What About The Economy?

Guest Post by The Zman

Depending upon your age, two standard items in the news for most of your life, if not all of it, have been economic data and the stock market. The economic stagnation starting in the late 1960’s lasting into the 1980’s made the economy the top priority on everyone’s mind. Every election, it was one of the top issues. In the 80’s, Baby Boomers got into the financial markets, so the stock market and your 401K became a strange proxy for general happiness.

Something that has gone unremarked during the Trump era has been the fact that these paramount issues have dropped in priority with the media. On the Left the only thing that has mattered is hating Donald Trump and white people. On the Right, the only thing that matters is the various internal battles over what it means to be on the Right and where Trump fits into it. No one has noticed that the stock market has just about doubled in value during his presidency, despite it all.

Many on this side of the great divide mock public concern for the economy, but that is often just a pose. A primary goal of any human society is the prosperity of the people, as that is the point of human organization. Humans came together in larger and larger groups, in part, because it increased material prosperity. Even the communists were primarily focused on material prosperity. Read the book Red Plenty and you will see that no one is more materialist than a communist.

What’s odd about the sudden lack of interest in the economy and markets by ruling class media organs is that it is a central part of the Covid panic. Government shuttering businesses has to have an impact on the economy. Washington has been hurling money at the economy for a year now. The Federal Reserve’s balance sheet is probably going to top $10 Trillion to end the year. The 2020 deficit is over $3 Trillion. More money is promised for 2021, assuming current plans move forward.

Again, the massive economic upheaval caused by the government in response to Covid should be showing up in the economy and that should be news. In many cities, the restaurant industry has collapsed. San Francisco has seen an 85% decline, which is an unprecedented event. Big chains with connections into the ruling elite will survive, but the small ones will never come back. San Fran is hardly unique. The tyrant Cuomo is promising to finish off the restaurant industry in his state.

Of course, it is not all bad news. The nations rich people are doing well, which is no doubt a relief to everyone. Toll Brothers, the luxury home builder, reports they are having their best year in decades. Much of their business is around the Imperial Capital, where it is always good times, so Covid has been manna from heaven. Those trillions in new spending are laundered through Washington, so it means the locals are flush with cash for new cars and new homes.

On the flip side of this, we are seeing food lines turning up in what used to be middle-class parts of the country. Again, you would think this would be at the top of the news, but it gets limited coverage. Usually, it is someone on social media posting a picture of cars lined up at a food bank. The reason we have food lines is we have lots of people without work all of a sudden. It turns out that shutting down businesses and locking people in their homes increases unemployment.

One reason for the lack of interest in the economy is the numbers no longer make any sense to people. How can the stock market be booming when the economy is being cratered by lock downs? How can housing prices be soaring when we have food lines and massive small business failure? The official statistics are little help, as they are mostly wrong now. For a long time, the economic data was a rough approximation of the economy, but now it is just more noise from the system.

The point here is that the economy should be the big story. There are a lot of red flashing lights that suggest 2021 could make 2020 look like good times. Those millions lined up for free food are going to become a story, even if official media refuses to notice it. The collapse of small business will have a huge impact further up the supply chain in the next year. All of those closed restaurants had suppliers and those suppliers have suppliers and creditors.

The elephant in the room, of course, is the growing wealth gap in America. We are becoming a land of very rich people, a minor aristocracy we call the managerial class and then a vast population of peasants. The media is in the minor aristocracy, so from their perspective, things are doing well. They have theirs and their bosses are happy, so why bother talking about the economy? The politicians have no reason to discuss it for much the same reason. They are doing great.

Regardless, realty is that thing that does not go away when you stop believing in it and our economic reality is increasingly muddled. How long can the Federal Reserve keep buying up assets to maintain asset prices? What happens when those mortgage forbearance plans expire? Delinquency rates remain at levels you see in a severe economic crisis. How about those late rent payments? Those problems are not getting better with jobless claims going up.

The official media could ignore the economy for most of the Trump term, because the public was generally satisfied with what they were experiencing. That’s probably about to change, but they won’t have the orange man to blame for it. One consequence of the selection of the Pretender Biden is that the ruling class has no one to blame. They own it all now and if the people are not happy with the bread or the circuses, they know who is responsible for it.

