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Trump Decrees That the Economy Must Grow Twice as Fast

Mother Jones

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The Congressional Budget Office forecasts that the labor force will grow 0.5 percent annually over the next ten years and productivity will grow 1.4 percent. That’s total economic growth of 1.9 percent per year. But the Trumpists are forecasting 3.5 percent growth over the next decade. Let’s give them the benefit of the doubt and assume that they supercharge the economy, pulling everyone back into work and achieving labor force growth of 0.8 percent. They still need productivity growth of 2.7 percent. That’s astronomically higher than anyone thinks possible. So how are Trump’s economists justifying this?

The answer is simplicity itself. The Wall Street Journal explains:

What’s unusual about the administration’s forecasts isn’t just their relative optimism but also the process by which they were derived. Normally, the executive branch starts with a baseline forecast prepared by career staff of the CEA….Discussions for the Trump administration unfolded differently, with transition officials telling the CEA staff the growth targets that their budget would produce and asking them to backfill other estimates off those figures.

So…they’re doing it by just telling their economists what growth will be. That’s an interesting approach. But what’s the point of this? Here’s a pair of growth forecasts—one for 2 percent and one for 4 percent—that should illustrate things:

If you assume higher growth, you can cut taxes and still get more revenue. Alternatively, you can spend more on the military or a border wall without increasing the deficit. Or a combination of both.

In other words, it’s magic fairy dust. Sprinkle it around and you can do anything you want. Problems only arise if a bunch of snooty Ivy League economists insist that you’re delusional, which explains why Trump hasn’t bothered to hire anyone for his Council of Economic Advisors. They would just tell him stuff he doesn’t want to hear. It also explains why Paul Ryan isn’t playing this game too: his budget is vetted by the CBO, which has no intention of aiding and abetting fantasyland figures like these.

It’s hard to know what the point of this is. Most likely, Trump said on the campaign trail that he’d grow the economy at 4 percent, and by God he’s going to stick with that. (Remember: 3.5 rounds up to 4, so his campaign promise is safe.) Besides, Trump probably really believes that he can get the economy growing that fast through the sheer force of his personality.

The real shock here isn’t Trump—we already know he’s divorced from reality—but the rest of his staff. Is there really not a single person in the White House who has both the gumption and the standing to tell Trump that the president can’t peddle this kind of drivel in an official document? Is there no one who can tell him that Twitter is one thing, but the Budget of the United States of America is another?

I guess not.

UPDATE: The original illustration of 2 percent vs. 4 percent growth used figures for nine years of growth instead of ten. It’s been corrected.

Originally posted here – 

Trump Decrees That the Economy Must Grow Twice as Fast

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Donald Trump Demands an Apology From You

Mother Jones

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Just out of curiosity, I did a quick check to see how many people/organizations Donald Trump has demanded an apology from since he began his presidential campaign. The answer is 21:

Intelligence chiefs
Cast and producers of Hamilton
Mika Brzezinski
The media
Ruth Bader Ginsburg
CNN
Wall Street Journal
Vicente Fox
Mark Halperin
Hillary Clinton
Rachel Maddow
Chuck Todd
Chris Christie
The liberal media
The Washington Post
Carly Fiorina
Fox News
Tom Llamas
Charles Krauthammer
John McCain
Univision

For a guy who never apologizes himself, he sure does demand a lot of apologies from others, doesn’t he?

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Donald Trump Demands an Apology From You

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Trump Somehow Found Time Today to Meet With Monsanto Execs

Mother Jones

Amid the furor surrounding allegations of covert ties with Russian intelligence figures as well as his first press conference since winning the election, President-elect Donald Trump found time in his hectic Wednesday schedule to meet with two towering figures in the agriculture world, reports Fox Business Daily. But the main conversation topic wasn’t the job opening atop the US Department of Agriculture, the sole cabinet spot awaiting an appointment from Trump.

Rather, the meeting involved German chemical giant Bayer’s $66 billion buyout of US seed/agrichemical giant Monsanto—a deal that will have to pass antitrust muster with Trump’s Department of Justice (more on that here). Fox reports that Bayer CEO Werner Baumann and his Monsanto counterpart Hugh Grant met with the incoming president at Trump Tower in midtown Manhattan to promote the merger. In an email to the news organization, a Monsanto spokesperson confirmed that the two execs “had a productive meeting with President-Elect Trump and his team to share their views on the future of the agriculture industry and its need for innovation.”

