Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

Impeachment? What Impeachment? Voters Are Tuning Out

This article appeared online at TheNewAmerican.com on Monday, January 27, 2020: 

Voters are tuning out of the Trump impeachment trial in droves. After two days of watching the Democrats bash the president, viewership of the six major networks covering it dropped by 20 percent. When the Associated Press asked voters why, they said they’re bored and tired of “the whole partisan saga.”

Most of them made up their minds months ago, said Eric Kasper, director of the Center for Constitutional Studies at the University of Wisconsin-Eau Claire: “A lot of people have made up their minds, and it looks pretty clear what the outcome of this trial is going to be.”

Only 11.8 million people watched the six networks during the first two days of the Senate trial, compared to

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Davos Confab to Replace “Shareholder Capitalism” With “Stakeholder Capitalism”

This article appeared online at TheNewAmerican.com on Thursday, January 23, 2020:

As The New American noted on Wednesday, the real agenda of the Davos confab taking place this week in Switzerland is giving more and more power and control to global elites in order to make the world more “sustainable.” We wrote: “This involves us giving them — the saviors — more power and more money.” The partners supporting the World Economic Forum (WEF) vision include Big Business, Big Banking, Big Tech, Big Foundations, Big Green, and Big Labor. As we noted, “This united front pushes for more Big Government as the solution to every “crisis” — with Global Total Government as the ultimate solution.”

The “crises du jour” Davos is laboring to solve consists of “income inequality,” “climate change,” and “political polarization.” The solution: changing how corporations operate to meet those needs and solve those problems, by force.

It’s called “stakeholder” capitalism, and it will replace the old, outmoded, and corrupt “shareholder” capitalism that has done nothing less than catapult the world’s standard of living to levels never seen in history.

The real intentions of the gathering at Davos were barely visible in 1973 when its Code of Ethics for Business Leaders concluded that

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Faceoff Between Trump and Thunberg at Davos Was a Bust

This article appeared online at TheNewAmerican.com on Wednesday, January 22, 2020: 

Cain Burdeau, writing for Courthouse News, hoped for more drama at Davos as Greta Thunberg (the “voice of climate change”) and Donald Trump, the president of the United States, were expected to confront each other over the climate-change issue. Instead, Trump “said nothing about global warming, called climate activists [without mentioning Thunberg by name] ‘prophets of doom’, and touted a future where ‘virtually unlimited energy reserves’ from fossil fuels and other polluting energy sources will keep factories humming while government cuts regulations and taxes.”

Thunberg set the table for the confrontation in a nearly unintelligible speech given just hours before Trump’s arrival, in which she stated,

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Big Trump Donors Looking to Double Their Money in 2020

This article was published by The McAlvany Intelligence Advisor on Monday, January 13, 2020: 

Most investors expect to get their money back, plus a profit. A few big Trump donors are now being given a chance to double their money by November.

There’s a movement afoot to purchase tiny One American News Network (OANN) for $250 million. It started in 2013 and already reaches 35 million homes.

By contrast, Fox News reaches 90 million households. But an increasing number of Fox viewers are being turned off by its leftward drift, and could be enticed to move to OANN if that drift continues.

There could be a double bonus in it for those Trump donors being given the chance to buy the tiny news network. It being election season, a small network like OAN needs only a few million more households to sign on to make the investment profitable. And if it picks up enough households disgusted with Fox News‘ leftward drift, it could also help reelect the president in November.

That would turn a good investment into a great one.

A dozen GOP heavyweight donors are being pitched on the idea of buying up the tiny television network to offset the steady leftward drift of Fox NewsThe Wall Street Journal first reported that

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Economy Adds Another 145,000 Jobs in December, Says Labor Department

This article appeared online at TheNewAmerican.com on Friday, January 10, 2020: 

Said the Bureau of Labor Statistics on Friday, “total nonfarm payroll employment rose by 145,000 in December, and the unemployment rate was unchanged at 3.5 percent.” It also noted that the long-term unemployment rate U6 (which includes discouraged workers no longer seeking jobs and part-time workers seeking full-time employment) dropped to the lowest level since the agency started reporting it in 1994.

