The Weiner Component V.2 #51 – DACA & Funding the Federal Government

speaking at CPAC in Washington D.C. on Februar...

Never before in the history of the United States has a President been an embarrassment to the country.  Instead of making America Great Again he has diminished the nation in the eyes of the world.  Where the United States used to be the leading nation that function has now passed to Germany.

 

Recently, as President, Donald Trump got a physical to determine both his state of mental and physical health.  For a seventy-one year old man he is apparently in good health but overweight.  Interestingly there was no evidence that he had ever had bone-spurs.  These are what kept him from being drafted into the military during his younger years.  Could it be that this condition was faked by a well-paid doctor?

 

Trump’s past history is very colorful in a negative way.  It seems that Trump recently paid a porn star $120,000 to keep secret a one year affair he had with her.  After collecting the money she sold her story to a rumor newspaper.  Another woman, this one a centerfold star, was paid $150,000 for exclusive rights to the story of her affair with Trump by the Enquirer.  The story was then suppressed.  All of this was shortly before Trump ran for the presidency.  The question here is: Where did all this money come from?  If it came from his campaign funds it would be illegal.  Trump is very secret about his income and expenditures.

 

Interestingly all this occurred during Trump’s third marriage.  But there is no fear about his wife divorcing him.  Melania intends to stay married to Trump.  Presumably she had forgiven him again.  He is well into his seventy-first year now.  He may not be able to function as well as he did a few years ago or, for that matter, he may no longer function at all.  The body’s capability does wear out with age.  His fidelity may not be a problem anymore.  After all he is currently our oldest president.

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The Company, Apple, recently announced that they would be moving their headquarters to California in the United States and that over the next two years they will create at least 20,000 new jobs.  Trump has modestly taken credit for this move, stating that it has occurred because of his new Tax Reform.  Is this true?  Sort of!

 

Apple several years ago moved its major headquarters to Ireland.  They made a deal with the Irish government to pay very low taxes.  Ireland, since the inception of the European Union has been part of it.  Within recent years the European Union has been in the process of suing Apple for 20 billion dollars in back taxes for Ireland.

 

By moving back to the United States and, with the new tax laws, paying a very low rate of taxes, can Apple still be sued by the European Union?  Would the jurisdiction for the suit be in Ireland which Apple is leaving or in Europe, or, for that matter, in the United States?

 

I seem to remember that directly after the American Revolutionary War in the late 18th Century the Southern planters in the U.S. all owed large amounts of money to English merchants which they refused to pay.  Some of the merchants sued some of the planters in the new United States.  None of them won their case in the U.S. courts.  Would it be any different now if Apple were sued in an American court?  Is Apple moving because of Trump’s actions or to get out of being sued?

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As a businessman Trump liked to change the terms of the contracts he hired for his various projects like his casinos.  Generally this meant not making the last payment due to the subcontractors.  This was usually their profits.  They could, of course, sue him but the cost of the lawsuit generally exceeded the amount of money they were due.  A number of these individuals went bankrupt after working for Trump.

 

In many respects he never changed his methodology after he was elected to the presidency.  Trump, who by his own admission is the greatest deal maker alive, does not like to make deals.  And this seems to be because he might be on the wrong side of the deal.  Consequently he does not specifically lead.  What Trump likes is to give Congress and the nation a general idea of what he wants and then let Congress pass a bill which he might or might not approve.  We have seen him follow this path several times.  It is the way he has been handling the stoppage of government funding up until January 20th when a law had to be passed continuing to fund the U.S. government.

 

What, among other things, does Trump want with the new funding?  It seems that he wants Congress to vote him 18 to 20 billion dollars in order to build a 1,200 mile wall between the United States and Mexico.  Before the fund stoppage Trump has had two offers to continue funding the government.  Each contained a billion and ½ dollars to start the wall.  Apparently they have not been acceptable to Trump.  He wants the full amount in advance.

