Are People Going Insane Again?

Looking closely at the financial markets; corporate earnings; contractions in various industries (retail, food service, manufacturing, entertainment, and financial services); stock trends of bloated, over-expanding companies that rely on the discretionary income of their customers; job markets; and overall stoppage in economic growth, I absolutely believe we may be in (or at the very beginning of) a recession.

The big banks are in stock hell: Deutsche Bank, Credit Suisse, UBS, Barclays. The talking heads keep prattling on about how post-2008 regulatory decrees strengthened up Bankster balance sheets, but that’s hogwash. And certainly, the same cannot be said about household balance sheets. Personal debt — in the form of auto, mortgage, student debt, and revolving credit — is escalating, thanks to the masses juicing on artificially-depressed interest rates.

And corporate debt has almost doubled since the Meltdown. Stock buybacks are propping up the equity market and adding massive debt to corporate balance sheets. Corporate executives are all drinking the Kool-Aid.

And not a single layman seems to get it. I cannot have this conversation with people because they look at me like a deer into headlights. They are content to remain the comatose masses, enjoying their coma since 2007-2008. Peter Schiff thinks were are topping out and easing into the recession. David Stockman thinks it is within spitting distance. And Mish Shedlock makes the (very good) case that the recession was underway in Q4 2015.

And still, we see the same behavior we witnessed in 2007: those unaware are pumping their $$$ into things that will go bust. New home starts, insane retail expansion, crazed food service expansion, and my favorite bubble phenoms such as the new (upcoming) 22,000 sq. ft Nike store in downtown Detroit. Now that’s a real winner in an economic contraction. Oh, and then there’s the gazillion burger & fries joints, coffee shops, and mega-huge auto dealers the size of a small city. All unsustainable.

And some nutbag from Goldman Sachs has called this all a “growth scare.” The Feds are out of tricks, and the Central Bank is out of ammunition.