Markets: Time to be Paranoid?

Although people use the term pejoratively, the word Paranoid is not a bad thing.  If it’s fed with actual life-experiences, it’s a great example of how the human species learned to avoid injury (and death) in our formative millennia.

I mean, you stick your hand into a bee hive – resulting in a massive bee-stinging attack (worse: swarming and death) – you’re going to learn from the pain.  Next time a buddy says “Get me some honey from that hive, why don’t you?” Paranoia cranks-up and you tell ’em “Piss off!

In the stock market, people don’t always take “the long view” but in terms of overall returns in life, being an ultra long-term investor makes sense.

Therefore, when you look at where the market closed last week and compare it with 1929, it looks like this:

Many economists don’t like long cycle work because it’s not well-understood how to harness the power of “going with the long-term trends.”

So when I catch an article like “‘Father of Reaganomics’ says ‘get out of the market’ — bond and stock market — ‘and put your money in cash’” I look at it from as pragmatic a viewpoint as I can muster and wonder if David Stockman is being paranoid or whether there is something to his warning.

I don’t know if you’ve read any of Stockman’s books (there are several) and paranoid is not a label I’d pin on him.  Because, I suppose, I’ve read several of his books and they read like fine wine to a certain economic skeptic  (ahem)…

Some of his books are self-critical: “The Triumph of Politics: Why the Reagan Revolution Failed.”  Which goes hand-in-glove with his optimistic “Trumped! A Nation on the Brink of Ruin… And How to Bring It Back.”

Then something happened.  Like our view, Stockman’s evolved into a kind of “sand in the gears will break things” line of reasoning in “The Great Deformation: The Corruption of Capitalism in America.”

Even more interesting is that Stockman then continues to sense America’s growing frustration with the ongoing corruption of politics and leadership in his “Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA.”  (This is the one I’m wolfing down now as time permits now.)

The Crooked “Virtuous Cycle”

What’s not explicit, though he’s moving in this direction, is that we have moved out of the “real” world and have moved into one where everyone knows the system is broken, but in massive denial-fashion, we simply rewrite a few rules and keep things going via bad policy rather than honest values and money.

So why talk about Stockman, paranoia, and the victory of political money over sound money rather than focusing on the Housing data or this morning’s Chicago Fed report which we’ll get to in a sec?

Because Friday the Bureau of Economic Analysis releases updated GDP data.

People (in government these days) don’t like to mention specific numbers. Instead, in a PR policy slightly reminiscent of the Former Soviet Union, they refer to “percentage gains” rather than absolute numbers.

So, just as collectives reported perpetual percentage gains, so too, the US economic data is parsed down to percentage because (to quote a movie line) “You Can’t Handle the Truth.”

Which can be found way down on Page 9 of the last detailed release of GDP data.  It says (top line) that Q3 that the US GDP was $18.665 trillion dollars.

The reason this is THE DIRTIEST SECRET AROUND is that with the current Federal Debt to the Penny report showing total debt at $22.039-trillion, n We assume you know that even this number falls into the “not quite honest” bucket?

Reason is that this is principal only and doesn’t include a larger amount of promised interest.  It’s like the “pay-off” on your home.  If you were to pay it off today, maybe you’d write a $100,000 check.  But, in reality, since you have no serious prospect of paying it off, the real debt number is the $100,000 of principal plus another $125,000 of interest for a total (IRL) debt of maybe something like $225,000.

Government does the same thing:  Talks about the payoff number only, but since we DON’T HAVE $22-trillion laying around the HONEST number if more like $55-trillion.  Following?

But that’s not my point (though it’s one to be aware of, for sure).

The real point is when we divide the real GDP into the real debt, we find what?  1.180766139833914.  Slide the decimal point two places to the right and we know as of this morning, the most current data says we are bankrupt in the sense that our debts are now 118 percent of what is effectively the income number.

Debt is 118% of GDP – which is the kind of level from which massive declines begin.


While we wait for sobriety to return to markets, the Chicago Fed National Activity Index is out.  And not so good…

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.43 in January from +0.05 in December. One of the four broad categories of indicators that make up the index decreased from December, and two of the four categories made negative contributions to the index in January. The index’s three-month moving average, CFNAI-MA3, decreased to a neutral reading in January from +0.16 in December.

Which means – simple enough – that we’re sliding a bit.

Does that worry the crack-headed market?

Nope: Dow futures were up 164 points and outfits like CNBC are focusing on stories like “Warren Buffett says he was close to making a ‘very large’ acquisition in the fourth quarter” which are now unlikely, but toss in strength in Intel and GE today, and its oh so easy to overlook the fact that “Growth Has Left the Building.”

