Economy contiues to spin its wheels
More disappointing economic news: the Dow Jones
tumbles 150 points and now has entrenched itself firmly below the 10,000 mark.
When last December the Dow Jones once again climbed over the 10,000 mark, I
pointed even that there was nothing to justify have the Dow at so high a mark.
It looks like investors have finally figured this out. The economy began slowing
down in June, and the most recent payroll figures show that this trend is
continuing.
Anyone who has kept up with my blogs on the
economy should not be surprised by this development. This confirms what I have
been saying all along. The economy is way over-extended and it cannot possibly
attain a full and complete recovery. The more likely outcome is either runaway
inflation (the government has been inflating the money supply at a horrendous
clip in recent years), or, through a massive debt crack-up, a major deflation
like we experienced in the
Depression.
When any of this is going
to happen cannot be predicted with any degree of certainty. But what you can be
pretty sure about is that there will never be a full recovery until a gale of
creative destruction has swept through the economy and gotten rid of all the bad
debt and inefficient businesses. A full, complete, healthy recovery is an
impossibility at this time. A leprous, limping, noisome recovery, like the one
we've been experiencing the last few years, is of course possible. Perhaps it's
possible for many months, or even years, to come. But anything more than that
can never happen. The fundamentals are just too rotten for all that.
Posted: Fri - August 6, 2004 at 08:09 PM