OUR ROBUST ECONOMY
They used to say that 70% of the economy was consumerism. I never really bought that, believing more along the line Kunstler suggested that suburban sprawl was most of the economy. We saw that here when Las Vegas had an economy devoted to construction ( then, when that stopped, the rest of the state had to start paying a lot more taxes to bail them out. Democracy is so groovy ). Since the 80’s, the economy has mostly been finance, as bankers took over from industrialists. But the construction gave the illusion of growth as the housing bubble pushed the Ponzi scheme.
There is still housing bubble prices, but a large segment of society got roped into renting. At last bubbles prices. And construction slowed way down. Just as in mortgages, if the government wasn’t guaranteeing or stimulus spending, nothing was happening. Companies are not hiring, building or innovating as much as they are buying back their own stock to boost quarterly bonuses, thank you very much interest rate drops and tax adjustments. Well, you say, just start your own company but don’t attach it to suburban sprawl like the last group of mom and pops did.
But what is the economy today, a decade after the housing crash? It seems like the only thing left outside the stock market is military/medical spending, welfare and financing. How many of you have a job at a corporation, a company that shouldn’t even be in business? How many people do you know that only have a job because of Diversity Hiring ( that doesn’t mean Whitey didn’t get the job, it usually means it is a Fake Job created where the incompetent OtherGender/Color cannot do too much harm ). How many folks do you know that get some government assistance?
I’m not saying sprawl is over, or construction dead. There are still plenty of people buying Starbucks, even if the chain can no longer expand. I’m only speaking of a general trend towards less risk and more perceived safety. How bad are things when Family Dollar is having a hard go of it ( the last crash, these were the darlings for performance, but now parent company Dollar Tree is regretting the purchase, I’m sure. Oh, and Dollar General? Zombie )? I’m sure a lot of that is Wal-Mart pulling their head out of their ass and lowering their prices, but it is still indicative.
And, if you think it is indicative of Trump Times being so wonderful that nobody NEEDS to go to discount stores, I would strongly advise you to get out of your coastal BlueCity enclave and look around a little more closely. Does nobody remember Trump warming of a “big fat bubble”? Okay, neither do I. I actually just watch the video clip all the time at Truth Never Told. The Donald was blaming the Fed for keeping interest rates at zero through Obammy’s tenure, playing politics. He warned when those rose, the economy crashed.
Which was almost our collective Christmas present last year. I’m sure you recall that one. Okay, let’s go over the process again. Empire sucks wealth from the colonies to enrich itself. When the treasure falters, so does the fortune of the empire. We are at the point now where the colonies are withdrawing funding. And since it IS all about the hookers and blow, in turn the elite areas start drawing all the wealth from our own countryside. That means Red suburbs and fly over Deplorable Land lose wealth. Just as Vegas sucks in the states wealth, water and soul ( to replace construction spending ).
Those booming Fracking Fuel areas? How are they being financed? Almost every company, if not all, lose money. That is just money creation propping them up ( I don’t believe it is mostly investors, as is assumed, but back door bankster activity. A third of daily oil use is too important to propping up the economy to chance to the whim of failing pension funds. Remember, only energy is truly economic activity. Money creation alone is insufficient. Money creation to create energy is actually going to work. Until the energy runs out ).
The medical industry is similar. There is no way that the unemployed and the Less Hourly can pay 20% of GDP to the medical industry. The government throws a lot of money that way ( from borrowing, not so much taxes ), and overpays Social Security as another prop ( how many seniors need to raid the SS to supplement the Medicare? ). In addition, the insurance companies who are the humpwits who got the ObammyCare passed, are making a huge butt ton of money, but they also return a portion to keep the scam going. But it IS corporate welfare on a huge scale, ultimately.
Do you think the War On Terror in Afghanistan is about war on terror? Perhaps we actually didn’t learn that an air force cannot defeat guerrillas. I don’t know. Officers as a class are pretty humping retarded. But even they, properly motivated by losing their hooker and blow fund, can accidentally stumble onto the correct strategic answer once and again. No, I think the war of terror is JUST economic stimulus. Nothing more. Not “enriching the military industrial complex”, because that assumes that funding ever stopped. The war continues to combat poverty at home, not terrorists abroad.
Almost everywhere you look, it all boils down to the elite and their 9% lapdogs creating money and then distributing it to the 90% underclass, to maintain peace. Then promptly hoovering back in most of it to their walled communities. Smoke and mirrors, NOT so much a functioning economy anymore. I’m not complaining. It is better than a sharp poke in the eye, any time. Without this Great Game, we all would be in a world of hurt. But, certainly, you do not expect it to last indefinitely? I don’t.
