NYC Journal

[Calzone]

A dry night, but almost hourly waking and getting up to pee. Oh-well.

Scrotum is finally normal sized, and the bloating has faded to the extent that abs and the Bruce Lee 3 finger definition is beginning to return.

When I look in the mirror the amount of fat I have is also less suggesting that my diet adjustment, cutting carbs, trimmed some weight. There is still bloating, but I’m not far from getting my build back. It has been 2 weeks since the surgery…

So today a history of cooperation and tied economies ends on our north and south borders. A new isolationism has begun.

There was an article about how uncertainty promoted by the Orange House might not favor foreign investment. The point being that the uncertainty and Willy-Nilly chaos that is being promoted makes a hard sell for making long-term business decisions. Lots of arbitrary decisions, flip-flopping, and probable shock and surprise.

So instability is not a good business environment to have added risk.

As far as my personal consumption goes, I say austerity pays. Hopefully you hoarded and bought your durable goods in advance. Hopefully you have supplies stockpiled. Hopefully you have plans to economize and embrace seriously austerity.

Better self imposed rather than imposed by others to retain some sense of freedom.

So the best thing I can do now is not consume, and pretty much exert as much independence as I can. The idea is not to spend because the tariffs can be looked upon as taxation. The Donald is using tariffs to gain revenue, so why pay in. The struggle here is to minimize purchases as to not pay the tariffs.

Last week I had a $5.00 off coupon at DSW. I figured I would save some money, but I refrained knowing I likely have about 50 gallons of new footwear stored in a trunk in my basement. Enough is enough, and already even the clearance/closeout items I often buy held inflated prices. I ended up hoarding my cash.

They say tariffs will cost each household $2.6K, but I’m not buying any car, electronics, furniture… Pretty much I have what I need. The idea here is to go establish independence and embrace little or no consumption.

The Orange House needs to collect revenue, and this is a way to tax the masses in disguise. Boycott this economy as much as you can. Let austerity punish these bad policies.

On one hand they say these tariffs will lower our GDP by 0.4%; and on another as much as 0.8% lower GDP.

Then to add to this The Donald wants to lock in tax cuts and make them permanent. Of course the tax cut means less revenue and an increase to the deficit.

The markets to me were subdued Friday. La-la-la; and La-la-la… Monday could be a panic…

For sure a slowdown will happen and inflation will advance, and pretty much a scenario for slow growth and higher inflation will exist known as stagflation. The markets will correct.

When Wall Street gets grounded there too goes the “Wealth Effect.” A reverse wealth effect will reinforce the slowdown by bad policy. Another self inflicted wound…

Save your ammo and spend it wisely. I’m so glad I have stockpiles of what I need. I have no need to buy anything other than food, oil and gas.

Cal

 

[Calzone]

Tariffs are a consumption tax.

Soon buying a car, durable goods or electronics will be more costly.

There is a workaround and that is use what you have, stop unnecessary consumption, and embrace austerity.

Hopefully you recognized the opportunity during the period of “Free-Money” with low interest rates and Zero APR offers to wisely load up the truck with items that would be assets and durable goods.

Now the switch is in the opposite direction, austerity after a period of unabashed greed. One was an opportunity of a lifetime, that is unlikely to ever happen again; and the other, meaning a consumption tax, inflated pricing, and supporting Orange House policies that lead to further evil.

So I have a steadfast plan. Limit spending, embrace austerity, and limit participation in the Orange economy.

I think I will feel a sense of freedom despite the economic oppression. It will be liberating, and there is a focus and purpose of not supporting or getting trapped in consumption.

Hope you join in. Pretty much I’m going to boycott the economy as much as I can in a disciplined manner. Fug-‘em…

Cal

 

[Calzone]

I’m seeing a “Red” screen evolving in the market futures.

The route I thought would happen Friday looks to be going to happen Monday at the open.

No surprise. Say goodbye the the wealth effect, and now a “Reverse” wealth effect will curb consumption as well as the tariffs.

Don’t forget that the last quarter of 2024 involved a lot of stockpiling, hoarding, and purchases to avoid these tariffs. What I’m saying the strong spending in the last quarter of 2024 was in anticipation of these now enacted tariffs and that demand has passed. That upturn in consumption was a one-time event.

