THE DEBACLE OF THE US ECONOMY
Submitted by Tyler
Durden on 04/29/2016
The
banquet of consequences is about to be served.
If we step back and look at what's happened since the
Global Financial Crisis of 2008-09, it's easy to see that the global leadership
has chosen to do more of what's failed spectacularly.
Signs of financial craziness
abound:
-- 25% of all stock market gains occur after Federal Reserve meetings: in
other words, central banks "own the market."
-- The Swiss central bank admitted to spending $470 billion on currency
market manipulation since 2010.
-- Other central banks have intervened in the stock and bond markets to
the tune of trillions of dollars/yen/euro/yuan.
-- The central bank of China has spent over $100 billion in a few months
propping up the yuan.
-- China has made it easier to borrow money again, sparking yet another
housing bubble in First Tier cities like Shanghai and Beijing--as if another
housing bubble will fix what's broken in China's economy.
-- U.S. corporations have borrowed billions of dollars at 1% to buy back
their own shares--a dynamic that may account for 50% of the current rise in the
stock market.
-- ObamaCare has added costs to the healthcare system rather than
reducing costs; though healthcare spending adds to GDP, it is a form of
consumption, not production.
-- Cheap credit enabled energy companies to boost production to the point
that oil is now in over-supply--and the need for revenues to fund the debts
taken on to expand production force producers to keep pumping.
-- Sweden has dropped its interest rate to negative territory, a policy
that has sparked an insane housing bubble
And this is considered sane and healthy?
In other words, central
banks and planners have generated enormous bubbles in debt, housing and stocks
to maintain the illusion that doing more of what failed spectacularly
will actually fix what's broken. This is crazy, because these policies are
what's broken. All these massive interventions and manipulations are driving
the system off the cliff.
Americans with
gold-plated healthcare coverage don't see what the system bills or what is
actually paid, so completely outrageous bills are commonplace.
(Note that
caregivers aren't necessarily benefiting from these soaring costs to consumers,
insurers, etc.--many physician correspondents have explained that their income
has declined significantly in the past few years, extending a decades-long
trend. In regions with a shortage of nurses, pay has risen markedly, but in
other regions, nurses' compensation has not risen along with higher healthcare
costs.)
Here is the craziness: nothing has actually been fixed in
the past 7 years.
Rather,
everything that was broken in 2008 has been ramped up to an even higher levels
of craziness.
The crazy
solution to bursting housing bubbles is even bigger housing bubbles (see Sweden,
China and the U.S.).
The failure of
central planning (super-low interest rates, easy credit, etc.) has led to
extreme extensions of the very policies that made the global financial meltdown
inevitable.
Yet strangely, we accept this craziness as the New
Normal.
People with demanding jobs
in Corporate America are working harder and longer for less pay (eroded by
inflation) to the point of physical, emotional and psychological exhaustion.
But the mortgage and bills must be paid, so they continue sacrificing their
health for the sake of supporting an unsupportable lifestyle.
We now have a TINA economy--there is no alternative.
People feel trapped, unable to choose
another way of living and another livelihood, because all the alternatives mean
sacrificing discretionary income--often by 2/3. The person earning $90,000 in
Corporate America or the government can only earn $30,000 if they bailed out
and took a less insane job.
Eventually, things start breaking.
The overworked person's health breaks.
The corporate bond market breaks, as debt that can't be paid is not
paid. Small businesses break, close their doors and the owners retire or move
on to some sort of work that is less stressful. The Venture Capital bubble of
throwing millions of dollars at Unicorn startups with no revenues breaks.
Blind, destructive craziness has costs. The supposed benefits of doing more of
what failed spectacularly are short-term, and they're finally starting to run
out.
The banquet of consequences is about to be served.
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