The “Three R’s” of Depression II

We’re reliving the 1930’s – although it’s just not obvious to everyone.  No, It’s not “stagflation.”  There’s plenty of stag but no flationin or de – apparent in the data. Financial rigor mortis.

Thursday’s Industrial Production and Capacity Utilization figures showed that the total index was up 3.5%. 

Given this, and a money supply that is up 6.2% (M2, year on year) we know that there is still deflation around, but the lack of other (normal) sources of money creation (loan originations and rising velocity of money) has kept gold and silver from making major advanced. 

This morning we have some new figures on housing to ponder, but again, nothing to write home about.  Good, but still in catch-up mode.

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,080,000. This is
8.0 percent (±0.7%) above the revised March rate of 1,000,000 and is 3.8 percent (±0.9%) above the April 2013 estimate of
Single-family authorizations in April were at a rate of 602,000; this is 0.3 percent (±0.8%)* above the revised March figure of
600,000. Authorizations of units in buildings with five units or more were at a rate of 453,000 in April.

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,072,000. This is 13.2 percent (±13.6%)* above
the revised March estimate of 947,000 and is 26.4 percent (±11.8%) above the April 2013 rate of 848,000.
Single-family housing starts in April were at a rate of 649,000; this is 0.8 percent (±10.8%)* above the revised March figure of
644,000. The April rate for units in buildings with five units or more was 413,000.

Privately-owned housing completions in April were at a seasonally adjusted annual rate of 847,000. This is 3.9 percent (±10.1%)*
below the revised March estimate of 881,000, but is 21.2 percent (±13.6%) above the April 2013 rate of 699,000.

And then, there is where America is in the economic long wave.  Nearing a long term bottom in interest rates. Between now and 2020.

We already know from looking at a maximum zoom-out that 10-year Treasuries have been falling since 1982, or so.  And this has fueled a rise in stock prices since lousy earnings don’t matter if everyone else has crappy real returns.  Average thrives and CEO’s are cutting a fat hog on stock benefits they had nothing to do with.  They largely have been lucky.

So, just how sick is this economy? 

Well, you have to keep your comedy-writing mindset in place, notice that earnings and jobs are so tight in America right now that a headline mentioned how “Hospitals reach out to attract affluent immigrants:  Hospitals compete for affluent immigrants with premium menus, revamped rooms, other extras.”  Truly WTF running wild.

That’s almost like saying “Help the economy: Get sick.”

Ever read the Lincoln Star Journal?  “Meat prices lead higher inflation” was their take on Consumer Prices. And we’re likely to keep heading down this road through 2015.


Driving it is the national drought.  As you can see in this week’s National Drought Monitor.

Oh, sure, the drought continues in California which means higher veggie (and almond) prices.

But the biggest area hit now is turning to the Dust Bowl area of the New Mexico, Colorado, Texas, and Oklahoma.

A couple of months ago, I alerted you to my expectation that we would likely see human relocations beginning this year from California.

But maybe I’m wrong:  So far, only cattle are migrating, along with truckloads of salmon.

What’s worse, when you read the local news out of the Bay Area, you’ll find the drought is being used to roll back protection for endangered species of salmon, and whatnot.  Thanks to senatress Diane Feinstein.

To be sure, managing through times like this are difficult.  But migration of humans and settling in other parts of the country makes sense.  Yet, our real estate sources say people are still moving to the Bay Area is good numbers.  Lemmings are alive!

And so it goes with humans in  denial:  You can read the numbers all day long to folks, yet few will take them seriously, let alone act on them.  It’s a subtle difference, but the difference between survivors and victims.

While one of my consulting clients in the East Bay is still several weeks out on a drilling rig to punch in a water well on his (large) property, officials are already billing him for the increased valuation of his property if he gets his well in. Sending him forms of well equipment cost, you can almost see the tax slobber on the forms. Turns out the well-drilling permit process gets people’s hands out looking for more and more money…tax money.  Like the State has anything to do with climate.  Kinda like “tax the air.”  Oh, but we do that too, sorry.

Meantime, the wildfires in California are no surprise, at all.  Reporting includes words like “firenadoes” (creative green star) but we’ll just sit back and wait for the Climate Change Choir to strike up the tune. Lest we forget, many parts of SoCal ban (or regulate and permit) cutting brush – which in turn – makes fires bigger when the come. 

