How Long Can Election Ether Power The American Economy?

Having broken the elusive glass ceiling at 20,000 the DJIA apparently now has no place to go but down, for all the reasons I’ve pointed out previously, including an over-valued stock market, unbridled optimism for the economic effectiveness of bombastic infrastructure spending, and especially the shelled-out condition of many public companies whose executives traded long term growth for short term profitability, utilizing cheap Fed money for stock buyback programs. The election euphoria is quickly waning now, as protests are becoming the norm rather than the exception. The inflationary implications and uncertainty that was projected to enshroud the marketplace as the new administration began to insert policy changes are beginning to solidify and take root.

As I write this article, the DJIA is down well over 100 points, while the NASDAQ, TSX and NYSE are also taking their lumps. Actually, the best thing that could happen right now would be a protracted decline in prices, because as you may know, my greatest fear and the greatest threat we continue to face is a sudden and dramatic collapse. Meanwhile, the Volatility Index (VIX.X) spiked 12%, the dollar has given back 50% of its post-election run, and executives at many top American companies, Apple, Facebook, Microsoft and Netflix, just as examples, loudly voiced their disappointment with the new administration’s immigration executive order. They pointed out that immigration allows them to thrive and innovate, while such policies only serve to restrict.

The coming week will provide some answers, but long-term uncertainty is sure to prevail, as the Fed concludes their first meeting of the new year, corporate reaction to the immigration ban continues to be digested, and new policy directives are delivered from the new administration. Moving forward, the media as usual, will be a big part of the economic euphoria or depression. Persuading Ford to keep a plant in Michigan may save 700 jobs, but it’s just as important to realize and report on the fact that GM recently announced 3,300 layoffs. Reality TV has become a big part of the American lifestyle, but it is incumbent upon the media to cover all the news, including the good, the bad and the ugly. This is no time for sugar-coating.

A lot of effort seems to be getting spent on increasing the number of manufacturing jobs here in America, but history clearly describes such political effort as folly. The sector achieved a peak in 1979 with 19.5 million employed. The recession of the 80’s tore into those numbers and the crash of 2008 provided the final blow. The sector hit a recent peak in 2010 at 12.3 million, but has been dwindling since. I’m hoping that savvy investors are taking the current lull in precious metal prices to stock up and fortify holdings. And anyone without physical precious metals in their financial or retirement portfolio is simply playing Russian roulette with a fully loaded pistol. The ingredients necessary for an economic cataclysm are simply too plentiful.

Please follow and like us:

You may also like...


  1. Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you can do with some pics to drive the message home a little bit, but instead of that, this is great blog. A great read. I will certainly be back.

  2. I like the helpful info you provide in your articles. I’ll bookmark your blog and check again here regularly. I’m quite certain I will learn many new stuff right here! Good luck for the next!

  3. After checking out a handful of the articles on your web site, I truly like your technique of writing a blog. I book marked it to my bookmark webpage list and will be checking back in the near future. Please visit my web site as well and let me know how you feel.

  4. Can I just say what a relief to discover an individual who truly understands what they’re talking about on the internet. You certainly realize how to bring a problem to light and make it important. A lot more people ought to read this and understand this side of your story. I was surprised you aren’t more popular because you definitely have the gift.

Add a Comment

Your email address will not be published. Required fields are marked *