GOVERNMENT OWNED COMPANIES

There are cases where the government owns some companies.  For example, Norway owns the steel industry whereas in the U.S. we would probably subsidize such an industry.  Making steel is not economic in Norway, but they feel that for strategic reasons they need some steel capacity.

But the U.S. government does own quite a few companies (a number even have the word Corporation in the title), for one example the Tennessee Valley Authority.  Among others are  Commodity Credit Corporation (CCC), Fanny Mae, Freddie Mac,  FDIC, Amtrack, Corporation for Public Broadcasting, Corporation For Community Service (AmeriCorps), Federal Agricultural Mortgage Corporation, and the USPS, among many others  of course many of these are controversial.*

Long ago I worked for the U.S Geological Survey and they had a patchwork of contracts that at one time were done by their employees.  These included such things as the library, a shuttle going from the headquarters in Reston, VA, to the Interior Dept in D.C., a photographic operation, mail delivery in the 7 story headquarters building.

The mail contract was won by an organization of mentally deficient people.  I thought the mail delivery that had been awful was going to get even worse.  When these guys got the routes down, you better get out of the way in the halls because the mail was going through.  These mail people tended to be physically disfigured as well.   Once I went into the mailroom where a bunch of them were and it looked like a Far Side cartoon.**  I got on an elevator once where a young sturdy large young man was already.  As the door shut he said to me, "Why do you hate me?"  He had arms like tree trunks and I was a little scared, well, a lot scared.  I said, "I do not hate you." and got off at the next floor.

* (https://en.wikipedia.org/wiki/State-owned_enterprises_of_the_United_States) of course many of these are controversial

** https://www.google.com/search?rlz=1C1PRFC_enUS655US656&q=far+side+cartoons&tbm=isch&source=univ&sa=X&ved=2ahUKEwimqZH_4PjiAhVP2FkKHd4jBkoQ7Al6BAgDECU&biw=1232&bih=796#imgrc=UYK4vucZNmQ5QM:

PRESIDENT TRUMP: OUR DE FACTO DICTATOR - II

At the end of April this year I published what is now Part I of this title.*  The basis of this is the President misusing his authorities for National Emergency and Immigration.  Nothing better explains this than Trump putting a tariff on Canadian steel and aluminum by declaring them a National Security Threat..**

Trump ignoring laws continues to escalate.  It seems that Trump is getting ready to fire his handpicked chairman of the Federal Reserve because he won't lower interest rates to take the pressure off of Trump's adjustable rate loans.***  A 1924 law gives the House Ways and Means Committee the ability to request tax returns from the Treasury Department to be reviewed in closed session and Trump refuses to do so.***

Then Kellyann Conway, for example, violates the Hatch Act that says that government employees can't get involved in political campaigning, and then she jokes about it because Trump refuses to fire her.  Danielle Pletka on Meet The Press said that the Hatch Act is a joke and congressmen violate it all the time by making calls for money from their offices.  But when I worked for the government I can assure you that, for people at my level, the Hatch Act was no joke.

Then, of course, Trump says it is all right for him to accept "oppo" research from foreigners.  Should one be surprised at this?  Even when Trump tried to walk this back he only said he would report bad things to the FBI whereas any contact should be reported.
[Head of the Federal Election Commission, Ellen] Weintraub tried to clarify: “Let me make something 100% clear to the American public and anyone running for public office: It is illegal for any person to solicit, accept, or receive anything of value from a foreign national in connection with a U.S. election.”
“This is not a novel concept,” she wrote. “Election intervention from foreign governments has been considered unacceptable since the founding of our nation.”****

Some action has begun on some of the dictatorial actions by {President Trump.  The House Oversight and Reform Committee has voted to hold Attorney General Barr and Commerce Secretary Wilber Ross in contempt for not providing information of the census citizenship question.   This would be the second Contempt holding, but both Civil and Contempt charges, on the Attorney General who was also recently held in Civil Contempt along with former White House Council Don McGahn concerning release to Congress of an unredacted copy of the Mueller Report.
(https://www.businessinsider.com/house-oversight-william-barr-wilbur-ross-contempt-of-congress-2019-6
https://www.businessinsider.com/house-vote-attorney-general-barr-don-mcgahn-civil-contempt-2019-5)