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On Friday, January 20th it seemed that the United States Government was about to run out of money.  Congress had to pass a law funding the U.S. Government.  However there were problems and no law was passed.

 

Up until the end of December 2017, with the exception of a bill to apply new sanctions upon Russia for messing in the 2016 Presidential Election, the Congress had passed one other important piece of legislation.  That dealt with so-called tax reform.  It was passed by Republican votes in both Houses of Congress.  No Democrat voted for it.  In addition the tax cuts are based upon deficit spending.  The bill after five years will increase the National Debt by 1 ½ trillion dollars.

 

The Democrats would support nothing the Republicans do unless they could get something out of the legislation.  Currently the Republicans wanted to extend the functioning of the government for a short period of time, until February 8, 2018, and they didn’t want to give the Democrats anything.  The Democrats wanted a major spending bill for infants and young children, CHIP (Children’s Health Insurance Program), which had recently expired and the Republicans were allowing it to lie dormant.  They wanted to reduce government spending on entitlement programs for the poor and middle class in order to help pay for their tax program.  This program funds the health of about nine million poor children whose parents can not afford proper medical care for their children.

 

In addition the DACA Program (Deferred Actions for Childhood Arrivals), which was set up by President Obama, is close to expiring.  It needs to be extended.  There are multi-thousands of people who were brought to the United States as young children and know no other country, who are legally considered aliens and can be sent to Mexico, a country they know nothing about.  Many of these individuals are today in college or the military.  It does not seem right that they should suffer for what their parents did.

 

This was what the Democrats wanted in exchange for extending government funding.  On Monday, January 22, after assorted discussions enough Democrats supported funding the government to pass the bill.  In return he Republicans in the Senate promised to consider both Chip and DACA.  Both of these issues could have been resolved well before the issue of funding the government arose.  The probability at that time was that even if the Senate complied with the Democrats the House of Representatives would kill the bills.

 

In the House of Representatives the Republicans have a fair majority while in the Senate they have a majority of one senator. In order to pass a funding bill the Senate needs some Democratic support.  The Democrats would not vote for the bill unless they get extensions of CHIP and DACA.  The Republicans just want a short extension of the funding bill; they have stated that they will negotiate after they get a spending extension bill.

 

But both CHIP and DACA should have been extended before the Federal Government needed a new law extending spending.  Are the Republicans telling the truth?  House Speaker Paul Ryan has stated more than once that ways have to be found to reduce government spending and that these monies should come out of “entitlement  programs;” that is programs slated to fund the poor and middle class.  Are the Republicans just gaming the Democrats or are they telling the truth?  There has been a lot of stalling going on with both these programs so far.

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In addition to this morass President Trump wants to fund an 18 billion dollar fence for twelve hundred miles between the U.S. and Mexico.  While he wants an extension of the funding bill he doesn’t seem to know what else he wants.  His basic attitude is that if the bill is not funded it’s the fault of the Democrats.  Mitch McConnell, the Senate Republican leader, has stated more than once, that if Trump will just tell them what he wants they will attempt to turn it into a law.  The probability is that Trump does not know specifically what he wants but it will be the Democrats fault if he doesn’t get it.

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Main while a 39 year old man was deported after 30 years in America.  The man’s comment: “It wasn’t my choice to come.”  The man, Jorge Garcia, was married to an American citizen and has a family.  He has no criminal record and has been spending his life working and taking care of his family.  He is now in Mexico while his family is in the United States.  Hopefully he may be allowed to return to the U.S.

 

Trump in a general meeting in a highly derogatory way denounced all immigrants from Haiti and the African states as coming from “shithole” countries.  His statement indicated that none of these nations had functioning toilets which is, of course, total nonsense.  What we wanted he stated were more people from Norway.  The problem here is that all the people from Norway have total medical coverage from birth to death and they also have a decent basic standard of living whether or not they are employed.  Norway has no homeless problem.  Someone coming from Norway to the United States, actually someone coming from most of Western Europe to the United States, is coming to a country with a lower standard of living than from the one in which they are living.  The United States has been criticized by the United Nations for the negative conditions of many of its citizens, particularly for those present in every large city living out in the streets, generally under bridges.  There is an inordinate number of homeless in the United States and the number seems to be increasing.  The wealth produced mostly goes up to the upper one percent.

