The Nation's Financial Condition

[Trinity]

https://www.wsj.com/articles/fed-adds-5 ... 1579276745

Borrowing during boom times.

[Peter Brown]

In your quest to keep the convos to your liking, your self serious replies (with the usual accompaniment that ‘you’re ignorant’ or ‘only neverTrump offers facts’) are self defeating. Not to the echo chamber, but to the normal people in the country. I don’t take these debates too seriously, nor do I care about the gratuitous personal insults, because I’m always far more curious about the why’s of life. Such as, why is neverTrump so quick with self importance? That intrigues me far more than Trump, Clinton, or foundations.

In what manner?

Read these boards. Experts on all manners of law, international relations, science, you name it.

Two guiding principles for me on the internet.

1. I’m smart enough to realize I am never the smartest guy in any room. Just yesterday I got to drive a SnoCat; the guy who taught me has been driving one of these for 20+ years. He knows every trick how to groom a mountain. I look up to him because he’s become a master craftsman at his trade. Dedication, humility. I love it. I love learning things when I know I know nothing.

2. My philosophy on writing internet posts is keep the convo about philosophy and less granular. Try not to assume the opponent is a shi!hesd unless they prove it over and over. People here bellyache that I won’t post links etc; I’ve got zero interest in debating the finer points because we’ll never end the debate and I have a life to live.

Also write with a twinkle in your eyes. ⛷

[foreverlax]

In your quest to keep the convos to your liking, your self serious replies (with the usual accompaniment that ‘you’re ignorant’ or ‘only neverTrump offers facts’) are self defeating. Not to the echo chamber, but to the normal people in the country. I don’t take these debates too seriously, nor do I care about the gratuitous personal insults, because I’m always far more curious about the why’s of life. Such as, why is neverTrump so quick with self importance? That intrigues me far more than Trump, Clinton, or foundations.

In what manner?

Read these boards. Experts on all manners of law, international relations, science, you name it.

Two guiding principles for me on the internet.

1. I’m smart enough to realize I am never the smartest guy in any room. Just yesterday I got to drive a SnoCat; the guy who taught me has been driving one of these for 20+ years. He knows every trick how to groom a mountain. I look up to him because he’s become a master craftsman at his trade. Dedication, humility. I love it. I love learning things when I know I know nothing.

2. My philosophy on writing internet posts is keep the convo about philosophy and less granular. Try not to assume the opponent is a shi!hesd unless they prove it over and over. People here bellyache that I won’t post links etc; I’ve got zero interest in debating the finer points because we’ll never end the debate and I have a life to live.

Also write with a twinkle in your eyes. ⛷

So you want to post your views as facts and you don't want a response - gottcha!!

Is that enough twinkle for you?

[jhu72]

Gary Cohen says Trump tarrifs have totally hurt the country. Of course they did and you don't need to be a Wall Street maven to know this and understand why. Gary carries the argument further, claiming it stepped on the Trump tax cuts (give away to the 1%). They couldn't spend the cuts.

[a fan]

So you want to post your views as facts and you don't want a response - gottcha!!

And when called out for having the facts wrong....he scurries to move the goalposts.

[Farfromgeneva]

Here’s an issue I’ve been concerned about for a while. Chevron had a big writedown in Dec but I think there’s a lot that needs to be done, accounting is boring and lame, but this one day, perhaps in this next year will suddenly make lots of people experts in parts of accounting

https://www.wsj.com/articles/goodwill-s ... 06?mod=mhp

[Peter Brown]

So you want to post your views as facts and you don't want a response - gottcha!!

And when called out for having the facts wrong....he scurries to move the goalposts.

I’m just trying to figure out why Hillary wants Trump to be re-elected by igniting the Dem civil war. That’s all.

[a fan]

Do you think Hillary is richer or poorer under Trump's rule?

There's your answer.

[jhu72]

I think it is just payback for 2016. A good argument can be made that the Bernie Bros cost her the presidency, given the closeness of the EC race.

[Peter Brown]

Do you think Hillary is richer or poorer under Trump's rule?

There's your answer.

