Soon after the presidency of Barack Obama began—on April 8, 2009—the McClatchy-Tribune News Service published an article of mine entitled, “Euphoria or the Obama Depression?”[3] In it, I wrote:
Barack Obama is euphorically optimistic, but neither he nor the leaders of other countries can hold back an economic tsunami, just as mankind is helpless to stop the wrath of natural tsunamis in the oceans.
. . .
According to the Rasmussen Reports, most Americans—53 percent, in fact—believe the United States is at least somewhat likely to enter a 1930s-like Depression within the next few years. If so, the repercussions are unfathomable.
. . .
Years from now, economic historians may look back at this era and conclude that the world’s central bankers were overwhelmed and Depression-era “safety nets” did not work; and global market forces ultimately determined the depth and duration of the economic meltdown, not the politicians in Washington or anywhere else.
The tsunami that was released when the housing bubble finally burst may not run its course until about 2017-2019; and its effects will be devastating worldwide. There are no legislative solutions or quick fixes to the problems. The carnage between now and 2019 will approximate the Great Depression. . . .
. . .
America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times. Also, the limits of godless secularism and paying homage to the false gods of materialism may become self-evident.
It is interesting to reflect on these comments and others contained in the article, as well as those in an companion article that I wrote for the American Banker—the daily newspaper of the U.S. banking industry—and in an interview that I gave on these subjects.[4] Today, it is as though the economies of individual countries are “careening,” creating a “cascading” effect.
This is not 2008 all over again. It may be much worse, even eclipsing the Great Depression of the last century. A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison. America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable. Americans and people of other countries have lost trust in their governments, which will only compound the problems.
Hold on tight. Things will get very scary between now and the end of this decade.[5] Whatever happens will be attributable principally to Barack Obama’s failed presidency. Indeed, there are so many tragedies he has spawned that it is impossible to do justice to each of them in a short article like this one.
For example, he has set back race relations in the United States by years if not decades. He has been a divider, not a healer.[6] With respect to his so-called major policy “accomplishments”—such as Obamacare, limited gun control, and the Paris man-made “global warming” accords—they can and probably will be undone by executive orders on Day One when the next American president takes office less than a year from now. Americans are clamoring for this to happen.[7]
Obama may go down as the worst president in American history, even eclipsing Jimmy Carter, which is a remarkable feat unto itself. History may record that Obama became a “transformative” or revolutionary president, which is not what the majority of Americans wanted. Perhaps because he was not raised on the U.S. mainland, his perspective is not that of most Americans . . . even blacks.[8]
With the global economy imploding, and Obama being an impediment to the U.S. growth that has occurred, his place in American economic history may rank next to or below that of Herbert Hoover.
Today, Barack Obama is like a minstrel wandering the land, with respect to whom no one will listen.
© 2016, Timothy D. Naegele
_______________________________________________
[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/documents/TimothyD.NaegeleResume.pdf). He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal. Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com; see also Google search: Timothy D. Naegele
[2] Note: This article is an expansion of earlier articles and comments at this blog. See, e.g., https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally”) (see all of the comments beneath it) and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/#comment-8016 (“Barack Obama: A Failed American Presidency”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8011 (“Helter Skelter Is Arriving With A Thud, Sell Everything”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-7614 (“Doomsday Clock For Global Market Crash Strikes One Minute To Midnight As Central Banks Lose Control“) and https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/#comment-7646 (“The Surging Ranks Of America’s Ultrapoor”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8006 (“The EU’s Collapse In 2016?“) and https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/ (“Global Chaos And Helter Skelter”)
[3] This article has been republished by RealClearPolitics, and can be found at the links that follow.
See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html (“Euphoria or the Obama Depression?”) and http://www.naegele.com/documents/Commentary-EuphoriaortheObamaDepression.pdf (“Commentary: Euphoria or the Obama Depression?
[4] See http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.naegele.com/documents/GreenspansFingerprints.pdf (“Viewpoint: Greenspan’s Fingerprints All Over Enduring Mess”); see also http://marketshadows.com/2012/05/21/greenspans-legacy-more-suffering-to-come/ and http://seekingalpha.com/instablog/2951-market-shadows/31177-interview-with-timothy-d-naegele and http://www.naegele.com/documents/InterviewwithTimothyD.Naegele-ilene–SeekingAlpha.pdf (“Greenspan’s legacy: more suffering to come”)
[5] Not factored into these comments explicitly are the effects of (1) the terrorist strikes on Paris and elsewhere in the world; (2) the immigration issue that is tearing Europe and the Middle East apart; (3) the military implosion that is taking place in the Middle East, with much worse yet to come; and (4) the effects of our adversaries (e.g., China, Russia, North Korea, Iran) on peace, and on the American and global economies.
See, e.g., https://naegeleblog.wordpress.com/2015/11/20/we-are-all-parisians/ (“We Are All Parisians”) and https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/ (“EMP Attack: Only 30 Million Americans Survive”) and https://naegeleblog.wordpress.com/2015/11/29/the-death-of-putin-and-russia-the-final-chapter-of-the-cold-war/ (“The Death Of Putin And Russia: The Final Chapter Of The Cold War”) and https://naegeleblog.wordpress.com/2011/01/13/china-is-americas-enemy-make-no-mistake-about-that/ (“China Is America’s Enemy: Make No Mistake About That”) and https://naegeleblog.wordpress.com/2010/12/22/the-next-major-war-korea-again/ (“The Next Major War: Korea Again?”) and https://naegeleblog.wordpress.com/2009/12/28/human-trafficking/ (“Human Trafficking”) and https://naegeleblog.wordpress.com/2015/12/06/islamophobia-is-un-american/ (“Islamophobia Is Un-American”) and https://naegeleblog.wordpress.com/2015/12/31/is-israel-doomed/ (“Is Israel Doomed?”)
[6] See, e.g., https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/#comment-8016 (“Barack Obama: A Failed American Presidency”) and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/ (“Is Barack Obama A Racist?”)
[7] See, e.g., https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/ (“A $34 Trillion Swindle: The Shame Of Global Warming”) and https://naegeleblog.wordpress.com/2012/12/20/abortions-and-autos-kill-more-in-america-than-guns/ (“Abortions And Autos Kill More In America Than Guns”)
[8] See, e.g., https://naegeleblog.wordpress.com/2015/01/03/edward-w-brooke-is-dead/#comment-7434 (“Disappointment In Obama Leads Some Blacks To Ask Whether Voting Is Worth It”)
NaegeleBlog 
Buy silver…
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Thank you, Rick, as always.
I do not believe in the purchase of either gold or silver.
See https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-7397 (“What About Gold?”)
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My only regret is that I bought much of it when it was much higher than it is now. Silver is easily traded, due to its lower value per ounce compared to gold. If the dollar collapses, it’s precious metals that will always have value .
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Can you eat them, Rick? 🙂
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I can trade them for goods and services. 10% of your worth should be in silver and gold. Not certificates, the actual metal. If you disagree, then you are deriving your strategy from the wrong information.. It is a safety net. Plain and simple.
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In truly desperate times, Rick, how is anyone going to know the value?
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The value in desperate times will be significant. Paper money will be worth nothing..so more than that..
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The greatest threats to the American way of life are (1) a nation-ending EMP Attack; (2) nuclear, biological or chemical attacks; and (3) a massive economic depression, surpassing anything that we have witnessed in our lifetimes.
See, e.g., https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/ (“EMP Attack: Only 30 Million Americans Survive”)
In the first instance, I believe gold and silver would be worthless. Ours would be a primitive, barter system, at best. Variations of that would occur with the last two situations.
. . .
Any further discussion should begin with a new thread, to help those who read these comments on smartphones.
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I agree about keeping physical gold and silver. In the past every fiat currency system has collapsed. And when this happens again ( most likely due to debt that is impossible to repay ) an ounce of gold will be able to buy a house. I dont think this will happen in my life but im keeping some more as an insurance policy!
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You’re overlooking something, Rick. In a collapse such as the Soviet collapse in the early 1990s, very few people own gold and silver coins, so these coins never become a medium of exchange. In the Soviet collapse, barter and goods became the medium of exchange.
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Bullets. That would also be a valuable asset to trade with..
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And guns . . .
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OPPORTUNITY COSTS
I agree that President Obama has not been a very effective president, but in his eyes, still ” a pretty good president”. I am looking ahead and see difficulties as far as the eye can see for the majority who even still, are unable to comprehend what has happened in the last ten years.
The world is fast changing and in many ways, not for the better from an American point-of-view. We must either change with it and attempt to adapt in the best possible way to maximize our domestic interests or we will be swept away along with most of the rest of the world. Everything is up for grabs and the deck is going to be reshuffled. To a large extent, the lack of progress- for whatever reasons- has effectively taken the initiative away from the United States.
If you doubt it, look at our Federal Reserve Bank. Janet Yellen is a dove. She was appointed by President Obama. She delayed raising interest rates and maintained the zero percent regime far too long. Since the world is still on the dollar standard, this created immense global financial problems/imbalances.
