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EconMatters - Global Economic and Market Analysis That Matters

Trump`s Deficit Spending Plan Will Bankrupt United States

February 19, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss giving more wasteful government defense contracts to private corporations, and lower taxes and the damage done to the growing and out of control National Debt in this video. Corporations are already paying a much lower effective tax rate, they need to be paying more taxes in my opinion. Especially given the mergers and acquisitions that the government has let go over the last 30 years which creates massive system and sector monopolies and oligopolies that lead to non competitive industries, and is ultimately bad for competitive market environments and consumers.

First of all, the President of the United States should not be cozying up to any CEOs or Corporations this just leads to massive conflicts of Interests, shoot several Corporations have made me sign massive Anti-Bribery Documentation Agreements to avoid this very type of conflict of interest. This is just bizarre theatre under the guise of Job Creation. But we need to downsize all Military Spending given our unsustainable National Debt profile, the interest portion of servicing this National Debt is very troubling for the future economic health of the United States.

Sure Donald Trump might get a short-term, and I mean very short-term jump in GDP with deficit spending programs, but any increase in Military Spending with an already out of control government expenditure of the overall budget on this category is just pure stupid fiscal policy. And to lower Corporate Taxes at the same time as raising Defense Spending and government spending overall is just more "short-termism" government policy that has dire consequences down the line in just two years time for our federal deficit, national debt, interest on the debt and economic prosperity.

Donald Trump we don`t need the Boeing or Lockheed Jet program, we need to cut defense spending given what waste and inefficiencies there are already are in this budget expenditure. The overkill factor alone regarding what the United States spends on the Military versus all of our nearest competitors combined is mind-numbing economic stupidity at its finest. No wonder we cannot balance our budget, pay our bills, and have an unsustainable 20 Trillion Dollars in National Debt. The Rate of Change on the National Debt is just beyond alarming, going from 8 Trillion to 20 Trillion in ten years. Let me restate this: Going from 8 Trillion to 20 Trillion in ten years.

Deficit Spending and Increasing Military Spending is great if somebody else is footing the bill, this money ultimately comes from you and me in the form of higher taxes. Sure you can lower Corporate Taxes, but this is only temporary, because everyone`s taxes including Corporations will just be raised higher in the future (Another 2 years) because of unsound financial policy and our Blow Out National Debt, and Higher Debt Servicing Costs. This is not Rocket Science, this is basic 6th grade Math here. This isn`t a political statement, a Democratic or Republican issue, this is a Taxpayer and American Financial Advisor issue.

You don`t get something for nothing, and given the Rate of Change of our National Debt this country cannot afford Corporate Tax cuts period, A Massive Infrastructure Spending Program, or A Costly Deregulation Program that all over the next four years lead to increased government spending, increasing our National Debt, and ultimately bankrupting the United States.

I know this wasn't what the country wants to hear because citizens want to think there is a magic solution to all these problems with Voodoo economics, but remember Bush`s statement: "Read My Lips: no new taxes" lowering Corporate taxes will backfire bigtime on Republicans and the Economic future of the United States. This just means taxes will have to be raised by the next administration, probably in two years to address growing budgetary imbalances. Surely, the Republicans in Congress are not this stupid, Donald Trump`s Tax Policy is economic suicide. Most Corporations pay much lower effective tax rates, it is part of the reason we cannot pay our current budgetary bills. You cannot get something for nothing, and somebody always has to pay! You can lower Corporate Taxes, You can lower Individual Taxes, but somebody still has to pay for any budgetary gaps, and our growing National Debt. And that usually means higher future taxes to play catchup to unsound fiscal budgetary policy.

This is why Bush had to raise taxes. You Republicans should be smarter than this, to fall for this trap: You Don't Get Something For Nothing! Somebody Has To Pay! Moreover, Donald Trump sure didn`t want to pay his fair share of government taxes the last 18 years, this just means somebody else did! Guess who? It is always easy to Deficit Spend Somebody Else`s Money Donald Trump!! And keep in mind I am a-political; I am not coming at this National Debt problem with a political axe to grind: we just are a pretty unsound fiscally run country right now, and headed in the wrong direction at an alarming rate of speed.