Add the reverse wealth effect, the slowdown in consumption because of higher prices, and no supporting blip and the predicted 0.4% to 0.8% loss of GDP has mucho potential to be a surprise to being a bigger loss of GDP.

Right now evil prevails, brace yourself. Don’t expect debt relief through lower interest rates when inflation is expected to bloom. Debt will get compounded, both government and household debt, both at record levels.

What a big mess… Two quarters of financial repression and I predict a recession that involves stagflation, both inflation and an economic slowdown.

The FED is strapped. No Helicopter-Money to kick the can down the road. Perhaps the start of the “Greater” Depression.

Cal

 

[Calzone]

It is 16 days since my surgery. EZ-PZ to have dry nights with bladder control. The bad is waking frequently.

During the day any gas or bowel movement compounds a possibility of leakage or worse a gusher.

So an idea here and way to exercise my pelvic floor is to pee more frequently. This encourages muscle memory and control I figure. I don’t worry about capacity so much because I never had large capacity, and pretty much I’m locked into having a small bladder. Oh-well…

So some new training, and life gets interrupted by peeing frequently every 10-15 minutes, but this is good training. Yesterday had too much leakage to my liking…

“Maggie” just got picked up by the kids. They are getting an estimate on doing a MFM, meaning getting rid of trees too close to the house. Then they will get some lunch.

For my own good I need to stay at home and be close to a bathroom. Oh-well.

I figure I’m actually somewhat ahead in my bladder control. They say it takes a minimum of 3 months and perhaps 6 months. Don’t forget 10% never regain control.

I can reliably make the “move,” meaning sit on a toilet, without any incident, leakage, or worse gushing (a sudden release). This actually is a mucho big deal. Yeah, I know, a boring life, but kinda funny/challenging… LOL.

In another 12 days pretty much l won’t live with restrictions, and I can hit the gym. I wonder if my bloat will be totally gone, and if I will weigh-in at or under 155 pounds to be again a skinny-bitch.

I’m not so worried about myself. The Baby-Victorian has had all the heavy lifting performed that requires contractors, except maybe a whole house Generac generator.

The garage roof I figure I will strip and replace myself in the later spring or early summer. I’ll insulate the floor of the front porch, and also the attic roof. Lots of small jobs, painting, more stripping of moldings… I forgot, build carriage house doors.

So pretty much my time and sweat equity. I receive my own dividends and build up equity.

Finally Maggie proclaims she wants a simple life.

Off to play acoustic guitars…

Cal

 

[Calzone]

A miso soup break…

I avoided buying Chinese products for decades. Pretty much I can live without throwaway cheap goods. I only buy Chinese goods like say my now 3 year old IPAD made in China because I had to. Oh-well.

But the Walmart crowd buys all these cheap goods being dumped here…

The Chinese also had 8 years to get ready for Trump 2.0, and it also is a different China.

What happened to those 60% tariffs that were threatened against China. Why in the media are they calling 10% tariffs a “duty.”

One thing I know though is the Chinese mentality. I don’t think westerners really understand the Chinese. A smart man like Ray Dalio got it wrong. China will never become the world’s largest economy, well maybe if it does it likely will only last a blink of an eye or perhaps a sudden moment. An empire could be born, but it will quickly collapse.

In a trade war someone has to have the upper hand. In an article I just read they claimed that China is self sufficient. I guess he forgot that China is a net importer of food and can no longer feed itself due to not only environmental destruction, but also dislocations of rural farmers, and urbanization.

Also China imports energy.

Meanwhile the U.S. is a net exporter of energy, and also food.

Granted, China has the rare earth minerals kinda cornered.

So with 20% youth unemployment, and outflows of capitol, as well as deflation is China doing as well as the article says it is to have ammo to make the U.S. suffer as much as they already are suffering at the moment.

So the question is what do we really need from China, and what do we have that China needs? Things will get mighty messy, but I don’t think China has the upper hand. China needs a market to dump its products, and if they can’t unload their cheap goods here, and they have no internal consumer market to absorb all the overcapacity. Oh-well a collapse.