( .Y. )
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Spot on Jim. As a Vegas Minion I can attest to the many bullet point examples put forward. Starbucks in east Las Vegas shithole neighborhood had a friday morning line in the drive through like there was a something free giveaway with all the plastic suv's lined up for "coffee" (wtf?) The growth is mainly commercial construction projects, stadiums, freeways and roadwork in yuppie areas. There is not any sort of true on the ground growth of wealth not of an overly financed sort. Everybody seems giddy with the fake good times feelings that they seem to be missing the points of perpetually degrading neighborhoods, homeless and destitutes occupying every dead space ground or intersectional areas, and thanxs to legislatures, municipals, utilities, and corporate's price rape inflation there is no reprieve for those treading water awaiting the next dam break of economic and political structure collapse. The media and entertainment control keeping stupidity front and center, as well as gov't sweeping the obvious evidence of a major crime under the rug, will result in some very rude awakenings when collapse arrives in front of folks faces. Food is weapon number one, not that flir semi auto, sports fans. Stay frosty.ReplyDelete
Can you run down the water situation there? My info is years old. Are they still digging lower intakes for Mead? Drought worse, or better?ReplyDelete
Yep. They are nearly done on a second deeper water agency intake tunnel to the near bottom of lake mead /boulder dam resevoir.($big money job$) I think drought term is misused for political or economic manipulations. Mostly human overusage problems, but water naturally recirculates (same amount on earth for like forever just moves around) they will build the 15 billion dollar pipeline if needed and steal eastern nevada groundwater, turning it all into a owens valley deserted desert. Water flows uphill towards the money. Hermitage site selection note: be near free natural open sourced water bodies, need access for your permanent camp out come collapseville.ReplyDelete
Addendum, The lower water line ring that is seen around lake mead, lake powell, etc is because the damned dams that are the cause of there being a resevoir/lake in the first place is not corking back that amount of water. (Duh?!) A large allotment is channelled away to California to use (ag, industry, population demands are bigger). If the ancient romans can aqueduct, why friggin can't 'Merica prevent all the perpetual floodings and quench the thirsty deserts, hhmm?ReplyDelete
Water flows uphill towards the money. Ha! Classic. The pre-collapse Romans and Oil Surplus 'Murica both were capable of huge water products. Both could no longer even maintain the old projects as energy shrunk. We literally cannot keep the water flowing ( or the sewage in some instances ) or the roads maintained or the power always on. Just expect worse, not better. Sad Panda :(Delete
Part of the problem with lake mead is the lake is filling with silt. The damn at lake Powell was built to slow down the silting of lake Mead.Delete
Thank you. Yep, I forgot about that little issue. In the end every damn is doomed. Or, every dam is damned.Delete
You touched on a lot points Lord Bison. With your permission I'd like to address a few.ReplyDelete
First, the stock mkt, both US & Int'l is actually pretty small compared to bond & currency mkts by a magnitude of 4-5 times. NYSE is just a handy device to hang a hat on. Not indicative of all things at all times. Talking TV heads need easy examples for proles
Second, yes since '80s finance (& all F.I.R/E) has become larger share of employment and economic base. But, the cause of that, I believe, is due to two things: mass adoption of IRAs starting in late '70s and the long-cycle destruction of high interest rates by FedChair Volker in '81-'83.
Private companies wanted to bail on expensive in-house pension liabilities. Longer life spans and biz stagflation of '70s really started to hurt corp. balance sheets. People were made responsible for for own retirement, for good or bad.
For example, PennCentral railroad pension collapse in '70s wasn't because of energy, just bad mgmt and rising costs of pension obligations.
Third, yes biz and public institutions now being forced to hire non profit center employees (die-versity coordinators, Title IX gravy train in colleges etc etc). But that is a POLITICAL mandate. That has zero to do with economics or commodity prices. It's just political parasitism. They too will fall by wayside. No different than the rules aristos made about what type of clothing the low class (but increasingly wealthy) merchants could wear. Once the "middle class" tradesmen started accumulating gold guilders and reáles the land poor aristos gave ground. Just look at the paintings from Dutch "Golden Age" of early 17th C. All those "meisters" with big frilly lace neck pieces and pricey beaver fur hats were just a generation or two away from wearing peasant's wooden shoes. Beginning of Age of Capitalism. Yeah!
Fourth, as for stock buybacks...yep, but you see that for two reasons 1) old mainline segments of economy not being able to expand domestic production due to China's rise (low-cost producer) and 2) ever more burdensome regulatory parasitism [see above].
You really dont see stock buybacks in high tech or new process industries because they have a better rate of return by SELLING stuff than having the chief financial officer gaming buybacks during NYSE pullbacks...hello Apple, Microsoft.
Fifth, that "frack oil" industry you..."dismissed". Here is info on three exchange traded funds specific to Explor O&G for 1,5,10 yr returns. Note the 5 and and 10 yr returns were only negative in single digits. How did other segments of economy do in aftermath of 2009?? The recent 1 year returns all above 30%
More to address but I've already taken too great a liberty with your hospitality. Besides got to measure and vac/pac away great deal on some bulk oatmeal.
Thanks for the forebearance
Permission to address is implied. :) You aren't wrong on secondary causes. I try to focus on the underlying fundamentals. Example: The underlying fundamental in anthropology? It is all about food. But everything gets caught up in secondary effects. Propensity towards violence, evolutionary pressures towards that such as mate selection, the formation of female competition and the group dynamics that entails. You can point to any secondary effect but it isn't what was at core the chief motivator/engine. End example. Now, what caused businesses to NEED to cut costs and shift costs? Energy production stopped increasing, then fell. All economics are based on resources and energy. Compare today's EROI on conventional plus fracking fuels to 1970. We are WAAAAY down in net energy, even as we pump an extra 20% volume. Now, compare the two population numbers. The wonder is only that we still function at any level.Delete
I'm really, really, surprised that we haven't had a recession. I think I'm calling the top for this one as of April, 2019. That means the fun will hit about January, if we are really having a recession.ReplyDelete
That'll make the election interesting . . .
I think we are hopping it will only be a recession. Lizard Brain is nervous it will be much more. However, note this date you published your prediction, for our future reference when you get to do a "told you so" dance.Delete
Yup. Actually I published it back in 4th quarter of 18 (if I recall) - I didn't pick April as the top, but I did say "starting this year and continuing through election 2020."ReplyDelete
I hope I'm wrong.
We all hope you are wrong, but probably know better. You can only whip a rented mule so long before it keels over.Delete