Mayday! - or May Day?

One of my favorite sports is wordplay - using not quite the right word, or one that is precisely correct, but obscure, or swapping out sound-alike’s - or playing scrabble.  I’m into the history of words (and people), including their ethnic and cultural heritages, and so I was pleased when I looked into the interesting sound-alikes - Mayday and May Day.  

My musings started when we scheduled our Spring Social on May Day - the traditional start of spring, where families would bring flowers to one another in celebration of friendship and the return of warm weather and crops beginning to grow.  Mayday joined the blog title when I saw it written on a sign at the “Dump Trump” protest on the corner of College and Mulberry a few days later.  Mayday is an international signal of distress, adopted in 1923 during the rise of air travel, especially over the crowded British Channel. 

Owing to the difficulty of distinguishing the letter "S" by telephone, the international distress signal "S.O.S." will give place to the words "May-day", the phonetic equivalent of "M'aidez", the French for "Help me."

—"New Air Distress Signal," The Times [London], 2 Feb. 1923

To see where I’m going with this - click the link!

Let’s start with the “Dump Trump” rallies, which I must admit have sustained more traction that I might have imagined.  These started mostly in response to DOGE, and the objection to young computer whiz’s poking around in NGO’s like USAID looking for wasteful spending and corruption.  Why we wouldn’t want that I don’t know - I’m the kinda guy that would like to see every government spending dollar accounted for on a blockchain, open source style, for all the world to see.  But Elon is a bad guy now, and we can’t have bad guys poking around in the democracy.  (isn’t it funny/sad how often we can replace the word democracy with bureaucracy and the sentence still makes complete sense?)

And then - tarrifs - tarrifs on, tarrifs off.  Tariffs on, tariffs off - for everyone except China - they’re double, no triple!  Tariffs on everyone, but just 10%, and tariffs off for some stuff - like Apple phones, for now.  Predictably, the stock market indices have been bouncing around like the head of a Chinese dragon in a parade, and wealth managers are taking so many phone calls it almost seems like they work for a living!  and wealth managers are taking so many phone calls. It almost seems like they work for a living!

One thing businesses don’t like is uncertainty, and the level of uncertainty in the global trade atmosphere hasn’t been higher in my lifetime.  Even within our member community, there are supply chain challenges, funding uncertainties, and in some cases a threat to their very business model.  And it seems like things are just getting started, but it’s also possible that things are just getting settled.

One thing is true however, China has been an abusive trading partner for decades. It’s amusing to see old videos of Nancy Pelosi, encouraging Donald Trump during his first term to apply tariffs and pressure to China to counter intellectual property theft, and a legal and political structure that gives American companies (and everyone else) almost zero leverage to seek justice in the Chinese system.  

And what many of those protesting the tariffs fail to understand is that most of our trading partners have been abusive to the United States. In Europe, there are tariffs and regulatory restrictions that keep American automobiles virtually off the roads, and even our friendly neighbor to the north Canada has massive restrictions on American products to protect their agricultural industries, especially.  And maybe that’s OK, I want Canada to be able to feed its own people, but they should understand it comes at the cost of a higher price for cheese and butter.

And we should probably be able to make our own electrical transformers, for the sake of national security, or resilience in the case of an EMP attack.  Or at least not get them all from China!  The market is a slippery creature - it cannot be pushed, but sometimes it can be guided. But to make transformers in the US - some company is going to get some government gravy out of the deal - and therein lies the challenge.  Markets will give you much of what you want - always at a better price - but will not always give you everything you need. 

Before I move on, a word about the stock markets.  By almost every indicator, stocks were overvalued coming into the end of 2024. Price to earnings ratios were not favorable for continued strength, and the biggest reason in my mind that prices were so high is the expectation of continued inflation.