Anyways, Germany too has an export economy, and it is the industrial powerhouse of the E.U. There is no plan “B” in Germany other than an export economy, and their government is as messy and chaotic as here in the U.S.

The U.S. is not so self sufficient either. We need immigration, and Mexican as well as Canadian labor. Canada is a big source of raw materials and resources.

So what country is really self-sufficient in this new world order of isolationism?

I have to brag that owning 3 great Santa Cruz guitars is a mucho huge luxury. Kinda like having three hot girlfriends that are all super models. “Don’t tell Maggie.” Very insane and stimulating. Too much fun…

Bathroom, then guitar.

Just wanted to share how self sufficiency is a key here to surviving the economic and financial oppression/repression. A small footprint is good, meaning little or no debt, having dry ammo, and a position of strength to defend.

Cal

 

[Calzone]

I just read an article from “The Atlantic” about the impact of the tariffs. Not good.

Pretty much America First translates into America Alone.

A great example of how tariffs tax imports as well as exports, and another great point is about obscured “input costs.”

In my writing I wrote about the 20% Canadian lumber tariff from Trump’s first term, that Biden shamefully did not rescind. Pretty much analysts and economists even discounted and even wrote off how my input cost made the housing shortage worse, and building new housing more expensive.

The biggest tragedy though is the betrayal of trust and rule of law. The example given also sites Biden guilty of disregarding a WTO ruling against the initial Trump Tariffs on steel and aluminum. The writer drags this out to a fourth point which is our reputation that is no longer worthy of trust or honor.

Now just imagine, you no longer have friends, let alone allies, you are not trusted, and you are known to not follow the rules and unilaterally break the law (Both Bidin and Trump dismantled the WTO).

I’m ashamed, we have no honor, we don’t deserve respect, and I wonder how safe it is for me as an American to travel outside the U.S. How crazy is that? This sickens me.

Decades of trust and cooperation destroyed in a day, meaning today.

Cal

 

[Calzone]

Another dry night. Frequent awakenings though.

Something happened yesterday and there was a vast improvement in the day leakage, and I gained a lot of bladder capacity. A significant improvement in control.

Been practicing descending scales to balance or rebalance my skills and development. Adjusted the HOG’s truss rod for a straighter neck which also enhanced the treble and lowered the action a tad.

Seems like Canada is going into “Hockey” mode. Things will get mighty ugly fast. The last time we fought Canada was the War of 1812, and pretty much the Canadians beat our butts. They flipped the switch. No polite Canadians now. Trudeau I think did well in unifying all Canadians.

While the Orange-House states that we don’t need Canadian products, the fact is we do. Canadian aluminum is made using hydro electric power and is cheaply manufactured. Where are we going to get cheaper aluminum? Now that formally cheap aluminum is 25% more expensive.

You know the windows on buildings and houses use aluminum. This is where input costs get masked and hidden. We get 25% of our lumber from Canada. How costly will it be to rebuild L.A.? How does this help eliminate the housing shortage?

I suspect these increased costs will not get counted again to mask the real inflation. At this point expect more fudged numbers that lie about inflation. No surprise here, Americans are dumb and are not critical thinkers. Lies work and the masses are gullible and easily controlled.

Another “Oh-well.”

Meanwhile the equity and value of the Baby-Victorian and existing homes increases to make the housing shortage worse via escalated unaffordability.

On Hudson Street in Peekskill I took notice of a house that displays a Canadian flag. Am I a traitor if I route for the Canadians too?

Mexico’s woman President is being more calculated. Big “Q” factor here. Could be scary. In wars supply chains are vital. Pretty easy to cause delays and havoc. What if Mexico locked the border in a spiteful way. I think the U.S. would suffer bigger losses financially. Just create an emergency, alright to be bogus, deception is a tactic of war.

Shut the Mexican border for a week. Who looses more money when say the entire auto industry in the U.S. shuts down. BTW laid off workers are not unemployed long enough to get unemployment benefits.

What I’m saying here is Mexico does have power. Can a woman have big balls?

