Nobody expects them.
Their chief weapons are fear, surprise, and ruthlessness. They come in when they’re least expected, they do incredible economic damage, but when they’re gone they’re forgotten.
I have seen three recessions during my business career, each one worse than the last.
The 1991 recession wasn’t expected, because we’d just won the war in Kuwait. But we’d also poured enormous effort into our military, which was no longer needed, and it took years to get something sustainable to replace it.
The 2000 dot-com bust certainly wasn’t expected, but I saw it coming in 1997, when I launched my newsletter a-clue.com. I cried bubble for three years, but when it burst I won no prizes. I lost out like everyone else and had zero income in 2002 and 2003.
The 2008 recession also wasn’t expected, although I’d been writing about the “big shitpile” for two years before it exploded all over everyone, taking Wall Street down with it. We might have never gotten out of it but for the leadership of Barack Obama, who used the opportunity to pass a $1 trillion stimulus bill that is still providing economic benefits.
Unfortunately, Wall Street learned a different lesson. The banking sector blew up so spectacularly that Washington was forced to pay its losses back. The $1 trillion lost in the mortgage securities blow-up was extorted from the Federal Reserve, and given back to the banks, who to this day don’t think they did anything wrong.
Quite the contrary. They think their shit don’t stink. They think economic collapse is their big opportunity. They even take pride in author Naomi Klein’s term for it, “The Shock Doctrine.” They use disasters to extort monopoly rents, and political power, then run the economy on high until the next disaster, the next opportunity.
Donald Trump is the Shock Doctrine in action. He doesn’t care about order, he cares about running the economic train as fast as possible, letting it crash, and then taking advantage of the disorder it creates to steal what he and his buddies can.
The Shock Doctrine might better be termed the “My Shit Don’t Stink” doctrine. It worked a treat a decade ago.
It won’t work this time.
The ingredients of the next economic crash, and recession, are already baked into policy. The idea is that government won’t be able to borrow its way out, because that money has already gone into the hands of Trump’s big business cronies. It is their capital that will be required to fix things, and they’ll make the rest of us pay through the nose for it. The retirement you thought you bought with Social Security is already being called “welfare.” The efficient Medicare and Veterans Affairs’ medical programs are being deliberately run into the ground, leaving us with only monopolist hospitals and drug companies demanding monopoly rents.
The hope is that the stock market can keep chugging upward on belief through November, when the Republican base can be turned out, the Democratic base can be prevented from turning out, and all power can go to Trump and his cronies forevermore.
That is Cray-Cray from Crazytown.
There are too many economic and political forces now arrayed against the scheme. The Cloud Czars won’t let the next election be stolen. They need more human capital, and Trump policies are only delivering less. U.S. military power is no longer intimidating, Chinese economic power is more important. America is no longer seen as an honest broker, just another interest. We have no friends, and in fact countries who were once our allies will be delighted to watch us fall.
Lots of trigger events are lined up. The Cloud Czars are now in their own stock market bubble. Pop that and the whole edifice collapses. The yield curve is already inverting, in that it will soon cost less to borrow for 30 years than for 2, and that always means trouble. Oil prices could collapse, or they could skyrocket – either one is bad. The trade wars guarantee inflation, which means the Federal Reserve is guaranteed to tighten.
Then there is the seething anger you can see and feel throughout the country. It’s not just “liberals.” It’s young people, brown people, black people, and women, a working majority of the population, that absolutely hates Trump and, by extension, the Republican Congress. Meanwhile, the Trump coalition is dying, literally, as he leads among those over 65 and in the heart of the opioid belt. Trade tensions are already pissing off Midwestern farmers, who control many states, and all the money in the world won’t convince us again that up is down and down is up. It will take a massive theft, manipulation of voting machines, and denial of voting rights, to prevent Congress from falling to Democrats, and if that happens the next step is violence.
Maybe Trump thinks he can put that violence down. But in doing so, the economy, everything that makes America great, goes down with it. In the wreckage of revolution Trump minions won’t be going on talk shows after this is over. They’ll be in the dock, at Nuremberg-like trials, and a lot of Americans are going to understand how Guatemalans and Libyans now feel, because no one is going to want us.
Blowing up the old order and expecting something new, under more control, to take its place is stupid piled on stupid. Believing this is possible is stupid piled on stupid piled on stupid. Yet that’s precisely what Wall Street believes right now, and they love to pretend they’re never wrong.
Even though they’ve been completely, totally, and utterly wrong three times in less than 30 years.