Tuesday, January 28, 2025

Delta to Resume Flights to Israel

 Delta Airlines announced it will resume flights to Israel. (See below) Less than a week ago we called for the three major U.S. air carriers to end their boycott of Israel. (See: https://shulmaven.blogspot.com/2025/01/us-air-carriers-stop-boycotting-israel.html) Delta has followed though and we applaud Delta CEO Ed Bastian for his decision. Now it is time for United, who had the most flights to Israel, and American to follow through.

Delta to resume Tel Aviv service from New York-JFK on April 1

Delta will restart daily nonstop service to Tel Aviv (TLV) from New York-JFK on April 1, utilizing its Airbus A330-900neo to provide customers with nearly 2,000 weekly seats. 

Friday, January 24, 2025

My Review of Andrew Leigh's ""How Economics Explains the World: A Short History......"

History Through the Lens of Economics

Andrew Leigh over-promises and under-delivers in his history of the world through the lens of economics. To be sure economics is particularly important but as Ecclesiastes says, ‘time and chance happens to all.” Economics gives us tools to help understand the world, such as incentives, diminishing marginal utility and sometimes, as behavioral economics has taught us, people aren’t as rational as the classical theory would predict.

He, of course, mentions many of the great economists from Smith to Keynes and Freidman, and Kahneman. There works clearly help explain the world. He also mentions the work of Jared Diamond on the importance of an economy residing along and east-west axis as opposed to a north-south axis. This helps to explain why the northern hemisphere has done so much better than the southern hemisphere, but what does that have to do with economics?

He fails to discuss how human beings can really screw up what apparently looks like a strong endowment. Witness the weakness of Russia and Argentina and the converse of South Korea and Japan.

My bottom line is if you want a very short overview of the role of economics in history, this book might be for you, but it leaves out much.



Wednesday, January 22, 2025

U.S. Air Carriers: Stop Boycotting Israel

An Open Letter to:

Robert Isom

CEO, American Airlines

Ed Bastian

CEO, Delta Airlines

Scott Kirby

CEO United Airlines


As a frequent flyer to all three airlines, I have one question for you: Why are you boycotting Israel? All three of you had regularly scheduled flights from the United States (JFK, EWR, ORD, DFW, ATL, LAX, SFO, and IAD).  I recently flew on El Al  from LAX to TLV. I would have preferred an American carrier, but because of your boycott I had no choice, but to fly on El Al.


I understand that Israel has not been the safest of countries. Nevertheless, El Al has been operating safely since the Gaza war began and now with a limited cease fire in place, I don’t think you have any excuse for not flying into Tel Aviv. If your current policy of not flying into Israel persists, there can be only one explanation: you are boycotting Israel. 


I therefore urge you to resume flight operations to Tel Aviv as soon as possible. Otherwise you would be doing a great disservice to the flying publics of the United States and Israel. You also would objectively be taking the side of Hamas in the Gaza War. If that is your policy, say so!



Thursday, January 16, 2025

My Review of Stuart Banner's " The Most Powerful Court in the World:...."

 A History of the Supremes (Not the Motown Group)


UCLA law professor and former Supreme Court clerk Stuart Banner has written an encyclopedic history of the Supreme Court of the United States. He not only covers the case law, but he also covers the personalities, the politics inside and outside the court, from its earliest beginnings in the 1790’s to the present. In the interest of full disclosure, I had a very small adventure with the Supreme Court as a plaintiff in Yahr v. Resor (4th Circuit 1970) and having cert. denied in 1971.


What Banner rightly argues, the Supreme Court always was and always is a political body. When the Senate was controlled by a party not in the White House, appointments were often delayed until the next election. Merrick Garland’s nomination in 2016 was not an exception to history. As the old wag goes, “the Supreme Court follows the election returns.”


What I found interesting was Banner’s discussion of the 1925 judicial reforms, authored by Chief Justice Howard Taft and adopted by Congress. Those reforms enabled the Supreme Court to reject cases coming before it and it enabled the court to leave a rather dingy office space in the Senate office building to the Greco-Roman shrine it occupies today. According to Banner the ability of the court to choose its cases enabled it to take cases, many concerning civil rights, that it wouldn’t have previously taken because of a very crowded docket. Further he notes that the Republican Administrations in the 1920’s appointed several moderate justices, Harlan Fiske Stone, Charles Evans Hughes, and Owen Roberts. Those three justices played a meaningful role in ratifying the New Deal legislation of the late 1930’s.


