Come to think of it, they are the same problems (mostly) that we had back in 2000 when the stock market fell into major decline and (oh, so mysteriously) along came terrorism and the security state to create instant employment and spin the country around into a new bubble – the Housing Crisis.
There are many ways to figure where we are in history: I mean, there’s a case that we’re already in the Greater Depression as lifestyles are not getting much (if any) better despite additional work. I look at this as either (long list here)…
- 1936 with an immediate downturn due this spring after nominal new highs, on the theory that the Fed and Washington managed to paper-over the 1929 part with the terrorism/security state industry. Or…
- It could be 1927 since the charts actually line up better, but not on an inflation-adjusted basis. Or…
- We could be writing a whole new kind of history because never before has a central banker just “made up money” (via quantitative easing) and shoved it into the financial markets, which is what kept the oil bubble going.
What we see before us now is that oil (sans free speculation money) has dropped to something approaching a realistic price. When you look at how monetary inflation has been screaming along in background, you’ll see that M1 was up last year 9.5% while M2 was up 5.8%.
Only a damn fool would argue the point that if M-whatever is up….call it 7%….and inflation is running (by the cost of living 1.8%) that pernicious, grab you by the hairy-parts, deflation is rolling along around 5%.
And that problem will continue into the New Year with us.
Eventually, someone besides US will wake up and figure this out, and as they do, we keep coming closer to Ure’s Discontinuity.
But when prevailing interest rates drop to 1%, it’s obvious that in that kind of world (don’t look, we’re on that planet right now) the value of a stock runs up dramatically.
In point of fact, many companies are not earning as much as they once did. Nor, because of disposable incomes collapsing, have they really had any greater sales volumes. All of which, any third-grader knows is not the sign of robust companies.
What HAS accounted for the massive run-up in the market is what?
The declining interest rate environment.
When you look at the 10-year US Treasury, at it’s longest zoom-out (over here) this is one chart that really defines where we are in the economic Long Wave, it’s obvious (all other things being equal) that stocks SHOULD have rallied since the interest rate peak in the early 1980’s period.
When sober-minded people (like me) look at the chart, and see how we have see the 10-year in decline for this long, there are few questions about what’s going on.
Some might look at the market”mini-melt” of 1987 and wonder if that was something of importance. Sure, it was: That’s when inflation expectations went through an initial cooling.
But that wasn’t anything at all like a real ass-biting pit bull of a real long wave bottom will be like. No, no, no!
That’s going to be the “makes your hair stand on end” because people who have salted money away in banks and so forth will have to deal with a confiscatory government. Just like in the 1930’s when both gold and silver were “called” – there was a serious government need for wealth and it was simply confiscated.
As luck would have it, that won’t be the case this time. Instead, government will most likely draw out money directly. If you missed the Cyprus example, you missed some major/key learning.
It is not too late to go read old news articles on how the year of Cyprus losing deposits worked out at a practical level. This old Forbes article is a good start.
For the opening few weeks of 2015, we could see the markets trade sideways, or even up from here. Then, we should have another major “downer” perhaps bottoming out in May – that remains to be seen.
What will be critical this year will be how low we go. If the first decline of this year takes out the S&P lows of 1,866’ish (October 2014), then we would likely see a very playable rally, but this could then turn into “the Big One’s” first wave down.
We will run out some of these numbers for Peoplenomics readers in tomorrow’s report, and go into “Ure’s Discontinuity” in more detail.
But the main thing to be aware of – as markets begin trading this year – is that there are serious economic problems ahead in 2015, not the least of which will be lifestyle preservation.
A dozen years back, I was warning you (or earlier readers, sorry you missed the “heads up!) that the next problem to come along for the economy would be this thing I called the “Debtberg.”
Like the Titanic, the US economy had become (and was about to become even more-so) dependent on cheap money and untrustworthy debt.
What I predicted back then (circa 2001) was that this Debtberg thing would “rollover” just as icebergs do.
Now, what we see if a similar situation developing with regards to jobs and employment.
Automation, ERP, Robotics, are all expected to reduce the number of jobs available by 2025 to one-third less than there are today.
A quick summary of “robotic replacement” articles and implications is beyond this morning’s report, but believe me when I tell you: The US economy utterly fails when there are not enough jobs to go around.
What’s more: In order to make up work, we can plan on seeing things like mandatory job-sharing in government, since it’s an easy fix. If you’re a single 40-hour worker, your gig could become two 20-hour workers. Laugh not: Job-sharing was a key feature of the Great Depression and it’s an almost unavoidable projection from hitting the automation-driven Workberg.
Oh, and did I mention that would also reduce government’s future liabilities? Part-timers don’t have to get benefits, even through there’s almost a $3-dollar per hour bonus being a federal “minimum wage” worker, already.
The Great Depression of the 1930’s was a different critter than what’s ahead for us over the next couple of years.
I will continue dutifully telling you about lots of human-interest and personal growth (and motivation) in our “Coping” section reports starting next week.
But the very first message of the New Year, my dear reader, is that while it may seem like Ures truly is a mellow, easy-going, laid-back journalist, that’s not the whole range of his skillsets.
There’s another part that’s not-so-flip, not to boisterous, not so quippy: That’s the considered, deliberate-in-research and reasoned in conclusions fellow.
That part of the “whole me” is scared shitless about what could go terribly wrong over the next three years as we face “the Discontinuity.”
The really good news? I mean, such as it is?
We’ll find out very specifically what our metal is; although if Ferguson, blessing illegal immigration as OK, and watering down the money so as to maintain an illusion for a dying economy is any indication, my worst fears seem more like reasoned concerns than knee-jerk panic attacks.
As much as the Debtberg was 7-years ahead of the Housing Bubble collapse (with bad debt its key feature), so too we may be way early on the “Workberg.” If we are, so much the better.
You may still have time to get out of debt, downsize, partner, and build a sustainable lifestyle. But as was the case with the Debtberg, you’ll have a choice to “Be on the bus, or under it.”
We all pays our money and takes our chances.
But the odds in 2015-2018 absolutely suck.
Some Detailed Outlooks
As you know, I’m a big fan of predictive information leaking out of dreams. For this reason, I’ll refer you to the National Dream Center outlook for 2015 which Chis McCleary as so ably compiled over here: http://nationaldreamcenter.com/wp/2015/01/proj-ano-results-predictions-for-2015/
And let me begin the new year in proper form by acknowledging the ceaseless work of Grady at the www.nostracodeus.com project who had made much of my work easier, as well as providing the data tools that held Chris pull the “essences” out of dream reports without having to manually spend an impossible amount of time reading and re-reading for content.
Gentlemen, start your SQL’s.
Write when you break-even.