What Could Go Wrong?

Authored by James Howard Kunstler via Kunstler.com,

Everybody and his uncle, and his uncle’s mother’s uncle, believes that the stock markets will be zooming to new record highs this week...

And probably so, because it is the time of year to fatten up, just as the Thanksgiving turkeys are happily fattening up - prior to their mass slaughter.

President Trump’s new Federal Reserve chair, Jerome “Jay” Powell, “a low interest-rate kind of guy,” was obviously picked because he is Janet Yellen minus testicles, the grayest of gray go-along Fed go-fers, going about his life-long errand-boy duties in the thickets of financial lawyerdom like a bustling little rodent girdling the trunks of every living shrub on behalf of the asset-stripping business that is private equity (eight years with the Deep State-ish Carlyle Group) while subsisting on the rich insect life in the leaf litter below his busy little paws.

Powell’s contribution to the discourse of finance was his famous utterance that the lack of inflation is “kind of a mystery.” Oh, yes, indeed, a riddle wrapped in an enigma inside a mystery dropped in a doggie bag with half a pastrami sandwich. Unless you consider that all the “money” pumped out of the Fed and the world’s other central banks flows through a hose to only two destinations: the bond and stock markets, where this hot-air-like “money” inflates zeppelin-sized bubbles that have no relation to on-the-ground economies where real people have to make things and trade things.

Powell might have gone a bit further and declared contemporary finance itself “a mystery,” because it has been engineered deliberately so by the equivalent of stage magicians devising ever more astounding ruses, deceptions, and mis-directions as they enjoy sure-thing revenue streams their magic tricks generate. This is vulgarly known as “the rich getting richer.” The catch is, they’re getting richer on revenue streams of pure air, and there is a lot of perilous distance between the air they’re suspended in and the hard ground below.

Powell noted that the economy is growing robustly and unemployment is supernaturally low. Like his colleagues and auditors in the investment banking community, he’s just making this shit up. As the late Joseph Goebbels used to say describing his misinformation technique, if you’re going to lie, make sure it’s a whopper.

The economy isn’t growing and can’t grow.

The economy is a revenant of something that used to exist, an industrial economy that has rolled over and died and come back as a moldy ghoul feeding on the ghostly memories of itself. Stocks go up because the unprecedented low interest rates established by the Fed allow company CEOs to “lever-up” issuing bonds (i.e. borrow “money” from, cough cough, “investors”) and then use the borrowed “money” to buy back their own stock to raise the share value, so they can justify their companies’ boards-of-directors jacking up their salaries and bonuses - based on the ghost of the idea that higher stock prices represent the creation of more actual things of value (front-end-loaders, pepperoni sticks, oil drilling rigs).

The economy is actually contracting because we can’t afford the energy it takes to run the things we do - mostly just driving around - and unemployment is not historically low, it’s simply mis-represented by not including the tens of millions of people who have dropped out of the work force. And an epic wickedness combined with cowardice drives the old legacy news business to look the other way and concoct its good times “narrative.” If any of the reporters at The New York Times and The Wall Street Journal really understand the legerdemain at work in these “mysteries” of finance, they’re afraid to say. The companies they work for are dying, like so many other enterprises in the non-financial realm of the used-to-be economy, and they don’t want to be out of paycheck until the lights finally go out.

The “narrative” is firmest before it its falseness is proved by the turn of events, and there are an awful lot of events out there waiting to present, like debutantes dressing for a winter ball. The debt ceiling… North Korea… Mueller… Hillarygate….the state pension funds….That so many agree the USA has entered a permanent plateau of exquisite prosperity is a sure sign of its imminent implosion. What could go wrong?


Dindu Nuffins IH8OBAMA Mon, 11/06/2017 - 18:47 Permalink

Goebbels and Hitler never claimed to be using the Big Lie themselves.Rather they claimed that the mostly jewish-owned press was constantly using the Big Lie. Is that claim so unbelievable, when you can't even get the right story these days about Shinzo Abe dumping his fish-food in the tank before Trump did? A parade of Big Lies are all around us now, and Hitler certainly isn't the culprit of them.The very fact that you always hear Adolf and Goebbels were openly boasting of using the Big Lie themselves is an example of the cunning of the real Big Liars.  The very real Judenpresse of the western democratic world. For he who controls the money and the information controls the democracy. 