In that “Atlantic” article was also sited how protectionist policies allow inferior non competitive products to survive. Pretty much quality goes “extra-medium.” Basically expect promotion of third world quality. For high quality pay the premium and tariffs on imports.

Am I traitor if I don’t root for the home team? People voted for this… Trump got the popular vote. How can I support these evil policies, and know that respect, honor and decency are gone forever.

I love my country, but I cannot support what is happening.

Cal

 

[Calzone]

2026 are the mid-term elections.

So here is a scenario, they said there is a 50% chance of a recession in 2024, and also a 50% chance of a recession in 2025.

If the economy does a dump and tanks there could likely be a political shift in the House and Senate.

So if you think our government is dysfunctional now, things could get worse.

Then there are threats to our Constitution. Will the Supreme Court uphold our Constitution? Rule of law already has been violated.

Anyways just saying things could unravel further. We are undergoing and witnessing a collapse of the American Empire. Pretty much what Ray Dalio outlined.

Cal

 

[Calzone]

Locally ICE has been reported to be around.

Depending where you look Peekskill is either has a 42% white or 42% Hispanic majority. Either way it is an immigrant community that has many illegal immigrants.

When I go to CVS a few blocks from my house I use to see the day laborers loitering waiting around for a pickup truck to come by for possible work. You also see this roundup of illegal immigrant day laborers downtown by the Post Office.

Lately I don’t see them. No safety or haven.

I remember when this cargo ship ran aground in Brooklyn, the Golden Venture. There were drownings of Chinese illegal immigrants. I had an exaggerated concern back then of getting caught in a roundup. Kinda ridicules and unlikely.

But pretty much not so unlikely for Americans of Latino descent.

Also know that today there are very poor Chinese illegal immigrants that start their journey to cross the Mexican border starting the northern section of South America. Much has been written about the frontier of jungle and swamp that needs to be crossed just to get into Central America. Pretty much a lawless no man’s land.

What gets conveyed is these are very poor and often rural Chinese who decided to risk their lives to escape China.

Do you believe the 10-12 hour days of work, 7 days a week in China? How close is this to slave labor? Hmmm… How much of this could be exaggeration? Anyways this explains why there is a lack of a middle class in China.

So what happens here in the U.S. when failed policy creates a ruined economy? How close to China will we be.

In 2007-2008 every taxpayer assumed a mortgaged future because of the bailouts. Debt is related to indeturement as slavery is akin to working for free. Know and understand that in the year 2000 we had no deficiet, and we actually had a trade surplus that was squandered.

Social Security also was self-funded, but the government tapped into the fund and used it to fund unfunded programs. Another great squandering.

So here we are, looks like our debt, mismanagement, and squandering will lead to hyper austere times that will resemble a developing country. Mucho sideways action I predict. Lots of stagnation and bleeding.

Cal

 

[Calzone]

It is estimated the U.S. GDP will drop 1.5% in 2025.

Certainly Canada and Mexico will go into recessions. Will the U.S.?

The drop in Canadian GDP is estimated to be 2.6%.

Technically here the Canadians have a disadvantage, the numbers don’t lie, but really are not the American people the real losers here. We just isolated ourselves, and that is not good. No friends, no allies, and no trust.

No going back. How can we Americans ever apologize for a huge error and mistake?

I have to fact check, but 80% of Canada’s exports go to the U.S. and something like 40% of Mexico’s exports are U.S. bound.

Cal

POST SCRIPT: See below.

 

[Calzone]

FACT CHECK: The Washington Post stated almost 80% of Canada’s exports go to the U.S.

In another citation they say Canada exports more than 75% of its goods to the U.S.

Canada provides about 60% of U.S. crude oil imports.

For Mexico I got 82.7% and 78.29% from two sources as far as exports to the U.S.

Most of the products imported from Mexico are manufactured products, but know that Mexico supplies 63% of our vegetables, and 47% of our fruit and nuts.

So on one hand we have energy that can be weaponized. Canada is also a vast supply of raw materials as well as steel aluminum, nickel…

Then on the other hand we have a supply chain from Mexico that can disrupt entire industries, and food can be weaponized.

Let’s see how ugly this can get.

