Morning Reading

A few articles and blog posts you may have missed this week that are worth your time:

“We Are At The End Of A Failed Forty Year Experiment” – an interview with Kevin Massengill with observations on the current economy, why the accepted practices of the last forty years are close to an end, and where opportunity and risk may be found.

“Central Banks – Tiptoeing Toward the Exit” by Pater Tenebrarum on the “Frisky Fed Hike-o-Matic.” Acting-Man was requested to “comment on the efforts by the Fed and the ECB to exit unconventional monetary policy and whether they could do so without triggering upheaval in the markets and the economy, so we are taking this opportunity to do just that.” Worth your time.

James Kunstler brings his own unique wit and sarcasm to “Rain Dance”, writing about the new senate health bill. A taste – “Think of the ObamaCare reform debate now playing in the US Senate as the final gurglings of polity that knows it is whirling around the drain. They’re pretending to attempt to fix a racket that comprises eight percent of the American economy. Yikes! How did that happen? At the beginning of the 20th century it was one-quarter of one percent (.25 percent) of the economy.”

David Stockman penned “Just Stop It!” – “In short, reported GAAP earnings—–the honest kind companies report to the SEC on penalty of jail—— are now down 18% from their recent bubble cycle peak. But since the S&P 500 has remained within 3% of its May 2015 all-time high (2130), it  means that the PE ratio has been rapidly inflating right into the teeth of falling profits and a rapidly cooling domestic and global economy. In fact, the market closed today at 23.9X, which is a truly ludicrous valuation level. We are in the waning days of the third bubble cycle of the 21st century, yet the casino is pricing current earnings as if recessions have been outlawed and that the long-term growth trend of earnings is in double digits.”

Our friend Joshua Sharf contributed to The Hill with “An opportunity for lawmakers to fix Colorado’s broken public pension system” – Joshua outlines the lack of vision and bold solutions – “While PERA tries flicking switches and turning knobs to buy time, some states with similar problems have been taking bolder action to solve them. Pennsylvania recently passed sweeping state pension reform.”

International-economy.com provided a symposium of views in regard to the future of a world in which debt is approaching 300% of GDP – “Has The World Been Fitted With A Debt Straitjacket?”

 

 

 

 

 

 

 

Like A Dog With A Mop

Whenever we do any household chores or yard work our dog wants to help. If it is sweeping the floor, picking up, mowing the lawn, painting, you name it – our dog wants to help. She usually will insert her giant head – she is a one hundred and forty pound English Mastiff – right into the middle of what ever you are doing and drool on it, slobber on it, or try to eat it. To her, she is helping. She is part of the pack and if we are doing it then she feels she needs to be engaged in doing it too.

The problem there is that she is really not equipped to actually help with any of these tasks. She thinks she is helping but inevitably her helping just slows down progress or prevents you from doing what you are trying to do altogether. It is really not her fault, she has a tiny brain and is without opposable thumbs.

There are some things our dog is very good at helping with. She has an amazing instinct for knowing when there is anything awry in our neighborhood. She knows who belongs in the neighborhood and who does not and lets everyone know when someone she senses does not belong is out and about. At one hundred and forty pounds and with a ‘baddest bitch on the block’ bark she is an instant deterrent to any miscreants who may think our neighborhood is a good place to be malicious. She also has some marginal effectiveness in keeping squirrels and raccoons out of the garden.

Government can also be effective at helping with some things. Government can be very good at defending the country, competent at prosecuting criminals and adequate at issuing patents.

Beyond that government gets iffier and iffier at attempting to ‘help’. The idea that government can generate economic growth, jobs and investment is akin to the idea that if you give my dog a pail full of water and a mop you will have a clean floor. Reality is what you will have is a much bigger mess to clean up and quite possibly have to buy a new mop handle if you leave her unattended for too long.

Government is not equipped to generate economic growth, jobs and investment any more than my dog is equipped to mop the floor. The idea that we can ‘equip’ government to do this is just false, no different than by transplanting thumbs onto my dog you would enable her to mop the floor. She still would not know what to do with the thumbs.

The government has no idea what to do with the ability to generate economic growth, jobs and investment and never will because of the inherent nature of what they are. It is really not the fault of the government but it is our fault if we keep trying to train that dog to mop the floor rather than just doing it ourselves.

Quote Of The Day

Quote of the Day: “Socialism states that you owe me something simply because I exist. Capitalism, by contrast, results in a sort of reality-forced altruism: I may not want to help you, I may dislike you, but if I don’t give you a product or service you want, I will starve. Voluntary exchange is more moral than forced redistribution.” – Ben Shapiro

Buy A Clue

Let us review:

·       117 million Americans are on means tested assistance during a calendar year.

·       46 million Americans are on food stamps.

·       94 million American adults of working age are not engaged in the work force what so ever.

·       We have lost almost 9 million full time private sector jobs in the last nine years and that loss has not stopped or reversed but continues.

·       The official debt is $20trillion, if we used generally accepted accounting principles instead of government gimmicks that number is close to $100trillion, the CBO’s projected shortfall of Federal revenue vs. expenses is $210trillion.

·       For the last eight years virtually all economic growth in the United States is from only three sectors of the economy: financial services, real estate and healthcare.

·       Three million more American children are living in poverty today than during the height of the recession in 2008.

·       During the recession of 2008 the homeownership rate in the United States was 68%, after nine years of ‘recovery’ it is 64%.

·       During the recession of 2008 the United States was spending $37 billion a year on food stamps, after nine years of ‘recovery’ we are spending $74 billion a year on food stamps.

·       When Obama first took office real median household income was $54,000 a year. After nine years of ‘recovery’ the real median household income is $52,000 a year.

·       For each of the past eight years, more businesses have closed in the United States than have opened.  Prior to Obama, this had never happened before in all of U.S. history.

·       When Obama took office, 53 percent of all Americans considered themselves to be “middle class”.  Last year only 44 percent of all Americans still considered themselves to be “middle class”.

·       When Obama took office, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”.  Last year 49 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”.

Yet for months now the government and media have been focused on Russia interfering in the 2016 election.

Buy a clue…

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