America's Disneyland Economy

Tyler Durden's picture

Authored by Michael Snyder via The Economic Collapse blog,

Disneyland is known as a place “where dreams come true” and where every story always has a happy ending.  But there is going to be no happy ending for the U.S. economy.

Wishful thinking has resulted in one of the greatest stock market rallies in history in recent months, but like all childhood fantasies, it won’t last.  The real economy continues to deteriorate, and we can see this even right outside of the gates of Disneyland.  Every night growing numbers of homeless people sleep on the pavement just steps away from “the happiest place on Earth”.  It can be fun to “play make believe” for a while, but eventually reality always catches up with us.

Without a doubt, the stock market has been on a tremendous run.  Since Donald Trump’s stunning election victory in November, the market has been setting record high after record high, and it is now up a total of 17 percent

The Dow Jones Industrial Average recorded its 23rd all time high of 2017 yesterday closing at 21,532.  There have been a total of 120 days where the markets have closed since President Trump’s inauguration on January 20th.  The ‘DOW’ has closed at all time highs 23 of those days for nearly 20% or one-fifth of the days the market has been open.  The market is up 9% since the inauguration.

 

Since the election on November 8th the DOW has closed at record highs an amazing 40 times!   Nearly one-fourth or 24% of the 168 days the markets have closed have been record highs since the November 8th election.  The market is up 17% since the election!

If this surge was supported by hard economic data, that would be something to greatly celebrate, but that has not been the case at all.

Instead, stock prices have become completely disconnected from economic reality, and now we are facing one of the greatest stock bubbles of all time.  As Graham Summers has pointed out, stocks are now trading at price to sales ratios that we haven’t seen since the very height of the dotcom bubble…

Earnings, cash flow, and book value are all financial data points that can be massaged via a variety of gimmicks. As a result of this, valuing stocks based on Price to Earnings, Price to Cash Flow, and Price to Book Value can often lead to inaccurate valuations.

 

Sales on the other hand are all but impossible to gimmick. Either money came in the door, or it didn’t And, if a company is caught faking its sales numbers, someone is going to jail.

 

So the fact that stocks are now trading at a P/S ratio that matches the Tech Bubble (the single largest stock bubble in history) tells us that we’re truly trading at astronomical levels: levels associated with staggering levels of excess.

There is no possible way that this is sustainable, and just like before the 2008 crisis a whole host of experts are warning that disaster is imminent.  One of them is John Mauldin

Looking with fresh eyes at the economic numbers and central bankers’ statements convinced me that we will soon be in deep trouble. I now feel that it’s highly likely we will face a major financial crisis, if not later this year, then by the end of 2018 at the latest. Just a few months ago, I thought we could avoid a crisis and muddle through. Now I think we’re past that point. The key decision-makers have (1) done nothing, (2) done the wrong thing, or (3) done the right thing too late.

 

Having realized this, I’m adjusting my research efforts. I believe a major crisis is coming. The questions now are, how severe will it be, and how will we get through it?

And even though the stock market has been surging deeper and deeper into bubble territory in recent months, the middle class has continued to shrink and poverty has continued to grow all over the country. 

In fact, because so many homeless people have been sleeping at bus shelters across from Disneyland lately authorities decided to completely remove the benches that they had been sleeping on

The vanishing benches were Anaheim’s response to complaints about the homeless population around Disneyland. Public work crews removed 20 benches from bus shelters after callers alerted City Hall to reports of vagrants drinking, defecating or smoking pot in the neighborhood near the amusement park’s entrance, officials said.

 

The situation is part of a larger struggle by Orange County to deal with a rising homeless population. A survey last year placed the number of those without shelter at 15,300 people, compared with 12,700 two years earlier.

But simply removing benches will not make the problem go away.

Homelessness has been growing so rapidly in Los Angeles that the the L.A. City Council actually asked Governor Jerry Brown to formally declare a state of emergency.

And in New York City, street homelessness is up 39 percent over the past year.

This is where the real economy is heading, but a rising stock market makes for much happier headlines.

