When life gets expensive people stop going to Outback. I think Confucius said that.
Add the political pressure to raise minimum wages and things don’t look so good for restaurants right now.
The Crash of 2008 didn’t just go away (as too many of us know). It still hangs over the globe. But things have changed. We now have more debt on the books and an even more emboldened political class.
I remember that my restaurant clients were the first to feel the recession coming on in 2007. Then it was the retailers. Then everyone.
But keep pressuring the food service industry to pay $15 per hour. That should help things.
Refugees from Syria aren’t the only refugees the West is seeing. A different type of refugee, from China, has landed on the golden shores of the US and Canada. People with money from the great China boom are seeking a landing place for their families and their wealth. This has long been the story in Vancouver for example.
But these people are the lucky few. Most Chinese will never get on a plane and traverse the Pacific. Most will stay in China through the economic “slowdown”
Image: Screengrab from CNBC video
This is called “an excuse.” People wanted to sell, they saw a big fat excuse to sell in Brexit, and so they have. (Some were just sure that Brexit wouldn’t happen and were simply forced to sell.) Smart people are also prudently looking to buy. But one way or another life will go on and the world will adjust. The big banks just got socked and that is a good thing.
Stockman is deeply critical of the Fed’s grand experiment and he is right, it will end in ugliness. Probably an historic ugliness. When? No one can say, we are operating in sort of an economic hall of mirrors right now. (And have been for a long time.) Things are distorted all over the place. However, even in a hall of mirrors gravity continues to work. Like gravity, the market mechanism also continues to work no matter what the current economic reflection.
Trucks move goods. Goods and services make an economy. Trucks run on petroleum. Petroleum prices are down solidly. Yet trucking appears to be hurting. What’s going on?
And by the way, may God bless all the long (and short) haul truckers.
We’ll see. The market is down today but has been solidly up for a few weeks (after a dismal start to the year). But the underlying economic reality hasn’t changed. The deep fundamentals are not good and they haven’t been good for a long time.
The boat payment is always the first to go. Or maybe the snowmobile in Canada.
This is decline folks. Though it is by no means irreversible. This country has long suffered under presidents and congresses which were more interested in perpetuating a Washington centered agenda than in creating a climate for real prosperity. A little regulation here. An extra tax there. A sweetheart deal here. A war in some Middle Eastern corner we have no business in there. Each year the economy is eroded. Each year our debt increases. Each year the quality of leadership appears to decline.
There is a battle raging in economic circles right now. Are we headed for a relatively imminent (and severe) recession or are we not?
Let the old dead wood in the economy burn off. Renewal is not long in coming. But central banks would rather further distort the economy in an effort to avoid the inevitable. (In so doing the eventual economic fire burns much hotter than it would have otherwise.)
The central bankers fundamentally have little or no faith in the market mechanism. Let markets clear and then growth will appear, similar to a burned down forest. Burn off the dead economic wood.
In December as junk bonds began being really buffeted we asked whether a recessionary storm was on the way. Now even the guys on TV are openly talking about a recession.
It’s funny. No one ever wants to say “recession.” But what is happening in oil and in China reminds me very much of the rumblings and tumblings in the US housing market in 2007-2008. I can remember screaming at the TV as the real estate bulls were trotted out back then.
I am sorry but we can’t help reposting this tweet from the president from last week.
We also can’t help posting this graphic from last year.
Pay attention to what the graphs actually say and what the measurements are, but it is pretty clear, even before the likes of Bloomberg and CNBC started talking about a looming recession a recession was looming.