This followed the report from ADP on Wednesday that the U.S. economy added 261,700 jobs in December and caps off a remarkable year for the U.S. economy.

For the year, new jobs rose by 2.1 million, following a gain of 2.7 million in 2018. Since Trump’s inauguration, the U.S. economy has added more than seven million new jobs. The robust economy has simultaneously reduced those on food stamps (SNAP) by four million while adding $5,000 a year to the average American’s household income.

Wall Street has soared as well, with the popular averages gaining between 20 and 35 percent during 2019.

The outlook for 2020 looks for a repeat,

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“Made in China” Is Becoming “NOT Made in China”

This article was published by The McAlvany Intelligence Advisor on Friday, January 10, 2020:

With so many companies leaving China for more favorable business climes, the ubiquitous slogan “Made in China” is slowly turning into a pejorative, being increasingly replaced with “NOT Made in China!”

The number of companies moving some, most, or all of their manufacturing operations out of China, or making plans to do so, is turning from a trickle into a flow, and likely to become a flood.

In July, the Nikkei Asian Review listed just a few of those companies, including Apple, Nintendo, Sketchers USA, Komatsu, Sumitomo Heavy Industries, Mitsubishi Electric, Ricoh, Citizen Watch, Panasonic, HP, Dell, Kyocera, Sharp, Nintendo, GoPro, and Samsung. Each of them is facing rising labor and environmental costs in China, an ever-changing crazy-quilt regulatory system, not to mention the tariff wars that will likely continue long after the highly-touted “Phase One” agreement has been signed.

And the flow is likely to turn into a flood, according to Dan Harris, head of an international law firm that works extensively in China: “For every foreign company that left China in 2019 there are two or three more seriously contemplating doing so. We expect more companies to leave China in 2020 than in 2019.”

As a direct result of those trade war tariffs, China has now fallen behind Mexico and Canada, and is now the U.S.’s third largest trading partner. Before the tariff wars began in July 2018, China was number one.

Compared with June 2018, the month before the trade war began, U.S. imports of goods from Vietnam have soared by more than 50 percent, Thailand nearly 20 percent, Malaysia by 11 percent, Indonesia over 14 percent, Taiwan 30 percent, and Mexico nearly 13 percent.

The ripple effect is showing up in car sales in China, which have dropped for the second consecutive year, dropping 5.8 percent in 2018 and 7.4 percent last year. December car sales were down, the 18th down month out of the last 19.

As China’s consumers face food price increases that are the highest in eight years, they are paring back elsewhere, slowing the country’s economy to its lowest pace seen in three decades. Official numbers from China’s public agencies are increasingly being ignored in favor of more realistic, and much lower, numbers coming from more reliable outside sources. The Federal Reserve Bank of St. Louis has expressed its skepticism about those government estimates:

One way to assess the quality of Chinese economic data is to look at the difference between the growth rate of real GDP reported by the government and the estimated growth from 1992 to 2006 using the night-lights [luminosity] data. Reported real GDP growth in China over this period is about 122 percent, while predicted growth using the night-lights data is only 57 percent.

 

This sizable gap suggests cumulative Chinese growth over the years could be overstated by as much as 65 percent. [Emphasis added.]

Here’s the question: if the Chinese economy was growing at six percent a year or more over the last decade, why has the Shanghai Composite Index (made up of more than 1,000 Chinese companies) failed to show any growth whatsoever over that same period?

John Evans, managing director for marketing and consulting firm Tractus Asia, said that the companies that have left China for places like Vietnam, Malaysia, Taiwan, Indonesia, and elsewhere where conditions are much more favorable are only the “first wave,” which started about 12 to 18 months ago. “The second wave started mid-2019,” he added.

The trade war isn’t going away anytime soon, according to Evans: “For companies exporting to the U.S., the entire time span of the trade war has sent the message that this isn’t going to go away and that they need to rethink things.”

