In yet another unintended consequence of US President Donald Trump’s (and his minions) lack of control, his nasty comments towards Canadian Prime Minister Justin Trudeau after the G7 summit in Quebec resulted in a major political boost for both Trudeau and Canada. “There’s a special place in Hell for any Read more
After World War 2 the US (and West in general) supported its former enemies. Rebuilding cities, legal systems, and economies on a massive scale. Germany and Japan were the primary beneficiaries of that financial aid and guidance and today those two countries are large stable entities that improve the West’s standard of living by providing both solid trading partners and political allies.
Some argue that those countries now take “our” jobs when in fact the evidence is clear that those countries have expanded the global economy for all. It is true that the US, Canada and the UK have a smaller slice of the global economic pie in 2018 compared to1950, but the pie is many times larger, so the net benefit to those countries is irrefutable.
The rebuilding (not reconstruction) plan was named after then US Secretary of State George Marshall. Today the Marshall Plan is touted as the cure all for every failing state, from Afghanistan to Mozambique but, as this New Yorker article explains, for a Marshal Plan had a lot more to do with reassurance and a lot less to do with money than most people think.
It is well established that even well intentioned government intervention in industry very often ends up causing more problems than it solves. Today one of the issues facing the United States is a loss of jobs in the steel industry and so President Trump claimed this is a National Security Issue and so used his unilateral power to impose a 25% tariff on imports of steel into the United States.
On its face, this seems like a good idea. Simplistically, if decrease the ability of other countries to export their steel to the US will result in the creation of more US steel jobs. However, the world is not a simple place and what actually happened was:
The five points above are well documented oft discussed in the media. The video below however, points out two fascinating unintended consequences that we had not thought of:
In the last decade the Dutch have reduced prison inmate populations by 50% and those sentences average to about 90 days in jail. Many people expected this drastic reduction of inmates to lead to a notable increase in crime because:
Contrary to this expectation the fact is that Dutch system has also reduced crime by nearly 40%.
As you can see in the image to the right, the Dutch now use their old prisons as temporary housing for some refugees.
How can that be? In simple terms, it turns out that after thousands of years of trying different forms of incarceration and punishment that Europeans have figured out:
A man died and went to Heaven. As he stood in front of St. Peter at the Pearly Gates, he saw a huge wall of clocks behind him.
He asked, ‘What are all those clocks?’
St. Peter answered, ‘Those are Lie-Clocks. Everyone who has ever been on earth has a Lie-Clock. Every time you lie, the hands on your clock move.’
‘Oh’, said the man. ‘Whose clock is that?’
‘That’s Mother Teresa’s’, replied St. Peter. ‘The hands have never moved, indicating that she never told a lie.
Today the United States oldest gun maker Remington Outdoor Company Inc, which owns Remington Arms, filed for Bankruptcy protection. The anti-gun lobby has taken this as a sign that the guns and gun companies are finally starting to decline. Unfortunately, Remington’s collapse is only a sign of bad management and will do nothing to stem the tide of easy to find, cheap guns.
Remington expanded production several in the Obama era, especially after Sandy Hook, as Americans feared their misunderstood second amendment rights were going to be taken away, resulting in spiking gun sales. Then after the flip flopping sometimes NRA supporter Donald Trump became President, all gun manufacturers including Remington found that sales declined because there was little fear of new gun restrictions.
In 2007 high profile private equity firm Cerberus bought Remington and started loading up the debt. In the end Remington took on nearly 1 Billion (yes, that is a “B”) in debt and was stuck with huge inventories they could not sell to service that debt.
After numerous rounds of, “We don’t know if Kim Jong Un is still alive,” Kim Jong Un himself decided to send Donald Trump a letter in his own handwriting to let him know he was still in the game.
The Donald opened the letter which appeared to contain a single line of coded message, 370HSSV-0773H.
The Donald was baffled, so he e-mailed it to the Secretary of State and his aides who had no clue either, (so that’s why Rex was fired!)
So they sent it to the FBI but none could solve it.
