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Which Surviving Spouses Get VA Mortgage Benefits


Which Surviving Spouses Get VA Mortgage Benefits

Past and present military personnel have access to services that include Veterans Administration (VA)-guaranteed mortgage loans. If the veteran passes away, does his or her spouse has access to the same VA mortgage benefits? That depends, and it makes a difference. VA mortgages often come with better terms than conventional mortgages. (For more, see The Unique Advantages of VA Mortgages.)

Here’s what veterans and their families need to know.

VA Mortgage Loans Are Still Private

Don’t be fooled; the VA isn’t in the business of offering mortgage loans. Private mortgage lenders still make the loan, but the VA guarantees a portion of it and occasionally takes part in the process of obtaining it. Such actions allow the mortgage lender to be more confident that the loan won’t default, and if it does, at least the VA’s portion will be paid.

This means that even if the applicant falls below the standards the lender uses to approve the loan, the VA guarantee might be enough to gain approval. If you’re looking for a VA loan, don’t call the VA; work with your bank, credit union or mortgage broker.

They Come with Lots of Perks

VA loans come with benefits that often make them a better deal than conventional loans.

  • There is no down payment, providing that the sales price doesn’t exceed the home’s appraised value.
  • You don’t need private mortgage insurance, and with the annual cost of that at 0.5% to 1% of the entire loan, that’s a large savings.
  • You can only be charged a certain amount of closing costs.
  • There is no penalty for paying the loan off early.
  • The VA might help you if you have trouble making payments.
  • The loan is assumable by anybody who meets the qualifications for the loan.

Many Surviving Spouses Are Eligible

Not all surviving spouses are eligible. If any of these conditions apply to you, though, you probably are:

  • Spouses of military personal who died in active duty or from a service-connected disability who have not remarried
  • A surviving spouse who remarries after age 57 and on or after Dec. 16, 2003
  • A surviving spouse of some permanently disabled veterans whose injuries were or were not a result of their military service
  • The spouse of a person who is missing in action or a prisoner of war

Applying for a VA Loan Is Easy

First, find a lender that offers VA mortgages. Many do. As with any mortgage, you will have to meet eligibility requirements, including income, credit and other standards set by the creditor.

Second, the home must be the principal residence of the eligible surviving spouse. It cannot be an investment property, second home or a home being purchased for somebody else.

You’ll also need a certificate of eligibility (COE). This proves to the lender that the deceased veteran was eligible and allows the surviving spouse to receive those same benefits. To learn how to apply for a COE, click here. Often, you can also apply for one through your lender. The company will guide you through the process. For more information on eligibility, go to the VA’s website.

You Can Refinance, Too

Along with a loan to purchase a home, surviving spouses may be eligible for refinance an existing VA loan. The interest rate reduction refinance loan allows the surviving spouse to refinance an existing loan and roll into it all loan origination costs, so he or she doesn’t have to use existing cash to lower payments.

Dependents Aren’t Eligible

Unfortunately, VA mortgage benefits don’t extend to children of a deceased veteran. Only surviving spouses are eligible to apply.

The Bottom Line

Surviving spouses are often eligible for the same VA mortgage benefits as the deceased veteran. To learn if you are, contact the VA for further guidance. (For more, see How to Buy a House with a VA Loan.
Published at Wed, 03 May 2017 15:40:00 +0000

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Health Carriers Hit New Highs Despite ACA Debacle

by NatoPereira from Pixabay


Health Carriers Hit New Highs Despite ACA Debacle

By Alan Farley | May 3, 2017 — 11:35 AM EDT

Aetna, Inc. (AET) and Humana, Inc. (HUM) ended their $34-billion merger agreement in February 2017 after government opposition, but neither stock has suffered from the untimely split, as evidenced by this week’s bullish first-quarter earnings results. Both health insurance giants have rocketed to all-time highs after their releases, ignoring the breakup as well as Congressional disagreement on the fate of Obamacare.

Health carriers have enjoyed all the perks of their Affordable Care Act (ACA) participation since it became law in March 2010 but few of the shortfalls because they can pull out of markets or the entire program whenever they choose. Even so, the risk is now rising geometrically because whatever form health insurance takes in coming years; carriers are less likely to avoid the weight of bad legislation, underwriting or case management.


Aetna stumbled in the middle of the last decade, stalling just above $50 in 2006 and testing that resistance level in early 2008. Aggressive sellers took control at that time, dumping the stock in a major decline that accelerated during the economic collapse. Selling pressure eased at a 5-year low in the mid-teens at year’s end, ahead of a modest bounce that stalled in the mid-30s in 2009.

A 2010 test at that level triggered a reversal and pullback, ahead of a 2011 breakout that reached the 2007 high in 2013. It jumped above that resistance level quickly, entering a trend advance that continued into the June 2015 high at $134.40, ahead of a volatile correction that continued into the first quarter of 2016. Support in the low-90s denied short sellers, ahead of a slow and steady recovery wave into the fourth quarter.

The stock took off after the November election, in reaction to the President-elect’s call to repeal Obamacare, and stalled at 2015 resistance in December. A pullback into the first quarter of 2017 found willing buyers, ahead of constructive action that completed a cup and handle pattern. The stock broke out this week after strong earnings, with a measured move target in the 170s likely to attract a healthy momentum bid.


Humana topped out at $88.10 in January 2008 following a long uptrend and sold off in a vertical slide that continued into the March 2009 low at $18.57. The subsequent recovery wave unfolded at the same trajectory as the prior decline, completing a 100% round trip into resistance in 2011. Sellers took control at that time, triggering broad sideways action that continued for more than two years, ahead of a 2013 breakout.

The uptrend yielded the most fruitful period in the stock’s long public history, topping out above $200 in June 2015, ahead of a rounded correction that found support at $150 in July 2016. A fitful recovery intensified after the election in a vertical buying wave that reached within 2-points of 2105 resistance in December. A pullback into January 2017 found support at the 50-day EMA, ahead of a rally that finally reached resistance in March.

The company reported inline first-quarter earnings on Wednesday morning while reaffirming fiscal year 2017 guidance, triggering a gap up to an all-time high, followed by a pullback that’s testing shareholder commitment. It’s likely that bulls will win this conflict, allowing the breakout to gather momentum in a trend advance that could reach $300 later this year.

The Bottom Line

Former merger partners Humana and Aetna are trading near all-time highs after strong earnings reports that highlight health carrier abundance at a time that many Americans are struggling with the high treatment costs. The results could influence D.C. efforts to reform or repeal Obamacare, increasing carrier risk despite this week’s earnings euphoria.
Published at Wed, 03 May 2017 15:35:00 +0000

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Trump’s NAFTA is already running out of time


NAFTA explained
NAFTA explained


President Trump wants a new trade deal with Mexico and Canada soon. But he’s running out of time.

Trump says his promise to get tough on America’s trade partners — particularly China and Mexico — is a big reason why he was elected in the first place.

“It’s probably one of the primary reasons I’m sitting here today as president,” Trump said on April 20.

He’s labeled NAFTA, the free trade deal with Canada and Mexico, the worst in history.

Adding uncertainty to NAFTA’s fate, two senior Trump administration officials told CNN on Wednesday that Trump is considering an executive order to pull out of the deal.

Trump has said he wants a deal that benefits US workers, but hasn’t said exactly what he wants in a new deal.

If Trump decides to stay in and renegotiate, time isn’t on his side.

His trade team, led by Commerce Secretary Wilbur Ross, must trigger a 90-day consultation period before trade talks can begin. At the earliest, talks could start in August.

Edward Alden, a senior fellow at the Council on Foreign Relations, said “it’s completely unrealistic” to get a deal done this year.

“The notion that you’re going to have a negotiation that’s both fast and productive is just an illusion,” Alden added.

It’s also worth noting that the original NAFTA agreement, which became law in 1994, took years to put together.

Ross said Tuesday he hasn’t started the consultation period because U.S. Trade Representative Robert Lighthizer, a longtime trade expert, hasn’t been confirmed by the full Senate yet. (He was approved Tuesday by the Senate Finance Committee.)

But that’s not the only problem.

Mexican leaders want negotiations done by early 2018 because Mexico has presidential elections in July of next year. There’s no telling whether the next Mexican president will cooperate with Trump on NAFTA.

“It will be in the best advantage of the countries involved that we finish this negotiation within the context of this year,” said Mexico’s economic minister, Ildefonso Guajardo, to CNNMoney earlier this month.

Trump added a twist to talks on Monday, slapping a 20% tariff on Canadian softwood lumber. Experts say that won’t help Trump’s future trade negotiations with Canada.

“You’ve disturbed a lot of waters. It’s going to be a long negotiation,” says Gary Clyde Hufbauer, a trade expert at the Peterson Institute for International Economics. “Getting a deal done by early 2018 or the end of this year was wishful thinking.”

Canadian leaders denounced Trump’s decision, saying it was made on “baseless” accusations of government subsidies provided to Canadian lumber companies.

And Canada isn’t even Trump’s main target. Mexico is. Experts say Trump could use all the help he can get from Canada if he plans to strong arm Mexico.

Mexican and Canadian leaders say they’re ready to negotiate. They’re just waiting for Trump.

“We are ready to come to the table anytime, but the United States, in fact, has yet to actually initiate the negotiating process,” Canada’s Foreign Minister Chrystia Freeland told CNN on Tuesday.

The Commerce Department and the White House were not immediately available for comment.

