Biden Will Not Recover (Finance Friday)

Once a chief executive loses the public’s trust, his presidency is toast

RIP the American Marines and soldiers who died in Thursday’s suicide bombings in Kabul. They have been asked to execute an impossible mission under extremely trying conditions.

Joe Biden is through, and not just because of this attack. History demonstrates repeatedly that the American public rallies to a president who shows resolve in a time of crisis. Even Jimmy Carter’s average approval during his presidency was 46 percent and it actually escalated off of economy-related lows as the Iran hostage crisis began. Biden’s approval is in free fall. Americans see clearly that he has handled a major foreign crisis worse than any president in U.S. history. No president has harmed the country more since James Buchanan piffled as the South began to secede.

Biden’s communications and political teams are making matters worse. Following Bill Clinton’s playbook after the Lewinsky scandal broke, Democrats and the president are trying to rally the progressive base as a firewall to prevent the total collapse of the presidency.

Speaker Nancy Pelosi brought the House back to advance $6 trillion in just-for-fun spending (the real cost of the “infrastructure” and progressive bonanza bills) on top of the already morbidly obese annual budget, which this year reached $7.2 trillion (most of it borrowed). On Tuesday, Biden gave a bizarre, long-delayed update on Afghanistan that he prefaced with six minutes of shouting and stammering about the spending blowout and a “voting rights” act to enable more illegal voting, which is dead on arrival in the Senate. His performance on Thursday was little better, filled as it was with vows that everyone knows Biden will not execute. Only progressives are pleased.

This effort is the most half-baked attempt to change the topic in memory. Two good rules of thumb in even the duplicitous realm of political communications: when in doubt, tell the truth; and when you really screw up, come clean. Biden’s actions and utterances during this crisis, in contrast, are very senatorial. And I mean that as the insult it sounds like.  

Notwithstanding obsequious questions at Thursday’s press conference, the White House seems completely stunned that leftwing media properties have joined the pile-on, including companies like the New York Times and pointless CNN. The administration’s reaction reminds me of progressive fellow gays back in West Hollywood when confronted with a dissent from leftwing orthodoxy: disbelief and an inability to debate effectively because they have never had to do so before in their insular monoculture. The media helped elect Biden but there is a downside to having one’s butt kissed by everyone.

Once the public ceases to trust a president, his presidency is largely over. After Iraq deteriorated radically in the mid-2000s, after much delay, President Bush finally ordered a surge of forces and the adoption of a counter-insurgency strategy that was remarkably successful. But Bush’s popularity never recovered and he had little to show for his second term other than the surge. The public is charmingly ruthless, and so is history.

The impact of a presidency irretrievably failed in its first year combined with the collapse of U.S. credibility globally is unclear for now. Political risk to business from big troublemakers like China and Iran, and dozens of smaller bad actors, will certainly increase. Biden’s tilt further to his party’s radical left can only foretell more economic damage. Even those warning about higher inflation as a result of today’s overspending and insane Fed monetary policy have not factored in the coming supply-side shock that will result from higher taxes and regulations. Shift the supply curve to the left and you get higher prices. Democrats seeking much higher capital gains taxes think they will avoid a market crash by making the higher rates retroactive to the beginning of the year, but this gimmick will not repeal basic lessons in how equities are valued or when capital flees across borders.


St. Louis Identifies as Chicago  

James Bullard has suggested that the Fed curb its hyper dollar creation soon and complete the “tapering” by late March. Once again the St. Louis Federal Reserve Bank, of which Bullard is president, is the voice of reason in monetary policy. The bank even does crazy things like measure growth in the money supply and present this data to the public. The St. Louis Fed may even be the leading monetarist institution in the USA since they switched from teaching Milton Friedman at the University of Chicago to, um, other stuff.

