Man Plans and G-d Laughs!
So in retrospect, in 2015, not a single person got the answer right to ‘where do you se yourself 5 years from now?’
Where you gonna be in 2020?
Stuck at home for almost the entire year!
But you are a fortune teller and are so smart you should’ve rolled your dice in the ever exploding bubble of a stock market.
Oh, that’s right, you did! 😉
(Credit Photo: Andy Blumenthal)
I went to the mall today.
This is a few weeks into reopening phase 2!
I expected people would have pent up demand and be swarming the stores even while keeping their social distance.
They weren’t at the mall!
The stores were nearly void of people.
The shelves were virtually empty of goods.
Whatever merchandise there was seemed to marked “sale, sale, sale” even on the already deeply-discounted clearance items.
It was completely frightening–like the economy is dead or on severe life support!
Most stores had 3 or more associates standing around or sitting twiddling their thumbs.
This while the stock market keeps ticking up and the NASDAQ is reaching new highs almost daily.
Coronavirus is surging again across much of the U.S. and there is almost 140,000 dead in the U.S. after just 5 months even though much of the population was in self-quarantine.
The economy looks to me in sh*t shape, despite the U.S. pumping $3 trillion dollars more of debt to artificially prop up the economy and the fed lending out money at super low rates.
It makes NO sense for the market to be hitting all time highs as if everything is all roses when the economy is still a true mess!
The New Yorker magazine wrote back in May of a post coronavirus “decade of depression” with an L shaped recovery, yet we keep seeing a V-shaped one and no one seems to be able to offer any plausible explanation for it.
Two-months ago, even before the recent stock run-up to higher levels, Business Insider reported that “the Stock Market is trading at its highest valuation in 18-years.“
Last month, Forbes reported that “the stock market appears to be reaching unsustainable highs.“
Yesterday again, Bloomberg reported that the “economic recovery is faltering.”
Almost daily, I read that companies are laying off their workers (in Travel, Transportation, Entertainment, Retail, Energy, etc.) or declaring bankruptcy (e.g. Hertz, JC Penny, Neiman Marcus, Chesapeake Energy, and more).
This while we are still, in the best case scenario, maybe half a year away from the possibility of a tested, approved vaccine. And then it will then need to be mass produced and mass distributed to hundreds of millions of people in this country and billions globally.
In the meantime, we certainly could be up for a second wave of Coronavirus on top of the flu in the fall/winter. And then the Coronavirus may mutate and become more virulent requiring annual vaccines like the flu shot–more hit or miss.
All this while U.S.-China trade war is imperiling our economy further, and arch-enemies Iran and North Korea remain national security threats.
To me this all points to that we are nowhere near out of the woods and perhaps that there is a wildfire raging and no one seems to be paying any attention!
The stock market euphoria is a common trap and is the definition of “irrational exuberance” but comes after investors have been robotically indoctrinated to buy the dips!
IMHO, buyer beware, beware, beware. 😉
(Credit Photo: Andy Blumenthal)
Look folks, Pinocchio’s nose is getting longer by the minute.
The market continues on a tear, even while the economy is heading in the other direction.
I know people have been conditioned to buy on the dips, but I’m not sure that applies while we’re in the middle (or maybe still just in the beginning) of a pandemic that has claimed 286,000 lives in just over 2 months (and that’s with a global shutdown)!
Somehow, there is a notion that when things start to reopen that all the problems will just magically go away, including the $3 trillion we just added to our national debt, all the bankruptcies being declared, and all the job losses that are becoming permanent.
If you believe this, perhaps you’d like to buy the Brooklyn Bridge.
The greater fool theory is alive and well. 😉
(Credit Graphic: Andy Blumenthal)
I believe this photo best summarizes where we are with the Coronavirus stock market.
As they say:
Don’t count your chicken before they hatch.
This market has gotten way ahead of itself and the pending economic realities of the Coronavirus and the consequences of the trillions of response fund debt.
