All posts by Dr. ESP

Liberation Day Math

Economics

Former Daily Show host Trevor Noah often reminded viewers, “Two things can be true at the same time.”  One of his most famous examples concerned the dichotomous responses to George Lloyd’s death in May 2020 at the hands at the hands of Minneapolis policeman Derek Chauvin.  As a Black man who grew up in South Africa during apartheid, Noah he did not consider it an oxymoron to be supportive of Black Lives Matter and opposed to defunding the police.  Taking both sides of an issue is possible when we are focused on interpretation of the facts, not the facts themselves.

Which brings me to the topic du jour, Donald Trump’s calling April 2, 2025 “Liberation Day.” There has never been a better example of the difference between opinion and facts. At the heart of Trump’s performative White House celebration is a new round of global tariffs.  Commerce Secretary Howard Lutnick (the billionaire who wants us to believe his mother-in-law lives hand to month but would not complain if she did not get her monthly Social Security check) “… promised Americans that grocery prices would start coming down in early April but warned that there would be price increases on foreign goods as a result of the Trump administration’s anticipated reciprocal tariffs.”  (Source: NBC News)  In contrast, “One model constructed by the Federal Reserve Bank of Boston suggests that in an extreme scenario, heightened taxes on U.S. imports could result in a 1.4 percentage point to 2.2 percentage point increase to core inflation.”  (Source: CNBC)

Proponents say reciprocal tariffs will encourage America consumers to purchase goods and services produced by domestic manufacturers leading to sustained job growth and lower unemployment.  Critics suggest tariffs on raw materials and parts needed to produce those goods and services will result in a rash of business closures and/or downsizing leading to higher unemployment.  Prior to implementation of the tariffs and analysis of the ensuing data, it is impossible to determine who is right and who is wrong.

Not so with one aspect of the tariff regime which Trump has touted on numerous occasions.  According to the non-partisan Tax Foundation:

Last week, former President Trump took his affinity for tariffs much further, floating the possibility of entirely replacing the federal income tax with new tariffs.  (June 18, 2024)

The Tax Foundation went on to put this proposal in historical perspective.  Using the most recent available date (FY2021) as a benchmark, they report Americans paid $2.2 trillion tax on $15 trillion of individual income.  That same year, tariffs on a total of $3.4 trillion in imports generated revenue of $80 billion.  Extrapolating these figures to determine the tariffs required to achieve Trump’s policy objective, the Tax Foundation found, “To replace the roughly $2 trillion of revenue raised by the individual income tax with tariffs would require astronomically high tariff rates.”  They project fully replacing the individual income tax would require a 69.9 percent tariff on ALL imported goods and services. 

A Hyundai Tucson which sells for $38,000 today, according to their model, would now cost $64,562.  Which explains why Trump’s proposal makes even less sense.  Trump claims the tariffs will encourage Americans to buy domestically produced automobiles.  Let’s assume he is correct.  In which case, the $3.4 trillion total value of imports would decline significantly, requiring an even higher tariff to reach the tariff/income tax break-even point.

In other words, two things can be true at the same time when it comes to opinions.  But not when it comes to facts. Just one more example how the stable genius sitting behind the Resolute Desk turns an oxymoron into something just simply moronic.

For what it’s worth.
Dr. ESP

 

 

Surviving Trumponomics

Economics

In his platform for reelection in 2024, President Donald Trump promised to “build the Greatest Economy in History.” But in his first 60 days as president, the stock markets have dropped like a rock: The S&P 500 is down 7%, the Dow Jones has dropped 6%, and the Nasdaq has plummeted 10%.

~Fortune Magazine

If you are one of those people who took pride in the return on investment (ROI) of your 401(k) or IRA during the Biden administration, congratulations.  But do not consider yourself a financial wizard.  The scope of broad-based gains across most investment instruments assured that whatever choice you or your advisor made would have produced more than satisfactory results.  Of course some ROIs were better than others, a good indicator being whether your ROI was above or below the ROI if you had only held shares in an S&P 500 mutual fund.

