Bill Owens: Confounding And Confusing Events 11/4/19
A variety of reports are sending negative signals with regard to large capital purchases which went down 1.1%, as well as the investment by business in large commercial products which also over a two-month period has dropped 1.1%. It was also recently reported that our annual budget deficit is nearing $1 trillion for 2019 which is a 26% increase resulting from the 2017 tax cut and increased spending. These three pieces of data become very important in an attempt to analyze the direction of the economy as opposed to the stock market which is the focus of much of the commentary. Ask your Congress person what their position is on the growing deficit and debt.
The recent booing and chanting of “lock him up” in game five of the World Series in DC, has raised some concerns. Morning Joe thought that it was disgusting, although he did also indicate that he felt that Mr. Trump raising the cry against Hilary Clinton at rallies during the last election was also disgusting. Unfortunately, you frequently get what you give, and Mr. Trump has taken politics and the Presidency to new lows of decorum. What surprised me more was his look of shock when he heard the boos, followed by the chanting which also reflects on him surrounding himself with “yes” men, as General Kelly indicated, but also on his reliance on only conservative and right-wing media for news. The continuous recirculating of ideas within a small circle of people all of whom agree with you is incredibly dangerous and narrowing. Mr. Trump is now beginning to suffer some of the consequences. It is hard for me to believe that his staff didn’t warn him that he might not receive a pleasant reception. Then again, I doubt he would listen.
On Tuesday, the 29th, the EU approved an extension of the exit from Brexit until January 31, 2020. This leaves Mr. Johnson in the position of being affectively being unable to exit, both as a result of the EU decision, but also the legislation which is in place that directs that Britain can’t leave without a deal. The next step in this process is, of course, the snap elections which Mr. Johnson is promising in December, 2019, which could, very well, redirect the entire course of this process. The uncertainty must be unnerving for the entire UK population, or at least those who are paying attention.
US businesses along with Mexico and Canada are developing a strategy which is based upon the concept that the House of Representatives may well need to take some positive action during the course of the impeachment process, and one clear avenue available to the Democratic majority is passage of the USMCA. This makes certain assumptions that I am not sure I am prepared to accept: The first is, that it will be a long process and whether or not the House needs a diversion; the second is would the House want to give Mr. Trump a victory; third, groups pushing this concept are not generally friends of Democrats, so what is this hypothesis based upon. This is not a strategy I buy into unless there is some indication from the Speaker and labor, that they do.
How’s manufacturing doing? Reports indicate that manufacturing is again declining in the Midwest. The why is significant. Protectionist trade policies lead the way, the failure of the tax cuts to stimulate investment in production equipment (capital expenditures) and back to trade and the negative impact of tariffs. Adding to this is the fact that farmers are hurting, even though they are ironically being subsidized by the government that is causing the problem. Bottom line, farmers aren’t buying equipment which adds to manufacturing woes.
History is always helpful to review and the Clinton impeachment is closest in time. Republicans got what they wanted on October 31, 2019 (I hope you didn’t miss the fact that is was Halloween), a vote authorizing the impeachment process. The response was to vote as a block against it. The House in the Clinton impeachment had a handful from each party voting against their party, so yesterday’s vote was not a surprise, just disingenuous.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.
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