Headlines

Taliban council agrees to a ceasefire in Afghanistan

2019 US box office projected for $11.4 billion haul, second highest of all time

Zuckerberg’s personal wealth rose by $27 billion this year ...

Walter Williams warns Virginia about Gov. Northam’s gun registry plan

Joe Kennedy: Pelosi handling impeachment the right way

Wave of new laws to take effect in 2020: Electric cars, data privacy, pot & more

Biden leaves unclear if he would honor a Senate subpoena ...

Kennedy: If we question Hunter Biden, what about Trump’s children?

5 stabbed at rabbi’s house on Hanukkah, suspect in custody

It’s an election year, but don’t expect new fiscal stimulus, says Goldman

NYC bail reform setting suspects free after string of anti-semetic attacks ..

Suicide bomber slays at least 90 in Somalia attack

World Economic Growth

The world is gasping for economic growth. Flat or falling populations in much of the developed world has pulled the props out of economic expansion opportunities. This is compounded by a socialism trope that has removed the notion that capitalistic fiscal policies should be used to stimulate things ... like Trump has been effectively using in the US with tax and regulation cuts.

The result of course is that central banks in these countries are being used to try to stimulate their economies ... after all it worked in the US after the financial crisis in 2008-09. This lesson has been followed slavishly until interest rates have gone negative ... even for 30-year German government bonds. Another symptom of this lassitude is in England home buyers can get mortgages wherein only the interest is due monthly. And, in Holland, one can get zero or even negative rate mortgages.

This trend at most of our trading partners ... to ignore fiscal policy and rely on monetary policy for economic growth ... cannot turn out well. Even the US is now being forced to play this monetary stimulus game given that we must compete with the rest of the developed world. American 10-year interest rates have been more than halved in the last year ... yet we are still almost two percentage points above the rest of the big boys.

This pushes up the dollar as other seekers of yield flock to the US ... and a strong dollar hurts our exports ... not that weak economies elsewhere are not also a drag.

The solution: The developed world ... including China ... needs to start focusing on fiscal stimulus and productivity instead of relying on their central banks to hold their economic heads above water. If these Bernanke acolytes don’t change their ways, the world is in for some dark days.

Triple Whammy

The US economy seems to be doing quite well at the moment, historically low unemployment, blowout durable goods orders and an upwardly revised 2019 GDP estimates by the IMF. And it seems that at least one Fed rate cut this year is now baked into the cake. Next, the Democrats do what they invariably do (they can’t help themselves) ... they negotiated with the White House fire-house federal spending increases next year in exchange for raising the debt ceiling for two years (until after the next presidential election). Do they not realize that this is fiscal stimulus in an election year? And this will do nothing but help the president’s economic braggadocios?

If China has any smarts, it will realize that fiscal stimulus on top of monetary stimulus will mean that it would be best to cut a trade deal with Trump before he gets re-elected for the best terms possible. And, if it does so capitulate, this will be a a triple economic whammy ... one which could easily drive US GNP growth to over 5% — almost an unimaginable number for the world’s biggest economy!

Now, dear reader do you understand why America’s stock market keeps making new highs day after day?