How Mainstream Media Censors Readers And Viewers

Censorship is in many ways a reverse form of propaganda. It is not a mistake or oversight that many mainstream media outlets give their audience little ability to give feedback. They go out of their way to avoid anything that might dispute their narrative. While it could be argued the lack of a comment area or feature linked to an online format was an omission I often see this as something more sinister. The lack of a feedback loop is a tool that tends to reinforce the idea there is no objection or criticism of the article or statement and everyone accepts its conclusions. 

They Don't Want Our Opinion

Censorship is the suppression of speech, public communication, or other information, on the basis that such views or material have been deemed objectionable, harmful, sensitive, or "inconvenient". Censorship can be conducted by governments, private institutions, or corporations. This does include mainstream media.

By its nature censorship often implies those being silenced are trying to say something very wrong. I consider censorship and mainstream media's role in it as part of the self-feeding propaganda loop that plays such a huge role in shaping public opinion. This tends to result in those in leadership positions and controlling the media to slowly hack away at our individual rights by furthering the idea it is all "for the greater good."

The idea of having a press that is free to cover the news is generally linked to the idea they will be fair because such a freedom generally comes with a degree of responsibility. A common example is how freedom of speech should give someone the right to speak their mind but not scream fire in a crowded theater. This can slip into an argument as to the duty of the media in presenting as unbiased a view of events as possible. This is complicated by the fact many news outlets have moved more towards an entertainment format rather than presenting the cold hard facts and in that regard, sensationalism draws viewers.

In many ways, mainstream media has become a polarizing force that stirs the pot of social unrest. By promoting polarization America's media has made it impossible for the people to unite and regain any control over Washington. I would not be surprised if those in control are not giddy over this and the problems Facebook has created by playing fast and loose with data from its followers. Facebook by crossing the line and abusing the trust of those with accounts and information posted on  its platform has taken a great deal of pressure off of the mainstream media to do a better job.  

The sad reality is that "Power To The People" is dead because we are unable to agree on anything. Still, even more unsettling is the alliances' companies like Amazon have made with the government. This is evidenced by the massive contract Amazon's cloud division has with the CIA and NSA. Anyone who doesn't believe that countries use psychological warfare and propaganda to sway the opinions of people both in and outside of their country is naive. The fact Amazon's CEO also owns the Washington Post, which stands as America's most influential newspaper, should send shivers down the back of those believing in freedom and limited government.

Propaganda is a powerful tool that has resulted in many wars that enrich those who make weapons at the expense of those called upon to give their blood. The fact that behemoth Amazon has intertwined business interests with the CIA, NSA, and several other "Deep State" government agencies is a monument to our having lost control of the massive part of our government that spies on us and spins the narratives to which we dance. This tangled mess includes the influential Washington Post which is owned by the CEO of Amazon, Jeff Bezos. Simply put, this has unleashed a propaganda force to which none of our institutions can resist.

Today many people get the majority of their news over the internet. While this has made a huge difference in how news is distributed and how we receive the news, much of the content remains controlled by a few strong players that often are driven by an agenda of self-interest. I contend the subtle omission of a comment section online is often an effort to quell dissenting voices rather than because it to simplify the format. It could be argued that the media has a moral obligation to provide such a public forum if they want the right to call themselves "free and balanced."

Many of us out beyond the beltway in the backwaters and wilds of America have grown to feel the media has a casual relationship with the truth. In many ways, the media has become viewed more as a tool of the establishment than the protector of the people and defender of our rights. This could explain why the press is often held in such low esteem by the very public that relies on them for information. Coverage filled with subtle digs or comments and even subliminal messages taint the premise media is fair. During interviews, we often get an opportunity to witness examples of just how badly you can treat a guest invited to answer questions when they alter the narrative being pushed. 

This often results in over the top efforts to put words in someone's mouth and take statements out of context. These words are then spun in the most harmful ways. If the guest represents views differing from the interviewer what we often see is an ambush. If a guest is favored or their views are endorsed it is often as though they had written the softball questions asked of them or as if they had been given the questions in advance or controlled the interview. All this can then be backed up by a series of scripted statements that all loop back around to support a hard or subliminal message.

