THE EXPLAINER: Flaster says, “So You Want to be in Pictures?”

An old Hollywood Refrain, but the world may not be a safe place

By Marc L. Flaster

NEW YORK, New York (Texas Insider Report) — Tweet, Tweet, Twitter, Twitter… Our President takes no “billy-goat gruff”! The attacking strategy undermines his critic’s stability, keeping them on the defensive.

The political front-line expected a more civil leader who was open to compromise. Strong personalities are often exhibited in the corporate world where their leadership skills flourish. Their drive and political intrigue are often contained in corporate board rooms.

Few personalities in the public view have put the representative Congress so far back on their heels as the Trumpster has done. Congressional representatives are practiced coalition builders, not visionaries. But four more years of Democratic rule, expected with Mrs. Clinton, did not resonate well with the voting public, however.

The signature legislation of the Obama era was the health care bill (ACA). A disaster in the making, for it required healthy American’s to support the cost of those unfortunates who are not as healthy as they would like. Their desire for repetitive medical attention absorbs a large portion of their financial worth, and often that of a supportive family as well. Without the contribution of those still young enough to not have contracted recurring chronic conditions, ACA is primed to be a budget buster.

After 8 years of liberal compassionate management of the laws of our great nation, the Trumpster expected the new Republican majority, which he now leads, to have a proposal to “Repeal & Replace” Obamacare on his desk.

Boy was he surprised.

He learned his first lesson as ruler right away: You cannot rely on others to do your dirty work. And as the weeks have passed, it has become apparent that our President stands alone on the firing line!!!

The liberal-compassionate agenda of the past administration raised the limbo bar for legislation, whose main objective then was to equalize opportunity by imposing restraint. In other words, it compressed the top, rather than raise the bottom:

  • EPA Rules were Tightened
  • Dodd-Frank handcuffed the Banks
  • And Trade Agreements gifted away more then they got in return

The result has been a sluggish economy, weak stock market, and a public that complains that others were getting a better deal. The Bernake Fed countered this trend with cheap credit, but that effort fell on deaf ears. The legislative constraints drowned opportunity.

To accelerate the liberal’s legislative agenda, many restraints were put in place by Executive Action. So it comes as a surprise that the same vehicle used by the new Commander-in-Chief is subjected to so much criticism. What was good for the Goose appears not to be good for the Gander.

Energizing American factories may not be the most news-worthy course, along with re-negotiating international trade agreements like NAFTA, but it has raised the spirits of Americans. Yet American factories continue to produce an expensive product, and in many cases, one that is not up to standard. A case in point is the auto industry. It continues to produce an un-wanted product. Ford’s best seller and most profitable vehicle is the F-150 Truck Series. GM can only sell the truck platformed Suburban, a poor excuse for a family car. SUV’s have replaced the standard sedan in most garages. Both companies have plans to thin their name plates, reduce production, and focus on autonomous driven vehicles. This is resulting in closed facilities and a layoff of 1,000’s of workers.

An old refrain from the past when Detroit ruled was, “So goes General Motors, so goes the Nation.” Having sought bankruptcy once, GM may be headed for that destination again. Not only is re-invigorating our factories a false promise, but imports from abroad offer more choice, better features, and better value. John Q. Public is not interested where his sculptured ride was produced. A trade deficit is not a bad thing, it just recognizes that what we import is better and cheaper than that we can produce at home.

So the economic engine has swung to embrace intellectual property and “the internet of things”. Combined, they have undermined the Fed, and government actions, to create inflation. This would have allowed them to play the blame card. The Fed promises higher interest rates that often accompany an improving economy, but only if it can find where inflation is hiding. The local legislatives have encouraged a rise in the minimum wage as a complement. Pay people more, and they will have more to spend. That will invigorate the economy. The French unions have proposed the same cocktail for their stalled economy. The results have been less than stellar.

Companies are finding ways to operate with fewer employees. Online shopping has decimated the retail sector. Artificial intelligence and robotics are driving companies to produce the same (or more,) with fewer employees, and at a lower cost.

That’s another chink in the argument that the spreading inflation disease is no more than “fake news”.

You would think that after my comments about GM and Ford that the stock market’s stellar performance would have left them in the dust. Instead, the focus on self-driving technology has sprinted their shares to new heights. Compare this with General Electric, a colossus of a company with its hands in too many pots to be efficient. New management has pledged to divest $20 billions worth of business lines, layoff 10’s of 1,000’s, and focus on what it does best to improve earnings and shareholder value. The stock went from $32 to $20 in just 8 months. To the investing public, the company is not riding the right horse.

Add to all of this the idea that the world is not a safe place. Here, gun-related deaths beyond the horrific event in Las Vegas stain the pages of the nation’s press daily (And there’s been another calamity in South Texas before my ink is dry).

To accumulate the number of gun-related deaths of the Las Vegas shooting takes only:

  • 28 days in Chicago
  • 68 days in Baltimore
  • 70 days in St. Louis, and
  • 106 days in Philadelphia, but who’s counting.

More important to the public at large appears to be the concern that North Korea threatens to join the nuclear arms race. Japan and South Korea shiver in their sandals. Spain and Catalonia stand on each other’s throats. Kenya, Venezuela, Nigeria, Uganda and the Middle East in general are in political upheaval. Presently, Iraq and the Kurds are fighting over who owns the oil fields. Saudi Arabia’s young new sheik is purging his country of critics and dissenters. The economic impact is worldwide.

On the bright side, the OPEC quotas on oil production (to encourage a higher price) have been met with higher production elsewhere, primarily the U.S. The stock market is establishing a record close almost every session, creating wealth and opportunity that comes with it. Some companies merge to create efficiencies of scale, while others shed divisions that absorb more capital than they produce in income, rewarding shareholders with better earnings and a higher stock price.

The Trumpster’s cabinet has begun to modify, as well as roll back, many of the restraints on business, and the environment that smothered companies in President Obama’s regulatory purgatory. The Republicans tax proposal (in skeleton form) has been outlined for all to fret over.

All this puts a new focus on the investor and the taxpayer alike, hoping that a new landscape awaits ahead. That may allow a review of some issues that had put the Republicans at loggerheads with the Democrats. Now a different door has opened that may force not so much as compromise, but an awareness that the issues are what binds them, not the aisle that stands between them.

The balance beam now tilts in the other direction. The King is Dead, Long Live the King!!

Feel free to share this missive with anyone you believe might have an interest. It is written from my point of view, about topics I find interesting, and I don’t expect readers to agree with me even half the time.

Let me know what you think.

marc flaster sandler o'neillMarc L. Flaster has advised financial institutions across Texas in balance sheet management for over 35 yearsThe views expressed in this article do not necessarily reflect the opinions of any client or organization with which Marc L. Flaster might be affiliated. Readers are advised to complete their own due diligence and analysis prior to taking any actions based upon my economic and political views.

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