Daily Observations is my opportunity to share with subscribers significant news, thoughts, and ideas I come across each day. Consider this my “daily read file” of information affecting current and future events, national and community security, world war and culture war. If subscribers enjoy reading this report, then we’ll add it to our permanent reporting line up.
(1) JPMorgan Chase CEO Jamie Dimon was interviewed on Bloomberg last week, and I think there are some important takeaways regarding the future of the U.S. economy.
- For starters, Dimon doesn’t predict that the president’s steel and aluminum tariffs will hurt growth or escalate into a trade war. On the topic of the Federal Reserve, Dimon says:
The Fed — people think the Fed — the Fed is very smart. But they don’t control the economy. And, you know, sometimes they’re just riding the bronco so it’s a — they — they have to react to it. So sometimes it’s smooth sailing and it’s easy for them to react to it, and sometimes it’s pretty tough. You know? And you — so you can’t always assume. They can’t predict the future either.
So I think that people make a mistake, saying somehow they’ve got all this leverage and they’re going to keep it smooth sailing. They can’t do that. They — they try. And, of course, that’s a — a reasonable objective. But, you know, we’ll — we’ll see.
- Not exactly what I’d call ‘utmost confidence’. Dimon goes on to describe how JPMorgan Chase in expanding by 400 more branches and 5,000 new jobs in the U.S. That’s pretty bullish.
- Dimon also talks about the Industrial Commercial Bank of China (ICBC) and how 30 years ago, they were in one country (China). Today they’re in 70 countries and make more money that JPMorgan Chase, the largest bank in the U.S.
“They’re [ICBC] ambitious. They should be. I want to make sure I can compete against them. And I’m going to, so help me God. OK?”
- Increasingly, Dimon says, they’re having to compete with ICBC, and Chinese banks competing outside of Asia is going to greatly affect the financial landscape when they target U.S. markets as Lenovo, Huawei, and other Chinese companies are doing.
- When asked about whether or not the market (like financial stocks) are complacent to new banking trends, Dimon says:
Well, you’re — you’re going to know, in two years, whether it’s complacent or not. So the markets go down a lot in two years, you’re going to say, “Well, obviously, they were complacent.” No one knows the future.
If, in fact, we’ve got a couple years of good global growth…
If you postulate that we have a recession this year, well, obviously, stock’s overpriced. I mean — but the point is you — you —
You mean — you’re not expecting a recession this year?
I never guess the future. I don’t know what the future’s going to be. No one knows what the future’s going to be. If you ask me my opinion, I think we’re OK for a while.
One day, we’ll have a recession. I don’t know if it’s two years — I don’t think it’s this year. But, you know, could it be late-2019? 2020? Yes, could be.
(2) A Medium article entitled, “Why California Politics is Always 15 Years Ahead” floats the argument that the current state of politics in California is America’s future:
Spoiler alert: Trump will bring the old conservative agenda to its absurd conclusion with high-profile climate denial, anti-immigrant intolerance, and tax cuts for the rich in the face of historic inequality, to name just a few. The Republican Congress will embrace Trump, futilely try to apply their rigid orthodoxies to the complex modern world, break into ideological war with each other, prove totally incompetent, and fail big. In the process they will alienate all the growing political constituencies that matter going forward.The Republican brand will become toxic, their support will collapse and they will be pushed to the political sidelines for a long time to come.
Why? Because California is the future and that’s exactly what happened to California’s Republican Party about 15 years ago.
So says author Peter Leyden, who runs a media company and is a self-described “Tech & Future Trends Speaker”. Okay, let’s break down this prediction…
- First, I want to underscore the demographic and cultural changes I’ve been writing about in the National Intelligence Bulletin for months: younger generations are more racially/ethnically diverse, more liberal, and farther to the Left. That’s nothing new and is very unlikely to change: that’s the future of America right there.
- As for Heyden’s argument, he looks to California to identify this political trend — incidentally, if California is America’s political bellwether, is it also America’s financial bellwether? ‘Cause California is B-R-O-K-E.
- Heyden starts by talking about the conservative revolution in 1966 when Ronald Reagan became governor. Then a series of conservative governments dominated politics at a time when California’s demographics were changing:
- In 1980, California was 67 percent white.
- By 1990, 58 percent white.
- By 2000, California was roughly 50 percent white.
- Sound familiar? It should because that’s the trajectory of America, too.
“The politics of California became increasingly polarized and thus the state government became increasingly paralyzed as it moved into the early years of the 21st century…
In 2003 California voters had had enough. They recalled their governor, and in frustration elected a tough-talking Hollywood celebrity with zero experience in government.
The story did not end well for Schwarzenegger or conservative Republicans. They quickly ginned up a 2005 special election loaded with conservative ballot initiatives but the electorate would not go for them. All were soundly defeated.
That 2005 special election turned out to be the conservative movement’s Waterloo.
- And what was happening in 2005? Lots of voters who demographically skew Left — the same the America will experience in the coming 10-20 years.
- California now — after crossing the 50/50 threshold:
“California has turned true blue. All statewide offices are now held by Democrats. Republicans can’t even run a credible campaign on the state level. And the GOP is decimated down-ballot too…
If California is the future, then the Republican collapse will soon go national.
- Heyden’s conclusion:
Within the next fifty years, therefore, the number of majority-nonwhite states could be 22, including seven of the currently largest states and 11 of the top 15. Today, these states account for two-thirds of the nation’s population.
All signs show that the national Republican party is handling this demographic change exactly how the California Republican party did. They are totally screwing it up, almost certainly alienating these critical constituencies for a long, long time to come.
What did you expect? After all, California is the future. [source]
(3) The Securing Energy Infrastructure Act advanced out of the Senate Committee on Energy and Natural Resources recently. It calls for Congress to research viable options to reduce the U.S. energy sector’s vulnerabilities to hacking by reducing reliance on digital infrastructure.
“There is a clear, demonstrable need to develop techniques and technologies to better secure our grid from cyber vulnerabilities. As we reexamine our infrastructure security, this bipartisan approach would utilize the unique assets and expertise of our national laboratories to drive innovation.” – Bill co-sponsor Sen. Jim Risch (R-ID) [source]