Paradise in LA LA Land

More is revealed with each passing day.  You can count on it.  But what exactly the ‘more is of’ requires careful discrimination.  Is the ‘more’ merely more noise?  Or is it something of actual substance?  Today we endeavor to pass judgment, on your behalf.

 

Normally, judgment would be passed on a Thursday, but we are making an exception. [PT]

 

For example, here in the land of fruits and nuts, things are whacky, things are zany. Last month, State Senator, Dick Pan, introduced Senate Bill (SB) 1424, which would require California based websites to utilize fact checkers to verify news stories prior to publishing them.

Who exactly these fact checkers would be – the moral servants that would save the world from the ills of fake news – was conveniently missing from the bill. Ironically, the control freaks in California state government can’t control themselves; they want to muck around with people’s lives unconditionally.

Nonetheless, screwball proposals like this out of Sacramento fall into the mere noise category – for now.  We estimate it will take another Presidential election cycle, or two, before such nonsense is taken seriously by the majority of state lawmakers.

At the local level, there are more demanding problems that require more demanding solutions.  Here in Los Angeles County, according to something called the Los Angeles Homeless Services Authority, there is now a homeless population of precisely 57,794.  For perspective, Chavez Ravine (i.e., the Dodger Stadium), has a capacity of 56,000.

This army of indigents, roaming about the LA LA land paradise, has become a significant embarrassment for local leaders.  Haphazard urban campsites litter the bank tops of the colossal, concrete Los Angeles River Channel between Downtown Los Angeles and Downtown Long Beach.  The massive collection of tents and makeshift shelters has become too much to ignore.

 

Homeless in Lost Angeles – skid row is beginning to intrude on City Hall (note this photograph was taken in 2015). [PT]

Photo credit: Daniel D. Teoli Jr.

 

A Novel Pilot Program

Obviously, an unpleasant situation like this requires big, outside the box, solutions.  Free brown bag lunches and roll-out blankets won’t cut it.  Hence, the clever folks at the LA Community Development Commission have launched a pilot program to pay homeowners to construct backyard dwelling units to house the homeless.

Loans of $75,000 are being granted for constructing a new backyard unit for the purpose of housing vagrants.  There’s even a design competition for model secondary dwelling units.  What’s more, loan interest stops accruing after five years in the program, and the loan is forgiven after 10 years.  All for turning your backyard into your very own rescue mission. What could be a more noble endeavor?

Our objective is not to ridicule this novel homeless housing program.  Though, we’ll point out that every subsidy backed solution generates a horde of new problems.  What we’re really after today, is a better understanding of how this diminished condition came to be.

What is going on?  What is it that has produced a world where homeowners must be paid to build backyard homeless dwellings?  It is certainly not the world that is presented by the government’s statistics.

The last we checked the U.S. unemployment rate is just 4.1 percent – a 17 year low.  The unemployment rate in Los Angeles County is 4.5 percent, which is near a record low. So if everyone has jobs, why is everyone homeless?

 

Unenjoyment rates in LA County haven’t been this low in recent memory – things have probably never been better! This makes it difficult to explain the sudden proliferation of Hoover-towns – are they a fata morgana? The desert is nearby after all.  [PT]

 

From Fake Boom to Real Bust

Similarly, the economy has been on a continuous growth streak since June 2009.  That is a remarkable run.  In fact, it is the second longest economic growth period for the U.S. in the post-World War II era.

The current nine year bull market in U.S. stocks is also one for the record books.  It is now the second-longest U.S. bull market in history. What in the world is going on? After a 400 percent increase in the S&P 500, shouldn’t everyone be rich?  Wasn’t Ben Bernanke’s wealth effect thesis supposed to bring prosperity to the masses?

After a nine year economic expansion, and an unemployment rate of just 4.1 percent, shouldn’t everyone have arrived at a place where they can sufficiently afford even a small, rundown apartment?  Why is it that so many people have given up, and checked out from pursuing a productive, self-supporting life?

Perhaps, it is because the nine year economic boom has, in effect, been a fake boom.  Government statistics may say one thing.  But open eyes, and a crude awareness, tell a completely different story.  It is a story of large segments of the population being left behind.

 

Missing judgment day for reasons of long-standing left-behindness… [PT]

 

Alas, when the stock market cracks, and the economic growth charts can no longer be fabricated upward, the fake boom will turn to a real bust.  We suspect this real bust will coincide with the breakdown of the debt based fiat money system.

In other words, the entire capital structure that’s been propping up the present mirage of prosperity will cascade down like a Mammoth Mountain avalanche.  After that, things will really get out of hand.

