Spiraling Decompensation Open Thread



Tuesday Morning Open Thread: Yup, We’re Doomed

(Tom Toles via GoComics.com)
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Like earthquakes, wildfires, and floods, recessions are recurring problems. And as with those (other) ‘natural’ catastrophes, it’s easier to prepare for them in advance and survive them afterwards if we’re not dependent on grifters, political cultists, and soggy-brained showboaters…

Catherine Rampell, at the Washington Post“Move over, Illuminati. The conspiracy against Trump’s economy is massive”:

… Trump, aided by his economic brain trust of cranks and sycophants, believes any indicator showing the U.S. economy could be in trouble must be fabricated. It’s all part of an anti-Trump conspiracy, he rants, according to reports in The Post, the Associated Press and the New York Times.

And move over, Illuminati, because this particular conspiracy is massive.

It’s led by the Federal Reserve, Democrats and the media, of course, or so say Trump and his Fox News minions. But it also includes the entire U.S. bond market, which flashed a warning sign last week when the Treasury yield curve inverted (meaning long-term bonds had lower interest rates than short-term ones, which usually predates a downturn).

Also colluding are the many farmers, retailers, manufacturers and economists who have been warning for more than a year that the burden of Trump’s tariffs is mainly borne by Americans, not China or other trading partners, and also that uncertainty over trade tensions can paralyze hiring, investment and purchasing decisions, which we need to keep the economy expanding…

The White House has reportedly declined to develop contingency plans for a downturn because it doesn’t want to validate this “negative narrative.” This is, in a word, idiotic. As others have analogized, it’s like refusing to buy a fire extinguisher because you’re afraid of feeding a “negative narrative” that you might someday face a fire.

Administration officials decided the best way to deal with recession risk, which they of course aren’t personally worried about, was through a show of force on TV. There, Trump’s economic advisers assured Americans they definitely, certainly, cross-their-hearts-and-hope-to-die don’t see reason to worry…

… Kudlow’s call for optimism has a whiff of Peter Pan logic about it: If only we believe in fairies hard enough, we can always save Tinker Bell — even when we’re sending her out into a hailstorm. If you believe, clap your hands; don’t let Tink die!

It’s hard to imagine nervous Americans are really this credulous. Then again, perhaps we were never the intended audience for such performances. Sure, maybe White House aides are trying to fool the public into believing recession warning signs don’t exist. But maybe they’re actually just trying to fool their boss.

A frightening conspiracy theory, indeed.

(Mike Luckovich via GoComics.com)
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Smart Money, Scared Money. Plus, Bonus Tikka

First the reward (no sing-for-your-supper spiritual joylessness here!).

Here’s one fat cat that is Warren-curious:

 

Tikka has views on the e-book vs. book-books debate. E-books…nah.

Yup. Books it is!

(I find myself more and more on the opposite side of this divide; I spend more than half of my reading time on my Kindle these days.  But Tikka’s most definitely old school.)

Now to money.  Got my email update from Krugthulu today (Paul and I are like that, I tell you!).  While he notes, in effect, that the bond market and its economist watchers have correctly predicted eleven of the last three recessions, there’s no way to construe what’s happening in with US debt in any comforting fashion:

So the slump in long-term yields since last fall, from a peak of 3.2 percent to just 1.63 percent this morning, says that investors have grown drastically less sanguine about the economy. Long-term rates are now notably lower than short-term rates — and this kind of “yield curve inversion” has in the past consistently been the precursor to recession…

Why the long faces?

Krugman offers a few reasons why bond folks might be running scared.

For one, the ginormous, “self-financing” tax cut has failed; it hasn’t come close to stimulating enough economic activity to avoid blowing a hole in the deficit.

Trade wars, so easy to win, turn out to be a predictable idiocy, not just costly in themselves, but as they foment uncertainty, a deterrent to capital investment.  And last, he notes, economic troubles elsewhere, especially Europe, are beginning to affect us.

What might all this mean? Well, maybe a recession, maybe not:

The truth is that nobody is very good at calling turning points in the economy, and calling a recession before it’s really obvious in the data is much more likely to get you declared a Chicken Little than hailed as a prophet. (Believe me, I know all about it.) But the bond market, which doesn’t worry about such things, is looking remarkably grim.

And if the smart money here is also the correct money then, as Krugman writes…

I leave the possible political implications as an exercise for all of you.

Bonus Krugman — four key paragraphs from today’s column “Useful Idiots and Trumpist Billionaires”:

More to the point, Trumpism is about much more than tax cuts: It’s an attempt to end the rule of law and impose an authoritarian, white nationalist regime. And even billionaires should be terrified about what their lives will be like if that attempt succeeds.








Tuesday Morning Open Thread: Nobody Could Have Predicted


 
More immediately important:

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke late Monday as they tried to broker a debt ceiling and budget deal with just days left before Congress plans to leave for the rest of the summer.

The talks took on new urgency after Pelosi shot down a White House fallback plan that would have Congress raise the debt ceiling — potentially for just a short period of time — by late next week if they failed to reach a budget agreement.

Pelosi, the California Democrat, said the idea of raising the debt ceiling on its own and not in conjunction with a budget agreement was not “acceptable to our caucus” and therefore did not stand a chance of passage in the House of Representatives…

Pelosi has also said she is hopeful that she can reach a deal with the White House, but on Monday she made clear that the White House would not dictate the fallback plan if the talks falter. Pelosi wants the White House to agree to a specific budget deal that would dictate spending levels for the next two years.

Asked what would happen if the White House and Congress did not reach a budget and debt ceiling deal by the end of next week, Pelosi said late Monday “I’m not going into the theoretical. I’m into the actual.”…

Lawmakers must craft a new budget deal by the end of September, because that’s when funding for many agencies is set to expire. If lawmakers don’t fund the agencies after Sept. 30, there will be another government shutdown. Mnuchin said on Monday that the White House does not want to see another shutdown, but he said they didn’t have enough time to wait until late September to deal with the debt ceiling and budget talks, as the debt ceiling deadline could be much sooner…








Open Thread: Duncan Hunter, GOP Poster Boy of the Week

And here I thought Rep. Duncan was just a California-gated-community version of Jared Kushner — the entitled scion of a successful grifter who misused campaign funds because he felt he was entitled to a nicer lifestyle than he could afford honestly. Give Jared this much credit: either he has the sense keep his pants zipped, or he picks partners who have as much to lose from exposure as he does. Duncan was using campaign funds to ‘party’ with lobbyists — and using the campaign credit card he knew his ‘campaign manager’ wife would be auditing!

… “I’m saying when I went to Iraq in 2003 the first time I gave her power of attorney and she handled my finances throughout my entire military career and that continued on when I got to Congress since I’m gone five days and home for two,” Hunter said at the time. “She was also the campaign manager.”

“So whatever she did, that will be looked at, too, I’m sure,” he continued. “But I didn’t do it.”…

Bonus ‘Party of Family Value’ points:


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