As noted in the above quote, the situation in the opening months of Trump 2.0 suggests one metric of financial acuity would be whether your portfolio decreased percentage-wise less than the S&P 500.  Though “I only lost five percent compared to seven percent” is not very satisfying.  Here is where yesterday’s post “Telegraph” comes into play.

Donald Trump does not play by the old rules.  Maybe you should not either.  For example, financial advisors have historically said that you are better off letting your investments “ride” during stock market booms and busts.  That axiom is based on the assumption that it is hard to predict the top of a bull market or the bottom of a bear one.  However, you do not have to be an unintentionally invited member of a policy chat on Signal to know exactly what Donald Trump is going to do to roil the markets and when he is going to do it. His “attack plan” against the world economic order is so clear even a political scientist can figure out the impact on stock prices.

I call it the “penny saved is a penny earned” approach to survival in the Trump economy.  Here’s how it has worked so far.  Despite promises of new global tariffs, it was clear financial pundits at the Wall Street Journal, CNBC and Fox Business (another cohort of oligarchs’ useful idiots) believed this was more Trump bluster.  And as lemmings do, investors heralded the second coming of Trump with optimism resulting in a rise in the S&P index by almost two percent in the first 30 days since January 20th.  So for the very short term it made sense to let your investments ride.

But even the dumbest investors realized that Trump had convinced himself (again, his one man game of telephone) that tariffs were the answer to all the country’s ills. So on day 31, all you had to do was put all your IRA or 401(k) assets in non-equities (e.g. money market accounts, CDs or bonds), resulting in the following payoff.

Assume you had a portfolio valued at one million dollars.  On February 20, you put it all in a money market account at the current interest rate of 4.05 percent.  We are not talking about a “penny” saved.  By March 20, you would have saved $70,000.  Additionally, on March 31 you would receive $3,375 in interest.  If and when the Trump administration concedes “no mas” and takes off its tariff gloves, which he will surely telegraph in time for you to buy back into the market, you will have saved tens of thousands of dollars in the interim.  And if he does not, the savings will keep accumulating.

No need to stop there.  There are already opportunities to increase total savings.  For example, you plan to buy a new car this summer.  Yesterday, CNBC.COM reported if you make that purchase before April 2, you will save an average of $8,000 on the transaction.  Another “penny,” or in this case 800,000 pennies, saved.

Bottom line.  What Trump, et. al., are doing to America is not normal.  Neither should a creative response to Trumponomics follow norms.  The new metric of choice should be savings, not ROI, at least until the point in time ROI stands for “rejection of insanity.”

For what it’s worth.
Dr. ESP

 

Telegraph

Politics

Federal records are all recorded information, regardless of form or characteristics, made or received by a Federal agency under Federal law or in connection with the transaction of public business. Federal records must be preserved by an agency – as evidence of the organization, functions, policies, decisions, procedures, operations or other activities of the United States Government or because of the informational value of the data in them.

“Federal Records Management”/The National Archives

Sometime during our childhood, we were all introduced to an exercise called, “Telephone.”  Participants would stand in a line or circle.  The process began with the facilitator whispering a message in the ear of one of the players.  That person would then repeat the message to the person standing next to him or her.  And so on, until the penultimate participate whispered the message to the last person in line.  That individual would then share the message he/she received followed by the facilitator restating the original message.  The teaching moment involved a demonstration how a rumor passed from one person to another morphs with each iteration to the point where it is largely unrecognizable from the original source.

As well documented, the Trump administration has changed the rules.  No longer do they need a communications conga line to turn a given set of facts into a conspiracy or a lie. The president has usurped the role of originator, ultimate recipient and every participant in between.  Perhaps the best example was his claim millions of dead people, some older that the USA itself, were still getting social security payments.  A legitimate story about the outdated COBOL computer program to track Social Security accounts became a scandal of unbelievable proportions.  By March 6, 2025, during Trump’s address to a joint session of Congress, he had convinced himself the Social Security Administration was still making payments to over 16 million people over the age of 110, including one who was 360 years old.  Trump was right.  It WAS unbelievable because it was not true.