 

Trump has added to this state by continually lowering standards of living throughout the country by limiting Affordable Health Care (Obamacare) and diminishing other protections for the poor and middle class.  He is actually attempting to make the United States into what he accused Africa of being.

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The current Republican dominated Congress has done nothing except exacerbate the problem of unequal incomes in the United States.  They have been too busy to pass any laws to attempt to improve conditions in the country.  Their only ability has been to criticize Democratic presidents.

 

The country is now at a point of total non-functionality with President Trump attempting to blame everything upon the Democrats.  Currently many of the women are marching in protest against the President’s racism and sexism.  These women and their men will all vote Democratic in the November Midterm Election.

 

Chuck E. Schumer, the Democratic minority leader in the Senate has commented that negotiating with Donald Trump is like negotiating with jello.  It doesn’t matter what he says because one never knows what he’s going to do or say later on.

 

The great issue of funding the Federal Government was resolved three days later on Monday, January 22nd  with an agreement by moderate Senators, both Democrats and Republicans, who called themselves the Common Sense Coalition.  The Senate voted 81 to 18 to pass the bill refunding the Federal Government.  It included a six year extension to the Children’s Health Bill (CHIP) which had expired in September.  Mitch McConnell, the Senate Majority Leader also promised to bring up DACA for a vote before the current three week extension of government funding expires.

 

No sane person does not want the government funded.  Paul Ryan, the Speaker of the House of Representatives brought the bill up in the House where it passed and it was signed by President Trump that same evening.

 

If the terms of the DACA agreement are carried out when the new bill to fund the government comes up on February 8th the Federal Government will be funded for another year.  We are now left with four days before the Federal Government has to be funded again.  DACA has not been brought up in Congress.  The coming week should be exciting.

 

 

 

The Weiner Component #59 – The Chinese Dilemma/Conundrum

English: Third generation mobile phones (TD-SC...

HK Bank of China Tower 中銀大廈 (香港), designed by ...

HK Bank of China Tower 中銀大廈 (香港), designed by I. M. Pei (Photo credit: Wikipedia)

China Mobile

China is in an interesting quandary because the Chinese Communist Government, which is now an autocratic capitalist orientated socialist state that largely has control over all the elements of its society except the domestic money supply; that it has traditionally also controlled, but now watches endlessly increase.  Regardless of what the government does this keeps getting larger, creating an ever-growing inflationary spiral for which the government keeps finding fictional and other means to attempt to control.

Because of a very successful trade balance with innumerable other nations, more and more Yuans have come and continue to come   into the country.  Far more than the government would like to have present.  The problem with foreign trade is that it must be done in the currency of the country buying the products.  The Chinese government does not want these assorted currencies to be traded on the International Currency Exchange against its own money.  This action would raise the value of the Yuan significantly against all other currencies and also lower the rates of the other foreign exchanges.  Therefore the Chinese government has branches of the Bank of China in all her major trading nations that exchanges the various currencies into Yuans, which, in turn, return to China, forever increasing the amount of cash available in that country.  It also gives the Chinese government endless amounts of the currencies of other nations that she has to invest in these trading nations, like, for example, the United States.  There, among other investments, she has over a trillion dollars in U.S. Government securities.

The only way they can decrease this currency flow into China is to decrease the amount of foreign trade.  That action would lead to massive unemployment problems and a growing and continuing bad recession.  The government is, in essence, caught on the horns of a dilemma in which their current mode of operation is the only one that makes sense.  Therefore their domestic currency problem continues to grow.

The problem, here, is that China has about an 8% yearly growth of its GDP (Gross Domestic Product).  This keeps employment high and allows the people an ever-growing standard of living.  It also allows for continued National economic growth.  Because of this positive situation there is an ever-increasing growth of the domestic money supply, creating more money than there are goods and services available, which means that prices keep rising.