China had little choice but to devalue, as did the Swiss, when confronted with unsustainable monetary relationships (exchange rates). This triggered a number of global stock market corrections. We have lost the initiative and can not get it back easily, if at all. We wasted 8 years you don’t get back. Ditto with Middle Eastern policies and willfully allowing ISIS to establish a presence. What a mess.
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Thank you for your comments.
Yes, I agree that it is a mess; however, we are still the strongest country in the world, by far.
While the Wall Street Journal begrudgingly admits that Donald Trump is a formidable candidate for the presidency, the UK’s Economist—which I do not like, and seldom bother reading because of its biases—begrudgingly admits that the United States is still “second to none.”
See http://www.wsj.com/articles/trumps-new-york-advantage-1452877920 (“Trump’s New York Advantage”) and http://www.economist.com/news/united-states/21688406-presidents-final-state-union-showed-his-virtues-and-his-weakness-voice (“A voice in the wilderness”)
In the first article—with respect to Trump, and last night’s GOP debate—the Journal noted:
(1) “Mr. Trump won handily with an big assist from ‘New York values,’ of all things.”
(2) “Mr. Trump is a better politician than we ever imagined, and he is becoming a better candidate.”
(3) “He . . . won the round [with Ted Cruz] in a knockout by invoking the response of the firefighters, police and the entire city after 9/11.”
The Journal added:
In the second article, with respect to the United States, the Economist noted:
I agree with these assessments.
While the United States will fare better than other countries, it will still be hit hard.
Hold on tight. Things will get very ugly . . .
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Even with your humble reposting stamp on this most apt piece of timely prophetic literature I must say ….as commented before: Naegele For President.
Although let’s wait until after 2019….tthe country…the world even, will truly be ready to listen to some common sense wisdom round their fire barrels in tattered Gucci Jean’s and defunct purposeless 400.00 sneakers….yet,…that’s the brave optimistic rant…I fear God has a much different plan of moral recovery and economic restitution in mind.
Gary Flynn
Canada
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Thank you as always, Gary, for your kind words.
It must be getting a wee bit cold in your portion of the American continent. Stay warm. 🙂
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Hello, Timothy. I’d like to go somewhat light on the partisan issues, as we have different views on the presidency. With a new president coming on board in 1/17 and a Republican Congress, the local US economy will likely be in a very different place in a few years.
The primaries are likely to put in new front runners (alas, less choice on the Democratic side, they didn’t cultivate new talent). We can’t control the global economy completely, given China’s slowdown and lower thirst for energy imports, but the US is still the main influence on economics and we have the strongest and most stable currency.
Individuals can do much to protect themselves. Our investments have had, obviously, a very bad year, but our retirement incomes don’t depend on the Markets. I came into some money this last year, and while well invested in stocks, kept the new money in cash. Metals are not a good investment, they’ve plummeted and didn’t benefit from the panic in equities.
I like Gary Flynns attitude and philosophy.
I don’t care for Mario Rubios foreign policies, but he reminds me of the energy, youth and forcefulness of John Kennedy, albeit with a conservative orientation. Kennedy had that personality and in a world worried about nuclear war and foreign enemies, he gave us optimism. Reagan could do that too and the world did change then. If Mario found himself in power with a same party Congress, I think he could as well.
Anyway, whatever we try to do, the best way to make God laugh is to plan our future the way we think it will go. We’ll survive just fine, whatever it becomes.
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Thank you, Jonathan, for your comments as always.
I agree with your second paragraph. However, I would add that the Middle East is imploding; and Europe may fragment even more than it has. The “safe haven” may well be—or continue to be—the United States.
Regarding your third paragraph, I am a believer in sitting on the sidelines with cash. There may be real bargains down the road (e.g., residential real estate), but we are not even close to the bottom yet.
See, e.g., http://www.telegraph.co.uk/finance/oilprices/12104181/Russian-oligarchs-lose-11bn-in-just-10-days-during-oil-price-crash.html (“Cash is king.
The shrewdest investment decision seems to have been holding high cash balances”)
With respect to JFK, I was a believer too, but not anymore . . . at all.
See https://naegeleblog.wordpress.com/2010/10/04/john-f-kennedy-the-most-despicable-president-in-american-history/ (“John F. Kennedy: The Most Despicable President In American History”) (see all of the comments beneath the article)
With respect to your last thoughts, it is always best to “walk by faith, not by sight” . . . or so I believe.
See https://naegeleblog.wordpress.com/2010/05/12/what-and-where-is-god/ (“What And Where Is God?”)
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Oh, and my system still doesn’t allow me to give “likes” or I would have done that for all your comments, Timothy.
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Thanks so much, Jonathan. 🙂
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Markets Suffer Worst Start To The Year Since Great Depression [UPDATED]
This is the title of an article in the UK’s Times, which states:
See http://www.thetimes.co.uk/tto/public/assetfinance/article4667135.ece (emphasis added)
Anything can happen to the markets on any given day. It is a “crapshoot.”
See http://marketshadows.com/2012/05/21/greenspans-legacy-more-suffering-to-come/ and http://seekingalpha.com/instablog/2951-market-shadows/31177-interview-with-timothy-d-naegele and http://www.naegele.com/documents/InterviewwithTimothyD.Naegele-ilene–SeekingAlpha.pdf (“Greenspan’s legacy: more suffering to come”)
Again, this is not 2008 all over again. It may be much worse, even eclipsing the Great Depression of the last century.
A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison. America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable. Americans and people of other countries have lost trust in their governments, which will only compound the problems.
Hold on tight. Things will get very scary between now and the end of this decade. Whatever happens—at least in the United States—will be attributable principally to Barack Obama’s failed presidency, and referred to as “The Obama Great Depression.”
See http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html (“World faces wave of epic debt defaults”—”Situation worse than it was in 2007, says chairman of the OECD’s review committee”—”The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability”—”‘Our macroeconomic ammunition to fight downturns is essentially all used up'”—”Europe’s creditors are likely to face some of the biggest haircuts. European banks have already admitted to $1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed.
The European banking system may have to be recapitalized on a scale yet unimagined, and . . . any deposit holder above the guarantee of €100,000 will have to help pay for it”—”[I]t is impossible know what the trigger will be for the next crisis since the global system has lost its anchor and is inherently prone to breakdown”—”[T]he Fed is now in a horrible quandary as it tries to extract itself from QE and right the ship again. ‘It is a debt trap. Things are so bad that there is no right answer. If they raise rates it’ll be nasty. If they don’t raise rates, it just makes matters worse'”—”‘It was always dangerous to rely on central banks to sort out a solvency problem when all they can do is tackle liquidity problems. It is a recipe for disorder, and now we are hitting the limit'”) and http://www.rasmussenreports.com/public_content/politics/general_politics/january_2016/81_think_federal_government_is_corrupt (Rasmussen Reports: “81% Think Federal Government is Corrupt”)
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The World’s Central Banks Can’t Save Us Anymore [UPDATED]
This is the opening sentence of a Wall Street Journal article. One commentator cited in the article added:
See http://www.wsj.com/articles/investing-in-2016-the-only-winning-move-is-not-to-play-the-game-1453485940 (“Investing in 2016: ‘The Only Winning Move Is Not to Play the Game’”)
Amen!
These are messages that I have been repeating again and again, beginning with my earliest writings on the subject—which are cited in my article above.
We are living in topsy-turvy, helter skelter times, when anything is possible. Economic depressions have occurred periodically over hundreds if not thousands of years—and they change the course of history. The time between now and the end of Barack Obama’s presidency may be very precarious, to say the least.
There are sound reasons why our adversaries (e.g., China, Russia, North Korea, terrorists of all stripes) may wish to test us, perhaps like never before; and they may do so.
The Middle East is imploding; Europe may fragment even more than it has; Russia is a basket case, and will run out of its reserves momentarily; the problems with China may become greater, not less; and the list goes on and on.
See, e.g., https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/#comment-8047 (“America Elects Its Next President“) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8006 (“The EU’s Collapse In 2016?“) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8011 (“Helter Skelter Is Arriving With A Thud, Sell Everything“) and https://naegeleblog.wordpress.com/2015/11/29/the-death-of-putin-and-russia-the-final-chapter-of-the-cold-war/ (“The Death Of Putin And Russia: The Final Chapter Of The Cold War“) and https://naegeleblog.wordpress.com/2011/01/13/china-is-americas-enemy-make-no-mistake-about-that/#comment-7169 (“The Coming Chinese Crack-Up”—”China is trapped”—”A major Chinese devaluation would be a global earthquake, transmitting a wave of deflation through a world economy. . . .”) and http://www.rasmussenreports.com/public_content/politics/general_politics/january_2016/81_think_federal_government_is_corrupt (Rasmussen Reports: “81% Think Federal Government is Corrupt”)
Americans and people of other countries have lost faith in their governments; and the government bureaucrats aka economists at the Fed and other central banks have run out of options. Monetary policy has been tested to its limits.
Indeed, America’s Fed and the other central banks will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable.
We have not had this level of economic, social and political fragmentation and economic disintegration in our lifetimes. And the difference this time is that things are becoming “unglued” around the world, simultaneously.
As I have stated, a “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison.