That’s especially true of the communists ruling the country who are seeing their dream of overtaking the U.S. economically by 2030 and having an economy triple the size of the U.S. by 2050 slowly turning to ashes. Their “Hundred-Year Marathon” (Michael Pillsbury’s expression) to replace America as the global superpower is happily coming unglued as the economy staggers under Trump’s America First foreign policy initiatives.

It’s just a matter of time. “Made in China” will disappear from clothing labels, digital devices, and shipping containers in favor of the celebratory “NOT Made in China!”

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An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American primarily on economics and politics. He can be reached at badelmann@thenewamerican.com.

Sources:

McAlvany Intelligence AdvisorStocks Making Up the Shanghai Composite Index Are Cheap, and Likely to Get Cheaper

McAlvany Intelligence AdvisorThe China Threat Is Real, Says Oxford Scholar

South China Morning PostChina’s manufacturing exodus set to continue in 2020, despite prospect of trade war deal

The Wall Street JournalChina’s Car-Sales Slump Extends Into Another Year

The Wall Street JournalChinese Inflation at Eight-Year High Poses a Policy Dilemma

The New York TimesChina Moves to Steady Its Slowing Economic Growth

The New York TimesChina Injects $126 Billion Into Its Slowing Economy

The Nikkei Asian ReviewChina scrambles to stem manufacturing exodus as 50 companies leave

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More and More Companies Moving Out of China

This article appeared online at TheNewAmerican.com on Thursday, January 9, 2020: 

The number of companies moving some, most, or all of their manufacturing operations out of China, or making plans to do so, is growing from a trickle to a flow and likely to a flood.

In July, the Nikkei Asian Review listed just a few of those companies, including Apple, Nintendo, Sketchers USA, Komatsu, Sumitomo Heavy Industries, Mitsubishi Electric, Ricoh, Citizen Watch, Panasonic, HP, Dell, Kyocera, Sharp, Nintendo, GoPro, and Samsung. Each of them is facing rising labor and environmental costs, an ever-changing crazy-quilt regulatory system, not to mention the tariff wars that will likely continue long after the highly-touted “Phase One” trade agreement has been signed with the United States.

And the flow is likely to turn into a flood, according to Dan Harris, head of an international law firm that works extensively in China:

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Trump’s Tax Cut Act 2.0 Coming

This article appeared online at TheNewAmerican.com on Monday, January 6, 2020:  

Few details are presently available about what the president will be proposing later on in his campaign for reelection regarding his “tax cuts 2.0” package, but the rumors are tantalizing. If Republicans regain control of the House, many of those rumors could be enacted.

It was Larry Kudlow, Trump’s economic advisor and head of his National Economic Council, who timed his announcement as a Christmas present to the American taxpayer. On December 19, Kudlow said on Fox Business Network’s “Bulls and Bears”,

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Money Manager Claims Now Is Time to Buy China Stocks

This article appeared online at TheNewAmerican.com on Monday, January 6, 2020: 

Eric Moffett, a portfolio manager for mutual fund giant T. Rowe Price who works in Hong Kong, told the Wall Street Journal on Saturday that he thinks investors should consider investing in China “because we’re at a sentiment low [and] we think it creates a lot of opportunities.”

It’s no wonder that investor sentiment is low: Investors in the Shanghai Composite Index for the last 10 years have made nothing. Zero. Nada. And this was while China’s economy was allegedly growing at better than six percent a year.

Investors suffered through government manipulations of that index, watching their accounts

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Stocks Making Up the Shanghai Composite Index Are Cheap, and Likely to Get Cheaper

This article was published by The McAlvany Intelligence Advisor on Monday, January 6, 2020:  

As this writer noted here in November, the art of war according to Sun Tzu consists of deceiving the enemy. China’s deceptions extend to the manipulation of its GDP numbers, and have for decades. If China can be perceived to be stronger than it really is, then Washington may be fooled into making mistakes in dealing with its enemy.

At least one portfolio manager is deceived. Eric Moffett, who works in Hong Kong for T. Rowe Price, told the Wall Street Journal on Saturday that he thinks investors should now consider investing in China “because we’re at a sentiment low [and] we think it creates a lot of opportunities.”

