23 thoughts on “Walker’s Folly (as well as the WisGOP)

  1. pgl

    “The globe’s owner, Taiwanese manufacturer Foxconn, calls it a high-performance computing data center.”

    Foxconn? Wait they make those overpriced iPhones we buy from Apple, OK if you paid $1200 for your overpriced phone Foxconn got less than $300.

  2. Moses Herzog

    That reminds me of a large paperweight I bought my aunt (the stupid one on my mother’s side of the family). I was still in my teens and I sort of “came into some money” that year so I tried to get all my relatives super nice gifts for that year’s Christmas. It was large, and would look like a snow fall in front of a Christmas scene if you shook it (with both hands), and composed largely, on the inside, of water. On her way back home to Iowa, my aunt and grandma stayed at a motel and left it in the trunk of the car (it was January in the Midwest, can you imagine it freezing?? Possibly??) and it froze and exploded in the trunk.

    Remember kids. Always remember the important lessons Uncle Moses has tried to teach you here: “No good deed goes unpunished”

    1. David S

      I’ll bet your aunt would have voted for Trump. I feel bad for the misfortune visited upon Wisconsin sometimes. It’s like God wanted to create some sort of merry-go-round of stupid for his own entertainment. Minnesota has that wicked big mall and the legacy of Bob Dylan, but Wisconsin gets people like Tailgunner Joe and Paul Ryan and Scott Walker. Maybe the tariffs that the Orange Jesus will bring back in 2025 will save the the very fine people.

      1. Moses Herzog

        @ David S.
        Your guess is a very good guess on my aunt (no sarcasm). And I take no offense, even if I had family affinity to her (I have zero, possibly with the exception of fond memories of childhood Christmases, but not her really, just the memories themselves~~she was a part of~~like annoying background noise during a good film) But eh…. your very intelligent guess would be wrong on my aunt. Let me explain. She pretended to be handicapped over the vast majority of her adult life to get government payments. And as dumb as the woman was, she was just intelligent enough to know she was more apt to get Democrats to sign off on her handicapped income payments than Republicans. And that’s why she was Democrat.

        All of my immediate family knew she pretended to be handicapped (spine problems, hard to prove or disprove, in those days at least) and chose to say nothing to keep family relationships cordial. Doctors would happily sign off on her handicap papers for the unnecessary surgery income and drug prescription income. But the running joke my father told, was “If she had tried to be ‘accepted as’ or recognized as mentally handicapped, she would have qualified very easily/ legitimately.”

        We saw her lift a heavy sack of food groceries over a dumpster once, standing with the sack over her shoulders. Yup. Welcome to my Mom’s weird family, who used to join us every Christmas for 2 weeks. I was the patsy who was assigned duties of fetching her Diet Cokes out of the fridge for 2 straight weeks. Sigh….. fun being a kid. Good times…..

  3. Bruce Hall

    We’ve had similar government-sponsored projects in Michigan that were supposed to create thousands of jobs and make Michigan a high-tech center. Strangely, the money is given out and then the companies fold their tents in the night.

    Maybe it’s time for state (and federal) governments to get out of the business of picking winners and let the marketplace work that out. But, but, but… evil capitalists!

    Oh, btw, https://www.detroitnews.com/story/news/local/michigan/2023/02/28/michigan-lawmakers-crafting-new-billion-dollar-spening-plan-with-eyes-on-ford-battery-plant-marshall/69954593007/ Of course, they didn’t consider how the locals felt or that the money would go toward a (Chinese) state-owned company which kind of flies in the face of the current POTUS’ agenda. But the argument, of course, will be that Biden wants to restrict US investment in China with regard to high tech, not that he has any concern about giving US taxpayer money to Chinese state-owned businesses in the US because certainly none of the high tech stuff could ever find its way back to China, right?

