My associates have been beating the frontier drums all morning, and it is making me more than a little nuts. Sorry. Not your fault.
The issues at hand include the drive-by shootings in Chicago, notably the one that produced 13 victims, including a three year old, in the Back of the Yards neighborhood where Mrs. Obama started out his career as a community organizer.
We won’t know the motive for the shooting- they may in Chi-town, of course, but this story will sink like a stone. There is little comparison with the horror of the incident at the Navy Yard, despite the numbers and the fact that the localities share the strictest gun control regulations in the country, blah blah, but I am not interested in getting into that this morning, or the implications of what Mr. Bernanke did with his startling decision to continue the “Quantitative Easing” money-printing thing.
Most analysts expected the “taper” be started, so the new Fed Cheif would inherit some flexibility. That the Fed didn’t makes we wonder. The implications of it are pretty stark, and add to my general sense of unease. Smarter folks than me have laid it out pretty clearly- Peter Schiff from Euro Pacific Capital is one of them- and he thinks the mainstream analysts have overestimated the strength of our current economy. He thinks the Fed understands, as the market seems not to, that the current “recovery” could not survive without continuation of massive monetary stimulus.
Which means it is not a recovery at all. The money flowing out of the Bureau of engraving is actually pumping up another housing bubble and making the Stock Market artificially healthy.
Since everything I have got is in those two places, that has me nervous.
I was talking to Old Jim about that last night. Jim is a Democrat of the Old School, and the Tea Party folks drive him nuts. He thinks they are engaged in the politics of self-destruction, and are opposed to everything the President wants to do just because they don’t like him.
“They are all fucked up,” he said, taking a pull on his long-neck Bud.
“Well, I think that about the Administration, too,” I said, looking at the people walking by the Willow patio. Nicely-dressed people sat on the metal patio chairs and looked back, sipping wine and nibbling on morsels cooked by Robert in the kitchen.
“Well then you are fucked up, too,” he growled.
“I certainly acknowledge that. But listen, the Tea Party drives me crazy, too, when they get off onto social issues that I don’t believe in. I may be a social progressive who supports gay marriage, legalized pot and individual liberty, but I also believe in a strong military, the rule of law, and sound fiscal management. I don’t see any of that going on these days. It is not personal and it is not about the President, at least not in the way you think it is.”
“Well, I do believe in paying the bills,” he said. “We have to do that, just like we have to pay our bar tab.”
“Right. The alternative is to have Tex and Brenna cut us off. I think we are in a speeding car and the driver can’t take their foot off the accelerator. We are either going to have to swerve off the road and hope the ditch slows us down or we are going to hit a wall going a hundred and twenty. If Gentle Ben had started to taper off the QE thing, the bond markets would have tanked. He couldn’t have that.”
“But stocks and houses are doing great.”
“Bubbles, Jim. There is no place else for all the money to go. We are being set up for something, I am convinced. I have never owned a bond in my life, so I don’t know jack-squat about how it all works, but the smart guys have got this thing rigged. If stock and home prices continue to rise, and if the unemployment picture appears to be improving, it is only because the workforce is shrinking. There are fewer of us working than any time since the Carter Administration. The Fed has painted itself into a corner the same way we did on Syria. How can Ben keep claiming that the money-printing has to go on when things are supposed to be improving every quarter?”
“Been there. I remember the S&L crisis and the dot-com bubble and all the rest of it. You know I used to drink with Jeff Skilling?”
“The Enron CEO? The smartest guy in the room? Where did you meet him?”
“A bar downtown, before the conviction. He was actually a pretty good guy, despite all the flak he got. They nailed him on conspiracy and racketeering and he is doing 24 years and some change in the pen at Littleton, Colorado.”
“I remember a quote he had from that time.”
“He had a bunch,” said Jim, waggling a finger at Brenna for another Bud. “Including the one that got him arrested up in New York.”
“Which one was that?”
“He was shit-faced and haranguing the pedestrians on the street, accusing them of being undercover FBI.”
“I assume some of them might have been.”
“Well you may not be wrong on that, given what we know now. But the one I was thinking of was the meeting before the collapse in which he joked about the California energy crisis. He said , “What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on.” ”
“Hilarious,” I said. “Why do I get the feeling that we just hit an iceberg here, too?”
“You are going to drive yourself crazy if you keep fixating on all this stuff,” said Jim firmly. “All we need is another couple thousand a month and we are going to be fine.”
“Maybe,” I said, taking a sip of wine. It was crisp and cold and it made a good deal of sense, in its own way. “But like I said, this isn’t personal. There are some powerful things going on that I don’t understand. Fewer Americans are working at crappier jobs. Energy usage is down, the trade balance is weakening, savings are down, inflation is showing up in inconvenient places, debt is up, and wages are flat. So what the hell are we supposed to do?”
“Try to figure out when, I guess. But in the meantime, why don’t you have another glass of wine and relax?”
“You are right, Jim. Screw it.” I looked at Brenna hopefully. “One more for the ditch?”
Copyright 2013 Vic Socotra
www.vicsocotra.com
Twitter: @jayare303