10/18/11 Paris, France – Last week, the economy seemed to be looking up after all. No recession. No bear market. No muss. No fuss.
But this week started out on the wrong foot. All of a sudden, there was muss and fuss again. Stocks sold off yesterday…with the Dow down 246 points. Oil slipped a little. Gold too.
No surprise to us, is it dear reader? After all, we’re in a Great Correction that could be tipping into a worldwide depression. Here’s David Rosenberg with more explanation:
The reality is that the United States is still grappling with the excesses created by each of the last two bubbles of 1999-2000 and 2005-06. This is why employment is no higher today than it was at the height of the tech mania 12-years ago. Only 2.1 million jobs of the 8.75 million that were lost in the 2007-09 recession have been recouped. There are more than 20 million people in the total pool of available labor competing for three million job openings — a seven-to-one ratio, which is more than double the historical norm, and far above what would be considered normal even in a garden-variety recession and supposedly we are (were?) in some sort of expansion.
A report published by two former Census officials found that given this grotesque amount of excess capacity in the labor market, real median income since December 2007 [has] contracted by nearly 10%.
Is it any wonder that confidence surveys are so depressed? And it’s not just the University of Michigan or the Conference Board measures, either. A just-released WSJ/NBC News poll found that more than 70% of the nation believes the US is “on the wrong track” (74% to be exact, versus 17% who think otherwise). In October 2008, at the height of the crisis, that number was 78%. Nice to see we’ve made progress (and remember that the bear market then still had five months to go and the recession lasted another eight months for those who may be lulled into thinking that this is some sort of great contrary indicator).
And is it any wonder that the revolt of the popolo minuto continues? As we explained yesterday, the masses are getting restless. They know something is very wrong. Of course, they don’t know what. Or what to do about it. But they know they don’t like it. Bloomberg is on the story:
New Yorkers Back Occupy Wall Street Protesters, Poll Shows
Occupy Wall Street, the protest that has spread from Lower Manhattan to as far as Rome and Hong Kong, is supported by most New Yorkers, according to a Quinnipiac University survey.
Sixty-seven percent of New York City voters said they agree with the protesters’ views, while 23 percent don’t, the school’s Polling Institute said today. Support ranged from 81 percent among registered Democrats to 58 percent among independents and 35 percent from Republicans. By 72 percent to 24 percent, voters said law-abiding demonstrators can stay as long as they want.
The protests that began on Sept. 17 have inspired thousands to take to the streets in 100 US cities and on four continents worldwide, according to organizers. Participants say they represent “the 99 percent,” a reference to Nobel Prize-winning economist Joseph Stiglitz’s study showing the richest 1 percent of Americans control 40 percent of US wealth.
“Critics complain that no one can figure out what the protesters are protesting,” said Maurice Carroll, director of the Hamden, Connecticut-based institute. “But seven out of 10 New Yorkers say they understand and most agree with the anti- Wall Street views…”
The nice thing about revolution is that you don’t have to understand it. It doesn’t have to “make sense.” People don’t need reasonable goals or realistic proposals. Revolutions are like tech stocks. They allow people to believe whatever they want. They can imagine that the revolution will make them all rich…and powerful, too. They imagine themselves retired in Florida…or as the ambassador to the Court of St. James in London. They can imagine that the revolution will make their hair grow and add inches to their most private part. They can believe whatever they want.
But beneath the fantasies is a hard truth: the current system no longer works for them.
“In France, before the revolution, everybody was trying to get some special privilege,” explained our historian wife. “The rich and powerful always found some way to get ahead. I guess they always do. One had a monopoly on selling tobacco. Another had the right to collect taxes from some area in France. Still another got to sell fine fabrics or import china. Almost the entire aristocracy had been turned into zombies.
“The government was broke. It desperately needed money. So it began to squeeze everyone it could. This just made the situation worse.”
