Poor Donald Trump. Everybody’s against him.
Jeb Bush says he’s ‘unhinged’…
…Chris Christie says he has ‘no idea what [he’s] talking about’…
…John Kasich accuses him of ‘outrageous divisiveness’…
…and Marco Rubio describes him as ‘offensive and outlandish.’
And those are just his fellow Republicans!
‘Reprehensible… prejudiced…’ adds Hillary Clinton.
Piling on, Martin O’Malley says Trump is a ‘fascist demagogue.’
Can a man with enemies like these really be bad?
New low for oil
US stocks slipped yesterday. No big deal.
The press looked around for something to pin it on. All it could find was falling oil prices.
The price of the black goo fell below $38 a barrel to its lowest level since the depths of the global financial crisis.
You’d think cheaper energy would be a good thing…
Don’t company profits — outside of the oil patch — go up when the cost of fuel goes down? Don’t households have more money to spend? Shouldn’t other things be looking up when oil is looking down?
Oil is the biggest expense of the transportation industry. Lower prices should drop right to the bottom line as extra profits.
But the problem is not the cost side; it’s the revenue side.
As we reported yesterday, rail and truck shipping in the US is slowing — signalling a slumpy economy with weak demand.
And corporate profits are on the way down, too…dragged down by the energy sector.
The whole kit and caboodle seems to be funking up.
Under the hood
Which is just what you’d expect…
…partly because central banks’ ‘stimulus’ measures were a sham (about which we’ve written more than enough)…
…and partly because every expansion comes to an end after a few years.
The National Bureau of Economic Research studied the US all the way back to 1854. It found that the typical economic expansion lasts 39 months.
This one began in 2009. By our count, that makes more than 75 months without a breather. On that basis alone, you’d expect a little more caution on the part of investors.
But there is one supposed exception to this sombre picture…a bright light coming from the shiny bumpers of the auto industry. Rail shipments are down for everything — except autos. And ‘strong auto sales’ are said to be proof of a healthy consumer economy.
Uh…that is, once again, if you don’t open the hood.
The industry has been so corrupted by cheap credit that it is misleading even to talk about auto ‘sales.’ The typical loan period has stretched to 67 months, as the industry reached for more marginal (read: subprime) buyers.
The proud new owner reports to his friends that he has ‘bought a new car.’ But at a 5% interest rate, reports Bonner & Partners researcher Nick Rokke, that means the buyer only gets 1/77th of the car when he allegedly ‘buys’ it.
Readers who are quick with numbers will notice that the length of the average subprime auto loan, the length of the current business expansion, and the length of time that the Fed has maintained its zero-interest-policy are all clustering around 70.
Perhaps this is more than a coincidence.
But back to the big news…
Donald Trump brought the wrath, ire, and contempt of the mainstream political establishment down on his head yesterday.
He called for a ‘total and complete shutdown on Muslims entering the United States.’
Most commentators quickly condemned him, pointing out that such a ban would be unconstitutional and completely against the principles on which the nation was founded.
But in a spirit of pure mischief (a blustery billionaire hardly qualifies for our customary support for die-hards, lost causes, and underdogs), we rush to the defense of ‘The Donald.’
Yes, his proposal is reckless, stupid, unworkable, unfair, and un-American. But it might not be unpopular.
Give the man credit. He’s running for president. To win, he needs the votes of people who are at least as blockheaded as he is. In that respect (perhaps the only respect) his latest proposal may not be a bad idea.
Also, making preposterous and outrageous proposals hardly disqualifies you for the White House.
Some of our ‘best’ presidents — at least, according to historians and the public — were those who did the looniest things…things that were completely at odds with the Constitution, the spirit of liberty, and their own policy goals.
President Lincoln told the crowd at Gettysburg that his war against the South was in line with the Declaration of Independence, which clearly asserted the right of a people to choose their own government.
The war would determine, he said, whether ‘that nation, or any nation so conceived and so dedicated, can long endure.’
The answer was ‘no.’ And he made sure of it.
President Wilson did the same thing for foreigners — invading more countries than any other president…while proclaiming the right to self-determination.
Elections were fine, said Wilson, as long as they chose ‘good men.’ If he didn’t like the men chosen… he sent in the troops.
By the standards set by Lincoln and Wilson, Donald Trump has the capacity to be one of our greatest leaders.
For Markets and Money, Australia