself whether or not this amounts to a bunch of bullshit or not.

Now, let's talk about some of Donald Trump's appointees.

Jess Sessions is official as the AG candidate.  Civil rights advocates are not thrilled.

In testimony before the committee, former colleagues said that Mr. Sessions had referred to the N.A.A.C.P., the Southern Christian Leadership Conference and other civil rights groups as “un-American” and “Communist-inspired.” An African-American federal prosecutor then, Thomas H. Figures, said Mr. Sessions had referred to him as “boy” and testified that Mr. Sessions said the Ku Klux Klan was fine “until I found out they smoked pot.” Mr. Sessions dismissed that remark as a joke.

Michael Flynn is most likely in as national security advisor.  He takes a hard line against Islamic militancy, and perhaps against Islam itself.  Emphases added mine:

Islamist militancy poses an existential threat on a global scale, and the Muslim faith itself is the source of the problem, he said, describing it as a political ideology, not a religion. He has even at times gone so far as to call it a cancer.

If you view Islam as a cancer, you'll certainly be pleased by Flynn's appointment.  If you think that waging a war against the world's second-largest religion is not likely to work especially well, his appointment would not be good news.

Jared Kushner, President-elect Trump's son-in-law, having recently settled scores with old enemies who happen to be political allies of his father-in-law, is looking to work around anti-nepotism laws to find a place in the Trump cabinet, which would be nothing new; Hillary Clinton worked around the law in the days her her husband's administration.

Then of course there's Benghazi aficionado Michael Pompeo for the CIA.  About Pompeo, what can be said.  If you thought Benghazi was truly a scandal, his appointment was good news.  If you think the diplomacy requires open embassies and that open embassies carry with them the risk of attack, you probably don't think much of the Benghazi scandal in the first place and ergo you don't think much of Pompeo.

Pompeo was backed by the Koch brothers, and I imagine that statement arouses strong feelings either way:

Mr. Pompeo was first elected to Congress with a large amount of financial support and a prominent public endorsement from the Koch brothers, and the Kansas congressman has remained closely aligned with them since. Individuals associated with Koch Industries are by far the biggest donors to Mr. Pompeo’s political career, contributing $357,000 to him since 2009. (NY Times)

Conservatives are likely popping open the champagne (if they can afford it - America hasn't been Made Great Again quite yet).  Liberals are in dismay.  A veteran of the Berlusconi years in Italy offers some advice for dealing with the coming Trump years that may prove salient.

In other news, the icecaps are still melting.  The North Pole is 36 degrees Fahrenheit warmer than normal.  This is either entirely natural, caused by man, or perhaps a Chinese hoax, although the Chinese deny it is a hoax.  Still, can you trust them?  They're (ostensibly) communists.

However you feel about all this, I hope you can be stiff.

New Dem Strategy, Possible AG Candidate, Dollar Contradictions and Wall St. Celebrates

If you think civil rights laws have gone too far, you'll be excited to know that Jeff Sessions is under consideration for Attorney General under Trump.  It was a while ago, and people change (sometimes) of course, so bear that in mind when you read this:

In 1981, a Justice Department prosecutor from Washington stopped by to see Jeff Sessions, the United States attorney in Mobile, Ala., at the time. The prosecutor, J. Gerald Hebert, said he had heard a shocking story: A federal judge had called a prominent white lawyer “a disgrace to his race” for representing black clients.

“Well,” Mr. Sessions replied, according to Mr. Hebert, “maybe he is.”

Meanwhile, Dems look like they may be settling on adopting the strategy of aligning with Trump on certain economic issues over which he might be pitted against conservatives in Congress.

Will this strategy work?  It certainly has its logic.  On the other hand, what are the odds that conservatives in Congress really will defy the agenda of a President from their own party?  Even if paid child leave and infrastructure spending are not traditional Republican priorities, will Paul Ryan and the rest of them really defy their own President on the grounds of ideology?  It will be interesting to see how this plays out.  It may put Trump and the GOP in an awkward spot to the advantage of the Democrats, or it may leave the Democrats as bit players in this phase of history, as they arguably were until the tail end of the W. Bush administration.  We'll see.

