The American economy continues to sputter along, and at least one veteran economist and market maven, Gary Shilling, is forecasting another recession next year (link). Why all this treading water, with waves crashing over our faces? My thoughts:
1. The unwinding of the massive governmental and personal debt we recklessly piled on, and the uncertainty as to how we will get it all done and what things will look like at the other end. We have been consuming too much and saving too little, and how will an economy accustomed to high personal spending adjust?
2. The fear and uncertainty as we witness the collapse of the post-war Western welfare state. The Ponzi pyramid scheme at the core is collapsing from insufficient new saps to soak. The banking system is threatened. Western socialists have run out of other people's money. The pictures, literal and figurative, from Greece, where large numbers of citizens who live off the sweat of Northern Europeans, what of that there is, are violently protesting the prospect of having to work just a bit more, are revolting but not surprising. The recent violent union behavior in Wisconsin is no different -- those who live off government demanding a better life than that of those who pay for it.
3. The utter disaster that is Obama and his team on economic policy. Victor Davis Hanson: "I think … those in business, from the small entrepreneur to the captain of industry, have decided that it is wisest to sit out what is left of this administration, and wait to hire, buy, invest, and expand until someone at the top shows a basic knowledge of finance and economics, and some sympathy concerning what those in the private sector must contend with."
John M Greco