Wednesday, August 10, 2016

Trump is Right About Economy

Twenty years ago I was at a meeting of financial advisers in Boston.  The speaker told everyone that it was going to be a bull market for stocks and bonds as far as the eye could make sure all your clients are in stocks and bonds forever!

After he was done speaking, I walked up to him and said, "I realize you are hired by a mutual fund company and that they pay you say you believe stocks and bonds are the best thing you could ever do with your money basically forever....but what would the conditions have to be in order for YOU to say, "Well boys, it's been a good ride for a lot of years...but the party is over and it's time to sell?"

He looked at me and said, "Watch and listen for politicians to begin demonizing big business and making it sound like PROFIT is actually a bad thing.  When you hear that and see them get elected, sell all your stocks and bonds because you will see the markets fall like you could have never imagined."

So yesterday, billionaire Carl Icahn said this;

Trump is right on about our economy. A capitalistic system cannot exist if government is at war with business. CEOs rightly so are afraid to invest in new equipment, etc. to make our manufacturing competitive. It is no surprise that today it was announced growth in productivity was down for the 3rd straight quarter and is at an all-time low. Our workers cannot be productive with “worn out tools”. I never thought I would say this but we cannot blame even mediocre CEOs for not investing when they have to face regulators that are scaring the hell out of them. Instead they borrow at near zero interest rates and buy back stock. This will increase the value of their options and vested stock and their workers’ productivity be dammed. Democratic pundits say it is OK not to manufacture because we are a “service economy”. But what does this mean? Taken to its logical conclusion all we will be producing in the near future are more text messages and more tweets to send to each other. But no problem that all the decent paying manufacturing jobs will disappear. The Fed will just keep lending money at zero interest rates until the bubble bursts and we go over the proverbial cliff.


Did you catch that?  A capitalistic system cannot exist if government is at war with business.

Have you listened to some of Hillary's speeches?  Have you heard her say she is going to put the coal mines OUT OF BUSINESS?  Have you heard her say that she will make BIG BUSINESS PAY THEIR FAIR SHARE to the cheers of her welfare-based audience?

I'm not sure how many times I can say it, but I will say it one more time today...WE LIVE IN VERY INTERESTING TIMES.

I will remind you that following WWII, Europe and Japan were destroyed and the USA owned 75% of the entire world's manufacturing capacity.  We also had all the gold sitting in Fort Knox that we had captured, bought or traded during the war.  Because if this, WE MADE THE RULES FOR HOW THE FINANCIAL SYSTEM WOULD WORK FOR THE ENTIRE WORLD.

So who is going to make the next set of rules when our twitter-based service economy sitting at 0% interest rates, desperate for people to spend money they don't have to keep it all afloat...finally sinks into the dustbin of history?


Blogger Dave Gust said...

This year my son Sam has to read Animal Farm so I have been reading it as well so when we discuss it I can speak cogently. Orwell truly was a prognosticator of future political speak and I cant help hearing the voices of today's political class echoing those of the pigs who took over the farm. If it has been a while since you have read it, take another look it is worth a re-read!

Pig to the other animals - "No, no...I know it SEEMS like you have less food and are working longer hours then when the farmer was here but we have this report that shows we are actually producing MORE food while working less than before!"

Today's Politicians to the US masses - "No, no...I know it seems like we have less influence in the world and that the future is on really rocky ground but we have these reports that show it is really no problem!"

August 10, 2016 at 2:06 PM  

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