WATERFORD, IRELAND – We are making Ireland the hub of our global publishing business.
So we need a place to live here.
The last couple of days have been spent prospecting.
“We want something with character… a challenge… something we can fix up,” we explained to the real estate agent.
Fixer-Upper
Readers who suspect we have enough projects already can get in line behind friends, family members, and psychiatrists.
But this project will be simpler than others. And at least it will be in an English-speaking country.
Besides, we’ve always liked Ireland – whence cometh our father’s family – and have always wanted to live here.
Yes, we could simply rent an apartment in Dublin. But no, there wouldn’t be much fun in that. Instead, we came upon a real project yesterday…
The house is a wreck. We expected that. The surprise was that the land upon which it stands is lethal. No kidding. Here’s the sign:
An ominous sign on Bill’s potential future home
“It ought to be cheap,” Elizabeth opined.
Apparently, no buyer could be found at €330,000 nor at €190,000 (about $235,000). The poisoned land is scheduled for auction next month, without reserve.
Fake-Money Fantasy
Meanwhile, we turn our attention back to our beloved homeland… and its fake-money system.
Almost every day, the press, economists, and politicians cheerfully tell us how great the economy is doing… how the tax cut has revved up old engines… and how the stock market is hitting new highs.
And almost every day here at the Diary, we put on our own smirk and say the contrary: The economy is a sham. The stock market is sleepwalking toward a cliff. And the whole fake-money fantasy is about to enter a new, grim stage.
Now, admit it, Dear Reader: You were beginning to think we were wrong, weren’t you?
Oh, ye of little faith…
We were beginning to wonder ourselves. But today, we’ll look at more dots. Draw your own conclusion.
First, GDP…
Last week, we gave you two reasons why the government’s GDP numbers are fraudulent.
They pretend to track real growth and prosperity. But IMF chief Christine Lagarde pointed out that you could raise GDP by just putting more women to work.
If Japanese women stopped cooking their own meals and doing their own laundry, for example, GDP would go up 9%!
And Joe Withrow, who heads up the Bonner & Partners research department, showed that GDP went up two dollars for every one dollar handed out by the feds.
Neither describes the kind of real growth that produces real wealth.
Disappearing Growth
And now comes another dot to connect – the latest GDP “growth” figure out of Washington.
It didn’t come in anywhere near what the Trump Team was hoping for. Not 6%. Not 5%. Not 4%. Not even the 3% expected by a survey of Bloomberg economists. Instead, the reading for the last three months of 2017 was just… 2.6%.
That’s no better than we were getting in the Obama years.
The reason given for any growth at all was “strong consumer spending.”
That puzzled us. How could consumers spend money they didn’t have? As of the final quarter of 2017, they’d gotten no tax savings. Their wages hadn’t gone up – the typical working man hasn’t had a raise in 30 years.
So where did the money come from?
Simple: Consumers dipped into their meager savings. In other words, the “growth” was fake. It was not real growth of incomes or output… but of using up precious reserves.
Americans don’t have much money saved. Studies reveal that seven out of 10 people couldn’t raise $1,000 in an emergency. Still, so sure are they that no emergency will present itself that they’re saving even less.
Over the fourth quarter last year, the household savings rate fell from 3.3% to 2.6%.
If the savings rate had stayed the same, fourth-quarter GDP growth would have come in at barely above zero… which makes us wonder about the first, second, and third quarters of the year ahead. What if households are suddenly struck by an instinct for caution?
If households try to make up for the money they should have saved in the fourth quarter but did not, the savings rate will jump to 4%. That is still way below the standards of the 1980s and 1990s.
But that modest attempt at prudence would put the Q1 GDP growth rate at MINUS 1.4%… and growth would disappear entirely.
But that is the problem with all these phony-baloney “stimulus” efforts. People borrow from the future; eventually, the future shows up and wants to be paid.
Regards,
Bill
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Category: Economics