    1. Menzie Chinn Post author

      Bruce Hall: As a guy who went to CFIUS meetings, I can tell you there have long been restrictions on Chinese FDI in the US, and are only more stringent over time. By the way, remember how Trump relented on sanctions on ZTE after a deal with one of his affiliated hotels went through? Hmmm.

      1. Bruce Hall

        Apparently, I should not have pointed out the latest kerfuffle in Michigan because it somehow offended your sensibilities. My overall point was that government should not be in the business of picking winners and watching state funds disappear.

        I guess I could have used older examples in Michigan, many of which were administered by our current Energy Secretary. Failing upward?

        Naturally, Duckie needed to get in his 2¢ worth (which now buys nothing).

        1. Moses Herzog

          What exactly did 2⍧ buy us during the MAGA years?? The right to rub two pennies together while sitting at home jobless in the middle of a pandemic while donald trump told Bruce Hall type IQs to go drink bleach and shine UV light on your skin?? Dumb-ass.

    2. pgl

      Hey Brucie – better start pinching your pennies as your boy Trump wants 10% tariffs on every form of imports.

    3. ooe

      There is no “free market.” Markets are created and then dissolved. See the BBC’s “Century of Self.” to verfify how corporation use something called…advertising to create unwanted needs.
      Also, a subject that is in theadlines, nuclear power. It was crated by the …US govt by the Manahattan project. President Eisenhower then used the Atoms for Peace program to create the Nuclear Power industry. I could go on an on, but I do not have the time.

      1. Bruce Hall


        There have been many instances of military/space research such as NASA/DARPA leading to commercial applications. That’s different from the government(s) picking a company with a product/idea and then handing over taxpayer money in the blind hope that it leads to an economic miracle.

        And, yes, in a free market society, markets are created and replaced continuously by “selling” the advantages of new products… along with demonstration of their benefits. Along the way, there are going to be failures because the products/ideas did not translate well into providing superior products at lower prices. Governments selecting “winners” and pouring billions of dollars into these “winners” itself can create barriers to entry for other products that are superior. Competition should create the winners. When the real winners are evident, the government can facilitate expansion through public efforts that support the spread. An example is the Federal Highway Act of 1921 which improved roads some 30-years after it became evident that automobiles were clearly superior to horse-drawn vehicles and there was enormous demand for and competition within the new industry.

        Today, we have a situation where the government decided that electric vehicles are the “winner” and the government is subsidizing companies with immense funding… directly. Someone made the decision that companies who make batteries should get grants and other subsidies to manufacture batteries. Meanwhile, this winner-picking strategy may have short-circuited competition with other alternatives (such as Toyota’s hydrogen-powered vehicles) which may provide the same or superior environmental benefits as EVs without disastrous mining operations for lithium and toxic metals plus straining our electrical grid.

        The same government bureaucrats have decided that we should subsidize wind and solar power which is dotting our landscape with glass and ugly towers and, ultimately, a toxic waste problem of immense proportions. Bill Gates might have argued that modular nuclear power plants were superior in footprint and reliability, but the government picked a winner along with throwing away a lot of taxpayer money.

        1. pgl

          You are doing a lot of chirping but it seems you got the underlying story completely incorrect. Completely. Then again – you get everything involving economics or business completely wrong.

        2. ooe

          The govt did pick a winner. It funded the Interest highway system in the 1950’s which led to creation of sububia. Also, the govt made sure it there was segration. Also, the govt helped build airports to create a the aviation industry over the passenger rail. Then, the Nixon administration created AMTRAX to have a semblance of passenger railroads so the govt does pick winners.

    4. pgl

      “Ford will license battery technology from Contemporary Amperex Technology Co. Ltd., or CATL — the world’s leading LFP battery maker — but CATL will not receive tax incentives.”

      This is what little Brucie means when he writes:

      “they didn’t consider how the locals felt or that the money would go toward a (Chinese) state-owned company which kind of flies in the face of the current POTUS’ agenda. But the argument, of course, will be that Biden wants to restrict US investment in China with regard to high tech, not that he has any concern about giving US taxpayer money to Chinese state-owned businesses in the US because certainly none of the high tech stuff could ever find its way back to China, right?”

