Tag: economy

One of the media’s favorite economists is at it again

For four years the media and other Democrats gaslighted the public about how great the Biden economic policies were. But six months into Trump’s term, the media is trashing Trump’s policies in order to influence, not inform, the voters. And, like clockwork, they trot out Mark Zandi, who they pretend is independent, but is really a Democrat hack. Whenever the media and other Democrats want an economist to support their policies and trash Republican (Trump) policies, out comes Zandi.

Here he is in The Hill saying we are on the precipice of a recession. I guess the deep depression warnings of April the Democrats and media promised didn’t come true, so out he comes again, just like a groundhog, with new warnings:

US economy on ‘precipice of recession,’ Moody’s chief economist warns

  • Consumer spending flat; construction, manufacturing contracting, he says
  • Zandi blames tariffs, immigration policy for economic struggles
  • Low jobless rate masks shrinking workforce, hiring freezes

Moody’s Analytics chief economist Mark Zandi said the U.S. economy is ‘on the precipice of recession,’ citing indicators from last week’s economic data releases.

The article is everywhere. Not to be outdone, Fox News calls him a leading economist and says the Federal Reserve has few options to save us from financial crisis. Maybe they should lower interest rates? I have to wonder how many times an economist has to be wrong before the media stops considering them to be a leading economist?

Leading economist issues stark recession warning for struggling US economy

Mark Zandi cites weak jobs data and rising inflation as Fed faces limited rescue options[.]

In 2007, Moody’s (Zandi), S & P, and Fitch were earning huge fees by rating junk mortgage pools as Triple A. This allowed brokers, bankers, Freddie and Fannie, to package up trillion dollars worth of garbage to sell to individuals, banks, and mutual funds. This was pure fraud that almost destroyed the U.S. and world economy, and yet these people did not go to jail. The taxpayer bailed them out. 

Yet today Zandi and others are still treated as respectable ratings agents.

Keep reading

‘Relatively Simple’ AI Trading Bots Naturally Collude To Rig Markets: Wharton

In what should come as a surprise to nobody, ‘relatively simple’ AI bots set loose in simulations designed to mimic real-world stock and bond exchanges don’t just compete for returns; they collude to fix prices, hoard profits, and box out human traders, according to a trio of researchers from Wharton and Hong Kong University of Science & Technology. 

As Bloomberg reports;

In simulations designed to mimic real-world markets, trading agents powered by artificial intelligence formed price-fixing cartels — without explicit instruction. Even with relatively simple programming, the bots chose to collude when left to their own devices, raising fresh alarms for market watchdogs.

Put another way, AI bots don’t need to be evil — or even particularly smart — to rig the market. Left alone, they’ll learn it themselves. 

According to Itay Goldstein, one of the researchers and a finance professor at the Wharton School of University of Pennsylvania, “You can get these fairly simple-minded AI algorithms to collude … It looks very pervasive, either when the market is very noisy or when the market is not noisy.”

The phenomenon suggests that AI agents pose a challenge that regulators have yet to confront – with the trio’s research having already drawn attention from both regulators and asset managers. They have been invited to preset their findings at a seminar, while some quant firms – unnamed by Winston Dou (Goldstein’s Wharton colleague) – expressing interest in clear regulatory guidelines and rules for AI-powered algorithmic trading execution.

“They worry that it’s not their intention,” said Dou. “But regulators can come to them and say: ‘You’re doing something wrong.’”

Keep reading

Is The Federal Reserve Purposely Trying To Destroy The U.S. Economy?

Oops, they did it again.  Even though the housing market has been in a depressed state for an extended period of time and even though economic conditions are slowing down all over the country, the Federal Reserve has once again refused to lower interest rates.  What in the world are they thinking?  I certainly share President Trump’s frustration with the Fed.  Central banks all over the world have been cutting rates, but our central bank just won’t budge.  Have Fed officials gone completely insane, or are they purposely trying to destroy the U.S. economy?

Those that have been following my work for an extended period of time already know that I am not a fan of the Federal Reserve at all.  And now we have another very clear example of the Fed’s lack of competence…

There were two Fed governors that did not agree with this decision.  This was the first time since 1993 that more than one Fed governor has dissented…

Keep reading

Western Pressure On India Over Russia Already Backfired Even If It Partially Complies

India’s former Permanent Representative to the UN Syed Akbaruddin recently published an informative opinion piece at NDTV titled “Tariff Blitz: Is India Becoming Collateral Damage In Someone Else’s War?”

The gist is that the West, via Trump’s threatened 100% sanctions on Russia’s trading partners upon the expiry of his deadline to Putin for a ceasefire in Ukraine and the EU via its new sanctions barring the import of processed Russian oil products from third countries, is putting undue pressure on India.

They can’t defeat Russia on the battlefield by proxy, nor will they risk World War III by taking it on directly, so they’re going after its foreign trade partners in the hopes of eventually bankrupting the Kremlin.

This is counterproductive though since their threatened sanctions could torpedo bilateral ties, push India closer to China and Russia (thus possibly reviving the RIC core of BRICS and the SCO), and spike global oil prices, which hitherto remained manageable due to India’s massive imports from Russia.

Nevertheless, partial compliance is also possible due to the damage that Western sanctions could inflict on the Indian economy, so it can’t be ruled out that India might curtail its aforesaid imports and no longer export processed Russian oil products to the EU.

Full compliance is unlikely though since India would risk ruining its ties with Russia, with all that could entail as was touched upon here, while reducing its economic growth rate through higher energy prices and thus offsetting its envisaged Great Power rise.

Even in the scenario of partial compliance, however, Western pressure on India over Russia already backfired.

Their coercive threats and the very real consequences for no compliance whatsoever, presuming that exceptions can be made for partial compliance, are reshaping Indian policymakers’ views of the West and breeding resentment of their governments among its society. The “good ‘ole days” of naively assuming that the West operated in good faith and was India’s true friend will never return.

This is for the better from the perspective of India’s objective national interests since it’s more useful to have finally realized the truth than to keep having illusions about the West’s intentions and formulating policy based on that false perception. Conversely, this is for the worse from the perspective of the West’s hegemonic interests since their policymakers can no longer take for granted that India will naively go along with whatever they request and blindly trust its intentions. This new dynamic might lead to rivalry.

Keep reading

War Bankrupts Empires, Nations & City-States – Here We Go Again

France was on the brink of its Fifth bankruptcy in 1720. France defaulted in 1558 under Henry II, following the costly Habsburg-Valois Wars (also known as the Italian Wars), the outright repudiation of debt, and currency devaluation. Then in 1648, a Debt Crisis occurred under Louis XIV (Early Reign) with the Thirty Years’ War (1618–1648) and the Franco-Spanish War (1635–1659). Louis XIV suspended payments and manipulated currency. Then, in 1661, there was another financial collapse under Louis XIV, when Finance Minister Nicolas Fouquet was arrested for corruption. Jean-Baptiste Colbert later reformed finances, but debt remained high.

Then, in 1715, France fell into bankruptcy following the death of Louis XIV. The War of the Spanish Succession (1701–1714) left France deeply indebted. The regency of Philippe d’Orléans implemented the Visa of 1715, a partial debt repudiation. This brings us to 1720 and the collapse of the Mississippi Bubble (John Law’s system), for which history blamed him without examining France’s chronic debt problems. John Law’s speculative financial scheme collapsed, resulting in hyperinflation of paper money and a banking crisis. The French government defaulted on its obligations.

This was followed by the 1770  Bankruptcy under Louis XV. The Seven Years’ War (1756–1763) and financial mismanagement led to another debt crisis. The Finance Minister Étienne de Silhouette and later René de Maupeou imposed austerity and partial defaults.

Then, just 19 years later, this brings us to the debt crisis that sparked the 1789 French Revolution. The Pre-Revolution Financial Crisis was when France was effectively bankrupt under Louis XVI, leading to the Estates-General and the French Revolution (1789). The revolutionary government later repudiated royal debt.

Then, 23 years later, we come to the 1812–1813 Financial Crisis under Napoleon. The Napoleonic Wars drained French finances. The government resorted to forced loans and currency debasement. Just 5 years later, we come to the 1818 Post-Napoleonic Debt Restructuring. After Waterloo (1815), France struggled with reparations and debt. The Duc de Richelieu negotiated loans to stabilize finances. It is a wonder why anyone lends to governments that always want war.

We arrive at the next Revolution in 1848 and the 1848  Financial Crisis during the Second Republic. The February Revolution led to a credit crunch. The government imposed emergency financial measures, as it was unable to meet its debts, given that this was a socialist revolution against the wealthy.

Never learning from the past, which they always seem to assume is gone, we again arrive at the 1871 Post-Franco-Prussian War Bankruptcy Threat. Here, France had to pay 5 billion francs in reparations to Germany after losing the war. The government took massive loans (e.g., Morgan Loans) to avoid default. This was also why France demanded reparations from Germany after World War I, which resulted in bringing Hitler to power in 1933.

Keep reading

Democratic Party posts Biden-era price hikes in widely-mocked X post attacking Trump

A tweet from the official Democratic Party’s X account was ridiculed on Thursday after inadvertently showing prices skyrocketing under former President Joe Biden.

The post attempted to describe rising grocery prices under “Trump’s America” using a graph dating from October 2019 to 2025. The graph claimed that “U.S. Grocery Prices Reached Record Highs in 2025” with prices “higher today than they were on July 2024” in categories such as dairy, produce and meat.

However, many X users pointed out that the graph, in fact, showed prices skyrocketing in 2021 when Biden was president and only leveling off at the end of 2024 when President Donald Trump was re-elected.

“You’re showing us a graph of stable prices suddenly rising the moment you came into power and then steadily rising higher and higher until Trump was reelected,” political commentator Chad Felix Greene wrote.

Keep reading

Bank Branches are the Latest Creative Destruction Casualty

Over 8,000 bank branches are expected to close worldwide in 2025. Approximately 3,200 of those closures will take place in the United States. Q1 experienced 148 net branch closures in the US, with all major banks slated to close branches throughout the year.

These are merely bank closures and not bank failures, although two smaller US banks did fail this year. People simply prefer online banking as we have made the switch from relational to transactional banking.

Bankrate conducted a survey that found 77% of Americans prefer online digital banking, yet other surveys believe the figure is closer to 89%. Digital banking has been rising in popularity in recent years, up from 203 million domestic users in 2022 to the 216.8 million projected users in 2025. The survey found that 34% of consumers use online banking on a daily basis, consistently checking their account and transactions. There has even been a 19% increase in use among the 65+ crowd who is least likely to use digital services.

Keep reading

No Escape From Washington’s Fiscal Doomsday Machine

If you don’t think Washington is in the maws of a Fiscal Doomsday Machine, think again.

And the place to start is with the 30-year CBO projections—expressed as the dollar increase from the current $29 trillion level of publicly held US Treasury debt.

To wit, if Washington does nothing except leave current tax, spending and structural deficit policies in place (i.e. baseline policy), the publicly-held debt will grow by $102 trillion over the next three decades, reaching a staggering 154% of what would be $85 trillion of GDP by 2054.

Moreover, that outcome assumes that Rosy Scenario does not loose her footing for even a moment through the middle of the century. Stated differently, the underlying CBO projections presume that there will be no recession during the 34 year span from 2020 to 2054, and that, in fact, there will be perpetual full-employment at about 4% from here on out.

Of course, during the last 30 years there have been three recessions (shaded area) and no such full-employment perfection was even remotely achieved. The short spells of 4% unemployment or under, in fact, were few and far between—in stark contrast to the CBO baseline which presumes 4% unemployment year after year until 2054.

Keep reading

Report: California’s $20 Fast Food Minimum Wage Led to 18,000 Fewer Jobs

California’s new $20-per-hour minimum wage for fast food workers has resulted in a significant decline in employment in that sector, leading to 18,000 fewer jobs than would have been the case otherwise.

That’s according to a new paper released by the National Bureau of Economic Research (NBER) this month, which said:

We analyze the effect of California’s $20 fast food minimum wage, which was enacted in September 2023 and went into effect in April 2024, on employment in the fast food sector. In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California’s fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024. Adjusting for pre-AB 1228 trends increases this differential decline to 3.2 percent, while netting out the equivalent employment changes in non-minimum-wage-intensive industries further increases the decline. Our median estimate translates into a loss of 18,000 jobs in California’s fast food sector relative to the counterfactual.

HR Grapevine added:

The Employment Policies Institute estimated that “non-tipped restaurant workers [lost] 250 hours of work annually,” translating into up to $4,000 in lost income. That drop equates to seven weeks of work each year per employee.

The California Globe reported that “thousands of fast food jobs were shed by companies in anticipation for the higher costs,” including 1,200 drivers at Pizza Hut. Once the law took effect on April 1, 2024, “restaurants automated what they could to avoid the higher wages,” and “some fast food restaurants also closed.”

By June 2024, Stanford University data indicated “over 10,000 fast food jobs were already lost.” While the Governor’s office disputed the figure, saying fast food jobs had increased, it “stopped by the fall when it became apparent that federal data wasn’t on their side.”

Keep reading

China’s Economic Demise And Its Impact On The US

Few are as candid and historically accurate as hedge fund manager Kyle Bass when identifying structural breaks in the global economy. In a recent interview, Bass painted a grim but telling picture of China’s economic condition, warning:

“We are witnessing the largest macroeconomic imbalances the world has ever seen, and they are all coming to a head in China.”

While China has long been touted as the next great economic superpower, its recent trajectory reveals a far different story, one marked by policy missteps, systemic financial rot, and a rapidly eroding growth engine.

Bass didn’t mince words either:

“China’s economy is spiraling with no end in sight.”

China’s GDP deflator, the broadest measure of prices across goods and services, continues to decline as economic activity erodes.

For investors around the globe, this isn’t just a regional concern; it’s a seismic macroeconomic event that will ripple through capital markets. The implications are significant for U.S. investors because when global economies falter, especially one as large and interconnected as China’s, capital doesn’t just vanish. It moves. That movement will significantly impact U.S. assets as flows transfer back into U.S. dollars and Treasury bonds. This global repositioning of capital isn’t merely a symptom of market volatility; it reflects a profound reevaluation of risk in the face of deteriorating confidence in China’s financial system.

Keep reading