Many major cities around the nation are passing laws to essentially make it illegal to be homeless.  Forcing homeless people to go somewhere else may mask the problem for a while, but it certainly doesn’t do anything to solve it.  In my new book entitled “Living A Life That Really Matters”, I talk about how real love is not just about loving those that are just like us.  Rather, real love is about caring for people no matter what they look like and no matter what they are going through.

Unfortunately, the economic suffering that we are seeing right now is just the beginning.

Just like in 2008, the major financial crisis that is coming is going to greatly accelerate our economic problems.  And just like last time, millions of people are going to lose their jobs, and millions of people are going to lose their homes.

Homelessness is already worse in many parts of the nation that it was during the depths of the last recession, and what we are going to see during the next economic downturn is going to be absolutely unprecedented.

So don’t look down on those that need a helping hand, because in the not too distant future you may find yourself needing some help.

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Iconoclast421's picture

The real economy was deteriorating pretty bad in 2007 (far worse than it is now). That did not stop the stock market from having not one but TWO 15% rallies in the same year.

Cognitive Dissonance's picture

"There is no possible way that this is sustainable, and just like before the 2008 crisis a whole host of experts are warning that disaster is imminent.  One of them is John Mauldin…"

First off, John Mauldin is NOT an expert. He is a punter who talks his 'book' (his million plus readers who follow him because he tells them what they what to hear, something he has repeatedly admitted to in his newsletter) and was a grand supporter of the Fed since well before 2008-09.

John did not call the 2008-09 crash until it was well advanced.

Second, if Mauldin had not gone on vacation, would he have had his epiphany? He has said publicly that if he gets the 'next' market crash wrong like he got the first market crash wrong he will loose many many readers. So I think this is just John getting out in front of the crowd headed for the exit.

All Risk No Reward's picture

Forget Mauldin, the data and underlying logic of debt-money systems indicate that what he says is very likely to be accurate.

Trump was installed into office ($2 billion free advertising, criminal investigation October Surprise) in order to be the debt-money bubble bust fall guy (they will blame him, not the ROOT CAUSE Banksters, watch!!!!) and the DOMESTIC ECONOMIC HITMAN.

Goldman operatives are all over the place, including a literal Skull and Bones guy running Treasury.

Can't get more "outsider" than Skull and Bones, right?

The setup couldn't be more obvious.

GunnerySgtHartman's picture

And when it happens, the Fed and its band of merry men will not be able to fix it even with NIRP and massive QE.  The reset HAS to happen. (I will no longer call it a "correction," as we are way past that.  It will be a full-on reset.)

All Risk No Reward's picture

It isn't a reset, it is "wipe out" for ordinary people...

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
~Lord Acton

The debt-money bust will be the final decision on the banks vs. the people issue... and the people will lose... badly.

How To Be a Crook
https://www.youtube.com/watch?v=2oHbwdNcHbc

Poverty - Debt Is Not a Choice
https://www.youtube.com/watch?v=t7BTTB4tiEU

Renaissance 2.0 The Rise of [Debt-Money Monopolist] Financial Empire
https://www.youtube.com/watch?v=96c2wXcNA7A

Debunking Money
https://www.youtube.com/watch?v=5iBSBVew-3Y

Lost in translation's picture

Quit reading at Michael Snyder.

Snyder has ties to PTL Satellite Network, which is promoting him as "a prophet." PTL = Jim & Tammy Bakker.

As another ZHer already pointed out, Snyder is running for political office.

PUNCHY's picture

I bet you are pleased there's a free market  Messiah in the White House hey? Even more so now that he's appointed his GS money changers to oversee the US retirees/pensioners best interests, after gutting any and all forms of control over the banking sector cowboys at the same time.

Well Mom and Pop voted for him bigly, so I guess they are gonna have to put up with him for a little longer.

ThanksIwillHaveAnother's picture

Didn't know he is a Jesus Freak.   Jesus Myth was invented by the Flavians of Rome.   I guess that is how he keeps writing and writing...the Fear of Jesus!

mkkby's picture

Disneyland is where you pay thru the nose to stand in long lines under a blazing sun.  Pure pain.  That is what this economy is for the 90 percenters.  A suckers bet painted over by marketing.

Fuck all these pied pipers with their bullshit opinions.  Markets have never been tied to fundamentals.  NEVER.  Markets are human emotion, which is unpredictable.  This is a bull market until it's not.  When it's over the price action will be obvious to anyone with eyes.  That may be 5 days or 5 years from now.  Goldman will decide.