Hold on tight. Things will get very scary—at the very least, between now and the end of this decade.
[Note: The photo above is of Florence Owens Thompson and her children, who were the subject of Dorothea Lange’s photo “Migrant Mother” (1936). The Library of Congress caption reads: “Destitute pea pickers in California. Mother of seven children. Age thirty-two. Nipomo, California.” See also http://www.dailymail.co.uk/news/article-2290879/I-lost-hope-Startling-interview-unearthed-woman-iconic-Great-Depression-image-talking-just-years-death-1983.html (“‘I never lost hope’: Startling interview unearthed with woman behind iconic Great Depression image talking just five years before her death in 1983”)]
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By “hold on tight” do you mean don’t sell?
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No, it was meant to convey the recommendation to “hold on tight” to one’s “sanity,” while the world as we know it is coming apart at its seams.
Investment decisions are personal; and I do not make recommendations in that regard . . . except to agree with the commentator’s words cited above:
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I’m kind of doing both. I’m holding fast to my formal investments, so as not to sell low and never get it back. I don’t need to sell to pay bills anyway (I prepared for the future when young. That seems to getting out of fashion, now when it’s needed more than ever before).
On the other hand, I came into a windfall last year (that tends to happen when you get old and start outliving people who are older than you, or worse, younger than you). Not trusting the market enough this year to add to my investments even when the price is low, I parked all of it in cash.
As for sanity, meditation works well…………and avoiding looking at the market for days at a time. As for things coming apart, I was brought up during the Cold War and remember the duck and cover drills and Cuban missile crisis. I think nuclear war- in the Middle East possibly- is still the same main danger as it was in the 60s.
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Thank you as always, Jonathan, for your comments.
With respect to your first two paragraphs, you have been wise and fortunate.
I too remember the drills, which you have cited. Indeed, I mentioned them in the second paragraph of my recent article about Putin.
See https://naegeleblog.wordpress.com/2015/11/29/the-death-of-putin-and-russia-the-final-chapter-of-the-cold-war/ (“The Death Of Putin And Russia: The Final Chapter Of The Cold War”)
Regarding a nuclear war in the Middle East, whatever happens there is not our fight, or so I believe. We have shed enough blood and wasted enough economic treasures there to last many lifetimes.
See https://naegeleblog.wordpress.com/2015/12/31/is-israel-doomed/#comment-7993 (i.e., discussion of Donald Trump)
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The Coming Global Meltdown [UPDATED]
Jeremy Warner has written in the UK’s Telegraph:
See http://www.telegraph.co.uk/finance/economics/12128212/The-Lords-of-Finance-are-skidding-out-of-control.html (“The Lords of Finance are skidding out of control“) (emphasis added; charts omitted); see also http://www.nysun.com/national/rudderless-federal-reserve-freaked-by-markets/89436/ (“Rudderless Federal Reserve, Gets Freaked by Markets, And Retreats on Policy”—”[The Fed] has a hundred indicators — domestic, international, jobs, and inflation. In truth, it doesn’t know what its next move is going to be because it can’t read the economy. Fed policy is opaque, confusing, and rudderless”) and http://www.rasmussenreports.com/public_content/politics/general_politics/january_2016/81_think_federal_government_is_corrupt (Rasmussen Reports: “81% Think Federal Government is Corrupt”)
This is a fine article, and constitutes a very basic lesson in economics.
As stated in my article and comments above, the “financial overlords” are nothing more than government bureaucrats, who have been wrong all along. At best, they have postponed the day of reckoning, and insured that its effects will be worse then ever anticipated.
See https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally“) and https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/ (“Global Chaos And Helter Skelter“) (see also all of the comments beneath these articles)
The levers of monetary policy have been used to their limits; and now they have distorted the global economies beyond belief.
Since the world’s politicians will not control fiscal policies (i.e., spending), all “bets” have been put on monetary policy to do the job, which is foolhardy and tragic to say the least.
While the United States will not be hit as hard as other countries and regions of the world (e.g., Russia, emerging countries), it will be hurt too.
A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison.
America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
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WORLD ECONOMY IN DEATH SPIRAL, THE PERFECT STORM OF 2016 [UPDATED]
Katy Barnato of CNBC has reported:
See http://www.cnbc.com/2016/02/05/citi-world-economy-trapped-in-death-spiral.html (emphasis added); see also https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/ (“The Obama Great Depression“) and https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8068 (“The World’s Central Banks Can’t Save Us Anymore“) and https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8083 (“The Coming Global Meltdown“) and http://www.telegraph.co.uk/finance/oilprices/12143304/Oil-market-spiral-threatens-to-prick-global-debt-bubble-warns-BIS.html (“Oil market spiral threatens to prick global debt bubble, warns BIS”—”The global oil industry is caught in a self-feeding downward spiral as falling prices cause producers to boost output even further in a scramble to service $3 trillion of dollar debt”—”[T]he sheer scale of leverage in the oil and gas industry is amplifying the downturn since companies are attempting to eke out extra production to stay afloat”—”The [Bank for International Settlements] calculates that debt in US dollars outside the United States has surged to $9.8 trillion, a fivefold rise since 2000 and an unprecedented level for the global monetary system as a whole”—”[T]here is now clear evidence that this liquidity is drying up”—”We may be approaching the eye of the storm”) and http://www.telegraph.co.uk/finance/economics/12138466/when-is-the-next-financial-crash-coming-oil-prices-markets-recession.html (“Debt, defaults, and devaluations: why this market crash is like nothing we’ve seen before”—”A pernicious cycle of collapsing commodities, corporate defaults, and currency wars loom over the global economy. Can anything stop it from unravelling?”—”The real question is always when and how deep the upcoming downturn will be”—”Commodity prices have crashed by two thirds since their peaks in 2014. Oil has borne the brunt of the sell-off, suffering the worst price collapse in modern history. Brent crude has fallen from $115 a barrel in the summer of 2014, to just $27.70 in mid-January”—”[A] confluence of factors – led by oil, but encompassing China, the emerging world, and financial markets – are all brewing to create a perfect storm”—”[T]he current sell-off has seen commodity prices, equities and credit conditions all move in dangerous lockstep”—”Although a 75pc oil price collapse should represent an unmitigated positive for the world’s fuel thirsty consumers, the sheer scale of the price rout is already imperiling the finances of producer nations from Nigeria to Azerbaijan, and is now threatening to unleash a wave of bankruptcies across corporate America. It is the prospect of this vicious feedback loop – where low oil prices create financial tail risks that spill over into the real economy – which could now propel the world into a ‘full blown crisis'”—”[T]he globe’s largest emerging markets have shown signs of deterioration over the last six months”—”[A] tipping point may well be approaching. . . . [A] 20pc decline in stock markets that persists for more than six months, will translate into a decline in consumption of between 0.5pc to 1.0pc. ‘This would be a serious shock. My biggest fear is precisely that the dramatic shift in mood becomes self-fulfilling'”—”2016 is set to see the first wave of corporate bankruptcies in the oil and gas sector. Highly leveraged US shale companies will be the first be picked off. Should escalating defaults have a further depressant effect on oil prices, it could unleash a tidal wave of corporate bankruptcies in the world’s largest economy. Indebtedness is not just the scourge of the US. Globally, the oil and gas industry has issued $1.4 trillion of bonds and taken out a further $1.6 trillion in syndicated loans, driving the sector’s combined debt to $3 trillion, according to the Bank of International Settlements. They warn of an ‘illusion of sustainability’ that could quickly turn toxic as the credit cycle unravels. The question exercising the minds of economists and investors is the extent to which this contagion could metastasize beyond the energy sector, as banks cut off credit access, loans turn bad, and financial conditions enter a critical tightening phase”—”[A] series of other indicators are also flashing red. Global equity markets have endured their worst start to a year since the dotcom crash. To paraphrase Nobel prize-winning US economist Paul Samuelson, Wall Street has predicted nine out of the last five recessions, but the current turbulence has an ominous precedent”—”Macroeconomic indicators from the world’s largest economy are also beginning to turn sour. The US has already fallen prey to a manufacturing collapse. Service sector data for December showed the slowdown is spreading to the dominant driver of economic growth”—”[T]he economy is ‘firing on one cylinder’ with consumers the sole bright spot in an environment of still weak capital investment, and a crippling exchange rate that is hurting exporters and squeezing corporate profits”—”The soaring dollar has put record pressure on China’s exchange rate peg, forcing Beijing to burn through its reserves with interventions amounting to $140bn-a-month in December to protect the renminbi. Meanwhile, China’s capital outflows have accelerated to $676bn, according to the Institute of International Finance”—”A weaker renminbi would unleash a new wave of deflation in an already fragile global environment, and hasten the pressure on emerging market exchange rates as the world’s currency wars would renew apace”—”The lower oil prices fall, the faster buyers are expected to flood back in, with violent upward movements already in evidence”—”[The] world could find itself defenceless against another round of mania, panics or crashes”—”Should the world manage to ride out the perfect storm of 2016, next time round, answers will be difficult to find”) and http://www.marketwatch.com/story/why-a-selloff-in-european-banks-is-ominous-2016-02-07 (“Why a selloff in European banks is ominous”—”European banks have been caught in a perfect storm of market turmoil”—”‘The current environment for European banks is very, very bad'”—”The doom-and-gloom outlook for banks comes as the stock market has had an ominous start to the year. East or west, investors ran for the exit in a market marred by panic over tumbling oil prices and signs of sluggishness in China. But for Europe’s banking sector, the new year has started even worse, sending the bank index down 23% year-to-date”—”[I]ts worrisome, because banks are much more important for the credit mechanism in the economy here in Europe than it is in the U.S. There, you have a capital market where it’s easier to issue corporate bonds and get funding outside the commercial banking system. We don’t have that to the same extent in Europe, and therefore [the current weakness] is a little bit scary”)) and http://news.yahoo.com/russia-shuts-down-two-more-banks-093516555.html (“Russia shuts down two more banks“) and http://news.yahoo.com/greek-stock-market-falls-sharply-banking-sector-meltdown-001624353.html (“Greek stock market falls sharply on banking sector meltdown“) and https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/#comment-8148 (“Why Is America So Angry?“) and http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12151115/The-world-cant-afford-another-financial-crash-it-could-destroy-capitalism-as-we-know-it.html (“The world can’t afford another financial crash – it could destroy capitalism as we know it”) and http://www.wsj.com/articles/venezuelas-collapse-brings-savage-suffering-1455323300 (“Venezuela’s Collapse Brings ‘Savage Suffering’”—”Dying infants, chronic power outages and empty shelves mark the world’s worst-performing economy”)
As I have said in comments above, while the United States will not be hit as hard as other countries and regions of the world (e.g., Russia, emerging countries), it will be hurt too.