* http://stopcontinentaldrift.blogspot.com/2019/04/president-trump-our-de-facto-dictator.html
** http://stopcontinentaldrift.blogspot.com/2018/09/fixing-what-isnt-broken.html
*** http://stopcontinentaldrift.blogspot.com/2019/04/economy.
https://www.vox.com/2019/4/9/18296806/trump-tax-returns-congress-legal-experts
**** https://www.vox.com/2019/6/14/18677631/trump-campaign-finance-law-fec-illegal-fbi
https://www.cnn.com/2019/06/13/politics/oppo-research-donald-trump-foreign-powers/index.html

TRANSGENDER COMPLICATIONS

How about a break from politics?

Have you ever wondered about such things as will a man who is  Gay date a transgender man or a Lesbian date a transgender woman?  Quite a bit has been written about this sort of thing.  Here is what I have found.  If interested I suggest you read the entire article.
Surprisingly, among the 127 participants open to dating a trans person, almost half selected a trans person of a gender incongruent with their stated sexual orientation. For example, 50% of the trans-inclusive straight women and 28% of the trans-inclusive gay men were willing to date a trans woman, even though one wouldn’t expect either straight women or gay men to be attracted to women. Similarly, 50% of trans-inclusive straight men and 69% of trans-inclusive lesbians said they’d date a trans man, even though both groups are presumably only attracted to women. And 33% of the trans-inclusive bisexual/queer participants said they would only date a trans person of one gender but not the other, even though one may expect this group to be attracted to multiple genders.*

Digging even deeper into the choices of cis [straight] folks willing to date trans people, an interesting pattern of discrimination against trans women in particular emerged among those who would be expected to be attracted to women: 28% of trans-inclusive bisexual/queer/nonbinary folks and 38% of trans-inclusive lesbians said they wouldn’t date a trans woman — only a trans man. There was no similar discrimination against trans men among those expected to be attracted to men: 0% of trans-inclusive gay men and only 5% of trans-inclusive bisexual/queer/nonbinary folks excluded trans men from their dating pool.*

The high rates of trans exclusion from potential dating pools are undoubtedly due in part to cisnormativity, cissexism, and transphobia — all of which lead to lack of knowledge about transgender people and their bodies, discomfort with these unknowns, and fear of being discriminated against by proxy of one’s romantic partner. It is also possible that at least some of the trans exclusion is due to the fact that for some people, sexual orientation might be not (just) about a partner’s gender identity, but attraction to specific body types and/or judgment of reproductive capabilities.* 


And what do you call it if a transgender man marries a transgender woman?  It would seem heterosexual both ways.  I have Googles this, but can't find an example, but my guess is that it happened.

*https://www.them.us/story/cis-trans-dating

BALANCING THE BUDGET

Though I am a social libertarian, I am "reasonably" conservative on the Federal Budget as I follow Maynard Keynes in that the government should balance the budget over the period of a business cycle.  Therefore, if the economy is as good as we are told, we should be well into paying off the Federal debt now, but instead we got a tax cut for the wealth creating a huge Federal deficits.

Both Parties seem to have abandoned balancing the budget, no matter what they say. Conservatives never seem to get enough national defense so, in order to get large increases in the defense budget, liberals insist on getting increased social benefits. Conservative more than anything want tax cuts for wealthy people and perhaps business so they are willing for the government to go deeply into debt to get tax cuts as it did with the 2017 tax cut at peak economic performance (by Trump) and during the Middle East Wars of Bush-43 that also financed the wars with National Debt.

Conservatives, of course, are willing to cut benefits to the poor. They feel that, contrary to the data, that poor people should get a job whereas most poor people do have jobs (some would like to do away with the minimum wage). Of course, children don’t have paid jobs (seemingly some would like to do away with the child labor laws).*  At the same time they feel that workers are overpaid. Thus the working poor seem to get more and more behind and the working middle class is losing ground.