It’s no wonder that investor sentiment is low: investors in the Shanghai Composite Index for the last 10 years have made nothing. Zero. Nada. And this while China’s economy was allegedly growing at better than 6 percent a year.

They suffered through government manipulations of that index, watching their accounts quintuple from the summer of 2005 to November 2007 and then lose two-thirds of their value in the following 12 months. And what did they gain for all that suffering? Nothing. The index trades today at the same level it did 10 years ago.

Manipulation was made easy

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Can Gold Hit $2,000 While the Dow Reaches 32,000?

This article was published by The McAlvany Intelligence Advisor on January 1, 2020:

By all appearances, the remarkable run on Wall Street should continue into 2020. So says President Trump’s trade advisor Peter Navarro. On Tuesday, he told CNBC‘s “Squawk Box”: “I’m looking forward to a great 2020. Forecast-wise, I’m seeing closer to 3% real GDP growth than 2%. I’m seeing at least 32,000 on the Dow.”

He added: “It’s going to be the roaring 2020s next year. [Dow] 32,000 is a conservative estimate of where we’ll be at the end of the year.”

Navarro, it will be remembered, told “Squawk Box” the morning after Trump was elected in 2016 that his election would be “a very bullish thing for the markets,” and then proceeded to predict 25,000 on the Dow which was then trading at about 18,000.

Navarro, in retrospect, was too conservative.

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Dow at 32,000 in 2020?

This article appeared online at TheNewAmerican.com on Tuesday, December 31, 2019:  

So says President Trump’s trade advisor Peter Navarro. On Tuesday he told CNBC’s “Squawk Box”: “I’m looking forward to a great 2020. Forecast-wise, I’m seeing closer to 3% real GDP growth than 2%. I’m seeing at least 32,000 on the Dow.”

He added: “It’s going to be the roaring 2020s next year. [Dow] 32,000 is a conservative estimate of where we’ll be at the end of the year.”

Navarro, it will be remembered, told “Squawk Box” the morning after Trump was elected in 2016 that his election would be “a very bullish thing for the markets” and then proceeded to predict 25,000 on the Dow which was then trading at about 18,000.

Navarro, in retrospect, was too conservative. The Dow has gained more than 172 percent since 2010, the fourth-best decade-long performance in the past 100 years. For 2019 the popular averages all notched gains of more than 20 percent (for the record: Dow +22%; S&P 500 +28%; NASDAQ +35%). Even gold, usually considered a “safe haven” during times of economic difficulty, notched a gain of 20 percent.

U.S. citizens are enjoying the ride and predicting that it will continue. A USA Today/Suffolk University poll reported earlier this month that 80 percent of those polled predicted that their lives will be even better in 2020, with just 11 percent disagreeing.

What a turnaround from a year ago! The Federal Reserve had raised interest rates and Trump’s trade war with China was heating up. The stock market dropped in anticipation of a recession when the so-called “yield curve” indicator turned negative.

And then the Fed lowered interest rates in July for the first time in a decade, followed by additional cuts in September and October. This was followed by promises from Chairman Powell that he wouldn’t be intervening in the markets for the foreseeable future.

For the year the Dow gained 5,000 points while gold jumped by $259 from its low in May to close well above $1,500 an ounce to close out the year.

Is Dow 32,000 even possible? That would tack on another 12 percent to 2019’s remarkable gains.

Leave it to the Fed to answer that question. Despite protestations to the contrary the Fed is in fact intervening in the markets, but it is refusing to call it such. It added $500 billion to the money supply to “support” the “repo” market, which was having trouble digesting the enormous flood of new spending by the Treasury. Most of those billions went to help fund “repurchase agreements” between secondary parties handling the tsunami of new debt, with the balance used to purchase Treasury bills outright.