Remember:
– The virus does not yet have a vaccine, and it is mutating and may become even more virulent!
– The deaths continue to soar in the U.S. with now over 75,000 dead in just two months.
– The deaths involve much pain and suffering both for the victim and his/her grieving loved ones.
– The unemployment is at all time highs since the Great Depression.
– Companies are starting to move from temporary layoffs to permanent firings and contraction, and many eventually to bankruptcy.
– Profitability and gross domestic product are way down and may be even worse in the next quarter.
– Price Earning ratios are around their 10-year highs even looking out toward a possible 2021 recovery.
– Restarting the economy does not mean a return to what was as the extreme trauma from the pandemic, shutdown, and social distancing rebalance us to a “new normal.”
– A second and third wave of Coronavirus may be as bad or even worse than the first.
– The two biggest global economies of the U.S. and China are facing a deteriorating and toxic relationship.
– The lingering $3,000,000,000,000 that we just added to our National Debt is going to increasingly strangle our future economic outlook.
– The election is in November and brings increasing instability and likely volatility.
In summary, the term used by former Fed Chairman, Alan Greenspan of “irrational exuberance” seems like a gross understatement when it comes to our current stock market.
Get ready to see the froth come painfully off this drunken market–these eggs are about ready to crack. 😉
(Credit Photo: Andy Blumenthal)
This was such a funny photo I found of me from 2017.
Holding a book called The End of The F*cking World.
Little did we know back then Coronavirus was coming our way.
One thing that is amazing to me is the incredible lack of responsibility when it comes to our fiscal (tax rates and spending) and monetary policy (interest rates and money supply).
For example, we’ve spent almost $3,000,000,000,000 (i.e. trillion) on Coronavirus Relief/Recovery.
And there is another package in the works to borrow and spend more money.
This on top of our already tens of trillions of dollars of national debt we already accumulated.
The crazy thing is that this is going on globally with Europe and Japan and others borrowing and spending without any sanity as well.
Now here is the BIG QUESTION for you all:
If everyone is borrowing and spending, who are they borrowing from???
Yep, this is called funny money!
Because it’s not possible for everyone to be borrowing and carrying a bottom line net debt at the same time.
The money has to come from somewhere doesn’t it?
The Federal Reserve is “injecting” trillions into the economy and their balance sheet of “loans” to us is going up towards $11 trillion dollars now.
These injections are short term medicine that may kill the patient down the road by overdose!
Have you ever heard of a Chair of the Federal Reserve that “urges policy makers to spend more“?
Simple economics tells us that this will yield at some point an unbelievable inflation.
We are injecting or “printing” more and more money (or electronic bytes of it), and that causes the money to devalue because there is so much of it (supply side economics) with nothing but hot air backing it up (we haven’t been on the gold standard since 1971).
There is a DAY OF RECKONING coming when:
– People’s savings and wallets will devalue and money will be worth close to squat after RUNWAY INFLATION.
– Also, what do you think will happen to the stock market and jobs too when people have only loads of valueless funny money and can’t buy anymore like they used too–can anyone say MARKET CRASH and UNEMPLOYMENT!
Folks, you heard it here first, the end of the f*cking world is coming–it’s called CONSEQUENCES, plain and simple. 😉
(Credit Photo: Dannielle Blumenthal)
I understand the absolute need to reopen the country from this Coronavirus.
We can’t shelter in place forever and watch our economy go into the toilet and our national debt bankrupt us!
Therefore, once we have the mechanisms to control the deadly spread, we must open up offices and stores again gradually to get people working and our economy going again.
At the same time, I am pissed by those corporate executives that actually have the chutzpah and are pushing for us to open up crowded theaters, stadiums, and other such entertainment or other venues that are NOT critical and pose a greater risk for contagion to masses of people.
Instead of these CEOs understanding the need to hold off on this pending a vaccination or adequate disease control measures, these greedy corporate chieftain seem to care little to nothing about the health of their customers, and only about lining their fat pocketbooks with more ticket sales.