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Llpoh
Llpoh

I have long been talking about the issues re falling conditions of the middle class.

Here are a few of the issues:

1) manufacturing was the driver of the middle class affluence seen between say 1960 and around 2000. In 1955 manufacturing provided around 50% of all US jobs. That would be the equivalent of 80+ million jobs. The steady advancement of technology, robotics, etc. saw this eroded steadily. There are something like 13 million manufacturing jobs today. A few million went overseas, but the vast majority of the 67 million jobs lost went to technology advancement.

2) the US has steadily lived far beyond its means. That $20+ trillion in fed debt, plus the $200 trillion in unfunded liabilities, plus the trillions in personal debt all mean the US has been living grossly beyond its means for a very long time. The middle class were instrumental in allowing this to happen, happily jumping into debt for new TVs, igizmos, cars on 7 year notes, etc.

3) paying the parasite class to do nothing has come out of the middle class paychecks, although the “rich” pay the vast portion of that.

4) falling educational outcomes mean that huge numbers of middle class workers are ill prepared to succeed in a modern tech economy. That falls on them personally as well as on the system in generally.

5) the myriad bad decisions such as allowing rampant immigration, where many immigrants are now doing work that should be being done by the middle class – fruit picking, farming, etc. But how many Americans are willing to do those jobs?

The failings of govt at all levels played a part. The allowing if a parasite class to develop played a huge part. Taking from the productive by force and giving to the unproductive will always result in disaster. The issues go on and on.

But the net of all this is that middle class livelihoods will drop, and drop by between 1/3 and 1/2. That will put the value added by their labor on par with their remuneration. It is simply inevitable. They are consuming too much and producing too little, and their skills and talents are ill suited to a tech driven world.

The answer is that each individual must get skills that are valuable. Anyone can do it, but not everyone can or will do it. Those willing to make the effort and sacrifice will be ok. Those that will not will be eaten by the wolves.

The old values are still valuable – family, community, thrift, education, hard-work are still the core that individuals need.

LGR
LGR

True.

I saw the advent of automation, with and without robotics for almost all aspects of the production lines in auto plants in the U.S back in the early 90’s, and through up to 2015 or so.

When and wherever they could use a programmable logic control, and large electrical enclosures to intelligently run the motors on the assembly line, they did.

Machines don’t call in sick, get drunk on the job, or have union reps to protect them if they screw up.

Initial costs are huge, and the de-bug process is long, requires good expertise and time, but when it’s working reliably, the automation pays for itself and then some, and the human interface required is only modest periodic maintenance, or if / when it breaks down.

When the line stops, the earnings stop.
If automation is the problem, the plant manager gets on someone’s ass to trouble shoot what’s not working, why, what it will take to fix it, and how soon. As soon as possible doesn’t get it. Immediately!

Those guys who trouble shoot automation?
Those are the guys who will never have to worry about holding a job, but even now,
the new hires are brought in as either supplier sub contractors, paid either a flat rate, under purchase agreement, or an hourly rate.
But there are no legacy costs involved, like pensions, union dues, health insurance, workman’s compensation, or paid vacation anymore. Slowly weeding out those drags on the bottom line.

Taking care of a thriving, growing workforce of people? Hardly.
It’s all about profitability and the bottom line, using 2 or 3 eagles who know how to fly, instead of
8 or 10 ducks who waddle around quacking all the time, complaining and wanting more benefits.

Unfortunately, that model has cut across all industries.

A good friend works in a hospital, as a radiation lab technician, and it’s the same there, too.

The one thing that may come out of this is, the older boomers who retired just might get asked to
come out of retirement in some vocations.
They have the work ethic, the knowledge, and with inflation, perhaps the need to go back to work.