This article concerning the challenges posed by a strengthening dollar is a tad pissy but is also quite short, informative, and worth your time.  Here's the crux of the matter in a nutshell (emphases added mine):

He has also pledged tax cuts, infrastructure spending and deregulation. That set of policies has led markets to expect speedier economic growth and thus higher interest rates in coming years. That, in turn, is driving the value of the dollar higher on currency markets. Since Election Day, the dollar is up 2.6 percent against an index of six other major currencies. The value of the Mexican peso has fallen 10 percent against the dollar, a remarkable swing for the United States’ third-largest trading partner.

You don’t need to be an economist to see what that means: A pricier dollar makes it harder for American manufacturers to compete overseas; it gives an advantage to companies that locate operations elsewhere; and it will, all else being equal, tend to make the trade deficit higher rather than lower.

Finally for today: it's looking like Trump's administration is going to more or less be run by Wall St.  That might come as a shock to those who thought Donald Trump was going to clean up Washington, kick the bums out, be his own man and "drain the swamp".  In relevant part:

“You would have to go back to the 1920s to see so much Wall Street influence coming to Washington,” said Charles Geisst, a Wall Street historian at Manhattan College. “It’s the most dramatic turnaround one could imagine. That’s the truly astonishing part.”

Coal, Environmental Regulation, and Infrastructure Spending

I'm quite swamped at work today so I can provide only the most meager elucidation of our times at the moment.  However, here's a few links I encourage you to read if you're not swamped at work (or too busy making America great again, of course).

This is an op-ed about coal.  Unlike a lot of op-eds, it is substantive, not emotional.  I'll try to dig up a contrarian, pro-coal industry POV as soon as I get a free minute.  In short, the author argues that the coal industry is going the way of the dodo, Trump or no Trump.  Emphases added mine:

For Mr. Trump to improve coal’s fate would require enormous market intervention like direct mandates to consume coal or significant tax breaks to coal’s benefit. These are the exact types of interventions that conflict with decades of Republican orthodoxy supporting competitive markets. Another approach, which appears to be gaining popularity, is to open up more federal lands and waters to oil, gas and coal production.

Doing so would only exacerbate coal’s challenges, as it would add to the oversupply of energy, lowering the price of coal, which makes it even harder for coal companies to stay profitable. Those same policy actions would also lead to more gas production, depressing natural gas prices further, which would outcompete coal. Instead of being a virtuous cycle for coal, it looks more like a death spiral. And this is all without environmental regulations related to reducing carbon dioxide emissions, which aren’t even scheduled to kick in for several years.

Also, concerning a trade war with China:

The saving grace for coal production in the United States may be exports to Europe or China. But Europe’s demand for coal is waning. And Mr. Trump seems to be marching us toward a trade war with China. Doing so means the Chinese could retaliate by not buying our coal. And even if a trade war is avoided, cheap coal is readily available from nearby Australia.

Here's a little breakdown of the state of American infrastructure.  It's just one report and one point of view so, of course, digest it with salt added.  That said, it's a good place to start and not an overwhelming amount of information.  Sick of those high tolls, E-ZPass system commuters?  Raise the gas tax!

Here's the Governator speaking on pollution regulation in what is essentially an ad, but he makes some good points, especially about the alleged burden of regulation on California, the nation's leader in economic growth.

And just for fun (if you enjoy high-level shade-throwing), here's Dean Baker ripping the Washington Post a new you-know-what and telling it like it is regarding the "stagflation" of the 1970s.

Bonds Sell-Off, SEC Departures, Immigration, and Foreign Reactions

There's a lot to cover today! Unfortunately, here in the real world, I am swamped at work so I'm going to have to keep it short.

Stocks are in and bonds are out as the market anticipates economic growth due to Trump's infrastructure plan.  I am certainly not the expert, but I have my questions about Trump's infrastructure plan, as tax-cut heavy and direct spending light as it is.  As notes the American Enterprise Institute, "The president-elect’s infrastructure plan largely boils down to a tax break in the hopes of luring capital to projects."  The AEI are not exactly pinko commies.  