One problem though is that voices like Bullard’s may not persuade Fed Chairman Jerome Powell, whom Biden is allowing to twist in the wind, pondering whether or not to reappoint Powell despite the “independent” chairman doing everything the White House wanted. Even though Powell has orchestrated a proto-Venezuelan-style monetary policy, that has not been enough for radicals like Senator Elizabeth “Pocahontas” Warren (D-MA) and other progressives, who also want someone other than a white man. The SEC helpfully issued recent guidance indicating that someone who identifies as a woman qualifies as “diverse.” Powell could always mosey down to the Dress Barn to effect a switcheroo. The choice preferred by Pocahontas is Lael Brainard, who definitely identifies as a woman, and is the wife of Kurt Campbell. Campbell was Hillary Clinton’s assistant secretary of State for East Asia, and is currently Biden’s Asia czar. It is somewhat ironic that Pocahontas would further empower a Clintonista power couple: Campbell does a very Clinton job of orchestrating supportive language of U.S. Asian allies like Japan and Taiwan, but stopping short of real-world steps to shift the balance against China.

There is also the small problem that the Fed can “taper” creating dollars out of thin air to buy mortgages and corporate bonds, but will still have to purchase the trillions of new debt Democrats and some Republicans are planning to rack up. To “reimagine” (barf) a term economists use, that would sterilize any tapering. Don’t expect that middling $15 steak at the market to get any cheaper.

Inflation is also showing up in areas where we seldom expect prices to go up, including hardware. It’s been a landmark two years for semiconductors, and Taiwan leads the world in the state of the art. TSMC announced this week that it is hiking prices of Taiwanese-made semiconductors by 20 percent. According to USTR, the top import category from Taiwan is already “electrical machinery,” which I assume is how computer chips were thought of when the categories presumably were set in the 1970s. The increase, which makes perfect market sense and will introduce an overdue price signal to consumers, may bump up the modest trade-in-goods deficit with Taiwan (we have a services surplus). This should not be allowed to set back enthusiasm for a trade deal with Taiwan—in fact, it underscores the importance of the Taiwanese economy to the Free World’s high-tech ecosystem, which we should be trying to build and fence off from China.

Another factoid on Taiwan: Singapore Airlines just resurrected a nonstop flight from LAX to Taiwan’s main Taoyuan Airport outside of Taipei after a 13-year hiatus. Given a strict quarantine in Taiwan, one would think this is not the best month to initiate new service. But what Singapore is really after is the air freight, which will probably skew toward high-tech hardware. Singapore will fly three weekly roundtrips with an A350-900.

Canada’s 11th Province Issues Decree

Mediocre Prime Minister of Great Britain Boris Johnson may be working on a remake of The Mouse That Roared. Convening the G7, which consists of the USA, Japan, and yesterday’s news, BoJo decreed that the Taliban must allow anyone who wants to leave Afghanistan to do so, and insisted unsuccessfully that Biden extend the U.S. presence in Afghanistan past the August 31 deadline to which the Taliban surprisingly agreed. Is BoJo going to bring Prince Harry back from his woke journey of self-discovery and untamed shrew in Hollywood to go back to Afghanistan? Perhaps BoJo can dispatch the officers who made a cozy deal with insurgents not to attack British forces before they ran out of Basra, leaving the USA and Iraqis to pick up the pieces. But the critique must burn Biden particularly hard, since he has prioritized diplomacy with Old Europe instead of allies that matter today. London can expect that trade agreement with the USA as early as never.

One matter that BoJo and others who imagine endless tasks for American troops overlook is the extremely tenuous position of U.S. forces at the Kabul airport. They are completely at the mercy of the Taliban, and as we saw on Thursday, grimly susceptible to terrorists. As I pointed out on Tucker Carlson Tonight this week, it would only take a few pickups with mortar tubes to halt flight operations at the airport. Also on the show, I discussed China’s ambitions in Afghanistan, which have a lot less to do with minerals than billed, and more to do with hoping the place doesn’t become a base for jihadists upset with China’s incarceration of more than one million Muslims in re-education camps learning to be good commies.

