- It’s been over a week since I did my last podcast there’s been a lot of economic news – almost all bad
- The markets have been under pressure – we’re back down near the mini-Black Monday lows, solidly in correction mode
- The pressure on international markets has been greater
- Yet the vast majority of economists expect the Fed to raise interest rates by December
- This would really mean last minute – as the Fed’s messaging hints at an interest rate hike by the end of the year
- If you look at the Fed’s reasons it listed were:
- Weakness in overseas economies
- Lack of inflation, as the Fed measures it
- Increased improvement in the labor markets
- Why would the Fed move if all these concerns still exist?
- The answer is, it would not move
- No one wants to connect the obvious dots
- When the Fed refused to rule out an interest rate hike in October or December it might have been the worst thing for the markets because it is admitting it is considering kicking the economy when it is down
- Initially I thought the Fed would indiciate a dovish hold, but they opted for a hawkish hold, which exacerbates the issues with the markets, as the hike is already priced in
- International markets assume America can handle higher interest rates; but the Fed is still talking up the economy to send the message that the U.S. can handle higher rates, even though it can’t
- I discussed this at length in my recently released video of my address in Jackson Hole, Wyoming
- I really want discuss in today’s video two people who are in the news: Donald Trump and Carl Icahn
- Trump was on 60 Minutes this week and Carl Icahn recently released a video called, ‘Danger Ahead’
- Trump’s performance really hit the ball out of the park with his delivery, not that I agree with everything he said
- The typical voter will buy his bill of goods
- The interview was a commercial for Donald Trump in which he promises everything to everybody
- The promises to cut taxes on everyone but the hated hedge fund managers
- He promises to repeal and replace Obamacare with something even better and still insure everybody
- He promises to save Social Security
- He promises to grow the economy
- To the average voter, who doesn’t really understand economics, he sounds like he can pull it off
- He sounds optimistic about what the country can be like if he is elected president
- The economy will grow because jobs will come back from overseas
- How is he going to do that? I don’t know, but it doesn’t matter
- He says it in a way that people are going to believe it
- Who will argue against it?
- He is not singling out any one interest group that will suffer
- His performance was brilliant, even though much if what he promises is impossible
- His tax message resonates because currently the government uses high corporate taxes so that special interests groups can be given favors by Congress, and higher taxes are held over the heads of those who do not buy them off with votes
- With lower corporate taxes, the politicians lose that leverage
- Trump doesn’t need these special interest votes because he’s spending his own money
- All Trump needs to do is get the nomination, then the Republican Party will support his Presidential Campaign
- His campaign for the nomination has been largely fueled by publicity
- He is running a better campaign in light of public perception
- Trump is throwing light on the problems who the average guy really feel – even if he is pie and the sky
- Carl Icahn is in the news because he could be Treasury Secretary if Trump is elected, and he would probably not be that bad
- His new video, calledDanger Ahead“ starts out as a commercial for Donald Trump, giving him even more publicity, but in the second half of the video he addresses the real root of the problem in the U.S. economy
- He addresses our bubble economy and correctly blames the Fed
- He points out that quantitative easing and zero percent interest rates are the problem, not the solution
- He addresses manufactured corporate earnings, share buybacks and lack of investment in production
- He’s using an analogy I’ve often used that the market is having a party on a bus that is being pushed off a cliff by Janet Yellen
- He raises the question about the payback from Bernanke and Yellen’s extreme measures
- He said he is sorry no one made a similiar video in 2007
- Hello?
- I warned about the problem in 2004, 2005, 2006 and 2007
- When I started warning about he problem there was still time to do something about it. By 2007, it was too late.
- Icahn’s warning is too little too late
- I regret that my warning was not ever heeded
- Icahn will probably be ignored, too.
- He described the Fed’s methods as “medicine” but he is wrong – it is heroin
- I am coming out with a new video recalling my warnings about the housing bubble in 2006 from the “Janet Yellen Exposed” video
- Carl Icahn is right, just like I was right about the housing bubble in 2006
- What I said then should have been obvious, but it wasn’t
- Icahn’s points should be obvious, but they are not
- Trump is pointing out real problems; he doesn’t have real solutions, but at least he knows what the problems are
- My hope is that if he elected, he would figure out the solutions to the real problems and abandon the ones he is using to get votes
- You know what? He just might do it
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