Issues in However Long it Takes
When this world starts a- reelin’, from that pressure drop feelin’
We’re just treading water each day.
There’s a way to feel better.
Be well set to weather, the storms, ‘til the sun shines again.
When your compass is spinnin’, and you’re lost on the way.
Like a leaf in the wind friend, hear me when I say,
Bubbles up, they will point you towards home.
No matter how deep, or how far you roam.
They will show you the surface, the plot, and the purpose.
So when the journey gets long.
Just know that you are loved, there’s light up above,
And joy, there’s always enough.
Bubbles Up – Jimmy Buffett (2023)
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The feedback keeps coming in that, readers like the multiple topics in one missive format. So, here’s another. They won’t all be like this, but a lot will be, including this one.
Inflexion Point: In August of 1981, President Reagan fired the striking air traffic controllers. In retrospect, this was seen as a major inflexion point where the country transitioned from more than a decade of inflation and strikes into a new calmer economic and social period. Could the current UAW strike be a new inflexion point in the other direction? The UAW’s significant demands have been driven by three factors: inflation, low unemployment, and income inequality. These factors are causing the union to want bigger increases to protect against inflation and lifestyle changes to match white-collar workers who work from home. Shrinking the gap between executives and workers is another major motivator. The low unemployment leads them to believe that they cannot easily be replaced as the air traffic controllers were. But, these things are not negotiated in a vacuum. The “Detroit 3” automakers are competing against Tesla, European and Asian brands that all have non-union plants in North America and some of which build in low-cost countries like China. If the Detroit 3 give too much, they will be uncompetitive and lose sales and market share (and jobs). This is looking like it is going to be a long slog. How it ends will say a lot more than just where these companies and this union are going. It may begin a new era of change.
California Electric Rates: Last week I explained that peak electric rates in California are five times the rates in Arizona. I did not explain why that is. California has been reducing energy from the two cheapest, most reliable, and carbon-free sources of energy which are nuclear and hydro-electric. Governor Newsom was proud to say that five dams had been demolished in California last year. This energy was replaced by very expensive and only part-time energy from wind and solar. Because those sources only produce energy when the wind blows and the sun shines, they rely on expensive gas-fired “peaker” plants and energy from other states to make up the difference. So, Californians get expensive power that is unreliable, kills birds and destroys landscapes and makes zero difference in carbon emissions. Feel better?
Bill Gross: Mr. Gross was the Chief Investment Officer of PIMCO for decades and was known as the “bond king”. He left PIMCO ignominiously and by all accounts is personally not a particularly nice guy. But he is not a dummy. The 79-year-old had a rather candid interview with Bloomberg’s Odd Lots Podcast in the last couple of weeks. In it, he suggested that the massive debts in the world are sustained by rising asset prices. If asset prices (stocks, bonds, real estate, collectibles, crypto, etc.) decline, the debt will become a huge problem. We have already seen Crypto, bonds and big-city office buildings decline in value and cause follow-on bankruptcies of entities holding those assets or debt attached to those assets.
I’m sure Gross is not the first to say this, but when asked about his life today no longer with a big firm, he said that to be happy you need someone to love, something to do and something to look forward to. Both his financial and life observations made sense to me.
China Going Hard Communist: China is a one-party rule communist country. We know that. But President Xi is now cracking down in ways the CCP has not done in recent decades. Western Audit firms have been told they cannot say anything bad about a Chinese client in their audits. Kind of defeats the purpose of an audit, doesn’t it? Company employees, including western ones, now must take and pass mandatory classes in “Xi thought” and write papers to show they understand it that will be graded by the CCP. I am not making this up. I have only mentioned 2 of many such initiatives. These demands will further separate the west from China and set the stage for more global confrontation.
How many agents has the IRS actually hired this year? Answer-34. Not 86,000. I am not making this up, either. They tried to hire 3,833 but there is a shortage of accountants nationally and they were only able to actually hire 34. The IRS truly needs a bunch more people to answer the phone and deal with taxpayer inquiries. In the meantime, don’t fear some massive increase in audits.
Democrats, water and the Supreme Court: Last year in Sackett v. EPA, the Supreme Court ruled that the federal government could not claim jurisdiction over private bodies of water unless it has a “continuous surface connection to bodies that are ‘waters of the United States’”. This kept the EPA from claiming that it could control, for example, a pond entirely on private property dug by a rancher to provide water for livestock. Prior to the decision they wanted to literally control ditches on private property. Problem solved, right? Wrong. The administration is essentially ignoring the court’s ruling and saying they will claim authority over any water that is “relatively permanent, standing or continuously flowing”. In other words, a ditch or pond. Can you say despotic?
Japanese buying gold: The value of the Japanese Yen has been collapsing of late as their central bank tries to hold interest rates artificially below the rates in other industrialized nations in order to fund their massive debt load. Japanese citizens with cash cannot even earn 1% interest on that cash while inflation is 4% and the value of their currency in dollar or Euro terms has declined 40% in the last 3 years. So to protect themselves, they are buying more gold than ever before. This happens when bad economic policies come home to roost.
Windmills and Whales: We know that the sound and blades of windmills on land kill birds and other wildlife. But now, since they put windmills off the shore of New England, 71 whales have washed up dead on the beaches there. Coincidence?
This week’s Jimmy Buffett song is one that will be on his last album to be released in November. I have already pre-ordered it on vinyl, of course. He clearly knew he was very sick with cancer when he wrote and recorded this, and may have known it was terminal. Paul McCartney, who went to visit Jimmy just before his death, said he thinks it is one of his best. As always, it is a positive message, even when you are underwater.
I remain respectfully,
Congressman John Campbell
Drive Fast & Live Free