If you thought the collapse in Afghanistan would lead to calls for accountability from our failed $80 billion-per-year intelligence bureaucracy, our incompetent four-star politicians in uniform, or the broader foreign policy failure factory, think again. As a guest panelist on Mornings with Maria on Fox Business, I asked GOP Rep. Mark Green (TN) whether there ought to be some accountability. His answer was all but “no” amid a rush to pin all blame on Biden—a reminder that Republicans have not internalized that the bloated military-industrial-espionage complex is not on their side, and ought to be taken down a notch and put on a diet.

Cheryl Benard, writing in the National Interest, has a contrarian take on the Taliban. Like Cheryl, I lament that we are relying on the mercy of the Islamist government that is assembling, but believe its conduct so far is materially different than that of its predecessor before 9/11. We ought to adjust policy accordingly, but won’t, and ought to begin spotlighting why the former Afghan government failed, beginning with a federal corruption investigation of former president Ashraf Ghani, who reportedly fled with a helicopter full of cash. She writes:

How was it possible, we will ask in retrospect, that a superpower threw facts, reason, its own national interest, the pursuit of peace, geopolitical considerations, and simple common sense to the curb? And instead engaged in reckless, perfectly counterproductive actions while wallowing in panic and rumors.

No WuFlu For You

The Left simply will not let the COVID-19 crisis go; the opportunity to boss people around is too great. The path of the Delta variant, perhaps named in honor of Delta Air Lines’ woke mediocrity CEO, is tracking in the USA a very similar path to what occurred earlier in the UK—a spike in cases, but only a modest increase in deaths compared to pandemic peaks. But blue state governors are prolonging the crisis. Hawaii is telling tourists not to come, which is tricky since the islands’ only other industry is crystal meth. Oregon’s governor wants people to wear masks outside. Visiting Portland last weekend, I was all of 3-4 minutes off the freeway into downtown before I saw the first bum going #2 on the street. Perhaps tending to that notable feature of progressive-run cities would do more to improve public health than harassing the vaccinated and kids who face minimal risk.

One country that is taking a bold step toward normalization is Singapore. Having reached a high level of immunization, with 76 percent of its population fully vaccinated, the country is slowly starting to resume general travel by vaccinated fliers, beginning with Hong Kong and soon including Germany. The development is noteworthy because Singapore has kept COVID incidence and mortality very low throughout the crisis, mirroring other East Asian nations that have a de facto goal of zero COVID. Despite this, Singapore is making the reasonable choice to reconnect with foreign business and leisure travelers, accepting that cases will probably increase, but that such carefully contained risk is worth the upside of resuming normal commerce in the entrepot. This puts Singapore miles ahead of countries like Australia and New Zealand who are in hysterics over tiny numbers, and other East Asian nations that risk falling behind North America, Europe and the Middle East as businesspeople and tourists get used to going elsewhere.  

Wokeista of the Week

Clothing seller Patagonia has decreed that it will boycott the Jackson Hole ski resort, whose owners cosponsored a fundraiser for former White House chief of staff Mark Meadows and two Republican congressmen. The company announced: “We will continue to use our business to advocate for policies to protect our planet, support thriving communities and a strong democracy.” However, the company bosses said they would reconsider if the resort owners committed to “protecting the planet.” Meanwhile, the key ingredient in Patagonia’s overpriced jackets is actually petroleum. And the company has in the past reportedly benefited from slave labor. But that’s okay because they know how to signal virtue like all progressives.

The episode brings to mind a similar stunt by Patagonia competitor North Face, which cancelled an order for 400 jackets for a Texas oil and gas company since hydrocarbons offend the sun god. Since North Face’s overpriced junk, like Patagonia’s, is made mostly from petroleum, the good folks at the Colorado Oil and Gas Association gave North Face its first “Extraordinary Customer Award” for its abundant use of oil and gas. The move was second only in excellence to the letter the attorney for the Cleveland Browns once sent to a fan who had complained about fans throwing paper airplanes: “I feel that you should be aware that some asshole is signing your name to stupid letters.”

Have a good weekend.