Calling a spade a shovel
In God we trust; all others must pay cash. — American Proverb
There are so many Tweets and blogs and YouTube videos of late that carefully talk about a possible stock market bubble. The words they use are most often so timid and gentle. Bottom line, in my view, the repercussions of the inevitable stock market crash are going to be intense. There is currently a serious party on Wall Street and a big hangover is coming.
I am no economist and most who know me would not even call me a businessman, but I do know bullshit when I see it. When there is no respect for the fundamentals, things will eventually get ugly. This is all about quantity, and when quality gets disregarded then nature has a way of stepping in. You can’t cheat forever.
Google: The debt-to-GDP ratio is the metric comparing a country’s public debt to its gross domestic product (GDP). By comparing what a country owes with what it produces, the debt-to-GDP ratio reliably indicates that particular country’s ability to pay back its debts.
From what I understand this number is an important measure of economic well-being, and according to the current figure of 136% America has a lot to be concerned about. And that means, we all do too.
Debt is all about living beyond your means. There are over 100 million Americans, for example, paying off a car. The illusion that this was this best economy before the shutdown is really about an endless debt system that was sustainable for eternity. But no party lasts forever. And also, there is the constant printing of money which will result in serious inflation. This is how it works. What one dollar will buy you a year from now will be a lot less than at present.
The thing keeping America sexy are the stock markets, which are being propped up by all this printed funny money. Massive QE is about trying to cheat nature.
For years and years, so many countries have taking on more and more of the US debt. Most places are in financial crises due to the pandemic, so taking on more US debt is no longer such a good option.
Debt amongst corporations is insane. The Federal Reserve is currently buying failing companies. “Junk status” amongst corporations is becoming more and more commonplace, and The Fed is buying. Default on debt is coming left, right and centre. The banks are setting aside massive loan loss provisions. We are seeing supposedly strong retailers folding all over the place. The Fed is keeping the illusion alive for the time being. They are supporting these corporations, which need consistent infusions of debt to be able to survive.
Since the subprime crises there has been little to celebrate. The rich have got richer and the working class have been squeezed to death.
And what about the unemployment … ?
The trend in unemployment is not about to suddenly disappear. Quite simply, a lot of the small businesses are exhausted. They did not have money saved up for the first shock. They made it through, by the skin of their teeth. And once all the stimulus and PPP runs dry we are going to see more business failures and layoffs.
They say that the US economy is a consumer economy
American consumer spending accounts for roughly 70% of the US GDP. The consumers are obviously not supporting the economy or else we would not need The Federal Reserve taking all of these insane actions.
If America is all about the consumer then put money in the hands of Americans. Stimulus for people, not for companies. Of all the free money that has been handed out, less than 5 cents on each dollar has landed up in the hands of the average American consumer. Giving money to companies with the hope it trickles down to the workers is not working. Bailout people, not companies. Consumers lead the way and drive all recoveries, so stimulate the consumers. It seems obvious.
There is about a trillion dollars of student debt that The Fed could retire. That would also fire up consumers I reckon.
Consumer sentiment is at record lows, and the worst of this recession has not even been felt yet. The end result will be a prolonged decline in the standard of living in America.
If a free society cannot help the many who are poor, it cannot save the few who are rich. — John F. Kennedy
Ah, to get back to where we were before … not that this was such a good place for millions of Americans. And that is the whole point. Corona did not cause this. Greed did. Corona has exposes and accelerated what is inevitable: history always repeats itself.
Millions of people are losing their jobs, and loans are not being paid back more and more. Home mortgages, car loans, student debt, general business obligations, credit card overdrafts, etc., are defaulting and in an alarming way. And when the funny money gets spent and people are still let go, what actually was accomplished? Unemployment is approaching 25%.
The stock market and the bond market should reflect the actual state of affairs on the ground, but right now it does not. The stock market is ignoring the logic of what is happening largely because of actions of The Fed.
If the stock markets were down, then the government officials would be more prone to act, but right now we are in this world where we believe if the stock markets perform then everything is ok, which is just not the case. It must be that America is run by rich people who are all invested in the stock market.