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You Cannot Artificially Create Demand

February 17, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss the fact that the market could get all three of its wishes in tax cuts, an infrastructure spending plan, and deregulation and still go into a recession because the natural course of the business cycle trumps all of these on the margin policy growth drivers. I would put it at around 50% that the US Economy signals to the market that we are entering a recessionary downturn this year. The hard economic data is much softer than the market realizes given the upbeat soft market sentiment data.

Investors are often pointed in the wrong direction at crucial turning points. A normal business cycle last about 6-8 years, 10 years is pushing it. There are only so many houses and cars that need to be supplied to the market in a given time, real structural demand is what moves the economy, not meetings with CEOs promising to create more jobs. We have had quite a run since the 2008 financial crisis, with everything from clunkers for cash, bank bailouts, unlimited stimulus, zero percent interest rates, etc. which has brought a lot of demand forward with regard to many goods and services like automobiles and houses.

We could get all of Trump`s initiatives and still roll over in the business cycle, or Trump policies could actually quicken the tightening of the credit market, and send the economy into a recession faster than without policy changes. Shoot we could drop in the stock market just by valuations alone because financial markets are in a bubble. Market participants are rather complacent and oblivious to the risks associated with asset prices at these levels given that we are most likely at the late stages of the current business cycle in my opinion.

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Donald Trump Should Not Talk About The Stock Market (Video)

February 17, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss how in general it is a very bad precedent for government officials to talk about the stock market, especially to in effect tie the performance of the stock market to how effective government policy is being handled or implemented in an administration. Especially given the high valuation market lead-in, this risk/reward scenario plays out very poorly for Trump.

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Everyone Wants Something For Nothing (Video)

February 16, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss Politics, Markets (namely the financials) the Economy and Debt in this video. More signs everyone is loaded to the gills in debt right now, this is a reliable warning sign for the health of the economy going forward.

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At This Point - It`s Just Pure Gambling (Video)

February 16, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss the recent market move in equities, what are the causes and future ramifications given the size of the move, and address viewer e-mails as well in this trading video. A lot of Investors are holding some pricy stocks in their portfolios right now.

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The Fed Needs To Raise Rates 50 Basis Points In March

February 15, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss the global inflation problem that first started in financial markets and now is working its way into the global economy in this video. Central Banks all around the world are behind the curve in fighting inflation with far too loose monetary policies. None of these global interest rates belong at these historically low ridiculous levels, and we are starting to experience the consequences of bizarre abnormal monetary policies around the globe!

The fact that the Core Inflation Rate in the US could stay above 2% for an entire year, and in the 2.3% range despite a strong dollar putting pressure on inflation for an entire year should tell the Federal Reserve something, namely they need to play catch up in raising interest rates. My solution is a 50 basis point rate hike at the March FOMC Meeting in four weeks.

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New Oil Inventory Record Tomorrow (Video)

February 15, 2017 by EconMatters   Comments (0)

By EconMatters


We check out the API Report leading into the EIA Oil Report Tomorrow, and it appears we will set a new Oil Inventory Record Tomorrow Morning. So much for those OPEC cuts; I would hate to experience where Oil Inventories would be without those vaunted OPEC Production Cuts!

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Goldman Sachs Stock Is Up 50 Percent in 6 Months (Video)

February 14, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss some of the bullshit moves in the financials in this video; just pay attention to GS actual YoY Revenue numbers for their real sub par growth that represents the dead end financial universe these days. GS is a 12 p/e stock if there ever was one; alas the steepening yield curve myth and NIM flow through to the bottom line bullshit investing meme! Have you seen I-Bank Trading floors; compared to the Glory Days they have become ghost towns, and those Proprietary Trading Days are never coming back!

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Central Banks Need To Start Shocking Traders (Video)

February 14, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss how traders are in a Euphoric Bubble Mentality where they can buy every dip and feel there is no risk of losing money in a Market Environment similar to other Market Bubbles at the Euphoria Stage of Excessive Risk Taking.  The Fed Needs to Raise Rates 50 Basis Points at the March Meeting!

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The Houston Real Estate Market Crisis (Video)

February 14, 2017 by EconMatters   Comments (0)

By EconMatters


We discuss the fundamentals of the oil market, and how we are starting to experience the beginnings of the Real Estate crisis that is going to hit Houston`s Commercial and Residential Real Estate Market in this video. I knew there was going to be a delay, and the telltale signs are starting to emerge in the Market.

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