Sunday, March 17, 2013
The market is not the real world
The stock market is doing great. The DOW has reached all time highs. (ignoring the effects of inflation) The economy appears to be doing well.
Maybe it is doing well, for those on Wall Street, CEOs, and high level players in Washington DC. Out in the world where the 99% live, it's a different story. Wages are stagnant. Unemployment appears to be down a bit, but the number of people gainfully employed is way down. I've no idea how much that has skewed the numbers, but I suspect it has.
The stock market is fine, but that market is essentially just a bunch of ones and zeros in a computer. What's going on in the physical world? A country that's growing builds buildings, roads, railroads, bridges, museums, concert halls, and industry hums along. Do you see much of that going on? Maybe you see bridges collapsing, decrepit railroads, and so on?
Sure, highways got a modest boost with Obama's “shovel ready” projects. Some sections of road got much needed repair. Here and there, it made a real difference. A sustained effort would have brought everything up to an adequate level, but those funds are pretty much gone.
We have a natural gas and oil shale boomlet due to fracking. However, fracked wells have horrible rates of decline. Production numbers are only kept up due to massive drilling fueled by investors looking for any sort of decent return on investment.
As unsustainable as the new energy boom has been: financially and ecologically, at least it produces something. The world of finance doesn't produce much lately except exotic shell games and pyramid schemes.
Ignore the half built buildings.
A cousin of mine was in the Ukraine not that many years ago. The country is littered with massive construction projects that were never completed. When the USSR fell, work on these projects came to a screeching halt. Most are in various states of decay. That's the sort of thing that happens when an empire falls.
In 2008, the US and much of the industrialized world suffered the bursting of the housing bubble. These countries were also littered with half completed building projects. A lot of those were never completed either. There are parts of the US that still look like post Soviet Ukraine.
Residents of the US Northeastern coastal region are starting to catch on. Things will never be the same after Hurricane Sandy. A full rebuild just won't happen. Any who don't believe can just ask the good people of New Orleans how well things have gone since Katrina. How about all the forgotten towns ravaged by tornadoes? The scars still remain. Had the economy been booming in the physical world, all that real estate would be too valuable to leave idle.
The video game, computer generated economy is doing well. That would be fine, if the players in that game couldn't take their phony baloney money and buy nice things in the real world. Fortunately for them, not everyone in the game is cashing out their chips. Should that day ever come, they'd soon find out there's not nearly enough real world to go around.