A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison.
Hold on tight. Things may get very ugly and, yes, scary!
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I blame global warming.
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Thank you, Buffy, for your comment.
Lots of people blame the “Tooth Fairy,” and the Loch Ness Monster, and the Abominable Snowman . . . and the list goes on and on.
So-called man-made “global warming”—or “climate change,” or “The Great Green Con”—is way down the list of non-factors.
See https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/ (“A $34 Trillion Swindle: The Shame Of Global Warming”)
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Another Financial Crash Is Coming
[Two men walk along the road to Los Angeles in 1937, during the Great Depression]
Allister Heath has written in the UK’s Telegraph:
See http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12151115/The-world-cant-afford-another-financial-crash-it-could-destroy-capitalism-as-we-know-it.html (emphasis added; charts omitted); see also https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8114 (“WORLD ECONOMY IN DEATH SPIRAL, THE PERFECT STORM OF 2016“) and https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/#comment-8148 (“Why Is America So Angry?“)
This analysis is sobering and largely accurate.
However, what is coming will not be a recession.
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Financial Armageddon [UPDATED]
Echoing what I have written in the article and comments above, famed investor Jim Rogers has said:
See http://money.cnn.com/2016/02/15/investing/jim-rogers-central-banks-stock-markets/ (“Central bankers ‘don’t have a clue’ – Jim Rogers”); see also http://www.telegraph.co.uk/finance/economics/12149894/Mapped-Why-negative-interest-rates-herald-new-danger-for-the-world.html (“Why negative central bank interest rates herald new danger for the world“)
Also, echoing what I have written above, former OMB director David Stockman fears there will be “a run on mutual funds and ETFs [or exchange-traded funds]” amid the volatile economic climate:
See http://www.newsmax.com/t/finance/article/713890 (“David Stockman: Mutual Funds, ETFs at Risk of a Run“); see also https://en.wikipedia.org/wiki/Exchange-traded_fund (“Exchange-traded fund“)
As I have written in the article above:
See https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/ (“The Obama Great Depression“); see also http://www.marketwatch.com/story/chilling-ways-the-global-economy-echoes-1930s-great-depression-era-2016-02-19 (“Chilling ways the global economy echoes 1930s Great Depression era”) and http://www.wsj.com/articles/making-depressions-great-again-1456790200 (“Making Depressions Great Again”—”The pace of global trade continues to tumble, an ominous trend for growth”—”Four of the remaining U.S. candidates claim to oppose the Trans-Pacific Partnership, and Congress now lacks the votes to pass it”) and http://www.telegraph.co.uk/business/2016/03/01/britains-factories-engulfed-in-global-manufacturing-slump/ (“Britain’s factories engulfed in global manufacturing slump”—”Britain’s slump came amidst a broader slowdown in the world’s factories as global demand for industrial goods ebbs”)
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Hello, Timothy. As I’m writing this, there seems to be one of those respites which have been brief, in the poor market results over the last 14 months. As I earlier noted, we’re holding fast on investments, not wanting to buy but not wanting to sell low. And, as we’re now heavy on cash and planned retirement incomes, our retirement seems safe enough.
I noticed Jim Rogers is apparently an ex-pat based in Singapore. We visited Singapore in October for five days in October before spending a longer time in Australia. Singapore seems attractive to smart people from financially troubled countries who want a good standard of living, especially from India and China.
An Indian woman there running a small business gave us a long chat about how people should live and work that sounded taken from a successful American conservative playbook. It’s a prosperous city state surrounded by poorer countries, formed when it became independent of one of them (Malaysia). This tells me that this Jim Rogers is sophisticated about the world and where to live, and has a good international perspective.
This is a good time to be very financially diversified with back up plans. The pressures on Central Banks in Europe is troubling and I hope the mega banks in our country hold up- we do use one of them for our aggressive investments (most of my net worth is not in this category).
If I had to start my professional career today with the current economy and the lack of good positions, we’d be in trouble. Being empty nester retirees at this time is a good place to me. Our son and his wife struggle (we don’t support them) but they now have three jobs between them so I think they’ve got a lot more financial maturity than they used to. They (and all of us) will need that in the years ahead.
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Thank you, Jonathan, for your comments as always.
Google Jim Rogers. He is a fascinating person. He and his third wife moved to Singapore after they completed their around-the-world travels, which are mentioned in the last paragraph of the article about him.
One reason he did so is because of the emergence of China as such a global power now and in the future. Also, he wanted his first daughter (and now the second one too, presumably) to be fluent in Mandarin so they would be comfortable in China, and living and doing business in the Orient.
See, e.g., https://en.wikipedia.org/wiki/Jim_Rogers
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Thanks, Timothy, I’ll look up his name. …
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The Coming Deflation Spiral
An article appears in the New York Sun that contains one very important sentence:
See http://www.nysun.com/national/helicopter-money-next-new-course-for-the-fed-is/89469/ (“‘Helicopter Money’ Next? New Course for the Fed Is Growing More Urgent“)
The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable.
Americans and people of other countries have lost faith in their governments, which will only compound the problems. Yes, this is not 2008 all over again. It may be much worse, even eclipsing the Great Depression of the last century.
See https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/ (“The Obama Great Depression“)
A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison.
America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
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World Economy Stands On The Cusp Of Another Crash
The UK’s Telegraph has reported:
See http://www.telegraph.co.uk/business/2016/02/26/world-economy-stands-on-the-cusp-of-another-crash-warns-lord-mer/; see also http://www.telegraph.co.uk/business/2016/02/28/mervyn-king-the-eurozone-is-doomed/ (“[Former governor of the Bank of England] Mervyn King: the eurozone is doomed”—”The eurozone is doomed to fail and will lurch from crisis to crisis unless it is broken up”—”‘Monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy at the national level on the other. This is extraordinarily dangerous'”—”[T]he euro area today is a drag on world growth”—”The ‘only way’ to stop countries staring into the abyss of ‘crushing austerity, continuing mass unemployment’ with ‘no end in sight to the burden of debt’ faced by debtor nations is for them to abandon the euro”—”[L]eaving the euro area may be the only way to plot a route back to economic growth and full employment. ‘The long-term benefits outweigh the short-term costs'”) and http://www.telegraph.co.uk/finance/economics/12138466/when-is-the-next-financial-crash-coming-oil-prices-markets-recession.html (“Debt, defaults, and devaluations: why this market crash is like nothing we’ve seen before“) and https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8316 (“The Coming Deflation Spiral“)
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Hi, Timothy. You’ve been close to the Washington scene so understand it. I’ve noticed that when a high up official in a Western country is in office, they often are under pressure to spin an unfortunate situation and emphasis the plans to prevent or solve the issues. When they’re long out of office, they speak quite freely, sometimes in anger, over what they admit is a terrible situation that will produce dire circumstances. Lord King is now free to speak frankly.
On a much smaller scale, I worked in local government for the second half of my career until retirement (psychology field in a criminal justice setting). In my last year, the Recession hit and funding reductions and bad administrative decisions (stressed people at the top tend to act impulsively) led to making a wreck out of the once excellent programs we had developed. I kept my silence then. Years later, under assumed names, on line comment sections have witnessed strong opinions and recommendations for shutting down a certain Gov’t agency.
Doing the right thing is often balanced, sadly, with self protection in difficult times. Interesting times are what they are. Best wishes to you.
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Thank you for your comments as always, Jonathan.
Yes, I agree completely. In many ways, this blog has served that purpose for me. When I submitted articles to publications in the past, often they would be edited and it took time for them to be published.
