Entries Tagged 'Economics and Investing' ↓

This weekend Donald Trump settled multiple cases related to his Trump University for alleged scams that bilked 5,000 students out of $40 million of their hard-earned savings with the promise that they’d be taught how to make money in business.

Judge Gonzalo Curiel, the judge whom Trump alleged was biased because he is Mexican-American, kindly gave Donald an “out” by suggesting that President-elect Trump would be too busy to fight his lawsuits. And that was the reason Trump gave when he paid $25 million to settle.

But was it the real reason? Hardly! Donald Trump settled his previous scams because he has way bigger fish to fry.

The tell

On Friday, MSNBC news featured Hollywood Reporter, Michael Wolff on the Chris Hayes’ show. Wolff was first to interview Steve Bannon, Trump senior counselor.

In this interview Steve Bannon gave us a hint of what he’s really up to.

The media and many Americans have been consumed with worry about the racism, sexism, homophobia, and other prejudice that Trump voiced during his campaign and that Bannon’s Breitbart website fuels.

Asked about this, Bannon hastened to assure Wolff those things were not “what he was about.”

Next, Bannon claimed his chief goal is to create new jobs for Americans.

I can believe Bannon’s first assertion, but not his second.

Here’s what led me to discount Bannon’s second statement. Continue reading →

In my previous post, “Goldman’s Take on Trump’s Corporate Tax Cuts,” I discussed how these tax cuts are supposed to work to create new jobs for Americans, and the obstacles which might keep them from accomplishing that end.

Here is how Martin Wolf of the Financial Times describes the very real problem in the U.S. that voters on both sides of the aisle want to change:

Workers have not only suffered from declining shares of the pie [by over minus 4% of GDP over this century]. Just as significant is the steady rise in the proportion of men aged 25 to 54 neither in work nor seeking it from about 3 per cent in the 1950s to 12 per cent now…

This increase in the number of jobless prime-age American men since 1990 has made the US the second-highest jobs-loser among the thirty-five developed countries in the OECD (Organization for Economic Development). And it’s not just men having trouble:

After 2000, the declining trend in non-participation of prime-age women also halted. The proportion of US women…[age 25-54] in employment is now among the lowest of all members of the OECD.

We’ve been told repeatedly that tax cuts on the rich will somehow “trickle down” to the poor via new job creation. History shows that just isn’t true. I’ve discussed why in my post, “Taxes — Impact on Income Inequality”.

In addition, I’ve shown in “Goldman’s Take on Trump’s Tax Cuts” why corporate tax cuts are not likely to bring back manufacturing jobs from abroad. Now its time to look at the second part of the Trump’s job creation plan. Continue reading →

According to two rather skeptical commentators at Yahoo Finance video last week, Goldman Sachs’ take on how Trump’s corporate tax cuts might work goes like this:

(1) The statutory corporate rate of 39% would drop to the actual rate of 28% paid after companies use tax loopholes; then continuing to use tax loopholes corporations’ actual tax rate will drop to 15%. The result?

(2) Companies that pay way less taxes would make way more profits. And?

(3) Corporations would return those profits to shareholders through stock buy-backs and dividends as the stock market rises as a result. Likewise, overseas profits would come back to the US at 10% tax, and the result would be:

4) Shareholders would get and spend a lot more money.

I see the major problem with this reasoning is, shareholders are not individuals. Continue reading →