–Jeremy Diamond contributed reporting to this article
Published at Wed, 26 Apr 2017 14:59:44 +0000

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Swamp Creatures Sack D.C.; and Fed Drops MOAB on Wall Street

Swamp Creatures Sack D.C.; and Fed Drops MOAB on Wall Street


Wall Street and our central bank are in for a rude awakening very soon! The
idea that the US economy is on stable footing and about to experience a surge
in growth is ridiculous. Hence, the consensus that the Fed can normalize interest
rates and its balance sheet is nothing short of a bad joke…and it’s on them.

For starters, the government’s fiscal deficit for the month of March came
in at $176.2 billion, which means the deficit 6 months into fiscal 2017 is
$526.9 billion and running 15% over last year. If not for the calendar timing
of receipts and payments, our government’s deficit would be a year-to-date
$564.0 billion or 23% above last year. In addition, there was an 18% decline
in corporate income tax collection. We all know there was no corporate tax
reform passed. So the credible conclusion must be reached that corporations
are not growing there profits…they are actually shrinking.

The nation will now bump up against the $20 trillion debt ceiling on April
28th and is facing a possible government shutdown. This will happen to coincide
with day 100 of Trump’s Presidency.

Unfortunately, Trump resembles more like a swamp creature as the days go on.
Sadly, he becoming a flip-flopping carnival barker that duped the American
public into believing he was actually going to cause an earthquake in Washington
that shook the government back down to its constitutional foundation.

He no longer wants a strong dollar and an end to endless interest rate manipulations
that has been robbing the middle class of its purchasing power for decades.
Instead he’s become a Yellen supporting, bubble blowing, XM bank funding, NATO
backing, China loving, card carrying member of the neocons in D.C.

But even though Trump now loves low interest rates, the Fed has probably already
tightened monetary policy enough to send stocks into a bear market and the
already anemic US economy into recession. More proof of recession and deflation
came from the economic data released on Good Friday: CPI down 0.3% in March
and even the core rate fell 0.1%, Retail sales fell 0.2% in March and February
sales were revised sharply lower to minus 0.3%, from previously reported up

Housing starts, Empire State Manufacturing and Industrial Production have
all recently disappointed estimates. Housing starts fell a very steep 6.8 percent
to a 1.215 million annualized rate. Empire State Manufacturing dropped from
16.4 in March, to just 5.2 in April and within Industrial Production, the manufacturing
component shrank to minus 0.4 percent.

The sad truth is Trump isn’t draining the swamp…he’s flooding it with more
of the same swamp creature from Goldman Sachs that have mucked up D.C. and
the Fed for decades.

The Fed is About to Drop the MOAB on Wall Street

The mystery here is why the Fed is raising rates when Q1 GDP growth is just
0.5%, there was under 100K net Non-Farm Payroll job growth and a negative reading
on both the headline and core rate of consumer price inflation?

Could it really be that Yellen realizes that savers must finally be rewarded
for putting money in the bank? Perhaps she has come to the conclusion that
asset bubbles must correct down to a level that can be supported by the free
market? If only that were true. What is much more likely is that the clueless
Fed has duped itself into believing it fixed the economy by its massive distortion
of interest rates (100 months of less than 1% Fed Funds Rate), which has forced
stock and home prices to record highs–and debt levels soaring to levels never
before seen.

Wall Street and the Fed (which is a charter member of the swamp club) have
been quick to explain this economic malaise away. The floundering GDP growth
is being explained by a perennially weak first quarter. March NFP growth of
just 98k is excused by the bad weather that occurred during the survey weak.
And negative CPI is being brushed aside by what the Fed hopes are just temporary
factors. But unless the data turns around quickly, the Fed’s days of tightening
monetary policy may have passed.

The economy won’t accelerate unless Trump is able to push through a massive
tax cut very soon. But that doesn’t look likely in the least. Most importantly,
keep in mind, the Fed has been tightening monetary policy since December 2013
when it began tapering QE. Now, after three rate hikes, the economy is teetering
on outright contraction and deflation.

What all this warrants is extreme caution in Bubbleville. With geopolitical
risk flashing bright red, half percent GDP growth, record high equity valuations
and a delusional Fed that continues threatening interest rate normalization;
the market’s reality check is surly imminent.

Michael Pento

Michael Pento, President
Pento Portfolio Strategies

Michael Pento

Michael Pento produces the weekly podcast “The
Mid-week Reality Check”
, is the President and Founder of Pento
Portfolio Strategies
and Author of the book ““The
Coming Bond Market Collapse

PPS is a Registered Investment Advisory Firm that provides money management
services and research for individual and institutional clients.

Michael is a well-established specialist in markets and economics and a regular
guest on CNBC, CNN, Bloomberg, FOX Business News and other international media
outlets. His market analysis can also be read in most major financial publications,
including the Wall Street Journal. He also acts as a Financial Columnist for
Forbes, Contributor to thestreet.com and is a blogger at the Huffington Post.

Prior to starting PPS, Michael served as a senior economist and vice president
of the managed products division of Euro Pacific Capital. There, he also led
an external sales division that marketed their managed products to outside
broker-dealers and registered investment advisors.

Additionally, Michael has worked at an investment advisory firm where he helped
create ETFs and UITs that were sold throughout Wall Street. Earlier in his
career he spent two years on the floor of the New York Stock Exchange. He has
carried series 7, 63, 65, 55 and Life and Health Insurance Licenses. Michael
Pento graduated from Rowan University in 1991.

Copyright © 2011-2017 Michael Pento

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Published at Mon, 24 Apr 2017 08:06:32 +0000

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Trump to American steelworkers: I’ve got your back


Blackstone CEO: Infrastructure most important for Trump
Blackstone CEO: Infrastructure most important for Trump


President Trump and Commerce Secretary Wilbur Ross have a message for big American steel companies. We’ll protect you.

Ross said Thursday that the Commerce Department plans to launch an investigation into whether or not foreign steel companies, particularly those from China, are dumping steel on the U.S. market.

Ross argued that China is not acting in good faith to cut back on exports.

He said in a press conference that steel imports “have continued to rise, and they’ve continued to rise despite repeated Chinese claims that they were going to reduce their steel capacity when instead they have actually been increasing it consistently.”

Ross noted that steel imports are up nearly 20% so far this year and that foreign steel now makes up more than a quarter of the entire U.S. market. He said that has had “a very serious impact” on the domestic steel industry and that it could impinge on “our economic and national defense security.”

Shares of many American steel companies, including U.S. Steel(X), Nucor(NUE), Cliffs Natural Resources(CLF), AK Steel(AKS) and Steel Dynamics(STLD) all soared on the news, with some of the steel stocks climbing nearly 10%.

Steel Dynamics also reported solid earnings Wednesday and Nucor issued a strong report Thursday, further helping to lift the group.

The broader market was in rally mode too, thanks in large part to comments from Treasury Secretary Steven Mnuchin about the possibility of a tax reform plan being announced soon. The Dow surged nearly 200 points.

Ross told reporters that no firm decisions had been made yet about what the U.S. will do to try and make American steel more competitive.

But he did not rule out the possibility of tariffs, saying that the plan likely “won’t be to prohibit foreign imports, it just will be to change the price.”

Any moves by the Trump administration would be another example of the president’s desire to protect old school, blue collar U.S. industries, many of which have been laying off workers due to a combination of the effects of automation and globalization.

Trump has also pledged to try and help workers in hard hit sectors such as oil and coal mining.

Whether or not tariffs or other protectionist measures will actually boost any of these industries remains to be seen. But steel companies were quick to applaud the president.

U.S. Steel said in a statement that it is “pleased” that the president is launching a national security investigation into steel dumping.

“For too long, China and other nations have been conducting economic warfare against the American steel industry by subsidizing their steel industries, distorting global markets, and dumping excess steel into the United States” the company said.

U.S. Steel added that “tens of thousands of workers in the American steel industry, the industry’s supply chain and the communities in which our industry operates have lost their jobs due to unfair and illegal practices by foreign producers.”

And AK Steel CEO Roger Newport said in a statement that “we are hopeful that this action on behalf of our Administration will help us and other steel producers in America compete on an even playing field in all of our markets.”

Newport, U.S. Steel chief Mario Longhi and several other steel CEOs met with Trump at the White House on Thursday to discuss the state of the industry and the administration’s plans to crack down on steel dumping.

Trump and Ross need to tread cautiously though. If the U.S. clamps down too aggressively on Chinese steel, China could retaliate by slapping tariffs on American-made cars, electronics and other consumer goods.

China also owns more than $1 trillion worth of U.S. government bonds. China has been steadily trimming its Treasury holdings in recent months. If China ramps up the pace of its sales, that could send long-term bond yields sharply higher –something Trump would not want to see as he tries to stimulate the U.S. economy.

But Trump seems to recognize the need to be careful with China. He has already backed off his campaign pledge to label China a currency manipulator in his first few days in office for example.
Published at Thu, 20 Apr 2017 19:29:41 +0000

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U.S. Social Security reform: the clock is ticking


U.S. Social Security reform: the clock is ticking

By Mark Miller| CHICAGO

Can you count on your Social Security benefits when retirement rolls around?

Most Americans worry about this – partly due to the nonsense they hear from political opponents of Social Security and ill-informed media. You will hear that the program is bankrupt, its reserves are nothing but a bunch of IOUs, or that Social Security is a Ponzi scheme.

