James Howard Kunstler -- World News Trust
Where on earth did Paul Krugman get the idea -- expressed Monday morning -- that ours is "a weak economy?"
The Dow Jones Industrial Average is about to scale previously uncharted heights and the Standard & Poors Index is piling onto its molehill, too. If stocks are up the economy can't be weak since stock markets = the economy. All the efforts of theGitchi Manitou behind the operations of money, the Federal Reserve, are bent toward inflating the stock markets, including now the novelty of outright strategic stock purchases, so these stock markets must hold the secrets of economic life.
Notice, the Federal Reserve is not inflating the precious metal markets. Rather, they might be inclined in the deep background to militate against them, or even engage in coordinated subversion of them. It would be convenient for the Fed if the public, increasingly befuddled by the absence of yield, the mis-pricing of risk, and the antics of Larry Kudlow, would just let go of its delusion that yellow and white metals had any intrinsic value -- after all, you can't eat them, can you? The weight of opinion is also against gold and silver. The redoubtable Martin Armstrong is even inveighing against them because, as he put it, these things trade only on the technicals, not fundamentals.
This does raise a sticky question or two, of course, such as, what if the technicals are detached from the fundamentals, which is to say that the numbers and charts don't jibe with reality? That may be possible, after all, when everything from interest rates to asset purchases are rigged and accounting fraud is the order-of-the-day in government and its larger-than-life handmaiden banks. Consider, for instance, that if our national government under Obama has continued the practical policies of the Bush II regime -- wars, Gitmo, non-regulation and non-enforcement, wealth confiscation (and reassignment) -- than it may have also continued the underlying principle that "we make our own reality." In which case, the fundamentals are whatever you say they are and the technicals are just traffic lights on the freeway of "liquidity."
That perhaps explains why stock markets rise on both good and bad news. If a few more spec houses are being built in Las Vegas and Phoenix (where, I'm sure, they're needed) then the stock markets go up. If a low manufacturers' index comes out, well, then that's fine, too, because the Federal Reserve puts up a smoke signal that it might increase its monthly bond-buying beyond the current $85 billion a month -- meaning more liquidity to juice the stock markets, so up-up-and-away they go up. The stock markets apparently rocked on last week's news that about 175,000 more car wash attendants were added to the work force, because that's where the money is these days. If I were Warren Buffet or Jamie Dimon, I would consider part-time work in a car wash to plump up the family fortune.
Consider, though, that when everything is mis-priced then nobody knows the value of anything, and when nobody knows anything and everyone is flying blind, then accidents can happen. Welcome to the deep end of the risk pool.
Count Paul Krugman of The New York Times among those who don't know anything and as you do that, consider also that societies get what they deserve, not what they expect. What Paul Krugman doesn't know (because he never mentions it), for example, is that oil prices around $100 a barrel (the average between West Texas Intermediate and Brent Crude) crush industrial economies. That implacable downdraft is what motivates USGov.com and the Fed to intervene and manipulate the things that represent economic activity: currencies, asset values, interest rates, and markets, which in turn promotes the detachment of the technicals from fundamentals. Anyone actually paying attention to the weak signals coming through all the noise would hear the faint wail of desperation in the background.
These financial metaphysics are apart from conditions on-the-ground all over the foundering empire, namely, an infrastructure for daily life that becomes more onerous and obsolete every day. When historians of the future swap their stories around the campfire, this age will be remembered for little more than all the useless movement of automobiles and the fate of the crumbling surfaces they moved about on. Not even Paul Krugman is capable of noticing how we live, and what it means.
Well, spring has finally arrived in the bony northeast USA and I am preoccupied with cultivating my own garden. In honor of our heritage I planted two American chestnuts. The species was nearly put out of business in the first stirrings of the global economy, when previously unknown plant diseases arrived here with shipments of foreign botanicals. Now that the global economy is imploding, it is a favorable time to get with the older program, in which the technicals reflect the fundamentals.
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