The economic optimism has continued more-or-less unabated today and again, I must stand athwart against it and yell, “STOP!”
Personal incomes for the decade—down; how will it go up?. The jobs picture—cloudy. The housing market--weak. The Eurozone—roiled by systematic contradictions. (The Greece bailout is only enough to tide them over for a year—what happens next year? Greece and the rest of the PIIGS aren’t going to magically grow out of the problem).
There’s a lot of output that’s gone undone and a lot of demand that’s disappeared. It’s difficult to see where that demand will come from—China? Their banks are easing back on lending. The U.S. job market is so tilted towards employers that the employees won’t spend a lot without getting into vast amounts of debt. And whenever the growth engine looks to be revving up, it will need oil and lots of it. Which means higher oil prices, which means money right out of the pockets of workers…and you see where this is going. It’s hard to see where the gains will come from.