Meanwhile, no one seems the least bit interested in the really big news:
This boom is a fraud.
The Theology of Capitalism is a false god.
And the prosperity that Americans enjoy today is a swindle.
We've been saying so for the last eight years. (Yes, this month marks the eighth anniversary of The Daily Reckoning…which is why we're taking a two-week vacation; we're tired!) But now it's official - the New York Times said so - the average American earned less in 2005 than he did in 2000. Incomes went down only one single year in the last half of the 20th century. But never five years in a row! And this was when the housing boom was in full bubble mode.
Let's see, the average guy went further into debt during the period…while his income went down. If he isn't poorer, who is?
And yet, the average guy thinks he is getting richer. He's got more stuff…including a bigger house…and more cars. And practically the whole world thinks the United States has a dynamic, prosperous economy. But if the average guy gets poorer during the biggest boom in history…what kind of prosperity is that?
Allow us to answer our own question: It is flim-flam prosperity. It is the kind of prosperity you feel when you've just bought a doublewide trailer with a subprime ARM. It is the kind of prosperity you get when you take a trip to Europe on your credit cards, expecting to refinance your house when you get back in order to pay off the debt. It is the kind of prosperity that turns you into a pauper.
Not only is the average guy unaware that he is being swindled, so is the average investor. He sees nothing wrong. In fact, what he sees is that nothing CAN go wrong. (But he is ever in for a rude awakening…check out the full report on the lies Washington tells to keep us spending into oblivion here.
We were shocked yesterday when a fund manager, on vacation in France, stopped by the house to chat.
"Do you really think we can have a major correction?" he asked. "I think it is almost impossible. A major correction requires a fall in the supply of money and credit. But every central bank is putting out more and more money and credit. And they've shown that they will put out as much as is needed to keep things moving along. I don't think we'll have a major correction any time soon."
He has become a true believer in the Theology of Capitalism. He thinks the old-timed religion, with its fire and brimstone…the capitalism of delirious booms and cranky busts… has been replaced by a kinder, gentler variety…in which central bankers make sure no one suffers, ever.
An investor's Valhalla…a speculator's Elysium…a debtor's Eden…right here on planet earth. Gone is the nasty business cycle. Banished are bear markets. Forbidden are credit crunches, bank failures and rising unemployment.
Oh, dear reader…we can stop writing The Daily Reckoning right now… Our moment of rest has come. There is nothing more to be reckoned with.
*** Twice as many houses were foreclosed in July '07 as July '06. Default notices were sent to 180,000 people. Repossessions are up 93% from a year ago. House sales are at their lowest point in four years…and there are expected to be 2 million foreclosures this year.
Could it be that the poor, average American will be finally awakened from his dumb sleep by the sound of the housing crunch?
And some advice for Republicans:
Since few Republicans know what conservatism is, we will spell out a program for them:
1) Balance the Budget
2) Cut taxes
3) Don't meddle in anyone's affairs, domestic or foreign, unless you really, really have to
There, that's simple enough even for a Republican. And at least it would give voters a real choice.
Could this sort of program catch on? No chance.
Because too many people have come to expect something for nothing. No one wants to balance the budget, because then the government would have to curtail its program of bread and circuses. No one in government wants to cut taxes, because it would mean less money for the government to spend. And no one wants to stop meddling in other peoples' business - it would mean giving up too much power and money; what would all the lobbyists, consultants, lawyers and war-profiteers do?
But what about when the middle-class realizes it is getting poorer? Won't voters demand a change of direction?
Yes, they probably will. They will want "Relief!" They will want moratoria on debt collections and foreclosures. They will want lower rates from the Fed and higher spending from their government. They will probably want more war too; bellicosity is the traditional refuge of scoundrels and bankrupts.
No comments:
Post a Comment