Can gold continue its run? The “wall of worry” that Wall Street has climbed in 2019 remains in place for gold: Will the UK finally end, once and for all, its affiliation with the European Union? Will the Hong Kong protests be resolved peacefully, without China’s Peoples’ Liberation Army clamping down in a replay of the Tiananmen Square massacre? Will there be another drone attack on Saudi oil fields? Will the airstrikes by the United States against Iraq and Syria lead to more intervention by the U.S. military? Will China test Trump’s mettle in the South China Sea?

The U.S. dollar has steadily weakened since early October, falling more than 2.6 percent in response to the flood of new currency entering the bond markets. Bond yields, as measured by the 10-year bond, have dropped from near three percent a year ago to less than two percent currently in response. Experts think those yields could fall further especially as global central banks try to stimulate economic growth abroad.

Fawad Razaqzada, a technical analyst at London’s City Index, thinks the stock market is long overdue for a correction: “If U.S. stocks were to correct themselves in 2020, then this surely could lead to elevated levels of safe-haven demand for gold. As the U.S. equity market bubble finally bursts, safe-haven demand could nudge gold past its 2011 peak of $1,920 [per ounce], before tagging the $2,000 hurdle.”

Lukman Otunuga, senior research analyst at FXTM trading, says that escalating tensions in the Middle East could provide the catalyst for that stock market selloff in 2020: “If geopolitical tensions increase in the Middle East, there will be more reasons for investors to increase their allocation in gold. Otherwise the gold rally makes little sense while equities are making record highs.”

The only thing certain for 2020 is the high degree of uncertainty. However, Warren Buffett provides investors with this reassurance: “It’s never paid to bet against America. We come through things, but it’s not always a smooth ride.”

China Facing Massive Headwinds in 2020

This article appeared online at TheNewAmerican.com on Monday, December 30, 2019:  

The combination of Keynesian economic policies and the increasing strictures of China’s command economy is making for a bleak outlook for China for 2020 and beyond.

The idea that government spending drives economic growth is one of the myths that drive all central banks’ maneuvering. If some government borrowing and spending is good, then more is better — until it isn’t. While government spending has been a significant driver of China’s remarkable change from a third world poverty stricken economy to the world’s second largest economy, government debt is now a lead weight, pulling down the country’s economy.

That government spending has now created a debt-to-GDP ratio among the highest in the world: 300 percent. In other words governments in China — national, regional and local — owe more than three times the total economic output of the country.

As President Xi Jinping has attempted to rein in government borrowing, off-book borrowings (called “off balance sheet” loans) have soared. They now comprise a third of all borrowings, but because the credit-worthiness of the borrowers is questionable, any decline in the economy could push up default rates. In fact, it’s already happening.

But even worse, the Chinese consumer has been hit with

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China’s Xi Jinping Is Now the “People’s Leader”

This article appeared online at TheNewAmerican.com on Monday, December 30, 2019: 

During last week’s meeting of the Chinese Communist Party’s Politburo, China’s President and General Secretary Xi Jinping received another title: “renmin lingxiu” or “People’s Leader,” an accolade reminiscent of that awarded China’s first communist dictator, Mao Tse-tung.

It was a political move, not strategic. Xi likely arranged for the sobriquet to be bestowed upon him as a message to any who harbored any concerns about where he was taking China. Ever since he had the government’s constitution amended in 2018 to make his position his as long as he wanted it, Xi has been the communist party’s “core” leader, the chairman of the party’s military commission, commander-in-chief of China’s armed forces, and head of the party’s committees overseeing the country’s economy and finances.

The mask is slipping.

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The China Threat Is Real, Says Oxford Scholar

This article was published by The McAlvany Intelligence Advisor on Monday, December 30, 2019:  

This writer reviewed Michael Pillsbury’s “apology to the American people” titled The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower in November. Pillsbury, writing in 2015, said there was still time to head off the Chinese march to world hegemon.

