Sean Duffy Reprise

Yesterday I featured Transportation Secretary Sean Duffy and the Administration's skillful use of sleight of hand to take credit for transportation improvements and gains for which they didn't have any skin in the game.  They're good at it.  Same goes for this...

The Great American Road Trip was unveiled earlier this year as part and parcel of the further celebration of America's Semiquincentennial by inspiring the people to hit the road and travel America to join in the celebration.  Previous administrations and Secretaries have produced similar puff pieces and on paper I would not disagree with this conceptually.  Who doesn't like a good road trip and fun celebration?

Filmed beforehand and announced after Mr. Trump made his unilateral decision to go to war the timing was somewhat fraught.  Considering the impulsive nature of the president, the lack of planning and poor timing shouldn't come as any surprise.  With gasoline and diesel north of $4 and $5 a gallon the notion of a road trip was stunningly inopportune and tone deaf.  Working-class middle America was priced out of the road trip market.

So the administration held it back.  Planned for release three months ago it was put on ice ostensibly for additional editing to comply with government ethics rules.  Which is the second problematic issue; Road Trip was underwritten through the generous support of sponsors.  Namely the corporate entities that Duffy's Department is supposed to regulate - including $1 Million Platinum Level sponsors including names like Boeing, Toyota, Royal Caribbean,United Airlines and Shell.

Naturally, considering the Trump administration has its hand out for any opportunity to take money from any any well-heeled contributor that might have business before the federal government; with the exception of Presidential Pardons I'm unwilling to characterize this a bribery.  All previous administrations have done this at some level; however, considering the level of Trump's personal level of fiscal self-aggrandizement and the brazenness of the Trump organization's efforts this is nothing less than art form. But I digress.

I'll likely catch some flack because I'm a cultural philistine and not a fan of 1990's-style saccharine reality television programming.  Even so, if your viewing tastes match the target audience you might want to give it a look.  Its family friendly and the advertising is muted; and because it never rose to the interest of network or cable television you can find it over on YouTube.  And it can use the viewership.

Happy motoring.

You can learn more about the production here. 

Don't Pay Attention To That Man Behind The Curtain

Treasury Secretary Scott Bessent moved to calm the bond markets yesterday after a recent selloff made mortgages and other consumer loans more expensive.

Bessent's move to increase repurchases of long-term government notes and bonds (increasing demand for them) is largely symbolic but could still help bring those costs down.

Wall Street is skeptical the relief will stick, given that the Treasury Department's purchases are quite tiny compared with the roughly $30 trillion market for government debt.

The reason any of this matters is that the bond market impacts how much it costs everyone — the government, consumers, and companies — to borrow money.  The bond market is getting squeezed from multiple directions.  It sure looks like we’re in for a spell of rising interest rates.  

Meanwhile, Mr. Trump’s unilateral war in the Middle East and de facto closure of the Strait of Hormuz is feeding inflation all the while destabilizing global security and the world’s economy.  So much winning.

Yet we have gilded statuary, a ballroom, an airborne Qatari palace, reflecting pool and a triumphal arch.

Squirrel!

Brief Economic Briefing

 

Once upon a time you could count on Republicans to stand for lower taxes.  No more.  In case you missed it, last Friday, July 24, President Trump imposed new tariffs of 10% to 12.5% on 60 trading partners covering 99% of U.S. imports.  In a fit of pique, an additional 50% retaliatory tariff singling-out Canada was imposed as well.

Because the cost of these additional trade taxes are paid by consumers, the Yale Budget Lab now estimates that Mr. Trump's tax increase will cost American households an average of $1,100 per year.  That is double what it would have been had the president declined to impose higher taxes replacing the global tariff that expired on Friday.  

Notably, this tax increase wipes-out the $300 - $1,000 increase in average tax refund generated as a result of Trump's Big Beautiful Bill.

Five months into the Iran war the national price of gasoline is around $4 a gallon; so there is that additional household budget item. The Strait of Hormuz remains closed.  The Red Sea's Bab el-Mandeb (Gateway of Tears) is now threatened by the Houthis.  U.S. bases throughout the Gulf States remain vulnerable to attack.  And oil is trading close to $100 a barrel.

Naturally, it should come as no surprise that with the imposition of new and higher tariffs, rising energy costs, Iran war supply chain disruptions; businesses are raising prices.  Which increases the threat of rising inflation pressures. 