In reply to by IH8OBAMA

Barry Madingo-Odongo 38BWD22 Mon, 11/06/2017 - 15:13 Permalink

Read Mein Kampf: A big lie (Germangroße Lüge) is a propaganda technique. The expression was coined by Adolf Hitler, when he dictated his 1925 book Mein Kampf, about the use of a lie so "colossal" that no one would believe that someone "could have the impudence to distort the truth so infamously." Hitler claimed the technique was used by "the Jews" 

In reply to by 38BWD22

RTP Barry Madingo-Odongo Mon, 11/06/2017 - 16:53 Permalink

Goebbels "big lie...." is Hollywood history. The orginial quot is: “Churchill’s Lie Factory"

“One should not as a rule reveal one’s secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.”

In reply to by Barry Madingo-Odongo

38BWD22 Buckaroo Banzai Mon, 11/06/2017 - 15:40 Permalink

  BB, next time you are at the bookstore, leaf through his book.  His discussion is convincing.He even is careful re defining hot words like "fascism", Socialism, etc.  D'Souza classifies Fascism as a subset of Socialism.  AKA Collectivists.He also discusses projection ("transference") of The Left (who claim their enemies do just what they themselves do).

In reply to by Buckaroo Banzai

Buckaroo Banzai 38BWD22 Mon, 11/06/2017 - 19:08 Permalink

Only ignoramuses and misinformers classify Fascism as a form of socialism. Hitler put the word "Socialist" in the party name as a marketing move because it was a popular political concept at the time. But the plain fact of the matter is, Nationalism and Socialism are mutually exclusive concepts. Stalin proved this when his Russian Nationalist version of communism collapsed. Trotsky had it right, the only version of socialism that can work is international socialism-- the socialist elite must have complete control of the entire planet and turn it into a prison camp for socialism to work. There must be NO ESCAPE.D'Souza is flat-out wrong on this point. But what else would you expect from a fucking street-shitter? That race has been thoroughly corrupted, and their shitty country is simply a reflection of this fact. You can take the street-shitter out of India, but you can't make him shit in the toilet...well, metaphorically speaking. He probably doesn't actually shit in the street, but you get what I'm driving at.

In reply to by 38BWD22

malek Buckaroo Banzai Tue, 11/07/2017 - 11:41 Permalink

Are you just blabbering or do you think before you write?

When you compare communism and fascism, do you do it by concept (i.e. the theory) or by the way they are behaving (i.e. practice)?
Because utopian ideas have very little congruence between those two.

And back to the comparison, to REFUTE with a straight face that communism and fascism *in practice* are very similar to each other, just makes you look stupid.

In reply to by Buckaroo Banzai

karenm Barry Madingo-Odongo Mon, 11/06/2017 - 15:55 Permalink

Yep, and nowhere has the lie been so successful at converting previously skeptical thinkers into rampant, delusional Kool-Aid drinkers than right here on Zero Hedge. Maybe......just maybe......this thing has been dragged on this long for that very purpose. To destroy every last bear before the slaughter. That's something 99% of ZH'ers would've understood 4 years ago, but not now. No, now they're more on the train than the worst BTD'er of 2014 ever was. Heck, in a sick ironic twist of fate, the BTD'ers are more wary of the market now than the recently converted bulls. Indeed, the BTD'ers will have made money when it was time and left when it was time, more so than the original bears.  

In reply to by Barry Madingo-Odongo

Giant Meteor karenm Mon, 11/06/2017 - 16:28 Permalink

"... the BTD'ers are more wary of the market now than the recently converted bulls. Indeed, the BTD'ers will have made money when it was time and left when it was time, more so than the original bears...."Excellent. The important key for every good Ponzi player is to know precisely when to exit ...

In reply to by karenm

karenm buzzsaw99 Mon, 11/06/2017 - 15:57 Permalink

Wall Street ain't letting you have their money in the end, just know that. You can sell it all tomorrow and you're still having it pulled from your dead corpse when the bombs drop, and they will drop. Or did you think the greatest bubble in history would end peacefully and without incident?  