But as Arlo Guthrie would say, “That’s not what I came here to talk about.”  More importantly, as we learned this week, the Trump administration has spent the last two years perfecting a new game.  For lack of a better name, I will call it “Telegraph.”  Here is how it works.

  • Since the days of Newt Gingrich, aggrieved Republicans or now MAGA cultists have been making a list of governmental institutions, programs, officials or laws they believe are the source of their grievance.
  • American oligarchs created and funded the Heritage Foundation to be the keeper of the grievances and to construct a comprehensive plan to eliminate all the barriers to shape the government, economy and culture in their own image.
  • The oligarchs then needed a useful idiot who would run for president on their platform.
  • Next, pack the Supreme Court with justices who would give their useful idiot free rein.
  • In what turned out to be an unsuccessful dry run in 2017, the oligarchs wrongly assumed their useful idiot could build a team to implement their agenda.
  • Therefore, for their second attempt in 2020, the oligarchs commissioned the Heritage Foundation to draft a 980-page, step-by-step manual for addressing personal grievances and anointed their own vice-useful idiot.
  • Finally, they filled every major position in the executive branch either with one of their own or other useful idiots who would do exactly what the chief useful idiot told them to do.

So why do I call the new game “Telegraph.”  Because anyone who was paying attention no longer had to speculate what a second Trump administration would bring.  The oligarchs and their puppets “telegraphed” exactly what would happen.  There is no more proof of this than the case of the security lapse on Signal by useful idiots Vance, Hegseth, Gabbard, Waltz and Ratcliffe.  Which begs the question, “Why was Treasury Secretary Scott Bessent there?”  He obviously served two purposes.  First, he was the designated oligarch (a former hedge fund manager) to protect his fellow oligarchs’ interests.  Second, he was one of the architects of Project 2025 and, therefore, it was his responsibility to ensure the useful idiots followed the script verbatim.

And follow it they did.  Which explains why the Yemen confab was conducted on the Signal app.  One of the MAGA petty grievances from Trump 1.0 was the Presidential Records Act, the Federal Records Act and the Freedom of Information Act, which Trump and his benefactors claimed provided fodder for Congressional oversight and the media.  To avoid a repeat of this legal “inconvenience,” government officials began using alternative communications channels to circumvent the requirements contained in these three legislated prerogatives.  The danger to governmental transparency and oversight were clear as laid out in a 2021 analysis of the practice by SUNY-Stony Brook professor Jessica Wittman.

Recent litigation has highlighted why courts, attorneys, and other legal researchers must consider social media as a primary source of government information, particularly when records may become inaccessible once a social media post is modified or deleted, or when technology becomes obsolete…Until clear and consistent retention policies exist and there are systemic ways to access and preserve social media as government information, the definition of a “record” becomes irrelevant.

Knowing everything Trump and his sycophants say is either an admission of guilt or projection, the creation of “policy chats” on Signal proved their denunciations of Hillary’s emails and Hunter’s laptop were merely a roadmap how they would use non-traditional channels to expunge the record of improper or even illegal abuses of executive power.

Project 2025 is nothing more than a 980-page telegram of what the oligarchs and their useful idiots plan to do to change the sacred constitutional and legal foundations that made the United States exceptional as a role model for self-governance.  They could have saved a lot of time, energy and paper if only they had sent the following Western Union condolence telegram.

Unfortunately, nobody including the voters, Congress, the Supreme Court and both political parties responded by pointing out the word “STOP” was omitted at the end of the message.

For what it’s worth.
Dr. ESP

Selective DEI

Culture, Politics

If you think “diversity, equity and inclusion” (DEI) is a thing of the past, you would be sorely mistaken.  The only thing that changes is the target audience and the perceived threats.  Nothing makes this point more clearly than the following headline in the latest edition of the on-line University of Virginia newsletter “UVAToday.”  UVA Shares Report From External Review of Nov. 13 Shooting.  The report was in response to the shooting deaths of three UVA football players and wounding of two others on a bus that had just returned from a field trip to Washington, D.C.