In closing this has pushed yields on the 10-year treasury - a major benchmark for setting consumer borrowing costs - above 4.6%.  The bond market looks spooked.  This impacts commercial loans and pushed the 30-year fixed rate mortgage rate to its highest level of the year, a move that could chill the housing market.  Notably, this is higher than where they stood following Mr. Trump's Liberation Day announcement that sent the bond markets into a tailspin. 

Admittedly, updates and briefings are incomplete.  For instance, unemployment for the month of June was 4.2%, ticking down from 4.3% in May.  According to the US Bureau of Labor statistics total unemployed persons stood at roughly 7.09 million, reflecting a stable labor market.  

Watch the Fed today. 

What's The Tab On The War So Far?

The dollar figures are sketchy as the administration has left out the replacement cost of lost aircraft and the rebuilding of damaged bases; but here's a start.  Casualties on our side; 18 dead, 482 wounded and counting.  Deaths among the Gulf States, including Iran, and merchant seamen are estimated to number into the thousands.

 

Excluding aircraft and base losses the war in Iran has officially cost the United States $37.5 billion so far, according to recent testimony by Defense Secretary Pete Hegseth. However, intelligence officials and independent analysts  estimate the total cost exceeds $100 billion.  

 

Supporting the higher estimate consider that earlier this week Defense Secretary Hegseth and General Caine, chairman of the Joint Chiefs of Staff, appeared before the Senate appropriation Committee seeking $70 billion more to cover costs of the conflict and replenish depleted weapons stocks.

Sounds like the tip of an iceberg.  

 

Nevertheless, insofar as nobody can put the toothpaste back in the tube and hardly anybody wants to cut the troops off at the knees during wartime I think we're stuck with paying for a conflict of choice begun by one guy.  An impulsive choice, likely made against the advice of the Vice President, Secretary of State and Chairman of the Joint Chiefs of Staff; but that's a discussion for another day.  

 

What do we have to show for our expenditure of lives and treasure?

 

The Strait of Hormuz remains closed.  The Red Sea's Bab el-Mandeb (Gateway of Tears) is now threatened by the Houthis.  U.S. bases throughout the Gulf States remain vulnerable to attack.  And oil is trading close to $100 a barrel.  Mr. Trump has set in motion a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.   

 

By all outward appearances this has all the elements of an open-ended cluster.  Some have suggested this could develop into another costly and grinding conflict that might persist into the next administration.  Iran is near certain to obtain a nuke.  This is Mr. Trump's Jimmy Carter moment - on steroids.  Time will tell how this plays-out.

 

And not a single MAGA supporter I'm acquainted-with will admit that their guy might have fallen under the thrall of Bibi Netanyahu.

Or just, plain and simply, miscalculated….

 

Buyer's Remorse?

If anyone had any doubts about the incompetence of President Trump and his administration the Memorandum Of Understanding (MOU) with Iran proves it.  Russia and the United States misunderstood the inability of military might alone to crush small nations like Ukraine and Iran.  Britain's King George learned that lesson 250 years ago; yet that historic parallel is apparently lost on Donald Trump.

There is no regime change, no obliteration of the Iranians' nuclear ambitions, no end to their support of terrorist proxies and no unconditional surrender.  Sure, the Strait of Hormuz may eventually reopen; which is a return to the status quo that existed on February 27 before Donald Trump made a unilateral decision to go to war.  While Iran suffered substantial losses they have emerged from a conflict with the world's most powerful military having learned they can close the Strait any time they choose; and force the world to bend to their will by means of economic extortion.

We gained nothing. 

Iran holds all of its enriched uranium and one solitary man set in motion a cascade of gravely destabilizing events that have had all manner of adverse consequences for global stability, security and the world economy.  All of this at a cost of thousands of lives, billions upon billions of dollars and diminished American prestige.  With global petroleum reserves nearly exhausted; Trump capitulated.

No matter how you spin it, Mr. Trump lost his own war.  

The final deal, if it comes, must hold every red line; no enrichment, full removal of the existing stockpile, verification with teeth, the Strait open and free, permanently.  

Redemption demands nothing less.

Let's Make a Deal

Ships of the world, start your engines.  Let the oil flow!

- Donald Trump 

Trump sought to break Iran's regime and for the present has to settle for reopening the Strait.   

As of the publication of this post at 2:30 PM, Monday nobody has seen the text of "The Deal" opening the Strait of Hormuz.  Perhaps this emerging agreement ends a costly war but it leaves Iran's leadership intact and its nuclear future unclear.  Nevertheless, this is good news.  I'll join the president in celebrating a resumption of the way the world was on February 27, the day before the United States and Israel attacked Iran.  Ending one of the biggest global supply disruptions in decades  is hardly a victory; but it is good news.  

