Students of economic depressions may be pretty clear on where America “went wrong.”  Well, at least they should be clear in about five-years or so…the point of today’s outlook:

The American economic system?  Strong as ever.  But its fatal weakness?

Economic contraction.  We living in a system that has been optimized as a  growth model.  When things reverse – as they have been doing this year – nall kinds of shit runs off the rails.  While the job report out this morning wasn’t too bad, there are reasons why late summer and fall do have extra built-in upsides.

Peak time for crop shipments, and the like.  Where employment runs into the wall will be when the field work is done and manufacturing matters.  Yeah…manufacturing.  What’s that?  Here?

Comparing Depressions

You can start with the most recent paper by Andrew Odlyzko for  Financial History #132 (Winter 2020) aptly titled An undertaking of great advantage, but nobody to know what it is: Bubbles and gullibility.  It’s only 3 1/2-pages…so suck it up and learn something.

When the demands of economic growth fail us (as Covid enforced from January) America can deal with adapting to PPE manufacturing, redistribution of toilet paper, and even supporting now-dead businesses.  But, there’s a finiteness to it.  At some point, the money runs out. The problem is solved.

And this gets us to the Fed’s latest H.6 Money stocks report:

I really like the M2 numbers.  What these are hinting at – when you turn-on your mental speed-visualizer of  rates, is that the Fed poured on the coal during the early portion of the Pandemic.  But they’ve returned to (something approximating) their senses since.

Sure enough, M2 for the week ending August 24 was $1,188.7 billion where in the week ending July 20 it was $1,205.5.  Yes, that’s right…foots off the gas and the money is going to “coast” a bit.

Love to coast (tried to make a career of it, lol) but not the road to riches.

“The Problem Is…”

My buddy The Major calls this is my “life-long most-cited phrase.”  But the problem is the financial system has become “hooked” on too much cheap (here, take another wheel barrowful of…) credit.

This brings us to the (quite horrendous) possibility that if loads of investors get “twitchery” and blow out of positions prior to the close today (so as not to get trapped in a wrong-sided position over what could be a riotous a three-day weekend when all kinds of crap can go wrong) the odds of last Friday being the weekly high for this economic  cycle (how to say this gently?) rises above zero

In summary, what you can expect to see in financial headlines today will be “the usual” stories about how much Elon, Jeff, Bill, and Warren lost Thursday.  What few will mention is how there seems to be a correspondence between the 1920s run-up into the 1929 collapse and modern times.

Where’s that Jung Freud?

At some deep spiritual level, there’s a sense “This can’t go on…”  And as it takes hold, we see upticks in forecasts of calamity ahead.

On a few prophesy boards lately, the California Big One has popped up now and again.  But, since there’s a case for movement increasing around the “ring of fire” (see 6.8-magnitude earthquake, aftershocks shake Chile from a couple of days ago) this is not too wild.  Especially with the U.S. Southeast quake Thursday:  Which is you missed it was a Rare 4.0 magnitude earthquake reported in Florida Panhandle.

The other thing we’ve got on the hot list is incoming asteroids.  Especially around Halloween this year.

No doubt you saw Tuesday An airplane-size asteroid gives Earth a close shave today…and we survived just fine.  But, some of the longer-term views are turning grim.  Try whistling through this one: Will An Asteroid Hit Earth Just Before Election Day? Here’s What To Know About It.

See the mood-shift?

A sometimes-useful crackpot theory I carry around is “as above, so below” – a silly New Ageism dating from 1994.  Yet there’s our quake and over-head smack-down and there’s Thursday market action.

Now, blend in a quarter cup plus one tablespoonful of “CV-19 will soar after Labor Day” stories and the case for a continuing market rout could be solidifying.

Sorry for all the context, but it sets up the…

Jobs Report:  Hype Time!

Just out:  (From Ripley’s Labor Dept.):

“Total nonfarm payroll employment rose by 1.4 million in August, and the unemployment rate fell to 8.4 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In August, an increase in government employment largely reflected temporary hiring for the 2020 Census. Notable job gains also  occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.”

At the useful macro level, the only thing that matters is how many people were working this month compared with last.  And compared with year-ago levels.

Month on Month:  Employment was up 3.756 million.  That’s good.

Year on Year: Compared to last August, though, 10-million fewer people were working last month.  That’s bad.

Given the job number, did some “agent of Wall St.” have access to what was coming in advance and decided to use it for…well….you know….sheering of the sheep?

Antifa Gets Its Martyr

We’ll be expecting more violence from the insurrectionists following the shooting death of an Antifa supporter by law enforcement.  U.S. Marshalls were attempting the arrest of the man suspected of killing a protester in Portland when he reportedly pulled a gun on arresting agents.  One of the dumbest things that can be done during an arrest – with predictable results.

We anticipant Antifa will react -somehow and maybe that will light off violence this weekend.

Another driver of likely holiday rioting would be the killing of a naked, unarmed man in Rochester, NY this week.  In that, 7-cops have been suspended.

Linda’s Corner

Long-time reader in Houston carefully sends me “meaningful” stories almost every day.  So, as a holiday thank-you, let’s see what’s on the “Linda Desk” shall we?

She found “Turning waste into energy: How banana skins and manure are being re-used to help power homes” interesting.  Damn shame we can do that with political crap which is in greater abundance.

She also noticed the S&P futures had turned negative after being up for a while in the overnights.

With 10 minutes before the job numbers, the Dow ran to +50…but we’ll see how things look after the Amateur Hour which is from the open until an hour to 90-minutes in.  That short pop had the smell of someone trying to arb up the futures…but it failed and dropped back down 5-minutes later.

I swear – Wall Street must thing the American public can’t read.  But with all this “time out” lately, I got $20 bucks on the short side…figuring American’s are not as dumb as the egomaniacs at the top must think.

Laboring On

We’re guessing a third of America will blow out of work early today.  Lots of interest by people in short, car trips. Gas Prices: Cheapest Labor Day Travel in Four Years, comes out of Colorado.

Around here, there has been an been nothing but rain.  If you look at you’ll find we’ve had 7.4 inches of rain this month already.  We’ve gone over 9-inchs here.

To put that in perspective, our total YTD – about 43.4 inches (not counting another one this morning) means this part of Texas has already “out-rained” Seattle.  And we’ve had more rain in the last week than Las Vegas or Phoenix get in an entire year.

All this rain has left us with a cranky septic system and a shaggy lawn. But, we’re due for a couple of days of sunshine now.

Next week?  Bye-bye to the 90’s and temps will drop into the 70’s to mid 80’s – and should stay there until almost Christmas.

Coming Up

On Peoplenomics tomorrow – we’ll update all dozen charts, or so.  But that’s it – the UAP-UFO book out Wednesday is about my limit (34-thousand words) for a week.

Short “Around the Shop” on Sunday – can’t find where I misplaced the damn camera, though.  And Monday here, we’ll see how my personal mood swing does.  One side is my enjoyment of writing – but on Holidays, the comfort of that nice soft bamboo pillow….

Write when get rich,