That said, I certainly hope the market is right!  Economic growth would be good for our country, as a rising tide lifts all boats.  The market's track record is suspect so we have good reason to be cautious, but let's hope the market is right this time around.

Mary Jo White is leaving the Securities and Exchange Commission (SEC), and other resignations are likely to follow swiftly, with new personnel at the helm of the SEC, Commodity Futures Trading Commission (CFTC) and other agencies.  Dodd-Frank may be out the window.  Decreased regulation means greater likelihood of financial meltdowns, period.  Whether you see those meltdowns as the inevitable price of progress or as events that can be prudently managed and mitigated is largely a matter of ideology.  The last time over-leveraged financial institutions were largely left to their own whims it wasn't pretty, but perhaps they're properly leveraged now and can police themselves.

Donald Trump was largely viewed as an "anti-Wall Street" candidate by both his detractors and his supporters, a perception which the candidate cultivated.  Both the market's recent jubilation at his election and the likelihood that financial regulations are likely to be loosened or discarded seem at odds with the rhetoric and perception of the President-elect.

In other news, the Trump transition team appears to be in a rocky spot but these things tend to work themselves out. 

Let's touch base quickly on President-elect Trump and immigration.  Trump has dialed down his initial promise to deport 11 million illegal immigrants; he now says he'll deport only 2 to 3 million, all criminals, evidently.  This number would put him in good company: President Obama deported around 2.5 million illegal immigrants during his tenure in office.  Trump's promised numbers essentially match Obama's accomplished numbers.  President-elect Trump is going to face blowback from numerous police departments, as discussed towards the end of this article. 

Let's take a quick glimpse at how the world abroad is reacting to Donald Trump's victory:

Russia was swift to congratulate Trump on his victory over "the blonde woman," and bombing of rebel-held areas in Syria began anew.

China issued cordial congratulations to the President-elect, and then hinted at a possible trade war.

In Israeli, right-wingers were emboldened by Trump's victory to declare the two-state solution dead.  Benjamin Netanyahu has yet to show his hand.

In Mexico, there is some understandable anxiety.

Battered Greece is on pins and needles regarding the future under Trump, although far-right group Golden Dawn (what a name!) cheered his election.  Europe is clearly quite divided and it will be interesting to see just how far the European Union unravels, if it does.

Just as with Europe, Japan is highly uncertain as to what a Trump presidency portends.  Will Japan remilitarize at last?  Will South Korea go nuclear?  South Korea going nuclear may be inevitable, but the process would likely accelerate with Donald Trump's blessing.

The right-wing in India are well disposed towards Donald Trump and warm relations with Prime Minister Narendra Modi are to be expected.  It is less clear how Pakistan is taking the news.  Donald Trump has offered to mediate the Kashmir dispute.  If he pulled that off, it would be a major coup for world peace.  What India likes, Pakistan tends to dislike, but it is too soon to say with certainty how the US/India/Pakistan relationship will shift.

Iran is playing its cards close to the chest (always a wise move) and Saudi Arabia might have cause to be a little concerned, as detailed by this article.  

Turkey may seek a reset with the US, but this may be complicated by Trump's pro-Assad bent, which is not music to Recep Tayyip Erdogan's ears.

The rest of the world will have to wait, as I have to get back to my day job for the time being.  Let me just express my condolences over the surprise passing of Gwen Ifill.  The News Hour was one of the only news shows worth watching for past several decades.  Though the show will remain in capable hands, it is a shame that Ms. Ifill has died at an early age - she had a lot left to offer journalism.  Compared to what the News Hour has given us, most of broadcast journalism is a pathetic joke.  Gwen will be missed.

Some light Fed talk, and introducing Steve Bannon

I had hoped to speak a bit more about Donald Trump and the Fed today, but in reality we're just going to have to wait to see what moves he makes as President.  The odds that Trump defers to the judgment of the Fed are good, which should disappoint libertarians but be reassuring to most everyone else.