I think it’s criminal type behavior to push our government to open prematurely and irresponsibly those venues that are of greatest risk to potentially millions of people to get sick or dead in order for them to profit from it! 😉
Note: It’s reported that COVID-19 compared to the flu in 22 fewer days infected 11x as many people and killed 60 times as many.
(Credit Photo: Andy Blumenthal)
So I’m hearing two opposing themes about the proposed federal budget cuts:
1) It’s horrible because we are cutting into the bone and this is going to really hurt a lot of important government programs.
2) It’s great because we have been spending money that we don’t really have, and we need to finally reign it in.
Let’s face it, we’ll never get such drastic cuts across the civilian government unless this country goes into severe crisis mode–which never happens until it’s too late and something terrible has happened.
If we even got half the cuts being proposed–which most people don’t seem to believe will even happen–that would be significant and painful itself.
The truth of the matter is that we are facing enormous danger on both the national security and financial fronts!
– Militarily–Russia, China, Iran, North Korea pose huge threats including those involving weapons of mass destruction.
– Financially–We have a serious national debt to the tune of $20 trillion, an annual trade deficit of half a trillion dollars, and social security and medicare trust funds that are going bankrupt.
If we let these threats run their course, we will eventually have a crisis that will be truly nationally catastrophic.
So what’s it gonna be–guns or butter–or national bankruptcy. 😉
(Source Photo: Andy Blumenthal)
So the good news is that we have killed about 45,000 ISIS terrorist fighters.
The bad news is two-fold:
First, there are still roughly 15,000-30,000 remaining and more being recruited all the time.
Second, it took us 49,315 bombs dropped over two years to do this.
So we are averaging less than 1 kill per bomb!
Sure, we are also hitting other targets like oil and gas infrastructure and tankers.
But about 20,000 of the munitions dropped are GPS precision-guided (e..g Joint Direct Attack Munitions, Small Diameter Bombs, and Hellfire Missiles) and have cost $2 billion!
That comes out to a cost of around $45,000 just for just 40% the bombs to kill each and every ISIS terrorist, and doesn’t even include all the extensive military infrastructure, planes, intelligence, and people.
And this is just a super tiny drop in the bucket compared to the $4-$6 trillion that the wars in Iraq and Afghanistan, after 9/11, has cost just through 2013.
–That represents between 20-30% of our our entire $20 trillion national debt!
At this rate, ISIS, Al Qaeda, and the other terrorists may simply be able to cause irreparable damage and even bankrupt America.
How long can we afford to fight these extended and expensive wars against terrorism and never seem to even win–what’s the strategy here? Is there one?
(Source Photo: here with attribution to vaXzine)
To combat the recession of 2007, the Federal Reserve initiated an aggressive policy of Quantitative Easing–purchasing federal debt en masse to flood demand for Treasuries and lower interest rates to near zero to stimulate the economy.
As of June 2013 the Feds balance sheet has swelled to over $3.4 trillion in assets of treasury debt. What happens when the Treasury has to repay those trillions?
Who is the Treasury going to borrow that money from and at what interest rate?
Just like raising demand for Treasuries lowered interest rates, increasing the supply of Treasury debt to pay back the Federal Reserve will make interest rates go way up the other way.
Rising interest rates makes borrowing more expensive–e.g. buying a car with an auto loan is more expensive, buying a home with a mortgage is more expensive–and inflation can skyrocket.
But what is worse is that despite the recent slowing of the growth of the national debt, many economists calculate the total US debt at a whopping $70 trillion when you include the host of unfunded liabilities including social entitlements such as Social Security, Medicare, Medicaid, as well as government loan guarantees (mortgage, student loan, etc,), deposit insurance (i.e. FDIC(, and the money owed to the Federal Reserve.
What is really sad about this is that the entire wealth of American families in this country is guess what–also $70 trillion–which means that we are essentially a bankrupt nation:
Family assets of $70 trillion – Family liabilities of $70 trillion = a big fat 0 in the kitty!
