by David Haggith, The Great Recession Blog:
The world is descending into intellectual chaos. Read El Erian in the following linked article, and then come and back tell me we have not moved into madness:
There is clearly a tooth missing in one of the gears in El-Erian’s brain. How do you make this statement …
[A recession] is certainly not becoming a reality. You need either a major policy mistake or a massive market accident to push us into recession. But we will slowdown unless we build on the pro-growth policies.
… and then make the arguments he does against the Fed’s policies? Stunning in its apparent sightedness and blindness at the same time. The major policy mistake that El-Erian says we need is fully underway and is even mentioned by him, yet he doesn’t see it. That policy error is the Fed’s original recovery plan followed by the Fed’s Great Recovery Rewind plan. You cannot drain the water out of the reservoir you just filled and not have the reservoir go down. It was clearly an unsustainable plan in the first place!
Then El-Erian moves to the realm of lunacy:
The economy will remain strong, growing at 2.5%-3.0% but because what is happening in the rest of the world, because liquidity conditions have changed markets will remain volatile, so don’t be surprised if you see these 1000-point swings in the Dow, that is the new reality for now, and it reflects the fact that we are coming from a very good 2017.
Aside from the abysmal writing, El-Erian seems to rightly identify that the REST OF THE WORLD’S problems are happening because the Fed is reducing liquidity in the world’s global currency, but then he thinks the nation that is totally dependent on that currency (the US, in case you are an El-Erian fan who is slow to follow along) will continue to see a strong economy! Why would that nation not suffer the same settlement the rest of the world is experiencing?
Getting even crazier, Rl-Erian thinks 1,000-point swings in the Dow becoming the new norm are not going to be a wrecking ball? He doesn’t think that the “massive market accident” he claims is necessary for a recession is going to happen with a 1,000-point wrecking ball swinging back and forth through the china shop on a regular basis?
The level of seemingly intentional blindness at the top of economic advise to the elephant in the room is now astounding … almost beyond belief!
And what on earth does “a very good 2017” have to do with anything? We just had a very bad 2018. If things can go that poorly in the year following the roaring 2017, I think that makes the roaring 17 ancient history. It certainly doesn’t make it a foundation of support for 2019! It certainly doesn’t mean that all that went wrong in the year 2018 — with its record tax breaks, record foreign profit repatriation, record stock buybacks — is anything short of a complete chaotic mess!
The circus monkeys are the only act being watched
As I just said in a comment to Robert White, one of the regulars here, the circus monkeys get all the attention. It doesn’t matter that the most popular talking heads (like El-Erian) have never seen a big recession coming. They have the credentials or the celebrity status, so they get all the press all the time.
People don’t have time to sort through the logic of arguments. They want someone who has credentials they simply believe they can trust. But none of those big-name economists or celebrity advisors saw the Great Recession coming, and none of them see what is hitting us now (at all) — as El-Erian exemplifies — which is insane because it is so easy to see if you just ditch your denial.
So, the circus monkeys pull down millions of dollars a year to sit on television and fill people with a false calm, and I struggle to scrape together $500 a month. Moreover, they never have to figure out the technical issues of running their publishing platforms because they have staff to do that. I’m not a techie to get through all the technical issues, but I muddle through them as best I can when I can find time.
Thus, one feels like he is constantly struggling to get the word out to a comparatively tiny audience of people who are actually listening and that, when the economy does all come crumbling down, the majority of the world will remain completely unaware of the few small voices that were warning about the downfall and explaining why it would happen
That, I said, is why this is my last hurrah if I can’t even hit the sub-basement $500 support level. (But, hey, we’re halfway there, and I’m truly thankful to those who have stepped forward; so, we’ll see what happens. We just may make it, and I’ll stay in through January even below that level to give it a solid chance.)
