Castles and Huts
To me it feels like we are going back to a time of the Nobles and the Serfs.
I am taking off for a much need vacation and just have to get a few things off my chest. I left the Republican party when trickle down became the policy, I don’t believe trickle down works for the tricklee’s , only for the trickler’s. I was probably naive to think that Obama would make big changes in this respect. In reality he has talked a good game but has applied no teeth to stopping this trend, and in effect has allowed the Fed to expand the trickle down direction of the economy. Part of this is that he has no economic person in his administration who has any impact at all. I don’t even know the name of who is in the position that Larry Summers once filled. Obama has let Bernanke and now Yellen rule the roost.
What is ironic to me now is that the House Republicans, who as a whole have been a rotten group, are now the ones questioning the FED effect. Where have the Democrats been? We know the answer, they have been riding the trickle down train that has provided a booming stock market, and they think with a booming stock market they will prevail in the next election. Guess again, they are sitting on quicksand, as an economy has evolved that has no solid base.
In taking a look at this scenario, basic producer sales and earnings continue strong as the ramp up for the projected second half economic revival continues. Revenue and earnings for companies like GE today and Alcoa a couple of weeks ago show that optimism is high in this sector. Technology and social media are also in a good place, consumers are reportedly spending more on internet/communications than basic food these days. Cheap money has done a couple of things: buyouts and mergers are rampant, and, if you need a car you can get one at cheap long-term rates, kind of a mini-housing bubble for those that don’t have the money to buy a house. At the same time we are seeing that retail and restaurants are having a tough time, main street is drying up.
To me all this is just part of the increasing disconnect between producer production and sales and final sales to consumers. How long can this go on, not too long I would say. We probably just have to wait for the Alibaba IPO and the story will be complete.