Hi ACF Mike, Now what passes for the analysis, more seriously, folks out here are not comfortable with spending money out of passive savings. We only feel OK when spending a small portion of our active income. Problem, active income has decreased, for whatever reason. Folks also had never been comfortable with spending borrowed money, and never mind spending the old homestead by borrowing against it. We are very inefficient. I blamed it on old world values.
Folks thus have postponed car purchases. People have curtailed holiday travels. Girls have cut back on jewelry. Boys have slowed on equation of time machines. Most begin to buy clothing at grand finale discount affairs. Restaurants are changing menu, downsizing, or going out of business. New clubs and nights spots have opened, but based on much reduced rent paid to the landlords who lost the previous night spot tenants.
Some surveyed wealthy working folks in this town who had income greater than USD 10mm have taken hits on active income of 80%. While this is presumably a not a lifestyle changing percentage, but never-the-more psychology altering.
The wheels of commerce are grinding to a serious slowing, and the motivation of the economy is dependent more, ever than before, almost absolutely, near totally, on the species known as Boobus Americanus Spendicus, or J6P.
The FED had been discussing counter-intuitive measures against checkmate in three. Greepsputin and minions thought that the FED can release liquidity by direct purchase of assets in intervened markets that are no longer free to seek its own clearing level, hoping to thus causing a general rise in the particular asset class and hopefully also the related, associated, and imagination-linked adjacent classes. The resulting aggregate sense of wealth-effect lightness-of-being will then hopefully trigger renewed wanton consumption, and so fend off checkmate in three, and maybe even 'debtly' death in four, until real wealth creation can take up the battle.
If you sense that this super-duper-emergency-backup defense plan sounds like a variation of perpetual motion machine, you are of course wrong, because it is part of the new economist's magic elixir of forever youth. Maurice certainly thinks so, and you positively 'swear' by it.
We must give J6P all structured incentives to borrow, from all sources, by all the derivative means, to the extent of putting his shelter in financial danger, and retirement in 'debtly' harm. We must do this so that W3C (Wang 3 Cups), S2B (Sake 2 Bottles), and H4P (Hans 4 Pitchers) can save another ounce of Aztec metal, or buy an additional parcel of planet earth. But I misspoke, forgetting what Maurice taught me, that Aztec metal is not wealth, because it is not money, just that it is portable, fungible, untraceable, and is accepted by more, compared to Amex Card or the USD.
In any case, J6P must complete his life mission of giving painful birth to global equalization of cost and revenue, and therefore income, by borrowing, working, spending and working some more and finally spending somewhat less, for the good of W3CS2BH4P. Concurrently, J6P must not forget to keep busy fighting a war that will not end while preparing for a war that will never be, while W3CH4P marches towards economic integration and S2B meanders towards economic disintermediation.
Oh, did I forget to mention there is a problem, it is getting bigger, no one has a solution, it will affected all, and worse if manipulated, just like a boil on the skin.
See, if there were no problem, nominal short-term interest rate would not be so unnaturally low. Low short rate is not the cure. It is the symptom. Just and exactly like what has been taking place in the land of S2B, minus the hedonically altered sense of well-being.
By attempting to struggle in the quicksand of bubble induced profit implosion and careless debt explosion, Greensputin is making the going much worse, and the end result less kind.
No need to argue, just watch, and no need to spot for signs of recovery anytime soon, 'just like' in Japan, say, in 1992.
Bottom line, I have worked in my own business since 1988, and now I have no visibility on active income, am terrified of passive return drying up (no, Maurice, I am not going to convert to Q money), and have simply cut back my enthusiasm for all matters, concepts and frills of life that require spending.
My new hobby is an old one, to make more active income. The more direct, less expensive, and speedier, the better I like.
Chugs, Jay |