Some immediate thoughts.

The market for oil and other critical products (fertilizer components come to mind) will remain tight for weeks and months while ships are repositioned, damaged infrastructure is assessed and repaired, depleted inventories are rebuilt, mines are removed, crew changes are made and navies, insurers and shipowners are convinced the channel is safe.  Even after traffic picks-up, another 50+ days are needed for oil to arrive in Asia and begin to be refined.  Supply chain relief  won't materialize  until late August and any meaningful normalization would only happen in September at the earliest.

Before this deal crude oil flows have recovered only slightly this month with roughly 10 ships transiting the strait  per day according the commodities and shipping data provider Kpler; a far cry from the normal prewar ship transits of 100+ daily.

Remember this; under Obama's JCPOA no soldiers or civilians were killed, no US bases attacked, no aircraft or ships were lost, no treasure was expended on a war and Iran's enriched uranium was turned over to the custody of the Russians.

Donald Trump unilaterally walked-away from that agreement and in the absence of a replacement Iran embarked on a frenzy of nuclear enrichment.  In 2025 Donald Trump claimed to have obliterated Iran's nuclear program.  And earlier this year unilaterally decided to go to war with Iran.  Consequently, American service members and Iranians were killed and wounded, US bases in the Middle East were targeted and attacked and $34 billion of our treasure expended.  Iran still possesses its enriched uranium, the regime is intact and their nuclear ambitions unresolved. 

Happy Birthday Mr. Trump.  Stay-tuned...

The Folly of Impulsive Indifferrence

 

The reckless nonchalance with which leaders like Trump and Putin launch wars speaks volumes about their judgement. 

Meanwhile, playing the long game, China bides its time as Russia and the US burn thru lives, resources and treasure.

 

Not only are the Chinese backing their Iranian allies, China's leadership appears to be better-read than Putin and certainly Trump.  

 

True victory comes not from defeating others, but from arranging circumstances so that victory becomes inevitable before conflict arises.

- Sun Tzu 

 

 

 

PS - An MOU is a start; nevertheless, the deal, if it comes, must hold every red line; no enrichment, full removal of the existing stockpile, verification with teeth, the Strait open and free, permanently.  Nothing less.

President Trump Pays a Call To The Farm

Yup; the City Slicker from the Borough of Queens blew-in to Wisconsin a couple days ago and maybe got his shoes dirty.  But I doubt it. This was all for show because things have become increasingly uncertain in farmland world.  By and large, farmers continue to support the president.  Why?  Trump gets it.  The truth is not in his actual policies but in his showing-up to address their fears.  How to make farmers think he sees them; the people that live in fly-over country.

For as long as I can recall I have not held any particular fondness for the Communist Red-Chinese government.  They have raised the theft of intellectual property to an art form and have bamboozled the trade negotiators of every administration for just as long; including Trump 1.0 and now Trump 2.0 as well.

If I had a rational discussion with a Trump supporter I would hear a case that the recent troubles felt by family farmers and ranchers are simply short-term nuisances that are necessary to challenge long-standing, unfair trade practices by foreign countries; China in particular.

And I suppose that my interlocutor would likely suggest that it is only "strong medicine," such as an aggressive tariff strategy, followed-on by subsequent renegotiation that would result-in better more structurally-sound and long-term trade deals.  Fair-enough.

Yes, American agriculture is a complex subject; nevertheless, my immediate neighborhood is an almost exclusively agricultural community.  We own a farm and farm policy is of personal interest.  Consequently, and anecdotally, I hear and have some tingly sense that patience may be wearing thin. Hardly for all but certainly for some.

And I am not alone; numerous agricultural economists and trade orgs - who know more about this than I do - would argue that Trump policy-making initiatives have resulted in no small amount of financial strain for American family farms. 

Specifically, the strong medicine and its side effects include: lost export markets, rising input costs, financial instability leading to bankruptcies and dependency upon federal subsidies.  

Let's dissect each.

Mr. Trump has famously expounded-upon his love of tariffs; thusly when your only tool is a hammer every trade issue is treated like a nail.  The extensive use of tariffs - particularly Section 232 of the Trade Expansion Act - has led to retaliatory measures from major trade partners, including China.  This impacts an expansive list of stuff ranging from auto parts to semiconductors.  While most certainly the president and possibly my interlocutor might erroneously persist with the notion that foreigners pay these tariffs and make us wealthy beyond belief; the truth is that import companies pay them and pass the cost on to US businesses and consumers.  Just like a sales tax, tariffs make imported goods costlier.  Another unintended and equally unfortunate outcome is loss of market share.   

