We’re examining two charts, one is a Graph of world GDP versus equity prices while the other presents imports to rich and to developing countries of the World Economy. Unconvincingly, world GDP has been declining while share prices have gone through the roof. That parses out to say that the worse business gets, the more investors want to own it. If you believe that, you likely expect to fall upward. Nevertheless, stock prices have set new records as world business has declined.
The second chart, the first in a group, shows that imports into rich countries have been declining while those into ‘developing’ (i.e. poor) countries have been rising, an equally unexpected reality. Perhaps everything we’ve been taught all of our lives is false and we can indeed obtain something for nothing through the magic of “Progressive” politicians?
Hardly. While those politicians want us to believe, the facts are that GDP around the world has been falling in our present “recovery’ because we are in a continued decline, the ‘recovery’ is fiction. And stock prices have shot up because the U.S. Federal Reserve and the central banks in Europe, Japan, China and elsewhere have flooded the world economy with fiat money that has inflated stock, real estate and other prices with ersatz ‘value.’
The real world producers have been laying off people as production has declined; the ‘third world’ client aid recipients have sold into the resulting vacuum and inflated their own currencies; Argentina has just hit the fan, defaulting bonds. What the ‘developing’ folks have actually been importing, is unrepayable debt, something that the rich countries haven’t had to import since they were able to make it at home. The world economy resembles just now, a race to the bottom, which is one reason that President Obama isn’t sending the cavalry to rescue every settler threatened by the savages. He simply can’t afford it anymore.
He also can’t afford his social welfare largesse, nor can Europe but the run-up to an election is no time to admit such things. The Russian economy can’t afford to grab Ukraine, either but Putin is apparently betting that restoration of the Russian Empire will camouflage its costs to the citizens. Russians’ grasp of economics seems little better than that of Americans.
Billionaire investor George Soros recently bet some $2 billion on an imminent stock market collapse, an event that could restore reality overnight. He can afford to bet a couple of billion. If he loses, he won’t really notice. If he wins, many millions around the world are going to awaken some morning wondering where their savings went. (We mentioned this once before.)
Do examine the linked graphs … the money you stand to save, is yours. For now …