So now what...

To say that the last couple of months have been tumultuous is kind of like saying the sun is thought to be a little warm.  Here in Florida, we have basically been on a hurricane lockdown since August that has just lifted from when Debby came barreling through with more rain than we had all year combined.  Then things calmed down a little, and then Helene roared up and basically went up the western side of the state towards the panhandle like a corn shucker machine eating through a field of crop.  People all up and down the west coast of Florida were flooded out.  Millions of people were affected by either storm surges or hurricane wind forces and that was before Helen reached and wrecked the Eastern US from northern Florida to Virginia, inundating towns with muck, mud, flooding, destruction and suffering.  As a friend of ours put it, “there were five-foot waves in my F-ing living room like someone was riding a jet ski inside my house!”.

Then Milton came a few weeks later and it hit us dead one here in the Tampa Bay area.  Whatever was spared by Helen before was now underwater.  The west coast of the state is more waterlogged than a family of beavers after a spring snow melt.  The amount of trash everywhere is hard to overestimate.  Driving through Shore Acres is like taking a tour of a massive garbage dump.  Houses are dark and empty and there are huge piles of everything on the front lawns, from furniture, to drywall, to toys, to kitchen utensils, to TV sets touching each other, sort of like combining into a chain or garbage each representing the lifetimes of effort it took people to build all those things one piece at a time. 

Our brand-new car that we purchased in February essentially turned into a hunk of junk because of the saltwater damage that came about after Milton decided to take our Toyota for a swim.  Hundreds of thousands of families were without power, some continuously, some intermittently between the two storms, averaging about 20-25 days or so out of the month of September and October. 

There are no streets on the peninsula where St Pete, Largo, Pinellas Park, Clearwater and Safety Harbor are located that did not have trees down or limbs down needing massive efforts to clean up so traffic can safely start flowing again.  There were no safe spaces on the barrier islands where sand and water did not invade homes, destroy businesses and disrupt lives – in every sense of the word including lives lost. 

And… now we have a new hurricane on the horizon.  The incoming administration of Mr. Trump, who once again will become president of the United States on January 20, 2025, for four years.  Now, this is not a political site, I don’t discuss politics or ramifications of political agendas one way or another.  I don’t know what your political or emotional stand is when it comes to the election, and it is not the place to debate it.  I have no desire to get into a political discussion about right and wrong, you have your opinions, I have mine. 

But I do focus on economics and specifically on family economics and budgeting and from that perspective, the incoming hurricane that can potentially devastate US families financially will be larger than the combined impact of Helene and Milton.

Allow me to break it down for you what I mean.  We know that a Harris administration, had it happened, would have presented a continuation of a Biden administration essentially.  Not great – not even good in my opinion – but not terrible.  It would have been predictable.  It would have been quantifiable, and we could calculate the outcome with a fair amount of certainty based on data we have about the policies that were put in place the last 4 years.  We know for example, that the price of wheat, although still speculatory under normal circumstances, would be largely unaffected because the security cordon of the Black Sea would be unofficially guaranteed by a US underwritten NATO force that could guarantee a civilized and peaceful transfer of the product out of Ukraine and onto the world markets without a worry that a Kremlin escalated war against the Ukraine – now fighting without US support – can lead to a bloody mess on the sea routes that cuts of the flow of the grain. 

The last time Trump was president, he had strongly advocated for and got a strong tariff system to be implemented on hundreds or thousands of products coming into the US from our overseas suppliers.  These are products that we as Americans, have taken for granted as cheap material because in the past they were relatively cheap.  Under the Harris administration there is very very little possibility that any kind of a tariff system would have been implemented on imports.  Why is that a problem?  What is a tariff anyway?  Well, an import tariff in its simplest terms, is a tax – it is a tax levied on a product that is brought in from another country and sold locally here in the US.  Now.  A tariff can be a useful tool to employ if someone wants to ensure that a foreign competitor does not flood the local market with cheap goods, driving the local company out of business then driving up its prices on the consumers.  There are lots of tariffs imposed on products coming into the US right now.  For example, the tariffs imposed on many China made products by the previous Trump administration, are still in effect today – Biden didn’t decrease or eliminate them.  In fact he raised them on steel, aluminum, medical equipment, lithium-ion batteries, but this is within the purview of the Executive Branch.  Legislation from 1974 gives the White House essentially the right to levy tariffs and tariff rates by up to 80% on goods imported into the United States if the president believes that doing so serves the national security interests of the country.  So it was not outside the realm of possibility for Trump to impose tariffs on all those products and neither for Biden to keep them and increase them.  Here is the problem. 

If you as the president, increase tariff rates on a product that comes into the country from another part of the world, BUT our country does not have a substantial local manufacturing sector that produces the same product, than what you are doing is you are increasing the tax importing companies have to pay on those products that people still want to buy and need but then passing on the higher cost to consumers.  So.  Essentially, because the United States has for the past 40-some-odd years been steadily outsourcing our manufacturing capabilities to other countries where labor is cheap and benefits are nonexistent to pad in increasing amounts the pockets of the shareholders, have surrendered our abilities to engage in a competitive manufacturing process for the goods that we consume daily.  And we consume a LOT.

