11/26/09 London, England – One turkey turns to the other…
“Things were pretty rough there for a while…what with the recession
and all. But now there’s a recovery. Business is picking up.”
“Yeah, this is great…no more hanging around this place waiting…finally, the boss says we’re all shipping out today…”
“I wonder what we’re going to be doing…”
“I don’t know…I’m going to some place called ‘Butterball Birds’…”
“Hey, sounds like it might be fun…maybe it’s some kind of theme park. I’m going to work for a fellow named Frank Perdue…”
As our friend Nassim Taleb says, a turkey’s life is very
agreeable…until the very last day. Until then, his whole life is a bull
market. Everything looks good. Good food. A roof over his head. Plenty
of company. Even free health care. The MPT guys would look at his
history. They’d see no volatility. Every day, the turkey gains weight.
Every day things get better. They’d see all reward and no risk. They’d
say ‘every investor should have turkeys in his portfolio.’
The chartists, too. They’d look at the turkey’s life and see a line
moving steadily up. ‘Is this a winner or what,” they’d say to each
And what about the economists? Well, the old-timers would be
suspicious. ‘There’s no such thing as all upside…there’s no boom
without a bust,’ they’d grumble. But the young fellows wouldn’t listen.
They’d plump for the turkeys without hesitation, confident that if
anything were to go wrong, Ben Bernanke and Tim Geithner would set it
And now, they think the Bernanke-Geithner team has just pulled off a
save. Thanks to them, the turkeys who ran Wall Street – and invested in
it – have been spared. America is getting back to work.
But what kind of work?
Alas, it’s the work of a DEPRESSION – de-leveraging, busting up, working out loans, defaulting on debt…going chapters 11 and 7.
Yes, dear reader, the recession is over. Welcome back to the
Depression. The number crunchers reported a positive GDP growth figure
for the last quarter of 3.5%. Everyone cheered. Now, the crunchers
admit that they were a little too optimistic. The real number is only
2.8%. But it’s still positive. So the recovery is still on…
Sort of. If you deconstruct the numbers, and pull out all the feds’
hot money effects, you’ll probably find that the economy is not growing
at all. How could it be? It’s a consumer economy. Consumers aren’t
The Wall Street Journal reports that “One in four borrowers underwater.”
Mortgage delinquencies at a record high, adds The New York Times.
Real joblessness is at 17.5%, reports CNBC.
Insiders are selling 17 of their own shares for every one that they buy.
“Consumers lose appetite for dining out,” says The Los Angeles Times.
The National Retail Federation thinks holiday sales will be 1% lower than last year. And last year they were depressed.
But The New York Times is worried about us over here in England.
“Lost decade feared for British economy,” says a headline.
As we pointed out on Tuesday, the US economy has already suffered a
lost decade. No employment growth in the last ten years. No gains in
the stock market. No household income growth. As near as we can tell,
the whole nation is just another decade older and deeper in debt.
But that’s the way it works, isn’t it? A bull market on Wall
Street…or a boom in the economy…they’re just like a turkey’s life. It’s
all fine…until it ain’t fine any more.
And now, we’re going to let you in on the secret. You can pass this on to the White House and the Fed if you like.
How can you really get an economy out of a depression? Well, you have to get into a depression first. Then, you can get out.
The cure for a depression, in other words, is a depression. Nothing
else will do. Mistakes need to be addressed and corrected. Losses need
to be recognized and written off. Bad decisions need to be put right.
So, bring on the depression! Get it on. Get it over with.
Too bad the feds don’t get it at all.