In reply to by buzzsaw99

RagnarRedux Mon, 11/06/2017 - 15:49 Permalink

"As the late Joseph Goebbels used to say describing his misinformation technique, if you’re going to lie, make sure it’s a whopper..."Like the whopper you are attempting in that line?! The BIG LIE was the Modus Operandi technique of collective Jewry, NOT the NS's explaining to the German people how they are going to be lied to by the NS's. Good Gods.

whitedragon Mon, 11/06/2017 - 15:16 Permalink

Why is Kunstler still being posted here. His writing is WORTHLESSThe economy will grow. Never undersetimate human ingenuity. Even in COMMUNIST CHINA it grows. It doesn't grow for the fat or the old or the stupid, but it does grow, and it's not always official and you can't always see it. Most of the people who grow it don't flaunt it that much. It is growing and will grow, despite taxes and the bankers taking their rents. The progress of technology leaves a lot of room for everyone to take their cut (no matter how illegitimate their claims).

Giant Meteor whitedragon Mon, 11/06/2017 - 16:50 Permalink

Oh contraire amigo. Never undersetimate the depth of human greed, hubris, and corruption ..The economy grows? It shrunk, shrinks, shrivels like the nuts of an artic swimmer. The e CON omy is based upon unicorn farts, rainbows and skittles, the purest forms of financial ledgermain, and alchemy that the world has ever known. I understand WHY there is great preference of many, for the game to continue.

In reply to by whitedragon

Winston Churchill whitedragon Mon, 11/06/2017 - 18:59 Permalink

The economy can only contract from this point,unless you have access to some alien technologythat provides high net energy.We may be ingenious,but abolishing the 2nd law of thermodynamics is going to take a lotmore than that.We can manipulate fiat,the short term cost of energy,have nirp and zirp all eatingand destroying accumulated capital, but the curtain hiding the brick wall behind  is notgoing to stop it hurting  when we hit the wall at  100mph.Unless we get some high net energy source from somewhere very soon, the whole current system isnot sustainable as it is, let alone growing it from here.The predators at the top willbe fine,they get the net energy first,everyone else below is going to get fucked and be fightingfor table scraps,if they survive which is unlikely.The Rockerfella's getting out of oil completelyshould have warned you,no profit(net energy) in it anymore.Declining net energy means no"civilisation",and eventually very few humans.Just physics and logic.

In reply to by whitedragon

OverTheHedge whitedragon Mon, 11/06/2017 - 23:19 Permalink

There is a whiff of desperation in your post. The future is assured. We are all gong to be fine. Life goes on regardless.Really?To a point, you are right: I live in an economy that has contracted officially by getting on for a half (354 billion down to 194  billion).  Still, "normal"  life does go on, for most people. A bit of belt tightening, and a tiny improvement from the worst makes people imagine things are improving, but are they? Really? The only reason Greece exists as a coherent entity is because the other countries in the EU still work. Wait until that changes, and then.... poof!

In reply to by whitedragon

illuminatus Mon, 11/06/2017 - 15:19 Permalink

James makes valid points here, but the music plays on and all the musicians are happily playing the tune. It will end if and when one of two things happen, and I would guess it is option A. A: Central banks stop manipulating the exchanges/markets, or B there is finally a repudiation of fiat.

Kernighan Mon, 11/06/2017 - 15:31 Permalink

Not only this:Unless you consider that all the “money” pumped out of the Fed and the world’s other central banks flows through a hose to only two destinations: the bond and stock markets, where this hot-air-like “money” inflates zeppelin-sized bubbles that have no relation to on-the-ground economies where real people have to make things and trade things.I'd add:But increasingly aggessive chain substition used in computing price index figures.  The basket constantly changes so we're eating Spam now when we were eating steak just a decade or so ago.  You can find non-chain substitution figures and in most city areas the average annual inflation figure is closer to 10%Another point:How many know whether their retirement funds contain State of Illinois bonds?

Tolomeo resistedliving Mon, 11/06/2017 - 15:58 Permalink

NO Way! That comment’s right on the money! CBs cannot hike rates, they’ve got to keep them low and hope for the best! They will not deflate the bubble they created out of fear of what will happen (complete financial meltdown)... They’re trying to inflate slower, hoping growth picks up! The problem it’s debt! It’s way above GDP, at some point currencies become to expensive and will be devalued. What the FED and othe CBs are missing (badly) it’s inflation, it’s rampant in every day life, but not reflected in wages, this the regular Joe cannot pay old debt to squire new one and keep the ball rolling forward! That’s what may cause the next pop!!!

In reply to by resistedliving

ZeroBeek Mon, 11/06/2017 - 15:46 Permalink

"all the “money” pumped out of the Fed and the world’s other central banks flows through a hose to only two destinations: the bond and stock markets" And Trump? Trump has no clue.Trump is a coward picking Powell.