A long evening driving up to Hill’s Resort at Priest Lake. It was startlingly deserted. The food was superb, but the room was eerily empty. maybe it’s too early in the season and maybe it’s because bitter weather is forecast for tomorrow…Snow on June 26!
When my wife and I arrived home, we watched a stunningly upsetting documentary about Poland under the Nazis. Just incredibly horrible.
I opened my e-mails to receive a letter from a dear friend and brother expressing his fears about the economy and political leadership. He is a genuinely brilliant man and his concerns echoed my own. This is what I wrote back to him:
I agree with every word you are saying. A major blow up in Europe seems inevitable.
And a default far in the future for the USA also seems inevitable.
And I wish I had more cash and in the morning perhaps I will sell some stock and raise more cash.
Every point you make is powerful and valid.
As to President Obama, he is (as you say) clueless, just hopelessly out of his depth.
On the other hand (and I may be whistling past the graveyard here):
92 % of the labor force is employed, far, far above depression levels.
U.S. major banks are far stronger than they were four years ago and none of them will ever be allowed to fail unless true madmen are in charge (not impossible).
The housing sector is showing signs of life, albeit faint.
The ag sector is strong.
The minerals sector, while weaker than it was six months ago or even two months ago, is still strong.
There is still sufficient buoyancy in the economy to allow major bubbles in social media, which is not typical of a truly depressed market.
Despite our fiscal problems, U.S. sovereign debt is still what the whole world wants. This is a good sign.
China has slowed markedly and will probably have a property crash. But the Chinese government is extremely flush and has shown considerable ability to withstand shocks to the economy and pump it back up.
The typical course of a recovery is that it comes when things look bleakest. That may not be true this time, but saying, “It’s different this time,” is usually wrong.
That being said, I am worried and genuinely afraid for the future of this country. And, yes, although payouts are low, people must have them, and must have cash.
We lack inspiring or even intelligent leadership. This genuinely frightens me. We are a great nation, now being led by punks. Europe is far, far worse. They seem to have zero idea that a major crash anywhere in the Eurozone will lead to bank failures and then to wild political upheavals. That’s how we got Nazi rule in Germany. Terrible economic conditions caused by monetary crises caused by failures of international co-operation…and unemployment disaster in Germany after the bank failures and then Hitler to “fix things.” Can it happen again? Why not? People are still people and respond with rage and fear to suffering and uncertainty.
It is scary and it’s sad.
That’s what I wrote to my dear friend. In the meantime, I wonder who Mr. Obama is listening to about the economy. He seems out there in outer space campaign land by himself. Who is advising him? That’s a question John Coyne posed some time ago and it’s a good question. And, as my pal Phil DeMuth said two days ago, “Didn’t Ben Bernanke promise to throw money out of helicopters if things got really bad? What is he waiting for?”
Scary and sad.