To pay back the $70 trillion, it is not realistic that we will simply “grow our way out” of this fiscal mess with a GDP growth rate over the last 20 years of a mere 2.6%. Also, we will likely not confiscate people’s assets to pay off the debt, rather we will print money–lots of it–so that we end up paying back the trillions of past debt in much devalued future money.
Heads we win, tails you lose!
The problem is that devaluing the dollar will mean that American family savings will become worth less as well–with the risk, at the extreme, of wiping out mass amounts of savings altogether.
Despite sequestration reducing the rate of our debt growth, the aging baby boomers with the resulting liabilities for their care will soon escalate the debt problem once again.
David Walker, a former U.S. Comptroller has warned about our national debt problem as well as many prominent economists.
Like a pendulum swinging from one extreme to the other, the spendthrift ways of the past will by necessity lead to penny-pinching in the future, and inflation rates of near zero since 2007 will lead to hyperinflation after 2014.
It reminds me of the story of Joseph in the Bible, with the 7 lean years follow the 7 fat years (in Egypt that time)–this is not just providence, but common sense economics.
Good times will come again when there is a return to the mean and the pendulum hovers near center, but the swings until then can be wide and scary.
Of course, like taking your medicine, the earlier we start to course-correct our nation’s finances, the sooner we get healthy again. 😉
(Source Photo: here with attribution to zzz zzz)
So I was amazed at the depths to which Sears will go to try to save their horrible brand.
The Wall Street Journal (21 July 2013) described how Sears online has started a marketplace where they are now hosting the selling of high-end goods at their low-end department store site.
Sears which normally sells kitchen appliances, tools, and crappy clothing is now trying to market $33,000 Rolex watches and $4,400 Chanel handbags.
Good luck to that after their failed 2005 merger of Sears and Kmart–as if combining two lousy companies make one good one.
Since 2005, the company revenue has steadily declined about 25% from $53 billion to $39.9 billion and they lost $4 billion in 2011-2012. Yeah, that today’s Sears!
My own horrible experience with Sears:
I went online to order a range, and Sears botched the order over and over again and kept me holding endlessly throughout the miserable process and at each stage asking for my feedback and apparently doing nothing with it.
Problem #1: It started out pretty simply–I asked for some guidance comparing a couple of models, chose one, and they entered my order. However, when I looked over the order, they had entered the incorrect delivery date–when I wasn’t available. So I contacted Sears back to correct the mistake, but they couldn’t get their system to reflect the correct date–it would only show the original incorrect date–and this is a multi-billion dollar company? But I shut an eye when a supervisor finally assures me that it will arrive on the correct date.
Problem #2: The next day or so, I get a call from a Sears customer service representative who asks me whether I am the Andy located in XYZ (some G-d forsaken location)–ah, no! Well, they explain that’s where they have my order shipping to. They can’t explain how that happened, but promise Sears will fix it.
Problem #3: This time, I get a call from the Sear’s installation company. They are demanding that they will not come out to do the install unless I pay them a required inspection fee. But I explain that my order from Sear expressly states that shipping and installation are FREE. Sorry, they tell me free is not free, and if I have a problem, here’s a number to their national whatever line.
Three strikes, Sears is out–I contact them to review what had happened and to cancel this order. They refuse to cancel it–again, I think to myself this is a multi-billion dollar company? Over and over again this goes on, until finally they agree to cancel the order and refund my money.
All this nonsense literally wasted hours of my time.
Sears is no longer that brilliant mail order catalog of the early 20th century; now they are a dumpster diving junk company trying to sell brand stuff, but they are laggards to the brilliant Amazon and eBay retailers–and soon Sears will be out of business headed to the big retail trash bin of history.
The Rolex watches and Chanel bags are just another Sears circus sideshow. 😉
(Source Photo: Andy Blumenthal)
andyblumenthal