For decades China has been the undisputed heavyweight champion when it came to buying American soybeans.  It is a fact that the Chinese used to be the largest buyer of our beans than the rest of the world combined.  From the end of May through November of last year China did not purchase a single American soybean, choosing to do business with other countries instead.  As a result of Trump's import taxes China responded with an imposition of their own duties along with a boycott of American beans.  Sales, along with domestic prices, plunged.  Meanwhile, American agricultural exports to Canada decreased by more than $1 billion largely as a consequence of Canadian boycotts of American products.

Farm economists now point to the acceleration of a structural shift in markets with China permanently diverting its agricultural purchases to competing nations.  Even after a handful of temporary trade truces were reached American farmers today have a significantly reduced share of the global market.

What about input costs?  The president would tell you that tariffs are intended to protect domestic manufacturing.  And while that might be a necessary and useful tool to shield boutique specialty industries; when applied in broad swaths these trade taxes increase the cost of raw materials used to manufacture heavy machinery.

Not surprisingly, manufacturers like Deere are faced with higher production costs due to tariffs on metal, microchips and other component parts which are passed on to farmers in the form of higher prices for Deere tractors, harvesters and combines.  Even Trump knows this as the administration relented and temporarily reduced the offending taxes impacting agricultural equipment from 25% to 15%. 

And then, of course, Donald Trump made a unilateral decision to go to war with Iran resulting in the closure of the Strait of Hormuz.  This set in motion a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.  This has spiked energy costs and disrupted the the global supply of nitrogen and urea.  Some fertilizer prices are up 47% year-over-year.  For us here in the northern hemisphere the manure hit the fan before spring planting.  What were they thinking? 

Putting-on my financial guy hat, I am now witness to a perfect storm of reduced export commodity prices and skyrocketing operational costs conspiring to squeeze profit margins.  

According to the American Farm Bureau Federation, last year, America's crop farmers lost $34.6 billion and farm bankruptcies surged to numbers not seen since 2020.  In farm states like Iowa, Nebraska, South Dakota, Minnesota and Wisconsin there is now a sharp uptick in family farm bankruptcies and foreclosures.

To cushion the gut punch from his unilateral trade war Trump has authored the distribution of billions upon billions of direct aid including a $12 billion market facilitation package and the Farmer Bridge Assistance Program. 

These payments are a lifeline to keep farmers afloat; nevertheless, they smell peculiarly of Soviet-style central economic planning.  Or garden variety welfare; you pick.

From a purely economic perspective none of these subsidies assist the local rural economy.  Almost all of it went to multinational fertilizer and seed syndicates and large corporate landlords.  Moreover, welfare payments distort market economics resulting in an unstable environment where farmers become dependent on federal intervention rather than stable global commerce.  See previous paragraph.

So when I opened with the observation that the president's visit was mostly for show ask yourself if following Mr. Trump's departure did anything change for Wisconsin farmers?

Have lost export markets returned?  Have import duties gone away?  Has the price of fertilizer, diesel or purchased and leased equipment come down?  The Strait of Hormuz might reopen tomorrow; yet because things are so horribly broken any return to normalcy will take a year or more.  That does nothing to stem the immediate rise in bankruptcies and foreclosures for family farms.  

Farmers like to joke about why they don't gamble or place wagers in the prediction markets.  They'll tell you every season already comes with enough business crippling risks to satisfy anybody's passing itch to speculate.  Ham-fisted government policy getting in the way simply exacerbates the risks.  Increasing dependency on the federal dole to mask flawed policy in both trade and war is a failed strategy by any historical measure.

Farming is hard work and unlike an IPO or private equity wealth comes slow and steady.  America's family farms are not experiencing some transitory short-term hardship; they are disappearing.  Bankruptcies were up 55 percent in 2024, 46 percent in 2025 and 70 percent already by May of this year.  It will be interesting to follow how support for the president holds-up amongst farm producers for the remainder of his term.   

Time will tell.... 

Central Planning Meets The Law Of Unintended Consequences

Central planning is frequently (and erroneously) considered synonymous with socialism or communism.  Central planning is a legitimate economic model.  Socialism and communism use central planning as a way of achieving other social and political goals, but generally operate within the construct of a mixed economy.

Does that sound familiar?  It should, because that is a Trumpian economic model.  However, President Trump puts his own nuance on the concept; he, alone, is the decider. 

