I was on a Conservative Action Project panel last week with Brooke Rollins, Myron Ebell and Steve Moore. Thought you might be interested in my opening remarks.
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I tend to look at the world through the lens of a businessman and investor.
When I was a baby banker on Wall Street I was fortunate enough to work closely with Jay Pritzker the billionaire investor. He taught me a lot. And one of the things he taught me was before you go into any deal you need to know the list of horrible‘s. Horribles are all the bad things that can happen. You always know why you want to do a deal. But before you take any action you better understand the “unintended consequences.”
Well, Jay didn’t put it quite that way. It was more like “figure out how you can get screwed.” What’s your downside.
Well right now our economic landscape is filled mostly with horrible‘s, with lot’s of downside.
It’s bleak, but it doesn’t need to be that way.
Almost all of our problems are the work of the horribles of political leadership, not just here in United States, but all over the world.
The 40 year bull market we've had in equities and bonds is ending. Interest rates are rising, especially mortgage interest rates which are beginning to make housing look unaffordable. Inflation, well you know about inflation. GDP fell last quarter and is likely to fall again this quarter.
But it’s a strange economy, not one given to understanding with the aggregate numbers.
First we’ve had the economic fabric torn to shreds by the government lockdowns and mandates starting over two years ago.
That’s when we had the political class declaring - God-like - that some businesses were essential and others non-essential. If you want to know one of big reasons why we have inflation and shortages, it started here.
This created two economies: the privileged and the non essential.
The privileged were of course the tech companies and everyone who could thrive in a digital or government directed economy. Amazon, Google, the pharmaceutical companies and the rest…the privileged made fortunes.
Corporate profits as a percentage of the economy reached an all time high last year.
The rest of us got checks. Some $4 to 5 trillion federal government payouts to keep the economic plates spinning.
Now the money’s stopped coming but - strangely - people are not coming back to work. I’ve some theories but no one really knows why.
President Biden - or whoever stage-manages Joe Biden - seems hellbent on wrecking the economy in the name of climate change, social justice and open borders.
Whatever label they give it, it feels like payback time against ordinary Americans.
They’re determined to shut down fossil fuels then blame Putin for $5 a gallon gasoline. Diesel fuel’s now at an all time high which is driving up the cost of everything else.
Their alternative is a climate change agenda which ignores the laws of physics and economics.
The SEC is implementing ESG climate change disclosures that will cost tens of billions $$$ in compliance costs. For accounting firms and lawyers, this means big business. One accounting firm says it will hire 100,000 new people to meet the new requirements.
The Federal Reserve is coming to the inflation party with too little, too late. Instead of sound money, the San Francisco Federal Reserve believes monetary policy should be aimed at environmental and CRT social justice.
At Treasury, Janet Yellen tells us that abortions are good for the economy and is pushing for a global minimum tax on corporations.
There are examples like this in every federal government agency, but the economic damage is not just being done here in America.
The EU sanctions against Russia are hurting the rest of Europe’s economies, almost as much as Russia. They’re paying a huge price for Angela Merkel’s green energy obsession. Germany is now critically dependent on Russian natural gas.
Fertilizer prices are through the roof. Think food inflation is high this year. Wait until next year.
And China? It accounts for almost a third of global manufacturing and 18% of global GDP. The U.S. is at 24% and the EU 18%.
Unbelievably, China’s President Xi seems willing to commit economic suicide with his Zero Covid lockdown policy.
You’ve seen the horrors in Shanghai. Shanghai with 25 million people generates over 10% of China’s trade. More than 800 hundred multinational firms have regional or country headquarters in Shanghai, and 70,000 foreign-owned businesses are located there.
It’s not just Shanghai, it’s most of the rest of the country. About 3/4 of China’s 100 largest cities, have imposed COVID-19 restrictions. Beijing is likely next.
China has been a force driving the world’s economic growth engine. That could be changing.
These are just a few of my long list of horribles, but I’ve only got five minutes.
But I do want to be clear.
Most of our economic issues are not acts of nature, or from economic disequilibriums. They are man-made - they are government policy made.
In America at least, most of these can be solved by reversing course. As Joe Biden might say “you know the thing”
Stop the spending, balance the budget, protect our border, cut taxes, unleash our energy economy, protect free speech and - most essentially - leave Americans free to live their lives.
Hope to get more articles from you Mr. Walton!