Trump

This Is Not The Greatest Economy Ever

By David Stockman  |  July 29, 2019

Coming up on a year ago, I delivered a presentation at the 6th Irrational Economic Summit, the annual get-together hosted by Harry Dent and his team.

I “road-tested” what evolved into my most recent book, Peak Trump: The Undrainable Swamp and the Fantasy of MAGA.

Things went pretty well, and I’ll be back for the 7th iteration of IES at National Harbor, just outside Imperial Washington’s Beltway, October 10-12, 2019. I’ll be delivering the keynote address this year.

I imagine that’s because, as I noted in the July 18 DSD, we seem to have reached a critical juncture in the long-term experiment that is the United States of America.

“This feels like an inflection point,” I wrote. We’re stressing and stretching both financial markets and political institutions just about as far as they can be stressed and stretched.

As I see it, “Peak Trump” is either the signpost we blast through on our inevitably disastrous – in almost every conceivable respect – rendezvous with the Empire Hedge.

Or, the Donald realizes his destiny as the Great Disruptor and becomes the destroyer of this postwar world. An entrenched, self-interested, and Acela Corridor-dominated global elite has turned the entire apparatus for its own devices.

Here it is, in one graph:

 

Is the survival of American-style free-market capitalism in question? Of course, folks on the Left are screaming – literally – about “Inequality!” and the “inherent evils of capitalism.”

Well, there are folks on the Right concerned about multiple destructive tendencies first fiscal and, now, perhaps catastrophically, monetary authorities have let fester.

It’s more than a crony here, a crony there. There’s a crony everywhere. It’s systemic, it’s established, it’s bipartisan. And this duopoly just might kill us all.

Let’s put it this way: Why do you think Russia and China “seek to rebalance military might in Asia-Pacific” and are conducting joint air patrol tests around neighboring Japan and South Korea?

Those “Great Powers” – Russia and China – would like to end this era of the single “Super Power.” Sometimes it seems they’d like nothing more than to bury the whole idea of the “American Century.”

And, with our mismanagement at home on top of misadventure after misadventure abroad, we’ve exposed ourselves to challenge, by serious players, who control considerable resources.

Russia and China are plagued with their own sets of problems that render their individual cases for global domination basically moot.

But history tells us that hegemonic challengers need not necessarily “win.”

We will certainly lose our status – all by ourselves, with no malign exertions from overseas – if we maintain our present heading.

“Status quo” is certainly in the entire Acela Corridor’s interest. Ask yourself why, for example, Nancy Pelosi really is so shy about impeachment.

There’s a lot of explanatory value in the simple statement, “Well, the Dow’s 27,000 and the S&P’s at 3,000.”

Daredevils keep nibbling at the dips, and the indexes keep scrambling up.

But it’s a fool’s errand, as incoming data reminds us more and more each day.

The broad financial and economic landscape is nothing near this “greatest economy ever” of presidential imagination.

Neither the ballyhooed U-3 unemployment rate at 3.7% nor the Dow at 27,300 measure sustainable success.

They’re fluky artifacts of thoroughgoing rot.

When it comes to the core fundamentals, in fact, we’ve never before seen end-of-cycle conditions this bad.

Global debt markets are busted; asset allocators are mired in a mindless-desperate-and-growth-retarding search for yield.

Equities are egregiously overvalued; they hang from a fragile skyhook, as Corporate America’s profits are flatlining, not soaring as claimed.

And Main Street – the good, old, borrowed-up American Consumer – will run out of gas.

It’s been 121 months, and “recovery” is still but a rumor when it comes to work and wages.

We’ll address it in multipart series this week, “This Is Not the Greatest Economy Ever.”

A Modest Proposal

Desperate times call for… “common sense” measures.

And these are desperate times… Markets are corrupted by monetary central planning. They’re confused. And the road back is going to be treacherous.

We’re looking at a major re-pricing for all financial assets. And thousand-point intraday or day-to-day swings are part of that equation. Those can be frightening… for “buy and hold” investors.

I have a different approach, one that combines strategy and tactics into a plan flexible enough for you to survive and thrive amid the coming chaos. It’s called “The Stockman Model.”

All we’re after is a little stability, perhaps a chance to pocket a windfall when opportunity presents…

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR