US on autopilot, coasting on a river of debt(Read article summary)
The US is coasting on a river of debt.
ā Arthur Rimbaud, āThe Drunken Boatā
The news yesterday pushed against us like a gentle wind. Pending house sales were bad. Consumer spending was good. Unemployment was bad. Manufacturing was good.
The Dow rose 47 points. It has moved without much conviction for several weeks. It canāt seem to make up its mind. We thought it had headed down decisively a few weeks agoā¦and then, it stabilizedā¦and wandered aboutā¦
Gold has more sense of destiny about it. Itās been in a bull market for the last 10 yearsā¦and shows no sign of wanting to do anything else. It lost $11 yesterday, but still trades at $1,132ā¦not that far from its all-time high.
Gold is in a real bull market. As near as we can tell it is still in the developing stages. There are a few old gold bugs around. But the public is not yet talking about gold. Investors are not yet adding major positions in gold to their portfolios. Ordinary people are not yet expecting gold to go to $5,000 or $10,000 an ounce.
But the news keeps comingā¦the opinionsā¦the rantsā¦the dataā¦and the theoriesā¦
This way and thatā¦we begin to feel like a ādrunken boat.ā That was the title to a poem written by a 17-year-old Frenchman named Arthur Rimbaud. It describes how we meander. We are driven by the windsā¦and pushed by the back-eddiesā¦ Turning our bow this way ā¦and then that wayā¦
Never quite sure what direction weāre goingā¦or what to thinkā¦ No one is in controlā¦
And still, the current continuesā¦and we keep heading downstreamā¦carried by the great riverā¦always moving along.
One day weāre fascinated by what is going on in Japan. The next day itās China. Some days we think we might somehow muddle throughā¦on others, weāre sure something is going to blow up any minute.
But that river just keeps rolling alongā¦and weāre on it.
Where does it lead? Well, thatās the point. Weāre not sureā¦
All weāre sure about is that it doesnāt lead where most people think. They think they see a ārecovery.ā Forget it. Wonāt happen. We could have another speculative periodā¦but it wonāt be like the Bubble Epoch of 2005-2007. Houses would have to go up 20% just to get homeownersā heads above the water. Then, maybe they could borrow and spend like it was 2005 againā¦but thatās not going to happen. People donāt have the incomesā¦or the creditā¦to bid up house prices again.
Hereās a headline from The Wall Street Journal: āEmployment of Adult Males at Record Low.ā
Where does that lead? Weāre not sureā¦but we donāt think it leads to āgrowthā in the US economy. Instead, it leads to bankruptcy, deflationā¦and maybe insurrection.
And what about the Chinese economy? Isnāt that growing at breakneck speed ā over 10% per year?
The trouble with breakneck speeds is that you do break your neck. China should slow downā¦or itās going have an accident. And if it slows down, the whole world slows down with itā¦
And as to that āgrowthā ā itās counterfeit anyway. Itās not real growthā¦itās ersatz growth, caused by greater and greater government involvement and spending. The feds (the haulers) pretend to be in control. They want us to believe they are in control. But they are out of control themselves!
Can increasing government spending really make people more prosperous?
Show us an example!
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.