The president has downplayed the economic stresses arising as a consequence of his tariff policy and unilateral decision to go to war with Iran.  Asked earlier this month whether the financial situation of average Americans was a motive to end the Iran war, he said not even a little bit.  And you know what?  I believe him.  The president is adept at saying the quiet part out loud.  After-all, just like going to war, he alone is the decider.

There is a weak link in the chain of a centrally-planned economy orchestrated by a single individual.  Particularly if that individual is surrounded by sycophants.  In the absence  of hybrid vigor,  economics becomes inbred and less resistant to disruption by outside forces.  Add a war to the mix and things get more complicated.

Consider this; the percentage of credit card balances at least 90 days delinquent rose to 13.2% in the first quarter, the highest level in 15 years.  America's total credit card balance reached $1.25 trillion in the first quarter, the highest first quarter balance since the Fed began tracking it in 1999.

The average interest rate on these cards rose to 21% in February from 14.6% in February 2022 putting an additional strain on consumers.  Why is this important?  Our economy is not driven by manufacturing; it is a service-based economy driven by consumers.

Soaring interest rates and rising inflation have led to the highest delinquencies since the financial crisis; a pattern economists refer-to as survival debt. 

And, of course, the Strait remains effectively closed leaving global supply chains seriously messed-up with all sorta unintended consequences.  So I'm still waiting on President Trump to improve everyone's (not just the investor class) prosperity and general lot in life.  Along with making the world a safer place.

I sure hope he gets this right.  After-all, he's the decider.... 

Fast Facts

Baird Maritime photo

 

Global seaborne crude oil shipments have fallen ~16% since the start of the Iran war. We are currently down ~14 million barrels/day out of a total of ~103 total barrels of oil/day used globally. Empty tankers that previously would have picked up oil in the Persian Gulf are now heading to other destinations to pick up oil - including the U.S. These increased exports may potentially go from 4 million barrels/day to 6 million barrels/day. Robbing Peter (U.S. Citizens) to pay Paul (the rest of the World). It takes 22 days to transport oil from Saudi Arabia to Shanghai by sea; versus 52 days to transport oil from Houston to Shanghai by sea. For a Houston-to-China run, we would need to quadruple crew-hours: over twice as many crews to man over twice as many tankers - over twice as long for each voyage. A Houston-to-China run will require more than twice the fuel and twice the wear-and-tear on the ships.

 

We would need over twice as many tankers to transport oil from the U.S. to China. But those tankers do not exist. Oops.

 

I suppose China is going to have to figure this out. But, there again, the Strait of Hormuz is functionally closed anyway; as a consequence of the blockade by both Iran and the United States.

 

At some point in the future (weeks, months, years, whatever), and after a cessation of hostilities, it will take weeks to reposition most all of these ships back to their normal runs. As a follow-up to Sunday's post on the Iran-Trump negotiating situation; it is my opinion that the longer Iran holds out, the greater the international chaos and the stronger Iran's negotiating position becomes. Does Trump's negotiating position become weaker? Dunno for sure; but the polling is getting worse with the passage of time.  

Of course, Iran is aware we have a midterm election coming-up.

Who knew a war in the Middle East could be so complicated?

 

 

 

 

Data: U.S. Energy Information Administration - https://www.eia.gov/

Who Wants To Make A Deal?

Last week a buddy and I were pondering the Iran war, the nuclear deal (or lack thereof) and was Iran cheating when Donald Trump exited from the Joint Comprehensive Plan of Action (JCPOA) in 2018.  And for some strange reason a day later it occurred to me that Mr. Trump's situation is similar to that of the popular game show Let's Make a Deal that aired from 1963 to 1976.

If you're old like me you may recall that costumed audience members had to deal with fast-talking host Monty Hall in choosing what might be lurking behind up to three doors or curtains.  Was it a fabulous prize - like an automobile?  Or a lesser prize - called a Zonk?

Unexpectedly called-off yesterday, if nuclear talks resume in Pakistan sometime soon President Trump will be facing a similar conundrum mostly a consequence of his own making.  The President had previously characterized the JCPOA as "a horrible, one-sided deal."   And now he has the opportunity to make a new deal.  Will it be Door Number One, Two or Three?  But first, let's put to bed anything about cheating back in 2018.

Whether Iran was cheating at the time Trump withdrew from the JCPOA is debatable.  At the time, the International Atomic Energy Agency (IAEA) was monitoring sites on the ground and had confirmed that Iran was staying within the limits allowed for uranium enrichment and stockpile size.  Senior officials in the Trump administration, including Secretary of Defense James Mattis and Director of National Intelligence Dan Coats, testified to Congress that Iran was in technical compliance with the agreement.  Consequently, the consensus among both international monitors and the US intelligence community was that Iran was not cheating.

