The Trump Economy

[DC Tom]

First, Foxconn has a spotty track record of delivering on its promises. The company caused a lot of excitement about a revival of American manufacturing when it announced in 2013 that it would build a $30 million high-tech plant in central Pennsylvania but failed to deliver. The company also announced in 2014 that it would invest up to $1 billion in Indonesia, but failed to deliver on that promise, too.

 

Second, as the Washington Post reported Tuesday, lawmakers and other concerned citizens in Wisconsin are concerned that the state may give away too much in incentives to attract Foxconn. Those concerns are heightened by the facts that Walker is up for re-election next year, has a low approval rating, and has run as a job-creator.

 

Third, it is uncertain whether the promised jobs will be stable and pay a living wage. As for job security, both the BBC and MarketWatch reported in May 2016 that Foxconn had replaced 60,000 of its workers with robots.

 

Foxconn is also known for a work environment so harsh it led to employee riots and suicides. The Fair Labor Association a non-profit formed by Nike and others in 1999 after a series of sweatshop scandals documented in 2012 major labor-rights violations at Foxconn facilities including excessive overtime and salaries that were too low to cover basic living expenses and sometimes not paid.

 

The company has also been criticized for under-age workers, improper disposal of hazardous wastes, injury to workers required to clean iPhone screens with a toxic chemical, and fatal industrial accidents resulting from the failure to address known hazards.

Harsh work conditions at a variety of Foxconn locations in China led to a spate of Foxconn employee suicides in 2010. Foxconn chillingly responded to those suicide attempts by installing safety nets to catch employees attempting to jump to their deaths from company buildings. A company that cared about its employees would have done more to investigate and remediate the conditions that led to the suicides in the first place.

 

https://www.cnbc.com/2017/07/27/heres-whats-worrisome-about-foxconns-plan-to-build-a-plant-in-the-us-commentary.html

http://money.cnn.com/2017/07/27/technology/business/foxconn-china-us-wisconsin-workers/index.html

 

Well, then, it's a damn good thing Wisconsin isn't China.

[/dev/null]

https://www.bloomberg.com/news/articles/2017-07-31/no-bubble-in-stocks-but-look-out-when-bonds-pop-greenspan-says

 

Say whaaaaaaaaaaaaaat? 10 years of printing money might result in a bond market bubble? Who would have thunk?

[TPS]

https://www.bloomberg.com/news/articles/2017-07-31/no-bubble-in-stocks-but-look-out-when-bonds-pop-greenspan-says

 

Say whaaaaaaaaaaaaaat? 10 years of printing money might result in a bond market bubble? Who would have thunk?

greenspan will be wrong again, the bond bubble will not burst in a rapid move, though the stock bubble will. Despite all of that money printing, inflation remains tame. Mainstream economists at the Fed are flummoxed that the "Phillips curve" doesn't seem to be working--they don't understand why inflation isn't rising as the unemployment rate moves toward 4%. The hapless administration has done nothing substantive to help the economy, so it will muddle along until investors realize income growth won't support current stock prices. When the bubble bursts, there will most likely be a brief recession which will then give the administration the excuse needed to pass some of their bolder economic plans. They will be lucky if this happens within a year, before the 2018 elections...

[GG]

greenspan will be wrong again, the bond bubble will not burst in a rapid move, though the stock bubble will. Despite all of that money printing, inflation remains tame. Mainstream economists at the Fed are flummoxed that the "Phillips curve" doesn't seem to be working--they don't understand why inflation isn't rising as the unemployment rate moves toward 4%. The hapless administration has done nothing substantive to help the economy, so it will muddle along until investors realize income growth won't support current stock prices. When the bubble bursts, there will most likely be a brief recession which will then give the administration the excuse needed to pass some of their bolder economic plans. They will be lucky if this happens within a year, before the 2018 elections...

 

That's some funny stuff, right there.

[GoBills808]

https://www.bloomberg.com/news/articles/2017-07-31/no-bubble-in-stocks-but-look-out-when-bonds-pop-greenspan-says

 

Say whaaaaaaaaaaaaaat? 10 years of printing money might result in a bond market bubble? Who would have thunk?

If anyone knows about bubbles, it's Greenspan.

[/dev/null]

The hapless administration has done nothing substantive to help the economy, so it will muddle along until investors realize income growth won't support current

Which hapless administration are we talking about? The one riding free money for 2 quarters or 32 quarters?

[SlimShady'sSpaceForce]

Which hapless administration are we talking about? The one riding free money for 2 quarters or 32 quarters?

The one riding free money for 2 quarters?????

Edited August 1, 2017 by ShadyBillsFan

[/dev/null]

The one riding free money for 2 quarters?????

