Ummagumma

  The National Debt Clock about 9AM Eastern Time this morning. [ Read Part One ] The National Debt Clock tells a story that mirrors Mauldin’s warnings. Total public and private debt in the US now surpasses $100 trillion. This number is staggering, a testament to decades of unchecked borrowing and fiscal irresponsibility. To put it in perspective, in 1974, total debt was about $2.2 trillion. By 1984, it had risen to around $6.2 trillion. In 1994, it was approximately $14.2 trillion, and in 2004, it stood at about $29.2 trillion. By 2014, it had surged to roughly $58.2 trillion. These figures show a relentless upward trajectory, with each decade adding an ever-larger mountain of debt. This relentless increase in debt reflects a deeper, systemic issue. Our economy has become addicted to borrowing, using debt to finance growth, consumption, and government programs. This addiction creates a fragile economic environment, vulnerable to shocks and downturns. The historical data highlig...

The National Debt Clock about 9:20 Eastern Time this morning. “It’s important not to sugarcoat the past as somehow ideal. Before modern central banks, the economy resolved imbalances with financial panics, bank runs, and depressions. The Fed and other institutions like the FDIC were founded to soften these wild swings, and they succeeded. But it’s now clear this stability has a cost. In trying to smooth the cycle with ever easier monetary conditions, the “solutions” allowed enormously destabilizing debt to build. Now the bill is coming due.” That is from John Mauldin's recent newsletter article entitled “ The Coming Supercycle Crisis .” Mauldin is my current financial guru.  In the old days before contemporary interventionist banking practices, public and private debt would explode during economic booms but excesses by investors inevitably led to erratic results, often wiping out large numbers of people in a whip-saw type of effect that made investment itself highly volatile and f...

Recent history of the 10-year minus the 2-year Treasury yield curve.  You can see when it briefly turned negative in 2019 and the subsequent recession in 2020 (the gray bar).  You also see when it inverted again in 2022 - and continues to go lower. Lest there be any doubt, I am neither an economist nor an investment guru.  But I keep an eye on many economic indicators and have been watching long-term and short-term treasury yields for many years.  Back in 2019 , when the yield curve inverted (short-term rates were higher than long-term rates) I knew the historical success of that indicator in predicting recessions. Each time in the past 50+ years that the 2-year treasury yield was higher than the 10-year yield a recession has followed.  Not immediately, but within a matter of months, less than two years at most.  Most recently, the curve inverted (very briefly) in August 2019 and we experienced a recession by February 2020. Of course, we also had the star...

The number of new COVID-19 cases per day in the US since the beginning of the year.  Notice we have recently moved back up to a consistent 50,000+ cases each day.  This does not bode well for Christmas.  This graph is available from the Johns Hopkins website. Reality finally caught up with Donald Trump.  He caught COVID-19, spent time at Walter Reed getting aggressive treatment against the virus, and his re-election campaign started falling apart .  His ridiculous activities surrounding his " hospitalization " (which I put in quotes to remark about his joy ride while receiving treatment), his over-the-top unmasking of himself following the visit were political theater of the absurd. The American people are now finally seeing how absurd it all is.  How do I know?  Not from any public polling, although the latest fivethirtyeight poll gives Biden an 85 percent chance of winning the election (as of this post).  Hillary's margin was never that l...

May 7. We passed 75,000 dead in America from COVID-19 today.  The numbers don't seem to faze Americans much anymore. At one point in April we lost 20,000 in 7 days .  We hit 50,000 on April 24.  Now the daily rates are falling.  It took us 13 days for another 25,000 to die, about 1,900 per day. People are protesting at various state capitols to reopen the economy.  Some governors are at odds with big city mayors over the timing of things.  I guess we will see how it all turns out. So far, the overall trend in new cases is generally downward, but the "peak" (so far) actually occurred about two weeks later than he proclaimed; a reflection of more wishful thinking on his part.  Many people feel that the easing of social distancing too early will bring about a second wave of virus infections that will send death rates higher again. It's all politics.  The liberals say we need to remain shut down to save lives.  The conservatives sa...

The Great Virus Retraction.  From 29,000 to 20,000 in a matter of days.  An enormous wipe out of wealth.  A good rally today.   As you can see, there is a battle on for the 22,000 support level.  Can the markets hold? The longest bull market in history ended last week with the fastest decline into bear market territory since the Great Depression .  The major culprit was (and remains) COVID-19 but there were other factors too.  The News media is in such a frenzy about the 200,000 virus sufferers (and the possible spike in future cases, of course) that you don't get to hear much about what's happening to the other 7.5 billion humans out there. The Russian-Saudi oil war plays some role in the market crash as well.  Oil is now worth about 1/3 of what it was just a few years ago.  " Cheap credit " and the resulting massive consumer debt is another, actually even more fundamental, factor.  In fact, the dramatic collapse in oil price...