All of those claims are false, but there is one good reason for concern. Social Security faces a long-term financial imbalance that would force sharp benefit cuts in 2034 unless the government makes changes. The problem stems from falling fertility rates and labor force growth – which reduces collection of payroll taxes that fund the system – and also from the retirement of baby boomers, which increases benefit costs.

Absent reform, Social Security could continue to pay roughly 75 percent of promised benefits. The cuts would mean that the typical 65-year-old worker could expect Social Security to replace 27 percent of pre-retirement income, down from 36 percent today, according to the Center for Retirement Research at Boston College.

No surprise, then, that only 37 percent of workers are “very or somewhat confident” that Social Security will be able to maintain current benefit levels in the future, according to survey research by the Employee Benefit Research Institute (EBRI) – although confidence is much higher among older workers and retirees.

From a math standpoint, potential solutions to the problem are straightforward. The cuts can be avoided through increased revenue, benefit reductions or some combination of the two. But the politics are another matter.

Republicans are far from holding a unified position on the issue. For example, U.S. Representative Sam Johnson, a Texas Republican who chairs the House Ways and Means subcommittee on Social Security, has proposed legislation containing two significant benefit cuts: gradually raising full retirement ages to 69 by 2030, and using a less generous annual cost-of-living adjustment formula known as the chained CPI.

Meanwhile, President Donald Trump has so far held to his campaign promise of opposing cuts. He has suggested that economic growth will solve the problem by stimulating wage growth and payroll tax collections – a position most economists dismiss as unrealistic.



The last major Republican reform proposal dates back to the George W. Bush administration, which proposed shifting the program to personal savings accounts – an idea that aroused Republican passion but that went down in flames.

“That was an idea that got people excited, but there hasn’t been much enthusiasm for Social Security reform among Republicans since then,” said Andrew Biggs, resident scholar at the conservative American Enterprise Institute. Biggs worked on Social Security reform as an associate director of the White House National Economic Council.

Meanwhile, Democrats are in no mood to work with the Trump administration on anything that forces a compromise on their core values – and they have shifted significantly to the left on Social Security reform. Representative John Larson has introduced legislation that would not only restore trust fund balance but expand benefits. That is by far the best approach, since roughly half of all households have saved less than $25,000, according to EBRI. Larson’s bill is cosponsored by more than 80 percent of the Democratic House caucus – more than any previous expansion bill.

The bill would increase benefits by 2 percent across the board, shift to a more generous annual cost-of-living adjustment that reflects spending by seniors and set a new minimum benefit at 25 percent above the poverty line. It also would cut taxes for millions of retirees by boosting significantly the threshold for taxation of benefits.


The plan raises revenue by gradually increasing the payroll tax rates that fund the program. The rate hikes would begin in 2019, and by 2042, workers and employers would pay 7.4 percent each, instead of the current 6.2 percent.

Larson, a Connecticut Democrat, also proposes changes to the payroll tax cap for very wealthy beneficiaries. Currently, payroll tax is collected only on wages up to $127,200; the plan would start collecting taxes again on wages above $400,000. That exempts more income than many earlier expansion plans, which either removed the cap entirely or resumed taxation at $250,000.

The payroll tax cap feature played an important role in boosting support for expansion legislation, according to Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, a progressive advocacy group that supports the bill. “It brought many of the more conservative Democratic legislators on board,” he said.

Of course, the Larson bill is going nowhere in the Republican-controlled Congress, so Social Security reform will not happen before the 2018 midterm elections at the earliest – and perhaps much later than that. But that does not mean beneficiaries should worry about draconian cuts in 2034.

Even if reform is not achieved by 2034, Biggs thinks the problem likely would be solved at the 11th hour through tax increases – simply because benefit cuts must be enacted and phased in over long periods to give beneficiaries time to adjust.

“If they were going to do this by cutting benefits, it should have been enacted 20 years ago,” he said. “If you want to do it by raising taxes you want to wait as long as possible, so that you get to the point where the only solution is to put more money into the program.”

But the uncertainty on Social Security policy will continue to undermine public confidence in the program – and that is worrying. Meanwhile, the clock is ticking.


(Editing by Matthew Lewis)
Published at Thu, 20 Apr 2017 14:29:27 +0000

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Top Reagan economist tells Trump: Cut taxes ASAP


Trump signs 'Buy American, Hire American' order
Trump signs ‘Buy American, Hire American’ order


One of President Ronald Reagan’s top economic advisers has some blunt advice for President Trump: Put health care aside and focus on cutting taxes.

“Cut the corporate tax. Just do it,” economist Arthur Laffer told CNNMoney.

Trump really wanted a big win in his first 100 days in office, but the repeal of Obamacare failed spectacularly in March. Trump refuses to let it go. Last week, he stunned many by saying he still wants to “do health care first,” before tackling tax reform.

Laffer thinks that’s the wrong move. Laffer advised Trump during the campaign. He’s an informal counselor now, but he’s telling everyone in the White House who will listen to do what the Reagan team did: break up tax reform into small bits instead of trying to cram it all into one huge bill.

The easy win would be cutting business taxes, Laffer argues. It could even be done by August (the original deadline the White House set for action on taxes but has since backed away from).

“There’s no one who thinks a 35% federal corporate tax rate is appropriate,” Laffer says. He notes the U.S. has the highest tax rate on businesses out of any major economy in the world.

Trump proposed slashing business taxes to 15% on the campaign trail. Republican House Speaker Paul Ryan has pushed for a 20% top rate on business.

Republican economists tell Trump: Cut taxes ASAP

There’s a loud chorus of right-leaning economists telling Trump to drop health care and move on to tax cuts. In an Op-Ed in the New York Times on Wednesday, four of Trump’s top economic advisers from the campaign — Laffer, Steve Forbes, Larry Kudlow and Stephen Moore (a CNN contributor) — wrote, “Tax reform probably should have gone first, but now is the time to move it forward with urgency.”

The Op-Ed comes on the heels of Glenn Hubbard, President George W. Bush’s top economist, giving Trump that same advice back in March.

It’s notable though that Goldman Sachs(GS), the Wall Street firm that used to employseveral of Trump’s top advisers, now predicts tax cuts are “likely to slip to early 2018.”

The chorus of GOP economists says Trump should enact business tax cuts in 2017 and then tax reform for individuals in 2018.

Arthur Laffer says: Cut taxes but don’t cut spending yet

arthur laffer
Arthur Laffer was one of President Reagan’s key economic advisers. He also advised Trump during his campaign.


Laffer says the only reason Trump wants to tackle health care first is because overhauling Obamacare could generate more money for the U.S. Treasury. However, he argues Congress and the White House should stop obsessing about having tax cuts “paid for.” That would mean tax cuts do not add anything to America’s $19 trillion debt.

“The ‘pay for rule’ is the silliest rule I have ever heard in my life,” Laffer says. “You cannot balance the budget in the U.S. without growth.”

Laffer is telling Trump to cut taxes now and keep government spending about the same. The Trump Administration doesn’t appear to be heeding that advice. The White House is mulling deep cuts to the federal budget in order to fund an increase in military spending.

“Do not cut government spending right away. Wait until tax cuts have their effect on economic growth,” Laffer cautions.

How to revive Trump’s approval rating

Trump’s approval rating is just 41%, according to Gallup. That’s actually up from 35% a few weeks ago. But Laffer says Reagan faced something just as bad in his early years in the White House.

“Our first two years were a disaster,” Laffer says of the Reagan administration. He believes Trump will rebound if he gets back on track with tax cuts. “People criticized Reagan non-stop. Reagan made gaffes as well.”

President Reagan’s approval rating did hit a low of 35% as well, but that didn’t happen until 1983, two years into Reagan’s first term. During his first 100 days in office, Reagan had an approval rating of almost 70%.

Ronald Reagan approval ratings


The Kansas warning sign?

Laffer is a big champion of cutting taxes to spur growth. He’s often called the father of “supply-side economics” for his research on how cutting taxes can actually bring the government more revenue.

But Laffer’s theories have come under heavy criticism lately. Many point to Kansas, a state that cut taxes in 2012 and has since faced massive budget shortfalls and a floundering economy, as proof that Laffer is wrong.

Laffer says the real problem in Kansas is that Republican Governor Sam Brownback didn’t go far enough.

“The tax cut was too small. It was a rounding error,” Laffer told CNNMoney.
Published at Wed, 19 Apr 2017 16:59:15 +0000

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Trump rally challenged by rising global fears


North Korea may be preparing 6th nuclear test
North Korea may be preparing 6th nuclear test


The Trump rally was built on the president’s pledge to unleash the American economy. But now Wall Street is being forced to confront rising global tensions, the latest with an unpredictable North Korea.

Despite Monday’s market bounce, there are a growing number of signs that investors have become more worried about the increasingly-precarious geopolitical situation.

CNNMoney’s Fear & Greed Index is firmly in “fear” mode and even briefly tipped into “extreme fear” to start off the week. Gold, which typically does well when investors are worried, has popped 3% this month to the highest level since the election.

The closely-watched VIX(VIX) volatility index has spiked 24% so far in March, though it remains at relatively low levels.

Cash is fleeing to the safety of government bonds, driving down Treasury rates. The 10-year Treasury yield has slipped to 2.22%, a dramatic reversal from a month ago when it sat at 2.62%.

And even though the S&P 500 rose 0.5% on Monday, the market has retreated 2.5% below the record high set on March 1.