I still do that, certainly with professional publications like law reviews, but this blog allows for instant publication, without waiting. Also, it allows for instant feedback, such as yours.
I felt the Telegraph article above about Lord Mervyn King’s new book was rather shallow, which is why I have not “dignified” it by sending out a Tweet, as I usually do when announcing articles and comments that truly merit attention.
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Can The United States Save The World?
David Harrison has written an article in the Wall Street Journal entitled, “Amid Global Slowdown, U.S. Gets Miscast as Savior”:
See http://www.wsj.com/articles/amid-global-slowdown-u-s-gets-miscast-as-savior-1457379901 (emphasis added; chart omitted)
The U.S. has the strongest economy in the world; and it is the world’s only Superpower. Also, it is the largest energy producer globally, and essentially energy independent.
We do not need the Middle East anymore, for anything. Europe is in the process of fracturing; Brexit is underway; and Americans and people of other countries have lost faith in their governments, and are angry.
A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison. America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.
The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable.
Russia is in a death spiral; and China is not in great shape.
America cannot save the world, nor is it the world’s policeman. Those days are over.
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Extortion: Big Banks Paid $110 Billion In Mortgage-Related Fines [UPDATED]
The Wall Street Journal has an article that states:
See http://www.wsj.com/articles/big-banks-paid-110-billionin-mortgage-related-fines-where-did-the-money-go-1457557442 (emphasis added; charts omitted)
This article is ludicrous; however, we must be ever vigilant not to condemn the messenger.
This is robbery and extortion, and a national scandal, equalling or far surpassing anything that prompted the fines.
The big banks did not cause the problems. Alan Greenspan did; and in another time and place, he would have been literally hung for what he did.
As I wrote in the American Banker—the daily newspaper of the U.S. banking industry—on October 17, 2008, right in the midst of the crisis:
See http://www.americanbanker.com/issues/173_212/-365185-1.html (“Viewpoint: Greenspan’s Fingerprints All Over Enduring Mess”)
Greenspan was and still is a criminal, and a disgrace to America. He inflated the mortgage bubble—and he was responsible for the end of Glass–Steagall—the big banks did not do it. Yet, the big banks were blamed, and extorted.
And no, the so-called “Big Banks”—and in fact, all banks—are not evil, as they are so often depicted by the political class. Banks serve public purposes; and they are an indispensable part of our domestic and international economic fabric. The Fed exercises its monetary policies vis-à-vis the banks. Yet, they are demonized, and convenient whipping boys.
No one speaks of the fact that they have shareholders; and a broad sector of people were affected adversely by the payment of $110 billion in fines. It was not free “Monopoly” money. Also, when this level of extortion is paid out, the banks have to recoup the monies, and they do so through higher charges on loans and other activities. Put bluntly, what has taken place is an unconstitutional redistribution of wealth.
The bank executives who authorized the payment of such extortion should be held personally responsible by the shareholders—assuming of course that applicable statutes of limitations have not run. They should have blocked all of the extortion monies that were paid.
The prosecutors must be held personally responsible as well, and their legal careers must be ended. They are a vicious and unprincipled lot anyway. The same is true of the corrupt politicians who were involved in this wholesale fleecing of America’s banks.
If there is even a modicum of humor in all of this, it is that what happened reminds one of Rube Goldberg cartoons, whereby something simple was accomplished through complicated and contorted means.
See also http://www.theblaze.com/stories/2016/03/09/ag-loretta-lynch-testifies-justice-department-has-discussed-civil-legal-action-against-climate-change-deniers/ (“Attorney General Loretta Lynch testified Wednesday that the Justice Department has ‘discussed’ taking civil legal action against the fossil fuel industry for ‘denying’ the ‘threat of carbon emissions’ when it comes to climate change”)
. . .
Why should American banks (and foreign banks that operate in the U.S.) take any risks at all?
If they do so, (1) our financial institution regulators will pounce on them; (2) rabid attorneys general will sue them; (3) shareholders and customers will sue them; and (4) management will run the risk of being sacked and sued.
The world is on the verge of a financial crisis of unfathomable depths; and when its history is written in the decades to come, these will be among the contributing factors.
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An Ominous Sign Of The Future: Condo Bust Looms In Miami
The Wall Street Journal has reported:
See http://www.wsj.com/articles/another-condo-bust-looms-in-miami-1459266180
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Hi, Timothy (I made another unsuccessful attempt to log on in a way to allow giving likes). Looking at this latest article reminds me of when I was growing up in the Northeast. People there often saw Miami- South Florida in general as the promised land and longed to retire there one day. My family would take driving trips down there and stay at a Miami resort. The beaches were narrow due to heavy hotel and condo development, and the high rises were just white boxes with no style. I even remember garbage dumped in Everglades National Park. Florida is badly overcrowded today, certainly no “Mecca”.
When I decided where I wanted to live, I didn’t consider Florida…..I moved to Arizona in my early 30s, continued my career, married and raised a family, and we’re now empty nesters and retired. That said, sounds like a housing bust coming to Florida. Obviously too many people moved there, although Arizona, with a little more than one third Floridas population and twice the size, is getting crowded too in our only two metro areas.
Mr. Rosso sounded interested in Mexico, popular with Ex pats looking for a low cost of living and Argentina, with it’s exotic culture and great scenery (but a troubled economy and terrible gov’t). We like to visit Mexico and Argentina, but if the world destabilizes, the US will be the last place to fall so we’ll stay here to live!
Best wishes, Timothy, thanks for the insights. This smug retiree is opinionated but way too smug about his senior lifestyle.
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Thank you as always, Jonathan.
Sorry about the “like” issue. I use three Web browsers (Safari, Chrome, Firefox). Some features at Web sites work with one browser but not another. In theory, there should be no differences, but reality dictates otherwise. You might wish to try another browser, and see if it makes a difference.
Second, your key sentence (or so I believe) is:
I agree completely. So do people in other parts of the world, who are flocking here if they have a choice.
Which part of America to live in depends on one’s personal tastes, economics and fate. Growing up in Southern California, if anyone had told me that I would live in the Washington, D.C. area and raise my kids there, I would have laughed. But an Army commission brought me to the Pentagon; and the “excitement” of WDC took me to the Hill and beyond.
John Lennon had a line in one of his last songs (“Beautiful Boy”) on his “Double Fantasy” album:
Perhaps that says it all.
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Trump Predicts Massive Recession [UPDATED]
Watergate pundit Bob Woodward, and Robert Costa, have written in the Washington Post:
See https://www.washingtonpost.com/politics/in-turmoil-or-triumph-donald-trump-stands-alone/2016/04/02/8c0619b6-f8d6-11e5-a3ce-f06b5ba21f33_story.html (“In a revealing interview, Trump predicts a ‘massive recession’ but intends to eliminate the national debt in 8 years”) (emphasis added); see also http://www.latimes.com/local/california/la-me-trump-college-students-20160402-story.html (“On campuses across the country, students are standing up for Donald Trump”)
What Trump has predicted about the economy is a more politically-palatable version of the “Obama Great Depression,” which is described in my article above. Trump is pulling his punches, so he does not scare people.
Factors not discussed in the interview are (1) what effect Hillary Clinton’s possible indictment and withdrawal from the race will have on her true believers and the nation; (2) the effect of the GOP’s possible implosion; (3) more terrorist attacks around the world; (4) the migration crisis and Brexit in Europe; (5) North Korean aggression; (6) general uncertainty in the U.S. resulting from the fractious political campaigns; and (7) actions by our adversaries to take advantage of the waning days of the Obama presidency and the period before the next administration assumes office and gets its “sea legs.”
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FINANCIAL ARMAGEDDON? [UPDATED]
If Donald Trump is denied the GOP presidential nomination, his supporters may walk (or run) from the party en masse. They will be angry; and it is unlikely that they will support someone else who is anointed by the party elites, such as Ted Cruz, Paul Ryan or Mitt Romney. The Trump faithful will be gone, and they may not come back for the general election. Good riddance to the GOP: many will say or think, and understandably so. They will feel betrayed.
Similarly, if Bernie Sanders is denied his party’s nomination, his supporters—especially new and young voters whom he has drawn into the American political process for the first time—are likely to bolt. The Sanders and Trump supporters may form Independent, third-party challenges to their respective parties’ reigns. If Hillary Clinton is not indicted, many Americans may reject the nation’s political and judicial processes, as unfair and unjust. If she is indicted and exits the race, uncertainty will also ensue.
With Trump, Sanders and/or Clinton gone, the United States’ political system may be thrown into turmoil, before the eyes of the world. This will come at a time when financial, social, economic and military upheavals are happening globally, threatening any notions of a coherent, pervasive fabric of order. Migrants are changing the face of Europe. Others are seeking to flee the Middle East for a better life in Europe. The Middle East continues to implode, as Syria, Iraq and even Saudi Arabia disintegrate. North Korea threatens. China’s tentacles expand. Brexit looms. And terrorists have demonstrated that they can strike anywhere, at any time, with increasing ferocity and impunity.