TalkToLind's picture

I'm still waiting for the Disney/Pixar production of The Emperor Has No Clothes.

PUNCHY's picture

.....and very sparse hair as well.

Ghordius's picture

culprit number one: the immense military spending

seriously, Americans are completely clueless about how... gigantic the US federal "waste for war" is

with 600 billions per year, the US should be able to:

1. defend itself and it's interests abroad

2. balance it's federal budget

3. have sensible social spending

other countries do the same with way, way less

so it's easy, really: this "Disneyland Economy"? it's a War themed park

and then next announcement is incoming. another "War on...". it does not matter on what, as long as it is not war itself

consume, obey and yell for more war

Hal n back's picture

Ghordius: all you have  to do is point out in general Americans are clueless.

Lazy too.

 

Ghordius's picture

neither is true, imho

in fact, I often wonder how those who think so would fare in their environment

the environment shapes humans, literally, both mind and body

europeans like me, of my (advanced age), for example, were subjected to two sets of propaganda: from the US and the SU

if you shine two lights on an object, you have less darkness and better 3D vision, and see better the propaganda as what it is: a light that creates as much darkness as the opposite

Anon2017's picture

Europeans have also been through two world wars in the past century. My guess is that European schools do a better job educating their students about the wars. For most Americans, wars are something they experience on TV or at the movies. The draft was abolished back in 1973, a very long time ago if you are a millenial. A lot of Americans have not yet realized that they are competing with war veterans for funding of public services. The expenses related to the US wars in the Middle East did not end when Bush 43 or even Obama left office. Veterans wounded in 2003 or 2013 may live anther 40 or 50 years and be in need of government help for the rest of their lives.  

Nexus789's picture

. More than six hundred billion if you add in the spy and other related agencies. 

Seb's picture

They need the huge military spending in order to enforce the USD as Reserve Currency. And as long as USD is the world's reserve currency, they can keep spending as much as they whant on whatever they want. All they have to do is print more money. What's not to like (for them)?

SmokeOrMirrors's picture

And,  at minimum we should have secure borders for all that money we spend,  which we DON'T. 

Vinividivinci's picture

America gets a handjob but no "happy ending"...

AG17's picture

Who says key decision makers are doing nothing, they are planning cover up-war!! 2018 it is. Nuclear Winter. 

44_shooter's picture

"I now feel that it’s highly likely we will face a major financial crisis, if not later this year, then by the end of 2018 at the latest."

Uh huh.....

Byte Me's picture

TBAH - I thought that the US economy was more like the Do Lung bridge in Apocalypse Now:

https://www.youtube.com/watch?v=W82YyP9nleQ

10mm's picture

Don't look down to give a pot head,drinking homeless person. I'll pass.

Shed Boy's picture

Actually, Disneyland is known as "The happiest place on Earth". America was supposed to be the place where "Dreams come true."

silverer's picture

Dreams do come true. It's reality that doesn't.

umdesch4's picture

The problem with "helping" is that what doesn't kill you makes you weaker, despite the bullshit platitudes. So many people less than a paycheck away from poverty and homelessness themselves, they can't afford to help those who are just on the other side of the line. My property taxes, and hence my mortgage payments, just went up...again. I'm looking at reducing some of my charitable donations to make up the difference because I'm certainly not doing so hot at retirement savings lately. The price of everything goes up so much faster than my salary does.

TuPhat's picture

The price of everything goes up fast and my fixed income retirement stays the same.  Still keeping my head above water but for how long?

Anon2017's picture

I suggest that you take in a room mate to help with expenses, preferably someone you know well and may also be having trouble meeting expenses. Help someone else, as you help yourself.

Too many Americans have bought into the BS that "we're #1". Bill Gates is #1 but the bottom 80% is just struggling to pay all of their bills, even doctors that I know.

Back in 1957, when "Leave it to Beaver" first came on the air, I would occassionally watch it on someone else's TV, as our family could not afford a TV set in those days. I was impressed by how well the Cleavers lived, even if it was only make believe. Beaver and I were about the same age. 60 years later, I seem to be one of a small percentage of Americans who doesn't have financial problems.       

