A banker on the bonfire

Blow ye winds… crack ye thunder… 

We got back to Baltimore in time for the ‘Big Wash’. A major storm has come ashore. Skies were grey yesterday. Winds picked up. People went out to stock up on the essentials – water, drugs, and alcohol. We were advised to clean out our gutters and get ready for rain – lots of it.

All was well until Sunday night, when the newscasters became hysterical. It was as if Martians had invaded. Public relief agencies rushed to the defence! A Coast Guard spokesman appeared on TV, the police, the fire department, the White House, too. The Washington subway system closed down even before it started to rain. New York and Philadelphia too. Barack Obama declared huge areas of the US disaster areas, so they could draw on other peoples’ money to cover their own misfortunes.

Everyone seemed to want to get into the act. And everyone was supposed to get into the act. You were either supposed to lead or follow. Get in line. Follow orders. Don’t laugh at public officials; they’re here to help.

But after a couple glasses of wine, the whole spectacle was more fun.

We went to a Halloween party in northern Virginia. We didn’t have much time to get together a costume, so we just put on a beret and a scarf and let our daughter draw on a pencil mustache. What were we supposed to be? A sleazy Frenchman? A movie director from the ’40s? Errol Flynn? No one seemed to know; we didn’t know either.

There were some amazing disguises. One man came as a robot. Another was dressed in a suit and painted from head to toe in metallic grey, great ladies and wicked witches of the west were in abundance. There was a group of men dressed as stink bugs.

There were about 500 people out in the field when I got there. A friend had constructed a miniature Stone Henge in Rappahannock County, Virginia. A rogue theatre group was putting on a performance in the middle of the standing stones. They had large masks and strange, elaborate costumes and a band of exotic instruments accompanied them, including one man with an Australian aborigine horn.

The play told the story of the modern world and the trouble it is in. The lead characters were the Three Fates who confronted big business, genetically modified seeds, corrupt politicians, Wall Street, global warming and so forth. It was a mixture of 10% wit, 10% wisdom and 80% nonsense, but what the heck.

And then the FATES gathered all the good people and all the animals in a great ark. They set sail for a better world, leaving the bad people to their own fates.

When the play was over, there was music and dancing, of sorts, among the great standing stones. A bonfire was lit. On it were effigies of Richard Perle (a neo-con) and Jamie Dimon (a bankster). The fire burned hot. The crowd stepped back.

A ‘witch’, whom we had met a year ago, gave a long discourse. Very funny. She read the stars. She talked of Mercury ascendant and of Venus retiring, and how the Great Trickster probably has some improbable future in store for us.

“Want to know who will win the election”, she asked. “The stars can tell you…”

Maybe they can. But they didn’t. Not on Saturday night. They’ll wait until election night to speak.

Meanwhile, back in the financial world, not much action on Friday. Stocks and gold were flat. But the pressure is on this week. If the market cracks, Romney has a better chance of winning the White House. If prices move up, Obama may get another four years.

The Obama team celebrated the latest GDP news last week. The US economy expanded more than forecast in the third quarter. Bloomberg was on the case:

The U.S. economy expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction. Gross domestic product rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today. Michael McKee and Betty Liu report on Bloomberg Television’s ‘In the Loop’.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.

With the figure for the third quarter now in, it puts the growth rate for the year at 1.7%.

Wait a minute. As the Wall Street Journal put it, “we borrowed $5 trillion and all we got was this lousy 1.7% growth”.

But it’s worse than that. Of the third quarter’s growth, at least a third of it is attributable to growth in government spending. The feds increased their own outlays at a 9.6% rate. Take that out of the picture and the private sector is growing at a 1.3% rate.

This is described in the press as a ‘fragile recovery’. But it is no recovery at all. It’s a scam. The US population is growing at a 0.9% rate. That leaves actual growth per person at 0.4%.

And that’s a figure that has already been twisted by seasonal, qualitative, substitutional and other ‘adjustments’ that make it meaningless. In other words, there is so much fudge in the GDP figures that you can get tooth decay just looking at them. And in the end, they just don’t tell you anything worth knowing. In fact, they mislead you so you think you know something when you really don’t. Which is to say they have negative information content.

Here’s another headline from the New York Times that tells the tale: “Rise in household debt might be sign of a strengthening recovery.”

Come again?

Yes, after falling for 14 quarters, now for the last two months at least, households are stepping up to the checkout counter, credit cards in hand and doing their patriotic duty. They are buying stuff. They are going deeper into debt. Auto loans, for example, are up almost 14% this year.

Since 2008 total household borrowing is going down. Now, it is going up again. And this, dear reader, is something economists and the press call a ‘strengthening recovery’.

That is the trouble with this sad métier. We mean our sad trade – reporting on and trying to understand the world of money in the Age of Viagra. Anything that will get consumers pumped up is, apparently, a good thing. Anything that brings them to their senses, discouraging them from spending money they don’t have on stuff they don’t need is bad.

How could it be, dear reader, that going deeper into debt is a good thing? How could genuine wealth and prosperity be built on a foundation of greater debt? How could people be better off when they are actually getting poorer? What kind of a recovery leads households to repeat the same mistakes they made in the bubble years?

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One Response

  1. 29/10/2012, Critic Al Rick wrote

    A Fantasy Recovery – further fuel for the inevitable Fantasy Crunch? Oh dear! Hope I’m not still around.

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