The Antidote to Optimism

Guest Post by Bill Bonner

It is always brightest before they turn the lights out.

You can quote us on that.

Just when you thought things couldn’t get better… guess what?

They don’t. They go dark as a dungeon.

Antidote to Optimism

Our task is to show that however wonderful things may appear in today’s markets and economy, they may not be all that great.

We put our backs into this grim work neither for love nor for money, but simply out of a sense of stern duty.

If not us, who? If not now, when?

Someone must put forward an antidote to the optimism now raging through markets around the world.

Someone must make the case for cynicism, suspicion, and mockery.

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Someone must take the other side of the trade.

And so… the work, like shucking oysters on a cold day, falls to us. We open them up… hoping to find a pearl.

Donald Trump, Davos Man

Instead, we find claptrap.

“The elite gathering at Davos [including Donald Trump],” begins a Financial Times article, “takes place against a backdrop of improving economic activity across the world.”

The IMF says it is the “broadest synchronized global growth upswing since 2010.”

The FT goes on to tell us that the world economy is supposed to grow a healthy 3.9% “this year and next” thanks, at least in part, to the sweeping tax reform measure just implemented in the U.S.

Well, well, well. Gosh, it looks as though we were wrong about everything. You can predict the future after all.

As for the tax cut, we didn’t believe that the tax measure would have any positive consequences other than giving us more money.

What economic benefit could be reaped by taking money from one pocket and putting it in another?

Unless Swamp spending were reduced, we reasoned, there could be no net gain from cutting taxes.

Just goes to show what we know.

Over at The Wall Street Journal, meanwhile, the tax cut has touched off celebrations worthy of VE Day.

Andy Puzder, the former CEO of the Hardee’s and Carl’s Jr. restaurant chains, praises employers for sharing out their extra tax-spared loot with employees.

He also thinks employers should use the opportunity to indoctrinate workers about where the money came from, “otherwise employees may take their pay increase and bonus and not give Republicans the credit they deserve.”

What praise Republicans deserve for switching government funding from above-board tax revenues to surreptitious debt is not clear to us.

But now that we know that it is creating such a powerful, worldwide boom, we wonder why they don’t do more of it.

Perhaps they should cut taxes to zero for everyone and just print the money needed to pay for their boondoggles. What a boom that would set off!

Wealth Redistribution System

Whatever they are doing… it seems to be working.

The U.S. stock market has only been down one single day in all of 2018. And super hedge fund investor Ray Dalio says we’re “going to feel pretty stupid” if we continue to hold cash.

Reporters caught up with Dalio in Davos—where else?—and the great man told them we are in a “Goldilocks period,” where growth is almost guaranteed.

“Things couldn’t be better,” he seemed to say.

Heck, nobody wants to be stupid. So, everyone’s long now. In the latest tally, there are five bulls for every one bear. How much longer can this poor beast hold out?

The unemployment rate, too, is almost a miracle. At 4.1% nationally, it is at a 17-year low.

In some states, it is at a record low. In Mississippi, for example. And California. And in Hawaii, apparently, not a single person could be found who admitted to being jobless.

These glass-half-full figures don’t jibe with the 102 million American adults of working age who really don’t have jobs.

But perhaps in some future installment, the Bureau of Labor Statistics will fully explain the discrepancy… or simply ignore it along with all the rest of the glass-half-empty figures.

Inflation is still below 2%… but only if you follow the feds’ bogus numbers… and don’t count the rampant inflation in the asset markets.

And the stock market, too, requires a special caveat emptor. It is no longer a place where we find out how much companies are worth.

Instead, it is part of a wealth redistribution system: The feds feed fake money into the markets. Assets go up. And the people who own them find themselves with a greater share of the nation’s wealth.

Congrats to the “One Percent”

By pushing fake money onto the financial class, the feds have increased the share of national income made by the “One Percent” to three times what it was in the 1970s.

The bottom share had to go down.

There are 2.3 million people, for example, who earn more than $1 million per year. And the top 0.1% earn more than $6 million per year.

But the bottom half of the population has an average income of only $16,000. And seven out of 10 Americans, says USA Today, have less than $1,000 in savings.

How is it possible that an economy can be doing so well… when most people in it are worse off?

Casual readers will quickly tag us as bleeding-heart liberals whining about inequality. But we don’t care about “inequality.” What we care about is truth, justice, and the American way.

Which is to say, if a person earns his money honestly, it should be a rough measure of what he deserves. Or at least what other people are willing to pay him.

In a free, win-win world, what you get is related to—if not exactly equal to—what you give.

But in the 1970s, the top 0.1% got 10% of the nation’s income. Now, it gets 20%—twice as much.

What are the rich giving to deserve twice the income share? Are they giving twice as much?

The bottom 90% got 35% of national income as recently as 1980. Now, they only get 25%.

What happened? Do they give so much less?

Or is the system rigged against them?

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7 Comments
doug
doug
February 1, 2018 8:39 pm

Astonishing statistics. Does it seem like the working people really are the poor or do only 10% actually work? I mean the ones with a significant income…..Maybe I should ask about the privilages enjoyed by corporatism and corporate competition. Are they really people?

Cynicles
Cynicles
  doug
February 1, 2018 10:55 pm

“Someone must make the case for cynicism, suspicion, and mockery.
Statistics are tools of the con, nothing more.”

Offer accepted.

The US unemployment rate is under 4.5% nationally.

Well over 90 million working age Americans w/o jobs (“jobless”) out of over 310 million people ranging from a few months to over 90 years of age.

Unemployment numbers come from only those with current unemployment claims, nothing else is considered. Jobless statistics are skewed as well, currently sitting somewhere in the mid 20% range.
Both statistics are laughable.

Statistics are used selectively to present a specific point of view, typically boosting one side and presenting the opposing point of in a grim and undesirable way. Revelations these are not, but reality they remain.

Andrea Iravani
Andrea Iravani
  Cynicles
February 2, 2018 2:08 am

There are lies, damned lies, and statistics! Mark Twain

87% of statistics are made up.- an acquaintance’ s father

Andrea Iravani
Andrea Iravani
February 2, 2018 1:43 am

I’m sorry but Tuesday and Wednesday were both down days. There have been other down days in January as well. I freaked after reading that thinking that history was rewritten. I agree that people who are deliriously happy are either involved in a daisy chain, insider trading, or are just stupid or crazy.

Anonymous
Anonymous
February 2, 2018 8:59 am

Look for a way to succeed and you will find it.

Look for a reason to fail, and you will find that instead.

Your choice.

Wip
Wip
  Anonymous
February 2, 2018 10:39 am

So, we’re on a good trajectory? More people becoming a burden on your income is good? A large part of wealth having been produced through job destruction is good? Education, health care and housing through the roof is good?

Of course you are right but you are also ignoring the grifters.

Don’t complain when you see more welfare, crime, homelessness, disease, government solutions etc.

wdg
wdg
February 2, 2018 3:53 pm

“Let them eat cake”…now when have we heard that before? Oh yes just before the French Revolution. Davos man is a liar, a crook and a thief to boot. And he knows he is a thief…that is why he lies because he thinks it might save his rotten neck when the guillotines come out and Davos heads start to roll down the blood-soaked gutters. It will be a sight to behold and not one tear will be shed because true justice will have been rendered. And after justice is metered out, the next step will be to recover the trillions of dollars of stolen loot stashed around the world in banks and bunkers that will not protect Davos man…at least not for long.