Tuesday, October 28, 2014

Tell Me Again How Things Are Getting Better

Again this morning I awoke to a market where stock futures soared ever higher even after important economic numbers came in at below expectations. As the stock market continues to remain at historic highs please tell me what is so good? What is so much better? As I see it the weight of carrying a large number of unemployed and people who have dropped out of the work force will wear down society through attrition. Often these people have little in the way of savings, this means the burden of caring for them will be transferred to society. If too many people shift into this category the fabric that holds us together as a nation and as a people will be shred to ruin.

Year after year America imports around five hundred billion dollars more from other countries than they export. This means we have a giant trade deficit, when we add this to our enormous government deficit it is easy to see that we are living far beyond our means. The Fed has been both complicit and superbly entrepreneurial when it comes to the Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop. The Fed  must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect.

Fed policy has allowed Washington to sidestep addressing our structural problems to make America more competitive, this will massively thwart growth going forward. Many people have become disenchanted with Washington which has become viewed as both dysfunctional and corrupt. As of late I have heard little in the way of concern over our budget deficit instead many Americans are focused on the gridlock in our capital that while halting reform also keeps us from facing more misdirected and poorly crafted laws that will continue to carve away from our freedoms. The building resentment and angst evident across America is being taken by many as a sign of racism but I contend it is something more, people are pissed!

The seeds of a class war have been sown by a President as a weapon to divide us. The growth of inequality is not as many allege the 1% at the top stealing the icing off the cake, but the much smaller .1% or .01% that have been enriched by the crony capitalism and corruption in Washington. They have NSA spying on Americans and thanks to information leaked by  Edward Snowden we know the "black budget" last year was a massive 52 billion dollars. This money used in "secret" spy operations should send shivers down the back of those that have read about the totalitarian society described in George Orwell's novel Nineteen Eighty-Four.

So again as I look at a landscape of empty and under-leased buildings that once housed thriving businesses that provided Americans with good paying jobs I'm forced to ask, How are things getting better? When looking at new job formation details reveal a slew of low paying part-time jobs and people leaving the job market. A closer inspection of auto sales shows that 31% of those buying cars are taking out sub-prime loans. Student debt continues to grow at an alarming pace and will corral disposable income for years to come. And finally as I look at police forces across the nation gearing up for urban warfare and leaving their mission to "serve and protect" behind I must say that I'm far from convinced that all is well ahead.


  1. You are on to something but is it the .01% they are protecting or the larger army of government employees and retirees across the country? The mass of reliable supporters who's jobs never seem to disappear out from under them, even during so called cuts, and who's pensions depend on 8% projected returns on investments to remain viable.

    With a soaring market those funds appear to be much more adequately funded than they would if equities were not in a bubble.

  2. It seems to me that the workings of the stock market - why it rises and falls - is rather secretive.
    I assume more money goes in than comes out for the math to raise the market, but who are some of these characters investing in the market? Could one of them be the Federal Reserve?
    Don Levit

  3. It is income and wealth inequality the much discussed topic everywhere.

    If we go back to the times of 'Uncle Tom's Cabin' and look forward, we, human beings, have made a lot of progress as a society. There is no more slave trading. And we are sure of not repeating Holocaust. It took time to reduce the perceived social, racial inequality though it is not completely gone. Now it is economic inequality.

    Crony capitalism is the tool employed to maintain the distance in classes now. But the effect of it too will reduce as the awareness spreads and forces unite to fight against it. Initial attempts like 'Occupy Wall Street' may not yield desired results but the fight has begun, though it does not appear on the surface.

  4. Janet Yellen complaining about income inequality is ironic. Elites steal purchasing power from average people by giving new money to their club members. And the sheep think it is done for the common good. Sheep will never wake up. Prepare yourself for the collapse. Elites can drag this show longer than you think and outsiders won't know when the floor crumbles.

  5. Thanks for your interesting comments. The link below will take you to my latest article which looks into the cost of failing to plan long-term and goes on to question if "collectively" mankind is incompetent. The fact that we can not seem to get our act together is strongly linked to the policies under which we live.