While Banner applauds and criticizes many Supreme Court cases, he is silent on why the Supreme Court, from Marberry v. Madison in 1801 to Dred Scott in 1857, the Supreme Court did not overturn a single act of Congress. While after the Civil War and to this day many congressional acts were overturned. So, why was the court, so deferential to the congress in the early 1800’s. Banner rightly mentions Gibbons v. Ogden ((1824) which established federal supremacy over interstate commerce, but he fails to mention its huge economic impact in opening the Midwest and establishing New York City as the nation’s leading port.

He also doesn’t criticize Euclid v. Ambler Realty (1926) which ratified local zoning and, in my opinion, a regulatory taking; Berman v. Parker (1954) and Kelo v. New London (2005) which enabled government to seize private property and turn it over to another private party, not for direct use by the government for a public purpose.  He does note the extreme extension of the commerce power in Wickard v. Filburn (1942) which prevented a farmer from growing crops for his own use, hardly interstate commerce. My guess is that the case would be decided differently today. 


Lastly, he speaks favorably of Chevron v. NRDC (1984) which gave huge discretion to administrative agencies to go beyond the clear intent of Congress. Fortunately, that was overturned this year in Loper Bright Enterprises v. Raimundo. I do note that his book went to press ahead of that case.


These criticisms aside, Banner clearly explains how and why the Supreme Court overturned much of Reconstruction and how and why much of the rights we enjoy today were creatures of Supreme Court actions from the 1920’s on. However, although he discusses how the Supreme Court functioned as a super-legislature in overturning laws protecting workers and individuals, he is less critical of the court creating rights without any direct constitutional underpinning. The controversy over Roe v. Wade and its repeal is an exemplar of this. This is a book for supreme court nerds, and if you are one, it is well worth the long read.


Saturday, January 11, 2025

We are in the Early Stages of a Bond Bear Market

Bond market cycles last a long time. For example there was a bond bull market from 1920-1946 when long term U.S. Treasury yields declined from 6% to 2.3%. Thereafter a 35 year bear market ensued to September 1981 which took the yield on 10-Year U.S. Treasury Bonds to 15.84%. This was followed by a 39 year bull market that ended in August 2020 with the 10-Year U.S. Treasury yield trading at a meager 0.56%. It seems clear to me that with the 10-Year bond closing this week at 4.76%, we have been in a bond bear market for over four years. 

Thus if history is any guide, we are only the the early stages of a bear market that could last another two decades. Of course, as in any bear market, there will be rallies along the way, the the path for yields will be decidedly upward.

The fundamentals underpinning the bear market include monumental budget deficits throughout most of the world's largest economies, unfunded pension plans, a still smoldering inflation, and, at least in the near term, the global electorate's preference for populist politics that is working to deglobalize the world economy.  Further, if you add to the mix the need for enormous expenditures to harden infrastructure for weather events and the costs associated with energy transition, all the forces are in place for higher inflation and higher yields.

As far as the stock market goes, stocks can and have risen in the early stages of a bond bear market. That certainly has happened over the last four years. However, as high interest rates begin to bite, the stock market will no longer have a bond bull market at its back to support a near record price-earnings ratio for the broad market.  

The views outlined here are consistent with an earlier blog in 2022 outlining the prevalence of 13-year cycles. (See: https://shulmaven.blogspot.com/2022/05/the-useconomy-is-entering-new-thirteen.html) Also see my recent short term outlook       (https://shulmaven.blogspot.com/2024/12/2025-revenge-of-bond-vigilantes.html)

Thursday, January 9, 2025

Memo to the Republicans: Don't Over-Reach

You missed a bullet by electing Mike Johnson speaker on the first ballot. By the way I think Johnson has been under-rated by the media, and it is my guess that he has the potential to turn out to be a speaker of consequence. My primary suggestion is that you don't make the same mistakes the early Biden Administration did. They over-reached, and while it looked good early on, the Democrats reaped the whirlwind in 2024. Don't let that happen to you. Remember we are still a 50/50 country; Biden forgot that.

Thus you should focus on a few narrow, but important priorities. Namely extending the 2017 tax cuts with few amendments, immigration control, energy deregulation, increased defense spending and targeted tariffs. Don't mess around with the tax subsidies for alternative energy embedded in the misnamed Inflation Reduction Act. For example wind energy supplies a huge portion of the electricity needs of all of the states going north from Texas to North Dakota. I need not remind you that the folks in those states are your prime constituency. 

I am not smart enough to know that all of this can be done in one or two reconciliation bills. That tactical decision is way above my pay grade. But remember, success breeds success and if you can get this done early, the rest of your wish list could very well come within range.

One more thing, on the foreign policy front, do not abandon Ukraine. If you do, it will be your Afghanistan.