 

how_this_stuff_works's picture

" My property taxes, and hence my mortgage payments, just went up...again. I'm looking at reducing some of my charitable donations to make up the difference because I'm certainly not doing so hot at retirement savings lately."

It seems the politicians think the average American is a cash cow. They haven't gotten the message that there's an end to the money. When people are strapped by health insurance costs alone, how can they possibly support the economy overall?

Disney, too, should be starting to feel "the pinch."

silverer's picture

I have confidence in the whole scheme and that the Ponzi experts can keep it running for quite some time. Everytime a problem comes up with the economy, they figure out a way to overcome it. Americans, for the most part, are forever gullible and ignorant about the way the US financial system and markets work, and believe sources of information like MSNBC, CNN and Gartman. You actually have to hope they keep this going, because when the music stops, we already know there is a severe chair shortage.

GRDguy's picture

Notice that no one ever says who's "dreams come true" and who's "story has a happy ending".

At the moment, it's only evil that seems mostly rewarded.  

The sheep haven't woke up yet.

The book has already been written, back in 1903. 

https://en.wikipedia.org/wiki/The_People_of_the_Abyss

 

RubyPetunia's picture

Homelessness does not equal bad economy. There was a whole lot of homelessness -- at least that's what the media reported -- back in the 80s. 

how_this_stuff_works's picture

"Homelessness does not equal bad economy. There was a whole lot of homelessness -- at least that's what the media reported -- back in the 80s."

That may be true, but look at some of the differences between the 80s and today.

There were food banks, food assistance programs, but they were never "mainstream" news. There are routinely ads on the radio and TV encouraging donations. And that doesn't take into consideration EBT cards. And now there are more (2) generation households, and not just college grads moving in with mom and dad.

I had never heard of Section 8 housing in the 80s. Now, articles everywhere depict a shortage of available housing. The local mission is conducting a drive to build a new facility to better accommodate "families."

Homelessness in itself may not reflect a "bad economy," but other signs do.

adr's picture

Nearly all publicly traded companies are faking sales, but nobody is going to jail. 

Accounting rules were changed that allowed a certain level of legal fakery. 

Every company should have the same fiscal year, but they don't. This allows for massive sales fraud. You count inventory as sold, then take it back after your fiscal year. 

Then you have the corporate headquarters listed as a separate company from the stores the umbrella company owns. This enables product to be booked as sold, as the distribution center "sells" the product to the stores. Somewhere the cost of goods is listed, but the true sale doesn't happen until the product is checked out. Which may never happen. 

I've always wondered how you get multiple billion dollar companies in a market sector that maxes out around a billion dollars. If 100% of the customers make up a market that totals $1.5 billion, how can $5 billion be sold to them? 

Everything is fake. The stock market can only exist in a fake economy. Reality can't support $100 trillion valuations. 

redc1c4's picture

Dingyland is NOT the "happiest place on earth"...

if it was, there would be a bar on every corner, and drink wenches topping you off while in line for the next ride.

:-)

Jasher's picture

They turn the needy out of the way: the poor of the earth hide themselves together.

He that hath pity upon the poor lendeth unto the Lord; and that which he hath given will he pay him again.


44_shooter's picture

"I now feel that it’s highly likely we will face a major financial crisis, if not later this year, then by the end of 2018 at the latest."

Authored by Michael Snyder

Well sure, revised from last year when it was if not later this year then by the end of 2017 - which will be revised next year to if not later this year then by the end of 2019. 

I think I've been hearing this since 2008.  Fuck you Mike, and your ass buddy Mac Salvo.

ZeroLounger's picture

Ahhh, c'mon;  we all know it's true, the shit's gonna hit the oscillating air pusher one of these days.  It's gonna happen.  This shit's been going on a LOT longer than any of us could have imagined.  Give the guy a break, he's really trying to warn the sheep what most of us have known now for, what, 10 years?

ZangotheMagnificent1's picture

EVERYBODY LOVES DISNEYLAND! You are a slow boy and don't get it. If an economy has 25 balls juggling who cares if one or two drop?

ZangotheMagnificent1's picture

Another loser Zero Hedge "Doom and Gloom" story