Is The Economic Sky Falling, Or Settling Gently Upon Us?

Sky is FallingEminent financial guru Bill Mauldin is a professional pessimist; his sky is always falling. And he is as knowledgeable as financial folk get. So when he predicts an eventual end to debt and deficits as a transitional  whimper rather than a bang, it’s worthy of some attention.

We are not widely read financial gurus with impressive fees for our appearances in public. Nevertheless, we differ with Mr. Mauldin. We see a definite bang. followed by lots of whimpers for a long time as the world’s economy dwindles while it sorts out decades of political mismanagement.

For openers, Mr. Mauldin buys the governmental stats that deny inflation among us, on a world-wide basis. We, having followed our spouse around supermarkets and drug and other stores providing consumer goods, laugh at the governments’ claims of quiescent inflation. And knowing that our top politicians tell us we can keep our doctors, why would anyone expect us to believe anything put out by government? Fool me once, shame on you; fool me twice, shame on me, right?

Mr. Mauldin’s analysis mentions the reaction of the bond market as a counterweight to endless debt as it becomes visibly unrepayable but he gives that shorter shrift than do we. And he dwells but briefly upon the stratospheric levels of the stock market in a time when real values of business assets are static or declining. So, if one sees a stock market collapse as a a bang, that is what we expect. Followed by a long period of much whimpering from all directions.

We will proceed even further out on our limb and add that we expect it on President Obama’s watch, too. He seems to us to be undergoing a setup for discard anyway, with the 2016 election and the Senate up for grabs. Unless the Dems want to be stuck with the next Herbert Hoover, they need a wall around Obama, to protect the rest from contamination. The GOP wants a Democrat in the White House when the economy hits the fan; one Hoover was more than enough for them.

Certainly, we know nothing; Mr. Mauldin may be correct and the U.S. economy will dwindle off slowly like an opera tenor claiming too many encores. But given the declining U.S. living standard, the gulf between the U.S. government and its electorate on immigration, energy policy and the reasonable aspirations of Americans, we doubt that. We believe that what goes up, still faces coming down later and that reality and sound money have been abused, not repealed. The sign says: “Rough road ahead!” (Reality has not been repealed.)

The stock market still offers gains for the expert and the lucky but if you are a percentage player, we don’t se that as the way to bet, our respect for Mr. Mauldin notwithstanding.

But we’ve been wrong before, our spouse reminds us regularly lest we forget.

 

About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Debt, Deficits, Economics and tagged , , , . Bookmark the permalink.

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