Wall Street veterans point the finger mostly at a growing list of geopolitical risks: North Korea, Syria, Russia and the elections in France, to name a few.

“Just in over a week, we bombed Syria, our relations have deteriorated with Russia, we dropped the largest non-nuclear bomb on ISIS in Afghanistan and tensions with North Korea have significantly escalated,” said Kristina Hooper, global market strategist at Invesco.

“It certainly heightens volatility and increases downside risk,” she said.

Investors are paying especially close attention to worsening rhetoric between Washington and Pyongyang over North Korea’s nuclear ambitions.

“Our hope is that we can resolve this issue peaceably,” Vice President Mike Pence told CNN on Monday from the Korean Demilitarized Zone.

But Pence also said the Trump administration is “going to abandon the failed policy of strategic patience” and “redouble” efforts to bring diplomatic and economic pressure on North Korea.

His comments come days after the Pentagon sent the USS Carl Vinson supercarrier along with a guided-missile cruiser and two destroyers to the region.

Wall Street fears a military conflict with North Korea, which has a massive army commanded by the notoriously-unpredictable leader Kim Jong Un.

“The building tensions with North Korea are frightening,” David Kelly, chief market strategist at JPMorgan Funds, wrote in a report to clients on Monday.

Kelly said these concerns about North Korea “would likely alarm investors more had the world not seen many similar episodes in the past.”

Wall Street had been anticipating the Trump administration would take an isolationist stance. Investors have understandably been caught off guard by how many global incidents Trump has been pulled into recently.

“Geopolitics regarding Syria and North Korea is still a big factor keeping bulls at bay,” Michael Block, chief market strategist at Rhino Trading, wrote in a report on Monday.

“The fear is palpable,” Block wrote.

There’s also the April 23 French presidential election. One of the leading candidates is Marine Le Pen, who wants France to dump the euro — a move that would deal a serious, if not fatal, blow to the currency.

Of course, Wall Street isn’t exactly freaking out about geopolitical risks. The Dow shrugged off the latest North Korean headlines to rally about 100 points on Monday.

And there are domestic obstacles that investors need to confront as well.

The Trump rally was underpinned by his promises of infrastructure spending and “massive” tax cuts that would lift corporate profits and potentially stimulate the domestic economy. But Republican infighting, first over health care and now taxes, has dashed those hopes.

If anything, Trump’s focus on global headaches could further stall the domestic agenda that had inspired Wall Street.

Hooper said the Trump administration’s goal of tax reform by August “seems highly unlikely” and the delay could force markets to tread water or even take a tumble.

“Clearly, the market has gotten ahead of itself,” she said.

Published at Mon, 17 Apr 2017 15:32:54 +0000

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Trump is dialing back his economic promises.


Watch Trump's stunning U-turns on key issues
Watch Trump’s stunning U-turns on key issues

Trump is dialing back his economic promises.


President Trump and his top advisers appear to have a new message for America: Lower your expectations.

Trump played up his image as a businessman and dealmaker who could rescue the U.S. economy. The day he was sworn in, he vowed to create 25 million new jobs — the most of any president in history — and double the growth of the Obama era (among other promises).

Wall Street has roared in anticipation, with the stock market hitting new heights. Over on Main Street, small business and consumer confidence hit multi-decade highs.

Now, reality is setting in for how much Trump can really get done (and how fast) on the economy.

The big tax reform that was supposed to be done by August? Don’t bet on it. White House Press Secretary Sean Spicer put it this way: “It still would be a great opportunity before they leave for August recess, but we’re going to make sure we do this right.”

Trump’s campaign promise to greatly reduce — or even eliminate — America’s federal debt? “That was hyperbole,” White House budget director Mick Mulvaney told CNBC Wednesday. “I’m not going to be able to pay off $20 trillion worth of debt in four years.”

Labeling China a currency manipulator on Day One? That’s not happening (not even on Day 100). “They’re not currency manipulators,” Trump told the Wall Street Journal Wednesday in a major U-turn. During the campaign, Trump had said China has the upper hand against American manufacturers because it keep its currency artificially low.

Repealing Obamacare and replacing it with something “something terrific”? That’s up in the air. His first attempt failed in March when he couldn’t gin up enough votes in Congress. Many business leaders hoped Trump would move on to tax cuts, but Trump surprised many by telling Fox Business on Tuesday, “I have to do healthcare first.” Now, confusion abounds on what the next priority is.

Fixing America’s “disastrous trade policies”? The White House has decided to study the issue. Commerce Secretary Wilbur Ross announced a 90-day comprehensive trade review at the end of March. Much of the “trade war” talk has been dialed back after Trump’s recent meeting with Chinese President Xi.

Spending $1 trillion on infrastructure? That’s unlikely. Mulvaney said he and top economic adviser Gary Cohn are “assuming a $200 billion number.”

“The Trump train appears to be coming off the tracks as the president backpedals on a number of issues,” says Mike O’Rourke, chief market strategist at Jones Trading.

Investors run to ‘safe haven’ assets again

There are also his flip flops on NATO (now he’s really for it), China’s trade surplus (he says he’ll give China more favorable trade terms if they help out on North Korea), Syria (now the White House wants regime change there) and Janet Yellen (he bashed her on the campaign trail for propping up the Obama economy. Now he says he “likes her” and that low interest rates are good).

All this dialing back of expectations is causing a reality check in the markets.

U.S. stocks have stalled — and even dipped — since the S&P 500 closed at an all-time high on March 1. Even more telling is how investors are stocking up on “safe haven” assets like gold and government bonds.

Gold has jumped 7% in the past month, and the 10-year U.S. Treasury bonds are now yielding a mere 2.26%, a significant decline from 2.58% a month ago. The yield goes down when more people are buying bonds.

The key might still be tax reform

Since the election, the consensus view has been that Trump would do a major tax cut/overhaul (the biggest since the 1986 reform under President Reagan), scale back regulations and spend more money on the military and infrastructure. All of this was supposed to juice the economy — and stocks.

But now that thesis is breaking down. Any action on taxes probably won’t happen until later this year — or even 2018. Infrastructure and the massive budget cuts Trump wants are in doubt, and Trump’s “get tough” foreign policy is causing some alarm that the U.S. could be headed for more war.

“The 30 Freedom Caucus members in the House have sent a chill through the Trump inner circle. It’s clear they can block much of the Trump agenda, and Democrats seem lukewarm, at best, about cooperating,” says Greg Valliere, chief strategist at Horizon Investments. “So Trump has to lower expectations.”

Valliere still believes the “pro-business” faction of the White House, led by Goldman Sachs alum Gary Cohn, will prevail.

Business owners from Wall Street to Main Street would probably forget (and forgive) a lot of Trump’s flip flopping and uncertainty if tax reform gets done. But all the indications are the White House and Congress are a long way from making that happen.

“We’re talking about revamping one of the most complicated tax systems in the developed world, which would understandably take time to draft and negotiate across party lines,” says Lindsey Piegza, chief economist at Stifel Fixed Income.
Published at Thu, 13 Apr 2017 19:02:46 +0000

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FCC Chairman Moves to Keep Ban on In-Flight Voice Calls


FCC Chairman Moves to Keep Ban on In-Flight Voice Calls

By Mrinalini Krishna | April 11, 2017 — 2:36 PM EDT

The Federal Communications Commission (FCC) is moving to maintain a ban on use of cellular phones for mobile calls during flights. FCC Chairman Ajit Pai has set in motion a move to roll back the FCC’s earlier proposal to start allowing in-flight voice calls.

“I stand with airline pilots, flight attendants and America’s flying public against the FCC’s ill-conceived 2013 plan to allow people to make cellphone calls on planes. I do not believe that moving forward with this plan is in the public interest. Taking it off the table permanently will be a victory for Americans across the country who, like me, value a moment of quiet at 30,000 feet,” he said in a statement.

U.S. adopted the ban on cellular calls in 1991 fearing interference to the aircraft’s communication systems due to frequencies that cellular telephony would operate on. Technological advancements have overcome that obstacle.

In 2013, the then FCC Chairman, Tom Wheeler, had proposed allowing voice calls in flight based on that logic. “Modern technologies can deliver mobile services in the air safely and reliably, and the time is right to review our outdated and restrictive rules. I look forward to working closely with my colleagues, the FAA, and the airline industry on this review of new mobile opportunities for consumers,” Wheeler said in a press statement.

Not only did that make some airline customers uncomfortable, airlines and airline crews came out in opposition to the move. “Our customer research and direct feedback tell us that our frequent flyers believe voice calls in the cabin would be a disruption to the travel experience,” said Delta Airlines in a statement.

Some of Wheeler’s own colleagues in the government questioned his proposal.

“Over the past few weeks, we have heard of concerns raised by airlines, travelers, flight attendants, members of Congress and others who are all troubled over the idea of passengers talking on cellphones in flight – and I am concerned about this possibility as well,” said then Department of Transportation (DoT) Secretary Anthony Foxx in a statement the very next month.

In September 2015, DoT’s Advisory Committee for Aviation Consumer Protection recommended that “if safe and secure,” the department leave it to the airlines to decide on permitting in-flight voice calls. Eventually the DoT also began leaning in the direction of allowing voice calls. In December last year, however, it proposed requiring that airlines that choose to allow voice calls must disclose to passengers that they make this provision before the ticket is purchased.

“The Department is also seeking comment on whether disclosure is sufficient or whether it should simply ban voice calls on flights within, to, or from the United States,” said the DoT.

