I try not to finagle God.
Some days go better than others,
especially during elections years.
I ask that God’s will be done,
and I mostly sort of mean it.
To survive, natural systems have to periodically get their asses kicked. Without predators, deer will overpopulate, grow weak as a species, and perish for lack of enough food. Lucky for them, there are coyotes in the neighborhood to thin the herd. N. N. Taleb’s term for the phenomenon is Antifragility, a property of things that benefit from disorder.
Democracy combined with free markets is a formidable, and I would say natural system for societies to organize around to survive and thrive. But the solid values that inhere to it suffer over time as they devolve to what Pirsig called Static Values, a flawed body of concepts held to be state of the art for the system which, eventually, serve an ever smaller cohort of elites at the expense of the majority.
When such a state is reached, Pirsig’s observation is that a Dynamic Value will be introduced to force change. In the absence of coyotes, the disenfranchised sector of a democracy takes matters in their own hands, self-introducing the dynamic value. Revolution ensues. It is sometimes violent. It always brings about radical change. That is what this country has underway now.
A good friend reads my essays and refers to me as Mr. Apocalypse because he thinks I’m forecasting bad times. Forecasting? The fuck’s he think we have right now?
Household debt, at $12.73 trillion, is above the$12.68 trillion in 2008, when the economy was growing at nearly 3%, three times today’s GDP growth. The ’07-’09 Great Recession stands to have been the warmup for the depression we are now in and placidly ignoring.
The June jobs report out today revealed a loss of 367,000 full time jobs, offset by a gain of 133,000 part time jobs. The unemployment rate is reported as 4.3%, but average income is lower on an inflation adjusted basis than it was in 1973 because so much of the labor force is involved in part time work.
Meanwhile, 608,000 more Americans exited the labor force last month. A total of 94,983,000 souls in this country have given up on getting a decent job.
Globally, unfunded pensions are about to surpass $300 trillion, and that’s not counting $100 trillion in US government unfunded liabilities (Mauldin Economics).
The laundry list of economic ills besetting the global economies is the worst in my memory.
The analysis I base my observations on is forecasting profound disruption in the financial system, the economy and in politics, forcing an epic reset. Much of the debt outstanding today will default. Lenders will go under, pensioners will lose both principal and income, unemployment will soar, tax revenues will collapse, and, other than to say it will be radical, I have no way to imagine the politics of the nation at the bottom of the depression.
However, the same analysis indicates the nation will benefit from the disruption, fully recover, and be much better off than it is today. We are coming to an end of a Grand Supercycle Third Wave up. The Fourth Wave will be the down wave, the Antifragility wave, which will collapse of all the excesses that have built up in the system in the same way as the down wave of the 1930s. After that, it’s a new world with a fresh start for all, albeit from a lot lower base than we presently have.
Timing for the final stock market top is unclear. Best bet is still for one more short decline to complete a sideways consolidation that has been in force since late February. A lesser possibility is that the new highs right now will continue into the final high later in the year.
Can’t say that I’m looking forward to the immediate future, but I expect my grandkids will have a better time of it when they grow up.
Have a nice weekend.