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The Doomsayers Have Their Day

The doomsayers have a lot to say these days, and most of it is all too plausible. There’s also been a lot of happy talk from the White House lately, especially about the economy and that 5.1 unemployment rate, but it’s not nearly as convincing.
Even the suddenly front-running Democratic candidate and self-described socialist Sen. Bernie Sanders is getting big cheers from his far-left fans by scoffing at that 5.1 percent figure, which conservatives already know is severely understated by excluding the record numbers of those who aren’t even bothering to find work or those working part-time jobs or taking jobs for which they are obviously over-qualified. Even the usually uninformed folks of no political persuasion who occupy the middle have noticed their stagnant wages, and that most of those news jobs are going to legal and illegal immigrants, so they might have also noticed the latest trends are not positive.
Sanders probably won’t mention it in his otherwise frankly gloomy and doomy stump speeches, but what anemic economic growth  has occurred over the past six years of “recovery” was largely financed by extraordinary amounts of debt, not just here but in Europe and China and almost everywhere in the less consequential parts of the world economy, and not just among the countries’ governments but also their private sectors. The Switzerland-based Bank for International Settlements, considered “the world’s top financial watchdog,” now notes that since 2006 the combined public and private debt of the world’s developed economies has jumped 36 points to a daunting 265 percent of the world’s gross domestic product. Meanwhile the Federal Reserve Board of the United States, which is either the first or second biggest economy in the world depending on what accounting systems you prefer, is contemplating at long last allowing interest rates to soar beyond zero, which those Swiss bankers reasonably worry would might reconfigure the global ledgers in all sorts of troublesome ways. Much of the United States’ debt is owed to China, which is either the first or second biggest economy in the world, depending on what accounting system you prefer, but they’ve also managed to rack up a mountain of debt on building uninhabited cities and other make-work extravagances, and there’s no telling what measures that country’s communist leadership might resort to. The European Union, which includes most of those “developed economies,” is currently preoccupied with one of those occasional invasions by the Muslim world that they’ve had to put up with for the past several centuries. Perhaps debt can be perpetually incurred, but otherwise nowhere in the world does there seem to be any happy endings on offer.
All that debt did by one hell of a stock market run, here and elsewhere, with all the freshly-printed money having nowhere to go in a zero-interest world, but here and elsewhere that seems to be at long last coming to the same sorry end as all Ponzi schemes. The Chinese are resorting to the old Maoist adage about all power growing out of the barrel of a gun to deal with the situation, with stockholders being threatened with severe retaliation if they sell any shares in tanking companies, and the unlikelihood that even President Barack Obama and newly-anointed Labour Leader Jeremy Corbyn or any other EU official would dare to employ such methods makes the situation all the more uncertain.
Robert Schiller is a professor of economics at Yale University and a Nobel laureate in his science, and we are neither, but our gloomy and doomy temperament inclines us to agree with his worried assessment that “It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years, and at the same time people losing confidence in the valuation of the market.” One needn’t be a Yale professor or Nobel laureate to have noticed that the American economy has not tripled in strength and size over the past six years, or kept apace of the growing debt and surge of legal and illegal immigration, and that the rest of the world hasn’t been managing its affairs any better, nor to draw the obvious conclusions. Every roller coaster ride we’ve ever taken has eventually ended at ground level, and we can’t shake a bad feeling that the world’s stock markets will prove true to this rule.
We read that the stock markets are further spooked by the sudden realization that Donald Trump might actually be the Republican nominee for President of the United States, and that the equally embarrassing fact of self-described socialist Sanders as the front runner makes it possible that he might actually win the office, and this causes us even further gloominess and doominess. There’s little hope to be found in Europe, where the self-described Hollande is still running and some English guy with no discernible identity is Prime Minister of Great Britain and Germany’s Angela Merkel is talking crazy-talk about immigration one day and her usual common sense the next, with no time to talk about debt or stock markets or other economic issues. The Chinese communists are both Chinese and communists, and at the risk of sounding stereotypical we found them quite inscrutable. In any case, we find little reason for optimism.
On the other hand, the local QuikTrip convenience stores are now selling their lowest-octane gasoline for $1.99 a gallon, an economic stimulus the administration hasn’t been able to thwart despite its best efforts, the earthquakes that have occasionally troubled our fracked region might not have anything to do with that, and Americans have proved a shrewd people in other uncertain times, and one can still hold out hope that neither Donald Trump nor Bernie Sanders will ever be this country’s president. This doesn’t guarantee a hopeful outcome, especially with Hillary Clinton as a the next-most plausible alternative, but at least it allows for the possibility or the best and precludes the worst.

— Bud Norman

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