Laissez les bon temps rouler! The stock market is roaring up on the new industry of.... of what?
It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven't seen since the Roaring Oughts.
Which of those stocks is based on newly deregulated industry growing organically in freedom like telecommunications and trucking and airlines and beer in the 80's and 90's? Nothing. It is based on war and health care. The war industry is about as productive as kids making pipe-bombs in the garage. And "health care" is about shake down, not medicine.
And what is the nature of this "wealth?" How does one define that? Is it more better cheapre faster? More options of better goods at lower cost available quicker? That is what we get in a free market, but can you name anything (except Apple products) that fits that description today?
This "wealth" is denominated in fiat currency and in the form of debt. Since when is being in debt "wealthy?" Think of yourself starting up a business. You borrow a million to start up, and your first years sales are $100,000. You hit your first year target. Are you successful? Are you wealthier than before?
Now think of taking $10,000 in savings and putting it into starting up a business and you have $100,000 in sales your first year. Are you successful? Are you wealthier than before? You certainly are not in debt, and you certainly are making money on your investment. Which scenario would you prefer? The latter is easier and more likely. But the stock market "wealth" is based on the former.
But John, the new jobs, that proves this is real!
Jed Graham has a nice post on Investor's Business Daily that describes what I have been saying for months: Obamacare has accelerated the trend towards part-time jobs. There are more jobs, but fewer hours in them.
Read more at http://globaleconomicanalysis.blogspot.com/search?updated-max=2013-02-03T10:44:00-08:00&max-results=3#yybrMe4CGbFwwysL.99
Nice try. If you are unemployed, there is a depression going on, but it is hidden by EBT cards and section eight housing. It is hard to see.
This "good news" just tells us the can was successfully kicked down the road.
When it goes bad, and it will, it will be that much worse and that much faster and take that much longer to get out. In the meantime we slowly grind down, the frog sits quietly as the water heats up. How do they get away with it? Because people believe the press, the powers that be etc.
For your own business, whatever it is, study your customers. Is your customer base dependent on people who have ersatz wealth? Watch out, adjust while you can... for example, people who sell services, is a critical per cent of your sales expense account driven? Stop marketing to those customers and start marketing to people who organically earn their income.
The three groups being hammered are those who have paychecks, pensions and property, and only in the middle class. USA has a middle class of 200 million people, among which are productive citizens who will avoid by industry these deprecations. They will be good customers for you in the future. Small Biz people selling to small biz people. An alternative economy within the economy.
But China and India also each have middle classes of 200 million. If your product or service sells in USA, then it is now a likely candidate for export as well. If you took my classes you know what to do. Overseas you'll find a middle class that is not under the degree of control that the USA middle class is bound. Foreign middle class citizens are much freer than we are, in the sense it is more difficult for their Governments to abuse them.
And as to "cheap imports" coming in, you need not let them hurt your business, get ahead of the game. If you have distribution for your organic blueberries grown in USA, then you import the alter-season Chilean blueberries and distribute them to your on-season customers. Whoever is responsible for the blueberries coming in from Chile right now is doing a terrible job. Someone domestically who knows and cares about blueberries could crush the present importers. Multiply that by all industries and opportunity abounds...
If we can believe some rumors, there is a plan afoot by the powers that be to "kill the dollar." What does that mean? In essence to make the dollar cheaper vis a vis other currencies so USA products are cheaper for importers overseas, and we get a sales increase in exports from USA.
This is controversial, and Mish summarizes it well. First challenge is "can it be done?" Just because a policy is set does not mean it can be implemented. Other countries may decide they do not want to have their economies flooded with cheap currency-manipulated USA goods and defend themselves accordingly. But I'd reply, as the world's central banker, USA can play harder longer than the teams it has to beat.
But attempting any policy does have some effects, often unintended. There are side effects to every policy decision, a set of winners and a set of losers. One really cannot know what those will be. And policies such as these would not be announced.
And as a side note, Bass's comment about how do you "expand exports without wage deflation" betrays, for all his brilliance, a fundamental error. Low wages has nothing to do with int'l trade, never has, never will. Those countries who grow int'l trade also grow their wage rates at the same time.
Yes, we will not have economic recovery without falling prices and falling wages, which would be a reflection of economic expansion through more better cheaper faster. But USA workers who are putting out more goods per man hour is in effect "wage deflation" in the sense it costs less per man hour to put out a given unit.
But that is profoundly different than paying people less to do the same work, which is that to which Bass refers (and in his defense, he couches it as an impossible scenario - as in "if not the impossible, then what?)
What we are doing right now is putting less of everything, at lower quality, in everything we produce, and charging the same price. Industry is arbitraging the spread between the speed with which quantity, quality and service degeneration can out pace consumer awareness of getting screwed. The Dow at 14,000 shows our collective economic consciousness is roughly at the level of Down's Syndrome, God bless us. The market is doing very well!
