Thursday - June 16, 2011

Zombienomics

I’d like to repost a link that I posted the other day. It’s an article on how our dead economy is going to continue chugging along, and never get much better, even though it is dead. Mostly dead.

Here is the link.

Now I am not an economist, nor am I well versed at watching the moves in the market and figuring out what they mean. I think this guy “Spengler” might be. I put quotes around his name, because I’m pretty certain that “Spengler” is actually David Goldman; what the above link covers briefly, the past two months worth of David Goldman columns ( starting from about here ) cover in much greater detail. Same graphs, same conclusions, often the same expressions, but with more detail. Yup, same guy.

We’ve got a creative-destruction economy, without the creation: the startups, the venture capital, the entrepreneurship. MySpace and LinkedIn don’t count: they are a faddish extension of old technology, a means by which Americans who bowl alone can pretend to have lots of friends.

The only thing expanding is the government sector, and that by a spectacular margin.  Nearly a fifth of all personal income receipts by Americans now consist of transfer payments, which is to say that a fifth of all personal income received by Americans is redistribution of tax payments from other Americans.

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A major depressant on the property market is the simple calculation that property taxes have risen substantially as a percentage of the value of real estate. The deflationary consequences of this result will appear either on the balance sheet of households and businesses, in the form of lower property values, or on the income statements of state and local governments, in the form of lower tax collections.

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I hate to repeat myself, but this kind of implosion of private credit creation, never, NEVER happened before. We are in uncharted territory. We have had NO recovery in the private credit creation mechanism since the 2008 crisis. The banks keep buying Treasuries, and shedding risk assets.

The reason we’re not going to get a double dip is that there’s no more risk to be shed. There are no more workers to be fired. There are homes to be liquidated, but the banks have enough capital to absorb it, and they’re not making loans anyway.  Mortgage lending has collapsed, the housing sector is flattened, entrepreneurship is despondent–but big corporations can still take advantage of global economic growth. They will churn out profits but they won’t hire.

This is NOT, NOT, NOT a business cycle. Throw out your macroeconomics textbook. It was lousy in the past when we had business cycles. Now we have a different sort of economy.

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No start-ups, no employment growth.

What does the US need?

A repeal of Obamacare and slashing of regulations that choke off business start-ups.

Elimination of capital gains tax and dividends tax, period.

Cuts in the corporate tax rate.

In other words, we need a capitalist restoration to overturn the socialist revolution of the past few years.

I read the Zombienomics essay and the dozen or so posts that went into making it, and I’m beginning to feel that Goldman knows what he’s talking about. The banks, the government, and the top corporations are all doing just fine, thanks. They are above the fray. Whatever recovery we have had has gone to the big money players, and the rest of us can go pound sand. That’s what you get when your Manchurian Candidate is a puppet operated by Goldman Sachs.

No, understanding what’s going on is not going to make me rich. I am portfolio free, unfortunately. But such an understanding might help me figure out how we’ve all been played, and who the players really are. And possibly give us some survival tips for life here in the United Socialist States of America. ( Goldman’s term, not mine. But just how true is it? Quite, I’m thinking. Fundamental Change and all that. )

It took me perhaps 45 minutes to read the Zombienomics essay and all the other essays that went into it. It’s taken me several hours to even begin to digest it.

Posted by Drew458     on 06/16/2011 at 09:40 PM   
Filed Under: • Economics •  
• Comments (1) • Trackbacks(0)  Permalink •  

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