Author: David Stockman

During Friday’s bloodbath, I heard a CNBC anchor lady assuring her (scant) remaining audience that Brexit wasn’t a big sweat. That’s because it is purportedly a political crisis, not a financial one. Presumably in the rarified canyons of Wall Street, politics doesn’t matter much. After all, when things get desperate enough, Washington caves and does “whatever it takes” to get the stock averages moving upward again. Here’s a news flash. That’s all about to change. The era of Bubble Finance was enabled by a political abdication nearly 50 years ago. But as Donald Trump rightly observed in the wake of Brexit, the voters are about to … Continue reading →

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The Imperial City deserves to be sacked by insurgent politicians of the very ignorant kind. That is, outsiders unschooled in its spacious groupthink and destructive delusions of grandeur. That’s why Donald Trump’s challenge to the beltway’s permanent bipartisan ruling class is so welcome. He is largely ignorant of the neocon and war hawk catechisms and sophistries propounded by joints like the Council on Foreign Relations. But owing to his overweening self-confidence, he doesn’t hesitate to lob foreign policy audibles, as it were, from the Presidential campaign’s line of scrimmage. It is these unpredictable outbursts of truth and common sense, not his bombast, bad manners and bigotry, that has the Acela Corridor in high dudgeon. The … Continue reading →

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To hear the establishment media tell it, you would think that Attila the Hun was fixing to sack the Imperial City. Would that Donald Trump were that bold or dangerous. Then again, he is a showman of no mean talents. So if there is a maquette of Fannie Mae’s planned new $770 million headquarters somewhere around Washington DC, he could start the sacking right there. Hopefully, he would not hesitate to shatter it with a fusillade of tweets—-or even take a jackhammer to it while wearing a Trump hard hat. Fannie Mae is surely a monument to crony capitalist corruption, and living proof that … Continue reading →

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If Donald Trump has even a partial clue about the nation’s monumental economic mess one of his first acts will be to demand Janet Yellen’s resignation. And for sheer incompetence among countless other failings. She was out there again today talking in completely incoherent circles. On the one hand, Yellen robotically insisted that the U.S. economy is moving steadily toward the Keynesian nirvana of full employment. At the same time, she struck a profile in cowardice that was downright pathetic. Yep, after 90 months of ZIRP the Fed has decided to wait for further confirmation from the “incoming data” before concluding that even one more baby step toward interest … Continue reading →

The post Take Cover Now! appeared first on LewRockwell.

Sad to say, you haven’t seen nothin’ yet. The world is drifting into financial entropy, and it is going to get steadily worse. That’s because the emerging stock market slump isn’t just another cyclical correction; it’s the opening phase of the end-game. That is the end game of the Ph.D. Tyranny. During the last two decades, the major central banks of the world have been colonized lock, stock, and barrel by Keynesian crackpots. These academic scribblers and power-hungry apparatchiks have now pushed interest rate repression, massive monetization (QE) and relentless rigging of the financial markets to the limits of sanity and beyond. Honest, market-driven price discovery is dead as … Continue reading →

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Whatever is going on in the daily stock market, you can’t call it “price discovery” or even remotely rational. In fact, it amounts to grinding in harms’ way and measures the degree to which the Fed and other central banks have turned the Wall Street casino into a giant litter of sick puppies who are bent on rolling the dice until they self-destruct. Even MarketWatch has noted that the S&P 500 has climbed above 2100 on more than 30 occasions during the last 18 months, but has retreated each and every time. So buying the dips in that context is based on eyes wide shut speculation; it … Continue reading →

The post Sick Wall Street Creeps Will Self-Destruct appeared first on LewRockwell.

The cowardly dithering in the Eccles Building is sucking Wall Street punters into a vortex. And it promises to be the mother of all bubble implosions. There is no other possible outcome for a stock market that is trading at 24X reported earnings in the teeth of an enormous headwinds ever accumulated. The intensifying global deflation/recession lapping upon these shores gets more ominous by the day. Yet that’s only the half of it. When you take an unvarnished look at the domestic economy, the real recessionary skunk in the woodpile becomes apparent. Yet the casino is falsely capitalizing earnings as if recessions have been outlawed and the nirvana of Keynesian full-employment has become a permanent condition, … Continue reading →

The post The Economic War on Normal Americans appeared first on LewRockwell.

