Is the 9-Year Long Dead Cat Bounce Finally Ending?

Ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo.

The term dead cat bounce is market lingo for a "recovery" after markets decline due to fundamental reversals. Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to "buy the dips" once again buy the decline, and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.

I submit that the past 9 years of market "recovery" is nothing but an oversized dead cat bounce that is finally ending. Here is a chart that depicts the final blow-off top phase of the over-extended dead cat bounce:

Why are the past 9 years nothing but an extended dead cat bounce? Nothing that's fundamentally broken has been fixed, and none of the dynamics that are undermining the status quo have been addressed.

The past 9 years have been one long dead cat bounce of extend and pretend, i.e. do more of what's failed because to even admit the status quo is being undermined by fundamental forces would panic those gorging at the trough of the status quo's lopsided rewards.

This 9-year dead cat bounce was pure speculation driven by cheap central bank credit and liquidity. Demographics, environmental degradation, the decline of middle class security, the erosion of paid work, the bankruptcy of public and private pension plans, the global debt bubble, soaring wealth and income inequality, the corruption of democracy into a pay-to-play bidding war, the destruction of price discovery via market manipulation by those who have turned markets into signaling devices that all is well, the laughable distortion of statistics to mask the real world decline in our purchasing power (inflation is near-zero--really really really), the perverse incentives to leverage up bets in financial instruments that have no connection to the real-world economy--none of these have been addressed in the market melt-up.

Rather, ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo. Gordon T. Long and I discuss these fundamental forces in our latest half-hour video program, 2018 Themes (29:46 min):

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Matt B.-M. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, Emanuel M. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Is Congress Finally Pushing Back Against Security Agencies' Over-Reach?

The last time the U.S. Congress pushed back against the Imperial Presidency and the over-reach of the nation's Security Agencies was 43 years ago, in 1975.

The last time the U.S. Congress pushed back against the Imperial Presidency and the over-reach of the nation's Security Agencies was 43 years ago, in 1975. In response to the criminal over-reach of the Imperial Presidency (Watergate) and to the criminal over-reach of the security agencies (FBI, CIA, et al.), the Church Committee finally resusitated the constitutional powers of the Congress to serve the interests of the citizenry rather than the interests of political elites and the rogue agencies of the federal government.

The erosion of congressional power (or more correctly, the surrender of power by Congress) long pre-dates 9/11. The rise of the Imperial Presidency and the Shadow State of "national security" agencies dates back to World War II. Those interested in tracing this long-term and troubling decline of the constitutional powers of the elected representatives may find value in these two books: The Imperial Presidency(Arthur M. Schlesinger, Jr.) and Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy

The constitution grants the greatest powers to the elected representatives of the citizenry. The power to declare war, for example, has been eroded to the point that the Imperial Executive can wage essentially unlimited wars with little actual oversight by Congress.

There is a bitter irony in the Democrats' rush to "defend" the indefensible over-reach of the FBI and CIA to those whose rights were abused by the FBI and the CIA in the blatantly illegal COINTELPRO programs aimed at destroying the anti-war/ anti-civil rights movements in the 1960s and early 1970s.

(It has been estimated that up to 80% of the FBI's resources were devoted to targeting a handful of draft resisters and civil rights groups in this era. While TV programs presented a propaganda facade of incorruptible crime fighters, in the real world FBI and CIA agents broke into private offices, hired thugs to beat up anti-war leaders, conducted illegal surveillance, and so on.)

The irony is that the agencies the Democrats are now rushing to defend were targeting the "progressives" who dared to resist the foreign policies and domestic oppression of the federal government.

(So much for the bona-fides of the current crop of self-proclaimed "progressives." Those of us hauled in for interrogation by the FBI for resisting state policies have a different definition of "progressive;" note to Democrats: rushing to defend the politicized American Stasi is the opposite of "progressive.")

We know from the Church Committee reports that the FBI and CIA broke numerous federal laws and violated every constitutional limit on their powers as a matter of daily policy. The abuses of power were not the work of rogue agents; they were the work of rogue agencies, from the top down.

For more on COINTELPRO, please read War at Home: Covert action against U.S. activists and what we can do about it and/or Cointelpro: The FBI's Secret War on Political Freedom.

And here we are again, with rogue security agencies abusing their powers. All that's changed is the political parties have switched places; where the Republicans were defending the status quo abuse of power then and the Democrats were pushing for a transparent investigation of the agencies' abuses of power, now it's the Democrats who are defending the agencies' abuses of power while the Republicans are pushing for a transparent investigation of the agencies' abuses of power.

I don't care which party is pushing for the unmasking of these undemocratic Shadow State agencies; I only care that Congress awakens from its decades of surrendering power to the out-of-control "security agencies" and the Imperial Presidency, which characterizes both Democrat and Republican presidents.