Such are Wave 2 bounces,  we reckon.  We knew this last week, for example: Wall St. set for strong open as Trump delays tariff deadline.  But that means its a negotiating slug-fest and Trump may be out-classed by China.  But bubble-on is the hype and the market’s up again at least for the open.


In our Also Worth Knowing scans:

Speaking of Warren Buffett, he’s sounding more and more like he’s still in bed with the radicalized Left when headlines like this pop up: Buffett says wealthy Americans are ‘definitely undertaxed’.

We call bullshit of course:  We’re not under-taxed.  We’re “over governemented.”

Sideshow is still open for the weak of mind: Chicago police say they have more evidence Jussie Smollett staged hate crime.

Off to breakfast with (wait for it) moron the ‘morrow.

32 thoughts on “Markets: Time to be Paranoid?”

  1. “Paranoia cranks up and you tell ’em ”

    Show me how……

    I never did get the sacrificial bombers and terrorists.. that are told how lucky they are and that they get seventy two virgins.. the old men stay at home while the young men and girls go out and do this evil for them…( women and children don’t have any value as a rule.. the religion of peace you know I heard that once)
    why in the world no one tells these old evil men.. say I love the idea would you show me how its done.. you can have seventy two virgins yourself.. the same thing with war..
    we have some idiot sitting back in his den planning these evil acts.. and manipulating countries to bid his will without ever saying.. hey lead the charge we are confused at just how you want us to proceed so get a uniform on and show us how you want it done..

    Nope.. usually those people and their family members are tucked away someplace safe.. and if a family member is in a military position they to are usually put in a position of safety while we the minions go out and do their bidding..

    that is what I seen with NK leader kim.. he is just a little guy a small country.. he knew that the puppeteers wanted his land for the lithium.. and he knows they don’t care who they destroy kill or maim to get what they want and will use anyone they can to do it.. they play both sides as well.. so they are not only the instigators and perpetrators but no matter what the outcome they are winners.. so he would threaten.. hey bring it on.. I will make sure your places are the first target on the strike list.

    if you notice things calmed down a mite after that, especially no one has ever brought it to their back door in recent history that I know of…Not to mention the DJT has been working on easing the tension and gotten a lot accomplished as well..

    • Anon: Just as the Dems are playing PT in Washington, Russia, China, & NK are playing PT globally. His strike list is a hollow threat. With China he keeps changing the rules so he can back off. They all know he is a paper tiger. He has no game plan; he just wings it & the result is a disorganized Global Policy. Unfortunately, PT will accomplish nothing at home or globally. I had high hopes for PT when he entered office. The only thing he accompliahed was his Tax Scam Act to benefit him & his rich friends. He has botched health care reform because he had no idea how to reform it, & the Wall when he had a Republican controlled Congress & Senate & then signed a Wall Bill that was worst than he had been offered pre shutdown. The writing is on the “Wall” as they say.

      • ECS.. I wonder if the paper tiger is negotiating similar to when I was a child.
        If I wanted a dollar for something I would go and ask for five. He would give in and I would get two. He felt like he got a relief and I got more than I originally was wanting.
        I’m willing to bet that’s exactly what he’s doing. Ask for more than what he is really expecting. That aT both parties leave the table feeling as if you came out ahead.

      • I believe that The tax scam act actually went through that’s affecting him and his rich friends were voted in by congress in the form of a spending bill a couple years ago.
        Knew it was coming and hey.. Not all of it has been implemented yet.

      • The healthcare reform is simple. One paragraph and would be a major upset to congress.. They wouldn’t ever allow it to happen

        Open the borders..
        For medications and insurances.
        Price controls on services.
        A medication for thirty dollars in Canada should not cost an American ten grand.. A bandaid selling for 2 cents at the store should not cost fifty dollars at the hospital.
        A policy available in Texas should be available in new York and if the borders are opened then a company selling a policy sold in london should have the right to sell it here. No price gouging..policy a should sell for the same amount to everyone. If costs go up they should go up equally to all customers.
        NO DISCRIMINATION anyone wishing to buy policy a should pay the same.
        Since the I durante companies wrote the health bill my guess is they wouldn’t like that.
        I made it a third of the way through the bill and gave up. It would take a team of hat car lawyers to decipher that guess is if the truth was known for sure with all the referrals to different policies and provisions the total bill is someplace around fifty thousand pages..

