I had a very interesting conversation with a group of guys. Each of us had different views/backgrounds. Banking, Military, Small Business, Big Corporations, Gov't... All of us older with decent perspective.
And the topic of where is the economy going came up. Each of us were doubtful that things can turn around. But what made it most interesting was how we all looked at it. For example, the banker talked about loans. He pointed out the duality of 'news': on the one hand "Credit Scores" are higher than ever in history, yet credit card default rates are skyrocketing.
The big corp guy talked about how he examines in detail corporate numbers. He said they're running on threads. They're struggling with out-of-control medical insurance #'s. Sales are really hurting. Hiring foreigners to reduce employee costs. Car makers are in dire straits, lease take-backs (cars that were leased that were repo'd) have cratered new car sales.
The military guy talked about how things have changed. Vet services are as bad as ever. The military like Trump, but morale is still suffering. Life is uncertain for soldiers.
And small business startups are way down. Sales are still down, people aren't buying because they're not making money.
Another guy is heavily invested in oil companies but fears they're going to keep going down as oil stays cheap. Another is into real estate and his research shows that property values are going to collapse like in '08.
I raised the point that the dollar needs to 'collapse', at least face severe devaluing. It's a double edged sword: devaluing the dollar will substantially increase the $20T debt service costs, but it will also devalue the total payback balance. Let me explain, let's say the dollar drops quickly to 1/4 it's current 'value'. That of course will mean high inflation, so US Treasury interest rates will go up (at least short term). But also it will quadruple federal taxes, so it becomes easier for the gov't to pay off the $20T debt. This is an extreme example, but it's not impossible. But everyone agreed that high inflation rates are coming.
So it was an enlightening conversation. We were like 7 blind mice each touching a different part of an elephant and trying to describe it. The trunk, the leg, the side, the tail, the tusk, etc. They are all parts of the elephant but they are so different.
Comments, thoughts?
And the topic of where is the economy going came up. Each of us were doubtful that things can turn around. But what made it most interesting was how we all looked at it. For example, the banker talked about loans. He pointed out the duality of 'news': on the one hand "Credit Scores" are higher than ever in history, yet credit card default rates are skyrocketing.
The big corp guy talked about how he examines in detail corporate numbers. He said they're running on threads. They're struggling with out-of-control medical insurance #'s. Sales are really hurting. Hiring foreigners to reduce employee costs. Car makers are in dire straits, lease take-backs (cars that were leased that were repo'd) have cratered new car sales.
The military guy talked about how things have changed. Vet services are as bad as ever. The military like Trump, but morale is still suffering. Life is uncertain for soldiers.
And small business startups are way down. Sales are still down, people aren't buying because they're not making money.
Another guy is heavily invested in oil companies but fears they're going to keep going down as oil stays cheap. Another is into real estate and his research shows that property values are going to collapse like in '08.
I raised the point that the dollar needs to 'collapse', at least face severe devaluing. It's a double edged sword: devaluing the dollar will substantially increase the $20T debt service costs, but it will also devalue the total payback balance. Let me explain, let's say the dollar drops quickly to 1/4 it's current 'value'. That of course will mean high inflation, so US Treasury interest rates will go up (at least short term). But also it will quadruple federal taxes, so it becomes easier for the gov't to pay off the $20T debt. This is an extreme example, but it's not impossible. But everyone agreed that high inflation rates are coming.
So it was an enlightening conversation. We were like 7 blind mice each touching a different part of an elephant and trying to describe it. The trunk, the leg, the side, the tail, the tusk, etc. They are all parts of the elephant but they are so different.
Comments, thoughts?