The report contains several recommendations designed to ameliorate the possibility of similar future incidents, many of which were implemented prior to the report’s weekend release.  They include:

  • Expanded Threat Assessment Team Resources to include two full-time, licensed psychologists to serve as the associate and assistant directors of the Office of Threat Assessment; two response specialists; Housing & Residence Life representation; and a Victim Advocate/Threat Assessment Team liaison from the University Police Department.
  • Established an Office of Threat Assessment to more effectively lead the Violence Prevention Committee and execute the case-management recommendations of the Threat Assessment Team.
  • Enhanced Threat Assessment Team operating procedures and training opportunities, including the immediate investigation by the University Police Division if a firearm is reported to be on Grounds or in the possession of an individual who lives on Grounds.
  • Increased training and staff awareness on entering a dorm room to inspect for health and safety-related concerns.
  • Approved a permanent Emergency Operations Center to allow the University to activate the center without delay in response to emergency events.
  • Reorganized Student Affairs support resources – now known as the Care and Support Services, and Policy, Accountability and Critical Events units – to better discuss, review, triage and respond to student concerns and any necessary disciplinary actions.

Additional psychologists.  Response specialists. Victim advocates. Enhanced assessment.  Training and staff awareness.  Immediate response.  Care and support services to deal with student concerns.  Sound familiar?  These are some of the exact same services that used to be provided by university DEI programs for minority students which are now being shut down due to threats of extortion by the Trump administration.  I know.  You might argue that UVA’s enhanced efforts are focused on the threats to student safety resulting from physical violence.  Need I remind you of the lessons we learned from soldiers returning from Vietnam or first responders on 9/11.  All scars are not visible.

Or how about the new DEI program at Columbia University.  At the same time DEI efforts in support of minority students are being dismantled, the Columbia website touts efforts to address antisemitism.  Under the heading “Columbia Resources,” the university lists academic programs such as the Institute for Israel and Jewish Studies, the Columbia Task Force on Antisemitism, General Mental Health Support, Reporting Bias and Student Life Programming.

Do not get me wrong.  Gun violence and antisemitism are serious problems that deserve our attention.  But why are DEI-type activities okay when it involves threats to certain populations and not for others?  Is it the Don Ohlmeyer doctrine?  “The answer to all your questions is MONEY!”  Would Columbia University still have DEI programs for Black, Hispanic and Arab students if their parents were the major donors for whom buildings and schools are named?

Did some DEI programs have excesses that blurred the lines between support and overreach?  Probably.  However, the current situation strikes me as worse than the Elon Musk “DC Chainsaw Massacre.”  Instead of simply eliminating  USAID, it is akin to replacing it with USAIW, (U.S. Agency for the Independently Wealthy).  Oh, wait!  Isn’t that exactly what the combination of DOGE and the Trump cuts are going to do?

For what it’s worth.
Dr. ESP

Grandpa Takes the Field

Economics, Sports

Boston Celtics sold for $6.1 billion to group led by private equity executive Bill Chisholm, a record for a U.S. sports team.

~CNBC.COM

After finishing with a league-worst 3-14 record last season, the Browns have increased the prices of their season ticket packages by an average of about seven percent.

~Crain’s Cleveland Business

There’s something quite ludicrous about someone who already has, say, $5.1 billion running off to his city with his fedora in hand.  Yet this is what sports team owners do on a regular basis.

~Inc. Magazine

Forget the days when ownership of a sports franchise was a wealthy person’s “give back” to the community.  Owners now see it as among the  most lucrative investments in their portfolio.  Just ask the previous Celtic’s owner, the Grousbeck family, who purchased the franchise in 2002 for $360 million, a 1,694 percent ROI  in 23 years. And how will the new owners recoup their $6.1 billion investment?  As noted above, raising ticket prices or threatening to move the team if its current home city does not pony up taxpayer dollars to subsidize a new, state-of-the-art stadium or arena.  The final piece of this three-legged stool is media revenue, which like ticket sales, depends on the size of the audience.

