Economic Magic Wand Claim September 10
Manufacturing Magic Wand Claim November 26
At a Mississippi campaign rally yesterday, Trump bragged that his administration had “found the magic wand” for manufacturing in the United States.
This was just a few hours after GM announced it’s closing 8 plants, 4 in the US, and shedding close to 15,000 workers.
In response to the GM announcement, Trump told GM CEO Mary Barra she had “better” reopen plants in the US soon.
Trump Chastises GM November 27
Trump Threatens to Kill GM Subsidies November 27
Yesterday in reference to the Chevy Cruze Trump offered this threat. “Their car is not selling well. So they’ll put something else — I have no doubt that, in a not-too-distant future, they’ll put something else. They better put something else in.”
Or what?
Today we found out, sort of.
Trump never finished the sentence.
Tariffs Coming
Business Insider discusses Potentially Devastating Tariffs.
Chris Krueger, a policy analyst at Cowen Washington Research Group, told Business insider that GM’s announcement on Monday could add more fuel to Trump’s desire to impose a 25% tariff on all cars, trucks, and auto parts coming into the US.
Gary Cohn, Trump’s former top economic adviser, has said the president asked him why all cars couldn’t be made in America.
The move would be economically devastating, economists say. A study from the Peterson Institute of International Economics found that a 25% auto tariff would cause auto production in the US to fall by 1.5% over the first three years and result in a net loss of 195,000 jobs.
Krueger was confident that regardless the impetus for the move, there is only one outcome in the end. “Tariffs are coming,” he said.
No Magic Just BS
We are about to find out how little “magic” there is in Trump’s wand.
Mike “Mish” Shedlock
The President does not seem to be able to learn from his mistakes. I still believe he will go down as the next Hoover and Trumpvilles will be his real estate legacy if the economy tanks (which I am betting on). As for subsidies, there should be zero subsidies of any industry by government in a free market.
Details on the auto co. bailouts:
Americans love trucks…so maybe the US highway system is fixed so that only American cars can use them! Sounds logical to me too
Two biggest GM subsidies: (1) 11.2 billion given to the company in 2009, (2) subsidiy for electric cars. On “1” above — it was gift…. now they want it back? on “2” GM has solved the problem — it is shutting down its Volt production line.
“The Problem” is misallocated resources. You don’t get those resources back by stopping production of a car sometimes in the future.
Why should US taxpayers subsidize the (mostly foreign) car industry by building a vast highway system? Until the paving and building of roads started, the US had an excellent mass transit system, both inner-city and intercity. Towns sprung up along the railroad tracks as they do on highways now. Every major city had mostly privately owned and profitable trolley and bus systems.
Starting in the mid ’50s, the IHS made it even worse as educated people, then living in the cities, bought two cars and a house in the suburbs. Businesses followed, leaving the cities to elect liberal democrats and decay.
How would you get home or to work without your car and the highway today? You’d live near a railroad track or other mass transit corridor.
My 2001 GMC Sonoma, which I only bought last March (with a mere 117k mi) has had a major engine failure at 136k mi. I drove the truck across the country twice and back this year, but that, apparently, is all I will see out of it.
The repair shop said it was not a blown head gasket as I had feared, but much worse. They recommended a new engine guaranteed for 100k miles at $4k – more than I paid for the truck. I told them to forget it – I am not buying any more GM cars (or pickups). I am an experienced used car buyer
I used to be a GM/Chebbie lover years ago, then my new ’78 pickup turned out to be a piece of crap. Worst thing was the oil pan rusted through and the oil all leaked out! The whole thing was a rust bucket and mechanical failure. Now I like my Fords.
So you bought a 17 year truck that has at least 20 year old technology and drove it cross country twice all for less then $4k and some how that makes it a piece of junk? I am not sure what “experience” you have as a used car buyer or where you live but most people wouldn’t drive cross country with a sub $4k vehicle much less twice in a year.
I have purchased 14 used cars (and no new ones) during my 49 years of driving over 600k miles. My goal is a mile for every 10¢ of purchase price + repairs (excluding routine maintenance). This car got me less than 1/2 mile for each 10¢. Saving money on cars and taxes have been my best investments.
What a load of horse doo… he never said any of that, only you did.