Jonathon Ward, an Oxford scholar and founder of Atlas Organization, a consulting firm focused on the rise of China, says that the time is up. From his newly-released book China’s Vision of Victory, he wrote:

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The U.S. Consumer Is Doing What He Does Best: Taking Advantage of America’s Free Market Private Capitalist System

This article was published by The McAlvany Intelligence Advisor on Friday, December 27, 2019: 

All the numbers aren’t in yet, but it’s clear that the American consumer is happy. He is taking advantage of the opportunities afforded him by the most marvelous engine of economic improvement the world has ever seen: the private capitalist (non) system called the Free Market.

It isn’t really a system, but a highly complex network of individuals each seeking to improve their own economic welfare the best way they know how. It’s Adam Smith’s “Invisible Hand “at work:

As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual necessarily labors to render the annual revenue of the society as great as he can.

 

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it … he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention….

 

By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.

Forecasters shouldn’t have been surprised. The numbers from November – a record number of new jobs, consumer spending up 0.4 percent from October – should have given them a clue.

Consumers launched themselves into the holiday shopping season with a vengeance – some say abandon – setting records along the way. When President Trump learned from MasterCard that the American shopper set records over the holidays, he tweeted in capital letters:

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One Trillion Dollars Repatriated So Far, Reports Commerce Department

This article appeared online at TheNewAmerican.com on Friday, December 27, 2019:

According to the U.S. Department of Commerce American companies have repatriated more than a trillion dollars of their overseas profits since Trump’s “tax holiday” was announced in 2017. As part of his Tax Cuts and Jobs Act corporate profits held overseas would enjoy a one-time levy of just 15.5 percent tax on profits held overseas instead of the punishing 35 percent rate that existed prior.

As Walter Wriston, former chairman and CEO of Citicorp, famously said, “Capital will always go where it’s welcome and stay where it’s well treated.”

But forecasters at the Wharton School at the University of Pennsylvania weren’t impressed. They predicted

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Shoppers Set Holiday Records This Year, Exceeding Expectations

This article appeared online at TheNewAmerican.com on Thursday, December 26, 2019: 

When President Trump learned from MasterCard that the American shopper set records over the holidays, he tweeted in capital letters: “2019 HOLIDAY RETAIL SALES WERE UP 3.4% FROM LAST YEAR, THE BIGGEST NUMBER IN U.S. HISTORY. CONGRATULATIONS AMERICA!”

That wasn’t the half of it.

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Strong U.S. Economy Improving Trump’s Chances for Reelection

This article appeared online at TheNewAmerican.com on Friday, December 20, 2019: 

While Washington is focused on the impeachment proceedings, consumers are either online or at the mall doing their Christmas shopping. That’s almost all one needs to know about Donald Trump’s reelection chances next November. As the anti-Trump Washington Post painfully admitted, “Voters tend to base their vote on how the economy performed in the year leading up to the election.”

For the Post in particular, and for anti-Trump Democrats in general, it gets worse. The Post reluctantly admitted that “Since World War II, no U.S. president has lost reelection when the unemployment rate was below 7.4 percent.”

Under Trump, the unemployment rate is less than half that, at 3.5 percent.

When the president looked at reelection forecasting models in late October, he was pleased that three of the most reliable models showed him winning easily next November.

The numbers on the economy have done nothing but get better since then.

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After Trump Is Reelected Next November, Then What?

This article was published by The McAlvany Intelligence Advisor on Friday, December 20, 2019:

Less than a year before he died of pancreatic cancer, Professor Randy Pausch gave his final lecture on how to live life to the full. The YouTube video of that lecture has been viewed almost 20 million times. (Link below)

In that lecture, Pausch said:

Another way to be prepared is to think negatively. Yes, I’m a great optimist. But, when trying to make a decision, I often think of the worst-case scenario. I call it “the eaten by wolves factor.”

 

If I do something, what’s the most terrible thing that could happen? Would I be eaten by wolves? One thing that makes it possible to be an optimist is if you have a contingency plan for when all hell breaks loose.

 

There are a lot of things I don’t worry about, because I have a plan in place if they do.

Such a plan requires purchasing an umbrella while the sun is shining. Prices for umbrellas are lower, and they’re more readily available.

For President Donald Trump, the sun is shining.

Keep reading…

Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann