Thursday, March 14, 2019

The Most Chilling Thing Donald Trump Has Said

President Donald Trump reportedly has just threatened violence against his political enemies.  According to a news report, he said that his supporters (whom he identified as the police, military and Bikers for Trump) "could get 'tough' on his political opponents at a 'certain point'"  and "'then it would be very, very bad.'"  (See  This invokes the specter of the criminal violence of Nazis against their political enemies in the 1920s and 1930s.  The conduct to which Trump alludes wouldn't be legal.  But perhaps he thinks he will be protected by the U.S. Department of Justice policy against indicting a sitting President.  Maybe he thinks this will allow him to establish a dictatorship, thus permanently insulating himself from prosecution.  The Justice Department could end up looking like a bunch of ineffectual, complicit patsies while the Constitution is destroyed.  By all indications, the GOP Senators and Representatives won't have the guts to stand up for democracy--never before in American history have so many cowered so much before such a despicable man.  The Democrats in the House and Senate, and the federal courts, could and likely would attempt to stop incipient totalitarianism.  But the means at their disposal are limited if Trump defies the lawful measures they could take (especially if he inflicts political violence on them).  In the end, it will probably be up to the American people to stand up to and overcome Trump's threats of political violence.  But Americans shook off the chains of tyranny once before, in a struggle that began in Lexington and Concord and ended in Yorktown.  If necessary, they can--and will--do it again.

Wednesday, February 27, 2019

The Most Chilling Thing Michael Cohen Said About Donald Trump

Today, President Trump's former personal attorney, Michael Cohen, testified before Congress about his decade or more of dealing with Trump.  Cohen's testimony indicated Trump may have suborned perjury, violated campaign finance laws, conspired with Russians to undermine the Presidential election of 2016 and even possibly violated the draft laws of the 1960s in order to avoid service in the Vietnam War (which would have been a crime).  All of these could be serious offenses, although the draft violation, if there were one, would no longer be prosecuted today. 

But the most chilling thing that Cohen said was, "Given my experience working for President Trump, I fear that if he loses the election in 2020 that there will never be a peaceful transition of power."  See  It's one thing to have a criminal in the White House.  That, although very, very bad, has by all accounts happened before and America survived the experience.  But a felonious dictator is far worse.  America established the tradition for modern democracies, with the key element that elected officials step down when their terms are over.  Indeed, this is what most distinguishes America from the monarchies that preceded it.  The first President, George Washington, could easily have been crowned monarch of the United States had he wanted it.  But he did America perhaps his greatest service by stepping down at the end of his second term and retiring quietly to Mount Vernon.  That, more than anything, is the bedrock of democracy that makes America great.

Would Trump attempt a coup d'etat if he lost the 2020 election?  Michael Cohen, as Trump's personal attorney for about a decade, knows Trump better than almost anyone.  Having already pled guilty to perjury before Congress in 2017, he has little reason now to lie, as he knows the cost of perjury.  And Trump's well-publicized affinity for despots (think Vladimir Putin, Kim Jong Un, Xi Jinping, and the rulers of Saudi Arabia) ominously buttresses Cohen's assertion.  There is no procedure written into the Constitution for fending off a tyrant (who by definition would refuse to honor an impeachment proceeding).  Neither Congress nor the federal courts have the means to remove an autocrat who might flaunt the law in order to stay in power.  But Americans have dealt with tyrants before.  These were ordinary Americans, many of whom assembled quietly in the early hours of April 19, 1775 in Lexington and Concord to await the tyrant's redcoated soldiers.  And these farmers, tradesmen and other civilians were victorious.  In America, right makes might.  While we can hope that if Donald Trump tries unlawfully to seize power we don't need to take up musket, powder and shot, we must remember that the greatest defense against oppression and subjugation is the righteousness of a democratic citizenry. 

Monday, February 25, 2019

A Peek Under Facebook's Rug?

There's an old saw about people sweeping dirt under the rug when they do a quick and not necessarily good job of cleaning.   Well, CNBC reports that some Facebook content reviewers are so stressed out by what they see and hear that they are developing symptoms of PTSD, or starting to believe conspiracy theories about 9/11 or the Las Vegas mass shooting.  Reviewers reportedly used drugs or alcohol at work to find relief from their stress, or had sex in bathrooms or a lactating room to escape.  One even said he brought a gun to work in order to protect himself from other employees who made him feel threatened.  See  These reviewers, employees of a contractor hired by Facebook, work for wages around $15 an hour to screen violence, threats, hate, and other extreme stuff.  Facebook's contractor says it offers counseling and other assistance to employees.

Is it any wonder Russian government intelligence operatives can use Facebook to undermine American democracy?  Is it any wonder hate groups and other weirdos can use Facebook to promote all manner of sick and extreme views?  Facebook's algorithms can't stop this stuff.  Evidently, Facebook's human reviewers, paid what many consider barely a living wage, can sometimes become so stressed they aren't really able to cope with the job.  So they probably aren't stopping it, either. 

No website is better than its content.  Facebook evidently struggles to control its content.  If its content reviewers can develop PTSD or resort to alcohol, drugs or sex in the lactating room to cope, what reaction might Facebook's users (especially its young users) have to such content?  It may be that so much content is uploaded so fast to Facebook that it cannot truly screen out the bad.  Then again, no website is irreplaceable.  Whatever excuse Facebook may offer for its content problems, no one needs to use it.  The rest of the Internet is a pretty big place, and you're the only person stopping you from exploring it.    

Wednesday, February 20, 2019

The Defining Moment of Donald Trump's Presidency

Special Prosecutor Robert Mueller's report may be finalized as early as next week, according to a news story (see  The report presumably will address crucial questions about President Trump.  Did he collude (conspire would be the legal term) with Russian authorities to undermine American democracy?  Was he a Russian intelligence asset, as one former acting FBI director has speculated (see  Did he obstruct justice or suborn perjury?  Did he violate federal campaign finance laws?  Did he engage in money laundering?  Did he violate the tax laws?  These and perhaps many other questions could be encompassed by the Mueller Report.  The answers may go a long way to defining President Trump's legacy.

Will the report be released publicly?  The President has said he'll leave that up to newly installed Attorney General William Barr.  Barr has said he wants to be as transparent as possible and will release at least a summary of the report to Congress.  But there is a view in the Justice Department that "derogatory" information about uncharged individuals should usually not be revealed, and Barr may give weight to the this practice.  If Trump is not charged because he is the current sitting President, which is what traditional Justice Department thinking could dictate, then one might wonder whether Barr would engage in legal convolutions to reason that because the President hasn't yet been charged, derogatory information about him shouldn't be released.  Such a contorted line of reasoning would defy the logic of democracy.  If the President is a crook, the people need to know it whether or not the President is charged.  But only time will tell whether Barr is inclined toward something verging on a lawyer's trickery to protect President Trump.

In addition, Barr will have to think through the issue of executive privilege, a doctrine that often shields the President's conversations with other Executive Branch personnel from disclosure.  However, executive privilege is not unlimited, and a President's general interest in confidentiality does not override the needs of the criminal justice process (see United States v. Nixon, 418 U.S. 683 (1974)(a case in which the Supreme Court enforced a subpoena issued by Watergate special prosecutor Leon Jaworski for President Nixon's tape-recordings of conversations in his office).  Moreover, it is a time-honored tradition in American law that discussions concerning a crime or fraud cannot be protected by a legal privilege.  (See Alexander v. United States, 201 U.S. 117 (1906)).  If Mueller's investigation shows that Donald Trump was engaged in criminal conduct, release of that information cannot be blocked by a privilege.

How William Barr handles the question of releasing the Mueller Report will define his legacy.  Although he has had a highly successful career, nothing he has done thus far will compare in significance to his handling of the Mueller Report.  He will be well-remembered, or not, depending on what he does with the report.

