James Howard Kunstler, famous author and speaker, opines, "For now, the
'bottom' is in", which took me completely by surprise! I mean, how could
anybody in their Right Freaking Mind (RFM) think that "the bottom is in" as far
as the economy is concerned?
Of course, there may be lots of things that have seen their "bottom" ... Such
as crime, which is destined to soar as desperate people resort to desperate
measures, in a kind of "win-win situation" where the person either gets away
with the crime, or he doesn't, and if he doesn't, then he gets sentenced by a
judge to a bed, clean sheets, a communal crapper and three meals a day, free.
But most things have NOT seen their bottom yet, and are still
falling, falling, falling, like the economy, my pathetic career, my income, my
hair, my teeth, and my ability to control myself from screaming in Loud Mogambo
Outrage (LMO) at the economic insanity that has gripped the world, which has
NOT bottomed!
Naturally, I was just getting ready to fire up a scathing LMO missive to Mr
Kunstler to inform him of the Facts According To The Mogambo (FATTM), which are
that some hypothetical "bottom" is years, if not decades, away, which assumes
that the economy survives that long after being beset by outrageous fiscal
insanities from an idiotic Congress and a Federal Reserve that creates the
outrageous piles of money that finances it all, which, in a just world would
mean prison and utter ruination for them all. A pox on all their houses!
You can see how I was getting myself worked up, and so it was a big letdown
when I quickly learned, after I read further, that I had made a mistake! Oops!
He did NOT say the economy had bottomed, but "the bottom of this society's
ability to process reality".
Well said! And as a guy who seems to have a problem processing reality, I am
paradoxically Very, Very Happy (VVH) to hear this! Hooray!
I soon realized that he was not predicting some "miracle cure", whereby I
suddenly get along with family, neighbors, coworkers and Democrats, when he
went on to explain that "We're done doing business" like we did up to now, and
as one of the profound things that he calls "epochal discontinuities" for
starters he says that "The revolving credit economy is over."
This seems to go along with a recent report from Bloomberg.com that "Consumer
credit in the US contracted by a record in March after the jobless rate reached
its highest level in a quarter century and banks made it harder to get loans in
an effort to buttress their balance sheets."
So, how far did consumer credit fall? It fell by "$11.1 billion, almost three
times more than forecast and the most since records began in 1943", which is
not only a long time ago, but is also chickenfeed when you compare it to the
remaining $2.55 trillion in outstanding consumer credit! Hahaha! We're freaking
doomed!
And the news just keeps getting incredibly worse, as Old Bad News (OBN) is made
into Fresh Bad News (FBN) with the, ummm, news that "Credit also decreased by
$8.1 billion in February, more than previously estimated."
Oddly enough, consumer spending, which "accounts for about 70% of the economy,
rose at a 2.2% annual rate in the first quarter, the most in two years." Hmmm!
That "Hmmm!" at the end of the previous sentence can be interpreted various
ways, but in this case it simply means, "What in the hell is going on when
consumer credit fell by an astonishing $20 billion in the last Two Freaking
Months (TFM), and yet consumer spending went up?"
Bloomberg does not mention my clever use of "Hmmm!" or mention me at all,
actually, but goes blithely on that the $11.1 billion in decreased credit sales
was derived from adding "Revolving debt such as credit cards [which] decreased
by $5.41 billion in March" to "Non-revolving debt, including auto loans and
mobile-home loans" which "fell by $5.69 billion."
"Six of one, half dozen of the other," as far as I can see!
But with the staggering avalanche of money being poured into the world's
economies by central banks and deficit-spending governments, a Something Very
Bad (SVB) event is going to happen to a lot of prices, which will in turn cause
a lot of other SVB events until, well, just say it is ugly.
Thankfully, owning gold, silver and oil will make every day a beautiful day for
you if you, too, buy gold, silver and oil.
And if you don't, then it's back to SVB events for you, chump! Hahaha!
Whee! This investing stuff is easy!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2009, The Daily Reckoning.)
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