So the current hapless administration deserves criticism for following the same monetary policy as the previous administrations? What opinion of the previous administration?

[GG]

So the current hapless administration deserves criticism for following the same monetary policy as the previous administrations?

 

Except they're not.

[TPS]

So the current hapless administration deserves criticism for following the same monetary policy as the previous administrations? What opinion of the previous administration?

they don't determine monetary policy. Other than executive orders, they are struggling with anything that requires approval. Nothing yet to show on things they can effect that matter--tax, infrastructure, and health policy. Lots of golf though...

[GG]

Greg Ip is far from a Trump supporter:

 

Look past the noise.

 

This supports the premise of the OP. By removing the obstacles to normal business operations, the economy is humming along, despite Fed tightening.

 

Tax reform needs to happen though, because clouds are building on the horizon, and Greenspan is half right about the bubbles.

[Magox]

We are in unchartered territory with the Fed bond buying programs, which undoubtedly did lead to higher asset values, such as stocks, commodities and bonds. The lack of real demand kept certain aspects in check so it really is difficult to decipher how much of an impact it had. Now, demand seems to be picking back up which I believe is why you are seeing the values of many of these assets continue to go up. I really don't know how the unwinding of their balance sheet is going to effect the markets, I would imagine that at some point this will begin to be priced in which is why I think real action by the government for tax reform is going to really weigh in one way or another.

[TakeYouToTasker]

The Trump administration does have one silver bullet that would propel massive amounts of liquidity into the economy regardless of Fed policy, and that is the trillions of dollars sitting abroad in off-shored corporate assets.

 

A tax holiday for the patriation of those assets would bring them into our domestic economy.

[Magox]

It would help, but probably not nearly as much as you'd think. The last repatriation did little to spur economic output or jobs. It would help stock holders/dividends which of course is good. I'm for it, just that it wouldn't be nearly as much of a boon as I believe people would think it to be. The idea of a territorial tax system is something that I think they should really consider, seems like more of a long-term solution.

[row_33]

The Trump administration does have one silver bullet that would propel massive amounts of liquidity into the economy regardless of Fed policy, and that is the trillions of dollars sitting abroad in off-shored corporate assets.

 

A tax holiday for the patriation of those assets would bring them into our domestic economy.

 

Good luck on that one....

 

You saw the 60 Minutes show on top corporate lawyers instructing how to illegally move funds offshore?

[Pine Barrens Mafia]

Greg Ip is far from a Trump supporter:

 

Look past the noise.

 

This supports the premise of the OP. By removing the obstacles to normal business operations, the economy is humming along, despite Fed tightening.

 

Tax reform needs to happen though, because clouds are building on the horizon, and Greenspan is half right about the bubbles.

 

Paywall. Summary?

[GG]

It would help, but probably not nearly as much as you'd think. The last repatriation did little to spur economic output or jobs. It would help stock holders/dividends which of course is good. I'm for it, just that it wouldn't be nearly as much of a boon as I believe people would think it to be. The idea of a territorial tax system is something that I think they should really consider, seems like more of a long-term solution.

 

The conditions for the last tax holiday were different and there wasn't as much cash sitting offshore then. Planners are also discussing a deemed repatriation tax, so everyone will get taxed whether they bring the cash back or not. You're right there probably won't be a direct link between companies bringing cash back and increased direct investment in the US, but there will be a side benefit to alleviate the bond bubble because there will be less incentive for big companies to borrow in the future.

 

Paywall. Summary?

 

Despite headlines that Trump's administration has been less than effective, his department and agency appointees have done a good job in removing growth-stifling regulations, and that's helping economic growth.

[Nanker]

Despite headlines that Trump's administration has been less than effective, his department and agency appointees have done a good job in removing growth-stifling regulations, and that's helping economic growth.

Ssssshhhhhh! Don't say nuttin'! Does Dems dat be listenin' in just wonts beliefs ya nohow.

[Tiberius]

Wow, even Rasmussen pol has Trump's approval rating declining

 

http://www.rasmussenreports.com/public_content/politics/trump_administration/prez_track_aug2

[TPS]

We are in unchartered territory with the Fed bond buying programs, which undoubtedly did lead to higher asset values, such as stocks, commodities and bonds. The lack of real demand kept certain aspects in check so it really is difficult to decipher how much of an impact it had. Now, demand seems to be picking back up which I believe is why you are seeing the values of many of these assets continue to go up. I really don't know how the unwinding of their balance sheet is going to effect the markets, I would imagine that at some point this will begin to be priced in which is why I think real action by the government for tax reform is going to really weigh in one way or another.

I can't see a problem of unwinding their treasury holdings, simply hold until they mature. The MBS will be a little trickier, but, having said that, there really is no economic reason for the Fed to unwind its asset holdings.