No Pain, No Gain

Welcome to This Week’s Leyendecker View

Reality leaves a lot to the imagination.
– John Lennon

FAVORITE READ OF THE WEEK

What conservatives get wrong about taxes
What liberals get wrong about taxes

THINKING OUT LOUD

No Pain, No Gain

Well it hasn’t even been a month, and President Trump has the world trying to figure out what’s next and where we’re all going. 

To begin with, we should recognize that Donald Trump wakes up every morning ready to negotiate something, or maybe to negotiate everything. He’s a deal guy, not a politician, and certainly not a bureaucrat or a go-along-to-get-along kind of person. 

Also we must keep in mind that Trump really wants to Make America Great Again, or at least make it more economically successful and restore its position as leading the world out of the darkness of spreading autocratic tyranny. Face it, Trump wants to get his mug on Mount Rushmore, and he’s going to try all kinds of things that might build a movement of people saying he deserves it. Time will tell if he deserves it…or if just the opposite happens.

Let’s cover some of the big picture…

Prior to the inauguration, Trump’s influence helped create a ceasefire and hostage exchange in Gaza. Now he’s proposing the Palestinians leave Gaza for neighboring countries and let the US take over Gaza and develop it into some kind of economic engine for the region.

Trump is likely trying to coerce Middle Eastern countries to stop avoiding the Palestinian situation, which they have for decades, and collaborate on something productive with people and this region. It’s like Trump is saying, “If you don’t want us over there, you better come up with and get serious about executing a plan!”

Immediately after his inauguration, Trump signed executive orders to eliminate DEI from our public sector vocabulary and policy. Now lots of people involved in supporting DEI are losing their jobs in both the public and private sectors.

The Trump/MAGA worldview is that DEI reduced US capability by replacing what’s best for the country (meritocracy) with what’s best for a person (DEI). President John F. Kennedy, a Democrat, may have said it best: “Ask not what your country can do for you. Ask what you can do for your country.”

Elon Musk’s DOGE has severely upset the deep-rooted bureaucratic state. Musk is using technology to identify where the federal government is wasting our taxpayer dollars. Heads are going to roll. Departments are going to roll. Agencies may roll. Musk has already gotten over 40,000 government workers to accept a buyout and leave their jobs. More are coming, maybe many more.

We all know how inefficient government is. It seems to still operate in the analog age. Why? Pretty simple…job security. Most of what the government does is manage information. You think government workers want to let highly productive information management systems into their worlds? Doing so would destroy tons of government jobs.

DOGE’s effort is a double-edged sword. We may get a smaller, more efficient government and cost cuts that would help reduce  our rapidly growing government debt. But if it puts thousands of people out of jobs, then we’re going to have an unemployment problem. With recent job demand waning, DOGE could put us into a consumer-led recession.

A recession would push the Fed into lowering interest rates, which is what many investors have wanted since rates started rising a couple years ago. Lower rates would provide relief to highly-leveraged companies, and to the homebuilding industry, but there’s a catch. If the cost of capital decline comes on because of a recession, then it will translate into a decline in sales for many industries.

Lowering federal debt, a goal for many conservatives and investors, has its own challenges. If we reduce government expenditures in order to reduce the growth of government debt, then that is money we are extracting from the economy. Let’s call this an “anti-stimulus” effort. With less government spending, the economy will shrink unless we have a correlated increase in private sector economic output.

If the public sector is reducing its economic influence, then the private sector needs to take up the slack. How’s that going to happen if we have a growing number of people losing their government jobs, which could trickle down to job losses in the private sector?

Now throw in the tariff trend, which has the potential to increase inflation. Higher unemployment and lower economic activity while inflation increases is called stagflation. Now how do we get out of that?

Trump’s thinking is likely that tariffs will influence foreign companies to invest more money in American hard assets, specifically factories. A worthwhile amount of that investment would support construction jobs, construction materials and services companies. Those new factories would then add new jobs. And with the US producing more goods domestically, we would reduce our trade deficit.