In its statement, the Transportation Department noted that as technology advances, the cost of in-flight calls will drop and the quality will improve – and that this communications ease could result in “leading to a higher prevalence of voice calls and a greater risk of passenger harm.”

Media reports suggest that every time a government agency has sought comments on rules pertaining to this subject, it has received negative feedback by the thousands. The most recent attempt according to this report by Wired, saw more than 8,000 people logging in and leaving comments for the DoT, mostly against permitting calls.

Airlines like Delta (DAL) and United Airlines (UAL) that allow passengers access to Wi-Fi continue to firmly stand their ground against voice calling.
Published at Tue, 11 Apr 2017 18:36:00 +0000

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Stocks spooked, safe assets jump after U.S. missile strike on Syria


 Stocks spooked, safe assets jump after U.S. missile strike on Syria

By Nichola Saminather and Wayne Cole| SYDNEY

Bonds, gold and the yen jumped in Asia on Friday, while stocks retreated, as investors fled to safe assets after the United States launched cruise missiles against an airbase in Syria, raising the risk of confrontation with Russia and Iran.

The U.S. dollar dropped as much as 0.6 percent, while gold and oil prices rallied hard, though the early market panic ebbed when a U.S. official called the attack a “one-off”, with no plans for escalation.

“It was a knee-jerk reaction because markets are starting to come back a little, as it doesn’t seem like there will be further retaliation coming,” said Christoffer Moltke-Leth, head of institutional client trading at Saxo Capital Markets in Singapore.

European stocks were also poised for a negative start, with financial spreadbetters expecting Britain’s FTSE 100 and France’s CAC 40 to open down 0.2 percent, and Germany’s DAX to start the day 0.3 percent lower.

U.S. President Donald Trump ordered the strikes on Thursday against an airbase controlled by Syrian President Bashar al-Assad’s forces in retaliation for a chemical attack, launched from the base on Tuesday, that killed at least 70 people.

Facing his biggest foreign policy crisis since taking office in January, Trump took the toughest direct U.S. action yet in Syria’s six-year-old civil war.

A Syrian human rights monitor said the missile strike had almost completely destroyed the airbase near Homs, and the city’s governor said five had been killed and seven wounded.

While U.S. allies including Britain, Australia and Saudi Arabia, as well as Syria’s opposition group, welcomed the move, Russia and Iran condemned the attack.

A Russian lawmaker said the nation would call for an urgent meeting of the United Nations Security Council, adding the strikes could be viewed as an “act of aggression” against a U.N. member.

“The action adds a complexity to geopolitics that wasn’t there before, given Russia’s support for Syria and Trump’s pre-election pledges to try and repair relations with (Russian President Vladimir) Putin,” Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note.

“The U.S. would now appear to be on a collision course with Russia.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent after earlier sliding as much as 0.85 percent to a 2-1/2-week low. The index is set to end the week down about 0.2 percent.

E-mini S&P 500 futures lost 0.3 percent, having earlier tumbled as much as 0.7 percent, in unusually sharp moves for Asian hours.

But Japan’s Nikkei reversed course to close up 0.4 percent, narrowing losses for the week to 1.3 percent.

Secretary of State Rex Tillerson noted the attack was “proportionate”, suggesting no follow-up was planned.

“The unexpected and unequivocal nature of the U.S. response to the sarin-centric carnage in Syria by President Trump was very much in keeping with his promise not to telegraph his military options to the world in advance of taking action,” wrote Peter Kenney, senior strategist at Global Markets Advisory Group in New York.

Investors had already been on edge with Trump set to begin talks on Friday with Chinese leader Xi Jinping over flashpoints such as North Korea and China’s huge trade surplus with the United States.

Markets are also bracing for U.S. non-farm payroll data for March later in the session, with economists forecasting a significant drop in job gains from February.


The yen, a favored haven in times of stress, climbed across the board. The dollar moderated losses, last trading at 110.635 yen, after earlier touching 110.14, its lowest since March 28.

The dollar was otherwise steady against a basket of currencies at 100.63, as it benefited from flows into safe-haven U.S. Treasuries.

Yields on 10-year U.S. Treasuries fell as much as five basis points to 2.289 percent, its lowest level since November, briefly breaking a significant chart barrier at 2.30 percent for the first time this year. It was last at 2.3069 percent.

Spot gold added 1.2 percent to $1,262.46 an ounce after earlier hitting its highest point since Nov. 10.

Oil prices soared more than 2 percent on concerns the military intervention could affect supplies, but pulled back a little as that possibility receded.

U.S. crude added 1.6 percent to $52.50 a barrel, after touching its highest in a month, putting it on track for a 3.8 percent gain this week.

Global benchmark Brent climbed 1.4 percent to $55.66, set to end the week up 5.4 percent.

The euro was trading at $1.0651, just a hair above its close on Thursday following comments by the European Central Bank head Mario Draghi that he sees no need to deviate from the ECB’s stated policy path at least until the end of the year.

(Reporting by Nichola Saminather; Additional reporting by Charles Mikolajszak; Editing by Shri Navaratnam and Will Waterman)
Published at Fri, 07 Apr 2017 06:19:39 +0000

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Health Carriers Hanging Tough Despite D.C. Debacle

by DarkoStojanovic from Pixabay


Health Carriers Hanging Tough Despite D.C. Debacle

By Alan Farley | April 6, 2017 — 12:01 PM EDT

Health insurance carriers are holding intermediate support levels despite chaotic political swings that have generated massive opposition to Republican health care reform efforts. This resilient price action tells us investors and market players aren’t worried, at least yet, that industry profits will suffer when the smoke clears, and new legislation becomes the law of the land.

A number of major carriers have already pulled out of ACA coverage, lowering their exposure to legislative surprises, but that might not protect them because new laws are likely to impact the entire system from premium gathering to final payments. Also, taking insurance away from tens of millions of current policyholders could also have an adverse and chaotic effect because that entire premium base will be lost.


Dow component UnitedHealth Group, Inc. (UNH) broke out above the 2005 high at $64.61 in 2013 and entered a powerful trend advance that continued to post new highs into the first quarter of 2017. Rally momentum escalated after the November election, signaling optimism that new administration policies would underpin profitability. The company pulled out of ACA coverage in 2016.

It hit an all-time high at $172.14 on March 16th and turned lower, posting greater than average selling volume during Congressional negotiations that broke down near month’s end. The decline settled on the 50-day EMA about two weeks ago, with the stock holding like glue to that intermediate support level into April. The selloff had an adverse impact on institutional sponsorship, with On Balance Volume (OBV) falling to the lowest-low since January.


Aetna, Inc.(AET) topped out at $60 in December 2007, following a 7-year uptrend, and sold off to the mid-teens during the 2008 economic collapse. It returned to the prior high in 2013 and broke out, entering an uptrend that peaked at $134.40 in June 2015, ahead of an intermediate correction that found support in the low-90s in the first quarter of 2016. The subsequent recovery wave reached resistance after the election, but the stock failed to break out, instead of turning lower into February.

A bounce at the 200-day EMA gathered momentum into mid-March but reversed about 2-points under the 2016 high, dropping back to the 50-day EMA during the health care debate. On Balance Volume (OBV) has been dropping like a rock since 2016, signaling a bearish divergence that opposes a bullish cup and handle breakout pattern. This marks a major bull-bear standoff that could last into the second half of 2017.


Humana, Inc.’s (HUM) pattern looks similar to rival AET because the companies were locked into a merger agreement until the Federal government nixed the deal in January 2017. HUM topped out in the upper-80s in January 2008 and sold off into the upper-teens in March 2009. It took more than two years for the subsequent bounce to reach resistance at the prior high, ahead of a 2014 breakout that stalled near $220 in May 2015.

The stock carved a long rounded base into the second half of 2016 and took off in a strong rally that reached the prior highs in December. It pulled back into January 2017, testing the 200-day EMA and returned to resistance once again, completing a cup and handle breakout pattern. The stock is also sitting on the 50-day EMA after the reform debacle but has attracted much strong buying interest than its former suitor.

The Bottom Line

Health insurance carriers have pulled back to their 50-day EMAs and entered holding patterns after the administration, and House of Representative failed to deliver health reform legislation to the U.S. Senate. While UnitedHealth Group has carved the strongest rally in recent years, Humana now shows the greatest upside potential, after completing a cup and handle pattern backed by strong buying volume.
Published at Thu, 06 Apr 2017 16:01:00 +0000

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The Case for Socialized Medicine

by DarkoStojanovic from Pixabay

The Case for Socialized Medicine

By: John Browne | Thu, Mar 30, 2017

Last week the American political establishment was shaken to its foundation
when the Republican Party leadership withdrew the American Health Care Act
(AHCA) just before the vote was to be taken on the floor of the House of Representatives.
Besides being a most unusual procedure, it exposed a fundamental split in the
country,reflected not merely in Congress but within the Republican Party. GOP
purists, represented by the House Freedom Caucus, demanded more significant
roll backs in socialized medicine that were contained in the Ryan plan. Their
refusal to back the plan, after years of promising complete repeal, doomed
the bill.