Know how much richer Hil would’ve been had she won! Hay-oh!!

[foreverlax]

The Trump economy, three years in: What the numbers say

Stock Market

...the stock market grew 31 percent in the 807 trading days before Trump's election, but it grew by 56 percent in the 807 trading days after it, up through the third anniversary of Trump's inauguration.
...More than half of Americans invest in the stock market, either directly or through 401(k)s and other retirement funds.

Manufacturing

Manufacturing fell 1.2 percent during two quarters in the middle of 2019, before recovering partly in the latest reported quarter.... that qualifies as a recession over the last six months.

But overall, manufacturing has risen under the Trump administration, and it has done so faster than before he was president.

Unemployment

Unemployment fell under Trump, but it was already falling at a rapid pace before he came to office...

Wages

Workers' wages rose under Trump, but had been rising slightly faster prior to Trump's term

GDP

Why no mention of GDP never hitting 3%?

Spending

Why no mention of the increase?

Debt

Why no mention of the increase?

[a fan]

And no mention of the off the charts increase in socialism and handouts under Trump.

You think TrumpFans like Pete care? Nope. So long as it lines his pockets? Socialism is as cool as the other side of the pillow.

[jhu72]

Completely ignore the fact that during the last 3 years, state minimum wage laws in 33 states have increased low wage earner's wages significantly and 18 are indexed to cost of living. Nothing like taking credit for something you had nothing to do with.

[foreverlax]

Ludlow from Davos -

And I would add also, as the President has indicated: In this stock market rally, I know it’s commonplace to say it only helps a few rich people. That is just not true. Over half the households in this country own shares through 401(k)s, and IRAs, and brokerage accounts, and so forth.

He is correct, only the top half of Americans have investments.

Investments as of Q3 2019 vs Q4 2016

Top 1% = 54.2% vs 53%....2.26% increase
Top 10% = 33.9% vs 34.9%....2.87% decrease
Top 50% = 11.1% vs 11.4%..... .2.70% decrease
Bottom 50% = .8% vs .7%....14.29% increase

You look at the numbers — and the CEA just published a great slide book on this — the bottom 50 percent has had a 47 percent increase in their net wealth — consumer net wealth — between home prices and share prices, and that is a booster rocket to this economy.

Wealth as of Q3 2019 vs Q4 2016

Top 1% = 32.3% vs 31.9%....1.25% increase
Top 10% = 37.4% vs 37.9%....1.32% decrease
Top 50% = 28.8% vs 29.0%..... .69% decrease
Bottom 50% = 1.6% vs 1.2%....33%

Real Estate as of Q3 2019 vs Q4 2016

Top 1% = 13.5%.2 vs 15%....11.11% decrease
Top 10% = 31.0% vs 30.9%.... .32% increase
Top 50% = 41.8 vs% 42.9%..... .2.63% increase
Bottom 50% = 13.6% vs .11.2%....17.65% increase

Liabilities as of Q3 2019 vs Q4 2016

Top 1% = 4.6% vs 5.2%....13.04% decrease
Top 10% = 20.0% vs 18.4%....8.00% increase
Top 50% = 38.9 vs% 43.9%..... 12.85% decrease
Bottom 50% = 36.4% vs 32.5%....10.71% increase

No clue how he got to 47% and no clue how "consumer net worth is calculated.

It not only gives them confidence, it gives them some serious spending power, and the consumer spending numbers bear it out.

How do the bottom 50% have increase spending power, when any net worth they may is in their home?

[Farfromgeneva]

HELOC?

[foreverlax]

HELOC?

For sure a home owner can borrow to spend....which of course impacts their net worth.

[foreverlax]

Data from the 2017 tax cuts....

Trump slashed corporate tax rates to 21%, but many companies paid far less than that

Dozens of large, profitable firms paid no federal income tax in 2018, and U.S. collections fell by almost a third — an unprecedented drop during a strong economy.

In 2018, the first year under the new law, 379 profitable companies in the Fortune 500 paid an average effective rate of 11.3%, according to a study by the Institute on Taxation and Economic Policy, a progressive think tank in Washington.

That’s the lowest rate since the institute began studying the issue in 1984. In its previous study, which tracked results from 2008 to 2015, large, profitable companies paid an average of 21.2% — higher than in 2018 but far lower than the 35% maximum.

“Tax avoidance appears to be every bit as much of a problem under the new tax system as it was before the Trump tax law took effect,” Matthew Gardner, a senior fellow and co-author of the report, wrote last month. “This means these companies sheltered almost half of their U.S. pretax income from federal income tax in 2018.”

The U.S. collected $92 billion less in corporate income tax in 2018, a one-year decline of 31%. Since 1934, only the Great Recession had a steeper fall in that measure.

Tax Cuts and Jobs Act of 2017 lowered the tax rate from 35% to 21%...but the promised elimination of loopholes and workarounds were never delivered.

The top rate of 35% was in place from the 90's through 2016

During the 90's the effective rate was in the mid 20's

During the 00's the effective rate was around 15%

The report identified 379 companies that were profitable and provided enough information to allow for a calculation of their effective tax rates. More than half of those 379 companies paid less than half of the 21% rate. Fifty-six paid an average effective rate of 2.2% while 91 companies paid no federal income taxes at all, or got money back.

This tax cut was based on the economic theory that even though we're losing money, we'll make it up on volume (GDP), which has so far proven a failure....not only have we not achieved 4-5% GDP, in the greatest economy in our history, we haven't been able to hit 3%, which is the supposed break-even rate.

[Farfromgeneva]

HELOC?

For sure a home owner can borrow to spend....which of course impacts their net worth.

The question was how do the bottom half have increased spending power if their growth in net worth is in their home. There’s a lot of conflating, and it’s common, between net worth and income (or liquidity). As home value equity increased faster than liabilities that’s basically the answer. Both can be true if spending is done via tapping home equity without it being proportionately 1:1 and have higher net worth and increased spending. This can’t last forever and I don’t think it’s a good idea, in fact smart wealthy people like to de-lever and have a cheap or free option on the assets owned typically, but it answers the question and it’s entirely possible to have increased net worth and spending/consumption. I’d expect it to be all too common in a currency sterilized, zero rate monetary world (we should be 100bps high in FED funds regardless of the current growth rate IMO).

Now is this something that I wouldn’t be bragging about as a leader of a country, it will only lead to negative consequences eventually, but the question was answered.

(And yes lending is much more free and available than the news tries to present these days, I see and occasionally trade pools of various non agency and non QM mortgages regularly, standards are pretty loose these days-due mainly to the aforementioned loose and now useless global monetary policy)

[foreverlax]

HELOC?

For sure a home owner can borrow to spend....which of course impacts their net worth.

The question was how do the bottom half have increased spending power if their growth in net worth is in their home. There’s a lot of conflating, and it’s common, between net worth and income (or liquidity). As home value equity increased faster than liabilities that’s basically the answer. Both can be true if spending is done via tapping home equity without it being proportionately 1:1 and have higher net worth and increased spending. This can’t last forever and I don’t think it’s a good idea, in fact smart wealthy people like to de-lever and have a cheap or free option on the assets owned typically, but it answers the question and it’s entirely possible to have increased net worth and spending/consumption. I’d expect it to be all too common in a currency sterilized, zero rate monetary world (we should be 100bps high in FED funds regardless of the current growth rate IMO).

Now is this something that I wouldn’t be bragging about as a leader of a country, it will only lead to negative consequences eventually, but the question was answered.

(And yes lending is much more free and available than the news tries to present these days, I see and occasionally trade pools of various non agency and non QM mortgages regularly, standards are pretty loose these days-due mainly to the aforementioned loose and now useless global monetary policy)

We know what can happen when you treat the equity in your home as an ATM.

[Farfromgeneva]

People have short memories and educational standards have gotten worse...

(If anything, people should be delevering and getting liquid soon bc were a decade into a positive business/economic cycle with few bumps at all and it won’t go on forever-Late 70s/early 80s, early 90s, early 2000s, end of 2000s,.....)