Now that much of the dust has settled on Cambridge Analytica‘s misuse of Facebook users data the sad story can now be told. It is critical to note upfront that Facebook was not hacked and that the information that was misused was provided voluntarily by Facebook Users. The only breach Read more
After limited debate the US Senate overwhelmingly approved a further reduction in “Dodd-Frank” banking regulations introduced in 2010 to avoid another 2008 style bank generated economic collapse.
Dodd-Frank‘s primary mechanism for doing this was to require financial institutions that were “too big to fail” to withstand stress tests. The idea being that if your bank was going to need a government bail out in the event of failure, effectively making you and me the banks insurance company, that such banks need to prove that they can withstand large economic downturns by keeping enough cash (and near cash) on hand to cover their immediate debts.
If banks pass the stress test, and ALL did in June 2017, they can issue dividends and buy back their own stock (financial engineering to raise their own stock price). If they fail, they can’t. The results and some key details are published so both the markets and individual investors know which banks are stable and which ones are not.
The principle Dodd-Frank change passed in March 2018, was to increase the threshold needed to be included in the stress test, from $50B to $250B.
Banks and other large financial institutions are not evil corporations but they are run by greedy people just like you and me. When those people are given massive incentives to bring in large amounts of income to the banks, they are likely to take risks that are absurd in retrospect, just likely they did in the 2000’s.
When the money that is risked belongs only to shareholder, employees, and board members, there is not public issue with those risks; even ‘crazy’ ones. The problem occurs when the company (bank) in question is so large that if it fails it will bring down the countries (globe’s?) economy. This is also called “systemic risk“. Such a failure cannot be allowed to occur, so governments step and transfer your tax money to those companies.
Put simply, if you are ‘too big to fail’, the public has a right to validate your stability.
While laws must be periodically updated to keep up with the products offered for sale and global political / financial environment, the problem with the March 2018 changes is that they are all reductions:
Let me start with the obligatory, I do not particularly like Donald Trump, believe much of what he says or think his campaign was shinny clean. That being said I do like to listen to both facts and common sense, so let’s go:
There are a few key points to consider when thinking about the claims that the Trump Campaign for President of the United States in 2016 was seriously aided by the Russian Government:
On Monday January 22, 2018, the Trump administration brought in a 30% tax on imported solar panels. This new solar tax will last four years and decrease over time to 15% in its last year.
“Over the last 5 years, nearly 30 American solar manufacturers collapsed; today the President is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight… This is a step forward for this high-tech solar manufacturing industry we pioneered right here in America.”
pressreleasepoint.com/trump-imposes-tariffs-solar-panels
Of the few that have heard of this new tariff, the common misconception is that it is an attempt to punish China from dumping (selling below cost, to kill competitors) panels but the US only imports 10% of its solar panels from China (see the last 30 seconds of the video below). As you can see in the video below, the US solar industry did not ask for and does not want this tariff.
First world governments around the world, including Canada have come down on the side of Net Neutrality (the idea that internet providers can not advance or block one website or stream). The notable exception to this is the United States under President Trump’s appointed FCC leader (and former Verizon executive) Ajit Pai, which has eliminated the Obama era rules protecting an open internet in December 2017.
The Republican / Ajit Pai / Trump argument is that the infrastructure is owned by the internet providers so they should be able to do what they want with it. The opposing view, held by most citizens is that the internet is like electricity or a phone; charge for the service but it is not the providers concern what is or is not connected.
Much has been said about the Trump administrations lack of a coherent foreign policy plan. He seems to have changed to tone to an us vs them winner takes all approach without considering even the near term negative consequences of such an approach.
Even if that is correct, Trump definitely got something right on US Foreign Policy: US citizens stopped buying in the notional that the US should be the ‘Global Global Good Guy’. Somewhere in the George Bush, Bill Clinton era, citizens saw an ever expanding, less than fully-coherent foreign policy that directly cost them billions of dollars, thousands of lives and the respect of many foreign citizens outside of the political class.
The US Government has thrown its weight around, with a view that it can do little wrong, since the end of World War II while US Citizens see and feel the losses. The US Government has lost the ability to explain the vast positives that come from such interventions:
A brief panel discussion about the legal (and therefore political) implications of data collection in cars.