Archive for the “RealClearMarkets” Category

Articles from RealClearMarkets.

“Imports are Christmas morning; exports are January’s MasterCard bill.” - P.J. O’Rourke
Completed in 1883, the Brooklyn Bridge took fourteen years to build. This engineering marvel brought a still distant world even closer together.
Whats important about the Brooklyn Bridge in a bigger, historical sense is what it signals about mankind: as humans were in relentless pursuit of closeness with our fellow man around the world, with trade top of mind. Seemingly every technological advance of major consequence (the telephone, the car, the airplane, the computer, etc.) has been about…

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Despite the soap opera that has become Washington, the Trump Administration will likely succeed or fail on whether it can reignite U.S. economic growth. Regulatory rollback is a big part of its get-America-moving-again agenda, perhaps the biggest, if Congress remains frozen. But while the Administration has made good progress reversing the regulatory overreach of the Obama years, one cluster of mandates could still kill its hope for annual GDP growth that tops three percent — the U.S. financial rules implementing the international Basel Accords.
Enforced in our country mostly by the Federal…

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My last column, Don’t Be Silly, Youre Not Investing When You Buy Collectibles, argued that postage stamps, baseball cards, beanie babies, and other collectibles are not real investments because they dont generate any income. I received several responses, public and private, arguing that gold, expensive jewelry, scarce coins, rare books, and fine art are investmentsevidently because many people own them and their value has gone up over time.
For a value investor, an object is not an investment just because its price has gone up. A value investor thinks of an investment as a money…

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My last column, Don’t Be Silly, Youre Not Investing When You Buy Collectibles, argued thatpostage stamps, baseball cards, beanie babies, and other collectibles are not real investmentsbecause they dont generate any income. I received several responses, public and private, arguingthat gold, expensive jewelry, scarce coins, rare books, and fine art are investmentsevidentlybecause many people own them and their value has gone up over time.
For a value investor, an object is not an investment just because its price has gone up. A valueinvestor thinks of an investment as a money machine…

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With its decision last week to take the first step toward a trade war with China, the Trump Administration is starting to seem more and more like the Sonny Corleone character in the Godfather, anxious to go to the mattresses. Whats needed is a wise consigliere to explain to the president that this is business, not personal and all of the business and economic arguments are against starting a battle that both sides would lose. The battlefield would be strewn with injured industries, workers and consumers American as well as Chinese.
Perhaps the most dispiriting aspect of any…

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The California legislature in its latest session has proposed something like 130 different bills aiming to address what is being called a housing crisis. AB 352, for example, is a possible amendment to Section 17958.1 of the Health and Safety Code that would permit the building of efficiency units of as little as 150 square feet. Other bills intend to be more exclusively the usual offering of financial aid.
After ten years of so-called recovery, an estimated 38% of the states 18 to 34-year olds are still living at home with their parents. It is not a housing crisis, for that is…

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So far, one of the few good things to come out of the national agony that began with the white supremacist march in Charlottesville this past weekend is the fact that the Presidents Councils on manufacturing and strategy are no more.Good riddance. They were window dressing at best, an example of dirigiste economic planning and favor-seeking at worst.
The disbanding of the two councils is seen as a sign of an administration in disarray, and that may well be the case. But the existence of councils aimed at bringing CEOs together with the White House to plot economic strategy was a sign…

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The concept of irrational exuberance came to me in the bathtub one morning, Alan Greenspan recalled.
On December 5, 1996, in what became a famous speech at the American Enterprise Institute, the then-Federal Reserve Chairman implied that the stock market was suffering from irrational exuberance. To be precise, Greenspan put it in the form of a reasonable question:
How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?
I was choosing my words very carefully, he later wrote, and…

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A persisting puzzle about the U.S. economy is how it can seem both strong and weak. On the one hand, it remains a citadel of innovation, producing new companies like Uber. On the other, the economy is expanding at a snail’s pace of 2% annually since 2010. How could both be true? Why isn’t innovation translating into faster growth? The answer or part of the answer is that American businesses are running on two separate tracks. Call them the “youthful” and “middle-aged” tracks.
You can’t miss youthful capitalism. The Googles of the world dazzle with their rapid innovation. Their…

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Austin Powers: Only two things scare me, and one of them is nuclear war.Basil Exposition: What’s the other?Austin Powers: Excuse me?Basil Exposition: What’s the other thing that scares you?Austin Powers: Carnies. Circus folk. Nomads, you know. Smell like cabbage. Small hands.
–”Austin Powers, International Man of Mystery”
Dr. Strangelove, meet “The Art of the Deal.”
We saw it coming in “The Orange Swan Looms Ever Closer” last May.
But most people preferred to ignore the rising risks of an overvalued market (even with most valuation metrics in the 95% decile) and the growing ineptitude of…

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The Wisconsin plan to give a Taiwan-based multinational billions of dollars the state may never recover illustrates that the real race to the bottom is not globalization, but the sprint among governments to see who can run up the highest tab for jobs that may or may not result.
Wisconsins multi-billion dollar package to entice Foxconn to set up an LCD flat screen plant in Kenosha is the latest example of encouraging companies to play states and municipalities against each other in a vicious cycle of taxpayer pitted against taxpayer. On its way to snaring one of the largest economic…

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Donald Trumps pledge to Make America Great Again requires nothing less than reigniting economic growth and prosperity. Wealth creation is essential. Yet as Congress pivots to tax reform — which is crucial to the wealth creation that will put the nation back on the prosperous path — the president can take matters into his own hands by issuing an executive order to index capital gains for inflation.
President Trumps absolutely best economic policy so far has been his relentless rampage against onerous, burdensome, costly, prosperity-killing regulations on business. And the…

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Last week, West Virginia Governor and coal mogul Jim Justice announced to a Trump rally that he was becoming a Republican. This week, he started negotiating over his price: A proposal for a big federal government subsidy to try to bail out the struggling Appalachian coal industry. But is encouraging the regions communities to think that a fading industry can be rescued really the solution to Appalachias economic woes?
President Trump has promised to save the coal industry, largely by reducing regulations such as revising the EPAs Clean Coal Plan. But the Environmental Information…

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“I won’t tell you that the world matters nothing, or the world’s voice, or the voice of society. They matter a good deal. They matter far too much. But there are moments when one has to choose between living one’s own life, fully, entirely, completely - or dragging out some false, shallow, degrading existence that the world in its hypocrisy demands. You have that moment now. Choose!” –Oscar Wilde
Sometimes you need to sit alone on the floor in a quiet room in order to hear your own voice and not let it drown in the noise of others.
I am sitting on that floor now, and thinking — and…

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There is a certain beauty to securitization that will never be appreciated again for what happened. It is an expression of genius, masterful innovation equally as powerful for shaping our world as the jet engine or the transistor. In many ways, this bit of financial majesty has done more than either of those, and that is precisely the problem.
The idea behind the process is simple enough, as these things usually are. There are various motivations for any financial institution to hold any asset. Securitization brought together several factors which allowed for these demands to be met…

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