Interesting times, indeed.

realestatepup
realestatepup

The wolves are making it easier and easier to eat the sheep.
FHA just announced it’s 2021 “floor” for loans will now be $356,362, up from $331,760 (still ridiculous) with ONLY 3% down.
I want you to just think about this for a moment. Even with prevailing mortgage rates at 2.93%, meaning with just $10,500 down you can be paying $2043 per month (including taxes, this is for a fairly high-tax town in my area).
This is very, very bad. People are qualifying and buying much more expensive homes because THEY CAN.
For a family of four to live relatively OK in this area, they would need to make at least 75-80K a year, and that’s assuming no private school for the kids.
Many, many people using this much of a loan are NOT living in this well-to-do town, but are instead using the money to buy a triple decker in Worcester. Where the loan approval is predicated on rental income.
Oh, what’s that you say? Why yes, many tenants cannot pay rent, or may take advantage of the situation to just not pay.
And with eviction moratoriums and massive court back logs, what is an owner occupant to do? And so what, you get a court date and evict them, but you have a better chance of having Jesus to dinner than getting the $5000+ in money they owe you.
In the meantime, you still have to pay your water, sewer, maintenance, blah blah blah. The average year built of a triple decker in Worcester is 1900. These buildings are always going to need some damn thing.
So you have three hot water heaters. One goes, that’s 1800 bucks. A boiler? 7500 bucks. Where are you going to get this money from? Your wife, who made pretty good money Thursday through Sunday as a bartender, can’t do that anymore thanks to all the government “safety” mandates. So her $700 to $1000 bucks a week she pulled in is reduced to $200 or maybe $400 now. She can’t pick up day shifts because your two kids are on remote learning and she has to stay home with them.
Your dead beat tenants, even though they don’t pay rent, complain about mice and file a board of health violation against you. The mice are in their apartment because they are nasty people who don’t take their trash to the curb. But the board of health inspector doesn’t care, he fines you and says hire a pest guy and get this taken care of in 14 days or I’ll keep fining you.
So you put it on a credit card, you have no choice.
Your car needs new tires but hey, maybe you can roll the dice and just drive slow in the snow and hope you don’t slide into a plow.
Then your washing machine dies and you have to truck everything to the laundromat. Which is more expensive in the short run but you can’t scrape up the $400 bucks for a new washer.
So you call your lender and ask for a forebearance. They tell you, no problem! Just fill out the paperwork and we will review it in three months.
You sigh with relief because that’s three payments of $2000 you don’t have to make, so you can put in that new hot water heater and get a washer.
Three months go past and Tall Deval decides to restrict indoor dining again, reducing tables to parties of 6 and closing everything at 9PM.
Your wife finds out her hours are being cut down to one night a week, so the $300 she was pulling in is now reduced to $100 bucks.
So this drags on for months, with no end in sight. And you and the wife decided to sign your ancient, overpriced, triple decker back over to the bank and walk the fuck away.
Gird your loins folks, this is coming

Anonymous
Anonymous

Llpoh, you talk of ‘the parasite class’, but didn’t you up sticks and move to where the grass is (allegedly) greener?
What is that if not parasitical?
What you see in the mirror is a rat which jumped ship, and you’ll always be a rat, regardless of your pretensions.

Llpoh
Llpoh

Gee, your logic is unassailable. Here I thought paying taxes, receiving no government money whatsoever, being entirely self-funded, and owing no money whatsoever to anyone made me a producer and a net societal benefit. I had no idea that made me part of the parasite class. Thank you so much for setting me straight on that.

Fuckwits that post anonymously really should be tarred and feathered.

bubbah
bubbah

Yeah, I don’t think Australia is “freer” or any safer (from the collapse and all it entails) in the long run, nor short run than the US. But clearly, moving somewhere else is your choice–and you weren’t a taker when you lived here in the US. So all the best to you, you are certainly no parasite by any stretch of the imagination.

Anonymous
Anonymous

On the bright side, Australia should be a bit cooler, and better watered, once the Chinese finish terraforming it.

They might even allow some of the former population to return from those crowded old camps in Papua-Niugini.

overthecliff
overthecliff

Llpoh, what bubbah said.

Commie Killer
Commie Killer

While your small business goes OUT of business, your well-paid township, city, county, state workers, unionized public sector employees are still living the good life, staying fat in their well-compensated jobs while YOU pay their freight. How does it feel, suckers?

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