Year End Party!

 

 

"Oh sure - Mr. Raincloud has shown up once again to ruin the party!"

Who would have thunk it? The Dow continues on in record territory and the corks are a popping! Our President, who has tried so hard to burden our economy with anti-growth measures, has failed. In spite of our government, the economy is in great shape! Or is it?

To quote the old Star Wars movies, "There is a disturbance in the Force." As much as we would like to ignore the worsening shimmy in our front end, we keep driving our economic vehicle anyway. The financial red flags that worried many last year, today get nothing more than a "meh...".

Once in a while there are a few who come along who do not drink the economic Kool-Aid. This week there was an article in Money News which sounds the economic alarm. The article states we are in danger of  "massive wealth destruction". What? I did not see THAT on the network news! And further more, what kind of Chicken Little people would try to ruin our year end party? Well, it is people like Marc Faber, Peter Schiff, Donald Trump, and other smart folk. To put it in Bob Dylan terms, because of our Fed policies coupled with our massive debt, soon a "hard rain is going to fall". 

But who cares? Debt? Not even Paul Ryan is worried about that anymore! Mr. Ryan it seems, has sampled the Potomac Kool-Aid and found it to his liking. At $18T, our debt is two steps beyond unsustainable. In two years it will be at $20T. There is no plan to fix it. Just sit back and watch it grow. The Fed will keep the market in record territory by further delaying the inevitable interest adjustment. And the Fed printing press? It is so overworked, it is glowing white hot.

Like anything else which needs fixing, the longer you put the fix off, the more painful it becomes. If you put off fixing something too long, it becomes unfixable. And that is what the article in Money News was warning about. 

Mark Hulbert from Market Watch has republished a chart which shows the parallels between the market leading up to the 1929 crash and where we are now. The trend lines are so close it is scary. A couple years ago, my wife and I went to a luncheon to hear a wise financial advisor. This man is world renown and speaks all over the country. We came looking to get some good investment tips. Instead we received a very ominous message - if you have money, spend it now. Soon it will not be worth as much. It will be worth less, quite a bit less. And he lays the blame for this coming catastrophe at the feet of Washington.

So party on folks! Who cares? Live for today! Nature has a way of weeding out the stupid, and soon our stupid financial mismanagement will weed out much of our wealth. Years from now, the history books will not be kind to us. The warning signs, the red flags, the bright blinking warning lights were all there, and we just ignored them. No, history will show us to be a Ship of Fools, on a foolish voyage, crashing into the rocks.