Google “Shoplifting in San Francisco” and you will find more than 100,000 hits. And you will find lots of YouTube videos, where you can watch a single thief, or an entire gang, walk into an SF Walgreens or CVS and empty the shelves. Most walk in, go about their pilfering, and then walk out, though at least one thief rode their bike into the store and departed the same way, carefully navigating their two-wheeler down a narrow aisle.
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Spending is the main basis for the current inflation along with some stupid policy decisions by Biden simply because he wants to undue what Trump accomplished. Since politicians will continue to spend, inflation will probably continue but The Fed will probably begin to tighten over the ensuing year and as world economies re-link I believe inflation will subside but remain high.
Inflation is one of the major risks and topics at the moment. The Fed and several economists continue to believe that it is transitory and will subside by winter, however Powell admitted inflation is higher, and may last longer than they forecast. The IMF says there is now a risk that transitory pressures could become more persistent and central banks may need to take action sooner than expected. I continue to believe that inflation is not so transitory. I am not suggesting at all that we will return to 70s high inflation, but that 2% is not going to be the rate in 2022. People, including the Fed, point to lumber prices dropping dramatically. However, they are still well above 2019 prices, and showing signs of increasing again. The Fed is not going to increase rates until late 2022 at the earliest. Therefore, house prices will likely remain higher than they should be if interest rates were truly freely determined by market forces. Wage increases needed to get people back to work are not going back down. Energy-gas-prices are not likely to go back down from here. The shortage of chips is not getting solved until well into next year, and the shortage of truck drivers is not getting solved this year, and maybe not next year. That means logistics costs remain high, and shortages persist. The Delta variant will subside at some point, and reopening will proceed to increase demand. I do not know if inflation remains around 3%, or more, or less, into next year, but my view is, it is not going back to 2% for a longer time than the Fed thinks. A lot depends on what happens to the massive $5.5 Trillion spending plan in Congress. If that passes, inflation goes higher, the dollar declines. The Fed is already boxed in, and will not be politically able to fully respond with a higher rates as true independence would dictate. This is what I referred to as the critical moment for the Fed independence. Do they raise rates in 2022, or do they let inflation run too high in order to fund the $5.5 Trillion if that passes.
GDP grew faster than the 6.5%. It was a major drawdown of inventory that pushed the aggregate number down. Rebuilding of inventory should boost GDP in Q3.
Now, in addition, the Fed has a mandate that it has to continue to buy RMBS in the false notion that by doing so they will make better outcomes for affordable housing by keeping mortgage rates low. Rates are not the issue for affordable housing. It is cost to build and regulations.
The BOE has the exact same issues as the Fed, as does the ECB. All major central banks are at risk of losing their independence due to the massive Covid fiscal funding that can't be paid for. They are all now in a situation where QE can never be unwound. The Fed will always own trillions of dollars of bonds. The Fed generally buys short dated paper, so that makes rates more subject to quicker changes. They all face the issue of do you raise rates, or end QE first.
It is unclear now if infrastructure bill passes as the Dems in the House push for new add-ons. 30% of the pay fors are fake according to Kudlow, and so it is not really paid for. The $5.5 trillion is also now unclear as Sinema has said no. My gut says it does not pass at $5.5, but does with some much lesser number. Manchin will possibly fold again. Whatever they finally do will not be good for the country or capital markets un unless the do nothing.
There is now $1 Trillion of allocated Covid dollars unspent. It does not need to be spent now. Unfortunately much of that cannot be reallocated. What's a Trillion wasted these days- just money, according to Biden. Just proves the last $1.8 Trillion was unneeded
Biden has ordered the Labor Department to reregulate and to again push that franchisors are liable for wages and other things at franchisees. They are pushing wages higher on federal contracts and through other rules like tipping minimum wage. Seems the Dems never heard of cost pushed inflation, nor the need for a business to make a profit.
China is slamming entrepreneurs who have public companies like DIDI, Alibaba, or ANT. They seem to be crushing anyone who is acting as a capitalist and gaining huge wealth. Xi is probably afraid they will gain too much power through wealth creation, and in time threaten he and the party. Depending how far he pushes this, he might be stunting major growth in China since it was the guys who are acting like capitalists and going public who were building the really successful companies. Watch this trend. Investing in China is a high risk, bad idea.
