But where to now?
U.S. economic "growth" might actually occur in Q3 from a very subdued level... but what does that mean? I doubt it means that tax revenues will increase, or that government spending will decrease. I also doubt that it means that employment will pick up. You see, "growth" is in the eyes of the beholder (or the guy measuring it).
If you are trying to make money in the markets, this is a TRADER'S market. There is no buy and hold, even for mutual funds in my opinion. If your track record is spotty in the markets, this will be an especially difficult time to profit.
If you are starting a business, the environment could not be worse. That does not mean you cannot succeed. It means you are going to have no help from the winds or fate, it probably means "small is beautiful", employees are a luxury, and you are the star of the show. At times like this I would prefer selling ice cream to broccoli.
If you have a job, hold on to it! A good friend of mine called me and said he was thinking about leaving his cushy, SALARIED, banking job. I had to gently remind him: We are near 50, the age where corporations start optioning guys out the door. Who is going to hire you EVER AGAIN? (How's that for gentle?)
This was one of the things they skipped when he was in school for his MBA. See, if you go to grad school for dentistry, you can still be a dentist in your 50's. If you get an MBA and go into the corporate world... it is UP or OUT... and it is a steeply sloping pyramid, there just are not that many jobs in exec ranks for old MBA's. This is where "Franchise America" comes in. In the past, "Older Corporate Rejects" (late 40's to early 50's) usually have enough corporate stock or severance money to buy a Chic-Fil-A, Dunkin Donuts, Bennigans, or other franchise. Not now. These folks have far too much debt for their age and where they are in their earnings cycle, and the incomes from the franchises are not what they were - and are not likely to be in the future.
A similar fate awaits the union factory worker in his 40's and 50's. Many of these folks skipped college and went right to work for very, very good money. They were promised a big pension, which gave them a false sense of security and VERY little incentive to save.
The factory worker allowed themselves to be deceived, just as our MBA's allowed themselves to be deceived. (My dad was a Union guy. Worked for Local 553 Teamsters in the Bronx as the modern equivalent of Dickens' chimney sweep. He was a depression era child, and would no more trust the union (which did pay his pension till the day he died), social security, or medicare... than he would have trusted the Easter Bunny to provide for him. My parents could squeeze a nickel and give you 6 cents change.)
What about the small business man? More than half of these folks, as counted by the Small Business Administration are nothing more than sub contractors - people that are really employees but without the matching payroll tax contribution or other benefits... but let us speak about the other half. These folks, and I speak from the experience of a stock broker that called on them, put all of their money "back into the business". This is a nice way of saying "the business is barely profitable and I have no money", but these folks deceived themselves into believing that they did not need to save, because they would be able to sell their business - you know, the place where they put all of their money into (kind of like a boat, only instead of a hole in the water into which one throws their money, there is this black hole of employee payroll taxes, insurance, regulations, etc...).
So who's left.
Ahhhh. The government employee. The civil servant. Its good to be the King - or to work for him. The government is absolutely, positively going to continue to extract, BY FORCE, the resources needed to pay these civil servant's pensions from our broken MBA, laid off factory worker, and profitless small businessman.
Oh, but not just to pay the civil servant. We have millions of older folks on the dole for Social Security and Medicare, people who did not pay anywhere near into the system that they are trying to extract... and they VOTE. They vote ONE ISSUE. To continue the JACK.
So, how does our fearless leader, the Wizard of Change, propose to balance this cluster f**k? By sending our elderly MBA, factory worker, and bankrupt small businessman to community college so that he can get technical training in HVAC, refrigeration, and computer services.
But wait! There's more!
Isn't the unemployment rate in these sectors over 10%? Is there any hope in the life time of a 49 year old former Corporate MBA to get trained and seek a new career repairing air conditioners in an environment of 10% unemployment?
NAFC.
But we LIKE to deceive ourselves. So we are going to give it a go.
And that's the way it is/was/and always shall be.
Libertariananimal (at) gmail (d0t) com
13 comments:
So what happens when the retraining doesn't work, and the real unemployment rate (which would include discouraged workers) continues its inexorable climb, and more and more "citizens" depend on benefits to survive, and there are fewer and fewer productive citizens supporting the whole reverse pyramid scheme?
What happens when the productive few just can't support it all? When they give up and just retreat into subsistence living, which only those with the know-how and ability to tolerate hard work could even be successful at?
Will the government put the productive few into labor camps to produce food for those who cannot work, or who are just too damn lazy or feel entitled?
What's the end game?
Mao depended on famine and camps to get rid of the excess population. We know what the Nazis, Stalin, and Khmer Rouge did.
What will be the uniquely American solution to an excess of unproductive people who have no knowledge of how to live semi-autonomously in small towns, villages, farms, and such?
Ouch! Easy, Easy...
But I like the chess analogy - "what's the end game" - I am sick of baseball...
America is armed to the teeth. I am not worried about the government coming to Tennessee to put people in internment camps - these folks just would not stand for it, and they have the weaponry to make it an impossibility... something the Jews in Germany, the rural poor under Mao and Uncle Joe did not.
I don't know what the end game is.
BTW, the subsistence living thing? Not so bad. Remember college? No privacy, no car, no money, and lousy food.... but plenty of beer and sex... every guy my age would gladly trade the house, care, the wardrobe, et al, if he could just have the happiness he had while as a young scholar...