With the biased coverage of current events being very common, it is little wonder that Americans question the honesty of the media whose ranks appear to have become filled with opportunists and bums dressed as journalist. The fact is we often don't agree with everything we view or read so "implied agreement" is not valid. Even including a simple thumbs up or down box at the end of an article would at least give readers a place to weigh in. Next time you are boiling mad or disagree with how an article is characterizing an event I urge you to take the time to see if the source has provided you with an opportunity to present your view. I would not be surprised if they have not.


Footnote; For more on this subject see the article below which delves into the free press and their responsibility to be fair.
https://brucewilds.blogspot.com/2017/03/the-free-press-and-their-responsibility.html

The Land Of Default Is Where Bad Debt Goes To Die

If we have a strong financial disruption defaults will rise in importance and move front and center. The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value, a default falls into this area. In the last decade, debt has soared across the globe. With this in mind, you never want to be caught on the wrong side of a debt default. That is the place where you don't get paid or are paid with a less valuable currency that has seen its value eroded by inflation. A debt default can take many forms but what they have in common is they all can be considered as reneging on financial obligations. Generally, we make a distinction between public and private debt but even that may become blurred when a government in need of funds has to seize or take over assets or institutions.

Relationship Of Tangibles To Intangibles (click to enlarge)

Of great concern should be the growth in non-recourse loans as well as unsecured personal loans. These are particularly dangerous. It is also important to make a distinction between public and private debt. Many investors have become seduced into thinking the backing of government adds tremendous validity to both the explicit and implied warranty that come with government-backed instruments. History, however, has shown public debt can also be mishandled, in several ways. One example from the past was how Henry VIII, in addition to engaging in an epic debasement of the currency, seized all the catholic church's vast landholdings. While not strictly a bond default, actions such as these accompanied by imprisonment or even executions can still be considered as reneging on financial obligations. It is difficult to argue this doesn't constitute some kind of default.

A debt default is often the result of a collapse or failure of an institution, financial mechanism, or even a financial instrument and can result in a rapid shift in the value of assets. The word "collapse" has a way of conjuring up the image of something falling or crashing in but it is important to note subtle details of the way this occurs can have a great effect on the damage it creates. Many of the economic crises we encounter in our complex modern world have the potential to spread from one institution to another creating contagion and resulting in a destructive domino effect. The massive derivatives market that is touted as one of our modern financial tools is often sighted as having the potential to wreak havoc in this way.

Defaults often fuel the collapse of what some people label as Ponzi-type schemes, underfunded pension funds can be considered in this category. Pensions and promises will be broken so get ready for more pain. This is especially true in the public sector where the 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities. While it could be said that several ways exist to cheat or rob those who paid into pensions for years it would be an understatement, more ways exist than you could imagine. One reader on another site compared pensions to a Ponzi scheme where benefits are paid out to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. I fear the future will prove him mostly right. The financial stress caused by defaults is often the final straw that brings collapse and causes things to cave in upon themselves.

This Chart Is From Before Recent Problems! (click to enlarge)

One thing is clear, we are only beginning to see the tip of the iceberg when it comes to this growing problem and just how many pensions are severely underfunded. This is a problem that exists all over the world. Remember the PBGC, America's safety net for failed pensions has total assets of about $88 billion and liabilities of $164 billion, this is an indication of how dire the situation is.

A "bank bail-in" can be viewed as another way to disguise a massive default and it can happen here in America. An example of just how delusional we have become as to the fragility of our financial system is that many people have taken comfort in the efforts to control the banking sector through legislation following the 2008 crisis. The Dodd-Frank Act of over 2,300 pages and still growing allows this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debt holders, and other unsecured creditors including depositors.

There is also the area of inflation, we should consider the possibility that inflation has been kept in check primarily because we as a society have invested a large percentage of our wealth into intangible products or goods such as stocks, bonds, and even currencies. If faith drops in intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation would soar. This would drive interest rates upward and result in massive losses for bondholders. A lot of money has rushed into government bonds in a flight to safety, and this has sent yields lower and lower. To give you a sense of what this may mean to U.S. Treasury Bond investors a 10-year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds prior to the rise in rates, you would only be able to sell those bonds for $58,000 in the secondary market. Please note the $58,000 you get back would also be affected by a loss of purchasing value lost from inflation. 