 

Upcoming attractions on the long judgment day weekend. [PT]

 

Chart by: St. Louis Fed

 

Chart and image captions by PT

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

2 Responses to “From Fake Boom to Real Bust”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Is the Canary in the Gold Mine Coming to Life Again?
      A Chirp from the Deep Level Mines Back in late 2015 and early 2016, we wrote about a leading indicator for gold stocks, namely the sub-sector of marginal - and hence highly leveraged to the gold price - South African gold stocks. Our example du jour at the time was Harmony Gold (HMY) (see “Marginal Producer Takes Off” and “The Canary in the Gold Mine” for the details).   Mining engineer equipped with bio-sensor Photo credit: Hulton Archive   As we write these...
  • Oil Mania Redux
    Positive Energy By now, late September of 2018, it has become increasingly evident that something big is about to happen. What exactly that may be is anyone's guess.  But, whatever it is, we suggest you prepare for it now... before it is too late.   Art auction energizer: Norman Rockwell's portrait of John Wayne. You can't go wrong shelling out top dollar for me, pilgrim, can you? [PT]   Several weeks ago, if you haven't heard, an undisclosed rich guy enthusiastically...
  • Fed Credit and the US Money Supply – The Liquidity Drain Accelerates
      Federal Reserve Credit Contracts Further We last wrote in July about the beginning contraction in outstanding Fed credit, repatriation inflows, reverse repos, and commercial and industrial lending growth, and how the interplay between these drivers has affected the growth rate of the true broad US money supply TMS-2 (the details can be seen here: “The Liquidity Drain Becomes Serious” and “A Scramble for Capital”).   The Fed has clearly changed course under Jerome Powell...
  • The Gold Standard: Protector of Individual Liberty and Economic Prosperity
      A Piece of Paper Alone Cannot Secure Liberty The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.   Sound money vs. a piece of paper – which is the better guarantor of liberty?...
  • Fed President Kashkari Hears Voices – Are They Lying?
      Orchestrated Larceny The government continues its approach towards full meltdown. The stock market does too. But when it comes down to it, these are mere distractions from the bigger breakdown that is bearing down upon us.   Prosperity imbalance illustrated. The hoi-polloi may be getting restless. [PT]   Average working stiffs have little time or inclination to contemplate gibberish from the Fed. They are too worn out from running in place all day to make much...
  • Switzerland, Model of Freedom & Wealth Moving East – Interviews with Claudio Grass
      Sarah Westall Interviews Claudio Grass Last month our friend Claudio Grass, roving Mises Institute Ambassador and a Switzerland-based investment advisor specializing in precious metals, was interviewed by Sarah Westall for her Business Game Changers channel.   Sarah Westall and Claudio Grass   There are two interviews, both of which are probably of interest to our readers. The first one focuses on Switzerland with its unique, well-developed system of  direct...
  • US Stocks and Bonds Get Clocked in Tandem
      A Surprise Rout in the Bond Market At the time of writing, the stock market is recovering from a fairly steep (by recent standards) intraday sell-off. We have no idea where it will close, but we would argue that even a recovery into the close won't alter the status of today's action – it is a typical warning shot. Here is what makes the sell-off unique:   30 year bond and 10-year note yields have broken out from a lengthy consolidation pattern. This has actually surprised us, as...
  • Are Credit Spreads Still a Leading Indicator for the Stock Market?
      A Well-Established Tradition Seemingly out of the blue, equities suffered a few bad hair days recently. As regular readers know, we have long argued that one should expect corrections in the form of mini-crashes to strike with very little advance warning, due to issues related to market structure and the unique post “QE” environment. Credit spreads are traditionally a fairly reliable early warning indicator for stocks and the economy (and incidentally for gold as well). Here is a...
  • Choking On the Salt of Debt
      Life After ZIRP Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.   Our boy ZIRP has passed away. Mr. 2.2% effective has taken his place in the meantime. [PT]   We found the absurdity of zero bound interest rates to have parallels to the absurdity of hundreds upon hundreds of miles of...
  • How Dangerous is the Month of October?
      A Month with a Bad Reputation A certain degree of nervousness tends to suffuse global financial markets when the month of October approaches. The memories of sharp slumps that happened in this month in the past – often wiping out the profits of an entire year in a single day – are apt to induce fear. However, if one disregards outliers such as 1987 or 2008, October generally delivers an acceptable performance.   The road to October... not much happens at first - until it...
  • Yield Curve Compression - Precious Metals Supply and Demand
      Hammering the Spread The price of gold fell nine bucks last week. However, the price of silver shot up 33 cents. Our central planners of credit (i.e., the Fed) raised short-term interest rates, and threatened to do it again in December. Meanwhile, the stock market continues to act as if investors do not understand the concepts of marginal debtor, zombie corporation, and net present value.   The Federal Reserve – carefully inching forward to Bustville   People...
  • In Gold We Trust - Incrementum Chart Book 2018
      The Most Comprehensive Collection of Charts Relevant to Gold is Here Our friends from Incrementum (a European asset management company) have just released the annual “In Gold We Trust” chart book, which collects a wealth of statistics and charts relevant to gold, with extensive annotations. Many of these charts cannot be found anywhere else. The chart book is an excellent reference work for anyone interested in the gold market and financial markets in general. A download link for the...

Support Acting Man

Item Guides

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com