Robert Shiller, not always our favorite economist here, is warning that the stock market is looking particularly bubbly. This isn’t a huge story except that talk of a bubble is now coming from one of the accepted shamans of Keynesianism. Shiller also called the tech bubble and housing bubbles accurately. His book Irrational Exuberance is a classic.
Cheap money feels good initially. Nearly everyone is happy when central banks open the floodgates (or helicopter doors) and cash spills into the economy. Hooray! Money! Why is it here now instead of yesterday? Who knows? Get while the getting’s good. Look, the stock market’s rising – whoopee! Monetary tequila. Bottoms up!
But the morning, the aching, head thumping morning always comes after such a binge.
“All I know is Ben Bernanke was tending bar. Goldman Sachs was buying me drinks. Everyone was having a great time. (Except those teetotalers the Austrian economists sitting in the back. They’re never any fun.) But everything after that is hazy. Where am I?”
“Son, you’re smack dab in the middle of an economic depression.”
“Oh man, really? Who are you?”
“I’m the Austrian economist who was sitting in the back of the bar. Get your hat. I’ll drive you home Mr. Keynes.”
“No, no. What I need – what we all need is more tequila.”
“Suit yourself.” Said the Austrian economist as he walked out level headed and sober into the blinding summer sun.
Government is inherently crony. That is its nature. It has an inherent tendency toward corruption. Crony entropy. Like water flowing downhill.
In Greece we see a relatively poor crony state languishing on the rocks while the Germans pick at its liver. And we pity the place. Yes, they’ve gotten themselves into this mess, but Brussels (and Berlin) are being stupid about things.
Not because they won’t give Greece another bailout. They are dying to give Greece more money truth be told. (The banks want to be paid on their Greek subprime portfolio.) But because they won’t just cut the Greeks loose with any dignity.
But hey, Greece does have nice beaches, got to keep access to those.
There was a time when people in the West looked at the developing world and dismissed the corruption exhibited there as a disease of lesser economies. Nigeria, Belarus, Egypt, Brazil, all were (and are) chock full of insider dealing and bribery. In the West however we held ourselves to a higher standard. We had “clean” economies.
It wasn’t Wyoming or North Dakota. Idaho it looks like you get to stay. Arkansas you’re in too.
I look at it this way. Put yourself in the shoes of whoever makes the call to announce to the public that Ebola is now a problem which people need to concern themselves with in the United States.
We agree that this is very possible. Government is so large, so out of control, so unaccountable, and so expensive it is indeed likely to collapse one day. Less in a dramatic heap of rubble and more of a slow rusting rot. But perhaps a dramatic heap.
The big pharmaceutical companies have done very well in the crony department over the last decade. Medicare Part D was a giant gift to pharma, then the “donut hole” fill of Part D in 2010 meant even more money for the drug companies. Big Pharma in many respects is a government contractor. A quarter of its revenue comes from Medicare, Medicaid, and various other government programs. But now one of the giants is leaving for England lured by lower tax rates.
They’re in good company. The banking cronies here fear Bitcoin too.
To paraphrase David Stockman – The world’s central banks have not suspended the market mechanism. They can kick the can, they can lie, they can move assets around on balance sheets, they can even call debts assets. But in the end there is no free lunch.
To paraphrase the anchor, – If a nuclear reactor melts down in your neighborhood and the government says “don’t worry about it” get the heck out of there as fast as you can.
I don’t care if you like this president. I can understand why some people do. There are partisan affiliations which are hard to break. There are ethnic ties which are powerful. There is an opposition party which is not much of an alternative. But make no mistake, President Obama has taken this country down a very dangerous path and now is the time to set the country back on the right one, before the next president comes in and makes things even worse.
Soon nothing at all will be private. The government will have access to everything it could possibly want to know about you. (It can gather it fairly easily already.) Powerful new Internet tracking tools and prediction algorithms are being deployed right now.
“Don’t ask for whom the (debt) bell tolls, it tolls for thee.”
By N. Yakovlevitch
Does Detroit filing for bankruptcy indicate that the decades of corruption and can-kicking in America’s municipal governments have finally caught up with us? I don’t think most Americans understand just how serious this is and just how much it matters to their daily lives – even if you live nowhere near Detroit.