My Two Cents

Andy Sutton / Graham Mehl

It is now September. The time of year that the fright forecasters live for. Their dispatches grow more and more desperate. Tragedy lies just on the horizon. ‘Buy our products now’ they say or ‘reap the whirlwind’. We are now just a few days from the 10th anniversary of the Lehman Weekend Extravaganza which was the official start date of what stuffed shirts in media and politics call the ‘Great Recession’.

On the US side of the Atlantic, the goings on since have edged people into what is called normalcy bias. How can that be you might ask; the Dow has quadrupled since 3/6/2009. That’s an average annual return over double the market’s average annual return over the prior 100 years. The sad thing is there is not a single average investor we know of who has seen their paper stocks quadruple in the last ten years. Those types of gains are reserved for hedge funds, and JP Morgan’s trading desk, not the average person. The idea that the playing field is level is so ludicrous it is actually funny.

However, Americans – and many across the world - look at those meaningless stock index values as a measure of the economy when they’re really just numbers. Yes. Just numbers. They mean nothing to the average person. We might break down at some point how the Dow Jones Industrials average is calculated sometime, just for informational purposes, but it’s not high on the priority list.

What of the rest of the US Economy? If you listen to the Bureau of Labor Statistics, there is no unemployment. If you look at the debt numbers, the trajectories are the same as when U-6 was almost 18%. Cognitive dissonance. Which one is right. Put together, they make no sense. We might seem to beat credit activity like a dead horse, but when it’s the one thing separating your entire economy and way of life from oblivion, then you’d be smart to pay attention to it. The Europeans didn’t pay a shred of attention and they’ve paid dearly. We wonder when the word ‘austerity’ will be mentioned in our nation’s capital. The Congress is completely off the rails, hanging trillion-dollar deficits on the back of America for the foreseeable future.