Given the political and popular landscape, the legislative fiasco should cast
serious doubt that Washington will ever be able to take any meaningful steps
to roll back government involvement in health care. Although widely considered
a failure of design and execution, Obamacare seems to have succeeded in one
important mission: It has created an even greater dependency on government
in the health care marketplace. Getting government out is now much more difficult
than it was just eight years ago. This may have been the democrats’ plan from
the start. As a result, the choice conservatives now face is to embrace an
increasingly complex, cumbersome, and inefficient public/private hybrid system,
or to acknowledge the political reality and make the most palatable lemonade
they can from the lemons that are available. Believe it or not, that may argue
for a deeper embrace of socialized medicine.

Contrary to the current rhetoric, Obamacare was not in fact America’s first
foray into socialized medicine and it did not represent the kind of crossed
Rubicon that Republicans like to accuse it of being. The door had first been
opened in the Second World War when government imposed wage controls that gave
incentives to employers to bundle health insurance into compensation packages.[1] When
the government then made employer-provided insurance tax deductible, such plans
became the norm. But the government really charged into the market in 1965
with the creation of Medicare and Medicaid. For many years, Republicans have
had to twist themselves into logical pretzels in order to argue that Obamacare
is socialism while Medicare is not.

In granting a brand new entitlement, Obamacare did nothing to address the
problems that have plagued the U.S. health care system for decades. It did
not encourage competition among insurers, it demanded a “one size fits all” approach
to coverage, and most egregiously did nothing to contain the rising medical
costs that threaten to bankrupt the nation. To add insult to injury, it required
that people buy insurance that they really didn’t want.

Although the Ryan plan removed the obligation of individuals to buy coverage,
it made many of Obamacare’s shortcomings worse. It left pre-existing condition
requirements in place, which would guarantee that premiums and deductibles
would continue to rise. It did not relax the state restrictions on insurance
competition, nor did it seek to contain medical costs. In other words, the
Ryan plan would have put Republicans on the same hook from which the Democrats
are now hanging. The alternative of a repeal without a replacement, so much
wished for by the hard right, would have created the kind of political chaos
that would virtually guarantee a Republican massacre in 2018 and 2020.

However, Republicans may still, for now, be able to lay claim as the party
of fiscal responsibility. And as a result, I would suggest a basic cost-benefit
analysis. It is clear from almost any standpoint that the socialized health
care available in other developed nations like the UK, Canada and the 34 developed
free market economies of the Organization for Economic Co-operation and Development
(OECD) delivers health care more efficiently than in the U.S.

In October 2012, PBS Newshour reported the U.S. as the world leader in cancer
treatment and health care research. Given our private wealth and the strength
of our university hospitals, this should come as no surprise. But what we have
gained in high end coverage, we have lost in everyday care. The same report
mentioned that there are only 2.4 practicing doctors and 2.6 hospital beds
per thousand people, which is far below the OECD averages of 3.1 and 3.4 respectively.
In addition, the American life expectancy is 78.7 years, in 2010, versus the
OECD average of 79.8 years. (Jason Kane, 10/22/12)

The World Bank reports that, in 2014, the U.S. spent 17.1% of GDP or $9,403
per person on health care. The UK spent 9.1% of GDP or $3,935 per head; Canada
10.4% or $5,292; the EU 10.0% or $3,613′. In 2000, despite spending approximately
twice the amount per head of any other nation, or group average of nations,
the World Health Organization rated the U.S. health system at only 37th, Canada
30th, and the UK 18th out of 191 nations. (WHO Global Health Expenditure Database)
Clearly, we are not getting what we think we are paying for.

Many OECD countries like the UK and Canada have what is termed a ‘single payer’
system sponsored by the state. In the UK, this means that the National Health
Service provides basic ‘bangers and mash’ coverage which includes provisions
for prior conditions and catastrophic illness. Yes, wait times to see a physician
for non-acute conditions are generally longer than in the U.S., but the bureaucratic
process of paying through insurance, with its never-ending forms, co-pays,
deductibles, and network providers, is largely absent.

In the UK, a thriving private health system that provides higher end ‘roast
grouse and soufflé’ services runs alongside the “bangers and mash” state system.
This means that wealthy people with access to greater resources can still seek
care above and beyond what is available through the state. But since the level
of base care is widely regarded as adequate, the two-tiered system does not
generate significant class resentment.

Furthermore, this system allows top specialists to continue serving in the
public system while supplementing their low state income with the higher fees
paid in their private practices. And while doctors in the UK generally make
less than their U.S. counterparts, they are also free of the crushing malpractice
insurance which tends to be a great equalizer.

I have lived for long periods of my life in the UK and the US, I have had
a good deal of exposure to the two health care systems. And while both offer
mixtures of public and private care, the UK’s is much closer to the type of
socialized medicine that has long been the goal of the American left. I have
always considered myself a conservative but the UK system seems preferable
to the monstrosity that has been created by Washington sausage making.

Of course any state system would involve rationing on some level. But if such
guidelines are developed democratically, public acceptance of such limits can
be achieved. By acquiescing to a move towards a single payer system, Republicans
would be in a strong position to ensure that cost containment would be a priority.
In that sense, conservatives could potentially strike at the root of the health
care problem: The inexorable rise in costs and the crushing burden that health
care currently places on the economy. Currently, the push for socialized medicine
has been the province of the Democrats, with the primary energy coming from
the extreme left figures such as Bernie Sanders and Elizabeth Warren. The worst
scenario for health care would be to allow such big spenders and class warriors
to set the agenda.

Given that many countries have succeeded in providing better overall health
care outcomes with universal coverage and at far less cost, it should not be
too much of a stretch for Congress to take the final step and accept an extension
of Medicare to all. Of course, taxes would have to increase to pay for it,
but citizens and businesses would no longer have to pay for insurance themselves.
If the cost of health care can be brought down, the net result is less money
for health care and more for everything else.

I have never been a fan of socialized anything. But in the modern world of
instantly diffused outrage and the increasing frustration with a health care
system that is clearly dysfunctional, Republicans should recognize the political
reality and seize the initiative. A soberly devised plan could vastly streamline
health care delivery, minimize waste, control costs, provide basic care for
all, and perhaps even deal a harsh blow to tort lawyers. Moderate Democrats
would jump on board in droves and President Trump and the Republican Congress
could emerge as winners.

Observers should not count President Trump as down. He has a reputation for
coming back. He may recognize a political winner when he sees it and look to
ditch the ideological baggage of his own party. Trump was not put into office
by card carrying conservatives but by middle class populists who would support
anything that makes their lives less anxious.

I believe that private enterprise always delivers higher quality and lower
prices than government. This is true for goods and services and it also would
be true for health care if the markets were allowed to function freely (which
they have not). But voters today do not perceive health care as a good or a
service, but as a right. Conservatives can argue this point, but they will
lose the emotional battle, which is where this fight will occur.

[1] – BERDINE, Gilbert.
Supply and Demand: Government Interference with the Unhampered Market in U.S.
Health Care. The Southwest Respiratory and Critical Care Chronicles, [S.l.],
v. 2, n. 7, p. 21-24, july 2014. ISSN 2325-9205. Available at: <http://pulmonarychronicles.com/index.php/pulmonarychronicles/article/view/143/353>.
Date accessed: 29 mar. 2017.

Read the original article at
Euro Pacific Capital

John Browne

John Browne, Senior Market Strategist
Euro Pacific Capital, Inc.

John Browne

John Browne is the Senior Economic Consultant for Euro Pacific
Capital, Inc. Mr. Brown is a distinguished former member of Britain’s Parliament
who served on the Treasury Select Committee, as Chairman of the Conservative
Small Business Committee, and as a close associate of then-Prime Minister Margaret
Thatcher. Among his many notable assignments, John served as a principal advisor
to Mrs. Thatcher’s government on issues related to the Soviet Union, and was
the first to convince Thatcher of the growing stature of then Agriculture Minister
Mikhail Gorbachev. As a partial result of Brown’s advocacy, Thatcher famously
pronounced that Gorbachev was a man the West “could do business with.” A graduate
of the Royal Military Academy Sandhurst, Britain’s version of West Point and
retired British army major, John served as a pilot, parachutist, and communications
specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military,
John has a significant background, spanning some 37 years, in finance and business.
After graduating from the Harvard Business School, John joined the New York
firm of Morgan Stanley & Co as an investment banker. He has also worked
with such firms as Barclays Bank and Citigroup. During his career he has served
on the boards of numerous banks and international corporations, with a special
interest in venture capital. He is a frequent guest on CNBC’s Kudlow & Co.
and the former editor of NewsMax Media’s Financial Intelligence Report and
Moneynews.com. He holds FINRA series 7 & 63 licenses.

Copyright © 2008-2017 Euro Pacific
Capital, Inc.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com
Published at Thu, 30 Mar 2017 09:16:16 +0000

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Investors yank $8.9 billion from U.S. stocks, most in 9 months


Growing concern over handling of GOP bill
Growing concern over handling of GOP bill


Doubts about the future of President Trump’s agenda have put Wall Street on the defensive.

Investors have yanked $8.9 billion from U.S. stock funds during the week that ended March 22, according to research firm EPFR Global. That’s the biggest retreat since last June.

Some of the hardest-hit stocks were the ones that soared after the election. Investors pulled money from banks, manufacturers and small-cap stocks, which have the most exposure to the fluctuations of the American economy.

At the same time, the Dow has backed away from all-time highs, losing 250 points this week. The index is on track for its worst weekly performance since the week before Trump’s victory.

Analysts point the finger at Republicans’ struggles to pass a bill repeal and replace Obamacare. Investors fear that a failure on health care could delay or even derail Trump’s promise of “massive” tax cuts — a pledge that has underpinned the rally on Wall Street.

