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If you think Mr. Trump is just blowing smoke when he rails against Washington’s bloated bureaucracy, you’d better sit down and brace yourself for a series of shocks …
Shock #1. The federal government’s complete failure to pass its audit: Just four days ago, the Government Accountability Office (GAO) released its full audit report covering fiscal year 2016 … and it’s a disaster:
The U.S. government failed the audit on about 34% of its assets.
This is crazy. When you run a public company, if your books are so botched up that your auditors refuse to give you a clean bill of health, it’s the kiss of death. But for the federal government, it’s routine; Uncle Sam has failed his audit in every single one of the past 20 years.
Here’s what’s new: Mr. Trump is the first president since Ronald Reagan with an explicit agenda to disrupt the status quo. Will that include a reorg that cleans up the mess? That remains to be seen. But if ever there was a president who has explicitly expressed the intent to tolerate some disruption for the sake of long-overdue fixes, Trump is it.
Shock #2. The messiest department of all: According to the GAO, the U.S. government department with THE sloppiest accounting and THE most waste of all is none other than … the Department of Defense.
This also happens to be one area where Mr. Trump, General Mattis and the Republican Congress are unanimously gung-ho — to invest the most money. But that also raises some urgent questions:
As they move to boost defense spending, will they also tackle the waste at the same time?
If so, what kind of disruptions will be needed to really make a dent?
What will be the impact on major defense contractors?
Will they actually do it?
Trump’s pre-election Tweet against Boeing denotes a keen awareness of the problem. But the nightmarish logistics of cost-cutting indicate that he may first have to focus on the defense build-up, and only secondarily on the complex, time-consuming fixes that are sorely needed.
Shock #3. The government is the biggest enterprise on Earth: Well, maybe this is not such a shock to you. But even though you may be aware of the problem in general terms, it’s still shocking when you consider the numbers:
- The U.S. federal government employs a whopping 3.2 million people.
- India’s population is now over 1.335 billion. Take away the entire billion, and it’s still larger than America’s. But India’s biggest single enterprise, the Indian Armed Forces, employs “only” 1.4 million; and its second largest, the Indian Railways has “only” 1.3 million. Even combined, they have fewer employees than the U.S. government.
- In China, the largest single enterprise is the People’s Liberation Army. With China’s massive defense build-up in recent years, you’d think it would be larger than the U.S. government. But with 2.3 million, it’s far from it.
- Walmart, with more than 5,000 stores in the United States and Puerto Rico, is America’s largest private employer. Finding someone in the store to help you may often be a challenge, but there are actually quite a few employees around — over 2 million! Nevertheless, Walmart is also much smaller than the U.S. government.
Needless to say, all this is quite a change from the days of George Washington, when the federal government employed just a handful of people in three small departments — State, Treasury and War.
Can Mr. Trump turn around, stop, or at least slow this massive, centuries-long trend of government expansion? I think it’s possible. But to the degree he can truly shake things up, the side effects are bound to be painful.
Shock #4. Unintended consequences: Everyone on Wall Street knows WHAT Trump and Congress have promised to do: They want to get tougher on trade deals, lift regulations, cut taxes, repeal Obamacare, restore the nation’s infrastructure and more.
Everyone also knows WHEN these changes will begin: Soon after Inauguration, just four days from today.
What virtually NO ONE on Wall Street can tell you is what the unintended consequences will be. They don’t know if trade wars will be triggered. They don’t know what the impact will be on the federal budget. They don’t know how America’s adversaries will react or how the U.S. government will react to those reactions. They certainly don’t know exactly how investors will respond or when.
We don’t either. Nor do we need to. Indeed, it’s precisely at times like these that our investment strategies, perfected over decades of political and market turmoil, become such valuable assets.
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Larry Edelson, for example, didn’t need a PhD in political science to predict that Donald Trump would win the election. Instead, he used his deep knowledge of historical cycles, based on thousands of years of data, to correctly predict the outcome. Nor did he need a crystal ball to predict the housing bust of 2007, the Great Debt Crisis of 2008, the Fed’s wild money printing of 2008-2016 and every major move in gold since the 1980s. Cycles showed him the way.
This also helps explain why Larry’s subscribers are looking at open gains of 207% in gold bullion, as much as 167% in SPDR Gold Shares, and from 10% to 38% in four related investments recommended just last year, just to mention a few.
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Similarly, our editor Jon Markman didn’t need to be an Einstein Fellow to predict when the tech sector would rise or fall. Instead he relied on his robust forecasting model that has proven itself through some of the most disruptive market gyrations of all time. End result: Overall portfolio growth of more than 25% in 2016, including all losing trades.
Better yet, right now, after years of testing and validation, Jon has just launched a new investment approach based on a trading technology developed in the 1930s by one of my father’s contemporaries — Jesse Livermore. Until now, no one, not even my father who tracked his trades in real time, was able to decode Livermore’s timing indicator. But Jon has.
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Meanwhile, our editors Boris Schlossberg and Kathy Lien use a simple device that was created 354 years before boomers like Mr. Trump (and me) were born: The Gregorian Calendar.
With a calendar of pre-scheduled events that almost invariably impact markets, they know what kind of news will be announced when. Then, by overlaying their astute trend analysis, they can safely bet on how the market will react. The result has been one winning trade after another and an overall portfolio gain of 31% since we began publishing their service in February of last year.