That the agreement had flaws and shortcomings is not debatable. Everyone knew that; including the Iranians.  Trump's primary argument for withdrawal wasn't that Iran was breaking any rules but that  the agreement itself was fatally flawed including a sunset provision that would allow Iran to pursue enrichment activities after the passage of fifteen years and that the deal did not address Iran's ballistic missile program.

So Trump tore-up the agreement and walked away.

And in the absence of a replacement agreement Iran set in motion an enrichment spree and expansion of their ballistic missile program leaving them closer to a bomb than ever before.  Today, the IAEA tells us Iran likely has a total of 11 tons of uranium at various enrichment levels.  With further purification that is sufficient to build up to 10 to 11 nuclear warheads.  All of this happened in the open and without an inning of cheating.

It is noteworthy to remember that Iran had previously lived up to its pledge under the JCPOA to ship to Russia 12.5 tons of its overall stockpile of enriched uranium.  After which, Iran's weapons industry didn't have sufficient material to build even a single bomb. 

The actions of president Trump have had all manner of consequences; intended and otherwise.  Going back to 2018, ask yourself, was the original deal an OK deal?  Was abrogating it a better deal?  And who owns the results?  

From 2021 to 2025 the Biden administration was unsuccessful in negotiating new limits.  And throughout the negotiations Iran kept enriching and expanding its cache of enriched uranium.

Then, in June of last year, Trump bombed Iran's enrichment plants at Natanz and Fordo including underground storage tunnels and facilities at Isfahan.  He famously declared to the world that Iran's nuclear program had been "obliterated."   

But probably not.  

In very short order, Operation Epic Fury was launched in late February of this year.  Two months later the Straits of Hormuz are blockaded and effectively closed and presently the US and Iran have entered a period of tentative diplomacy.  President Trump has previously dispatched Vice President JD Vance to Pakistan; and until yesterday planned to send real estate developers and senior envoys Steve Witkoff and son-in-law Jared Kushner to Islamabad to conduct indirect talks presumably to secure a replacement nuclear agreement. 

A fragile ceasefire has been extended.  The president tells us that the military operation has decimated Iran's industrial base, ballistic missile production, drone manufacturing and sunk the navy.

President Trump's decision to unilaterally go to war with Iran without consulting Congress, the American people or (excepting for Israel) any of our global allies; set in motion a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.

Iran's Foreign Minister, Abbas Araghchi, has explicitly ruled-out direct talks with Witkoff and Kushner leaving Pakistan serving as an intermediary shuttling messages between the US and Iran. 

The administration is wise to seek an agreement that permanently eliminates any path to nuclear weapons, including restrictions on ballistic missiles and a cessation of support for Hezbollah and Hamas.

Intelligence reports suggest Iran still has its stockpile of highly-enriched uranium.  The president has to come up with a plan for that and Iran has to agree to it.  

Iran has signaled an openness to discussing nuclear concessions contingent-upon sanctions relief, reparations and a formal end to hostilities.  The missile program appears to be a non-starter.  

I'd love to be a fly on the wall of the Oval Office inasmuch as a rushed-deal (to end the war) has a high probability of being a sloppy deal.  I do not think that Trump has the attention to detail or the patience for arduous negotiations that would lead to a real deal.  I have little faith in Trump getting this right.  I think he wants to save face.  He wants to say his deal is better than Obama's.  He wants to get the heck out of this morass as soon as he can; slapdash deal notwithstanding.  Furthermore, with a decapitation of Iranian leadership and wholesale destruction of Iran's economic base what are the implications for a civil war and expansion of unrest in the Middle East?  Would you agree the situation is disordered and chaotic?

And, of course, the Strait remains effectively closed leaving global supply chains seriously messed-up with all sorta unintended consequences.  So, I'm still waiting on President Trump to improve your and my prosperity and general lot in life.  Along with making the world a safer place.

I sure hope he gets this right....

 

Choosing Your Battles

'Let those who have the power to unleash wars choose peace.  Not a peace imposed by force, but through dialogue.  Not with the desire to dominate others, but to counter them.  We are growing accustomed to violence, resigning ourselves to it and becoming indifferent.  Indifferent to the deaths of thousands of people.'

-Pope Leo XIV 

In the abstract these words might apply to any number of the world's leaders, including Iran's Mullahs.  Nevertheless, I suspect that the Pope was taking a shot at Donald Trump. Why do I think so you ask? 

