Via Denninger, we see that retail sales are down again, and the market is reacting, selling off quite a bit of Friday's gain. The dollar eases its grip on the euro's throat but not much. People are unsure of the Fed response, which we would normally think would be more QE.
The ship has struck an iceberg and water is rushing into the hold.
Bernanke says, "I have a great idea. Let's cut another hole in the
other side to let the water out!"
Conventional wisdom believes that Obama cannot be re-elected if the economy
does not improve, and I think that is true. A real recovery, had it
started a few months ago, would probably have guaranteed another four years of
golf and tyranny. Since that is not happening, one would tend to think
Romney is headed for the White House.
However, keep in mind that if your constituency is basically the Free Stuff
Army, and you have no scruples about lying, have no concern about anything
except maintaining power and transforming the United States into a post-First
World nation while building a Chicago-style, Democrat dictatorship, the right
kind of economic collapse might serve just as well as a recovery to get your
voters out to the polls. A mere holding pattern in the current stagnation
is not going to do the trick. I do not see any way for a recovery to
occur in time to save the regime. But a catastrophic collapse could
possibly be a catalyst for Obama to look heroic, sort of like Chavez in
Venezuela. If we were to fall off the cliff into a deflationary
depression in a very sudden way with, say, the Dow 3000 and the S&P at 650
or something, with unemployment skyrocketing, Obama could pull out his soaring
rhetoric denouncing capitalism and greed and all that stuff. Romney could
be painted, not as the answer, but the heart of the problem.
The Obama campaign is already doing this to some extent with their attacks
on Bain. And we have a good portion, if not a majority of the population
that has been conditioned to think of government as having a solution to any
My wife picked up a disaster movie called Category Seven, about
super-storms or something. She had several to choose from -- this one and
2012, maybe another one. I voted for Category Seven because
I saw Randy Quaid was in it. I figured they would all be lame but Quaid
has the potential to interject a little humor. I can't tell you for sure
as I gave up on the whole thing somewhere a little less than halfway in.
The idea is that a new head of FEMA has the resources to fund research by a
brilliant but outside-the-system scientist to explain why these new
super-storms are developing. One takes down the Eiffel Tower.
Another destroys the pyramids of Egypt. That's right. A tornado is
so strong that it pulled down the pyramids but basically left the
We have to cut the filmmakers some slack because, as ridiculous as the
conceit is, it is no more ridiculous than faster-than-light travel or shiny vampires
or King Kong. No, the part that got me was that government funding
was needed to solve the problem and that if we just channeled our resources to
the "right" researcher, we could suddenly find a solution to the
weather. This reflects, I think, an unfortunate attitude in the real
world. There are way too many people who believe that we would not have
hot weather in the summer or tornadoes in Tornado Alley were it not for the
internal combustion engine and that capitalism and greed in the energy industry
are thwarting the efforts of selfless reformers within the government who wish
to correct the system before it is too late.
In the same way, there are too many people who think that if we would just
turn our economy over to some wise professors, some kindhearted politicians, and
a few underpaid government employees who really care, we could have a
centrally-planned economy with full employment and free healthcare, and all of
us could live in Kincade-esque bungalows powered by dolphin farts. You
know, like in China.
Beware the October Surprise in September.