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Executive Order #0001: Trump’s $128 Billion Gift to Investors On Donald Trump’s first day in office, he’s expected to issue an executive order to fix one of Obama’s biggest mistakes. But not the one you’re thinking of… Instead, he’ll cancel an obscure rule that will immediately unlock a $128 billion fortune for a small, unheard of company. |
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I could fill volumes with these success stories. And I could also tell you a story or two about editors who sometimes go through slumps. But suffice it to say that all of us at Weiss Research are completely ready for the indisputable outcome of the Trump presidency:
The incoming administration will shake Washington and Wall Street to its core. It will precipitate a sea change unlike anything in living memory, sometimes for the better, sometimes not, driving some markets sharply higher, others sharply lower.
I repeat: Many people can tell us WHAT the Trump presidency will change and even when those changes will begin. But we are among the very few who can tell you with disciplined objectivity and relative confidence, how to deal with the impact — on stocks and stock sectors, interest rates, gold and silver, foreign currencies, options, plus much, much more.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
{ 14 comments }
Hi Martin
What has happened to Mike L.?
Donald Trump wants to cut 20% of the federal payroll and reduce total federal spending by 10% that waste taxpayer money. If Donald Trump keeps his word on just these two promises; He will have already done more than Reagan ever did!
For example; There was a massive increase in Cold War related defense spending that resulted in a record peacetime defense buildup including a 40% real increase in defense spending between 1981 and 1985 which caused large budget deficits. This increased U.S. trade deficit expansion, and contributed to the Savings and Loan crisis. Federal spending as a share of GDP was 21.5% in 1981 and was 21.3% in 1989. However in 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget. (In political jargon, it was taken “off-budget.†Yet today Social Security is treated like all the other trust funds of the Unified Budget. It is a political way of using a cash budget instead of the more appropriate accrual budget, for all the budgets in the U.S. government. It is a way of disguising total spending. In fact, the
budget grew significantly under Reagan. All he managed to do was moderately slow
its rate of growth.
The number of workers on the federal payroll actually rose by some 200,000 under Reagan, until the “savings and loan crisis” forced cuts to be made, leaving a net gain of 61,000 positions when he left office.
In order to cover new federal budget deficits, the United States borrowed heavily both domestically and abroad, raising the national debt from $700 billion to $3 trillion, a 429% increase, and the United States moved from being the world’s largest international creditor to the world’s largest debtor nation. President George H. W. Bush, derided Reaganomics as “voodoo economics”. Reagan’s response when asked about his increasing budgetary deficits and the nation’s debt was “Deficits don’t matter as long as the economy grows faster than the national debt.” Reagan later described the new debt as the “greatest disappointment” of his presidency.
While Obama has grown the nation’s debt from $10 to $19.7 trillion, a paltry doubling compared to Reagan’s quadrupling of the national debt!
It took about 232 years to get to 10 trillion in national debt but Obama doubled that in only
8 years with little to nothing to show for all that spending. Where did all that money stolen
from our children’s future go? It wasn’t to the middle class working people that’s for sure.
If our country doesn’t get this reckless spending under control we are headed for a currency crisis. The government must live within it’s means our it will drag us all down an economic sink hole.
20 trillion is just the “tip” of iceberg.
Include unfounded liabilities we as a
Country are “broke”. A pathetic job market “pay wise” the toilet has been flushed. Good luck.
“paltry doubling” 10 to 19.7 trillion; are you insane?
Sometimes you have to tear things up to begin rebuilding them as they should be. I predict trump with the help of Gen. Mattis will cut costs and build abetter military. Cutting waste and redundant programs can balance the budget again.
Unfortunately he will be stopped in his tracks, come on Martin the deep state will see to that, what was the saying give me control of the money and I don’t give a stuff who makes the laws.
Terry – He has plans to get control over the Federal Reserve. Might even be easier to accomplish than many of his other objectives, as the feeling that the Federal Reserve should be answerable to the government is widespread.
Martin,
The ‘Don’ will astound the world by turning lead into gold and distributing it to the common man making everyone wealthy!
YES IT IS THE HUGE BUDGET IN THIS ERA -2017
Lorne,
Thank you. Thank you for setting the record straight on Ronnie Raygun as we used to call him inbthe 80’s.
I am so sick and tired of people with no faculties of intelligence telling Americans how great Reagan was.
The facts are simple. He wasn’t! He actually started us “down the path” as the saying goes.
I went to a republican party election night event in Orange County CA back then and I remember the types of people attended were fat white businessmen with foul mouths and very corrupt minds and ethically challenged constitutions.
This was, is and likely always will be the parties base.
It was then I became independent. I hate the 2 party system. And until we move away from this most basic reality to a more intelligent way of Government…we will always see bloat.
I think all may have been said. This calls to mind the official whom wanted to close the patent office. Expecting more tweets. January 21, 80 + degrees in central Florida. Climate change is one hell of a myth.
Lorne, this is true. However, it is also true that Congress was supposed to enact some spending deductions in other areas. It didn’t happen. As an aside, Reagan with the agreement of Congress, also put through a large legalization of illegals. I forget the exact number but I believe it was around 2.5 million. The measure was enacted with Congress with the understanding that the border would be further secured. That didn’t happen which is why future immigration proposals involving amnesties were greeted with disgust & skepticism by the people. They simply didn’t trust Congress to do anything about the border; hence, most folks are demanding that the border be fully secured first before speaking about the status of folks within the country.
@Jim Shannon,
Right you are. That Amnesty was done and the result was 30 million more illegals flooding our country.
I live in California born and raised and I am ultra conservative.
I was involved in a few developments in the early 2000’s and remember Bush saying, “They only take jobs nobody else want’s to do.” Total BS
None of the workers on those job sites spoke English they spoke Spanish and Chinese.
In order for a contractor to compete he would have to hire illegals or he wouldn’t get the jobs plain and simple.
Time for True change.