What we are witnessing in real-time is a demographic bust of colossal economic and political implications. Human history's biggest pump and dump, covered over with record lying and buffoonish bullshit. Sponsored by printed money and Return on Imagination (ROI).
For the GOP, it's a mandatory delusion. Their last act of organized criminality - selling this well-lubricated Ponzi scheme, as the "greatest economy ever"...
The Republican party is now the standard bearer for existential delusion. Tasked with keeping the American Dream alive by any lies necessary. The last guardians of American mythology. Constantly recycling proven failure, each time with greater leverage, and each time expecting a different result. As it was in the late stage Soviet Union, no amount of human detriment is too great to protect the reputation of the "system". Including throwing Boomer retirement investors under the bus at peak retirement.
The high for U.S. GDP growth, fiscal normalization (surplus), and monetary normalization was twenty years ago. Which was also the high for labor share of GDP, in the past several decades. Subsequently, the Dotcom bust cratered stocks -50% at the lows in 2003. Cheap money subsequently funded the housing bubble, which crashed to the lows in 2009, only six years from the Dotcom lows. Those two events coming so close together took a tremendous psychological toll on retirement investors. In Y2K, Boomers had on average twenty years to retirement. At the housing crash low, they had on average ten years until retirement. Now, they are retiring at a rate of 10,000 per day on average, into the greatest bubble in human history.
This author does a good job explaining what damage was inflicted to investor confidence and capital over the past twenty years of boom and bust. Arguing that the majority are just now getting back to breakeven (in aggregate) for the past decade:
Just in time. The insiders have cashed out at the top again:
The SEC warned this was happening in 2018, but the Idiocracy ignored them:
"Now, we all know what happened the last time a Republican-controlled government pushed through a corporate tax holiday in 2004. As that bill’s sponsors hoped, American companies repatriated billions of dollars of overseas cash. But corporations didn’t invest most of that money in innovation. They didn’t invest it in retraining their workforce or raising wages. Instead, executives largely used the influx of fresh funds for massive stock buybacks"
So when I first took this job, I worried that 14 years later history would repeat itself, and the tax bill would cause managers to focus on financial engineering rather than long-term value creation. Sure enough, in the first quarter of 2018 alone American corporations bought back a record $178 billion in stock."
Even more disturbing, there is clear evidence that a substantial number of corporate executives today use buybacks as a chance to cash out the shares of the company they received as executive pay"
Financial engineering via share reduction to artificially increase per share profits, can only get you so far however, when aggregate profits have been falling for six years.
In other words, Trump's tax cut had no effect on demand, aside from a two quarter sugar high:
It can come as no surprise that today's older investors don't want to see this coming. Having dusted themselves off twice, and finally regained the courage to trust stocks, they don't have the option of another cataclysmic drawdown. So it "can't happen". This is the longest cycle in human history, and it will go on forever.
Worse yet, RECORD low interest rates have pushed far too many investors out of bonds and cash into stocks, in an attempt to "make up" returns. Unfortunately, the market doesn't work that way. Investors can't just bid up their own asset values like a piggy bank, storing those inflated values until they retire. The value of stocks in the long-term is determined solely by corporate earnings, not what price the last fool paid for them.
These record low interest rates are symptomatic of the assiduously ignored problem with the real economy. It's deflationary, because real incomes are falling. Underemployment is now ubiquitous. Higher education and healthcare costs are exploding the middle class. And yet all we hear non-stop is that unemployment is at an all time low. Which merely means that people are working more jobs and longer hours to make ends meet. It's hardly a victory.
And then of course, there is national debt now masquerading as "GDP". Which is also helping to propagate this mandatory delusion.
It's a fraud in every direction.
Ex-debt bubble explosion, does anyone actually believe that today's earnings and "GDP" are anything more than a figment of the imagination, with deflation already taking over the economy? The deflation trade has been leading this rally for over a year straight.
Utilities are making new highs just today. Giving total lie to any concept that this is "the greatest economy ever". This is the greatest Econ job ever.
All of which means that there are no (stock-based) safe havens anymore and there is no fiscal and monetary safety net beneath this delusion. It was all squandered in order to buy another election.
Ex-debt bubble explosion, does anyone actually believe that today's earnings and "GDP" are anything more than a figment of the imagination, with deflation already taking over the economy? The deflation trade has been leading this rally for over a year straight.
Utilities are making new highs just today. Giving total lie to any concept that this is "the greatest economy ever". This is the greatest Econ job ever.
All of which means that there are no (stock-based) safe havens anymore and there is no fiscal and monetary safety net beneath this delusion. It was all squandered in order to buy another election.
The term "retirement" in the future will bear no resemblance to the past. It will be some combination of downsizing, cutting liabilities, sharing housing and transportation, and likely working part-time. A lesson that should have been learned ten years ago.
The multi-million dollar retirement touted by Suze Orman and most of today's used-car-salesmen financial advisors is a figment of the imagination. It's TOTALLY impossible in aggregate via this Ponzi stock market. What we have now is a record number of paper millionaires, the exact same way we had record paper millionaires in February 2000 at the Tech bubble peak. They all found out very quickly the definition of unrealized gains. Which means that today's ALL IN stock-based retirement strategy is nothing more than a DANGEROUS delusion that will cost many people the money they could have used to create a more sustainable way of life.
The one they would have had if they hadn't been lied to constantly by proven psychopaths.