Many who have read my blog have indicated to me they strongly feel a major financial reset will take place in the future. Those invested in bonds should not underestimate the power of inflation to strip them of their wealth. Never before do I remember seeing so many predictions of interest rates remaining low forever and a day. Many of us have a problem lending hard-earned money out for a long period of time and we should be wary. Rates are based on predictions of future government deficits and events around the world that may or may not unfold as expected. Part of a conundrum we face is that far more freshly printed money has been created and floated into the system than new tangible assets to back it.

An issue that merits far more attention than it gets is the large role our government plays in the economy. I contend that in the case of a financial crisis brought on by a large number of defaults it will act as a net under the economy making painful deflation less likely. This means, in the end, those in power and control of the financial system are more likely to engineer an inflationary exit from this mountain of debt. As stated earlier, paying back debt with something of lower value is another way the system masks a default.

QE4 Or Necessary Liquidity Injections To Prevent Chaos?

If it looks like a duck, walks like a duck, and sounds like a duck it is probably a duck. That is what many of us are thinking when we hear the Fed again has announced that it accepted $30.8BN in securities ($26.25BN in TSYs and $4.550BN in MBS) in its latest overnight repo operation. The Fed has been forced to deal with this issue since a sudden and dramatic surge in repo rates began in September. While it is difficult to see the difference between QE and an injection aimed at maintaining liquidity, in this case, several reasons exist to believe them.

Central Banks Have Gone Crazy (click to enlarge)

Now the Fed has announced it will make monthly purchases of about $60BN for four months. these will be split across Treasury bills and short maturity coupon Treasuries. This is aimed at replenishing a roughly $200bn reserve shortfall and support the pace of growth in non-reserve liabilities. Two things are crystal clear. One is the fact the Fed is being forced to again add liquidity while markets are at near-record highs and unemployment at fifty years lows is very problematic. The second is this is a massive amount of money. So what gives?

It could be argued that these are necessary liquidity injections with the intent of preventing chaos in the markets. Banks have a way of failing us when we need them most and that is a big part of why liquidity is generally the first casualty in a financial crisis. Without them, it appears the whole financial system could seize up. This is occurring at a time central banks across the world are engaged in playing a similar game. After years of monetary easing it appears the markets and economy have become hooked on constant injections of stimulus.

Who Has Been Adding (click to enlarge)

More important than what you call these injections is how they are interpreted and where they take the financial system. Please note I did not say the economy because this money may be having a great deal more effect on asset prices than economic growth. This time it seems more people are aware this cannot go on forever. If so, this is a big shift psychologically and could account for investors becoming concerned about a financial collapse.

A prolonged contraction in the flow of new credit in any economy or a contraction in business investment are key factors that often lead to a recession. These decrease demand and alter how people feel about the future. Like many of you reading this I struggle with seeing just how this will play out but it is difficult to see much good resulting from the injection of more liquidity into a distorted situation where many assets are already overvalued and debt is constantly hitting new records.

 Many questions exist going forward. A few of these appear below.

• Can monetary or fiscal stimulus turn around a recession and if so just how large will they have to be? A hundred billion US dollars do not have the impact they had years ago.   
• How much of this is aimed at keeping the already strong dollar from going through the roof as other countries open wide the spigots of credit? The Federal Reserve has become the great enabler and is responsible for allowing the world to embark on a huge and rapid expansion of debt and credit during the last decade. A key role of a reserve currency is to force other currencies to toe the line or pay a stiff price.
• What is causing the current liquidity crisis? Where did all that other money go? It appears it went to creating more debt, credit, and increasing leverage. Debt creation to fund current expenditure is spiraling out of control.
• Was the Friday announcement by the Fed intended to send the market higher, to head off a looming recession or get in front of a liquidity crisis that might spin out of control over the weekend? I think it was the latter.
• Will this address the problem and stop it, and if so for how long? Maybe for a while, but it most likely only prop up the unpropable, and yes, while no such word exists it should.