Technically, it was Obama’s CBO that predicted in 2016 that GDP would not exceed 3% again. Obama did not disagree.
2banana has the right idea. Moreover, Ford would have been smart to follow GM in bankruptcy. GM at least shed some costs. Ford none.
Ford did not need to declare bankruptcy. It did not need any government help either, but the Fed insisted Ford take it so that the government interference with GM & Chrysler would not look as bad.
Something has to be done. The magic wand might be b’s, but poverty is real. All those skill sets that take an education will get dragged lower as well. I’m pretty sure this. Is 4th down territory for the US just hope war isn’t the play call.
Mish,
Imagine in 2009 when GM declared bankruptcy.
That obama didn’t interfere. He would let the system work. That he didn’t do all he could to keep the UAW donation flowing to include destroying 100 years of contract law.
GM would have downsized. Insane union costs would have been shed. Poor management would have been fired.
GM would have been a leaner, more nimble and meaner competitor.
And they would have most likely beat Tesla to market with a viable product too.
Today – would we be here having this discussion?
That was Romney’s recommendation
This happens everytime the body politic finally gets their way and puts “a businessman” in power. Always a complete disappointment in terms of economic policy and insight.
As well as every time they put a “not a businessman” in power.
Power is the problem. Not the previous job title of whomever gets to wield it.
As opposed to putting a lawyer or professional politician in power? Why not elect teachers? I wonder how many people who post on here have ever run a business before?
Magic.
Obama said the economy was “structurally changed” and 8% unemployment (with those with jobs slinging coffee) was the new normal.
In fact, just to keep 8% unemployment, he would need TARP, the stimulus, HARP, HAMP, QE infinity and adding more to the debt that all other administrations combined.
That we would never see GDP over 4%
That we could never defeat ISIS.
That manufacturing is dead in America.
And that we would bankrupt the coal industry.
That food stamp use would only increase exponentially.
That America would never be oil independent or an exporter of oil.
Etc.
I will take the new magic. It is at least a step in the right direction.
The United States is simply not competitive internationally. We are too much like the Brits. We can’t engineer good products because that takes time. And shareholders want their money now. We can’t build good products because or workforce is uneducated on not skilled in relevant trades. We are great burger flippers. Lousy welders. Our management is off on golf vacations learning about diversity instead of managing.
Our future is using military power to keep the value of the dollar high. And forcing foreign states to make stuff that we can’t for us, while we give them back treasury bonds. It’s what we are good at. And God help us if we can’t even pull that off one day.
You don’t even see the irony in your own statement.
America can’t manufacture anything…but yet the American military equipped nearly entirely with “made in the USA” military products are the best in the world and keep the value of the dollar high.
So the talent and will is there.
Now – why can’t we harness it?
Hint – globalism, corruption of the FIRE sector, insane regulations, etc.
I can’t imagine something much more socialist than a “President” who thinks he should tell CEO’s how to run their corporations.
You mean CEOs that get massive federal subsidies and bailouts? Those CEOs?
They take billions in US Taxpayer dollars – what do you think will happen when they shut down eight huge plants and lay off tens of thousands?
Or do you think the US Taxpayer should just be the fool?
Exactly!
Privatized gains and socialized losses. It has been Wall Street’s recipe for decades. Funny how they are all for capitalism and free markets until they implode on their own control frauds (insert your favorite too-big-to-jail bank). 🙂
Yes exactly. Giving private companies bailouts and then demanding they do what the government tells them to do is Elizabeth Warren’s idea. Socialism plain and simple. May as well just nationalize the bitches.
“Or do you think the US Taxpayer should just be the fool?”
He is. Or he wouldn’t have put up with a government with the power and funding to bail out corporations to begin with. What did he think the government was going to do with that power? Not use it?Talk about fool….
Good, libertarians like Mish & I don’t think the government should be subsidizing auto companies anyway. GM should have been allowed to fail; all their lenders (bondholders that is) got completely screwed anyway.
But the UAW was kept whole. Not one cut.
And tens of millions in campaign donations flowed into democrat coffers.
That is all you really need to know.
True, although I do think they had to shut down the “job banks” where UAW members were paid 90% of their wages to do nothing.