Because of the response.  In relatively short order Cardinal Christophe Pierre, the Holy See's ambassador to the US, was summoned to the Pentagon and given a lecture warning that the United States has the military power to do whatever it wants and that the church had better get on board with American foreign policy.  Yup, like hoodlums shaking-down a neighborhood shopkeeper.  

Catholic leadership is attempting to frame the conflict in Iran in terms of Augustinian just war theory including civilian protection and Defense Secretary Pete Hegseth has infused the war with Christian nationalist rhetoric and a maximal lethality approach.

Is it just me, or does the the notion of going to war with a blood-soaked collection of nutty clerics who believe God is on their side all the while invoking God is on our side seem a bit nutty?  The irony is not lost on me.  It's the same God after-all.

What I know is this.  President Trump is losing support among Catholics - even white, non-Hispanic Catholics who supported him only a short couple of years ago.  Furthermore, The Pope's favorability rating overshadows that of the President's. 

Just between you and me I wouldn't pick a fight with the Vatican.  This blogger ain't dying on that hill.  And I'm not gonna embrace any God is only on my side bullshit dogma either.

Just like Pope Leo is a Sox fan, Jesus was a peacemaker.  These are known facts.  

It's The Economy Stupid

A strategist in Bill Clinton's successful 1992 presidential campaign against incumbent George H. W. Bush; the title of this post was coined by James Carville as a missive to campaign workers. 

As we began the second year of Donald Trump's second term in office by traditional measures our economy was in decent shape.  Most forecasts put 2026 GDP growth around 2 - 2.5% with a solid, steady expansion and little risk of recession.  

Interest rates were expected to ease or stabilize while tax and spending policies supporting business and consumers took effect.  

Productivity gains and demand would lead to business - technology in particular - to post record profits.  All while artificial intelligence would boost efficiencies, margins and long term growth potential.  

The labor market was expected to remain near full employment levels with the prospects for American business and consumers looked much brighter following SCOTUS' striking-down of the president's import taxes.

Then President Trump unilaterally decided to go to war with Iran.  He did not ask for, nor receive the approval of Congress.  The president did not take the matter before the American people to make the case for war; although roughly a month later he did did make a formal prime time address to the nation on April Fools Day.  We heard a restatement of already-familiar talking points and were told the war was near completion and wrapping-up along with something about bombing them into the stone age.  With the exception of Israel, the president did not consult with our European allies or other global partners.  

Why is any of this worthy of mention?  The year 2026 had bright prospects  and by the end of February the president set in motion a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.  I think the president has stepped in it this time.

With the exception of Trump's war-loving MAGA base most of America disapproves of the war.   

Consequently, it should come as no great surprise that recent surveys of self-reported well-being have suggested that Americans are feeling discouraged and possibly becoming grumpy.   

Why is this important?  I hate to sound like a broken record but the American economy is not driven by manufacturing; it is a service economy.  With summer approaching the expectation at the beginning of the year was that of consumers spending more on travel and entertainment than last summer.  Accounting for two-thirds of all economic activity, it is consumer spending that fuels the US economy.  With the global disruption of energy supplies and the closure of the Strait of Hormuz all bets are off.

I've blogged on this subject from time-to-time and mentioned the University of Michigan's consumer sentiment survey which came in with preliminary results late last week.

The Consumer Sentiment Index plummeted 11% to a historic low of 47.6.  If these numbers hold by the time complete data is announced at the end of this month this represents the lowest reading in the survey's 74 year history.  In case you're interested, the previous record low of 50 was at the peak of Biden-era inflation.  

I'm not at all surprised.  I may be a retired financial guy but I know that average folks struggle with wrapping their mind around abstract economic data such as Gross Domestic Product (GDP) and Gross National Product (GNP), but everyone understands the gas pump.  Last week national prices for a gallon of regular gasoline hovered around $4.15 with diesel at $5.50; up roughly 39% from before Trump went to war.  Oh boy howdy.

Additionally, according to the US Chamber of Commerce Small Business Index, small business optimism fell for a second consecutive quarter this past week.  Just 28% of small business owners say the economy is in good health; down 10 points from the previous quarter.

Finally, driven by sharp spikes in energy costs, this last week we learned inflation is up Big Time. Raspberries and blueberries and fresh produce in general have risen in price as a consequence of increased transportation costs.  So when I suggest the President Trump has stepped in it; I'm doing so because his unilateral war in Iran may turn out to be a serious-bad unforced error.  While I may grouse about the increased cost of fresh produce the impact of Trump's excursion in Iran is being felt in both myriad and profound ways across the globe.