Feel free to forward this by email to three of your friends.
It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven't seen since the Roaring Oughts.
Which of those stocks is based on newly deregulated industry growing organically in freedom like telecommunications and trucking and airlines and beer in the 80's and 90's? Nothing. It is based on war and health care. The war industry is about as productive as kids making pipe-bombs in the garage. And "health care" is about shake down, not medicine.
And what is the nature of this "wealth?" How does one define that? Is it more better cheapre faster? More options of better goods at lower cost available quicker? That is what we get in a free market, but can you name anything (except Apple products) that fits that description today?
This "wealth" is denominated in fiat currency and in the form of debt. Since when is being in debt "wealthy?" Think of yourself starting up a business. You borrow a million to start up, and your first years sales are $100,000. You hit your first year target. Are you successful? Are you wealthier than before?
Now think of taking $10,000 in savings and putting it into starting up a business and you have $100,000 in sales your first year. Are you successful? Are you wealthier than before? You certainly are not in debt, and you certainly are making money on your investment. Which scenario would you prefer? The latter is easier and more likely. But the stock market "wealth" is based on the former.
But John, the new jobs, that proves this is real!
Jed Graham has a nice post on Investor's Business Daily that describes what I have been saying for months: Obamacare has accelerated the trend towards part-time jobs. There are more jobs, but fewer hours in them.
Read more at http://globaleconomicanalysis.blogspot.com/search?updated-max=2013-02-03T10:44:00-08:00&max-results=3#yybrMe4CGbFwwysL.99
Nice try. If you are unemployed, there is a depression going on, but it is hidden by EBT cards and section eight housing. It is hard to see.
This "good news" just tells us the can was successfully kicked down the road.
When it goes bad, and it will, it will be that much worse and that much faster and take that much longer to get out. In the meantime we slowly grind down, the frog sits quietly as the water heats up. How do they get away with it? Because people believe the press, the powers that be etc.
For your own business, whatever it is, study your customers. Is your customer base dependent on people who have ersatz wealth? Watch out, adjust while you can... for example, people who sell services, is a critical per cent of your sales expense account driven? Stop marketing to those customers and start marketing to people who organically earn their income.
The three groups being hammered are those who have paychecks, pensions and property, and only in the middle class. USA has a middle class of 200 million people, among which are productive citizens who will avoid by industry these deprecations. They will be good customers for you in the future. Small Biz people selling to small biz people. An alternative economy within the economy.
But China and India also each have middle classes of 200 million. If your product or service sells in USA, then it is now a likely candidate for export as well. If you took my classes you know what to do. Overseas you'll find a middle class that is not under the degree of control that the USA middle class is bound. Foreign middle class citizens are much freer than we are, in the sense it is more difficult for their Governments to abuse them.
And as to "cheap imports" coming in, you need not let them hurt your business, get ahead of the game. If you have distribution for your organic blueberries grown in USA, then you import the alter-season Chilean blueberries and distribute them to your on-season customers. Whoever is responsible for the blueberries coming in from Chile right now is doing a terrible job. Someone domestically who knows and cares about blueberries could crush the present importers. Multiply that by all industries and opportunity abounds...
If we can believe some rumors, there is a plan afoot by the powers that be to "kill the dollar." What does that mean? In essence to make the dollar cheaper vis a vis other currencies so USA products are cheaper for importers overseas, and we get a sales increase in exports from USA.
This is controversial, and Mish summarizes it well. First challenge is "can it be done?" Just because a policy is set does not mean it can be implemented. Other countries may decide they do not want to have their economies flooded with cheap currency-manipulated USA goods and defend themselves accordingly. But I'd reply, as the world's central banker, USA can play harder longer than the teams it has to beat.
But attempting any policy does have some effects, often unintended. There are side effects to every policy decision, a set of winners and a set of losers. One really cannot know what those will be. And policies such as these would not be announced.
And as a side note, Bass's comment about how do you "expand exports without wage deflation" betrays, for all his brilliance, a fundamental error. Low wages has nothing to do with int'l trade, never has, never will. Those countries who grow int'l trade also grow their wage rates at the same time.
Yes, we will not have economic recovery without falling prices and falling wages, which would be a reflection of economic expansion through more better cheaper faster. But USA workers who are putting out more goods per man hour is in effect "wage deflation" in the sense it costs less per man hour to put out a given unit.
But that is profoundly different than paying people less to do the same work, which is that to which Bass refers (and in his defense, he couches it as an impossible scenario - as in "if not the impossible, then what?)
What we are doing right now is putting less of everything, at lower quality, in everything we produce, and charging the same price. Industry is arbitraging the spread between the speed with which quantity, quality and service degeneration can out pace consumer awareness of getting screwed. The Dow at 14,000 shows our collective economic consciousness is roughly at the level of Down's Syndrome, God bless us. The market is doing very well!
Feel free to forward this by email to three of your friends.
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