Oh, and the fire’s aren’t really “unprecedented” although it makes a good headline.  Reality is that of the top wildfires in history,  a good portion occurred before climate change.  Side of hyperbole with that headline?

California is continuing to head down that “Land of Regulators and firefighters” path.  Which is why in a couple of years Toyota is coming to Texas, and I expect they won’t be the last.

Weather comes, weather goes.  And we suggest you read the editorial by Investor’s Business Daily  “New Climate Change Report is Filled with Falsehoods.”

Then, as long as you’ve got the brain engaged, read how global warming cheerleaders covered up skeptical research because it “was less than helpful” to the sales pitch on climate.

Where to?  Led by an administration that has failed to create meaningful long-term jobs, and which promotes political correctness rather than basic competencies in the “three R’s” (which is why we need the H1B visa system to bring in brainpower from overseas) the prospects ahead are more than slightly dimmed.

Climate isn’t changing, it’s cycling.  Climate does that.

What matters is how well people adapt, improvise, and overcome.  Helps to have leaders with vision and a dream to articulate that’s worth some hard work.  America needs some goal posts.  We do better with them.

Lacking all of this, we are on the cusp of another recession.  And as my friend Robin Landry says, “The difference between a Depression and a Recession is a drought.”

Here come both.

If you don’t understand why the market is soft the past couple of days, just look at the data, count the “Three R’s “ of the Second Depression:

Count raindrops

Count robots

Count reelections

Our new Three R’s.  It’s all pretty damn simple, isn’t it?

India Elections

Looks like the opposition will come to power with soon to be prime minister Modi likely to order business cards with the new moniker.

Over the Hill?

While her State Department was saying Hillary Clinton’s recovery from a fall at home took 30 days, Bill Clinton puts the number at 6-months.

Not to be overly cynical here, but if a former president and the wannabe missus can’t agree on the data in their own home, should either be left to run a whole freaking country?

Not I, said the little pig.

[Next] Impeachable Offense?

Here’s a key question for the spineless Fools on the Hill: With word that [imperial king] Obama is going to selectively enforce immigration laws (stopping deportations) is that an impeachable offense if it happens?

Yeah, I know, hard questions.  Just like turning loose convicted felons from out of country, eh?

And yes, it’s all about lining up future democrats.

Might the first offense be making up “law” on the ACA?  GFR

Eastern Ukraine Pressure

37-page UN report is over here.  Western Media is headlining this part:

In the aftermath of the 16 March unlawful “referendum”3 in the Autonomous Republic of Crimea, Ukraine, there are increasing reports of residents being affected by the changing institutional and legal framework. Human rights concerns relate to citizenship, property and labour rights, access to health and education. Of concern to the HRMMU, are the increasing reports of on-going harassment towards Crimean Tatars, and other residents who did not support the “referendum”. The reported cases of Crimean Tatars facing obstruction to their freedom of movement, as well as the recent attack on the building of the parliament of the Crimean Tatar people are worrying developments. Legislation of the Russian Federation is now being enforced in Crimea, in contradiction with UN General Assembly resolution 68/262, entitled “Territorial integrity of Ukraine”. In addition, its differences with Ukrainian laws will have a significant impact on human rights, posing in particular limitations on the freedoms of expression, peaceful assembly, association and religion.

The problem?  What exactly is lawful in a country where the sitting government seized powers through violence?  Is getting dough from the US/West/IMFC tantamount to sole proprietorship of “lawful?”  Isn’t Ukraine’s ex (elected) president still in Russia?

Lack of Dreams

I’ve been telling you for a long time that what America needs is a good “dream.”  Something that people can buy into at all ages, work towards, and hopeful come near achieving.

So here’s a report out of the UK that “Young people ‘ feel they have nothing to live for’ – which goes to this being a worldwide problem.

If you come up with a decent goal for omni-humanity, do send it along.  We need dreams worth living for, not just those worth dying for.  Besides, the repo depot has culled most of those anyway with the recent decimation of the Constitutional and Bill of Rights abrogation’s using the excuse of “emergency” and “terrorism.”