There are 75 million kids under 18. Only 330 died from Covid, and reports suggest most of those had serious underlying conditions. 809 died from pneumonia unrelated to Covid. Tens of thousands more suffered mental illness due to the lockdown, and some committed suicide-possibly more than 330. But they now mandate masks in school based on no real data. 330 is .0004% of kids. In a normal year a lot more die from flu and from other things. The teachers screamed no class until all teachers get to the front of the line for shots. It is estimated 30% of teachers are still not vaccinated- so the whole refusal to go back to school was a sham. The new mask mandate is wrong and unscientific, and seems like a bunch of doctors choosing the most conservative choice vs the most realistic one. Likely CDC was driven by the teachers union again who is threatening to not go back in the fall. If they do that there will be an uprising. Masks indoors is counter-productive. Now unvaxed people will say, why do I need a shot if I am not fully protected and need a mask anyway. If vaccination is so good why do you need to pay $100. The CDC messaging continues to be terrible. Delta is not the problem. It is CDC and the mixed messaging out of the White House. Cases are not hospitalizations when they talk about breakthroughs. The government and press need to talk about hospitalizations of vaccinated people, which is close to zero, not cases. That number is miniscule so the press ignores it.
I got vaccinated as has every person I know. So now because some people are acting foolishly and not getting a shot, we have to be inconvenienced so they can continue to be irresponsible and not get a shot. No shot, you are almost certain to get infected and potentially die. What is it unvaccinated people do not understand about you could die.
This next is really dangerous. Many medical schools have now been pushed by students to eliminate the concept and words male or female since such words are considered transphobic. You just read that right. Saying "when a woman gets pregnant" is now banned as it implies only women can get pregnant. Did I miss something in biology class. Is Mother Nature a transphobic thing. I am sure the concept of, and words Mother Nature would be banned. So now in a number of medical schools they are not allowed to use pronouns like man -female etc. How do you teach doctors unless you teach them there are males, and there are females, and their bodies and illnesses are very different. I verified this is really happening. We have now hit the point of total insanity in university education where it is very dangerous to our health.
Every Dem senator voted yes to confirm an eco-terrorist for Bureau of Land Management. She lied to Congress and they proved it. She and her husband publicly said let the houses burn in forest fires. A logger died due to the tree spiking which she was part of. Yet she is who they nominate, and now who the Dems approved. That is like making Charles Manson police chief. The new US Attorney for MA will be a black woman who thinks too many black men get charged with crimes so no charges should be brought in many cases. Good luck in MA with crime. It is clear Biden has nothing to say about who gets appointed. Good luck with lumber prices if this terrorist gets the position.
So you get this correct-if you are an illiterate illegal alien with Covid, you get to immediately enter the US and get put right on a bus to wherever with a promise of all sorts of welfare benefits. If you are a citizen and you dare enter the House side of the Capitol with no mask, even if vaccinated and free of Covid, you get arrested. If you are a heroic guy from Afghanistan who risked his life to help us, you have to go through a rigorous process before you get out of Afghanistan, then you go to wait in some other country before being let into the US. All of this makes perfect sense to someone.
There are several million who are not paying rent claiming they can't afford it. I must have missed something. Virtually all of these people received $1200,then $600, then $1400 free dollars for no work. Times two or more depending on family size. They got an extra $600, then $300 on top of unemployment. They got $3,000 cash if they had kids, they got food stamps, free medical care, and other welfare, all together worth much more than they earned when they worked, plus they are not paying rent. So how is it they have not paid their rent. Here is reality. My friend built a lovely affordable project here in the Hamptons. All tenants accepted had to prove they had a job and some cash. Now 20% are not paying any rent saying you can't evict me and the government will pay the rent, so I am not paying. Meantime they are collecting all this money and working off the book for cash at $30-$35 per hour-the going rate here for day labor. Don't you feel good knowing your tax dollars are helping these people game the system. Makes you all warm and fuzzy. Joe and the press will tell you to feel sorry for them.
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