While I thank you for the kind words, I’m not only NOT the only one (and you’re not saying that, of course....you know Denninger, Schiff, and Roubini... they have called this with fierce accuracy) but I’ve been wrong on plenty of things.
But make no mistake about it, we are headed for some very challenging times. Nobody can predict how this will play out, more accurately, how much pain will be sustained. The core concept is the coming dislocation in the credit markets. It appears we’re headed into a Japan-like condition, with the Fed fighting off asset deflation with all their might. I cannot encapsulate it; I don’t think it’s quite as dire as Denninger states, but he is much much more right than wrong.
My mantra is as follows: The game must go on. “The game” is the survival of the Wall St. cabal. That cabal has shrunk massively of late, of course. But the most dangerous thing we face, IMHO, is the credit dislocation that can and unfortunately, ultimately MUST occur as we stare at a 10 year bond in the 3.6% range while (consumables) price inflation is running rampant and money creation is going ballistic. Like all counterfeiting operations, the elites who get the money first will benefit, or at least, will suffer the least. Those at the bottom are going to be taken care of by Obamas’ GDP II programs. The middle class is headed for the hamburger grinder, I’m afraid.
Yes, we are in for a nice era of protracted pain. I’m grateful that I look to be positioned to ride it out in modest comfort. I really feel sorry for those who are going to lose everything or who will be out of work for years. The service economy had a lot of expendable jobs and I mean A LOT, as you well know.
I think unemployment is going to go much higher than anyone expects. A lot higher. I don’t have a fundamental reason for that conclusion. It is just a gut feeling that the service sector has too many disposable jobs that come from un-necessary luxuries we won’t be buying in a severe downturn. Your wife can do the haircutting. Who’s going to get $20 automatic car washes. Who needs frivolous hobbies. People losing their jobs don’t need dog walkers.
We have so many unnecessary services we use when times are good, I have to believe that people will go without many of those services in a bad recession and those people will go jobless, reducing consumption more, hurting GDP and adding to layoffs. Viscous circle.
If you don’t actually produce something, or provide a necessary, recession-resistant service, you should be in real fear of losing your job. At least a laundry service will provide something you need — clean clothing. Some will start washing at home, while others wont. But who is going to need a $5 cup of fancy coffee when the SHTF. I think whole expendable industries are going away.
I think the government is going to be stunned and blindsided at how high unemployment gets in this recession when consumers pull back and quit buying all the crap and quit indulging in all the marginal and frivolous services we take for granted in a booming economy. A lot of recession-resistant jobs are gone, replaced by a lot of disposable jobs that are going to disintegrate when consumers cut to the bone and focus only on the essentials.
I swear, I think unemployment is going to go MUCH higher than anyone in the government now realizes. Just a hunch, not a theory I can back up.