The Americas

There is a delicious irony in the world of economic policy at the moment. The Asian crisis back back in 1997 and 1998 was brought on by the same things that led to the current crisis in Europe and the US (and the one I believe is coming to China).

Robert Neuwirth says System D is the world’s second-largest economy, amounting to economic productivity of $10 trillion, which is probably a low estimate. At the pace at which government is growing, System D is set to employ as many as two of three workers by 2020.

The economy is not nearly as strong as most people think. There is no growth to speak of. And without growth, it doesn’t make sense to pay so much for stocks.

The US economy entered a period of debt destruction – a Great Correction, we called it. The question then was how long the Great Correction would last…which depended on what it was correcting.

I’d like to tell you about a study I read recently on investing. It’s a slim little booklet titled One-Way Pockets by Don Guyon (a pen name for a broker). The book, which was first published in 1917, covers some studies he did on the trading behavior of accounts at the time. What he found was timeless.

The US economy has come back to output levels of ’07. But this feeble rebound not only holds the title of “weakest post-war recovery ever,” it also shows that something else is going on. Most economists have no idea what. So, they just think this “recovery” is unusually slow.

A study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation.

As Alan Greenspan points out: The ‘greed’ that preoccupies Occupy Wall Street demonstrators is not a feature of capitalism, It’s a feature of human nature. He might have pointed out that socialists are just as greedy as capitalists. They are just more corrupt.