China keeps the value of her currency against those of other nations low on the international market, making her goods less expensive in other countries.  This practice gives her a great trade advantage.

In other countries, as we’ve seen, the Chinese have to sell their goods in the currencies of these nations.  The Bank of China has branches in most of the foreign nations that exchange the foreign currencies for Chinese money.  The profits, from this foreign trade, come back to China in Yuans or Chinese money, gradually increasing the amount of currency available in the home country.  This has been going on for a great number of years now bringing about a growing spiral of inflation which the government has attempted to control in interesting ways.

One of the first things the Chinese government did to lower the rate of inflation in their country was to take food items off the CPI (Consumer Price Index) that measures the rate of inflation.  With the cost of food off the CPI the official inflation level dropped significantly.  But promulgating a fiction does not solve a problem.  Next the government started and has continued to raise taxes but there are limits as to how much can be taken from the populace.

The government still had to lessen the amount of money in the National Cash Flow.  She did this by raising all sorts of taxes.  This, in turn, created a new problem.  These new or higher taxes mostly hit the average consumer.  They found their purchasing power significantly going down.  The entrepreneurs who had been and are carrying on most of the foreign trade have had their taxes raised the least; their profit margins keep going up.  Basically there has been and is a redistribution of the money supply in China with the upper percentage of the population’s incomes rising and everyone else’s shrinking.

I imagine the people of China are not too thrilled by any of this.  Not only has the cost of food continually gone up, but so has their taxes.  Their money buys less now than it did in an earlier year.  At some future point something substantial is going to have to be done to rebalance the costs of living or there will be all sorts of protests and problems.

If China is to maintain its 8% growth pattern and full employment the inflation will continue.  To what extent can the government keep up its current system of taxation before the people physically object?

There is another problem China is facing with all this foreign trade and that is what to do with all the foreign currencies that are being exchanged for the Yuan.  China is building up a store of different monies which she has to invest in the countries of their origin.  This also is a dilemma.  What can she do with all these monies?  She can, of course, open up her country to much more trade goods from all over the world.  But that would significantly change her trading balance.

Recently Apple negotiated with China’s leading wireless phone company, China Mobile, to make Apple I-phones readily available in China. China Mobile is the world’s largest mobile phone carrier with 763 million subscribers.  It is estimated that it will sell somewhere between 12 to 39 million I-phones in China.  In fact some experts have more than doubled that number of sales, while others have lowered it.

Smaller mobile phone companies have sold a relatively small number of earlier versions of the I-phone in China.  There are also several million black marker I-phones in existence there.  Both Apple and China Mobile began their sales of the 5C and 5S I-phones on January 17, 2014 in China and the United States. In the U.S. the 5C is selling for $739 and the 5S costs $871.

If China Mobile sells these units for an average of $800, then with these prices if we average 25 million units times the average price of $800, we get two trillion, one hundred million dollars.  It could be much more but it probably will not be less.  Suddenly the trade balance between China and the United States undergoes a dramatic change if favor of the U.S. and China has less U.S. currency.

The outcome of this would be a win, win, win, win situation for everyone involved.  China would benefit by having its inflation rate drop significantly, the U.S. would benefit by having its trade balance decrease favorably, the Chinese people would benefit by having their new toys that are more sophisticated than my desk top computer, and Apple would benefit by upping its profit balance significantly, and, of course, Apple shareholders will benefit by having the value of their shares and dividends rise.

In essence everyone involved in this process comes out ahead.  Is it a one-time transaction?  The answer is, No.  There will no doubt be an Apple 6 phone and an Apple 7 series and so on.

Will this solve China’s dilemma?  No necessarily; but it will help slow it down considerably.  It gives the Chinese government more time to come up with possible solutions to its inflation problem.  Can this occur?  Anything is possible with time.

 

 

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