Click To Enlarge

Other tools are available to the Fed such as slowly raising interest rates while keeping liquidity high. This is easier said than done and fraught with risk. Much of the problem the Fed faces is that low-interest rates have not created the financial environment they had hoped it would. Instead of investment in productivity, innovation, and new services that create wealth we have seen consumers and government increase debt on things of little value. To make matters worse these rates have hurt savers and massively added to inequality driving it to the highest level since 1929. While it is out of date, the chart to the right gives us a glimpse of what this is doing. We have become decoupled from financial reality.

A strong dislike and distrust of the Fed should not blind us to the idea this may still play out in many ways. A huge number of our economic problems are rooted in the economic tool known as leverage. The same massive gains leverage brings, also showers us with huge losses that rapidly paralyze both individuals and financial institutions. With this in mind, we should consider the possibility we have entered the period that may someday be referred to as "The Great Reset" where values might be shaken to their core. If so, the ramifications are that certain assets such as stocks could take it hard on the chin and not recover for decades.

Trade Talk Update - China's Slowly Getting What It Wants

So-called Narrow Deal Is A Huge Win For China

Lately, it seems the best way to manufacture a market rally is for someone to make a positive statement concerning progress in the trade talks. While this has become a bit repetitive it still has not lost its magic. The trade talks started in early 2017 and have dragged on with promises of a deal always around the corner. Always nearing completion but such announcements time and time again have proven premature. This is an update and an appraisal of what we might expect considering the direction in which both countries seem to be moving. Remember nothing is yet carved in stone after the latest "positive statements" were made.

Two very different views exist as to the road ahead. The first is Trump always escalates when put under pressure and will raise tariffs if the Chinese fail to fall in line. Those in this camp feel that if China thinks Trump is going to crumble now just because he faces possible impeachment, they are in for a nasty surprise. The second is Trump will fold like a cheap umbrella to keep the stock market up. A good number of people hold the opinion Trump values the false image of victory and being reelected far more than the overall long-term health of the nation.

With Washington embroiled in impeachment talk do not expect China to rush towards cementing a deal anytime soon. For China to agree to anything it will have to be strongly tilted in their favor. The dance between the United States and China continues with both sides spinning their narrative of what is occurring. As each little news blip emerges the markets swing back and forth. Optimism quickly fades each time either party threatens to retaliate against the other or expand the scope of what they see as an attack on their economy and standing in the world.

Click Here To Enlarge

Critics of America's existing trade policy say trade deals over the years have failed to deliver on what they promised. Instead, they have added to environmental problems across the world and exacerbated economic inequality within many economies as manufacturing jobs have been outsourced to low-wage countries. Some activists also claim these deals can curb freedom of speech on the internet and other detractors say it incentivizes currency manipulation. Viewing the global economy we should consider that much of the "free trade" movement has been fueled by mega-companies desire for larger markets and greed. The desire of big business to both develop and control future rules has caused them to lobby governments into giving up control and becoming subservient to corporate “efficiency.”

It would be fair to say that not everyone is a fan of Trump's trade war strategy of confronting countries that the United States suffers a trade deficit with and forcing concessions from them. This includes many of America's mega-companies that moved production overseas years ago to exploit cheap labor. Several of these mega-companies oppose any policy that will that harm their profits. Because of this they and their lobbyists have mounted a well-funded propaganda campaign against the trade talks based on the idea consumers will be forced to pay higher prices. This means a big group of Americans blame Trump's trade policies for rising prices which they say hurt the poor.

Click Here To Enlarge

So far the trade talks with China have been a dismal failure. It is important to remember negotiators have not been talking for weeks or months but years. In early April of 2017, China's Xi visited Trump’s Mar-a-Lago estate in Florida, where they agreed to set up a 100 Day Action Plan to resolve trade differences. Unfortunately, little progress has been made in getting China to make long-term concessions in the important issues that give China unfair advantages in trade. A good source or timetable detailing trade talk progress, or lack of it, can be found on China Briefing published by Dezan Shira & Associates. Their web page; "The US-China Trade War; A Timeline" is continually updated as new developments occur.