Donald Trump has predicted a “massive recession.” However, it may be much worse than that. Many economists and seers discount this possibility, but Trump may be correct. The economic problems and structural weaknesses of 2008 were papered over, and the can was kicked down the road, while the true day of reckoning was postponed. The chickens may be coming home to roost, bigtime; and like the late 1920s and early 1930s, the world may be unprepared. The Fed and the other central banks may have exhausted their options, especially in the face of an economic, political and social tsunami and calamity of unknown dimensions.
A perfect storm has been gathering for a long time now, and soon it may be upon us. One of the biggest worries in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable. Americans and people of other countries have lost faith in their governments, which will only compound the problems.
See https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8636 (“Trump Predicts Massive Recession“); see also https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally“) and http://www.newsmax.com/t/finance/article/724131 (“Republican presidential candidate Ted Cruz said the United States is headed toward a stock-market crash because Federal Reserve officials are ‘playing games with money to juice the system’ but have ‘created bubbles. . . . But that’s not built on anything real. It’s not built on an increase in the intrinsic value of those assets. That’s just playing games with money, which means a crash will be coming'”) and http://www.telegraph.co.uk/news/2016/04/24/i-iz-rich-ali-g-creator-sacha-baron-cohen-joins-britains-rich-li/ (“Britain’s super-rich have suffered the worst hammering of their fortunes since the financial crash”) and http://www.newsmax.com/Finance/StreetTalk/Alan-Greenspan-economy-entitlements-productivity/2016/05/26/id/730990/ (“David Stockman, former budget director under President Ronald Reagan, warns that the nation will plunge into recession by year’s end. He said the Federal Reserve’s hawkish tone about hiking interest rates is bluster. ‘When has the Fed ever gotten it right about the economy? Did it see the crash coming in 2000? Did it see the housing bubble? Did it see the Wall-Street meltdown in 2008, or the bubble it’s creating now,’ he asked Fox Business Network. ‘The answer is no . . . it has no clear view of the future'”) and http://variety.com/2016/dirt/real-estalker/celebs-slash-prices-on-multimillion-dollar-homes-1201789604/ (“Celebs Slash Prices on Multi-Million Dollar Homes”) and http://blogs.wsj.com/economics/2016/07/28/u-s-homeownership-rate-falls-to-five-decade-low/ (“U.S. Homeownership Rate Falls to Five-Decade Low”)
[Mr. Naegele was counsel to the Senate Banking Committee and chief of staff to former Sen. Edward W. Brooke, R-Mass. He has an undergraduate degree in Economics from UCLA, and two law degrees from Berkeley and Georgetown. He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see http://www.naegele.com).]
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FINANCIAL ARMAGEDDON: UPDATED
The UK Telegraph‘s International Business Editor in London, Ambrose Evans-Pritchard, has written:
See http://www.telegraph.co.uk/business/2016/09/08/ecbs-mario-draghi-has-run-out-of-magic-as-deflation-closes-in/ (“ECB’s Mario Draghi has run out of magic as deflation closes in“) (emphasis added; charts omitted); see also https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-8654 (“FINANCIAL ARMAGEDDON?“) and http://www.wsj.com/articles/a-fed-insider-warns-of-the-risk-of-low-rates-1474196402 (“‘Should prevailing economic conditions change in response to a large negative economic shock, commercial real-estate prices could decline relatively quickly, leading to large losses at leveraged firms,’ [Boston Fed President Eric Rosengren] said in an Aug. 31 speech in Beijing. That, in turn, could trigger a broader economic downturn, he said”) and http://www.telegraph.co.uk/business/2016/09/18/bis-flashes-red-alert-for-a-banking-crisis-in-china/ (“The Bank for International Settlements warned in its quarterly report that China’s ‘credit to GDP gap’ has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the US subprime bubble before the Lehman crisis”—”Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control. . . The BIS said there are ample reasons to worry about the health of world’s financial system”) and http://www.wsj.com/articles/banks-are-now-too-scared-to-even-make-money-1474277532 (“Banks Are Now Too Scared to Even Make Money“) and https://www.washingtonpost.com/local/md-politics/condominiums-in-crisis-financial-troubles-put-many-communities-at-risk/2016/09/17/07ba32ac-6972-11e6-ba32-5a4bf5aad4fa_story.html (“Condominiums in crisis: Financial troubles put many communities at risk“) and http://www.bloomberg.com/news/articles/2016-09-19/that-100-000-painting-bought-to-flip-yours-for-about-20-000 (Art market crash: “That $100,000 Painting Bought to Flip Is Now Worth About $20,000”) and http://www.telegraph.co.uk/business/2016/09/13/oil-investment-crashes-to-60-year-low-incubating-next-energy-sho/ (“[Putin’s Russia] is burning through its Reserve Fund to cover a fiscal deficit, drawing down $6bn in August alone. There is only $32bn left”) and http://www.wsj.com/articles/londons-mega-mansion-owners-have-a-tough-time-selling-1476889789 (“London’s Mega-Mansion Owners Have a Tough Time Selling”)
At some point in time—in the not-too-distant future—the bottom will fall out. It is simply a function of time.
The storm clouds have been gathering globally for a long time now; and when the perfect storm hits, an economic tsunami will be unleashed that will roll the world’s financial markets, unlike anything that we have witnessed in our lifetimes.
The Fed and the other central banks will be helpless, and hopeless. One of the great worries in Washington for years is that there would be runs on the uninsured funds, which would be unstoppable, and massive panics would ensue.
Hold on tight. It will not be pretty when it hits; and the destruction of families and their lives, economically, will be unparalleled.
See, e.g., http://www.telegraph.co.uk/investing/funds/largest-property-fund-re-opens-following-investor-panic/ (A sign of things to come: “Largest property fund re-opens following investor panic”)
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The Federal Reserve System and the Congressional Budget Office are saying quite forcibly, lately, that the Social Security and health care programs are not sustainable and will likely fail, within 12-16 years. They are saying this for two reasons: the U.S. government revenue as a percentage of GDP has been flat since 1945. But, it’s spending as a percentage of GDP has been increasing, especially lately. They are saying a political solution isn’t likely. The second reason we will experience a collapse is the slowdown in GDP growth. We’ve been spared a collapse, because of the output generated by the Baby Boomers, but as they retire, they are being replaced by less productive younger people. Worse yet, the debt will need to be repaid, as global growth slows, to prevent severe deflation. Because the U.S. is the world’s reserve and trade currency, the dollar must inflate at global GDP rates or global growth chokes. But, if it slows, we must repay that accumulated debt. This is the dire aspect of the outcome laid out by the Fed and the CBO, rather than a projected cutback in SSN and Medicare payments. It isn’t a pretty picture.
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Thank you for your comments.
Yes, I agree. The picture is not likely to be pretty at all
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Hi, Timothy. Just read Toms comment. I believe that Social Security simply needs the latest reforms to be sustainable and this has successfully been done numerous times in the past by Congress. The actual numbers say it won’t fail, but in a decade or more, the payout will simply go to 70% of what it is now.
Medicare is in worse shape, and my studying of medical bills of mine and that of my late mother (who lived into her mid 90s) suggested that Medicare routinely enabled fraud by paying on request, up to triple what they had to, to greedy providers. There’s no better way to see the shady stuff that goes on with senior health insurance than handling someones Estate!
That all said, the solution is simply for Congress to come together and do the standard reforms of the past; perhaps raising the age for SS as done before, raising the taxes for it in certain circumstances, changing criteria’s for income brackets, more careful screening for SS disability than they do now, etc. While I mostly voted for the other party (not entirely), I admit having one party in charge of gov’t does make SS reform inevitable and likely to occur soon.
Of course, everyone should have back up plans. I kept my Employers insurance after retirement to cover what Medicare won’t, and we invest actively in case the “gov’t well” ever does go dry. I realize there are many millions of Americans that can’t afford these actions, but I do think the new Congress will pass reforms to help this.
I have an actual pension (well earned, given the kind of extreme positions I held and the physical and other risks involved), and believe that pension reform the last few years has already begun the process of gradually phasing out pensions for new gov’t workers. Retirement planning is more important and more difficult with each new generation. Our son will one day get what we have, but our grandson will have a tougher time.
That all said, we just got back from a month in South America, half of it a cruise and half of it exploring foreign cities on our own. One advantage I learned first hand is that if you’re traveling in Latin America anyway on vacation as a tourist and you have urgent dental work needed (which insurance barely covers any of), you can get the same quality care there on short notice at a tiny fraction of the price! Our last country there was Columbia, and instead of the third world poverty we expected, most of Bogota looked middle class, clean and with a modern new skyline………….and the badly cracked tooth I got two days before we traveled was easily handled by the first dental office we found in Bogota for the price of a good hair stylist. American health care is a real money machine that sucks people dry.
Oh, and congratulations, Timothy, your candidate won! My politics is offended, but my skyrocketing stocks after the election are quite pleased with the results………………..Best wishes, Jonathan.
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Welcome back, Jonathan. 😊
I assume you had a wonderful time; and I am pleased that your dental needs were met so cheaply.
Yes, Donald Trump won, and it is nice that your stocks are increasing in value. The Carrier deal is a sign that companies will benefit by keeping jobs here. Both Carrier and Ford seem to have learned that lesson already.