      • @ ecs

        You do realize that the DS and most of Congress has been against this president from the beginning….BOTH parties and the MSM have been lined up to LIE about everything and Divide this country to a point of NO RETURN…we are there now and for the next two years we will have to listen to the LIES about how great socialism is and how great it will be for AMERICANS while at the same time TRASHING this President.;;;;The ENEMIES of Freedom , Liberty , your health and wealth are in this CONGRESS and the MSM…and they will never stop till they are in Control ….and you and I are obeying them….I choose NOT obey….soon we all will see where that leads to….Semper Fi

      • Yes d. But PT was supposed to lead, but has proven to be an ineffective leader, do to his inability to strategize a workable plan. His ego got in the way & the Dems steamrolled right over him. He deserves what he is getting because he did nothing to stop it but tweet. He should have listened to his advisors, they are smarter than him but he won’t admit it.

      • @ecs

        The Presidents ‘advisers’ …ARE the DS and have been ‘given’ to him to box him in and curtail his efforts to right this ‘ship of (evil fools )State’…my ‘hope’ is that the Q team will prevail and indict ALL those that have conspired to bring this President down and MORE importantly.. those that have worked to ENSLAVE the citizens of this country and most of the world..NWO for lack of just plain EVIL satanist….

      • ECS: “Yes d. But PT was supposed to lead, but has proven to be an ineffective leader,”

        …And you know this, how? Because some one (or some dozen) in the Marxist media-entertainment complex told you so?

        When is the last time you dropped in on which is the ONLY SITE IN THE WORLD that lists the accomplishments of any current Administration, without bias or prejudice (provided one reads the official releases.)

      • Yes Ray… A leader should lead. Unfortunately those that should be supporting him..aren’t their support is somewhere else.
        I am sure he thought at some point someone would take a stand with him as He made the emotional rally cries to stand united. Even on subjects everyone agrees with.. That is his fault. He underestimated just how deep the puppeteers had ties and control. As a leader you cannot underestimate your adversaries.
        They always told us that if you see the rats jumping overboard.. Follow them. The same thing with a leader if when you turn around and everyone is running might be wise to follow them.

      • “Yes Ray… A leader should lead. Unfortunately those that should be supporting him..aren’t”

        Ding, ding, ding… We have a winner!!

        Mr. Trump may be the best leader this nation has seen since Washington. He may be the worst since Harrison.

        How would you, or I, or any other honest person, KNOW?

        The Mainstream “press” is hellbent on destroying DJT by any means necessary. One of the tools they use is “censorship and thought control by exclusion.” They say nothing about anything he does, until it can be spun into something negative. If it can’t be spun, it is NEVER mentioned.

        If it is never mentioned, the only place to find it is the official presidential record.

        If it is twisted, distorted, or grossly misreported, the only way to find out is to compare it against the official presidential record.

        The only place to find the official presidential record is at

        Mr. Trump doesn’t write it… However, neither does the media.

  2. Tim Heulskamp, writing for the Heartland Institute, observed that there are certain “ideals that have made America exceptional: self-reliance, a fierce commitment to individual liberty, intellectual and religious freedom, and market capitalism, which has saved more people from poverty than any other economic system in all of human history.” The socialists troll bait such as “free college, universal medical care and government cash payouts” to their coalition of the disaffected. The promoters of socialism fail to detail how these luxuries will be afforded and who, precisely, would afford them to the budding collectives. Socialism will decidedly quench the very engines of capitalist innovation which fuel the nation. In less than a decade, America’s light of liberty would dim and ultimately extinguish should the Republic not wake up and rise up to crush socialism’s venomous head under the heel of a free enterprise motivated democracy.

    “You will be hollow. We shall squeeze you empty, and then we shall fill you with ourselves.”
    ? George Orwell, 1984

  3. George. Not tracking you here.
    So we add $2 trillion to our national debt in good times overwhelmingly for rich people.
    Which makes us a bankrupt nation.
    And your take away is that we are “over governmented?”
    Best, Mike.

    • If only Donald Trump had not endorsed a tax cut that let people keep more of their money we would be well on the way to solving income inequality, the national debt, climate change and the cure for cancer! Best, Mr. Wacky

      • Me. Wacky,

        Get your facts straight. That did not happen. Trump robbed Peter to pay Paul. “Some” Americans may have received a few bucks more in their paychecks…but will have to pay it all back when their taxes are due. Refunds are nearly 20% less…I can guarantee you that these same people didn’t have an increase in their paychecks that will make up for that loss.

        And…for those that usually have to pay taxes at the end off the year…be prepared for an increase in payout to the IRS. Up to 15% so far and growing with each filed return…The IRS predicts a record number of extensions this year, as a result of the inability of middle class America to fully pay their tax bills this year.

