Bitcoin Market Correction
In a matter of speaking, this is a told-you-so. Last year Bitcoin went from under $1000 to nearly $20,000. I think when I last commented, it was roughly near $15,000, with wildly volatile trading, sometimes up to 20% up or down in daily trading. Too risky for my blood. In just over a month, there's been a violent correction with Bitcoin currently around $9300. (In fact, it briefly dipped below $8000; is the current price a dead cat bounce? Why? Some governments are looking to regulate trading, in part due to concerns over its use by criminals and/or rogue governments, destabilizing effects of a cryptocurrency tether which is supposedly pegged to the dollar, resistance from major banks, etc.Let me point out that I'm not happy about State manipulation of fiat currencies, and I'm generally favorably inclined towards cryptocurrencies in concept, but when I see stories about a pro athlete needing to talk his mother or a grandmother of trying to buy into Bitcoin at $17,000, I cringe. I personally do not hold Bitcoin or other currencies. It's bad enough watching my retirement account drop nearly 3% over the past week or so of selloffs. I did weed out one investment; generally, though I realize that markets take a breather and don't just go up in a straight line. I did stop a colleague from making a big mistake; we have a common former employer and he wants to transfer from their 401K plan to a well-known vendor. But he seemed to be under the impression he gets the check and then deposits it at the vendor. WRONG! You do not cash that check: it becomes a taxable transaction. You want your former plan to transfer directly to the trustee/custodian of your target vendor. As always, invest at your own risk.
The Price of Eggs
I don't usually discuss the prices of commodities. There are reasons, of course, to closely monitor commodity prices for signs of inflation (particularly with a weak dollar); of course, I remember supply shocks in things like oil, sugar, coffee, and orange juice. And, of course, there are economically illiterate populists who pontificate conspiracy theories of market manipulators who seek windfall profits and argue for government intervention. (Yet as the market responds to profit incentives and we see, for example, falling gas prices, the populists are mute. Rockefeller gained wealth by driving down prices for consumers, not by driving prices high enough only the elite could afford it and giving an opening to other vendors who are competitive at higher prices (e.g., US oil shale) or for substitute products.I can recall when regular eggs went past $2.50/dozen in the aftermath of the avian flu a few years back. I love eggs (including the yolks; I never could figure out why people throw out a nutrient-rich source which enables young chicks to thrive). I once attended parochial elementary school. We Catholics went to Mass at the beginning of the school day. Because of Church fasting requirements at the time preceding Communion, Mom used to pack me breakfast as well as lunch--and breakfast usually took the form of a boiled egg sandwich, which remains one of my favorites (well, next to cretons).
Later, when I was in high school, I used to serve (altar boy) or attend the Sunday obligation Mass on late Saturday afternoon; among other things, I had deliver newspapers on Sunday mornings. When the rest of the family (9 total) went to morning Mass, I got a bit of alone time, well except for babysitting my youngest sister. Mom used to have strict rules about meals, but as soon as their vehicle left, I put a couple of eggs to boil. (In the fall, the local channel used to run hour-long editions of Notre Dame replay football games to watch.) My sister noticed my egg sandwich and wanted ,me to share; I was reluctant but thought she might tell Mom, so I gave her half, telling her this was our little secret, and she liked it. A few weeks later, she impatiently told the rest of the family, later than usually driving to Mass, "Hurry up, so Ronald can make me breakfast!" Oh, damn! Mom surprised me, though; she thought it was sweet of me to feed my little sister.
Eggs, at least at my local Walmart, are dirt-cheap. I recently bought a 5-dozen box for something like $2.15. At these prices, back up the truck. Not to mention bacon also seems cheaper; I can remember shelling out over $4/lb just a few weeks back, and I recently paid under $3/lb for certain brands.
The Trump Economy
This is not a partisan blog. I was nominally a Republican when I started this blog, but since I switched parties while I was an academic years back, I was more of a principled conservative with a pragmatic twist. I have never contributed to either party and made a modest contribution to one campaign (which I later regretted). I never voted straight ticket and remained open to voting for a center-right Democrat (that really hasn't happened, particularly on the federal level).I've never really bought into political spin from either party. Obama and Trump are both have over-inflated egos. (Trump is fairly obvious with constant claims of having the best brains, knowing the best words, the blacks love him, etc. In contrast, Obama was unflappable, but he also had his moments. Probably my favorite story was when a Congressman before the 2010 mid-terms warned him the House was at risk, just like Clinton lost the House in his first mid-term. Obama reassured the Congressman he was not Clinton but a better politician.)
But hearing Trump boast of being responsible for having the lowest unemployment rate in over a decade and taking credit for recent higher growth and stock market records is a bit much. (In the meanwhile, the economically illiterate Democrats are accusing Trump of reaping the fruit of long-term Obamanomics.) The fact is that the market is resilient as it always is after a recession, despite massive overspending and debt incurred by both Obama and Trump. Granted, Trump has been good on deregulation and has claimed $300-600M/year in savings. The new tax law will add to growth, but Trump has done nothing about eliminating the deficit, never mind paying down the debt or reducing the burden of the federal government on GDP. But Trump's anti-trade and anti-immigrant policies are anti-growth, never mind going into the headwind of upcoming interest hikes and the quantitative tightening (i.e., selling assets). (You can expect costs of servicing the debt to increase, exacerbating the budget deficit.)