Food prices basically caused Arab Spring (hungry children). Energy prices created 4 out of 5 recessions. Not good…

Cal

 

[Calzone]

People who really know me know that I have a big imagination. I admit I can be delusional at times.

So it has been said the food prices between 2020 and 2024 went up 25%. Of course the government dilutes this number.

So lets say Mexico has a 25% tariff on food. Above I posted that we get 63% of our vegetables from Mexico, and 47% of our fruit and nuts. So 4 years of price increases that were the product of a lockdown and a Pandemic that lasted 3 years suddenly and all at once is a possibility.

The Orange-House stated we don’t need their imports, but clearly we do. We need the raw materials, finished manufactured goods, energy, and food. Don’t forget also labor…

No lie is that 70%-80% of Canada’s and Mexico’s exports are needed here.

Is this an abstraction? Granted I have a big imagination, but I still have a hard time getting my head around this. This is my thinking and not the news, but I do have a Master’s in Journalism and am trained to connect the dots.

Since we don’t buy all our produce from Mexico of course a full blown 25% across the board increase is somewhat an exaggeration could be argued.

But here is how real economics works, and I will use the example used in the “Atlantic” article. Modelo Mexican Beer is said to be the number one beer sold in the U.S. A 25% tarriff would kill that position. American Beers would advance.

Mexico imports barley from the U.S. to make beer, but American farmers care more about price. Understand that the tariff on beer allows American farmers to raise prices even though less Modelo beer is imported. American beer prices go up and so does the price of barley along with the American price of beer.

In the “Atlantic” article they cite that Mexico buys 75% of its barley from the U.S. With less demand for Modelo beer in the U.S. certainly this grain will not be needed.

So what happens to domestic vegetable, fruit and nut prices when tariffs effect Mexican food imports. Your guess is correct, domestic food prices increase.

So is it really an abstraction that fresh fruit vegetables and nuts will increase 25% rather suddenly? Should I go to Trader Joe’s and load up the truck and hoard at least nuts. IMHO not a bad idea…

Anyways I don’t think I’m delusional here.

I mentioned earlier or rather suggested that Mexico’s woman President should close the border for a week to basically shut down the U.S. automotive industry.

It is said that some automotive components can cross both the Canadian and Mexican borders 6-8 times. The way the tariffs are engineered it would trip a tariff trigger at each individual crossing. Pretty much 25%+25%+25%+25%+25%+25%+25%+25%= a 200% increase in price for say a steering column. That’s for a manufactured part that crosses the border 8 times.

So lets say a steering column would effectively cost suddenly 3 times what it cost pre-tariffs. Can I sell a car without a steering Column? Has self driving cars advanced as much as Elon Musk says over the weekend?

There is no way that the U.S. automotive companies can absorb these costs or get away with passing them to the consumer. I expect a surprise sudden complete shutdown and layoffs.

Oops. An unintended consequence. How did this happen?

Another self inflicted wound. Are you bleeding yet?

So certainly the monitoring of all this is set up. NOPE. Who forgot, and who will get blamed? DEI?

My mind is blown. I can’t make this stuff up. How do we destroy our own economy? How much bleeding has to take place?

Again, people voted for this…

What were they thinking? Evidently they were not thinking at all.

Is my thinking irrational? Am I crazy? Or am I just going with the flow.

I guess we can expect more self inflicted wounds as more and more becomes evident.

Cal

 

[Calzone]

More bad news. We import a lot of food from Canada also: grain; and meat.

Another self inflicted wound…

Cal

 

[Calzone]

The markets Friday did not take the proposed tariffs seriously as if it was just a threat/bluff. A sell off in Asia happened already as it was Monday, already Dow futures are down over 450 points. European futures are down 3%.

Expect Monday to be a red screen and a sell off tomorrow in New York.

Watch how oil and gold respond. More talk of $3K gold soon. Watch oil and gold. If they both climb, and if they diverge. Look for when they diverge.

The Donald mentioned that Europe will also be targeted for tariffs. Soon this will be a world wide trade war. Pretty much a possible implosion of the world economy.