Meanwhile, the underlying economy was changing fast. While the zombies still controlled most of the land and the government, a new class of merchants and entrepreneurs was creating real wealth. This new dynamic bourgeoisie needed to get the zombies off its back.
The French Revolution began sensibly, with petitions and peaceful movements. The Estates General was convened. Grievances were heard. Change was promised. A great reform was proposed. And for a while, it looked as though France was on its way to becoming a constitutional democracy, like England, with its monarch and aristocracy still with heads on their shoulders, but with reduced powers. It looked like it might work…a peaceful revolution…an evolution towards a better system, one better suited to the needs of the new capitalistic era, with fewer zombies.
But it was not to be…the zombies dug in their heels. They resisted change…just like the elite always does. They could no more agree to give up their privileges than the elite in Washington today can agree to give up its revenues.
But the show must go on. Entrenched elites do no readily evolve; but history cannot be stopped. The unstoppable force of the Industrial Revolution and the Enlightenment ran right into the immoveable object of the monarchy and the privileged classes. The result? A huge, violent crash. The Committee of Public Safety…the Reign of Terror…and the Napoleonic Wars.
What’s ahead for the US and other developed countries? We don’t know. But the tax-spend-and-borrow model no longer works. Because these economies aren’t growing fast enough to keep up with the rising debt. Soon, they will be overwhelmed.
What then? Will they be able to reform themselves? Will “change” be more than a campaign slogan?
What Bastille will be stormed by the mobs? Whose head will roll?
We will have to wait to find out.
Finally, we include a special word of support for Baltimore radio host Ron Smith, who has been a long-suffering reader of these Daily Reckonings for many years. The other day, Ron announced on the air that he is suffering from pancreatic cancer. We wish him well in his fight; we hope to have him as a Dear Reader for many more years.
Regards,
Bill Bonner,
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
BB- “But beneath the fantasies is a hard truth: the current system no longer works for them.”
Most nihilistic college kids wouldn’t be able to tell what works and what doesn’t.
IUDM is pretty much correct on his observation. I would add, even if most college kids did know what works or what doesn’t, their near total inability to form a coherent written sentence would block them from persuading anyone to act based on their knowledge.
We in the US aren’t lucky enough to have an impending revolution, because revolutions require thought, communication, and action. The masses are so functionally illiterate that anarchy is pretty much their only option.
And to anyone who is wondering, NO, I did not post this from a mobile device. Absolutely nothing has collectively caused more brain damage to our youth than mobile devices. Most of them have allowed their entire lives to slip through their fingers as they masturbate the keyboard of their little electronic gizmos. And these are the people who are supposed to lead us out of the current crisis? God help us all if that’s the case.
Revolts don’t make sense. Too many different agendas and some of them are opposed to each other. They never know who the enemy is. They want to take on Obama’s Union Guy and his comrades. Yes, he is a billionaire, saw him at Davos on the BBC, and a tough looking one at that.
Sorry to hear about your friend with cancer. That is tough. Use marijuana to get over the kemo. It will have him back on his feet in 24 hours and takes away all that junk those meds do do your body. Demon mango is legal and is just the same as marijuana.
“And these are the people who are supposed to lead us out of the current crisis? God help us all if that’s the case.”
Do you honestly believe they are any worse than the people who led us into this crisis in the first place?
Amygdalin is the natural cure for cancer.
It’s found in many foods but tends to be in doses too small to help someone with cancer.
It’s found in high quantities in the seeds of certain fruits in the rose family, however – apples, apricots etc.
Apricot seeds in particular are rich in this amazing cancer-fighting substance.
Do some research on it.
@Aticus I’ve watched the documentary “World without Cancer” It seems a good idea to look for amygdalin. Anyway, I always read libertarians MD like Douglass William Campbell, Bill Sardi and Donald Miller from lewrockwell.
What do you guys think about those?
What about Dr Burzinsky? For instance he looks pretty liberal…
3rd Cousin –
It’s not that they are any worse.
The problem is that they are just as clueless.