    • My take on it Mike is the bottom line is..
      We have been Kiting the economy and neglecting our country and infrastructure.
      So.. we are at this point of our current civilization..


  4. Obviously we are headed to a culling of the idiot class, because when the next great war begins, they or their children, will be the ones fighting it !!

  5. Draining the swamp is like looking for gold on Oak Island. Too many barriers, unforeseen dangers, rabbit trails, etc. Either we learn to live with it or demolish it and start over — but where are the Hamiltons, Jeffersons, and Washingtons?

    • Richard…I doubt seriously that the swamp will ever be drained..But On a positive note though .. I’m betting that they’ll uncover a great deal of what went on on oak island..
      I don’t miss an episode and would love to go take a peek at their progress.
      My wife’s uncle after he retired as a hobby made scaled down models of his home town the white house etc. It eventually was given to a group that made a museum with it all in..for my enjoyment I got to play in his shop while the wife was one of the best times I had.

    • Hi, RWT –

      ” the Hamiltons, Jeffersons, and Washingtons?”

      They were in on it. The first person to turn guns on Americans was George Washington. He turned guns on Americans justifying taxation during the Whiskey Rebellion.

      The last good president Americans had was President Andrew Jackson.

    • Hamilton , Jefferson, Washington, and Franklin are headed to Venezuela where I believe they will get a new shot at a new constitution with more clarification to help avoid the mess we seem to be in. (actually clarification is not the prime requisite, common sense is but that seems to be in short supply in U.S. )

  6. “pay-off” on your home. ”

    I know .. Very few really get it that your payments about a grand plus taxes but the actual amount going towards principle is ten dollars or if you go to a low payment mortgage company.. Less than a dollar..
    Very few catch how I was able to pay off two homes in my life at 18 percent interest.(yeah i never made enough to qualify for any of those give away programs.. And an employer playing stock market destroyed my credit) .even when you explain it they don’t get it.
    The national debt interest is hovering someplace around money in.( if you was buying a car..they would say your horribly upside down in your car loan.)
    Anyone buying the crap being told them about lowering taxes is just fooling themselves.
    It can’t logically be done and still let the 37 trillion being funneled to and hidden in offshore accounts go un taxed.
    DJT gets that.. He knows the only way to stop a total collapse of the financial system is to bring back jobs. Tax incoming goods and services.. Tax AI and robotic assembly equipment.
    Yet he faces total opposition on everything. Which has me wondering what the puppeteers playbook has in store for us.
    We’re all just stupid enough to buy it and think what they’re proposing is actually possible.

  7. George,
    You often refer to getting out of stock / bonds and into cash (I know that is NOT financial advice) The question I have had for quite a while is What is CASH???
    -Do you mean green Amerikan folding money? (and then where to put that?not in a safe deposit box for sure.)
    -Do you mean funds in a very low yield checking, or savings acct. (remembering that those funds are only as secure as the bank you put them in in the event of a massive bank run the FDIC will be long gone by by and the printing press will take over)
    -Do you mean a CD or Money Market funds?
    -Do you mean funds left in a brokerage trading acct? (which may be untouchable in the event of a serious downturn)
    -Do you mean in commodities?
    -What do you mean by “CASH”

  8. When discussing the national debt, one must add that “other” $22 Trillion unaccounted for in just the DOD and HUD and discovered by Catherine Austin Fitts (former HUD undersecretary) and Prof Mark Skidmore and his team of grad students at the University of Michigan.
    So the debt is really over $44 Trillion since we know the $22 Trillion was spent…just unaccounted for.
    Those in the woo-woo corner believe we already have a space force and the money was spent on “black projects”

  9. That’s why they’re here ,
    it’s for our seeds,
    Oh do you mean for my tomato seeds (no).
    They’re here for your Genetics seeds.
    The experiment has been going on for trillions of years,
    it’s a never-ending endeavor into the manufacturing of DNA structure as it crosses all time and dimensional borders.

  10. Looking: PT is negotiating like a child, but not in a smart way, more of a “Wing It” way which never beats good planning.

  11. Paranoid? How sec-URE do you feel in your charts with the almost hidden in the media about the March 1 restoration of the US Debt Cap with potential of default on US Debt payment by August 2019?

    Like you, I receive SS monthly and Medicare assistance with med expenses, but perhaps I am more dependent on their continuance . Many seniors have some cash in short-term treasuries. Perhaps, China might also have some concern that payments on their debt might get caught up in the morass of Pres vs Congress politics.

    Paranoid? I have no faith that I and many others like me won’t be “road kill” when the bus comes.

    Here is an article that doesn’t look to be overly dramatic but be sure to read all the way to the end:

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