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.
In my entire lifetime, there has never been a Thanksgiving like this. 39 million Americans don’t have enough to eat right now, more than 70 million claims for unemployment benefits have been filed so far during this calendar year, and people are waiting in line for hours at food banks all over the nation just for some Thanksgiving handouts. If you and your family have plenty of turkey to eat, you should be very thankful, because many Americans can no longer even take Thanksgiving dinner for granted these days.
On Tuesday, vehicles were lined up for hours in New Jersey as people waited to receive prepackaged Thanksgiving meals at a local food bank…
Disney is laying off 28,000 workers. American Airlines and United Airlines plan to cut 31,000 workers. Last week’s disappointing unemployment report shows that we have a long way to go. Perhaps a lot longer than we think.
I’m going to quote at length from my friend David Rosenberg, who I believe is absolutely spot on:
“You tally up these sectors and before the crisis, they supported 32 million jobs, or about a third of the private sector workforce, and it looks to me as though half of them are not going back to their old jobs.
“And I’m not sure many people understand that amusement parks, airlines, hoteliers and restaurants cannot stay in business at 50% capacity (or even 75% in the case of restaurants).
“… As it stands, the US Chamber of Commerce said that 25% of small businesses have already shut down. Another survey by Ipsos concluded that two-thirds are still nervous about leaving their homes; 59% say they intend to remain locked down on their own until signs emerge that the virus is ‘fully contained.’ A YouGov/CBS poll concludes that 85% of American households say they wouldn’t get on an airplane even if they could. That’s why the industry needs a bailout!
“A Washington Post/University of Maryland poll shows that only 56% of consumers across the nation intend to shop at the supermarket, which I suppose is a continuous bullish data point for delivery services but that’s about it. Just 33% say they are comfortable entering a retail store. And a mere 22% say they are willing to dine in a sit-in restaurant.
“All these polls say basically the same thing – it will not be ‘business as usual,’ as the bulls will try and convince you, and the best we can hope for is a partial recovery. I mean, at best. What we had on our hands was a vertical down economic decline with job losses an order of magnitude higher than anything we have witnessed since the Great Depression. So, even as the stock market is telling you it has it all figured out, I can assure you that what we face at this very moment is a very uncertain economic future. And unfortunately, most of the longer-term risks are to the downside.
“We are in a depression – not a recession, but a depression. And I think the dynamics of a depression are different than they are in a recession because depressions invoke a secular change in behavior. Classic business cycle recessions are forgotten about within a year after they end – the scars from this one will take years to heal.”
“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” ― Aldous Huxley, Brave New World
“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.” ― George Orwell, 1984
Huxley and Orwell were contemporaries. Huxley’s dystopian masterpiece was published in 1932 at the outset of the rise of totalitarianism, while Orwell’s was published in 1949 after 65 million people perished in a World War and Stalin had already murdered tens of millions of his own citizens. Those were dark times. They also coincided with Edward Bernays 1928 publication of Propaganda, in which he revealed the existence of an invisible government who used propaganda to manipulate the minds of the public to insure those controlling the levers of power were able to engineer their desired outcomes.
“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed.” – Strauss & Howe – The Fourth Turning
I’ve been writing articles about the Fourth Turning for over a decade and nothing has happened since its tumultuous onset in 2008, with the global financial collapse, created by the Federal Reserve and their Wall Street co-conspirator owners, that has not followed along the path described by Strauss and Howe in their 1997 book – The Fourth Turning.
Like molten lava bursting forth from a long dormant (80 years) volcano, the core elements of this Fourth Turning continue to flow along channels of distress, long ago built by bad decisions, corrupt politicians and the greed of bankers. The molten ingredients of this Crisis have been the central drivers since 2008 and this second major eruption is flowing along the same route. The core elements are debt, civic decay, and global disorder, just as Strauss & Howe anticipated over two decades ago.
Basing one’s decisions on analogs from the past is entering a fool’s paradise of folly.
Like addicts who cannot control their cravings, financial analysts cannot stop themselves from seeking some analog situation in the past which will clarify the swirling chaos in their crystal balls. So we’ve been swamped with charts overlaying recent stock market action over 1929, 1987, 2000 and 2008–though the closest analogy is actually the Oil Shock of 1973, an exogenous shock to a weakening, fragile economy.
