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Saturday, July 27, 2013

The Great Bean Counter Conspiracy

            The Great Bean Counter Conspiracy

        Yesterday, July 26th, as I watched CNN they announced that IRA investment had reached a level last achieved almost five years ago.  In other words it has taken five years to return to the level we were at prior to the Market Crash of 2008.  They announced it as if it was some significant milestone. I found it to be a bit ironic that it happened forty-four years to the day after our first Moon Landing.  It was a high point in American history that we have equaled, but never surpassed.

     Every boom or major advance in industry from the Civil War till today has been followed by a period of stagnation.  Each crash was only ended by the next big advance or a period of war. The industrial boom that supplied the Civil War, was followed by the railroad expansion, the steel boom, the birth of the auto and aviation industries, World War I, the automation of the auto and aviation industries, World War II, the infrastructure boom, the technology boom, the computer boom, the boom, the housing boom/bubble and a number of energy crisis interspersed along the way. 

     The last and ongoing slowdown has been caused in large part by the development of the robotic and computer control systems that have replaced large numbers of workers.  Those workers displaced by this last boom are no longer needed and will only survive by adapting or creating a new skill that meets some new demand that society has not yet realized needs to be fulfilled.

     The stock crash of 08 caught the bankers and business with their pants down and almost destroyed America as we know it.  Millions of people lost their life savings due to blind investment by institutional investors that did not question the investments they put their client’s money in.  Their job was simply to put it somewhere and many did not care where that was.

     After “The Great Bailout” many of the Bean Counters realized there was a problem.  Banks froze capital and investments with a new plan to just hold their own and not grow, but to survive and definitely not collapse.  As the institutional investors started investing in the market again a light went on.  There was no need to take risks on investments.  If they just sat tight and did nothing the institutional money would grow the companies and they would look sound and solvent. Even if in reality they did absolutely nothing.

      It was the perfect financial storm.  Do nothing but watch the investments roll in and take no risks.  With interest rates in the tank, investors had nowhere else to go. The only threat would be inflation.  The government bean counters went along with the program and gave figures that pronounced little or no inflation. 

       Individuals know better as their buying power constantly decreases.  Jobs have slowly increased but not at a rate to even keep up with the new people entering the market.  The present administration swears things are getting better, but the real question is, in comparison to what?

       I will have to admit there seems to be a more positive attitude in America.  To me it stems from the hope that things are not getting noticeably worse.  The problem with that view is that things are not getting noticeably better either.  The only hope at present is that Americans are learning to get by with less and thereby lowering their level of pain.

       Recently I read that the level of the national debt per person has exceeded the annual median income of America.  That means over half of Americans owe more than they make per year as income to the national debt.  It is a number that is getting progressively worse.  The debt is not being addressed.  The new tactics of the Bean Counters of America is to sit and do nothing but count the money they are raking in from institutional investors.  The stock market balloon is being pumped to the max.  The only question is, what will burst the bubble. 

    Will it be the national debt?  The constant rise of entitlement programs?  The collapse of the dollar? The rise of the price of oil? Some foreign market collapse? It does not matter what it is.  The point is that it is a bubble, and all bubbles bust sooner or later, especially if they are ignored by those with the responsibility to fix the problem.  As long as the bankers, businesses and bean counters are making money they will not address the problem.  They are the ones creating the problem, but as long as the cash is flowing their direction, why fix it?

  The President and Congress are certainly not going to address the problem as long as they are in office. Even the Supreme Court is contributing to the problem as they make millions of people eligible for benefits with the stroke of a pen. It might pay to get a place in the country where you can be totally self- sufficient.  The only problem with that is that the local tax collectors will tax you right off of the property.  Enjoy life while you can, before government figures a way to tax that too.

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