“The Trump trade was always going to have a ‘where’s the beef’ moment,” Bank of America Merrill Lynch strategists wrote in a report to clients.

BofA said failure to pass the health care bill is “unlikely to cause a ‘TARP moment,'” referring to the 9% crash in the S&P 500 after Congress initially rejected the Wall Street bailout package in September 2008.da

Still, BofA said health care failure could cause a “credibility hit” that “temporarily” pushes stocks and Treasury yields lower.

EPFR said the exodus from U.S. stocks is a sign that investors have taken a “turn towards the defensive” as they question whether the Trump administration “has the necessary focus and political skills to get its economic agenda through Congress.”

For instance, investors yanked $1.1 billion from small-cap stocks last week, the most in six months, according to EPFR. Small-cap stocks are typically based in the United States, and investors had hoped Trump’s America First agenda and promise of 4% economic growth would juice profits. But the Russell 2000, which measures small-cap stocks, has started to struggle and lost 2% of its value this week.

Likewise, industrial stocks, a group expected to benefit from Trump’s focus on trade, suffered their biggest outflows since mid-January.

Banks were another big winner after the election amid hopes of higher interest rates, which allow banks to make more money, and less regulation. But investors withdrew $600 million from financial stocks in the last week.

So where are investors putting their money instead?

Emerging markets and bonds benefited from the U.S. uncertainty, with both enjoying significant inflows in the past week.

Gold, which tends to do well during times of investor fear, is also going back into style. Investors poured $1.1 billion into gold funds in the last week.

Looking ahead, the key for Wall Street will be whether it looks like Trump and Republican leaders can quickly pivot from health care to tax reform.

Treasury Secretary Steven Mnuchin on Friday promised that Trump’s new tax reform plan is coming “very soon.” He expressed confidence that tax reform will happen this year, if not by August as he originally predicted then definitely by the fall.

But tax reform won’t be an easy deal, either.

The Trump rally is “dependent upon the delivery of tax reform,” David Kotok, chairman and chief investment officer of Cumberland Advisors, wrote in a note to clients.

“The longer that process takes and the more questionable the outcome, the higher the risk to stock prices,” Kotok wrote.
Published at Fri, 24 Mar 2017 18:20:44 +0000

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If healthcare vote fails, would jeopardize ‘Trump trades’: Gundlach


If healthcare vote fails, would jeopardize ‘Trump trades’: Gundlach

By Jennifer Ablan| NEW YORK

If the U.S. healthcare legislation overhaul is not passed, or is postponed, it will put “a lot of doubt” on the “Trump trades,” which include higher U.S. equities and bond yields, DoubleLine Capital Chief Executive Jeffrey Gundlach said on Wednesday.

“Surveys show that people believe the (Obamacare) repeal is the most likely part of Trump’s agenda to be passed,” Gundlach, who oversees more than $101 billion in assets at DoubleLine, told Reuters. “So if you can’t pass the repeal, everything else is in doubt for sure.”

Investors have been bracing for Thursday’s floor vote scheduled in the U.S. House of Representatives, with safe-haven securities including Treasuries and gold seeing price gains on Wednesday. Trump and Republican congressional leaders appeared on Wednesday to be losing the battle to get enough support to pass the Obamacare rollback bill.

Gundlach repeated his recommendation that investors would do better selling U.S. equities into any kind of stock rally and diversifying into emerging markets. He noted that the iShares MSCI Emerging Markets ETF (EEM.P) has outperformed the Standard & Poor’s Index by over 4 percentage points since early March.

Gundlach, who is known on Wall Street as the Bond King, said Tuesday’s stock-market slump illustrated how “investors are questioning whether the pro-growth U.S. policies are really going to happen.”

In early March, Gundlach said on his investor webcast that he expected a minor yield high on Treasuries, and then a rally. The benchmark 10-year U.S. Treasury note US10YT=RR currently trades around 2.40 percent, down from 2.60 percent in mid-March.

(Reporting by Jennifer Ablan; Editing by James Dalgleish
Published at Wed, 22 Mar 2017 20:33:44 +0000

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Donald Trump’s Real Net Worth: $3.5 billion


Donald Trump’s Real Net Worth: $3.5 billion

By Aaron Hankin | Updated March 14, 2017 — 10:01 PM EDT

The net worth of President-elect Donald J. Trump was a popular story in last year’s presidential election. He has said on multiple occasions that his net worth is around $10 billion. But, if you take the average of the three best outside estimates, Donald Trump’s net worth is actually $3.5 billion.

What we did just learn from David Cay Johnston’s DCReport.org article on Trump’s 2005 Form 1040 is that, in that year, Trump and his new wife, Melanija Knavs, earned $153 million. They paid $36.6 million in federal taxes that year, a tax rate of 24%. In a statement, the White House confirmed that the document, which appeared in Johnston’s mailbox and was shared with the White House, is real.

This glimpse of the Trumps’ returns are a snapshot of one year. They do not reveal his entire net worth.

Here’s what we do know about that worth and how it breaks down:

In May, Trump released his Personal Financial Disclosure (PFD) forms with the Federal Election Commission (FEC). In true Trump fashion, he was quick to let everyone know. “I filed my PFD, which I am proud to say is the largest in the history of the FEC,” Trump said.

The PFD revealed Trump had:

  • At least $1.4 billion in assets, which includes 40 Wall St, the Trump Tower, golf course resorts in Florida, NY, NJ and Scotland and an aircraft, all which are valued at over $50 million.
  • Over $300 million in income from the golf courses and resorts.
  • Over $100 million in rental income and sales from his property.
  • At least $25 million in Blackrock’s Obsidian fund.
  • Liabilities, which include debt of $50 million or more on each of the following; the Trump Tower, 40 Wall Street, Trump National Doral, Trump International Hotel and Trump Old Post Office.

Forbes recently reduced its estimate of Donald Trump’s net worth to $3.7 billion, down from $4.5 billion earlier this year. Forbes said the softening of the high end retail and commercial property market in New York City is to blame for the $800 million reduction. In their reassessment, Forbes looked at 28 assets of which they said 18 had declined in value since the last estimate.

Fortune magazine say Trump is worth $3.9 billion, up from $3.7 billion in 2015. Fortune states the revenue he discloses in the PFD does not fit someone with a net worth of $10 billion. However, they believe the Presidential campaign is having a positive effect on his worth. “Rather than damaging his brand, Trump’s notoriety appears to be boosting his business, and making him even wealthier. By our best calculations, Trump’s net worth has indeed grown over the 10 months since the last filing,” Fortune said.

The Bloomberg Billionaires Index estimated Trump to be worth $3 billion, up from $2.9 billion in 2015. Bloomberg notes the toughest calculation is his brand. While Trump estimates his brand to be worth $3.3 billion, Bloomberg valued it at just $35 million.

Whether it’s $3 billion or $10 billion, as he claims, it’s safe to assume he is a billionaire, so the exact amount doesn’t really matter. However, Trump campaigned for the presidency on the size of his wealth. “I’m really rich. I’ll show you in a second. I’m not saying that in a bragging way,” Trump said when announcing his Presidential bid in 2015.

Any concrete estimates of his wealth would require a detailed look at his tax returns, which he continues to withhold. Two pages of his 2005 Form 1040 are just a quick look at one year.
Published at Wed, 15 Mar 2017 02:01:00 +0000

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CBO: 14M to Lose Healthcare by 2018 Under GOP Plan


CBO: 14M to Lose Healthcare by 2018 Under GOP Plan

By David Floyd | Updated March 14, 2017 — 1:07 PM EDT

On Monday the Congressional Budget Office (CBO), the nonpartisan research arm of Congress, released an analysis of the Obamacare​ replacement proposed by Republican Speaker of the House Paul Ryan. According to the document, 14 million fewer Americans would have health insurance by 2018 under the plan, and that figure would rise to 24 million by 2026.

Health and Human Services secretary Tom Price told reporters following the analysis’ release, “we strenuously disagree” with the findings.

Altogether, 52 million people would lack health insurance in 2024, compared to a projection of 28 million under current law. Much of that increase would come as a result of the repeal of the individual mandate, which penalizes those who do not purchase health insurance. Many currently insured people, the CBO writes, “chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.” (See also, Obamacare Costs Up for 2017.)

The CBO estimates that the Republican plan would reduce federal outlays by $1.2 trillion from 2017 to 2026 and receipts by $0.9 trillion over the same period. As a result, the deficit would fall by $337 billion. Most of the reduction would come from a reduction in Medicare spending and subsidies for non-group health insurance.

The CBO’s analysis forecasts a temporary rise in health premiums under the proposed replacement. Relative to projections under current law, premiums would be higher in 2018 and 2019, though they would be lower after 2020. Eliminating the individual mandate would lessen the incentives for healthy people to sign up for insurance, raising premiums by 15% to 20% relative to current law. By 2026, however, premiums would be around 10% lower than projections under current law.

The CBO does not foresee the bill destabilizing health insurance markets; it also states that markets would remain stable under current law. Critics of both Obamacare and its potential repeal have warned of a “death spiral,” in which healthy customers opt out of insurance markets, causing costs per head and thus premiums to rise, and driving more healthy people out of the market. (See also, Is the Affordable Care Act Failing?)

