Sunday, December 28, 2008
Where Are They Now?
During the election, I called "Foul" on silly claims by the Obama campaign regarding the American economy. I received dozens of emails from "True Believers" asking why I was so dumb and can't I see how he will unite us, rally the US$, bring Wall Street greed to heel, cure AIDS, Tax the rich into submission and redistribute it all to the poor - a modern day, Anglo/African Robin Hood. (Not that McCain was a single shred better).
That was when all the candidates had to do was talk. NOW that they winner of the election has to DELIVER...
Folks, in real terms unemployment is going to be MUCH higher than 10% by the end of 2009. And that is the small story, really. America has over 25 MILLION small businesses at the moment. Let us forget for the moment how many of them will fail, and as small business owners they are NOT eligible for unemployment insurance and so will not be counted, and focus on the DECLINE in earnings that these 25mm will experience. It will be punishing. In other words, less people will be working, and the remaining non-union workers will be making much less. On top of this, people making a living will be forced to increase their savings.
The only corner the U.S. economy will be turning in 2009 would be going off of a cliff. The question is is the decline in investment in productive capacity in the commodity sector going to overwhelm the decline in demand? I am working on it...
This is no time to be a hero. A bottom might be near in time, and far in price - or near in price and far in time. The divergence between Gold and Oil, and Gold and the US$ is not helping provide clarity, either.
By the end of his first term, Obama may wish he was on the outside of the tent peeing in, rather than inside and getting peed on. Still, I wish him much success. I just like to point out how campaigns are not in the business of speaking truths.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 1:57 PM