If Barr disappoints the curious members of Congress and the public, remember this.  Many, and perhaps most, of the investigations into President Trump and his doings are outside the scope of Mueller's investigation.  The U.S. Attorney's Office in Manhattan is looking into activities of Trump's former personal attorney, Michael Cohen, in relation to various Trump matters and also activities of the Trump Inaugural Committee.  The U.S. Attorney's Office in Washington, D.C. and the main Justice Department in Washington are involved in some of the cases brought by Mueller's staff, and other cases (like the Maria Butina case).  The Attorney General of New York is looking into the Trump Foundation and some of Trump's activities as a landlord.  Trump's continued ownership in the Trump International Hotel in Washington, D.C. is the subject of litigation brought by the Attorney Generals of the District of Columbia and Maryland.  As these cases progress, we will learn more and more about Donald Trump.  Even if we don't learn everything in the Mueller Report, we will eventually learn a heck of a lot about Donald Trump.  And the totality of this growing tidal wave of investigations and litigation will define Trump's legacy.  Facing, as he does, a Democratically controlled House of Representatives, he won't have any more major legislative achievements.  And his erratic wackiness on the international stage make major diplomatic accomplishments highly unlikely.  It's a sad time when a President's legacy is defined by the legal investigations into his activities.  But Donald Trump has done what he has done, and the chickens are coming home to roost.

Saturday, January 12, 2019

Donald Trump Doesn't Want to Govern

The current federal government shutdown has now become the longest on record. Lots of folks are hurting, from furloughed government employees to furloughed government contractors to the beneficiaries of numerous government programs, such as farmers, small businesses needing SBA loans, prospective homebuyers seeking an FHA or USDA loan, and women seeking protection in one of the many domestic violence shelters that receive federal funds.  Although a lot of government leaders in Washington are creating the appearance of activity, there is no sign of a resolution.  The reason is simple.

President Trump doesn't want to govern.  He wants to win.  Winning, for him, is an imperative.  He looks at life as a competition, where there are winners and losers.  And he is obsessed with winning. 

Governing, however, requires magnanimity, open-mindedness, a concern for others, and an interest in the welfare of the polity as a whole.  In a democracy, governing involves a willingness to accommodate the wishes of those of differing views and compromise.  Leaders, to be successful, must forbear from pressing for the lion's share.  The people are the lion in a democracy.

Trump has shut down the government in a contest over funding for his wall on the border with Mexico, where he wins if the wall is funded and he loses if the wall isn't funded.  By turning what was a political issue that was quite susceptible to compromise into a zero-sum situation, he has pushed the newly empowered Democratic leadership of the current 116th Congress into a joust.  The Democratic leadership in Congress, now wielding majority control in the House and understandably feeling they have a mandate from the electorate not to do things the Trumpian way, see no reason to concede.

President Trump has set a record--for the longest government shutdown ever.  He's not winning.  He's losing.  His legacy, already tenuous, now careens toward abysmal infamy.  The government will re-open, because it must.  Americans, fed up with the dysfunction in Washington, won't accept non-function.  A little graciousness from Donald Trump would be all it takes to get the government up and running again quickly, without an inordinate amount of fallout.  But he's not a gracious man.  So the eventual re-opening of the government is likely to be as ugly as the shutdown.  Whatever the circumstances under which the government re-opens, Trump will have revealed a senseless pettiness that tarnishes his Presidency for the remainder of his time in the White House.

Friday, January 11, 2019

Apple's Dilemma

Apple Corp. is facing mortality--the mortality of the smart phone.  Not that the smart phone is going away any time soon.  It will be around in various iterations for decades.  But it's reached the point in the product cycle where it has become a commodity.  There are lots of different types of smart phones made by many different manufacturers at prices ranging from almost $2,000 to almost zero.  Competition has intensified immensely from the time the iPhone was introduced in 2007, and the iPhone is not always at the cutting edge of technology. 

Last fall, Apple announced that it would no longer report unit sales of iPhones, its most important product.  That was a bad sign, indicating sales were no longer exuberant.  Apple also significantly raised the prices of many products, and said it would endeavor to increase sales of services.  Then, at the beginning of 2019, Apple announced that sales in China were more disappointing than expected.  Not surprisingly, its stock has sagged. 

Apple is swimming against the current.  While it continues to make excellent products, it raised prices at a time when its prices were already at premium levels and the world's economy was slowing.  Even though its products include upgrades, none were astounding, must-have innovations.  Ten years ago, people were willing to pay premium prices for Apple products because they were superior to the competition, in terms of technical capability and quality of manufacture.  Today, other manufacturers turn out very high quality products, sometimes with better features than Apple has, at competitive or lower prices.  Apple seems to be betting that consumers will pay up for a brand name.  That's not ultimately a winning strategy.  Mercedes, which has never been a luxury brand in Germany, tried to do that in America by charging premium prices and creating an aura of exclusivity.  Although it succeeded for a while, its outsized prices attracted a flock of competitors.  Today, Mercedes is no longer a show-stopping dazzler, with some of its lower end models selling for less than many pickup trucks. 

Econ 101 teaches that when Apple raised prices, it shrank the pool of its potential customers because fewer and fewer people can and will pay escalating prices.  And hoping to sell more services is predicated on people buying more Apple hardware.  But if hardware sales are lagging because of price increases and a slowing economy, something has to give--and it has, in Apple's recent disappointing news announcements.

Most consumers don't use more than a few of the myriad features in iPhones and other high-end smart phones.  Indeed, most consumers don't even know what those features are.  When you can buy a smart phone for $100 or $200 that does the few things you care about well, there's no point to paying $1,000+ for a brand name.  Probably most millionaires in America drive ordinary cars.  You don't get to be a millionaire by burning up money on a brand name. 

Apple's dilemma is that it is a giant consumer products company trying to be a high-end luxury company.  That doesn't work.  Highly priced luxury products can only be sold in market niches that serve the wealthy.  Apple cannot afford to become a niche company, lest it lose most of its customer base.  The key to Apple's past success is that it appealed to a lot of middle class but aspirational people.  But those folks can't shell out thousands of dollars a year for computing devices plus wireless service plus other services.  Instead, Apple should take a close look at Toyota, another company known for excellent products made with very high quality of manufacture.  While Toyota vehicles are not always at the cutting edge of technology, they have a strong, loyal customer base because they deliver value--excellent quality at reasonable prices.  While Apple can try to use clever marketing to boost financial performance for the next quarter, or two or three, its long term prospects won't be well-served by hoping that consumers will embrace its cute logo and ever increasing prices.  

Sunday, December 16, 2018

How Donald Trump Could Create a Stock Market Crash

Stock market crashes, such as in 2008, emanate from inflated asset prices.  While economic recessions and other events, such as war, can trigger market downturns, large, sharp market drops (a/k/a crashes) are the result of artificially high asset prices that often have started bubbling.  In 2008, the asset bubbles resulted from overly generous prices being paid for real estate, the resulting mortgages, stocks that seemed like good bets in light of all the real estate activity, and stocks generally because market averages kept rising.  It didn't help that the U.S. government guaranteed almost all mortgages on a de facto or de jure basis.  The easiest way to get people to pay too much for an asset is to make it seem like a sure bet.  Con men know this and profit from it because, despite all the evidence that there is no such thing as a sure bet except taxes and death, people remain suckers for sure bets. 

Donald Trump bet the image of his Presidency on the rising stock market.  Stocks rose briskly right after Election Day in 2016 and maintained their upward momentum for over a year.  Trump noisily celebrated the huzzahs he thought he heard from the financial markets and wore out the fabric of his suit jackets patting himself on the back.

But Trump, despite decades as a New York businessman, hasn't absorbed a simple lesson that he should have learned about stocks a long time ago:   that stocks go up and stocks go down.  There is no such thing in the stock markets as continuing upward momentum.  There is no endless applause.

So, when the stock markets got tummy trouble in 2018, and began to burp, belch and make other inelegant noises, Trump became discombobulated.  He berated the Federal Reserve Board for raising interest rates, manipulated oil prices down by persuading the Saudis to keep pumping large volumes, and condemned American businesses that closed down domestic operations.  Sometimes, on down days in the market, he made statements about trade talks that turned out to be optimistic or premature.  He seemed indifferent to widening federal deficits, instead suggesting a further tax cut for the middle class.  All of these actions seem linked to a desire to support stock prices.  But stocks have remained gloomy.  So we can expect that Trump will keep searching for some way to boost the metric that he thought made him look so good.

Persistent efforts by governments to support and boost asset prices have tended to end badly.  There is no free lunch, and governmental distortion of asset prices inevitably leads to misallocation of capital and other resources.  Pushed far enough, this mispricing eventually becomes too much for investors to stomach, and they back away from the asset. Then, bad things happen to the asset's price. That happened with real estate and mortgages in 2008 and it may be happening with stocks now.  If Trump pushes too hard on maintaining and increasing stock prices, he could foster a bubble in the stock markets, and nothing good for him will result from that.  If you're an investor, don't bet on governmental action to make stocks great again.  Remember:  in the final analysis, stocks go up and stocks go down.

