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How to Survive the Winter

 

A Flawless Flock of Scoundrels

One of the fringe benefits of living in a country that’s in dire need of a political, financial, and cultural reset, is the twisted amusement that comes with bearing witness to its unraveling.  Day by day we’re greeted with escalating madness.  Indeed, the great fiasco must be taken lightly, so as not to be demoralized by its enormity.

Symphony grotesque in Washington

Symphony grotesque in Washington [PT] - Click to enlarge

Of particular note is the present cast of characters.  Could Bill Shakespeare himself have come up with a more flawless flock of scoundrels to take the plotless narrative from comedy to tragedy?

There’s President Trump, Hillary Clinton, Paul Ryan, Mitch McConnell, Maxine Waters, Chuck Schumer, Nancy Pelosi, Robert Mueller, the Podesta Brothers, all of Congress; the list of political actors goes on and on.  Moreover, it wouldn’t be complete if we didn’t also mention former A-lister’s Barney Frank and O-Bama.

The efforts of members of the political class to climb and crawl over each other to reach the top of the dust heap and stay there are without restraint.  Promises, lies, coercion, and deceit are all part of Washington’s standard operating procedure. They’ll steal from your kids and lie to grandma to get what they want.

Financial actors like Jamie Dimon, Lloyd Blankfein, John Stumpf, Steven Mnuchin, Janet Yellen, various Fed Presidents, and soon to enter stage right, Jerome Powell, have their parts to play too.  Namely, to extract as much of the savings and future earnings from the general population as possible without triggering a revolt.

The Congress

The Congress… a bunch of facinorous, serpigo-infested swinge-bucklers, roynish cony-catching nuthooks and cozeners. Obviously. [PT] - Click to enlarge

Tricks with No Treats

Then there’s the cultural cast, perhaps the worst of all.  This company includes dirt bags like Harvey Weinstein, Kevin Spacey, Bill Cosby, the Kardashians, half of the NFL, cultural appropriation police, and an endless assortment of freaks, dweebs, geeks, and weirdos.  Have you heard of Caitlyn Jenner?

Until very recently, the cultural actors primarily served to distract the public from the crimes of their cohorts in the elitist class.  But now the stage spotlight shines directly on them.  Their exposed skeletons are a disgrace.

Still, their skeletons, along with nearly all story-lines circulating, are enormous distractions.  In fact, there are so many distractions it’s hard to tell what is real.  Certainly, Halloween week has provided a multitude of tricks – yet, no treats – to chew on.

Harvey Weinstein

Harvey Weinstein disposal squad spotted in Hollywood; meanwhile, young persons reportedly escaped from Kevin Spacey’s basement as far back as 2005. [PT] - Click to enlarge

There was special counsel Robert Mueller’s indictment of several of President Trump’s campaign advisors.  Somehow this has something to do with Russian meddling in the 2016 election.  More accurately, it provides grounds for the Washington establishment to escalate its efforts to impeach Trump.

Nonetheless, could there be a more one-sided witch hunt?  What about Hillary Clinton and Tony Podesta?  What we mean is, what is the objective of Mueller’s fiddle faddle?  Is it an investigation or a cover up?

This week also brought forth another trick – the House Republicans’ tax reform bill.  From what we gather, the bill would result in a moderate reduction in taxes for most households.  But it doesn’t really simplify things. What’s more, the tax cuts will require greater amounts of government debt to pay for them.  And the problem of too much debt, after all, is already bearing down on all of us.

The Elbonian investigation

The Elbonian investigation… - Click to enlarge

How to Survive the Winter

Many Americans have borrowed far more money than they will ever be able to pay back.  At the time of borrowing, it may have seemed like the sensible thing to do.  Some borrowed money to invest in their education.  Others took on massive levels of mortgage debt to buy a house in a nice neighborhood.

These are both sensible things to do when the economy is in the midst of a long-term growth trend.  From World War II until the turn of the new millennium these debt burdens generally worked out for people.  Well-paying jobs were commonly available to bail out college graduates.  Similarly, rising incomes softened the mortgage borrower’s debt burden over time.

Overwhelmed Consumer

The overwhelmed consumer Image credit: Corbis - Click to enlarge

But all that has changed, especially after the Great Recession.  Individual debt levels have increased.  However, the means to pay off the debt have decreased.  This is a gigantic problem that won’t magically go away.

Who knows?  Maybe prayers will be answered.  Real gross domestic product (GDP) has grown at an estimated annual rate of 3 percent  or more for two quarters in a row.  Perhaps increasing GDP will grow the economy, and individuals, out of debt.  Unfortunately, we suspect the GDP growth was fueled by record consumer debt.  Rather than diminishing overall debt burdens, it seems to increase them.

The point is, the Potemkin village of inflated stock and real estate prices cannot continue indefinitely.  When asset prices crack, and pension funds are exposed as being in terminal arrears, exacting clarity will prevail.  Federal, state, and local governments are flat broke.  So, too, are corporations and consumers.

Federal Furniture

One day after the arrival of clarity, central planning agencies begin an extensive review of their priorities. [PT] - Click to enlarge

 

Thus you should enjoy the harvest season while it lasts.  You may want to pickle a few eggs to survive the winter.

 

Image captions by PT

Full story here
About MN Gordon
MN Gordon
Making sense of the latest economic policy touted by the Federal Reserve or the U.S. Treasury is an exercise in befuddlement. No doubt about it, the economics trade is overcome with an abundance of nonsense these days. This is no coincidence. M.G. Gordon of Economic Prism looks to bring clarity to the muddy waters of economic policy.
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