In the end, its all about beer and sex, or more poetically, "wine, women, and song"... Of course, that's what money is for when you get older, because, as Aristotle Onasis famously quiped:
"If it weren't for women, money wouldn't mean a thing".
We all know what it is... and it is what it is...
I'm trying to be an optimist here. We are grossly undercounting the immense amount of sheer waste we have in modern living today. It isn't just energy (though I think maybe 50% of oil and natural gas is wasted), it is also all the shit we buy cause we think we need it. You don't need a new car every few years, or new clothes, or a plasma TV, or a home remodel. These were the gifts of the 1980s and 1990s, a time that will never come again, except for the very rich. I don't believe any of the apocylapse stuff when the energy starts rising in price. We would be 100% happier anyway without all the garbage in our lives. Try walking to the store for once. I haven't seen France in my 42 years, and I'm just fine regardless. :)
P.S. we civil servants paid into those pension/401k systems too.
personally i was thinking i'd try my hand at geology. It looks to have good prospects, at least better than most. Eternal optimist I know; but hey, I somehow managed to get where I am now.
Greg,
Did you just get done watching The Ugle Truth, I did. Great movie in theaters now. By the sound of your last sentence you have. Lots of potty worlds though.
Bureaucrat,
I agree with the excess, I agree with a better life without it,etc. I am a realist though and have to say that when the uneployment reaches mid 20's across the country walking anywhere had better be worth it. Think California and no welfare system to speak of, high crime rate is directly related to high unemployment just one example. WE ARE headed back a few steps at least short to mid term.
PS The FED is going to add 22,000 new military persomnel to the rooster though. Maybe, it will be the 20,000 + being released from Cali. Jails.
Peace
Anon :
I have not seen the ugly truth. I will try, but with 2 in diapers... AND a teenager.
Bureaucrat:
Part of my point was that all we really want is sex and "shelter from the storm"...
This has some significant implications for people that have investments to protect, not to mention those that are going to be on the wrong end of the government's guns.
Were you referring to the last sentence in comment 2?
That is a saying from working class New York... "It is what it is."
B:
I already can't afford a new car or a home, let alone a remodel.
A number of job offers I had were revoked due to the collapse. Thus, I am stuck at my lower paying position.
It is fuel for heating that will really cause the problems.
Our economy depends on consumers, so people buying less shit will also be problematic.
I am seeing marital problems left and right, and depression, etc. at this point in the decline.
More thoughts later..
I see it differently; I don't think there will be real growth at all. The numbers can only indicate growth in this environment if either:
1 We are borrowing future capital and spending it now - and that's not growth!(Its mining the future economy)
Or 2, the dollar is devaluing so the numbers give indications of growth, like a rising stock market and commodity prices.
But I do see opportunities in all kinds of businesses in this environment; recycling, sustainable energy, retrofitting houses, education(for reskilling), security and legal services, exporting technology, .... Even making bicycles!
But I'd be very scared of the markets in this environment. Everything is overvalued by cheap oil except land and labour, so almost every company which was successful in the cheap-oil environment (i.e. for the last 50 years) will struggle.
So I can't see a real market recovery; I'd suggest a chaotic period of big swings, but a long, general underlying decline in the real value of pretty much everything.Except land and labour.
As far as society changing to the new reality, I think it will happen automatically as fuel prices rise. A doubling of fuel may not halve transport, but it'll certianly make a big dent, with all kinds of knock-on effects to people's lifestyles. Orlov makes the point of how fast people adapt to changed circumstances when they have to. You'll be surprised!
bureaucrat, would that not accelerat the very thing we are trying to avoid? If we stop/slow consuming ANYTHING, how many more unemployed or needy will be looking for goverment intervention. The suggested cure for our ails, is job creation, spending by the masses and increased tax revenues. How do we accomomplish this if we all hord and stop the excesses of living? Is it not fair to say our whole world wide economic system has turned into the end game of a pyramid scheme. We can't find any more gamers willing to pay it forward. More modernly known as a Ponzi! We are all on the wrong side of the big pendulum swing. We are in a paradigm shift that is hard to imagine the view from the other side. We need to act big collectively to make a difference. But we don't know if the vaccine we choose is going to kill us or cure us!
I see things almost perfectly, except that I cannot accurately predict the future. :) Stopping the buying of stuff we don't need or waste will indeed reduce the consumption of goods and services, and lower business income. But I see this as inevitable anyway. I am obsessed with the long term, and obsessed with exposing painful truth. And if something is going to happen anyway (energy price escalation, lack of money to buy trinkets and baubles, etc.), we might as well face it now than later, when the problem gets a lot worse. Paul Krugman is a famous economist that says we need more stimulus to get things going again. Sorry .. I'm not buying it.
Dear Jeff:
The worst is behind us? I can't believe what I am hearing. Is this you writing. I must have misunderstood. To this I would have to say that 'Prognostication is extremely difficult, especially if it's about the future.'
Best of luck to us. I hope you are right.
Chuck H.
CHuck:
I said the worst of the CONVULSION is behind us.
In other words, the rate of change will not stay the same.
We might even have a Quarter of "Growth".
I did not say we will have a "V" recovery and all will be 1999 again. Far from it.
I was trying to allert folks not to be fooled by media reports designed to get them to support rallies in asset segments that will only wind up harming them.
Post a Comment