11/8/2012 Portland, Oregon – Pop in your mints…
During our college days, the Counting Crows put out an album called August and Everything After. This refrain became popular once again back in August of 2007, which is now seen as the beginning of the continuing Financial debacle which just passed its 5th anniversary.
August 2007 was when the game changed permanently. The Federal Reserve had unwittingly sent Fixed Income markets off a cliff. In a panic to correct its error (blind 25 basis point increases in the target rate month after month for over two years) it overcorrected and basically did an end run around its primary dealers, offering to buy mortgage backed securities from all comers. This miscalculation blew up modern finance as most knew it.
By late 2007, the public began to acknowledge the fundamental changes which were taking place in the financial markets. Ever since then, the Western Governments and their associated Central Banks have thrown caution to the wind in an effort to maintain what they see as the status quo.
Today, we shamelessly borrow the Crows refrain and apply it to the United States political scene. Despite a plethora of No votes, which we like to speculate are an indication of the American public’s display of displeasure with the ruling class and a rejection of the corrupted political system, another President elect has been declared.
Our basis for this speculation is nothing more than heresy, mind you. Low voter turnout is a fact of the American landscape. Early on, it was a byproduct of the exclusion of large classes of people from the voting rolls. Women, native, and african americans were barred from voting, while those in rural districts and those too busy clinging to day to day subsistence to be bothered to vote were excluded by default.
After the Women’s suffrage and the Civil rights movements remedied some of these democratic oversights, voter turnout in America enjoyed a golden period where it could be said that the land enjoyed a legitmately elected government.
Voter turnout began to wane again as the Richard Nixon train wreck occupied the White House and the modern era of voter disenchantment began. While the paid swarms of voter registrars have made some headway in increasing voter turnout, 2012 is set to see another decline, with the high estimate of 60% of the VAP casting a ballot.
A brief update for those of you following the results of the Silent Majority, we are now projecting that they have “won” the election by an even larger margin than previously thought, with a whopping 45.3% of those eligible to vote choosing not to endorse the Government and claiming a solid majority when the overall Voting age population is considered, a staggering 50.2%.
We can only surmise that the past four years have confirmed to the American public what many have suspected all along: That the government does not have the solutions, rather, be it red or blue, it is a big part of the problem.
As the public woke up to the financial debacle in early 2008, we foresee that sometime in early 2013, the general public will wake up to the debacle of federal governance.
Welcome to the Divided States of America, where 25% of the populace has thrust a leader onto the other 75%, and 50% have thrust a Government which is unwanted or unrecognized by the other 50%.
No matter how you look at it, there are bound to be hard feelings all around. As Mr. Obama heads back to a government as divided as the country, the stock market took its cue and sold off in defiance. According to Marc Faber, it will fall at least another 20% within the next six to nine months.
We leave you, fellow taxpayer, with a bit of friendly advice. If you have any unrealized tax gains to recognize, recognize them this year, before the clock strikes midnight. After that, the divided government will begin to cannibalize its citizens wealth in earnest. It is inevitable. As a second assignment, work on becoming resilient. John Robb over at Resilient Communities has a wealth of information to help anyone. Even if a miracle occurs and the US can grow its way out of this mess despite a fractured government, resilient living is just plain fun.
Stay tuned and Trust Jesus.
Oil Price per Barrel: $84.67
Corn Price per Bushel: $7.44
10 Yr US Treasury Bond: 1.63%
FED Target Rate: 0.16% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,717 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.9%
Inflation Rate (CPI): 0.6%
Dow Jones Industrial Average: 12,933
M1 Monetary Base: $2,394,100,000,000
M2 Monetary Base: $10,168,900,000,000