The Recession Ahead Will Be Brutal

Buckle up!

The zombified everything bubble is losing steam, even the “QE” money printing may not be enough to keep it going this time


“American exceptionalism has led to a country that is exceptionally un-self-aware.” — Peter Thiel

The economic contraction ahead will put this borderline psychotic country through some interesting ch-ch-ch-changes. Mr. Trump now fully owns the Potemkin status quo of record stock markets poised against a withering rot of human capital at the core of an industrial society in sunset mode.

Leadership at every corner of American life — politics, business, media — expects an ever-higher tech magical updraft of fortune from an increasingly holographic economy of mere fugitive appearances in which everybody can get more of something for nothing. The disappointment over how all this works out will be epic.

Globalism is wobbling badly. It was never what it was cracked up to be: a permanent new plateau of exquisitely-tuned international economic cooperation engineered to perfection. It was just a set of provisional relations based on transient advantage. As it turned out, every move that advantaged US-based corporations blew back ferociously on the American public and the long-term integrity of the social order. Sinister as it seems, the process was simply emergent: a self-organizing evolution of forces previously set in motion. And, like a lot of things in history, it seemed like a good idea at the time.

“Off-shoring” US industry jacked up corporate profits while it decimated working class livelihoods. In return, that large demographic got “bargain shopping” at Walmart, a life of ever-upward revolving debt, and dead downtowns. The country got gigantic trade deficits and government debt loads. In effect, globalism compelled America to borrow as much as possible from the future to keep running things the way they were set up to run. Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing.

You can see how this is playing out in politics, especially the proposed government-enforced redistribution of whatever wealth is supposed to be left. Of course, much of that wealth is a figment, represented in abstract financial instruments pegged to “money” that may have a lot less value than presumed. The Democratic Party detects opportunity in the gross imbalances of this notional capital and so they are promising every conceivable form of grift to voters from a guaranteed basic income and free medical care and college education to reparations for the descendants of slaves.

They certainly might win the 2020 election on the basis of that proffer, but good luck scaring up the actual financial mojo to make it happen without destroying whatever value remains in the US dollar. The predicament may be aggravated by foreign capital seeking refuge in US financial markets as the banking systems in China and Euroland unwind, giving politicians the false impression that other people’s money belongs to Americans. And anyway, what will these foreigners actually be investing in here? Collateralized loan obligations based on seven-year used-car payment schemes?

The American Left just can’t grok the fact that we missed the window of opportunity for setting up a national health system. That was a mid-twentieth century thang: cheap oil and industrial growth. Please note: it was the Democratic Party under Mr. Obama that turned the college loan industry (and Higher Ed with it) into the appalling racket it’s become, because it fit the template of a society pretending to prosper by racking up debt. That demographic of debtors will be seeking magical debt relief. If they get it, it will be at the expense of the government that took on the guaranteed backing of all that debt, now well over a trillion dollars.

Industrial growth is over, and with it the expectation that all the old debts can be paid back. A few economic commentators are predicting “stag-flation.” We’d be lucky if that’s all it turned out to be. But we’re unlikely to get a re-play of the 1970s. That was an era of geo-financial disturbance that resolved for a while with new oil from Alaska and the North Sea. That’s not going to happen again this time. Stag-flation was just a matter of going nowhere for a decade. The contraction ahead will be brutal, not going nowhere but rather going down hard to a lower and harsher standard of living.

It’s also hard to calculate how disturbing and disruptive the prosecution of the RussiaGate perps will be. If the Democratic Party is acting batshit crazy about it now after the Mueller testimony fiasco, how will they react when dozens of their partisans are marched into court to face charges of sedition. That ugly business looks on-track to collide with the coming financial distress. The result will be much more severe political turbulence than the thinking class expects. It’s easy to imagine circumstances in which normal institutions get suspended and the old major parties are superseded by “emergency” seizures of power by other parties as yet unknown.

Source: Clusterfuck Nation

  1. Mary E says

    It will be Russia, China and Iran (possibly others?) who ride the wave of liquidity…
    they have been buying (and storing) gold for many years and don’t spend it all on wars against other nations as the US has…the US administrations have ruined their own country’s financial security and now it is too late to save it.. very unfortunate for those of us who truly believed in saving our money as being the only way to save ourselves!
    Money put into the stock market for others use is not a good idea at all, especially now.
    A new book out “The Presidents’ Bankers” is very insightful and gives an unglamorous
    look at the history of Wall Street and its very close connections to the White House, no matter the occupant might have been. It will give people a little shove toward taking their money out of banks now and keeping it under the mattress…or some other safe place they might have in mind.

  2. JustPassingThrough says

    …and not a word about the batshit crazy foreign policy that has turned a good part of the world into an enemy of the exceptional ones.

    running on empty…duly clusterfucked.
    you’ve pissed away your opportunity to lead the world and for what?

  3. Garry Compton says

    Last paragraph is very important – tie all these judicial tests like the DNC, Epstein, 9-11 re-investigations, Russia-gate / Israel gate possibilities and these may be the clue to when the Feds will break the camels back – again. Thanks.

  4. John C Carleton says

    He who has the gold makes the rules.

    Paper and ink is not gold.

    If one “owns” gold, and has it stored in a commercial bank or vault, one does not own gold, cause you are not getting the gold back!

    Anyone leaving their assets in banks at this point, are idiots.

    My great Grandfather worked, slaved, worked his family like dogs, put all that gold coin in a bank.
    One morning in 1929, the banker told my great great grandfather, the bank was closed and all his gold was gone!

    Into the bankers pocket!

    Man wrote a book about the great crash of 29.
    Said he had enough money in the bank, to make three or four house payments.
    The bank closed down, took his money with it.
    But the closed down bank, also took his home, as he could no longer pay the mortgage.

    He wondered, why a bank which could not give him his gold coins back, could still operate and steal his home.

    Get your wealth out of paper, into physical gold or and silver, and keep it close. not in a “bank”.

    1. Richard Hollembeak says

      If Uncle Samuel wants what you have , Uncle Samuel has been known to take it .

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