Baumann and Grant have plenty to be concerned about regarding possible antitrust obstacles to their mega-deal. As I’ve reported before, a combined Bayer-Monsanto would own 29 percent of the global seed market, and 25 percent of the global pesticide market. And if the pending merger between agribiz goliaths Dow and DuPont also wins approval, three enormous companies—the above two combined firms, plus Syngenta (itself recently taken over by a Chinese chemical conglomerate)—would sell about 59 percent of the globe’s seeds and 64 percent of its pesticides. In this post, I tease out how such concentrated power can harm farmers and consumers alike.

And as The Wall Street Journal reports, opposition to these mergers has arisen even in rival agribusiness circles, including among the motley crew of execs and aligned GOP farm-state pols who served on Trump’s rural advisory committee during the campaign. Iowa corn, pork, and ethanol magnate Bruce Rastetter, a member of that committee and a leading candidate for the USDA post, told The Journal he “plans to raise his concerns about the mergers directly with Mr. Trump in the near future.” Rastetter is tightly aligned with Iowa Gov. Terry Branstad, whom Trump has picked to serve as ambassador to China.

As with everything else he does, Trump seems intent on plunging these momentous decisions—on both the future of the seed market and the leadership of the USDA—into a swirling sea of chaos and drama.

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Trump Somehow Found Time Today to Meet With Monsanto Execs

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Living At Home Has Become Steadily More Popular Since the 1960s

Mother Jones

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According to the Wall Street Journal, millennials are living in their parents’ basements at record rates:

Almost 40% of young Americans were living with their parents, siblings or other relatives in 2015, the largest percentage since 1940, according to an analysis of census data by real estate tracker Trulia.

Despite a rebounding economy and recent job growth, the share of those between the ages of 18 and 34 doubling up with parents or other family members has been rising since 2005. Back then, before the start of the last recession, roughly one out of three were living with family.

Hmmm. “Rising since 2005.” I’ll assume that’s technically true, but take a look at the chart that accompanies the Journal piece. The number of young adults living with their parents rose in the 70s. And the 80s. And the aughts. And the teens. Basically, it’s been on an upward trend for nearly half a century. That seems more noteworthy to me than the fact that it failed to blip slightly downward after the Great Recession ended.

Part of the reason, of course, is that people have been getting married and settling down later in life. According to the OECD, the average age at first marriage has increased nearly five years just since 1990, and ranges between 30 and 35 around the world:

The United States is still at the low end of the world average.

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Living At Home Has Become Steadily More Popular Since the 1960s

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ERP Blogstorm Part 3: Banking

Mother Jones

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Part three of our series of charts from the Economic Report of the President is all about banking. Mostly, it’s a trip down memory lane. Here’s a look at the worldwide market in derivatives over the past couple of decades:

The volume of derivatives went from $10 trillion to $35 trillion in two years starting right before the market crashed. Here’s another perspective on that:

In 1990, shadow banking was about the same size as the traditional banking sector. By 2007 it was more than twice as big. Just before the crash, shadow banking comprised two-thirds of the entire banking industry and it was almost entirely unregulated. This is why I was happy that Hillary Clinton at least mentioned shadow banking during the campaign.

Here’s how all this affected tradition banks:

In 2007, losses from trading amounted to about $30 billion. By 2009 that had skyrocketed to about $100 billion—and that’s in addition to about $40 billion in traditional loan losses. This is what happens when you start with a housing market that’s already in bubble territory and then egg it on with insane levels of rocket science derivatives, most of them unregulated bastard offspring of the shadow banking sector.

So what’s happened since then? We had a huge crash, the Fed instituted higher capital ratios for “systemically important financial institutions,” and we passed the Dodd-Frank reforms. Here’s what banks look like now:

Before the Great Recession, the biggest banks (green line) had Tier 1 equity ratios of about 7 percent. That’s why they couldn’t weather the crash. Today they’re above 12 percent. Is that enough? Maybe not. But it’s a helluva lot better than it used to be.

Finally, here’s an intriguing chart that shows one of the specific consequences of Dodd-Frank:

Most single-name derivatives are now cleared through a central clearinghouse, which makes it easy for traders to cancel out mirror-image positions they hold. This is called “compression,” and it reduces the total volume of derivatives and increases the safety of the financial system. Today, derivatives worth $200 trillion (notional) are compressed out of existence each year.

Needless to say, Republicans are hellbent on repealing Dodd-Frank. Sure, it makes the banking system safer and helps protect consumers, but big banks don’t like it, so that’s that. The party of Donald Trump, the working man’s president, will do whatever Wall Street tells them to do. Funny how that works, isn’t it?

Continued: 

ERP Blogstorm Part 3: Banking

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