      Let’s count the ways Brucie got this wrong?

      (1) No tax incentives were given to this Chinese company.
      (2) The high tech stuff is Chinese created technology. Even dumbass JohnH knows China has an edge in the technology of batteries but not Brucie.
      (3) Ford is investing in Michigan not China.
      (4) Ford is willing to pay the appropriate royalty to the creator of this valuable technology. I guess little Brucie thinks we should just steal China’s IP.

      Come on Bruce – this was well written and not very complicated. And you get EVERY part of this very wrong. Now we know you are STOOOPID but DAMN!

  4. Macroduck

    Off topic, for spread watchers –

    The 15-year mortgage spread is now wider than the BAA corporate spread:


    Notice that the mortgage spread was narrower than the BAA spread prior to Q4 last year. Always:


    Nearly all the action since early Q2 has been on the corporate side. Corporate spreads have narrowed as risk appetite has improved along with an improving economic outlook. However, from the time the Fed started hiking rates, most of the action has been in widening mortgage spreads.

    Now, Johnny likes to get all emotional about mortgage spreads, without ever really making a point; his masters simply want him to stir up dissatisfaction. For the rest of us, the structural difference between the corporate and mortgage markets is obvious. There are more serious strains in the housing market than in the corporate market, in a way that was not true even during the housing and mortgage market collapse. Pretty remarkable. That’s a reflection of the rapid rise in interest rates.

    1. pgl

      “Now, Johnny likes to get all emotional about mortgage spreads”

      Yep but maybe we can get us to tell us what mortgage rates in Russia right now.

  5. Macroduck

    As to the evidence of increased strain in the mortgage market while the corporate debt market is looking sturdy, there may be implication for the real economy. (Spread watchers wouldn’t bother watching spreads if we didn’t think there was information in them.)

    Housing typically leads. Housing went through a rate-induced slump and has recently begun to recover:


    We have so far dodged a recession (unless NBER says otherwise), and housing may be in the process of leading us toward growth. Why did housing not lead us into recession?

    Whatever else you think of the post-Covid-recession surge in profits, those profits are obviously a source of strength for corporate spreads. You can make the same point with regard to the period of weakness in industrial production – it hinted at recession, but profits were high and were a buffer against economic contraction.

    Thee background for good corporate performance is consumer demand, and the background for demand is fiscal policy. Massive transfers to households and businesses provided the wherewithall to buy stuff like crazy. So corporate performance has been good during the expansion despite a whole raft of troubles. Hiring has been good despite a whole raft of troubles. This is, of course, the rolling expansion/rolling recession idea (https://econbrowser.com/archives/2023/08/a-rolling-recession-from-a-rolling-expansion) seen through the lens of interest rate spreads. Corporate spreads look good due tofiscal policy. Mortgage spreads look baddue to monetary policy.

    1. Ivan

      Thank you. I think you boiled that down very nicely with good links to supporting data from credible sources.

      I am also convinced that the corporates will do fine. Even though corporations are being forced to pay a bit more on the low end of the pay scale, that money runs straight into consumption, so they get it back from increased sales/profits.

      However, I think the market is a little too concerned about mortgages. The upcoming crisis in housing will not be about people failing to pay their mortgages – it will be about not getting one in the first place. Those who already have a mortgage can afford it, and few will be getting into a new one they can’t afford. Potential buyers will either chose or be forced to, not purchase a house at current rates – because their choices will be between a higher monthly payment or a lower priced house. Both buyers and sellers seem willing to wait it out for now. It will take years before they give up waiting/hoping and just accept the new reality. Household formation seem to be slacking as more adult kids decide to just stay with the parents a few more years. Homebuilders will be hit hard, but we are not China, so our economy will overall not be affected that much.

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