Conservatives like to say they are Christians, but they seem to have missed the part that Jesus was all about helping the poor.**

There is not all bad news. Economists tell us that, if the rate of increase in the deficit is less than the rate of increase in GDP, we could run increasing debt forever. Japan has gone this a couple steps further and blown the increase in debt way above their increase in GDP. They have done this for years and can do this apparently because nearly all their debt is internal.

The US debt is bought about 28% externally as I recall so I don’t know if we could get by doing the Japan course. In fact the problem in the Third World is external which keeps them in trouble as they owe the money to others who want to be paid.

* There are 16.4 million American children living in poverty. That’s nearly one quarter (22.6 percent) of all of our children. More alarming is that the percentage of poor children has climbed by 4.5 percent since the start of the Great Recession in 2007. And poor means poor. For a family of three with one child under 18, the poverty line is $18,400.  [December 2017]
(https://www.huffpost.com/entry/americas-greatest-shame-c_b_4238566 )
** I have written before about Jesus and the poor and found a passage saying that poor and poverty are mentioned 446 times in 386 passages in the Bible (http://stopcontinentaldrift.blogspot.com/2014/03/the-poor-in-bible.html)

WHERE IS THE ECONOMY HEADED?

A question a lot of us would like to see answered is where is our economy headed.  Steve Rattner thinks it might be into a recession.*  Below is his figure from Morning Joe showing that every time the Yield Curve drops below zero, a recession has followed.  You can see that this has happened recently (at the extreme right in the figure).  Rattner attributes this to the ongoing Global Tariff War.

(Click on figure to enlarge)
The  yield curve is the difference in interest rates between the government’s shorter term debt and its longer term debt.*

MANUFACTURING
Among the factors indicating economic problems is the decline in the manufacturing index.
“The Trump bump to manufacturing in the US which takes place in many swing states has already petered out,” Binky Chadha, chief strategist at Deutsche Bank, said in a research note. “In our view, a continued decline and in particular a falling below 50 will be hard to spin as anything but a manufacturing recession.”

The ISM reading for May came in at 52.1, essentially a percentage reading representing manufacturers who plan to increase activity. That means a reading under 50 means more companies are planning to decrease activity.

The index rose from 51.8 when Trump took office up to a peak of 60.8 in August 2018 during a year in which U.S. GDP increased nearly 3% and posted some of the strongest levels of activity since the recovery began in mid-2009**

TRUCKING
But that is not all.  there also are problems in the trucking industry.
FTR’s Trucking Conditions Index for March showed its first negative reading in several years, reflecting a softening environment for carriers.

The March TCI reading fell to -1.18 driven by easing freight rates and sluggish, though still positive, demand. Active truck utilization and the truckload rate have also continued to ease. The weakness in truckload rates was attributed mostly to spot rates, but FTR also found that the contract rate outlook has turned slightly negative.

FTR’s outlook for loadings growth has been revised downward from previous forecasts with year-over-year growth now expected to be under 2%.

...............................................................

This trend was also spotted by analysts at ACT Research who noted in the May Freight Forecast that slowing freight and increased tractor sales will likely have a downward effect on freight rates.

“Freight remains soft, as expected, and while we see reasons for recovery in the second half of 2019, escalating trade tensions raise the risk of freight recession,” said Tim Denoyer, ACT Research’s vice president and senior analyst.***

FARMING
Then, of course, there is farming where problems due to tariffs are acute (particularly soy beans), but there are also problems related to natural disasters such as Hurricanes Michael and Florence plus the midwestern floodings.  Though the relief bill was held up in the House by two Republican Representatives, it finally has passed on a rare bipartisan vote in early June.****
The fight in Washington has turned the nation’s farmers into collateral damage. The disaster bill includes $3 billion in direct aid that covers not only cotton farms in Georgia, but also cattle ranches in the Midwest that suffered historic flooding, vineyards in California hurt by wildfires and sweet potato fields swamped by Hurricane Florence. The Farm Bureau, an industry group, estimates losses to the agricultural sector at $8.5 billion.****

“It’s a reflection of our broken politics, but also of how few things are getting done these days,” said Brendan Buck, a former top advisor to House Speaker Paul Ryan. “Any legislation that matters is now a hostage to be taken. When so few bills become law, there’s much greater incentive to hold out to get what you want in there.”****

