Category Archives: Dollar

Cure Worse than Disease?

cure, Covid-19 virus, economy
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Is the cure worse than the disease? The war against the Covid-19 virus is destroying businesses and jobs. The Wall Street Journal in an editorial titled Rethinking the Coronavirus Shutdown thinks maybe so:

In a normal recession the U.S. loses about 5% of national output over the course of a year or so. In this case we may lose that much, or twice as much, in a month.

Our friend Ed Hyman, the Wall Street economist, on Thursday adjusted his estimate for the second quarter to an annual rate loss in GDP of minus-20%. Treasury Secretary Steven Mnuchin’s assertion on Fox Business Thursday that the economy will power through all this is happy talk if this continues for much longer…

And David Katz, the founding director of the Yale- Griffin prevention research Center, wrote in the New York Times

I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life — schools and businesses closed, gatherings banned — will be long lasting and calamitous, possibly graver than the direct toll of the virus itself.

…A pivot right now from trying to protect all people to focusing on the most vulnerable remains entirely plausible. With each passing day, however, it becomes more difficult. The path we are on may well lead to uncontained viral contagion and monumental collateral damage to our society and economy. A more surgical approach is what we need.

Feds Plan to Make Everyone Flush

feds,$1000, toilet paper
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The feds are trying to stimulate the economy out of the toilet. The plan so far is to make everyone flush with free money. Thousand dollar plus checks could be in the mail soon.

Fed Grinch Steals Trump Christmas

fed grinch
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You’re a Mean One, Chairman Powell

President Trump overheated his Twitter account trying to pressure the fed chairman. But it didn’t work. Jerome Powell was more than ready to to stand up to Trump by playing the Grinch and raising rates. Not only that he said he’d do the same thing two more times next year.

Fed Grinch

The Dow swooned and the president sputtered. But Bloomberg says the Fed did the right thing. Vox, however, not so much. 

Meanwhile the stock market crater continues.

King Dollar Rate Hike

King Dollar

President Trump doesn’t want the Fed to raise interest rates. And he said so. Which is frowned on since the Fed is supposed to be independent.

It’s also awkward for Trump’s chief economic advisor Larry Kudlow, a strong advocate for a strong dollar. Or King Dollar as he likes to say.

Trump hired Kudlow in March. But in February here’s what Kudlow had to say on CNBC:

A strong dollar is an essential pillar of economic prosperity with minimal inflation, but we worry that the White House has not adopted this strategy. So we urge the Trump administration to return to the successful “King Dollar” policies that worked in the 60’s, 80’s and 90’s.

Uh oh. He went on to say:

We also worry that the recent widening trade deficit numbers will further tempt the administration into a weak dollar strategy.

 

Trump’s Animal Spirits

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James Fallows, in the October Atlantic, says Jane Goodall told him that Donald Trump reminds her of a chimp:

In many ways the performances of Donald Trump remind me of male chimpanzees and their dominance rituals,” Jane Goodall, the anthropologist, told me shortly before Trump won the GOP nomination. “In order to impress rivals, males seeking to rise in the dominance hierarchy perform spectacular displays: stamping, slapping the ground, dragging branches, throwing rocks. The more vigorous and imaginative the display, the faster the individual is likely to rise in the hierarchy, and the longer he is likely to maintain that position.”

Animal Spirits

The elite made a monkey of Trump before the election. But since then he’s released the stock market’s animal spirits. Oil and the dollar dig The Donald too.

Many 401-k investors are bullish because stocks have hit record highs. But Clinton Foundation investors – not so much.

Well, at least one Clinton supporter has done ok. Warren Buffett’s Berkshire Hathaway is up 8% since the election.