Records of the year

Now that we know that the Grammys are rigged, where can you find the best music?  As the former rock critic of the Michigan State News, I offer you my favorite albums of 2019:

1.  FKA Twigs, "MAGDALENE," a blend of R&B and electronics with a dash of medieval church music and hip-hop
2.  Sharon van Etton, "Remind Me Tomorrow," following in the steps of Bruce and Bon Jovi in the Jersey pipeline
3.  Weyes Blood, "Titanic Rising," songs about romance in our digital age
4.  Angel Olsen, "All Mirrors," Asheville's own keeps turning out amazing stuff
5.  Lana del Rey, NFR, I cannot spell out the title for this PG blog
6.  Jamila Woods. "LEGACY! LEGACY!" tributes to artists who inspired Woods including Zora Neale Hurston, Miles Davis and Frida Kahlo
7.  Aldous Harding, "Designer," the best yet from this singer-songwriter from New Zealand
8.  Stef Chura, "Midnight," the next great rocker from the Motor City (but she is originally from the U.P.)
9.  Sleater-Kinney, "The Center Won't Hold," still going strong after 25 years
10.  (tie) Big Thief, "Two Hands" and Thom Yorke, "ANIMA," it would be wrong to leave one out.

The careful reader will note that the performer on all but one of these albums is either a female solo act, a band consisting entirely of women, or a band fronted by a woman.

Honorable mentions (multiple playlist-worthy tracks): Floating Points, Crush;" Black Keys, "Let's Rock;" Jenny Lewis, "On the Line;" Billie Eilish, "WHEN WE ALL FALL ASLEEP, WHERE DO WE GO?"

AND WHY THE ALL CAPS IN SO MANY ALBUM TITLES?

And U.P. stands for Upper Peninsula (of Michigan).

Let's make a trade deal 2: China

To evaluate the trade agreement with China that was signed last week, the fairest comparison to make is between where trade relations between the US and China stood on Inauguration Day 2017 and where they stand now.  On Inauguration Day 2017 the US had negotiated the Trans-Pacific Partnership with Australia, Chile, Japan, New Zealand, Peru, Singapore, Vietnam, and four other countries in the Pacific Rim.  It would have lowered or eliminated tariffs and other trade barriers among the partners and posed a strong counter-weight to China's ambitions.

Since that time, the US walked away from TPP and the remaining 11 members signed the agreement on their own. The US started imposing tariffs on China, which countered with its own tariffs, including significant tariffs on US agricultural products such as soybeans.  In game theory, this is known as a tit-for-tat situation, where each side replicates the moves of its opponent and there is a risk that both parties impose tremendous costs on each other.

So where are we now with last week's trade agreement with China?  The best news is that the tit-for-tat tradeoff has moved in the opposite direction; both sides have agreed to de-escalate and roll back some of the tariffs.  The not so good news is that (1) there are still a lot of tariffs and (2) businesses face uncertainty about future tariffs, which will slow investment and make sourcing decisions riskier.

The good news for American farmers is that the Chinese say they will buy more agricultural products from them.  That might mean US taxpayers will not have to send another check to farmers to offset the damage from the tariffs.  The not so good news for Brazilian farmers is that their sales, which surged when the tariff war started, will now drop off.

The good news is that the new agreement has stiffer rules for intellectual property protection in China.  The not so good news is that words on a page need not be strictly enforced by the Chinese government which has its eye on who will win the 2020 election.

Bottom line: Are we better off with this trade agreement compared to another tit-for-tat escalation?   Most definitely.  Are we better off compared to Inauguration Day 2017?  Definitely not.

Let's make a trade deal 1: USMCA

Now that all three countries have approved USMCA (US-Mexico-Canada agreement), what should we expect?  The best analysis I have seen to date comes from the Cato Institute's rating of which parts of USMCA will be helpful, which will be ho-hum and which will be dreadful.

Economically speaking, the best news is that the difference between USMCA and NAFTA is fairly modest.  President Trump did not terminate NAFTA, as he had threatened.  The one tangible gain from USMCA is that Canadian markets will be more open to US agricultural products, including wine.  This is great news for Wisconsin dairy farmers, who could have a large voice in whether the President will be around to make more trade agreements in 2021.  There also appear to be improvements in using regulations to create trade barriers, improving dispute settlement procedures and boosting digital trade.

The worst news is that automobiles are going to cost more.  To import a car from Canada or Mexico duty-free, 75% or more of its value must be created in North America, up from 62.5% under NAFTA.  That means fewer parts will come from Asia and manufacturers will have to shift to higher-cost suppliers in North America.  Also on the minus side, there is a sunset clause that could lead to the entire agreement being renegotiated or terminated in six years.

The International Trade Commission did an analysis last April that projected a 0.12 percent in US GDP as a result of the USMCA.  Based on my visits to Mexico over the last 30+ years, I think the biggest gain from NAFTA is that it has helped open up the Mexican economy which has in turn led to dramatic increases in well-being, at least in urban areas.  Having a more stable, more prosperous neighbor does not show up in the GDP statistics, but it might be the biggest gain from these trade agreements.

Another great jobs report, but ...

Today we learned that employers added 145k to their payrolls while unemployment remains at historic lows.  One would think that when economists gathered in San Diego last weekend for the annual meetings of the American Economic Association, it would be laissez le bon temps rouler.  

Au contraire!  NYT reports that many leading economists are worried that the ten year expansion is near an end.  Concerns cited include large government budget deficits, trade wars and ultra-low interest rates.   The low rates discourage saving.  They also limit the ability of central banks to stimulate the economy in any future recession; when rates are close to zero already, you cannot lower them much more.

As of now, no prominent economists are predicting recession for 2020, but the consensus is that growth will slow down.  Keep in mind that no prominent economists were predicting the market crash and subsequent recession in 2008.