Coriolois Economics: Last Gasps of the Crack-Up Boom

You know how when you flush the (john/crapper/head/throne) how it begins to spin as it goes around prior to taking a load of crap out of your life?  Scientists call this spin-up the Coriolis Effect and around here we’re becoming terribly fixed on watching the opposite-acting effect in economics.  The one that will be lots of crap into our lives shortly.

The way this one’s going to work (take this to the bank) is simple:  Things have been flushed and now they are beginning to spin up nicely.  How soon, and how much crap?  Well, that’s why we watch the spinning actions so closely…

A key insight into how the coming end of the crack-up boom may be read in Wednesday’s Peoplenomics report [subscribe].  In it, the relationship between span of control and ultimate organization size is explored and the linkage between size-limited organizations is reviewed.

Thus, if we consider how the Second Depression will bloom a second time (2009 was the first flowering) and thereafter how FutureWar will arrive, we can see that the most-effective enemy attacks on America in the future will be on infrastructure that communicates command and control of the civilian population. 

But I’m getting ahead of myself.  There are several key stories this morning that are must reads if you are to understand the context what’s coming towards us.

imageFirst is the huge pending economic impact of the California Drought.  As you can see in the updated Drought Map released just a few minutes ago, things are still bad, still not raining.

We’ve been all over this story for weeks, but now it’s starting to claw its way front and center into the mainstream press.  The story ”Historic California drought called a red flag for future of US” in the Christian Science Monitor is definitely worth your time.

So is the PBS coverage of how the evolving drought is likely to drive up food prices this summer.

I’m not telling you to run out and buy a couple of Heirloom Vegetable Garden Seed Collection – Assortment of Gardening Seeds: Pumpkin, Tomato, Beet, Spinach, Eggplant, Corn, Kale, More for $17 bucks at Amazon, just because I have….you may not understand what “Grow food or die” means,  or you might live in a coop.

So we can put that one aside and label it “bad news in the pipeline.”

The next bit of bad news is coming from Nobel winning economist Robert Shiller, well known here for his Case-Shiller/ S&P Housing Price Index work.  While the MSM headlines are that he’s still invested in the stock market, and true ‘nuff that’s reassuring on the surface, if you track back to sources, you’ll see on this CNBC crawler the more revealing “Potential for another stock market collapse” Nobel winner.”

When one of these “smartest guy in the room” types, like Shiller, says he’s in the market but worried, it very much squares up with our Peoplenomics Trading Model which has been long for 13-months now and yet gives me The Willies every time I look at it.  Like Shiller, I’ve been long – and worried, too.

For now, I’m not worried enough to dump stocks and go to cash, or short.  A reasonable present expectation is that the World Economic Forum in Davos will come out with some serious platitudes, that the Fed will do nothing but more talk next week when they meet, and that the market is poised for another explosive upward burst on even tiny scraps of good news.

You can see that already if you remember the slogan  techs lead the way.  While the Dow and S&P simmer, we notice how the NASDAQ just hit new 52-week highs.  That says more crack-up boom is to come.

But by late summer, at latest, the “new top” may be in, and when it arrives – anywhere near these levels – it will score approximately a massive (inflation-adjusted) double top with regard to the peak of the internet mania in 2000.

At that point, we will likely see the really bad news come pouring out as fallout of today’s ill-advised policies…so we’ll look at some of that next..

Bad News ‘Bamacare: Bye-Bye 40 Hour Weeks

If you’ve taken the time to read through the Obamacare legislation (ACA) something becomes very clear.  In a back-handed kind of what, the legislation could be exactly the kind of carrot and stick that eventually ends the 40-hour workweek for good.

Good news?  Well, not if you end up having to work two gigs…just to “stay legal.”

How so?

Well, under the law (at least my read of it) employers won’t have to give healthcare benefits to people who are working part-time.  That would be 30-hours per week, or less.

We have already penciled in how many major employers of minimum wage workers will be ending healthcare options, and that’s doubly true for minimum wage workers who may get a bump to more than $10-bucks an hour under legislation presently pending in congress. Doesn’t seem to have killed San Francisco…the drought will do that.

But as a recent article in Reason notes, many CFO’s are looking at their soaring healthcare costs and and trying to contain their labor costs.  One of the most effective tools?  Go to 30-hours a week, or less, and simply not pay.  This seems to be what’s coming.

If you need some backup to that, check this article in the Washington Post.

As you’ll begin to piece together, paying 18-28% of your income as income tax PLUS now another 9.5% or more in healthcare, means that Tax Freedom Day is now likely to move to the second half of the year for a lot of people.  Especially those who living in heavy sales tax states where a further 9-10% of all spending goes to state government.

Sooner, or later, this hard reality is going to show up in economic numbers and when it does, all hell will break loose in the markets. 

But not yet…for now, it’s only the first waves of disappearing healthcare.  But the time of working half your life “for the man” seems to be quickly approaching.  Disposable income has become “dictated spending.”  Last time I checked, that wasn’t the definition of “freedom.”

But I might be the last guy standing who can read the Constitution and the all other powers not so enumerated as reserved to the states part, bleeding heart do-gooders aside.  Runaway Congress, runaway Presidency…lost country.

Then There’s the “War Ticker”

Contrary to the impression that the Obamanistas have tried to give, Iran is making it very clear this morning that they are NOT planning to dismantle anything associated with their nuke program.

So after the next leg down of Depression 2 plays out, the Middle East will be ready to light off, if we don’t accidentally slip into global war ahead of that.

Say, this really makes you want to jump out of bed and go do 8 for the man, don’t it?

A.M. Lingo Sling

Meanwhile, all the drought, Obamacare, and war in the wings is one reason why “economy” are coming back up in the Nostracodeus data runs from overnight.

The “arrested” language this morning seems to involve Justin Bieber’s reportedly being popped for a DUI down in Miami Beach.

You’d think these well-heeled types could afford a cab or a limo….but who knows?  I’ve long noted that the relationship between income and IQ/decision-making skills is often a soft relationship.  Luck seems to play large, coming or going…

Chillun

It’s still cold in the Northeast.  Accuweather’s thinking into early next week

Job Seeking

Can’t help but toss my hat in the ring for NFL Commissioner, now that word’s out about that $29.5 million cush-cush grind. 

I’d do the job for half that and donate the rest to charity.

But as we’ve preached many times, we live in the land of Bread and Circuses and this is clear proof for where the bread part is going…

As if recent legislative history doesn’t call into question the intelligence of the collective Fools on the Hill, granting special tax status to pro sports of any flavor comes down to guess which word?

Bullshit, plain and simple.

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