Per the Treasury.gov website, the US deficit was almost $2 Trillion in 2024 at $1.83T, after $1.7T in 2023, and $1.38T in 2022.  Deficit spending is basically inflation, and the even higher deficits in 2020 and 2021 is what ate everybody’s lunch money in higher grocery, gas and auto prices the last couple years.  Remember the “free money” debit cards - yeah, those weren’t actually free.  In America, when we don’t have enough money, we print more! - making all the existing dollars smaller.  When dollars get smaller, asset prices go higher - even though their value is basically the same, and that’s why the stock and real estate prices have been up so much over the past few years - even though their values haven’t changed much - companies aren’t making bigger profits, and any extra rents collected are just to cover the higher interest costs and property taxes paid by property owners everywhere.   

If you live beyond your means for long enough, there will be a mayday moment, and my sense is that we’ve been approaching that moment for years.  To dig our way out of $32T in national debt, we need two main things - fiscal restraint, and increased growth - which can only be achieved through sensible deregulation.  

In 2008, California passed a statewide ballot initiative to fund high-speed rail between California’s largest cities, in an effort to alleviate traffic congestion and reduce greenhouse gas emissions.  By 2025, roughly 120 miles of the initial 494 mile Phase I from Los Angeles to San Francisco via the Central Valley is under some level of construction, but the project has been beset by delays and cost overruns, and isn’t expected to provide LA to SF transportation until at least 2031 and more likely 2033.  Over 11 Billion has been spent so far - and no passengers yet!  

In China - they introduced the CRH plan - China Rail High-Speed - in April of 2007, and the Beijing - Tianjin segment was opened in August of 2008, a ~72 mile stretch, with 200 mph trains.  At the end of 2024, China was estimated to have over 29,000 miles of high speed rail in operation, over ⅔ of the world’s total operational high speed rail system miles - and infinity times more than what California accomplished over the same time period.  And the difference is mostly - regulation.  What China wants, China gets, but even when voted for by a strong majority in California - the process gets tangled in regulation and costs that may prevent high speed rail from ever moving people around in California - but we shall see.  

The thing is - fiscal restraint is what creates a freer people.  The more our government taxes and spends, the more it remains the decider on who gets taxed - and who gets the spoils!  If we deregulate the economy, and decentralize spending from the national level to local and regional governments, businesses will prosper and jobs will be created, and the citizens will prosper!  

I should qualify, especially for those of my readers who are certain that Trump is a Nazi, or at least plans on grasping and holding power beyond 2028 - I hope you’re wrong, but I’m a little queasy about it too.  His recent talk about possibly running in 2028, and some of the extra-judicial executive orders - they make me nervous too.  And - he might be just jerking chains to get a response.  

But - something had to change - the bureaucracy was on pace to consume the democracy, and the republic has been in ever-increasing danger as our debts build and our currency devalues.  If the dollar became unsustainable enough to lose reserve currency status - bye bye high standard of living!  Perhaps clearing out some of the chaff from decades of overspending and bloat can set the stage for new growth?

And - perhaps May Day can help!  The foundation for all economics and all politics is local, and so if local consumers and businesses celebrate their friendships with flowers and commerce, we can grow from the inside out and lift one another up!  Not two years ago, small businesses in our region were hurting for enough employees, with revenues and opportunities spurred at least in part from government spending - and consumer spending - what with all the free money swimming around.  But it was fake growth, and today the job market is much more employer-friendly - there have been a lot of layoffs in the tech industry the past 12 months or so, and many of them were remote workers who moved here during the pandemic season, with paychecks coming from California and New York.  But - if we grow our local businesses and local economies - we can create jobs for these people too!  

So much of life and business relies on connection, and so if you’ve been watching the news, or flipping through the social media posts, and getting yourself all anxious about the future - I invite you to join us and spend some time in the present with some real local people.  Our LoCo Spring Social is on Thursday, May 1st, and it’s at a newish local business in Fort Collins - Hutch Home Co.  We’ll have flowers, and door prizes, amazing business leaders in attendance, and food and drink and community - so come and join us!