“The Obama Great Depression” may or may not materialize, now that Trump is about to seize the reins. Even the Trump naysayers may benefit, which would be ironic.
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Is A Housing Price Collapse Coming To America?
The UK’s Daily Mail has reported:
See http://www.dailymail.co.uk/news/article-4657812/Britain-brink-housing-price-collapse.html (“Britain ‘is on the brink of the worst house price collapse since 1990s’: Experts predict property costs could plunge by FORTY PER CENT“) (emphasis added; charts omitted)
The same thing may be true of the U.S. Our Fed has been irresponsible, and has allowed an enormous housing price bubble to inflate. When it bursts, the results may be truly catastrophic.
Yes, some will argue, such dire predictions have occurred in the past, but they have not materialized. True, many economists—including yours truly, whose undergraduate degree from UCLA was in economics—have been predicting a serious economic downturn, if not collapse, for a long time now.
See, e.g., https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/ (“The Obama Great Depression“) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally“) and https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/ (“The Great Depression II?“)
When it will happen is anyone’s guess. Those who have bet on housing prices and the stock market rising in the U.S. have been correct so far. However, like the game of musical chairs, at some point a severe “correction” will occur, and not everyone will end up having a seat.
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Americans Have The Highest Credit-Card Debt In History [UPDATED]
Maria LaMagna of MarketWatch has written:
See http://www.marketwatch.com/story/us-households-will-soon-have-as-much-debt-as-they-had-in-2008-2017-04-03 (emphasis added; chart omitted); see also https://naegeleblog.wordpress.com/2016/01/16/the-obama-great-depression/#comment-10379 (“Is A Housing Price Collapse Coming To America?“) and https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/#comment-10290 (“24 Percent Of Americans Do Not Have Single Dollar Saved For Emergency“)
If anyone had a sense of well-being during the Obama presidency, they were ignorant or delusional.
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BITCOIN COLLAPSE? [UPDATED]
In the article above, and in two earlier articles of mine and the extensive comments beneath them, I predicted a catastrophic economic collapse, not only in the United States but globally.
See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html (“Euphoria or the Obama Depression?”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally“)
Had Hillary Clinton been elected, I believe this would have materialized, sooner rather than later. There are “houses of cards’ all over the globe today, which are being buoyed up by the economic optimism created by the election of Donald Trump and his policies.
Yet, even as I write this, treasonous steps are being taken by our Left and far-Left—the Democrats, a party that I once embraced—to destroy the Trump presidency at all costs, which would send our great nation into an economic tailspin, and precipitate a second American Civl War at the very least.
See, e.g., https://naegeleblog.wordpress.com/2017/05/16/americas-newest-civil-war-2017-and-beyond/ (“America’s Newest Civil War: 2017 And Beyond“) (see also the comments beneath the article) and https://naegeleblog.wordpress.com/2017/10/20/the-real-russian-conspiracy-barack-obama-the-clintons-and-the-sale-of-americas-uranium-to-russias-killer-putin/ (“The Real Russian Conspiracy: Barack Obama, The Clintons, And The Sale Of America’s Uranium To Russia’s Killer Putin“)
One out of every five residents of California is poor; and California is nation’s largest state economically.
See https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/#comment-11773 (“CALIFORNIA LEADS THE NATION IN POVERTY“)
And what about the collapse of “Bitcoin”? The UK’s Economist has noted:
See https://www.economist.com/blogs/buttonwood/2018/01/tales-crypto-1 (“The rise and fall of Bitcoin“) (emphasis added); see also http://www.ibtimes.co.uk/bitcoin-crashes-reddits-cryptocurrency-community-post-links-suicide-hotlines-1655553 (“As bitcoin crashes, Reddit’s cryptocurrency community post links to suicide hotlines“) and http://www.news.com.au/finance/money/investing/260-billion-cryptocalypse-as-cryptos-plunge-30-per-cent-amid-fresh-china-south-korea-fears/news-story/3775fe60f78da3c9bd53cedf3ef0f23b (“Bitcoin plunges 25 per cent amid South Korea, China fears“)
Will the collapse of Bitcoin trigger an economic collapse?
Clearly, what goes up, must come down. Also, there’s a sucker born every minute. And the kids’ game of “Musical Chairs” repeats itself again and again in real life.
It is “a game of elimination involving players, chairs, and music, with one fewer chair than players. When the music stops[,] whichever player fails to sit on a chair is eliminated, with a chair then being removed and the process repeated until only one player remains.”
See https://en.wikipedia.org/wiki/Musical_chairs (“Musical chairs“)
Who will be left without a chair? Only time will tell.
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Southern California Home Sales Crash: A Warning Sign To The Nation? [UPDATED]
What goes up, comes down, often with a thud. The economic cycles operate, and have throughout human history.
Diana Olick has written for CNBC:
See https://www.cnbc.com/2018/07/24/southern-california-home-sales-crash-a-warning-sign-to-the-nation.html (emphasis added); see also https://www.cnbc.com/2018/07/26/the-anything-goes-list-price-strategy-is-no-longer-working-in-housin.html (“Housing market is showing signs of cracking: ‘Anything-goes list-price strategy is no longer working'”) and https://www.wsj.com/articles/record-drop-in-foreigners-buying-u-s-homes-1532632676 (“Record Drop in Foreigners Buying U.S. Homes“) and http://www.dailymail.co.uk/news/article-6049557/Billionaire-owner-Johnny-Carsons-luxury-Malibu-estate-slashes-asking-price.html#article-6049557 (“Billionaire owner of Johnny Carson’s luxury Malibu estate slashes the price by $16million (but you’ll still need $65M to buy it)”) and https://www.wsj.com/articles/luxury-apartment-sales-plummet-in-new-york-city-1534770001 (“Luxury Apartment Sales Plummet in New York City“) and https://www.cnbc.com/2018/08/31/the-1-billion-price-cut-luxury-real-estate-gets-slashed.html (“The $1 billion price cut: Luxury real estate gets slashed“)
My father was a realtor, who had offices in the Encino and Brentwood suburbs of Los Angeles before the advent of the mega-firms. Growing up, I lived with the swings in the housing markets, bigtime.
As I have written above:
During the Obama presidency, the Fed allowed housing prices to reach the stratosphere, with housing becoming unaffordable for lots of—or most—Americans.
Also, as prices have risen, people have become real estate salespersons who have never lived through the tough times. Like used-car salespersons, they will tell prospective buyers anything to produce sales; and their collection knowledge is paper thin, if not nonexistent.
Will California, and in particular Southern California, lead the way downward?
See https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/#comment-14278 (“THE NEW 1928? In 5 states, Richest Americans Live In A New Gilded Age“) and https://naegeleblog.wordpress.com/2018/07/01/the-death-of-new-york-city/#comment-14019 (“THE DEATH OF SAN FRANCISCO?“) and https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/#comment-13279 (“California Has Gone Berserk Again!“) and https://nypost.com/2018/07/24/san-fran-straphangers-on-edge-after-third-bart-murder/ (“San Francisco straphangers on edge after third BART murder“) and https://www.city-journal.org/html/california-economy-16076.html (“The Hollowing-Out of the California Dream“) and https://www.marketwatch.com/story/housing-market-now-reminds-me-of-2006-robert-shiller-says-2018-10-30 (“Housing market now ‘reminds me of 2006,’ Robert Shiller says“)
For those who say there can never be another major housing crash, the answer is nonsense; they are grossly naïve.
Indeed, someone whom I know bought a house in the Newport Beach area of Southern California, and had to move elsewhere for business reasons. In the process, the person lost $800,000, after telling me that prices only go up.
This example may be repeated again and again, in California and elsewhere.
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NORMALCY BIAS AND SENTIMENT
Real Estate Agents are just like Goldbugs preaching the next boom in precious metals is always “just around the corner” ( been in a bear market for the past 7 years and has a ways to go ). The faithful and those who already have “skin in the game” by owning a home are biased with what is often been referred to as “normalcy bias”. Another words, if markets keep going-up, then they will continue to appreciate with only “minor” corrections. Similarly, once markets are in a prolonged funk, the bias (public sentiment) changes to negative and assumes it will keep getting worse ( ever lower prices). The media follows this social trend both ways.
What matters here in California is where the money is? The related issue is where is the money coming from? From 2005-2017 an average of 25% of real estate in California ( residential condos and single family houses) was purchased with CASH ONLY. Quite a bit of this money came from out-of-state or foreign buyers, primarily Chinese Nationals laundering money out of China. ( California real estate records do not detail the nationality of home buyers, as its irrelevant to the State or local governments, so they don’t track it here )
Starting this year, capital controls have been imposed from Beijing, curtailing much of the Chinese real estate purchased in the U.S., Canada, and Australasia in prior years. In addition, a stronger U.S. Dollar in 2018 has made U.S. real estate relatively more costly for any foreign buyer, thus slowing down sales.
So, its a complicated subject and includes domestic demand and foreign demand together in large, coastal markets, like California. Its not just Trump (Tariffs) or the FED. Many more factors to consider (analyze). No simple explanations. So, its not well understood by real estate agents or homeowners who just assume its like all past real estate cycles. You really can not conclude that. Maybe, maybe not. We will all find out soon enough.