As inflation gains further traction, when will American consumerism drop off? The money has to come from somewhere… When this tipping point happens… Oh-well…

Know that China already has an export economy that is in a deflationary spiral. Germany, the powerhouse of the E.U. Also is suffering excess capacity in its export economy. So when further slowdown happens…

I coined the term “Greater Depression.” Here’s the formula: an inflated stock market; record levels of borrowing of governments and households; a rapid reversal of globalization; inflation via physical wars and financial wars; isolationism; two export economies (Germany and China) with vast overcapacity undergoing deflation; and lastly tariffs to kinda worsen all the aforementioned.

They say in war there are no winners. I believe that.

Not only will the U.S. economy lose 1.5% GNP, Canada’s economy 2.6% GNP, but the entire world’s economy will slow down.

Rule of the jungle will prevail.

China says it will complain and make a case at the WTO, but the WTO already has been somewhat dismantled by Trump and Biden. There is no “rule of law.”

A deflationary spiral meaning oversupply is taking root. Sideways slow growth, austerity, and stagnation. In one word stagflation.

1929 was a financial crash. 2007-2008 was a financial crash, but the bubble was reinflated with loose money policy, low interest rates and free money. Deficits and debt loads increased to record levels, both governments and households lived on credit.

1929 happened after the Roaring 20’s. Protectionist and isolationist practices took hold and were developed, then came tariffs to create the Great Depression by 1934.

So 2007-2008 was the first step, and now protectionist policies and tariffs are being cemented in place.

A repeat of history… The definition of insanity is repeated behavior and expecting a different outcome.

Prove me wrong… This is the big picture I see clearly happening. Boom then bust…

Cal

 

[Phil_F_NM]

Spray tan in chief creates a global problem, scapegoats literally everyone but himself, convinces the idiot electorate and Congress that he's the one to fix it, then gets a third term.
Phil

 

[robert blu]

The markets Friday did not take the proposed tariffs seriously as if it was just a threat/bluff. A sell off in Asia happened already as it was Monday, already Dow futures are down over 450 points. European futures are down 3%.

Expect Monday to be a red screen and a sell off tomorrow in New York.

Watch how oil and gold respond. More talk of $3K gold soon. Watch oil and gold. If they both climb, and if they diverge. Look for when they diverge.

The Donald mentioned that Europe will also be targeted for tariffs. Soon this will be a world wide trade war. Pretty much a possible implosion of the world economy.

As inflation gains further traction, when will American consumerism drop off? The money has to come from somewhere… When this tipping point happens… Oh-well…

Know that China already has an export economy that is in a deflationary spiral. Germany, the powerhouse of the E.U. Also is suffering excess capacity in its export economy. So when further slowdown happens…

I coined the term “Greater Depression.” Here’s the formula: an inflated stock market; record levels of borrowing of governments and households; a rapid reversal of globalization; inflation via physical wars and financial wars; isolationism; two export economies (Germany and China) with vast overcapacity undergoing deflation; and lastly tariffs to kinda worsen all the aforementioned.

They say in war there are no winners. I believe that.

Not only will the U.S. economy lose 1.5% GNP, Canada’s economy 2.6% GNP, but the entire world’s economy will slow down.

Rule of the jungle will prevail.

China says it will complain and make a case at the WTO, but the WTO already has been somewhat dismantled by Trump and Biden. There is no “rule of law.”

A deflationary spiral meaning oversupply is taking root. Sideways slow growth, austerity, and stagnation. In one word stagflation.

1929 was a financial crash. 2007-2008 was a financial crash, but the bubble was reinflated with loose money policy, low interest rates and free money. Deficits and debt loads increased to record levels, both governments and households lived on credit.

1929 happened after the Roaring 20’s. Protectionist and isolationist practices took hold and were developed, then came tariffs to create the Great Depression by 1934.

So 2007-2008 was the first step, and now protectionist policies and tariffs are being cemented in place.

A repeat of history… The definition of insanity is repeated behavior and expecting a different outcome.

Prove me wrong… This is the big picture I see clearly happening. Boom then bust…

Cal

Frightening...