To increase fan interest in any number of sports, owners and league management have proposed or implemented changes which they believe will attract more fans to attend games or watch on television.  Some changes make sense, perhaps, the best example being baseball’s pitch clock to do away with the egomaniacal  histrionics of those who thought the mound was akin to the Globe Theater.  Sadly, Major League Baseball (MLB) refused to quit while it was ahead. They created the “runner on second” rule for extra innings where the team starts with a player at second base.  But it only applies in the regular season.  The lifelong memory of sitting in the stadium until the wee hours of the next day is no longer a possibility.  And why was it a “lifelong” memory?  Because it happened so rarely, few fans ever had a similar experience.

And then came this “brilliant” concept.  MLB Commissioner Rob Manfred recently floated the idea of a “Golden At-Bat” rule that “would allow teams to choose one at-bat in a game to send any hitter to the plate, regardless of the batting order.” (ESPN)  Fortunately, negative feedback forced Manfred to back off, saying, “To go from the conversation stage to this actually showing up in MLB is a very long road.”  Hey Rob, did you forget you’re the genius who started the conversation?

Though baseball is a piker when compared to the National Football League.  Consider the following.

  • More than doubling the length of the half-time intermission during the Super Bowl to accommodate musical extravagances.  On more than one occasion, this extended break completely changed a team’s momentum and the outcome of the game.
  • Creating a kick-off scenario which challenges the time/space continuum in the name of player safety while proposing to add an 18th regular season game to the schedule.
  • Knowing an additional game would be detrimental to players’ health, one version of the 18-game season would require players to sit out two of those contests.  Too bad if you paid top dollar for seats to watch your favorite player on the sidelines in street clothes.
  • Imposing a penalty on an offensive lineman whose head does not line up with the center’s behind.
  • Thursday night football.  Forcing teams to prepare for a game without the prerequisite time to recover from the previous one.
  • Spreading telecasts across two broadcast networks, two cable networks and two streaming services so viewers never know where to look for games or have to subscribe to additional platforms.  Is pay-per-view far away?

Not to mention fútbol/soccer.  A sport that uses technology called “Video Assistant Replay” (VAR), a fancy name for instant replay, for every offside violation cannot figure out how to operate a game clock.  I can only imagine the outcry if the World Cup champion is determined by a goal scored after the announced stoppage time in the second half has lapsed.

But let me close with my own sport of choice–golf.  The beauty of the game sportswriter Rick Reilly dubbed “A Good Walk Spoiled” is the environment in which it is played.  Recently, Tiger Woods, Rory McIlroy and the PGA Tour decided that the challenge of uphill, downhill and sidehill lies further complicated by the weather du jour could be moved from its natural home to an indoor arena with fake grass mats, projected holes and an undulating green with hydraulic lifts that change throughout the contest.  The extent to which this setup resembles little that is associated with real golf was proved when the best player of this generation Woods confused a simulated 190 yard shot with a 90 yard attempt.  It produced a good laugh, but not golf.  Hopefully, it will go the way of World Team Tennis.

What do all these sports have in common?  The guardians of each do not have enough faith in what makes their respective domains special.  So they do things that bastardize the original concept in search of new audiences.  Why?  Because it takes time to educate the next generation about the challenges, strategies and nuances that makes one appreciate what is happening on the field, gridiron or course.  Because a parent cannot afford to take his or her children to a ballgame and share “inside information” about the game.  For example, the first time I took my daughter to a Royals game in Kansas City, I explained why walking the lead-off batter was a mistake.  One out of three times, the walked batter eventually reaches home base.  Twenty-five years later she reminded me of that statistic while watching an Orioles game at Camden Yards.  Instead of constantly looking for gimmicks to grow an audience, maybe owners and commissioners should figure out how to increase these interactions among long-time and potential new fans of their sports.

Grandpa has to go now.  It’s time for his seventh-inning nap.

For what it’s worth.
Dr. ESP