There is speculation that Trump's infrastructure plan will in fact be inflationary, which would be good for wages and employment, though obviously would provide some sticker shock to the consumer.  In these conditions, the Fed could probably afford to raise rates with little to no political cost to the Trump administration.  Should inflation fail to materialize, and economic growth remain tepid, Trump will have to resist the goldbugs and inflation hawks in his own party and try to keep the punch bowl out for the party. You'd think resisting the hardliners would be the salient move on his part, but I think Trump has done a good job of providing the unexpected so far, so who knows?

There is a lot of general misunderstanding about the Fed, and a lack of appreciation for why we have it in the first place.  Those who wish to abolish the Fed and replace our current fiat dollar with a gold-backed dollar have a lot of explaining to do as how we would handle numerous depressions and panics without the modern Fed.  I think many "creative destruction" types might welcome these economic events as natural and ultimately beneficial, but people with day jobs, or people seeking day jobs, may beg to differ.

(Not to veer off-topic, but for a top-flight, highly entertaining and informative look at the moves of the Fed through the turbulent 70s and through the major recession of the late 70s/early 80s, I cannot recommend Secrets of the Temple highly enough.  It's a long read, but so are the Harry Potter books and everyone on earth seems to have read those except for me.)

While we await more substantial events, Trump began to roll out his staff: the fairly standard, by Washington terms, Reince Preibus for Chief of Staff, and the more volatile alleged anti-Semite Steve Bannon for his "chief counselor".  This collection of Breitbart headlines makes for interesting reading.  Again, we'll have to see how much of this turns out to be hot air rather than the basis for policy, but it's easy to understand why people might be a little upset.  In any event, it's just good politics to have an attack dog on your staff - it allows you to keep your hands clean while the dog does the dirty work.

Class Resentment, Manufacturing and Higher Education

Here's the single most trenchant article written about the voting results.  It's concise and worth your time.  If you only have five minutes to spare, skip the rest of this blog and read that article instead.

Another good article, if you have the time, on the mind of the citizens who cast their vote for Obama is 2008 and for Trump in 2016 is this one.  Can Trump bring back lost, or save threatened, manufacturing jobs?

The article suggests that if he doesn't do so, he is on thin ice:

In interviews in recent days and in March, Trump voters here made clear that if he does not follow through on his promises, they are prepared to turn on him, just as they are seemingly punishing Democrats today for not delivering the hope and change voters sought from President Obama after he won as an outsider in 2008.

Further, throwing up tariff walls as Trump has suggested he might do (withdrawing from NAFTA, axing TPP, etc.) might not really solve the problem.  Emphases added mine:

As president, however, Mr. Trump will face a tough balance. Tariffs and trade wars stand to hurt American workers who make products that are exported to Mexico or China. Few voters will be happy paying more for imported goods.

And regardless of who is in the Oval Office, manufacturers are seeing relentless pressure, from investors and rival companies, to automate, replacing workers with machines that do not break down or require health benefits and pension plans. Wall Street hedge fund managers are demanding steadily rising earnings from Carrier’s parent, United Technologies, even as growth remains sluggish worldwide.

As always it is worth reading what Dean Baker has to say about the subject.  He touches on labor's recuperation, and how the Fed could undo it with an interest rate hike.  (I wish I had more time to get into intra-Republican bickering over the Fed today, but that's a whole post on its own.)

If Trump can't bring back manufacturing jobs to the Rust Belt as he has suggested he will do, one alternative might be to provide the unemployed with a college education, which has been proven to raise lifetime wealth.

The higher education plan that Donald Trump has floated is subject to change, but you can read about it here.  It places significant emphasis on training more engineers and fewer liberal arts grads.  On the one hand, you'd think this would produce a generation better geared to build "real things" rather than just discuss Plato.  On the other hand, that point of view might not hold up when scrutinized.  Either way, it would take a generation to see how this plays out.

I think we should all hope that Trump's infrastructure plans, and plans to return solid middle class jobs to America, work out.  We will find out if they will over the course of the next few years.  In addition to withdrawing from NAFTA and erecting tariff walls generally, he is going to have to find a way to grapple with automation, and the pressures shareholders place on manufacturers based in the United States to let their manufacturing workers go and replace them with machines.