We are now in month 83 of this so-called recovery. Yet there are still 45 million people on food stamps——one out of every seven Americans. The median real household income is still 5% below its level in the fall of 2007. There are still only 71 million full-time, full-pay “breadwinner” jobs in the nation—–nearly 2 million fewer than when Bill Clinton was packing his bags to vacate the White House. At the same time, we have had monetary stimulus like never before. There have been 90 straight months of virtually zero interest rates. The balance sheet of the Fed has been expanded by $3.5 trillion. For … Continue reading →

The post Why America Is Hurting appeared first on LewRockwell.

The U.S. is heading straight for a fiscal calamity in the next decade. Even if you believe the CBO’s Rosy Scenario projections——-which assume that we will go 207 months thru 2026 without a recession or double the longest expansion on record and nearly 4X the normal cycle length—–we will still end up with $28 trillion of national debt and a $1.3 trillion annual deficit (5% of GDP) by 2026. But that’s the optimistic case!  As I demonstrated recently, if you get real about all the enormous headwinds down the road—-including the virtual certainty that the Red Ponzi will have a crashing landing and take the global economy … Continue reading →

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The estimable Martin Feldstein put the wood to the Fed in a recent op-ed and in so doing hit the nail directly on the head. He essentially called foul ball on the whole inflation targeting regime and the magic 2.00% goalpost in part due to the measuring stick challenge.  A fundamental problem with an explicit inflation target is the difficulty of knowing if it has been hit. That problem is plainly evident in the chart below. You could very easily make the argument that goods prices are beyond the Fed’s reach because they are set in the world markets and by the marginal cost of … Continue reading →

The post The Mother of All Financial Meltdowns appeared first on LewRockwell.

That Hillary Clinton has—–unaccountably——stood by her man for 40 years is her particular foible. But now she wants 320 million Americans to stand by him, too, by electing her President so she can make Bill the nation’s economic czar: During a speech in Kentucky Sunday she referred to “my husband, who I will put in charge of revitalizing the economy ’cause he knows what he’s doing.” Actually, he doesn’t. Herein follows a two-part essay on why Bill and Hillary Clinton had precious little to do with the vaunted prosperity of the 1990s, and why another twofer would be exceedingly bad for the nation. In … Continue reading →

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You have to love it when one of Donald Trump’s wild pitches sends the beltway hypocrites into high dudgeon. But his rumination about negotiating a discount on the Federal debt was priceless. No sooner did the unschooled Trump mention out loud what is already the official policy of the US government than a beltway chorus of fiscal house wreckers commenced screaming like banshees about the sanctity of Uncle Sam’s credit promises. Let’s see. For 89 months now the Federal Reserve has pounded interest rates to the zero bound because come hell or high water the US economy must have 2% inflation in order … Continue reading →

The post Trumped! Washington’s Fiscal Hypocrisy appeared first on LewRockwell.

Yesterday’s spasm of machine rage begs a question. After the S&P 500 has chopped sideways for 600 days in no man’s land either side of 2060 and given the baleful headwinds now gathering from all points in the global economy, there is absolutely no reason to stay in the casino. At Tuesday’s closing level there was, at best, a 2% upside back to the May 2015 high of 2130, and a momentary one at that. In the other direction stood the prospect of at least a 40% of downside to 1300 (15X current shrinking earnings of $87/share) when the third great central bank bubble of this century inexorably bursts. Anyway, the likelihood was that the … Continue reading →

The post The Frogs Are Boiling Again appeared first on LewRockwell.

Donald Trump says a lot of whacko things and his recent wild pitches about defaulting on the national debt and replacing Yellen because she is not a Republican sound as if they were coming right out of his wild man wheelhouse. Certainly these statements have gotten mainstream financial journalists and editorial writers in high dudgeon. Said the NYT editorial page about Trump’s observation that if things got bad enough he’d seek to negotiate “discounts” on Uncle Sam’s towering debt, Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low … Continue reading →

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When it comes to the economic future, a Trump presidency could bring either a shitstorm or salvation. Regrettably, the odds of the former are immensely the higher. That’s because Trump is a welcome, but an extremely unguided missile. On the one hand, his great virtue is that he is a superb salesman and showman who has captured the GOP nomination and has a serious shot at the White House with absolutely no help whatsoever from the Washington/Wall Street establishment. So unlike any other candidate in recent memory, he owns his own talking points; is not saddled with a stable of credentialed advisors schooled in three … Continue reading →

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