With Trump being the most anti-trade President in history for China this has become a waiting game with time on their side. I am not alone in recognizing China's reliance on an age-old and tested Asian negotiation technique, call it a tactic or style if you like, but it is deeply rooted in wearing down your opponent over time. By time I mean years and sometimes even decades. This can be done in many ways such as demanding minor changes and constantly renegotiating matters that have already been agreed upon.

It is naive to think a unified China will not continue to exploit the advantages a state-driven economy has over free enterprise. With an expanding military armed with a slew of modern cutting-edge weapons produced at home its predatory economic system views a divided America as easy pickings. China is a state-run economy based on a business model that is geared to expand by crushing the competition. Subsidizing those companies working within its system in a multitude of ways helps it achieve this goal. Countries that export goods at slightly below cost in exchange for manufacturing jobs are not stupid they are predatory and we in America are their prey.

While exports to Canada and Mexico rose in June which some people view as a sign that Trump's tough talk is working with America's two big North American trading partners. The U.S. trade deficit with China is up more than 6% this year which indicates a huge failure on the part of America to stand firm and put some real hurt on China. It is silly to think China returning to trade talks will result in anything substantial or a quick resolution to current issues. China has little intention of altering its course and will concede nothing in future trade talks.  Any agreement conflicts with the goal of the Chinese Communist Party (CCP) to turn China into a “manufacturing superpower” so advanced in tech manufacturing that it dominates global high-tech markets.

At times China has even taken up the role of being the injured party and threatened to retaliate after the Trump administration expanded its trade blacklist to 20 Chinese public security bureaus and eight of the country's top technology firms over alleged human rights violations against Muslim minorities. This includes imposing tariffs on American products. Beijing has also mounted its own offensive aimed at the American economy and causing a political fiasco for Trump that could affect next year’s U.S. presidential elections. The Chinese Communist Party (CCP) has gone public with a strategy of “creating an enemy for itself” and the U.S. economy is the main target.

This is all being played out before a backdrop of a global economic downturn. This coupled with the  escalating trade war has prompted the World Trade Organization (WTO) to reduce its global growth forecasts for 2019 and 2020. This means world merchandise trade volumes are expected to only expand by 1.2% in 2019, which is substantially slower than the 2.6% growth forecast in April. They also see 2020 global growth slowing to 2.7%, down from 3% previously predicted.

Back to what appears to be the deal on the table. What is now being presented includes no commitments on reforming Chinese industrial policy or the government subsidies that have been the target of longstanding U.S. complaints. Given China's insistence that structural reforms remain "off the table" a so-called narrow deal, with punitive tariffs eliminated in return for greater Chinese purchases of soybeans and LNG amounts to a total victory for Beijing. Given China needs both these products they are by far the big winners in these talks.


Footnote;  Trade policies have massive long-term ramifications on the strength of a nation's economy. How these policies develop and take shape are generally the result of many factors coming together and not always well planned.  The article below explores these issues.
 https://brucewilds.blogspot.com/2019/05/fair-trade-remains-key-global-economic.html

The Global Pastime Of Kicking The Can Down The Road

Delaying Payment Does Not Make Lunch Free!

Nowhere is the trend of kicking the can down the road more prevalent than in government. Consider this a tribute to politicians and governments everywhere that postpone and delay taking necessary actions. Frequently for politicians, the goal of being reelected takes priority over doing the right thing. This is why  those in office often surrender their better judgment as they go seeking jobs and economic growth at any cost. The idea of paying later for a hamburger today is very seductive for those in this state of mind.

This explains why we constantly see government bargaining with, and making concessions to companies like Amazon to locate facilities in their State. This is done to gain a few jobs with little thought to the long-term consequences. Sometimes it is exempting sales tax, sometimes it is giving the company free utility build-outs, forgiving property taxes, or seeing they are granted special pricing and privileges when it comes to delivering their goods. I use Amazon as an example because it uses all these methods to gain an advantage and exploit its competitors. Sadly, the toll Amazon takes on the brick and mortar stores that line the streets of our cities and neighborhoods is just now becoming apparent.

The sweet allure of getting and receiving the benefits while setting back the negatives is not new or is the desire from which it flows. Getting something for nothing is often the catalyst for bad policy. This is apparent in our healthcare system when it comes to the Affordable Care Act or what is still commonly known as Obamacare. After promises the ACA would lower healthcare costs while extending coverage to millions of Americans the decision was made to phase it in.  In just a few years we have seen healthcare cost soar moving Obamacare towards the brink of failure. As usual, those handed the task of cleaning up such a mess are faced with the unpopular job of making many people unhappy so they do nothing.

When politicians give one company an advantage over another you could say the government has entered the game of choosing winners and losers. States are also lowering the ability of some companies to compete and in the long run can lose more jobs than are created in the short term. In Fort Wayne, Indiana years ago the city backed a bond and the loan to build a massive hangar at the airport for an air-freight company named Kitty Hawk. In return the company promised a slew of new jobs when they located their hub in the city, Kitty Hawk is now bankrupt and the jobs are gone. With the taxpayers of Fort Wayne now paying for an empty hanger that they are trying to lease at an aggressively low price. this means private investors and property owners that lease building space are taking a hit as they are forced to compete against the government to which they are forced to pay taxes. This goes past the issue of fairness and into an area where companies are disincentivized to invest.

National Debt Now Almost 23 Trillion Not 12!

The Devil is in the details when these so-called "pay you later" deals are crafted. When dealing with the Devil we often pay a price far greater than anticipated. It is not uncommon to find promises broken and estimates way off the mark as to the final cost. Sadly, the National Debt Clock is rapidly moving towards the 23 trillion dollar mark. The chart to the right predicted that by 2019 the national debt would top 12 trillion dollars, boy they really missed that one! Projections made by the government or any group predicting budgets based on events that may or may not happen at some future date are simply predictions and not fact. This means that such numbers are totally unreliable.

Another place the effort to obtain a free lunch or at least to get a big discount on it can be seen in the explosion of Public-private partnerships. Over the years we have been hearing a lot of good things about "Public-Private Partnerships" and how they can propel forward needed projects by adding an incentive for the private sector to undertake projects they might choose not to do alone. Often this is because the numbers often simply don't work. These collaborations between government and a private-sector company while touted as our salvation tend to create boondoggles and white elephants.

These projects are often haunted by problems that go from one extreme to another ranging from over-engineering to shoddy work with little oversight. Risks are frequently distributed between the public and private partners according to the ability of each to assess, control and cope with them. The risk-sharing may be in the form of "guaranteeing" a certain occupancy such as was the case of a hotel recently constructed where I live, or the government may pick up part of the cost of the project by providing low-cost loans or supplying part of the infrastructure needed for the project to proceed.

Expensive studies paid for by the government to determine whether a project is viable or needed by a community is often the first step down this slippery slope. Public officials constantly promote and undertake glorious and unsustainable projects to better their communities at little or no cost. This can be seen in situations where the public partner agrees to guarantee a minimum occupancy or income if it turns out that there are fewer users or demand for the service or infrastructure than expected. Fortunately for the public officials involved it generally takes years before anyone notices how toxic many of these projects are and voters seldom are focused enough to hold them accountable. 

The lesson is that there is no such thing as a free lunch. Delaying payment should be viewed as sidestepping reality rather than a solution. Short-sighted attempts to sidestep real structural failures and problems are usually doomed to fail. Real problems must be addressed with real solutions not just promises of future action or put off until a later date. Not taking the proper steps to set things right often causes more problems down the road. Winston Churchill said, "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." My point is that sooner or later the piper always demands his due. 



Footnote; This post dovetails with many of my recent writings, other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.

The Reasons For America's Difficult Path Ahead Remain

In the early part of 2018, a piece appeared on this site titled; "The Three Reasons America Faces A Difficult Path Ahead." These three major obstacles are and will most likely remain solidly carved into our path forward. Regardless of record new highs in the stock market or any positive predictions, there is no guarantee as to how long this growth trend will go. When easy money is the fare of the day leverage is generally growing at a rapid pace. While leverage tends to drive a market higher, when it is on the rise it also has exactly the opposite effect, when the market is falling only it often works faster and magnifies the fall. The three key challenges that America must confront and deal with are explored below. Our failure to deal with them will impact and bode poorly upon our ability to maintain our position in the world.