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Thank you again, Craig.
Please read what I wrote above and at the links that I cited.
I grew up in the business, and know it well.
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FAMILY PERSPECTIVE OF A NATIVE
I read it. You are right of course. Just saying the cycle probably has peaked in SoCAL but I’ve heard as much for the past 2-3 years in my neighborhood. Just this month a nearby home sold for $1.9 Million Dollars. One local real estate agent recently told me the average (median) home in my zip code (91208) is now priced at $1.1 Million dollars, up +10% from a year ago. You should be able to verify these stats for Glendale or parts of it anyway.
My home was purchased by my late father from my grandfather in 1965 for $50,000. My grandparents bought the lot and built a house on it brand new on a Public School Teachers Pension ( L.A. Unified Scholl District) and then bought a brand new Chevrolet every three years for 12 years until he died. NO DEBTS either ! They always voted and always voted for a Democrat.
Life was real good back then and for more (average) people in California like they were. Not so today. That is a huge (BASELINE) difference often unaccounted for.. As you can see, we are losing ground and have been overall for the past 50 years. There is your real long term trend. Different State and Different Economy too.
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Yes, I understand, Craig.
My parents built our home in Westwood, a mile west of the UCLA campus, before I was born. Today, Zillow estimates its value to be $2,681,632.00; and it was sold last in 2015 for $2,120,000.00.
The house has barely changed at all since I was a baby there, up through my college years.
Location, location, location. 🙂
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If The Democrats Take The House (Or Senate), The Obama-Hillary Depression May Ensue
Douglas Ernst has written for The Washington Times:
See https://www.washingtontimes.com/news/2018/oct/18/nancy-pelosi-on-the-collateral-damage-of-dems-econ/ (“Pelosi on the ‘collateral damage’ of Dems’ economic policies: ‘So be it’”)
If the Democrats take the House—the Senate is unlikely—they will precipitate an economic collapse, which would have been coming if Hillary had been elected.
See, e.g., https://naegeleblog.wordpress.com/2017/05/16/americas-newest-civil-war-2017-and-beyond/#comment-14894 (“KAVANAUGH: A DRESS REHEARSAL FOR IMPEACHMENT?“)
Lots of us began as Democrats, but will never vote for one again. Also, some of us lived through Watergate; and the viciousness perpetrated by the Democrats this time will make those days seem like child’s play.
All Americans will suffer, but the Democrats do not care. They are truly America’s enemies. This is what the mid-terms are all about, and what is at stake.
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THE TIDE IS GOING-OUT NOW
I suspect the partisan animosity and the uncertainty of the upcoming Nov. Midterm elections, as well as all the rancor surrounding the latest Kavanaugh Supreme Court Confirmation process has harmed the stock market. Retail investors, pension funds of all kinds, and 401 (K) retirement account holders are already suffering a reduction in the gains of the past two years. In fact, the “Trump Bump” has almost been erased for many brokerage accounts.
We are already back to square one. In the meantime, credit is a bit more expensive and interest rates on debt has risen by 1.4% on a traditional 30-year bank mortgages. The global stock markets already fear a trend of rising inflation in the upcoming decade. We have peaked, as far as High Living.
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Possibly.
But if Democrats take the House and/or Senate, a true catastrophe may occur.
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A LOST DECADE
If president Trump were to be impeached, but not “removed” by a Democratic House, then yes, all Hell may indeed break-out. You must remember what happened to the economy and stock market following the impeachment and removal (resignation under threat of removal) of the late President Nixon.
The Democrats forced us to renege on our treaty arrangements to safeguard South Vietnam following our evacuation of troops. We were winning until the anti-War movement caused the Republicans to lose public support, thereby handing victory to the Viet Cong. The seventies were truly a lost decade for America. Sure hope we don’t have another one coming-up. Could be, but not a “catastrophe”. We still have some choices left which affect final outcomes.
The (final) collapse of the United States of America may be in our collective futures, but not yet. Look at Venezuela as a Case Study. ONLY could happen some day if we all just let it happen in increments. If so, what can possibly be said ? We would rightly deserve to lose it all if our response is apathy or denial.
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Yes, South Vietnam collapsed and the ensuing blood bath was horrendous, because Congress pulled the plug.
And yes too, as I have stated many times, lots of us began as Democrats, but will never vote for one again.
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AMERICAN CAPITALISM IS GETTING LONG IN THE TOOTH
The global economy, largely driven by China and other Asian Economies ( Belt and Road Trade Initiative ), will grow more slowly for about the next ten years. Sometime after they fix their economy and over-indebtedness, the Chinese and other Asian economies will really take-off, leaving the North American economy more isolated and cut-off. In the meantime, America- internally divided and politically weakened, can not change its trajectory- even with President Trump.
The United States will continue to lose its ability to alter world affairs in a way that is advantageous and will continue to lose influence and financial primacy. We already have lost it. Career politicians of BOTH political parties are active members of the “Swamp”. Its the new bipartisanship.
We remain set ( in our ways ) and will continue to incur more sovereign indebtedness until we face a major sovereign debt crisis. Its definitely coming. The State and Local Public Pension (funding) Crisis is a big part of it too.
All the bad debts in our system and political corruption will continue to retard our long term economic growth rate (GDP). It won’t average much more in the future than it did under President Obama, possibly 2.2%/ year GDP. It is higher now for awhile, but only during Trump’s presidency at most. Then we fade back to trend and continue our national glide path.
America will NEVER be the same again. Taxes overall will trend-up everywhere to some degree over time. We lost our chance to turn it around long ago. So now, Its all temporary Executive Orders (EXO) under President Trump which undoubtedly will be quickly undone by his successor. Congress won’t often Act on major policy initiatives with new legislation.
China & the Hidden Debt Crisis in the Provinces | Armstrong Economics
https://www.armstrongeconomics.com/international-news/china/china-the-hidden-debt-crisis-in-the-provinces/
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Yours is a negative view about the future of the United States and the American people—akin to the fall of the Roman and British empires—and one that is worrisome to lots of our fellow citizens. I am not being critical of you; I am simply stating a fact.
I believe it is essential that Congress remains under the GOP’s control; and that President Trump is reelected in 2020, and serves out the second of his four-year terms in office.
Obviously, the Democrats—and I began as one of them, but will never vote for another one—will do everything in their power to see that Donald Trump is destroyed, and his agenda and accomplishments are brought to a screeching halt and undone.
I view them as greater threats to this nation’s future than China, Russia, North Korea, Iran and international terrorism. As George Orwell wrote in his prescient “Animal Farm,” all of the animals were equal until the “Pigs” reigned supreme and subjugated the other animals.
See https://en.wikipedia.org/wiki/Animal_Farm (“Animal Farm“)
Orwell was railing against communism, but what he wrote is just as relevant and timely today as ever. The “Pigs” are America’s Left. Also, Hans Christian Andersen’s “The Emperor’s New Clothes” rings loud and clear.
See http://www.andersen.sdu.dk/vaerk/hersholt/TheEmperorsNewClothes_e.html and https://en.wikipedia.org/wiki/The_Emperor%27s_New_Clothes
In his fable, two make-believe weavers purport to spin a fine suit of clothes for the emperor, which is made of beautiful material that possesses the wonderful quality of being invisible to any man who is unfit for his office or unpardonably stupid. The potentate and his subjects acknowledge that the garments are very fine indeed. That is, until one little child sees the emperor marching in a procession, and says at last: “But he has nothing on at all”—and the grand swindle is exposed for all to see.
Nancy Pelosi and Maxine Waters, among others, have exposed the Democrats’ future for America clearly. They and their co-conspirators are bent on regaining power and exercising it, even if it means the American economy’s destruction and unending mob violence and the subjugation of Americans who disagree with them. Theirs is today’s “grand swindle.”
Assuming that President Trump succeeds in serving eight years in the presidency, the issue of his successor is critical. In my opinion, Mike Pence is not that person; and the President would be wise to dump Pence before the 2020 elections. At best, Pence is the Republican version of Joe Biden: a career politician who has little or no courage, and is a creature of the “Deep State.”
. . .
In reading your comments, one party has noted:
I believe President Trump will address and come to grips with the debt issues, after our borders are secured, and after the “Deep State” is prosecuted to the fullest and/or is catatonic, and after the Korean peninsula is denuclearized.
Lastly, Donald Trump is a political rock star. If anyone has doubts, just watch the packed stadiums and other venues when he speaks, and the long lines waiting to get in—and his adoring fans.
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Home-Sales Plunge Stuns Real-Estate Agents
Newmax has reported:
See https://www.newsmax.com/finance/economy/home-sales-real-estate/2019/01/23/id/899403/ (emphasis added)
Far far worse is likely to lie ahead. The Obama economy was weak and fraught with potential peril; however, to his credit, Donald Trump began to restore faith in America and its economic might.
With two years of Washington treachery ahead, much worse than the Watergate era that lots of us lived through, it is anyone’s guess where the U.S. economy will go, but the likely prognosis is not pretty.
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