It is not that I care about getting any credit for my theorizing, but what I do care about is getting people to listen. One hopes that times like this will provide clarity and that a voice that has been consistent in speaking about the coming of this time would rise out of the ashes of the collapse; but I’m not sure how that voice will even be heard over the chaos of trampling feet because the chaos is rising to a cacophony of alternative excuses to blame for our economic demise.
Come Hell or Hillary, we had no choice
This was why I wished on this blog long ago for Hillary to win, even though I said I could never possibly stomach voting for her (and I didn’t). Chillary sends chills down my spine. She would have been a horrible all-out-establishment president; but, at least, the entire blame for the present inevitable failure of the Fed would have fallen undeniably on the heads and hands of the establishment. I couldn’t wish her on the nation, but the alternative may be as bad in other ways.
Trump, I have always said, will craft himself into exactly the scapegoat the establishment needs in order to say, “See, vote against us, and look at how everything falls apart.” That he would do that was so obvious that I actually asked back then whether he might be the establishment’s chosen decoy to take the blame for their failure — someone they knew they could count on.
I still don’t know whether or not he rose according to plan or just fortuitous luck on the Fed’s part; but the fact is (and I recognize many readers here will not like hearing this fact) that Fed won’t even need to voice that argument for it to seize the day because there are so many voices ready to do it for them. Trump’s constant trumpeting stirs visceral hatred in counter-protest to his own boisterous ways. I point out that all of this is a scapegoat argument before the argument is made, however, in hopes that it will make the argument less effective; but who is listening?
We can see that argument coming together now. We are at the point where people who have never been willing to stomach uncomfortable truths, as Robert described in his comment, are reaching for alternative excuses to blame. Trump provides a bevy of such excuses with his constantly erratic and extremely boisterous, blathering behavior.
(Even though some of his ideas are right, his ham-fisted manner of going about them provides all the cover the Fed will need. Anyone who doesn’t believe me on that (or doesn’t want to believe me on that), just stand by a little longer and watch the argument gel as the new accepted narrative. See how quickly and successfully the majority blames Trump for the troubles that are now happening — not just the liberals, but many in the middle. I hope they fail, and my argument here is to cut them off at the pass by seeing that coming. It is not that they will be wrong in pointing out the damage Trump causes, but they will be wrong in thinking he is the underlying problem.)
The Great Ponzi has climbed to the ultimate tier of its inverted pyramid, and neither the Plunge Protection Team nor the Fed (nor even Trump) are going to prevent its failure. Exactly how such a massive, inverted pyramid topples, I’m not sure, as it is too complex; but topple it certainly will do … and IS now doing.
We are watching a mammoth machine shake, rock, rattle, roll and shudder and estimating how much longer it can do that before it blows apart in the greatest financial explosion/implosion the world has ever seen. I suspect the economic implosion will happen more like a mountain-sized landslide where, although it can all go at once, such large land movements often happen with this piece here sloughing off and then that section and then more and then a whole massive section and then many little trickles that keep coming for a few years. But we’ll see, and it won’t be long.
The Great Recession has always remained as the cavern beneath the “recovery” and has been carved out much deeper and wider by the Fed’s Great Recovery methods. Fall back into it, we certainly will do and are doing now. And I’ve said from the start of this blog that will happen because of the path the Fed chose for its fake recovery. Hopefully, it will somehow become possible to be heard over the cacophony, but I am doubtful now that I see the noise of competing excuses starting to rise.
The video in 22 Comments provided a clear example of how people are already turning toward alternative excuses even in the face of a clear statement by someone of the underlying greatest cause, and she is a voice that is already widely heard on mainstream media; but her statement received no respect, merely scoffing laughter, though it should have gotten respect, given its straight, clear logic. It is almost as though she was a foil in order to mention the real reason and then scoff at it.
Her voice got no respect because it is the answer people don’t want to hear because it means we have done NOTHING to solve our underlying economic problems and will collapse back into them. They don’t want the hard answers. It is the same problem my arguments face.