The real story revealed by the New York Times Trump tax returns bombshell is not that Donald Trump paid no taxes in 10 out of 15 years or that he paid $750 in 2016 and 2017. The real story is that he doesn’t have net income to service his debt. There is nothing inherently illegal about that. He did it before in the 1980s and when real estate prices stopped rising in 1990, his creditors were left holding the bag.

Hyman Minsky wrote about Donald Trump’s investment strategy in a 1990 talk, “The Bubble in the Price of Baseball Cards.”

One of the puzzles of the 1980s was the rapid rise in the financial wealth of Donald Trump, author of The Art of the Deal, and what else. Trump’s fortune was made in real estate. Many large fortunes have been made in real estate, since real estate is highly leveraged. Two factors made Trump somewhat unique — one was the he developed a fortune in the period of high real interest rates, and the second was that the cash flows on most of Trump’s properties were negative.

Trump’s wealth surged because the market value of his properties — or at least the appraised value — was increasing faster than the interest rate. Trump obtained the funds to pay the interest on his outstanding loans by increasing the draw under what in effect was a home equity credit line. The efficiency with which Trump managed these properties was more or less irrelevant — hence Trump could acquire the Taj Mahal in Atlantic City without much concern about the impacts on the profits of the two casinos he already owned. Trump was golden — he had a magic touch — as long as property prices were increasing at a more rapid rate than the interest rate on the borrowed funds.

The puzzle is that the lenders failed to recognize that the arithmetic of his cash flows was virtually identical with that of the developing countries; in effect Trump was Brazil in drag. In the short run Trump could make his interest payments with funds from new loans — but when the increase in property prices declined to a value below the interest rate, Trump would become short of the cash necessary to pay the interest on the outstanding loans.

The increase in U.S. real estate prices in the 1980s was regional, and concentrated in the Northeast and in coastal California; for the country as a whole, real estate did not increase relative to the price level. The regional dispersion in the movement in real estate prices more or less paralleled the changes in personal income. Real estate prices dipped in the oil patch, climbed modestly in the rust belt, and surged in those areas that benefitted from the rapid increases in incomes in banking and financial services — sort of a derived demand from the financial success of Drexel Burnham. In effect, those individuals with high incomes in financial services — and with the prospect of sharp increase in incomes — set the pace for increases in real estate prices

 

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I had written on the high cost of pharmaceuticals late 2019, “Another Look at Drug Pricing, Costs, and Why” citing from the World Health Organization, the ICER, JAMA Network, Health Affairs, and my own posts (links below and in text). You will find the some of the same articles cited in new commentary of increased drug costs in the Washington Post, Kaiser Health News, and Medpage Today. It appears the three of them have caught up with Angry Bear’s coverage on the rising costs of pharmaceuticals except we go deeper into this issue. A footnote would have been nice as my information has been out for ~ 1 year now.

The Cost Table (below) lists the most common prescriptions from 2012 through 2017 as detailed in the May 2019 JAMA Network Open’s article “Trends in Prices of Popular Brand-Name Prescription Drugs in the United States” shows  median total costs and percent change in price for 49 high volume brand name drugs over six years. If you care to read it, this JAMA Network Open article is open to anyone.

A Bit of A Summary

This particular table can also be found in another post I wrote; Does Trump Read JAMA Network Open? which reviewed the latest JAMA findings (Trends in Prices of Popular Brand-Name Prescription Drugs in the United States) on pharmaceutical price increases from 2012 to 2017. It is another in a series of articles (by me) which has looked at the rising prices of pharmaceuticals. The World Health Organization (2018) findings cited here reflect on R & D costs for cancer drugs and the amount of time needed to recoup those costs (median of 3 years for $750 million) with an average return of $14. 50 for every $1 invested in R & D for cancer drugs.  For the maximum estimated risk-adjusted cost of R&D (US$2.827 BN), the time to cost recovery was 5 years (range: 2 years; 10 years, n=56).

Click on the JAMA Table: Median Total Cost of Top-Selling Brand-Name Drugs 2012 – 2017 to enlarge and again to magnify if needed.

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In the 19^th century, employers stove off employee demands by bringing in immigrants willing to work under existing conditions. In the 20^th Century, consequent the Great Depression, prohibition of child labor, immigration reform, … it was no longer so easy for employers to ignore workers demands. Unions took root and membership grew and so did the workers’ wages and benefits; welcome: the end of child labor, the 40 hour week, living wages, and paid vacations.

Fast forward to the late 1960s: Beginning of the end for US manufacturing dominance. Unionized industries moved south in quest of lower wages; thence to Mexico, … Fewer and fewer union jobs, fewer and fewer union members. 1970S, manufacturing exodus to Asia begins; labor becoming more and more irrelevant in US, unadjusted wages stay the same. 1980S, Immigrants from Mexico, Central America, and Asia brought in to work for less. Wages continue decline. 2000, Bush II mounts assault on labor and small business. They didn’t call; it that, but that is what it was. The intent was to put labor in its place. Dems remain on sideline, clueless. 2008-2016, Dems still clueless, went with rhetoric and old fashioned religion. 2016, Trump. 2020, Dems still clueless, keeping talking about the good old days, the good old union days.

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Though more different than alike, they do have a lot in common. All are, in some way, progeny of the microprocessor. Some were born in around Silicon Valley, others quite distant. The first generation was born in the US early in the last third of the 20^th Century. The second was born near the end of the late 20^th — early in the 21^st Century. None of them could have been born in an earlier era. Microsoft* 1972, Apple*1976, and Oracle*1977, were instrumental in developing the power of microprocessors either through developments in software, hardware, or both. Amazon*1994, Google*1998, Facebook*2004, and Twitter*2006 were all about utilizing the vast computing power of microprocessor based computers. They grew like weeds. The nation had not seen the likes since Carnegie and Rockefeller of the 19^th Century. Now, as then, it didn’t quite know what to do with them. Now, as then, the Nation found itself being jerked about economically, socially, and politically by these new giants. What are to be the standards when all is so new?

Called Technology Companies because they were the children of this Age of Technology; some sold software, some hardware, some both; some provided a service in exchange for the users eyeballs, and personal info, which they then sold to others. Some sold stuff for others until they became so rich they took these others’ business from them, bought others, and did some of everything. One thing they held in common was that they all, excepting Theranos and Twitter, had quickly grown to be very prosperous, and to be very big and powerful. Amazon has enough cash on hand to buy General Motors outright; so does Apple, Microsoft, Google, and Facebook. Another thing held in common; they all started up in an unregulated environment. And another; these Technology Companies were all, with the exception of Theranos, started up by young men, some of whom were very young.

For nigh on fifty years now the US Government hasn’t seemed to know enough about what was going on with this new technology to step up and impose needed regulations. In some cases, those running these companies couldn’t have told you what was going on. It has all been a wild ride. Now, in the early 21^stCentury, as in the early 20^th, it is clear to most that something must be done. As in 1904, the first step is to break them up. They are so big that no one else can compete. Sound familiar? As with the titans of the Gilded Age, these guys have tremendous influence on national economics, society, and politics and policy. These guys have world-wide influence.

As in the gilded Age: Too big is when a company has its own Representatives and Senators, and writes legislation meant to benefit itself. Too big when, as a result of that legislation, immigrant labor is used to suppress workers wages. In the Gilded Age, Capitalism was next to god; strikers were shot. In Myanmar, Buddhist nationalist beat, raped, and killed Rohingya Muslims because of anti-Muslim hate-speech postings on Facebook. When confronted with this fact, Facebook expressed concern.

As in the Gilded Age, these new Titans of what was now the Technology Age have been hailed as geniuses. Fair to say, some of them are of well above average intelligence. Also fair to say that some of them are not. That some aren’t all that well rounded, or educated. That some are amoral. Wise? We have seen little or no evidence of that.

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Steve Hutkins of Save The Post Office updates us on the “Jones vs USPS” suit filed in United States District Court for the Southern District of New York. He has been live-blogging the events from Save The Post Office blog.

September 21, 2020

Big news today: The plaintiffs have won a second suit against the Postal Service. The judge in Jones v USPS, Victor Morrero of the SDNY, has ordered a preliminary injunction preventing the Postal Service from enacting changes that endanger voting by mail. The order is here. It’s the second such order for a preliminary injunction, following the order in Washington v USPS issued on Sept. 17. The Associated Press has the first article about the Jones decision, here, and CNN reports here.

The Jones order directs the Postal Service to “treat all Election Mail as First-Class Mail or Priority Mail Express” and to provide the court a cost estimate for doing so;  to “pre-approve all overtime that has been or will be requested for the time period beginning October 26, 2020 and continuing through November 6, 2020”; and “submit to the Court a list of steps necessary to restore First-Class Mail and Marketing Mail on-time delivery scores to the highest score each respective class of mail has received in 2020.”

The Jones order also directs the Postal Service to submit a proposed memorandum to all USPS managerial staff (the “Guidance Memorandum”) that explains all USPS policy requirements concerning the treatment of Election Mail and that clarifies late and extra trips are not banned, do not require pre-approval, and will not result in disciplinary action.

Judge Morrero has also ordered the Postal Service to provide not only the same weekly updates on service performance that the USPS is providing Congress but also more detailed reports that disaggregate 2-day and 3-5 day service reports and include variance data showing how many days late the mail is.

These are the same detailed reports that, at my request, the Postal Regulatory Commission asked the Postal Service to provide. The Postal Service said that it would take 56 weeks to prepare such reports, and it failed to submit them by the deadline, Sept. 18. It will be interesting to see how the Commission responds to this failure and what the Postal Service does in response to Judge Morrero’s order to produce these reports.

As a side note, we’re happy to report that Mark Jamison, regular contributor to savethepostoffice.com, submitted oral and written testimony in Jones, and his comments are cited several times in Judge Morrero’s order.

In Richardson, the plaintiffs have filed a Reply in Further Support of Plaintiffs’ Motion for a Preliminary Injunction. The Reply frequently cites the order for a preliminary injunction in Washington, and concludes with a request for a “special master”: “The grave constitutional harm that will result from USPS’s failure to implement any changes ordered, along with the extremely short time in which USPS must implement those changes, requires supervision to ensure that it is done. Therefore, Plaintiffs request that the Court exercise its discretion to appoint a master to assist in the implementation of the Court’s orders.”

In Vote Forward, defendants DeJoy and USPS have submitted a Response to Plaintiffs’ Motion for Expedited Discovery, arguing that “expedited discovery would impose an undue burden on USPS as its key personnel are consumed with assessing and coordinating the agency’s compliance with the injunction” in Washington. The defendants also argue that there is already a “wealth of available, relevant evidence” from the other cases so that additional expedited discovery would be duplicative and burdensome.

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by New Deal democrat

August housing permits and starts bode well for 2021 economy

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The COVID-19 Pandemic, the inadequate response thereto, and the incompetency of the Trump Presidency in general, combined, have exposed our nation’s weaknesses and failings to an extent unknown since at least the Great Depression. This is likely a do or die moment for America. Recovery will be difficult. Improbable unless we are careful in our choice of goals and daring in our efforts to achieve them. The margins for error do not allow for dawdling. Attempting to just return to a time before Trump and The Pandemic would be disastrous. A time like this should also be seen as a time of opportunity.

—

First, we must rid ourselves of denominational economics such as Capitalism, Socialism, Hayekism, Free Marketism, … These, but ideologies, dogmas, that some would impose on economics, on the rest of us; have done the Nation great harm. They are, at their very best, reasonings of a time past. As likely to be the answer to today’s problems as Adam Smith is to rise from his grave.

As a first step toward becoming again competitive in today’s world; we must stop blindly paying twice as much for inferior healthcare, internet, and cellphone service,… as is being paid in other developed nations; and while we are at it, we need to solve our homeless problem. These are all essential services that should be provided to all. In the grand competition of things; we’re losing. Have been for a while. Were before the pandemic. Ideology is a luxury we can no longer afford.

Let’s pay for these things that need to be done, and help with our wealth distribution problem, too, by taxing the piss out of the too rich and too profitable. Apple, Google, Amazon, Facebook, Microsoft, Sheldon, Warren, …; fun and games are over guys, time for you to pay up.

Let’s pay for these things that need to be done by cutting the ‘Defense’ Budget in half. Halve the number of Generals, the number of Admirals, the number of Aircraft Carriers, the number of Missiles, …; and full-stop attacking other nations. Half of $720⁺Billion is $360⁺Billion; $360⁺Billion is aplenty for Defense, nothing for Attack, and about right for expanding Medicare to Medicare For All. Ike was right about that and Harry was right about health care.

I. Internet Access and Cellular Networks

All those fireman who died because of poor communication on 9/11/2001 should have taught us the need for an ubiquitous cellular network. Mobile radio networks separate cellular networks should have shown us the need for one network. A police car with a half dozen radio antennas on the roof is ridiculous.

So, too, the fact that our cell phone uses a cellular network, our computers use a cable based internet service, and that we need a WIFI router to use our laptops. What’s now the cellular network should be the WIFI router and these routers should be all over our homes, all over every floor in every building, everywhere on our streets, and all across and over rural America. Ubiquitous. Today, thousands and thousands of teachers across America are trying to remotely teach kids, many of whom have very limited internet access, over an internet system that is not reliable. When the fires struck Santa Rosa, the cell towers went down. The internet w/ phones must work at all times during normal times and during times of emergency; needs to be bullet proof. This new inclusive internet is too critical to be trusted to the ‘Market’. Cell phone and Internet should be one and that one should be regulated as a public utility; a service, as a service application, and, as always, the application dictates. Not the ‘Market’.

As a Post Office service, maybe?

In order to fully utilize our Nation’s productivity, better fulfill our personal lives, and assist in times of emergency, the Internet needs be ubiquitous and bulletproof. We should be able to access the internet from our backyards, on a hike, in the mountains, in transit, …; from anywhere we are or can be. It was a big mistake letting cable companies have the internet and the cell phone companies the phone towers. Let the cable companies have Cable TV. Internet and cell phone transmission should be one and the same; should be a Public Utility. It isn’t about ideology, it’s about how it should be; what should be. Half-arsed won’t get it. If we continue to stick with ideology and dogma, China, Japan, and the EU will continue to eat our lunch.

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Working-class Black and Latino Americans, more likely to be paid lower wages, less likely to own significant assets; feel that they are being deprived of a fair share; see this as a consequence of white privilege. Meanwhile, white working-class American’s see themselves as less than privileged, barely hanging on; feel that such demands by Blacks and Latinos amount to a threat to their meager share, their livelihood. Neither group is the other group’s problem, the two groups have a common problem; America’s wealth and income distribution problem.

In a prosperous nation with more than 800 billionaires, no one should have to work for low wages, work multiple jobs, in order to survive. Yet, not enough is coming down to the working class for sharing. Robbing Peter to pay Paul is not the answer. It is because of America’s unfair income distribution that the two groups are being pitted against one another in their struggle to eke out a living. More needs to come down to the working class in toto. Less needs to go up to the already wealthy.

While the Democratic Party seeks to attract the vote of working-class Blacks and Latinos, Republicans have made significant progress in attracting votes from the white working-class; thus splitting, thereby negating, the working-class vote. Choosing sides is not the answer. These are the same group with an artificial distinction being made on the basis of race and ethnicity. There is only one side here – that’s the side of the working class; the side of a majority of Americans.

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Let’s take a look at the ‘Greatest’ Trump Economy. The first graph shows the BLS Civilian Unemployment rate from 2000 t0 2020. Use the link for a better look Civilian unemployment rate

If you look really close, no you have to look a little closer yet, you can see the Trump effect.

The second graph is the FRED Gross Domestic Product Gross Domestic Product . By clicking on the link you can shorten the period to 2000-2020. It might help find the Trump Effect (the graph, not an abstract of the graph, too).

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It appears the FDA is now willing to deviate from its “bedrock mission” of guiding the public with accurate science-based information to a different road emphasizing variable political interests.

“The deep state, or whoever, over at the FDA is making it very difficult  .  .  .   @SteveFDA“, addressing you directly with your Twitter handle (trump). 

FDA is endorsing twitter as a mechanism to broadcast actions with and by Commissioner Dr. Hahn. Tweeting:

“I have been criticized for remarks I made Sunday night about the benefits of convalescent plasma. The criticism is entirely justified. What I should have said better is that the data show a relative risk reduction not an absolute risk reduction.” SteveFDA.

It would appear the FDA is now under direction of trump who is taking it down roads not traveled by the FDA in the past with the medical profession in the back seat. Some are not so willing to go along for the ride.

“We cannot entrust the health of 330 million Americans to a person who is subservient to President Trump’s whims, unprecedented promotion of unproven therapies, outrageous lies, and political motivations.” Dr. Eric J. Topol, MD, the editor-in-chief of Medscape

Medscape has three interesting articles critiquing the FDA. The first article reviews the  expansion of remdesivir usage, the second covers FDA Commissioner Dr. Stephen Hahn actions, and the last is questioning the FDA’s Covid decisions.   The first two articles were published on August 31st and the last on September 2nd. Typically, I read the articles and then go on to the comments section to see what medical practitioners have to say. I would suggest you too read the articles and then read the comments which can reveal a different perspective.  The comments can be useful and insightful.

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