But all those things we consume come from other countries.  Other countries that the Trump administration wants to have a tariffs war with.  So essentially what that will result in for those of us who try to budget our income and expenses to save for our retirements and for our children’s future, we will now have to pay more – a lot more – for the privilege of consuming the very same items we are consuming today because there is no manufacturing base in the US we can turn to in order to keep buying things we need even though the stuff we need is being brought in with higher tariffs the cost of which is being passed down to us.  So, if you currently budget lets say, $750.00 for groceries for a family of 5 for a month, if the Trump tariffs go into effect, that has the potential to increase to over $1300 a month because of the tariffs that will be placed on items coming in from Mexico, from China, from Europe, from the Middle East etc.  Would you be surprised to learn that we not only import seemingly every stich of clothing in Walmart from China, but also virtually 90% of all the vitamin C consumed by Americans, 70% of all apple products, 25% of garlic and over 80% of tilapia and over 100 million dollars’ worth of tea?  We do.  We also import textiles, no surprise there, plastics, metals, in fact, China is the leading maritime importer for the US by a margin of 42% as of 2021.  The problem of course, is that the US does not have the manufacturing capabilities any longer to compete with this to offset Chinese products with locally produced ones because in our infinite wisdom over the past 40 years, we basically decimated manufacturing in this country in the name of corporate profits.    It is bad enough what the Biden administration did with tariffs on Chinese imports, a Trump tariff will positively drive US average families’ budgets into the ground with the increased prices.   Bottom line, many of us will not be able to afford the things we want or like to buy and will start settling for things we need.  This of course, will lead to a spiraling decay of product availability leading to a generally poorer and weaker society on the long run, dependent even more on imports than we are now. 

The flip side of it of course, is a tariff on imports necessitates a tariff response on exports.  All those things we export to other countries will be hit with a tariff as well, increasing the prices of the goods we currently send overseas but here is the problem.  In the United States the VAST majority of exports are conducted by private corporations, employing hundreds of thousands of workers.  These corporations are for profit companies, run by individuals who keep the bottom line in close proximity to their own wealth.  There is a direct correlation between their income and the company’s income and in many cases, how the share prices perform.  Now then.  Lets say that there is a tariff being slapped on a US export product to Germany.  The German company receiving the product distributes it and they charge a higher premium for it because the EU has now put a higher tariff on that US export.  Btw, an individual EU member cannot go around this by negotiating directly with the US – the EU negotiates tariffs on behalf of its members, so a tariff on a US product in Germany will also have one that is distributed in France or Denmark or any other EU country.  OK fine.  A higher price for that US product.  However, the European Union has the luxury of tapping local markets that probably produce the same product OR – has the ability to deal directly with another entity like China, to import that same product but without the US tariff being attached to it.  So, what happens to the US product?  Well, it stays unsold in the US. 

And what happens to a US company that cannot sell its products?  Well, it usually lays off its workers.    

Here is the bottom line.  A Trump administration economic package, if he is to be believed to act on it and I don’t see why not, Trump is the ONLY president in history who actually wanted to do exactly what he said on the campaign trail he would do, will result in a diminishing US economy, a shrinking US economic output and a poorer and more depressed US population financially overall than under a Harris administration – IF Harris would have followed the Biden policies in somewhat close alignment. 

So, who will benefit?  Well, people who already have a lot of wealth.  People who can own and negotiate outcomes beneficial to them because they don’t have to rely on the greater collective bargaining abilities of hundreds of millions of Americans otherwise known as voters to voice their opinions.  People who can independently influence market conditions. 

And for the million-dollar question – what can the average American budgeter do about it to protect themselves for the next 2 years?  I say two years because there is one trend that not even Trump has been able to buck and doubtful if he will or any president ever will and that is the 2-year midterm elections by enlarge tend to favor the opposition party in congress.  So, what can we do, those of us who don’t have billion-dollar portfolios to still be able to save, to be able to go forward to be able to survive and thrive in an economic scenario that will be taxing and difficult for most of us going forward for the next two years? 

Step 1 – make sure that your budget is locked down and ironclad for the next year and if possible, for the next two years.  Have a crystal-clear picture of your finances before the end of the year so you know what you have, what you will have to pay for and what you have left over. 

Step 2 – know for sure that with the decrease in economic output, there will be a corresponding increase in the stock market and the inflationary tax on your pocketbook will take its toll.  If you think you will need $3500 per month to survive, try to imagine what you can do TODAY with $2500 instead because chances are good that in 2-4 years your $3500 will only be able to buy what your $2500 can buy today.  So become thrifty and stop spending on things you don’t need.  Look at the next 2 years as a strictly rebuilding year.  Pull in your arms and legs, put your head down and become a bit of a budgeting puritan. 