 

[robert blu]

Spray tan in chief creates a global problem, scapegoats literally everyone but himself, convinces the idiot electorate and Congress that he's the one to fix it, then gets a third term.
Phil

Frightening...

 

[Calzone]

A red screen this Monday in the market futures. At one point the DOW was down over 700 points. Presently down about 650 points. The Nasdaq down about 2%.

There are lots of 4th quarter earnings to be reported this week.

The definition of insanity is playing out. Repeating behavior and expecting a different outcome.

Last Friday the tariffs were taken as bluff, bluster and only as threats. Now there are headlines suggesting they are momentary or temporary. The markets are speculating that this can’t go on.

Disruption is happening. Perhaps the Orange House will have to provide an exemption for automotive parts.

With Canadian oil Canada will likely take a hit on the price and take a haircut of $3.00-$4.00, then on the U.S. side there will be a $2.00-$3.00 increase to pay the tariff. In the end this will mostly effect the upper Midwest and extend as Far East as Ohio and Pennsylvania. New York dodged a bullet.

I will repeat that the markets do not like uncertainty. Expect a downward bias and a loss of market confidence. A fall to earth is not a bad thing in itself because valuations got ahead of true value.

But then there is the reverse wealth effect, and people will begin to understand our economy is really not so strong. Remember they estimate a 1.5% drop in GDP from a reported 2.3% 4th quarter 2024. There was a lot of stockpiling and hoarding in anticipation of tariffs that was a one time bump-up.

Two quarters of dropping GDP is the definition of a recession. The longer the tariffs exist the higher the probability of a recession, but understand there is no going back, and increased volatility will persist.

Perhaps the only clear direction is a downward bias to the markets, and clarity that inflation will be supported but Trump Tariffs.

Understand the term “input-costs,” and you will understand the economics of how this leads to inflation. Input costs have just made rebuilding L.A. a lot more expensive. Also use to be we got 25% of our lumber from Canada, but in one report they say 30%.

How do you compound a disaster?

Cal

 

[Calzone]

Snow last night. The city plowed the roads already.

Expected 40 degree temps, so a snow melt off expected.

Nice to be home…

If the world goes into a recession, it will take the U.S. economy with it. Tariffs will cause inflation and curtail American consumerism eventually. The reverse wealth effect also will slow down the economy. Add onto this then any FED action to rescue the economy this time is very limited. Not much wiggle room or dry ammo.

Get ready for the big turn… I can see stagflation persisting. I lived through 1974-1982 where the cost of living kept going up. The FED really did not tame inflation, the FED only moderated inflation, and now with tariffs inflation will get entrenched.

The markets open soon…

Cal

 

[Calzone]

Tariffs according to Barons will be in two phases: one is transitional to enforce policy; the second is transactional to attempt to pay down deficits and raise revenue.

Securing the borders to stop illegal immigration is no easy task. Stopping drug infiltration might never happen. Then add onto the the labor shortage, wage inflation, and lower economic output and productivity.

Again look into “input-costs” to see and understand how inflation and price increases get masked and absorbed.

Pretty much the ambition here is to try and gain enough revenue to enact tax cuts that exist today as permanent.

The money has to come from somewhere…

Kinda ambitious, very crazy, and what if this does not work out? Perhaps a world recession, certainly chaos, and perhaps a depression because of structural matters that will limit stimulus along with debt problems.

Can the Donald create a surplus?

So the takeaway is this is only phase one, and phase two has yet to happen.

China is already experiencing a deflationary spiral, has a youth unemployment of 20%, and looks to be falling into the same boom and bust that Japan experienced called “the lost decade.” Pretty much China the second largest economy in the world is in a depression already. The model of having an export economy no longer is viable.

The era of cheap goods is kinda over…

Don’t forget Germany also has an export economy, and it is the powerhouse of the E.U.

So tariffs make exporting more expensive, but also importing get also more expensive. It has been said that tariffs are a tax on both imports and exports. Any consumption will be costly. Best adaptation is not to consume, not spend, and not get taxed.

Ideally have self sufficiently and a tiny foot-print.

Also any debt not at record low interest rates will be a burden for many governments, Central banks, and households.

Payback time… this is the new harsh reality.

Cal