Monday, August 5, 2019

Waiting For Godot With American Characteristics For The Modern Era

The Inspector General’s report on the origins of the Russian Collusion story (e.g., the FISA court warrants) was imminent last spring, definitely in June, for sure in July, well past due in August, now unquestionably due in September. Ditto for Attorney General Barr and other Justice Department investigations.  Or maybe not!  Increasingly probably not.  I would not be surprised if AG Barr’s investigations, like former FBI Director James Comey’s description of Hillary’s emails, result in “no reasonable prosecutor would bring a case.”  So, for conservatives or Trump supporters out there, don’t get your hopes up.

Is there a Chinese trade deal anywhere in our future?  Maybe.  Maybe not.  An intensifying trade war with China will likely further depress equities and slow global growth,    An agreement would be good for equities and growth.  But a trade agreement will not change the underlying trends.  China will not honor any promise to stop intellectual property theft or halt cyberattacks against U.S. firms.  The merchandise trade deficit with China will not decline.  Perhaps, deep down, Trump knows this, or maybe his economic advisers have failed to explain the balance of payments to him.  In either case, so long as he stands strong, or appears to stand strong, on supporting manufacturing jobs in swing Midwestern states, he should win reelection.  It worked in 2016.

Will budget deficits decline in our near-term future?  President Trump is delighted with the Defense Department increases and Democrats with social spending increases in the two-year budget agreement.  Trump says there will be plenty of time to make cuts in his second term, except that cuts won’t happen.  There will be more overseas military contingencies that require more defense spending.  In return, Democrats will get dollar-for-dollar increases in social programs.  Budget deficits and public debt, like old man river, will just keep rolling along.  Low interest rates make current debt financing manageable, but wait until the next recession hits.  Two trillion dollar deficits will suddenly appear.  Investors may begin to worry.  Who knows how markets will handle two trillion dollar deficits?

Will conservative ideas make a comeback in our leading citadels of higher learning?  Not for at least another 20-30 years, if then!  As the few remaining conservative elderly White males retire, they will be replaced by younger women and under-represented minorities, who are 10-15 percentage points to the left of the already overwhelmingly left-liberal faculties.  The left keeps marching on, growing stronger by the day.

Lots of other mid-summer musings in my briefcase, but let’s try to enjoy the rest of the summer before the new school year begins and the political silly season intensifies.

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