Step 3 – GET RID OF YOUR CREDIT CARDS.  Do not, I repeat, whatever you do, do not borrow large sums of currency off your credit cards.  If I had to borrow money for something, I would do a fixed asset loan, or a personal loan capped at a rate that cannot adjust up no matter what the FED does.  Why?  Because your income will not keep step with an increasing inflationary dollar as more and more money is pumped into the stock markets and you will wind up with payments you won’t be able to afford.  Have a disciplined and system approach to paying off your credit cards and any adjustable-rate loan products you might have. 

Step 4 – don’t deviate from your budget if at all possible – try to be disciplined and keep being frugal for the next 2-4 years because you don’t know – I don’t know – what the future economic outlook will bring.  But I don’t see an economic turnaround under Trump for anyone who has to budget – that’s people like you and I, those of us who work for a living.  I see an increase in the wealth of the top 1% - but those of us who go to work every day, we will only see added expenses.  This is based all on the actions taken by Trump in his first term.  Unless he drastically changes his economic agenda, I don’t see any other outcome from his second term. 

Step 5 – don’t panic.  We will get through it.  We will survive. 

America is not just a country; we are not just people who live in the same place.  America is a state of mind.  It is a state of mind of optimism, it is a state of mind for a better future, we believe we will have a better future if we work hard, and we do better and we will.  Look at the exit polls of who voted for the new administration.  By and large people of Gen X and older.  Yes, a lot of younger people also, but they voted AGAINST Harris and not FOR Trump.  But you can’t build on the greatness of our nation with old people – and I am a GEN X person – you need new, young people with energy, with enthusiasm, with vigor to be the best we can be.  We need new ideas! It wasn't an 80-year-old president who came up with the Internet... No 8-year-old president EVER came up with an earth changing idea that shaped the globe for ever and ever. Young people do that kind of stuff. You know... the same young people who are called naive and out of touch and ignorant of the world, yet they come up with ideas that change the world. Old people just sit around and complain mostly. So, we need to start listening to younger people about what to do with our nation and how to take this amazing American experiment and make it better. Because until the US came along, the world was basically one way, and it was that way for a long time. But then we rebelled, and the world saw that and said, "you mean I don't have to follow the rule of kings that oppress us?" then the French rebelled and then 1848 happened and then ... the rest is history. Not always good history... but despite massive setbacks along the way, it is generally going in the right direction history.

We need young men and women who want to build a better future on the ideals our nation was founded upon.  Trump didn’t win the young vote, Harris lost it.  My god, have you ever heard Trump making a speech?  He sounds like Grandpa Al about to fall asleep after Thanksgiving dinner!  Absolutely no energy whatsoever.  Who can sit through that?!

His time, and his generation’s time, will be gone and it will be gone soon.  His impact will be felt for a while, but when our kids will start getting into the workplace in 10-15 years, they will build a much better future for themselves and our grandkids than we ever could dream of, using the ideals of a strong, independent America, economically and socially thriving and working with our allies around the globe to make this a more just and more free society for the planet.  That is the future, and no number of border closings, tariffs or any other restrictive measures will be able to stop it.  It is inevitable.  It is simply inevitable – you know why?  Obsolescence.  Old ideas die out.  New ones take their place.  Better ones.  100 years ago, nobody ever heard of anyone going to the moon.  Now we have rockets routinely taking people up to the ISS – how long before we have colonies on the moon?  We don’t know.  But it will happen.  Progress cannot be stopped and America is the most progressive society the world has ever seen.  Why?  Because we are strong in our believes that optimism and the future will win out over tariffs. 

Most Americans do not think like the far right or far left of the parties.  We think in terms of optimism for our nation.    We think in terms of American exceptionalism rooted in our leadership abilities and our undying enthusiasm for a better future.  We don’t think we are better because other people are worse than us, we think we are better because we have great ideas about a better future and people follow us because they think our ideas are great, also. 

We don’t think our nation is worse off because we welcome immigrants, we think we are better off when other people want to come here to be our fellow Americans.  To be like us.  To be optimistic.  To want a better life.  Because that means we are doing it right!  We have something they want; we have something they desire.  We have freedom to build a life here.  We are not weaker as a country because we have new ideas about who we are, weather that’s debating social policies or deciding if all Americans should have the same rights regardless if they are men or women or who they proclaim to be, we are stronger when we are able to have new ideas that make us stronger than other nations because we stick together as Americans.  We are stronger when we build relationships, and we encourage long term economic development not when we seek shortsighted and silly goals that will hurt everyone. 

We are strong because our ideas are better and the vast majority of us believe in something that we were thought from a young age that guides our lives and makes us who we are as Americans.  Despite our many shortcomings, despite our many faults, we all have something nobody can take away from us. 

We believe in living with decency.