From Mark Grant, author of Out of the Box
It Is Indeed, A Fearful Place
“It is indeed, a fearful place. The torrent, swollen by the melting snow, plunges into a tremendous abyss, from which the spray rolls up like the smoke from a burning house. The shaft into which the river hurls itself is an immense chasm, lined by glistening coal-black rock, and narrowing into a creaming, boiling pit of incalculable depth, which brims over and shoots the stream onward over its jagged lip. The long sweep of green water roaring forever down, and the thick flickering curtain of spray hissing forever upward, turn a man giddy with their constant whirl and clamor. We stood near the edge peering down at the gleam of the breaking water far below us against the black rocks, and listening to the half-human shout which came booming up with the spray out of the abyss.”
-Sir Arthur Conan Doyle, The Final Problem
Here are words worthy of describing our present abyss. Here is a verbally painted picture of a terrifying falls where Holmes and Moriarty grasped and struggled and eventually plunged to an almost certain death. So this morning I invite you to sniff the sea air. I beckon you to wipe your eyes and clear them and take note of our current surroundings because we are standing at the rather infamous Reichenbach Falls and we are struggling with our almost certain fate as we attempt to keep ourselves upright before the plunge into the whirl of some fiscally boiling pit.
"I think that you know me well enough, Watson, to understand that I am by no means a nervous man. At the same time, it is stupidity rather than courage to refuse to recognize danger when it is close upon you."
We have gamed ourselves for too long and dined upon hopes and prayers and morsels of central bank expectations that have been tossed to us by the sirens that constantly and consistently surround the markets. I fear we have listened to their haunting calls and now, with some great degree of certainty in my mind, it will not just be a fiscal cliff but an intertwined market cliff from which we are about to plunge headlong over the side and down into the raging sea. The last rocky ledge is beneath our feet but the rock crumbles and the footing is slippery and the minions of both our President and our Congress are pushing mightily on our backs with the strength of the Herculean battle for the treasure of the nation. It is clear that some made the money and some did not but now everyone is clamoring for the keys to the vault and everyone feels entitled to the spoils. It is Denmark no longer but something rotten in the United States and beware the tidings of a new year!
The sales numbers for the Christmas season were dismal. The Associated Press reports that holiday sales increased 0.7% and were the worst since 2008. S&P and Moodys are cutting corporate debt ratings the most since 2009 as the ratio of downgrades to upgrades increased to 1.85% from 1.23% in 2011. Sovereign debt ratings are getting hammered globally as Europe careens into another recession, as China falters and as the United States is about to be swept into the rampage of a failed economic policy. Increase taxes, do not increase taxes it is but the while of a moment, the propaganda of eight days of financing the government as entitlements and social programs that cannot be afforded are not yet even a serious part of the national discussion. The subjects currently being bandied about are like droplets of water while the raging falls are ignored and the hours left are trivialized as we plunge headlong into midnight of December 31. Obama care, increased payroll taxes, increased personal taxes, increased entitlement programs, the debt ceiling and a nation living off the largesse of the Federal Reserve Bank printing paper from thin air as we prepare to join Alice in the great fall down the rabbit hole.
“It had darkened since I left, and now I could only see here and there the glistening of moisture upon the black walls, and far away down at the end of the shaft the gleam of the broken water. I shouted; but only the same half-human cry of the fall was borne back to my ears.”
Still the slosh of new money is there. The compression in the bond markets will continue for a time. America will join Europe in her recession and the Continent will be buoyed by the sharing of the misery. It will certainly not be the best of times and most probably not the worst of times but it will be a time that is not marked by much joy or good fortune either. I predict that anger will swell, that people will feel betrayed and that the social conscience of the nation will be frayed by what has been promised and cannot be delivered. The spirit of the season may well call; “Rest Ye Merry Gentleman” but it will neither be “rest” nor “merry” as the New Year begins.