Economic Issues Around the World

Rodney Johnson | Thursday, January 24, 2013 >>

I don’t like it when it’s too quiet. It makes me nervous.

When the air conditioning has been off for too long at my house I glance at the thermostat to see if the temperature has risen above the set rate, which would indicate a mechanical problem.

If I don’t receive an email at work in more than an hour I have someone send me a test.


Maybe a little… but sometimes this sort of action is warranted.

If the air conditioner is on its last leg, then paying attention to its cycles makes sense. If our Internrnet connection at work is spotty, then checking emails is an easy way to make sure things are working.

Right now, on the economic issues, we have a zillion things that could go wrong, and in fact are trending wrong… and yet all is quiet.

Too quiet.

Where’s the outrage? Where’s the demand for change?

Where is my revolution?

Germany saw manufacturing fall in November.

Euro zone retail sales are down.

Spanish unemployment is over 26% for the whole country (and almost 60% for the young set).

Greek youth unemployment is also near 60% and the bad loans in Greek banks continue to rise.

Spanish bankruptcies have shot higher, French unemployment is over 10% and they are driving away high earnrners.


The response of the central bank?

Find a way to debase the euro so that every governrnment has enough euros, regardless of value, to make good on their debts.

The response of the markets?


European equities were some of the best performers at the end of 2012 and southernrn European bonds (Greek, Spanish, Portuguese and Italian) have all fallen in yield and risen in value. It seems as if everyone is content that the governrnments in the euro zone can shuffle around paper, make claims about hard choices, send each other a bunch of electronic deposits, and call it a day.

But nothing has changed.

Greece is still broke and getting “broker” by the day.

Spain is moving backward, as is Italy.

The Germans are watching their manufacturing fall off because of slumping exports.

And this is what brings on peace and tranquility?

Things Are No Better Here at Home

Here we have falling unemployment, but it results solely from people leaving the workforce.

Housing is up modestly, from absolutely abysmal levels up to simply devastating lows.

Wages continue to fall in real terms.

The Fed is crushing savers with manipulated low interest rates up and down the yield curve. And it’s crushing everyone with higher prices through the printing of $85 billion per month.

Congress partially avoided the fiscal cliff by doing the least amount possible (raising rates on rich people), and left all the hard work for another day… which is quickly approaching.

The debt ceiling debate, which will be coupled with a fight over spending cuts, will begin in earnrnest by month’s end.

The response of the U.S. markets?

To move higher.

It seems as if everyone has decided that if they wake up tomorrow, well then, that’s a success.

That might be true at one level (still breathing is good), but shouldn’t we be in an uproar because the status quo has turnrned into the status awful?

Instead of waking up to more bad news that leads the Fed to print more money, benefiting Wall Street while crushing Main Street, shouldn’t we be demanding better leadership across the board?

Wouldn’t it be better to wake up and know we are working our way OUT of a state-built debtor’s prison?

Wouldn’t it be better to know that, as we toil away, our savings aren’t being confiscated by some central banker intent on sending it to a privileged few?

Wouldn’t it be better to know that the rules can’t be changed midstream to benefit the few while the rest of us have to use the convoluted playbook developed by Congress and the IRS?

Wouldn’t it be great to know that when you look at your children you can be reasonably assured they will have a better life than you have?

I think about these things, and then I see… nothing. Complacency. It feels as if there is a blanket lying over people and the markets and it’s preventing them from reacting as reasonable people would.

But that’s where it gets weird…

Things are just too quiet, as if maybe something is going to happen.

People know their food and energy costs more while their paychecks shrink. People realize their savings accounts earnrn laughable interest. Retirees understand their conservative investments can’t possibly keep up with the cost of living.

People are uneasy, but quiet.

We are waiting for the storm.

We think it will be economic at first, but then political and potentially even social. The fragile state of affairs, where money is constantly swept from those who work for it to those who pull the levers of power, will change.

It’s just a question of when… and where you want your funds parked when it happens.




Ahead of the Curve with Adam O’Dell

Apple Stock – Dropping Like a Rock

Yesterday I compared the Nasdaq and the S&P 500 to discuss the market’s tenacity. As you’ll remember, I used the Nasdaq Index as a proxy for bullish sentiment because it typically attracts more aggressive buyers than does the S&P 500.



Rodney Johnson

Rodney’s investment focus tends to be geared towards trends that have great disruptive potential but are only beginning to catch on to main-stream adapters. Trends that are likely to experience tipping points in the next 5 years. His work with Harry Dent – studying how people spend their money as they go through predictable stages of life and how that spending drives our economy – helps he and his subscribers to invest successfully in any market.