The task of uncovering security agencies' abuses of power is made more difficult by the rise of political polarization. Unmasking abuses of power shouldn't be a partisan issue, and the nation's best hope is the rise of independents who view both parties with revulsion born of the status quo's profound failures to defend the rights and livelihoods of the bottom 95%.

I've written extensively about state over-reach and illegal suppression of dissent: remember, the state exists to enforce the dominance of Elites: everything else is propaganda, misdirection and obfuscation.

We're in a Boiling-Point Crisis of Exploitive Elites (June 19, 2017)

Welcome to the United States of Orwell, Part 3: We had to Destroy Democracy in Order to Save It (March 28, 2012)

State Over-Reach: Stripmining the Citizenry for Fun and Profit (November 13, 2009)

When It Becomes Serious, First They Lie--When That Fails, They Arrest You (March 16, 2015)


My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, David A. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, William L. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Political Correctness Serves the Ruling Elite

No wonder the Ruling Elites loves political correctness: all those furiously signaling their virtue are zero threat to the asymmetric plunder of the status quo.

The Ruling Elites loves political correctness, for it serves the Elite so well. What is political correctness? Political correctness is the public pressure to conform to "progressive" speech acts by uttering the expected code words and phrases in public.

Note that no actual action is required. This is why the Ruling Elite loves political correctness: conformity is so cheap. All a functionary of the Ruling Elite need do is utter the code words ("hope and change," "we honor diversity," "thank you for your service," etc.) and they get a free pass to continue their pillaging.

Those placated by politically correct utterances accept symbolic speech acts as substitutes for real changes in the power structure. This glorification of symbolic gestures--virtue signaling via social media, the parroting of progressive phrases, etc.--is as cheap as the mouthing of PC platitudes. Everybody gets to feel validated and respected at no cost to anyone: the progressives feel smugly superior because the Ruling Elite now feels compelled to parrot "progressive" speech acts in public, and the Ruling Elite is free to pillage without any demands for a radical restructuring of the incentives and distribution of the nation's wealth and income.

The rise of "progressive" speech acts and political correctness parallels the decline of the fortunes and incomes of the bottom 90%. While the "progressives" focus on cheap symbolism, the laboring classes are being gutted by the centralized financialization that rewards the few at the expense of the many.

Here's median family financial assets: back to the levels of 1995:

Here's civilian participation in the work force--back to the levels of 1975:

Here's the percentage of income going to the top 1% and the bottom 50%:

So while the "progressives" focus exclusively on their own ineffectual virtue-signaling and the empty "victories" of Ruling Elites mouthing the acceptable code words, our economy, society and the social contract are being shredded.No wonder the corporate media promotes empty gestures, virtue signaling and political correctness: all that phony compliance leaves the current wealth-power structure unchanged, and the Ruling Elite firmly in charge of the economy and governance.

No wonder the Ruling Elite loves political correctness: all those furiously signaling their virtue are zero threat to the asymmetric plunder of the status quo.


My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Thomas J. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, Dominik R. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

The Rowboat (Wages) and the Yacht (Assets)

As I keep saying: the status quo has divested the working and middle classes.

The reason why the status quo has failed and is fragmenting is displayed in these three charts of wages, employment and assets: wage earners (labor) are in a rowboat trying to catch the yacht of those who own assets (capital).

Here is a chart of weekly wages of those employed fulltime: up a gargantuan $4/week in the 18 years since 2000. Let's see, $4 times 52 week a year--by golly, that's a whole $208 a year. Brand new Ford F-150, here we come!

If we go back 38 years to 1980--an entire lifetime of work--we find real (adjusted for official inflation, which seriously understates big-ticket expenses such as rent, healthcare and college tuition/fees) wages have notched higher by $10/week--a gain of $500 annually.

If we adjusted wages by real-world income, we'd find wages have declined since 1980 and 2000.

Here's employment by age group since the year 2000. THose who can't afford to retire are still dragging their tired old bones to work while employment for the under-55 cohort hasn't even returned to the levels of 2000.

Meanwhile, asset valuations have soared. Those who own capital (assets) have done very, very well, those who trade their labor for dollars--they've gone nowhere.

Households with two regular jobs could afford to buy a house in Seattle, Brooklyn, or the San Francisco Bay Area in 1995. By 2005, they were priced out. Can a household with median income ($59,000 annually) afford a crumbling shack in any of the white-hot housing markets? You're joking, right?

The cold reality is wage-earners are tugging on the oars of a water-logged rowboat, trying to catch up with the sleek yacht of asset owners. The system has been rigged to reward those who own assets (capital) or who can borrow immense sums of nearly-free money (credit) to buy assets.

Can we be bluntly unpolitically correct for a moment and observe that the rowboat is never going to catch the yacht? No wonder the nation's savings rate is near-zero; most households don't earn enough to save much, and those that do are caught up in a nightmarish Red Queen's Race in which they save $10,000 a year but the asset they hoped to buy rose by $50,000.