Republicans strongly opposed the passage of the Affordable Care Act – now known universally as Obamacare – in 2010, and President Donald Trump campaigned on a promise to repeal and replace the law, which he called a “disaster.” Ryan proposed the bill under consideration by the CBO on March 7, but its reception among Republicans was mixed. Trump endorsed the proposal the day it was unveiled, though he tweeted a promise that “phase 2 & 3” would allow insurance to be sold across state lines. He promised to introduce such a reform repeatedly during the campaign, but it does not appear in the House bill. “Don’t worry,” Trump wrote, adding that a plan to reduce drug prices was also forthcoming. (See also, The Beginning of the End of Obamacare.)

Other Republicans were even less enthusiastic. Representative Jim Jordan of Ohio called it “Obamacare in a different form,” summing up many hardliners’ dissatisfaction. Moderate Republicans such as Maine Senator Susan Collins worried that too many patients would lose coverage. A number of groups representing hospitals and physicians came out against the plan. (See also, 7 Industries Benfiting From Obamacare.)

The American Health Care Act, as the new bill is known, would eliminate the penalties associated with the individual mandate. As a substitute, it would add a 30% surcharge to premiums for patients who have gone without insurance for 63 days within the past year. Beginning in 2020, it would reduce the federal matching rate for adults made eligible for Medicare by Obamacare. It would limit spending on Medicare beneficiaries based on the medical consumer price index beginning in 2020. (See also, Why a Repeal of Obamacare Could Be a Boon for Wealthy Investors.)

It would eliminate Obamacare’s subsidies beginning in 2020 and replace them with tax credits. It would provide Medicare funding through block grants to states and allow insurers to charge older patients five times as much as younger ones, rather than the current ratio of three times. Beginning in 2020, it would eliminate the requirement that insurers cover at least 60% of the costs of covered benefits. (See also, 6 Things Obamacare Plans Won’t Cover.)

Perhaps anticipating the tenor of the analysis, White House press secretary Sean Spicer sowed doubt regarding the CBO’s competence on March 8, saying, “If you’re looking at the CBO for accuracy, you’re looking in the wrong place.” In 2010 the CBO significantly overestimated the number of people who would be insured under Obamacare in 2016, forecasting that 30 million fewer people would be uninsured than if the law had not been passed. In 2016, following a Supreme Court ruling and other developments, it revised that estimate down to 22 million.
Published at Mon, 13 Mar 2017 22:16:00 +0000

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White House jumps the gun with tweets on the jobs report


The danger to economic data in the age of Trump
The danger to economic data in the age of Trump

At 8:30 a.m., the Labor Department reported that the U.S. economy added a healthy 235,000 jobs in February. Just 22 minutes later, Press Secretary Sean Spicer fired off a celebratory tweet.

“Great news for American workers: economy added 235,000 new jobs, unemployment rate drops to 4.7% in first report for @POTUS Trump,” Spicer posted from his official account.

Spicer’s boss beat him to it. Trump had already retweeted conservative website Drudge Report: “GREAT AGAIN: +235,000.” And White House Chief of Staff Reince Priebus followed with his own congratulatory tweet.

It turns out there’s a federal rule — which far predates Twitter — that says executive branch employees are not supposed to comment on major economic reports until an hour after they are released.

“Except for members of the staff of the agency issuing the principal economic indicator … employees of the Executive Branch shall not comment publicly on the data until at least one hour after the official release time,” a 1985 directive issued by the Office of Management and Budget reads.

The OMB, in issuing the rule, highlighted the need to “preserve the distinction between the policy-neutral release of data by statistical agencies and their interpretation by policy officials.”

Spicer defended the tweets at Friday’s White House press briefing, noting that the jobs figures were reported online and on television right away.

“I apologize if we were a little excited, and we were so glad to see so many fellow Americans back to work,” he said.

The rule, Spicer said, aims to stem market fluctuations. The White House’s tweets wouldn’t wind investors up.

“I don’t think that’s exactly a market disruption,” Spicer said.

Just another day on Twitter for an administration that uses social media as one of the primary ways it communicates with the public.

“We didn’t have anything like Twitter to worry about,” said Glenn Hubbard, head of the U.S. Council of Economic Advisers under President George W. Bush from 2001 to 2003.

Published at Fri, 10 Mar 2017 23:06:28 +0000

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Prosecutor fired by Trump leaves legacy as Wall Street crime-buster


preet bharara fired 2
Preet Bharara was named as chief federal prosecutor in the Southern District of New York by President Obama in 2009. The office has a rich history policing banks.

On Friday, Bharara was one of 46 U.S. attorneys asked to resign by President Trump. That was a standard move for a new president. But Trump, during his transition, had asked Bharara to stay on. After Bharara refused to resign, he was fired by Trump on Saturday.

Bharara, 48 and born in Punjab, India, was appointed as U.S. attorney for the Southern District of New York by former President Obama. His parents immigrated to the United States in 1970, and Bharara got degrees from Harvard and Columbia University School of Law. He started work as Democratic Senator Charles Schumer’s chief counsel in 2006.

Then, during the depths of the financial crisis in 2009, Bharara got the coveted prosecutor’s job in New York. Because it oversees federal crime in Manhattan, the U.S. attorney’s office in the Southern District has a rich history prosecuting cases involving Wall Street and banks.

And Bharara prosecuted scores of financiers, some of whom are now behind bars.

One of his most high-profile cases was that of Raj Rajaratnam, a former hedge fund manager, who was sentenced to 11 years in prison and fined $93 million in 2011 on insider trading charges brought by Bharara.

The man who leaked information to Rajartnam, former Goldman Sachs board member Rajat Gupta, received a two-year prison sentence in 2012.

“He’s had a very, very significant impact,” said John Coffee, the director of the Center on Corporate Governance at Columbia Law School. “There were other [U.S. attorneys ] that prosecuted insider trading, but none as rigorously and systematically.”

Bharara’s most prized target was hedge-fund billionaire Steve Cohen. He never made a criminal case against Cohen but he went after several employees of Cohen’s SAC Capital, and the company was fined $1.8 billion in 2013.

More recently, Bharara prosecuted two executives from Valeant Pharmaceuticals who were arrested in November last year and charged with concocting a massive fraud scheme.

The Civil Frauds Unit that Bharara created landed nearly $500 million in settlements. That includes multi-million dollar deals with CitiMortgage and Deutsche Bank for engaging in the type of reckless lending practices that led to the financial crisis.

But Bharara was criticized by some who thought he didn’t do enough to push criminal charges against financial fraudsters. A column in the Guardian was headlined: “Why is Preet Bharara, the ‘scourge of Wall Street’, taking a friendly tone towards mortgage bankers?”

Bharara defended his office against those claims. He cited a lack of evidence as a reason for his restraint. At a National Press Club event in 2014, Bharara said the lack of criminal cases “has not been as a result of a lack of effort,” the Atlantic reported.

He’ll also leave behind a legacy of aggressively prosecuting political corruption. Bharara extensively investigated officials in Albany, the New York state capital, and secured “convictions against multiple elected officials and other corrupt public servants,” according to his office.

Bharara’s exploits taking on hedge funds inspired the Showtime series “Billions,” in which Paul Giamatti plays a cutthroat federal prosecutor.

Brian Koppelman, the co-creator of Billions, said on Twitter on Saturday that he’s not surprised by how Bharara’s departure played out.

Published at Sat, 11 Mar 2017 21:16:31 +0000

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Why a trade deficit isn’t like losing money


NAFTA explained
NAFTA explained

Under President Trump’s description of a trade deficit, America is losing money to Mexico, China, Germany and Japan.

America had a trade deficit with all those countries in 2016. But that’s not the same as losing money.

A trade deficit means the U.S. bought more goods and services from each of those countries than they bought from America.

These normally mundane trade stats, which were released Tuesday, have come under fire from Trump. He frequently cites trade deficits as a reason to renegotiate or even withdraw from deals with other countries.

The big 4 trade deficits

The U.S. had a $61 billion trade deficit in goods and services with Mexico in 2016.

The U.S. trade deficit was significantly larger with China: $309 billion.

Trump lambasted China on the campaign trail. But his criticism of China over trade has not been as frequent as his criticism of Mexico since he arrived at the White House.

America’s trade deficit with Germany was $67 billion, and with Japan it was $56 billion last year.

Peter Navarro, director of the White House National Trade Council, criticized Japan and Germany for manipulating their currencies to make their exports cheaper and more competitive against the U.S. (Germany uses the euro, not its own currency, but its economy has a heavy influence on the euro).

However, Trump has had very little criticism about either nation’s trade ties to the United States.


Trade deficits – good or bad?

Navarro and Trump both like to say that a trade deficit is a negative factor when officials calculate U.S. economic growth. That’s true.

But the U.S. trade deficit has grown for decades, including during periods of strong economic growth. A report from Trump’s U.S. Trade Representative acknowledged that fact last week.

“Of course, a rising trade deficit may be consistent with a stronger economy,” the USTR noted last week.

For example, in the late 1990s, the U.S. economy grew at 4% annually, while the trade deficit got bigger. And during the Great Recession, between 2007 and 2009, the trade deficit got smaller.

How could the U.S. grow if the trade deficit got bigger?

Because America is a consumer economy. About 66% of U.S. economic activity consists of consumer spending. Cheaper products from Mexico, China and elsewhere make it easier for Americans to spend. And all that spending is the main engine of growth behind the U.S. economy.

Published at Tue, 07 Mar 2017 18:52:38 +0000

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