But not all information is bad.  For example job hirings hit a new record in April
Hirings increased to 5.9 million for the month, a gain of 240,000 from March, the Job Openings and Labor Turnover Survey indicated. The hiring rate rose to 3.9%, an increase of one-tenth of a percentage point. The total hirings was the most recorded in the data series’ history going back to December 2000. (https://www.cnbc.com/2019/06/10/jolts-hirings-hit-record-high-1point6-million-more-jobs-than-unemployed.html
https://www.cnbc.com/2019/06/11/manpowergroup-hiring-expected-to-hit-highest-in-13-years-during-q3.html)

* https://stevenrattner.com/2019/06/steve-rattners-morning-joe-charts-trumps-erratic-policies-stoke-recession-fears/
** https://www.cnbc.com/2019/06/11/that-big-trump-bump-in-manufacturing-is-pretty-much-gone-now.html
*** https://www.truckinginfo.com/331832/trucking-industry-hits-the-doldrums-with-neutral-economic-outlook
**** https://www.cnbc.com/2019/05/07/farmers-feel-the-pain-as-lawmakers-haggle-over-disaster-relief-plan.html
https://www.cbsnews.com/news/disaster-bill-house-passes-long-delayed-19-1-billion-aid-package-sending-it-to-trumps-desk/

https://www.cnbc.com/2019/06/07/heres-where-the-jobs-are-in-one-chart.html





https://www.cnbc.com/2019/06/07/could-you-save-money-by-refinancing-your-mortgage.html

https://www.cnbc.com/2019/05/09/us-trade-deficit-widens-to-50-billion-in-march.html

https://www.cnbc.com/2019/04/25/americans-financial-happiness-hits-new-high-long-running-index-shows.html

https://www.cnbc.com/2019/04/25/heidi-heitkamp-trump-has-failed-rural-americas-reagan-test.htm

INTEREST RATES: THE SPOILED GENERATION

I have to mention that I have been expecting runaway inflation since 2001.  In reality, interest rates have been near the lower bound (0%) since 2008.

I don't know if you have noticed, but interest rates seem to be at or near all-time lows.  The 30 yr mortgage rate is listed as 3.75% and the 15 yr as 3.125% as reported by Wells Fargo.*  From 1971 through 2008, the lowest 30 yr loan rate didn't drop below 5%.  It is only since 2011 that we seen the average annual mortgage rate drop below 4% and then for 5 of the 7 yrs.

The 10 yr Treasury interest rate is 2.131% and threatening to drop below 2%.  Even the 30 yr Treasury is below 3% at 2.644%.**

I recall that, when I bought my first house back in 1963, I was able to assume a home loan at 5.0%, and I was so happy to get a loan less than 7%.

The Federal Funds rate dropped to near zero in March of 2009 but that was when we had a financial collapse of the Great Recession.

Below is a chart of the Federal funds rate for the last 62 years.***  Note that the amount of time the Federal Funds Rate has been below 3% over this time is very small, especially since 1963.  During my adulthood, I wouldn't buy a 5 yr Treasury below 5%.  In the last decade, I bought a 30 yr Treasury that paid 5%.  I soon could get three years equivalent of interest in capital gains by selling the bond and did so.   I figured things would certainly go back to normal in 3 yrs. Mistake, as it turned out.

(Click on figure to enlarge)

The shocker is that people and companies are complaining that the current Federal Funds Rate is too high!  Our president has said he wants them to lower it by a percent (but then he has variable rate loans so he would benefit financially from such a drop).  I think people and companies are spoiled because of the exceptionally low rates after the great recession.  For a brief period in 1981, the Federal Funds Rate got above 20%!

For a history of mortgage rates, see: https://bebusinessed.com/history/history-of-mortgages/


* https://www.wellsfargo.com/mortgage/rates/
https://www.valuepenguin.com/mortgages/historical-mortgage-rates#nogo
** https://www.cnbc.com/bonds/
*** https://www.macrotrends.net/2015/fed-funds-rate-historical-chart