On a more personal level, I just heard from a Trump-supporting relative that, based on this blog, I was "mad at the wrong people."  He then admitted that he hadn't read the blog because it was too long.  About 50% of Americans read on a daily basis to keep up with current events and around 36% read on a daily basis for pleasure, if this study is to be believed. 

I'm off to watch the Jets decisively not make America great again.  Have a wonderful day.

Transition Team and Other Matters

Things perhaps don't bode well for those who thought that Donald Trump's considerable wealth would insulate him from the traditional corruption of Washington.  Rather than "draining the swamp" it appears that President-elect Trump may be quite comfortable wading in the swamp.

It appears as though fossil fuels are set to make a comeback, and wind and solar are going to be on the ropes.  This is likely to mean continued cheap oil prices for the foreseeable future, and also a globally depressed economy.

Of course, Donald Trump has a $1 trillion infrastructure plan. $1 trillion which is a considerable number and could potentially offset losses from a globally depressed economy, but it relies entirely on private financing, so it is unlikely to actually work.  The crux of the potential problem with Trump's infrastructure plan is that if one is unlikely to earn a profit from investing in routine infrastructure upgrades, one will likely not invest in infrastructure upgrades.  All the tax credits in the world won't make a difference: no potential profit, no reason to invest. 

For what it's worth, President-elect Trump also states that this plan would be revenue neutral, which sounds great if you're concerned about excessive government spending.  Michael Sargeant of the conservative Heritage Foundation has said of the infrastructure plan, “It’s unclear exactly what [Mr. Trump] has in mind for his infrastructure tax credit ... He says they’re deficit neutral, but I’m not sure how exactly they could pay for themselves.”

To the extent Donald Trump cares about winning re-election in 2020, he will do his utmost to make sure his infrastructure plans keep Americans with industrial jobs employed. 

If you wish to peruse it, here's a speculative look at Donald Trump's cabinet to be.  Those who would like to see an aggressive Attorney General who will not hesitate to target and attack his enemies should be happy to see Chris Christie, a man whose career was recently left for dead, on the list.

Those who are concerned about internal threats from communists and other enemies of the country will be happy to see Newt Gingrich considered for Secretary of State - although shouldn't he be placed in a position to oversee domestic policy?

For the time being I'm going to hold off on detailed examination of any of these persons, but once cabinet members become official I'll delve into greater detail.

Over in the disarray of the defeated Democratic Party, it appears the Bernie Bros are making a good effort to take over the organization.  Though the battle for party control is about much more than the figures at the top, symbolically, it appears progressives may be rallying around Keith Ellison.  Chuck Schumer, hardly a beloved figure amongst progressives, but a rather canny politician, has given Ellison his blessing.  The opposition to Ellison for now seems to centered on Howard Dean, which seems like an odd choice in many ways.

Swastikas, chanting and actual attacks appear to be on the rise, or perhaps the mainstream media is just "over-reporting" these incidents.  Donald Trump was very gracious in his meeting with Barack Obama, so certainly the passions of the moment will die down soon and the isolated incidents of today will not amount to something larger in the end.  Right?

(Supporters of Trump will, of course, claim that any historic parallels that enemies of Trump might draw are overblown nonsense. That's quite possible.  Other historic parallels may be more apropos.)

One large question looming amongst both supporters and detractors of Donald Trump is: how much of what he said on the campaign trail was a bunch of hoo-hah, and how much of it did he really mean?  Certainly, the reliance on traditional lobbyists to guide his transition team appears to belie his words concerning being his own man, "drain the swamp" and so forth.  On the other hand, this article is well worth reading, and suggests that much of his agenda will in fact go forward.

Tomorrow, barring unexpected developments, I will take a look at the reactions of China, Russia and others to the Trump victory.  For now, let me sign off with a reminder that whether or not global climate change is in fact caused by man or is simply happening on its own, Greenland is melting.  And as always, read your Dean Baker.