In Data Front: We’re Not Seeing The Growth Economists Predicted, Lance Roberts points out that the great economic surge everyone is banking on for a jolly holiday stock market rally isn’t supported by manufacturing data.
. . . surge in demand isn’t materializing at the manufacturing level. For example, it is worth remembering that ex-government , which jumped $30 billion after being flat in the previous two quarters, the growth rate in initial Q3 estimate would be 1.3% rather than 2.0%. Therefore, that jump in defense spending, which requires manufacturing, should be showing a bump in new orders for manufactured products. . . Unfortunately, that has yet to be the case.
So this is how the government is keeping the economy from slipping into a recession. Print ridiculous amounts of money and shovel it to corrupt bankers who can funnel it to the pork barrel spending projects of their political buddies and make loans to wealthy friends who can expand their businesses to keep the huddled masses employed flipping burgers, and covert government spending programs that Bernanke tells us aren’t really spending programs that buy bad mortgage debt from the bankers, and make up the rest by spending billions more on an already massively bloated military budget while millions of Americans live in poverty and children are malnourished and lacking basic healthcare.
If the $30 billion dollars in defense spending saw no uptick in manufacturing, exactly where did that money go? Are special op forces being trained in long-lost esoteric styles of Kung-Fu? Language classes in Arabic? Social management classes in manners for how to occupy a country without pissing off its people? There is no real accountability to control waste and corruption in defense spending.
But there’s housing! We can get a great Santa Claus rally from manipulated, seasonally adjusted housing data!
while it is very true that housing and economic recovery go hand-in-hand, it is important to remember that the residential construction story makes up just a little more than 2% of economy and just 0.1% of the equity market. Therefore, even if the resurgence in housing activity is real, and sustainable, its impact on the overall economic recovery will remain somewhat subdued.
And by the way, where are jobless, in-debt, low-wage Americans suddenly getting the money to buy new houses and cars? The Fed?
In a brilliant article Coping With The Debt Limit, Fiscal Cliff Stock Market, David Kotok takes congress to task by creating the “charade” and “fiction” of a debt limit and fiscal cliff. We all know that the government is not going to default on its debt without at least attempting to print quadrillions more dollars, or plunge the nation into a depression by failing to kick the can down the road again on agreed upon spending cuts and tax hikes that will be altered and delayed at a later date.
Congress persistently acts in the worst interest of the country by using the debt limit as an excuse for brinksmanship confrontational politics . . . The debt-limit debate is a charade . . . The US . . . has never defaulted. But we do use this congressionally-introduced fiction to exacerbate political animosity . . . Fiscal cliff is another fiction . . . this is a charade created by the scoundrels that we elect to serve us in Washington . . . Democrats and Republicans . . . coalesce into a common threat to us by purposefully choosing termination dates that follow hard on the heels of elections. They exploit the short memory span of the distracted American electorate. Shame on us for having such short memories.
Shame on us. We allow our government officials to act like buffoons while insulting our intelligence. We allow them to print, delay, obfuscate, lie, con, manipulate, and whatever else they can get away with to remain in power while sucking vital energy from the country.
Why aren’t Americans furious about this game that is being played at their expense? American voters don’t want this charade, and they know the uncertainty caused by it is harmful to them.
We could chastise Congressional representatives, senators, and the White House and its advisors, each and every time they engage in these shenanigans. We don’t. American voters, CEOs, Wall Street investors, and the working public could make that chastisement a consistent, intense, and vitriolic affair. We don’t. Our so-called leaders could be told, “I am sick and tired of you manipulating the political process in order to create a crisis that hurts me. If this nonsense does not stop, you will not be able to convince me to be loyal to you because I am a Republican. You will not be able convince me to be loyal to you because I am a Democrat. You will not be able to convince me that you are responsible in the execution of your public office. Instead, you will have become my enemy. Therefore, I will vote you out. My most important political mission will be to get rid of incumbents like you who create a crisis when none is necessary.”
By creating unnecessary political animosity and gridlock over sham issues, government ceases to function in an efficient and productive manner. These charades feed the egos of politicians who seek to score political points over the opposition while failing to do their jobs, which is to responsibly make the hard choices necessary to govern and run the country to best achieve its potential.
That means rooting out corruption at the highest levels; saying no to wasteful spending that placates constituencies while the country falls further into debt; creating a fair tax system that forces everyone to pay their fair share, including the rich and those who do business overseas while enjoying incorporation in the US; paying debts from real productivity that puts people to work rather than through financial shenanigans such as money-printing and currency debasement; reining in our compulsion to treat every problem with military aggression; managing our need to secure and control everything that manifests in a global security apparatus that is quickly morphing into Big Brother with borderline fascist tendencies.
That’s just a start.
Mr Kotok ends his article with the optimistic assumption that “US GDP will grow from the present level of $16 trillion to about $20 trillion by the end of the decade”, and “the S&P 500 Index [will] close above 2,000 before the end of this decade.” I don’t necessarily disagree with that optimism, although I believe American achievement will come, not so much due to the “Federal Reserve’s policy [being] firmly in place . . . [and that] the Fed will keep interest rates extraordinarily low for a number of years,” but rather the technological leadership that the US enjoys which, contrary to popular belief, is increasing over the rest of the world.
While it’s true that America will flourish despite the corruption of its leaders, we should expect and demand more from ourselves. Stand up America. It’s time.