In other words, trying to save enough by pulling on the oars of a rowboat for 10 years while the yacht has accelerated and is now on the dim horizon is a fool's game.

As I keep saying: the status quo has divested the working and middle classes.The laboring classes have no stake in America's status quo except their entitlements and whatever assets they bought 20+ years ago around 1994-97. Those who weren't able to buy assets 20 years ago have been in the wallowing rowboat watching the yacht pull farther away every day.

Even households making double or triple the median annual income ($120,000 to $180,000) are struggling to keep up in high-cost regions. This reality is driving social discord that will morph into social disorder.

Gordon Long and I discuss social disorder in Part 3 of our series 2018: Year of Accelerating Social Change (15 minutes):

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Nelson M. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, Tom D. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Rising Social Disorder Is Inevitable: Here's Why

We can do better, and if we don't, the only possible output of such an unequal system is increasing social disorder.

We are in a very peculiar point in history. On the one hand, we're reassured that all is well because Every One of the World’s Big Economies Is Now Growing. (NY Times)

Yet at the same time, we read that "Something Is Very Wrong With The Global Economy": Richest 1% Made 82% Of Global Wealth In 2017 and are asked, Can the World Survive a Winner-Take-All Global Economy?

Even the authors of the rah-rah NY Times piece on the wonderfulness of the global economy expressed concern that this "growth" may not be distributed any more equally than the previous 10 years of "recovery."

We already know absolutely nothing will change because neither the inputs nor the feedback loops in the economy have changed. As Donella Meadows explained in her seminal paper Leverage Points: Places to Intervene in a System, the only ways to change a system's outputs (in this case, widening income and wealth inequality and rising social disorder) is to change the inputs or add a new feedback loop.

The status quo has not changed the inputs or added any new feedback loops, so the output of the system--extremes of widening income and wealth inequality--cannot possibly change.

The portmanteau word "precariat" (precarious + proletariat) describes much of the modern work force--those in the less specialized sectors of the gig economy, informal/black market economy or in the traditional corporate-employment economy but with irregular work hours and little in the way of benefits.

Since the corporate media (MSM) is largely a haven for well-educated bourgeois with some family wealth and upper-middle class social circles, media coverage of the slow drip of financial anxiety in the lives of precariats is sparse.

If you talk to people working in the lower-pay service sector, you get a snapshot of a great many people living paycheck to paycheck, worrying about any unexpected expense (car repair, dental work, etc.) and mundane things that don't vex a "protected" upper middle class employee like scraping up the cash to buy their child a new pair of shoes for his/her birthday.

If we compare this reality with financiers and their technocrat worker bees skimming millions from what Adam Taggart calls "the river of money" (mostly credit, of course), we have to wonder why the US hasn't already exploded in class warfare.

The fuse is lit, as "fixes" like Universal Basic Income (UBI) that are embraced by the likes of Mark Zuckerberg don't actually re-enfranchise precariats, i.e. offer a real stake in the nation's productive capital. As a result, they're just Band-Aids over a sucking chest wound.

Much of my work is focused on explaining the intrinsic limits of the two "solutions" offered by conventional ideologies, think tanks, pundits, etc.: the market (i.e. the neoliberal fix for everything) and the state (government can fix everything). As I have explained, our problems are now exacerbated by markets and centralized power, not fixed by these dynamics.

I've endeavored to lay out a Third System that is decentralized, democratic and not dependent on either the financialized, globalized marketplace or the centralized Savior State in my books A Radically Beneficial World and Money and Work Unchained.

The core dynamic of my system is the universal opportunity to acquire productive capital in all its forms. The core dynamic driving the current extremes of wealth/income inequality is the system's rewards go almost exclusively to owners of capital and those closest to the central bank credit spigots.

The conventional solutions ("tax the robots," UBI, more job training, etc.) don't actually change the reward structure or the opportunity to acquire capital. This is why they have failed and why they cannot do anything but fail: they don't grasp the problem and they don't actually change any inputs, incentives or add new feedback loops.

There are solutions, but they lie beyond the status quo of stale, failed ideologies that have lost touch with the real economy and those being left behind by a system that radically favors owners of capital and those closest to central bank credit spigots.

We can do better, and if we don't, the only possible output of such an unequal system is increasing social disorder.

Gordon Long and I discuss social disorder in Part 2 of our series 2018: Year of Accelerating Social Change (15 minutes):

This essay is drawn from Musings Report 4, the weekly email sent exclusively to patrons, contributors and subscribers who pledge $5/month or more. Thank you for financially supporting my work.


My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Jim G. ($50), for your superbly generous contribution to this site -- I am greatly honored by your support and readership.

Thank you, Donald B. ($50), for your splendidly generous contribution to this site -- I am greatly honored by your support and readership.

Read more...