1.   The Low Job Participation Rate; Yes unemployment is at fifty-year low but much of that is because we have a very low civilian labor force job participation. Many people have left the workforce. The work ethic has taken a hit over the last few decades as many people adopted the attitude that frequently the reward for going the extra mile is just not there. The longer someone is out of the workforce the more difficult it is to return. Expensive job retraining programs will not solve the issue of creating new jobs in a world where higher mandated wages push employers to replace workers with robots that can perform repetitive tasks.

A Smaller Percentage Of Americans Are Choosing To Work

It should be noted that globalization has elevated the importance of creating jobs and a balanced economy that supports a strong middle class. A huge difference exists between creating a valuable and worthwhile product that benefits society and breaking a window then praising the jobs replacing it yields.  It is difficult to envision a larger share of Americans rushing to find jobs when society has come to accept not working as acceptable.

2.   Exploding National Debt; During recent years the national debt has soared and all indications are that it is about to get bigger as the bill for entitlements increases. The myth that a scenario of growth coupled with a falling deficit will allow us to outgrow many of the problems we face brings with it a false optimism and hope. In all truth, we have allowed those we have sent to Washington to spend money we don't have and continue to ignore the ever-growing debt being created.

Click Here To View The National Debt Clock

The fact is our trillion-dollar deficits will become commonplace before long. The deficit during the Obama years ran at over twice the nosebleed levels that had been projected. As things stand America continues to rack up a deficit each year of nearly $2,500 for every man, woman, and child in the country, such deficits were unheard of in the past unless it was during a major war.

Currently, the costs of entitlement programs are slated to rise in coming years. When we couple that with Trump's tax reform bill which has added to the deficit to the cost of paying over 100 billion dollars for a slew of natural disasters plus increased military and infrastructure spending it is clear the deficit will continue to grow. Trillion-dollar deficits are set to become commonplace in the coming years unless taxes or raised. Sadly, this massive deficit is much of the driving force that is propelling the economy forward, and it is not sustainable.

America Remains A "High-Cost Producer"

3.   Jobs Will Not Come Rushing Back; The truth is the recent tax reform bill that President Trump signed into law may slow jobs from leaving America but is not enough to cause them to return. The cost to produce goods in American remains higher than in many other parts of the world because of things like healthcare and regulations governing things such as liability and pollution.

Many people have mistakenly surrendered to the idea America is too small to continue to remain the world's premier nation. This is based on population numbers and discounts the idea that quality beats quantity hands down. Sadly, the spirit of, "I will gladly pay you Tuesday for a hamburger today" is alive and well in many of those advocating free trade and the expansion of globalism. Those advocating free trade would have been wise to remember that countries such as China that export goods at slightly below cost in exchange for manufacturing jobs are not stupid they are predatory and we in America are their prey.

We should not lose sight of the fact that while free trade is important, fair trade is far more so and should be the main issue. Trade policy has massive long-term ramifications on the strength of a nation's economy. Often people fail to note the difference between free and fair trade. In many ways, the global economy has become an ill-regulated business model tilted to favor big business and giant conglomerates. It is these companies that promote "free trade" which has replaced the idea of fair trade. Companies have long pushed for national borders to vanish as they pursue ever-larger markets and strive to achieve greater supply chain efficiency. Transnational companies have sold us out and made it completely about profit. 

The combination of the three obstacles listed above constitutes a grave problem with no easy fix. The bottom-line is that the longer we go before making a real effort to mitigate our problems and change our current policies the larger the negative ramifications will become. Clearly, America is not the only nation to face such problems or imbalances which means mankind and society, in general, will see economic challenges continue to unfold. Balanced trade instead of huge deficits or surpluses between various countries would contribute to both global cohesion and the world economy. Unfortunately, a country's prospects can rapidly diminish and when they do it can be incredibly difficult to turn things around. Like it or not in an unfair world tariffs may be the only tool able to protect the ability of the middle-class to earn a living.