Reducing our trade deficit would mean we’d be sending fewer dollars to other countries. Those exported dollars stimulate other countries’ economies. A lower trade deficit means we would keep more dollars at home, which would then increase our economic output as dollars are recycled into our own economy. 

Whew! That’s a lot of change Trump is trying to pull off in a very short period of time. And we haven’t even considered the immigration situation, trying to end overseas wars, or stemming China’s influence on the globe. 

Trying to do so much in such a short period of time could lead to some negative economic outcomes. Balancing all of this to produce a positive near-term outcome of increased economic activity and expanding prosperity more broadly will not be easy.

There is an old saying that seems relevant here…

No pain, no gain.

If the US is at the door of a painful economic period, we must hope and pray that when we emerge from it, we can have an “Argentine experience.” Once elected, Argentina’s President Milei implemented some rather dramatic changes, which tanked the country’s economy—temporarily. Today, a year or so later, Argentina’s economy is growing, and in the healthiest and most free market way it has in decades.

THE RANDOMS

The CIA just offered a buyout to every single employee. Is there something so rotten over there that the higher-ups want to give all the complicit a way out?

Since most of what Europe produces and sends over to the United States seems to be luxury goods like automobiles, wine, fashion, cosmetics, and more, then tariffs on European goods are almost like a tax on the luxury economy. That’s not a tax on average Americans but on Americans living the luxury lifestyle.

The “you gotta have a diamond” grift may finally be over.

Elon Musk supposedly now has access to our Social Security numbers. Which should we worry about, what Elon will do with that info, what the government does with that info, or what the government doesn’t do with that info?

Media outlets and government bureaucrats are up in arms over Elon Musk’s DOGE effort to better understand where the government is spending taxpayer money. A House Democrat is objecting to the fact that DOGE has a budget and is using money to save money. But for years, consulting firm McKinsey has earned anywhere from $50-$120 million a year from federal government contracts. Maybe it’s okay to pay DOGE, since its job is to save taxpayer money. Makes you wonder what work McKinsey has been doing.

During the Biden and Obama administrations, I seemed to get at least one call a week from some consulting firm telling me I could get a government contract. Do you think DOGE is finding a bunch of firms that we’re getting free money for nothing, or almost nothing, from the federal government?

Trump on potential EU tariffs: “They don’t take our cars, they don’t take our farm products, they take almost nothing and we take everything from them. Millions of cars, tremendous amounts of food and farm products.”

Well it turns out that air traffic controllers are understaffed all over the country because not enough DEI candidates have applied to the training program. So if they weren’t able to hire a “DEI candidate,” were they just not allowed to hire?

How interesting that, for a long time, Trump and a number of those on his team were once firmly in the Democratic Party.

We all stopped talking about a recession about a year ago. Now no one is talking about a recession. Red flag, anyone?

ECONOMIC NEWS

Economy
Is the momentum positive or negative?

Job report shows signs of hidden strength
Yet jobless claims are picking up
Productivity growth is slowing
Factory activity expands in January
Service industry slows

Inflation, deflation or both?

Power prices are set to climb
Are eggs the new gold?
Food inflation remains troublesome

Labor

Labor demand is falling fast
Fastest-growing jobs in US cities
We don’t need human workers, says this CEO
Here comes the AI salesperson

BUSINESS

Finance
Volatility is not great for finance folks.

Trump volatility is not helping M&A
Trump wants to tax PE more
Private credit is the new FOMO
Musk thinks DOGE can lower interest rates

Tech
Big tech wants to dominate.

Big tech goes all in on AI
Meta embraces “cognitive diversity”
Google kills diversity mandates
Google’s revenue growth slows
Salesforce cuts 1,000 jobs and embraces AI

AI
DeepSeek opens a new era.