Sunday, November 11, 2018

The Best Asset in a Time of Volatility

All markets are volatile these days.  Stocks are gyrating, bonds are falling as interest rates increase, oil is bouncing up and then down, bitcoin has fallen all year, and even the real estate market seems to be going wobbly.  Gold and silver have been slipping away.  And foreign markets look even gloomier.

Investors naturally look for opportunities when prices fluctuate.  Whether you're a buyer or a short seller, price movements create the potential for profit.  Volatility is gut wrenching if you're taking losses, and can stimulate panicky selling when prices are low.  But it can be exhilarating if it looks like a lucky break.

That's why cash is often the best asset to hold in a time of volatility.  It gives you the means to take advantage of fortuitous price movements, while its stability insulates you from the emotional roller coaster that often drives people to sell when prices are dropping.  Don't think that you have to remain fully invested all the time.  What you have to do is remain unemotional, as emotion is the enemy of careful investing.  A nice, comforting cushion of cash can prevent an unwanted flood of adrenaline.

Cash may appear to have a low rate of return, with greedy banks still paying miserly rates of interest on deposits even though interest rates have been rising.  But cash also offers the potential to profit from price volatility.  You can dive into an asset when its price is low and make a bundle when it rebounds.   That potential makes the effective return from cash much higher.  So don't be afraid to hold a lot of cash in a time of volatility.  That's when it's an investor's best friend.

Friday, September 7, 2018

Donald Trump on the Orient Express

An anonymous senior official of the Trump administration has written an op ed piece published by The New York Times that depicts the Trump White House as a looney bin for an amoral, impulsive, unpredictable and seemingly crazy 70-year old child who somehow managed to get himself elected President.  The asylum is run by a staff of adults (a/k/a the President's Cabinet), a number of whom ignore the directives of the child President whenever he issues orders that are dumb, dangerous or incoherent.

By all indications, President Trump is beside himself trying to figure out who the author is.  A number of Cabinet-level officials have issued statements apparently intended to deny that they were the author.  Their statements make interesting reading, as the explicitness of the denials seems to vary somewhat among them.

The anonymous author says that a number of officials in the Trump administration (referred to as the "Resistance") are working to thwart the President's craziness.  Even if only one of them wrote the op ed piece, all who are in the Resistance are authors in spirit.

In Agatha Christy's gem of a novel, Murder on the Orient Express, a man is found murdered on a train.  Belgian private detective Hercule Poirot investigates, and discovers that the victim was a criminal who had murdered a young girl but avoided punishment due to a technicality.  Poirot also learns everyone on the train is connected to the young girl who was killed and has a reason to kill the man because of his murderous past.  Poirot hypothesizes that either a stranger came on the train and killed the man, or all the other passengers on the train had a role in the man's death.  One of the passengers admits to the second theory, but at the end of the book, the police are presented with the first theory.  Justice is done, albeit extra-judicially.

If President Trump wants to know who wrote the anonymous op ed piece, he should give Murder on the Orient Express a quick read.  In the final analysis, it doesn't matter who put pen to paper.  The authors are hiding in plain sight.  And it he gets rid of them, new authors will replace them.

Saturday, August 25, 2018

The Cryptocurrency Bust

Cryptocurrencies are down about 75% from the beginning of the year.  See  Many investors have taken losses in the range of 70% to 90%.  Those who borrowed to buy cryptocurrencies learned the hard way that investments may or may not work out, but debts have to be repaid either way.  There may be some winners, but clearly there are plenty of losers.

The problem with cryptocurrencies is that they basically have no intrinsic value.  They're only worth what someone else will pay for them.  If buyer interest falls, people holding cryptocurrencies end up holding the bag.  If you want to buy cryptocurrencies, that's your choice.  But understand it's a speculative choice and lots of speculations end badly. 

The reason why stocks, bonds, real estate and a few other things have stood the test of time as good investments is they generally have underlying value.  If you want to build wealth, invest in value.  If you want to speculate, hope to win but don't be surprised if you lose.  If you want a decent retirement, avoid wishful thinking and focus on the higher percentage plays.  See