I don't want to come across as the skunk that showed-up at your garden party but these are three data points that are blinking like glaring red warnings on the instrument panel of the airplane you are piloting over a vast uninhabited rain forest without a landing strip in sight.

While not much of this is life altering to me; that is simply not the case for a many of my countrymen.  Worst-case, people are nervous about making ends meet. Best-case, they're anxious about possibly altering or canceling a summer family vacation.  Between you and me I think the president actually cares.  Less about anyone's hardships; but more about the midterms and polling. 

The missus purchased airline tickets since the war began and both wartime fuel and baggage surcharges were assessed.  So yeah, I'm feeling a wee bit grumpy too.  Hardly at all as a consequence of cost; but mostly because none of this nonsense has so far improved my lot in life and made the world any safer.  For my sake and yours I sure hope Trump fixes this.  

You can learn more about the University of Michigan data here.

Happy Easter

Once upon a time we would watch the President and his family walk across Lafayette Square to attend Easter morning church services.

Today we get potential war crimes.

Happy Easter, Passover, or whatever or however you celebrate the season.

Notable Quoteable

And any domesticated primate alpha male, however cruel or crooked, can rally the primate tribe behind him by howling that a rival alpha male is about to lead his gang in an attack on this habitat. These two mammalian reflexes are known, respectively, as Religion and Patriotism. They work for domesticated primates, as for the wild primates, because they are Evolutionary Relative Successes. (So far.)

― Robert Anton Wilson, Prometheus Rising

 

Garrison America

As of Monday, March 23, U.S. Immigration and Customs Enforcement (ICE) agents have been deployed to fourteen major US airports ostensibly to assist with crowd control and support TSA checkpoints during staffing shortages.  We've been told that agents are primarily assisting with, rather than operating, security, and the list of locations may change.

So far, every photo or newscast I've seen shows these guys standing or walking around in improvised and mismatched non-standard fatigues, ballistic vests, sidearms and automatic weapons; sometimes wearing ICE or POLICE patches.  They're unmasked and none of them are outfitted with a name tag or visible ID.  

Compared to the law in my community - by all outward appearances - they're unprofessional and poorly groomed.  Sloppy bordering on slovenly.  Up-armed mall cops.

We're paying these guys a premium wage to chill-out and stand around at the airport while the TSA agents continue to do all the work and go unpaid. 

Meanwhile, it is a proven fact that the long lines and wait times remain unchanged.

Check-out the photo above.  A few of you will cheer it; while most will shake their heads.

Welcome to the militarization of America.  Unkempt and unprofessional too.

I'm an old man and never thought I would live long enough to witness the normalization of this nonsense during peacetime.  

Ponder that.  

Peacetime. 

Any wagers this is a dress rehearsal so you will be less alarmed when you go to vote?

I pray this isn't a condition I have to get used to....

How To Blow-up The Budget

From the WSJ there is this.

According to projections from the Congressional Budget Office (CBO) U.S. debt will rise to more than 100% of U.S. gross Domestic product (GDP) before the end of this year. 

Debt held by the public will balloon to more than $56 trillion by 2036 as annual deficits continue to mount, according to the latest projections from the Congressional Budget Office.  By later this year, the federal debt held by the public is expected to surpass the size of the entire U.S. economy.

The main drivers:  increased spending on entitlement programs as the nation's population ages as well as rising costs related to paying interest on the debt itself.  Republicans have taken issue with the projections, suggesting the CBO's assumptions on economic growth are too low.

Here's a closer look at the numbers, in five easy charts.

The CBO projects that the annual U.S. budget deficit will top $3 trillion by fiscal year 2036. The deficit was briefly that high when the federal government spent heavily during the Covid-19 pandemic. 

By fiscal year 2036, the deficit will hit 6.7% of GDP, up from 5.8% in 2025.

Social Security and Medicare costs will drive mandatory spending to 15% of GDP by fiscal year 2036. Mounting debt will increase spending on net interest to nearly 5% of GDP.

CBO projects a $23 trillion deficit from 2026 to 2035, up around $1.4 trillion from its last projection. Tariff revenue will only partly offset effects of the GOP’s ‘one big, beautiful’ tax law.*

Debt held by the public will surpass 100% of GDP this year and is projected to exceed 120% by fiscal year 2036.

 *Projected revenues generated by import taxes are uncertain as a consequence of the recent SCOTUS decision.