For investors/economists, a collection of slides from Jeff Gundlach shows the precarious state of the economy. His presentation is a sobering, detailed look at trends in the economy unfiltered by government propaganda and media happy talk. Few, if any, signs of hope are seen in the hard data. Measures continue their unabated trend in the wrong direction. The picture is especially negative when compared to the recovery paths of other recessions.
Gundlach’s slides present a comprehensive picture unreported in the media. Patterns suggest something much bigger than a recession, and something that will go on for a long time. In my opinion, we are only at the beginning of what will eventually be viewed as a Greater Depression, greater than that of the 1930s.
There is an analogy. Political pundits proclaimed World War I as “the war to end all wars.” In about twenty years World War II made this propaganda obsolete. Subsequent to WWII, the US has been almost in a continuous state of war in areas around the world. The Great Depression was an event never to repeat. Politicians, economists and the Federal Reserve assured us that they had the tools to prevent it from ever happening again. We are in the beginning of an economic “World War II” in the sense that this economic downturn will dwarf its predecessor.
Our situation must be viewed in terms of the trillions that government has already spent (squandered). Despite the commitment of unprecedented resources, negative trends persist. Stimuli and monetary expansion represent many multiples of anything tried before. Yet they have had little effect other than to lower the standard of living of current and future generations.
The only other comparable period was the Great Depression where government actions were enormous and failed. Contrary to popular myth, Roosevelt did not “save us” from the Depression. Nor did World War II which only succeeded in siphoning off manpower to ease the unemployment rate at the expense of great damage and death. The economy never recovered until after the war ended, when government spending shrunk and resources became available again to the productive sector of the economy.
The inevitability of where we are headed cannot be changed by any government actions. Attempts to do so only intensify the pain to be felt at the end. The Great Depression began in 1930 and ended in 1946. All that government actions achieved was a prolonging and of the end and greater suffering. And so it is today.
Our nation’s leaders are in denial, want happy talk, bull markets, can’t even see the crash coming, even though the warnings were everywhere for years. Why the denial? Grantham hit the nail on the head: Our leaders are “management types who focus on what they are doing this quarter or this annual budget and are somewhat impatient.”
The government is out of bullets, left with only Quantitative Easing as the only hope to continue the image of a recovery. Its hope for righting the economy is misplaced. Its hope to continue the image of a recovery may fool some of the people for some of the time, but only at the cost of an even more painful ending.
In an attempt to cover up the economic disaster, all the government will accomplish is an unnecessary impoverishment of the nation and a more serious Depression.