Let AI be your fortune teller
DeepSeek will not lower AI energy needs
No one knows how to price AI
DeepSeek spreads Chinese propaganda

Energy Transition
Green energy keeps losing mojo.

Offshore wind takes another blow
European airlines backtrack on hydrogen fuel
Equinor scales back renewables focus
Ford is in EV hell

THE NATION

The Washing-Tone
Legacy Washington is in disarray.

CIA offers everyone a buyout
US lawmakers seek DeepSeek ban
FBI protects themselves, why?
USAID may be axed
Bessent orders work halt at CFPB

MAGA
The Gatling gun policy change president.

Trump hates US trade deficit
US begins migrant flights to Guantanamo
El Salvador wants US migrants
Trump ready to go after Mexican cartels
Trump tees up sovereign wealth fund
Is Trump changing the balance of power?

DOGE
Saving money without pain?

More than 50,000 take the DOGE deal
The Deep State fights back
DOGE looks for Medicare fraud
Musk digs in to education department
Musk wants to use AI to cut spending
DOGE is moving with lightning speed

Social Trends
Pawns of technology?

Slang is sprouting at a dizzying speed
“Fast food” gambling has ensnared young men
Luddite teens grow their ranks

The Tariff War
We demand you help MAGA.

JPM’s CEO supports tariffs
The EU is next, says Trump
EU threatens Big Tech retaliation
China announces their own tariffs
Mexico and Canada get 30-day reprieve

GEOPOLITICS

Europe
This region is losing relevance.

German industrial orders rise
UK wants more nuclear power plants
High travel costs are keeping tourists away
German far right wants mass deportations

Global
The world is fragile.

India’s economy needs help
Why does no one care about Sudan?
Or the atrocities in the Congo?
Argentina to follow US out of WHO
El Salvador wants to grow its prisons
Sweden experiences record mass shooting

Ukraine
Is a deal around the corner?

Let the negotiations begin
It’s Russian men against Ukrainian drones
US working on aid-for-rare-earth-minerals deal
Drones using drones to attack drones

Middle East
The world needs a productive Palestine deal.

Netanyahu open to restarting Hamas war
The US will take over Gaza?
Trump wants Palestinians to leave
Why Arab states don’t want Palestinians

War Creep
Are we one event, one accident away?

Can American win a war with China
Iran launches drone aircraft carrier
India inks weapons contract with Russia
Big Tech backs away from NOT weaponizing AI

China
Domestic challenges with global ambitions.

Chinese companies are bleeding cash
China factory activity slows
The Chinese love deepfakes of dead family
China steel production declines

MAKING A BETTER YOU

Mind
Get more quiet time.

Why you should read more fiction
The remarkable power of silence
How to beat the afternoon slump

Body
Get more outside time.

Frozen foods, better than fresh?
Best and worst habits for eyesight
How to maintain a healthy gut

FUN STUFF

Let your hair down, baby! Even if you’re all alone.
Spring break ideas, anyone?

The Extraordinary

A village in the middle of an old volcano?
Idaho’s impossible rainforest
Non-opioid pain medicine approved

Music That Found Us

The last live Beatles show was 56 years ago
“I’ve Got a Feeling” live!

“Nightswimming”
Who remembers R.E.M.?
Lyrics can be poetry, ya know.
Why this is R.E.M.’s greatest song

Worth a Watch

Companion, a funny horror ride.
Those amazing starlings!
The greatest NFL play ever

The Yum Yums
Time for the Super Bowl!!!

Food & Wine’s Super Bowl recipes
NY Times’s Super Bowl recipes
Bon Appétit’s Super Bowl recipes

PARTING THOUGHTS

Somebody said to me, “But the Beatles were anti-materialistic.” That’s a huge myth. John and I literally used to sit down and say, “Now, let’s write a swimming pool.”

– Paul McCartney

IN CASE YOU MISSED IT

Channeling Victor Frankenstein
January 31, 2025

The Cornerstone of MAGA
January 24, 2025