Thursday, April 03, 2025

Is this a shell game?

 Okay - A prediction - or maybe some homework.

In a perfect world you buy a stock and it goes up.  You sell the stock to someone and it goes up again.  They sell the stock and again it goes up.  In this “staircase” model, no one loses, it is just a function of time.  

Now when a stock goes down, two things could have happened.  First, the person bought at a lower price and they have lost value but not principal.  However, for the price to have gone up, someone must have bought at that price - they are losing money.  There are winners and losers.  Now, if you have the ability to hang on to the stock and not be forced to sell, IF the stock goes back up, you could regain those losses and maybe even make money, or at least minimize the losses.  But if you are drawing on that money, say to fund your retirement, they are definite losses.

So here is the homework.  When these people sell at a loss, who is buying?  I see two possible choices.  Before we look into them, these people have to have spare money.  Buying on margin in this situation can be a dangerous gamble.  So we assume the people (or companies) are well funded.  I think this leaves two entities.  First the companies themselves, buying back their own stock.  Second will be large capital investment companies, or wealthy individuals who can afford to take a loss, or use it as a write off.  Thus I see wealth being consolidated from the general population (mostly 401Ks) back to a smaller group of individuals and companies.  Watch who buys.

That and giving them a potential tax break, will actually do just the opposite of the proposed result of the tariffs.  It will not bring jobs back to the US, it will hurt many people’s retirement funding (the immediate sacrifice) yet continue to expand the national debt, resulting in even more pain for our children and our grandchildren….. 

Two sides of the same coin.


Tuesday, January 28, 2025

Those who watch

 In 1978 Congress established the position of Inspector General (IG) in Public Law 94-505.

The President appoints the Inspector General, but the IG REPORTS to Congress.

To prevent political removal or reassigning of an IG, Congress established some guardrails:

Removal Procedure:

The removal procedure for presidentially appointed IGs is found in Title 5, Section 403(b), which reads in part:

"An Inspector General may be removed from office by the President. If an Inspector General is removed
from office or is transferred to another position or location within an establishment, the President shall
communicate in writing the substantive rationale, including detailed and case-specific reasons for any
such removal or transfer to both Houses of Congress (including the appropriate congressional
committees), not later than 30 days before the removal or transfer. Nothing in this subsection shall
prohibit a personnel action otherwise authorized by law, other than transfer or removal."

"The 30-day notice requirement was established under the Inspector General Reform Act of 2008 (P.L. 110-409), and the requirement that notice include a “substantive rationale” was added by the Securing Inspector General Independence Act of 2022 (Title LII, Subtitle A, of P.L. 117-263)."

https://crsreports.congress.gov/product/pdf/IF/IF11546

https://www.congress.gov/110/plaws/publ409/PLAW-110publ409.pdf

Now, what constitutes breaking the law under this act?  Well - not following the procedure!

If the President does not follow this procedure, it could be considered an impeachable act.

It would probably go to the Supreme Court to rule on the original law, but considering that this was not brought up before the action, the "beg forgiveness rather that ask permission" argument I don't think would fly.



Monday, January 27, 2025

Rubber Stamp anyone

 White House Warns of 'Consequences' for Republicans Who Don't Get Behind Trump Cabinet Nominees"


"The White House has issued a stark warning to Senate Republicans to fully support Donald Trump's Cabinet nominees, emphasizing political repercussions for any dissent."

"The White House is doubling down on its pressure campaign, warning Republican senators of political fallout if they fail to back the president's picks."

Biden Joins the Club: Each of the Previous Five Presidents Had an Early Cabinet Nominee Withdraw

"Biden becomes the sixth president in a row who has notched at least one unsuccessful Cabinet-level nomination by the end of their first two months in office. Presidents George H.W. Bush, Bill Clinton, George W. Bush and Donald Trump each had one, while President Barack Obama had three."

The words are "to advise and consent", which is understood to enable a balance of power.
While it is customary for the Senate to approve cabinet picks, it is not a guarantee.

The fact that the advise and consent can occur before or after the nomination comes before the Senate, implies a working relation ship to get the best people in office.

Making threats against elected politicians doing their constitutional duty, would seem like an impeachable offence.  Hmmmm....


Monday, January 20, 2025

Doesn't anyone know about Tariffs?

 Yes, I do.  I have been involved in the Import/Export business for over 40 years, starting with my work with the Skip Barber Racing School in 1982.  We imported race cars and parts from Ireland and England.

Later, through 3 European companies, Mannesmann Demag, Arburg and Wittmann, I was involved in the importation of machines and parts for injection molding.  

I worked with many freight forwarders and brokers.  Even working in the domestic elevator industry as a parts supplier, we had dealings in England, and Australia.

So when someone tells you the company exporting goods pays the tariffs - they do not know what they are talking about.

https://incodocs.com/blog/incoterms-2020-explained-the-complete-guide/

Look at the chart above.  Notice the last line on the left column.  That is where the sender (exporter) pays the tariff.  Notice this is only one out of eleven situations, and the least likely.

In all the ten other cases, the receiver (importer) pays the tariff and it goes to the government.  In this case it is a TAX.  

Now the purpose is in theory, to make imported goods more expensive than domestic goods.  This works when the exporting country is dumping (selling deliberately at a low price to buy market share) or has an extreme manufacturing cost advantage compared to the domestic manufacturers.  

The problem that arises in many cases, is that the price to the consumer goes up and the quality of the domestic product goes down, as they do not have to be competitive.

Are tariffs useful?  Yes, they are a tool in the economy, but more like a precision screwdriver than a sledgehammer.  If you need a sledgehammer than sanctions are more the political solution, but this is usually a last case scenario.

Even President McKinley was moving away from tariffs at what turned out to be the end of his presidency.  You might want to read his last speech to understand.