Where oh where does the time go?
It is hard to believe we are close to halfway through the year. It is also hard to believe how this market is handling all the news that is being thrown at it – a quick cursory glance has the situation in Iran, the tariff tantrum, Deutsche Bank, North Korea and OPEC to name a few.
Another big one that we often forget to talk about is the issue with our own economy. We had the jobs numbers last week and they came out better than expected. I can’t really get too excited about it because the numbers are already expected to be low and the overall our performance isn’t really that much of an outperform anyway. I believe in the basic premised of what Trump is trying to do. I also know that regardless of his successes there are those that would rather see the country in pain without him as president than the country flourishing with DJT at the helm.
Nobody can agree with Trump 100% of the time except for the man that stares back at him every morning while he is shaving. There are always decisions and actions that presidents make that will flummox the most ardent of supporters. What has the country feeling good again is not the actual economic numbers (I will argue in a second as to why they are not that strong) but the movements he is making in trying to improve the lives of Americans.
To a lot of folks that got hurt during the financial crisis and climb back from the lows of 2008 a tax cut seems like common sense. I say that a lot on TV. It seems as though that sometimes we have lost that sixth sense that I call ‘common’ sense. If things are tough on the electorate and the economy is stalled, why not cut taxes? Seems pretty straight forward to me – but hey, what do I know – less regulation seemed like a good idea too. That is the name of my new political party – the Common-Sense-Ocrats.
I feel like there would be some decent ground swell support. Take for instance Illinois at the moment. For the life of me, you don’t have to be a rocket scientist to figure what is going on and what will happen next. About 3 years ago I taught a finance class at DePaul University. Besides the fact that it was incredibly exciting for me and mentally challenging, it gave me a platform to inform our young about what was going to confront them upon their graduation. We could have spent loads of time on bond calculations and break evens – that stuff is important. But I often think that there are a lot of other things that are just as important but they get overlooked on campuses across the country. Maybe this would be a great place to incubate the Common-Sense-Ocrat party. Get them while they are young. I could set out a table in the student union, right next to Visa and American Express trying to saddle them with more debt on top of their student loans. I could show them, especially in the case of Illinois, how things work – or don’t work. A friend of mine, Dan Proft who has a successful radio show and unsuccessfully ran for Governor of Illinois in 2010 puts it best – ‘Illinois isn’t broken, it’s fixed’. It was fun to take these kids from kids to adults when it came to their own personal financial health, the financial health of their adopted hometown (Chicago) and financial health of their own country. It was interesting to read the look on their faces when I laid out the facts about the state of the City of Chicago’s finances. They were in wonderment – like they had never heard these things before – even though they were front page news headlines. I often would wonder about the best place to hide a secret – the front page of the Chicago Tribune. No matter how loud you yell or how much you tell it seems as the average electorate just doesn’t want to hear the uncomfortable news. The money pit had run dry. There was nothing more to hand out and nothing more to abuse. I asked these kids what they thought would happen next. The answers were interesting and generally circled back to the unfortunate truth. Taxes would have to go up to get Chicago and for that matter Illinois out of trouble. You can only cut social programs and benefits so much before you have to wake up to the fact you need to spend less and take more in taxes. To that point, there has been some cutting, but nowhere near enough. The pensions that are/have been promised are not there. Money for day to day operations isn’t really there. So, without anywhere else to turn, the state and city have come after the last great store of wealth in the state – property. Seems like an ok idea, raise real estate tax to help lessen the blow and balance the books. Just like it seems like coaching football with X’s and O’s is a good idea too. But they forget to tell you that the other team actually moves when the ball is snapped – they don’t stand still like they do in your playbook. And Illinois voters don’t stand still either. They are leaving the state in record numbers. Illinois leads the nation in losing residents every year. So the negative vortex continues. Less people to tax means you have to raise taxes, so more people run leaving less people to tax leading to higher taxes etc. etc. And oh by the way, how does a much higher real estate tax affect your underlying asset? Is that just another unintended consequence or would the newly minted Common-Sense-Ocrat say I told you so.? How long can this last is a better topic to discuss. Needless to say the students were enthralled – real world issues (bond issues) with real world problems.
And I am sorry to report that in the 3 years since it has only gotten worse. I wonder what the kids are saying now.