Slew Of New Apartments Pressuring The Housing Market

Too much money with a shortage of good investment opportunities has resulted in a boom in multi-family construction. These new apartment complexes built on cheap money are creating a mess in the housing market. For the last several years we have witnessed a huge number of apartments being built under the idea if we build them, they will rent. This combined with many baby boomers downsizing has caused rising house prices to stall. It also has helped fill the needs of those always needing something new and seeing themselves as too good to move into a place where someone else had lived.

Rising Housing Prices Have Slowed (click to enlarge)

Two things have become clear. The first being many of these apartments are not cheap. Today roughly 80% of new apartment construction is geared towards the high-end luxury market. The second is it is difficult to fill them with quality tenants and the owners are counting on both inflation and time to make them profitable. In this case, a quality tenant is defined as someone who can and will pay the rent on time, follow the rules, keep their apartment clean, not create maintenance issues, and stay for the full length of their lease. Still, oversupply is the bane of real estate and crushes the value of this hard and expensive to maintain commodity. In this case, all the new multi-family construction may be spilling over and dampening demand for older single-family homes.

Interestingly this wave of new apartment construction is another situation where the big boys, also known as the rich and powerful, have the potential to widen the gap of social equality. Our nation's housing policies are feeding this craze and are as much to blame as greed. Many regulations, codes, and factors have been driving the cost of single-family homes higher. There are a multitude of costs associated with owning a home, such as upkeep and real estate taxes simply make it easier for many people to rent than buy. This gives the appearance people are getting more for their money when renting. Keep in mind, these apartment complexes are not being built for the poor and downtrodden or low-income people.

Apartment Construction (click to enlarge)

The idea of young people buying a starter home and later moving into a bigger house was a tradition for years. Today this is far less a factor than in the past. Today with the help of an older family member and low-interest loans a larger percentage of first-time buyers are reaching for the golden ring from the get-go. Unfortunately, the overall number of young people able to afford a home is small. The majority of millennials today have little in the way of accumulated wealth and many are still forced for economic reasons to live with their parents. To make matters worse, when they do move into a home many of these people have little interest or do not have the skills to maintain them.

With so many older homes across America needing upgrades and repair, it is a shame housing policies have not been developed to incentivize some of this money to flow towards older neighborhoods. America has built a lot of housing units over the years, now we must face the fact that they need to be maintained. Instead of focusing and creating policies to rebuild our cities by encouraging homeowners to invest more in upgrading windows, adding insulation and improving the existing housing stock, Washington has doled out low-interest money to Wall Street and apartment developers. This effort to kick-start the economy by building new housing to generate the illusion of growth has long term ramifications.

The government holds huge responsibility for a rising share of our housing problems in low-income situations because its policies avoid dealing with the growing number of tenants that are irresponsible. Government housing cherry-picks the best of the low-income renters providing them with very low rents and nice apartments and dumps the rest on the private sector. There is a strong need for simple basic housing that, shall we say, just gets the job done. I contend the best way to address or level the playing field would be to move away from public housing and give those needing housing aid "rent only vouchers" that could be used with any landlord rather than putting these people into a quasi-government ran project.

Old Houses Units Need To Be Maintained

When people leave older residential neighborhoods and move to a new house in the suburbs they in effect hollow out our cities. Adding to our housing problems is low down payments and other policies that put people in older houses that they have no interest or knowledge in how to maintain. This can cause even more people to flee the area bringing about further decay. When offered the choice many people find moving easier than repairing and maintaining their homes or neighborhoods and low-interest rates power this trend forward.  Policies should be geared toward creating jobs that maintain these units instead of making them prematurely obsolete.

By choosing easy answers America has not faced its housing problems with long-term solutions and this bodes poorly for society. Just how long many of these new apartment projects will stand the test of time and add to the feeling of community is questionable. Many are constructed fast and at the lowest cost possible. The name of the game is to get them up and get them rented. While they may look appealing on the surface we have become a society where everything is disposable. It is a sad situation when a front entry door needs to be replaced every ten years which is often the case today. The fact is the long-term ramifications of the Fed feeding cheap money to Wall Street and its minions will shape society and America's housing landscape for decades.


Footnote; While housing prices have stalled this does not mean rents will not move higher. This may be a supply and demand issue but is also driven by escalating costs in other parts of the economy.
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