Saturday, January 20, 2024

Saturday Snippet: A twofer


Normally I put up an excerpt from a book on these Saturday Snippet posts, but occasionally I've excerpted a magazine article, or Internet essay, or something else I thought was important.  Today is such a day.

John Mauldin is an expert of long standing on the economy and investment.  I don't always agree with him, and he's been wrong in the past in several areas, but generally I'd say he's batting a pretty good average on his analyses of the investment scene and who's doing what, with which, to whom.  I get his free weekly newsletter, "Thoughts from the Frontline", and make a point of reading it (and I suggest you should too).

The last two editions of "Thoughts from the Frontline" have contained Mr. Mauldin's forecasts for the year (and decade) ahead.  They dovetail with mine in many areas, including the need to prepare for them (although he'd concentrate on investment and financial preparations, whereas I focus on more practical - not to mention edible - areas).  I highly recommend both to your attention this morning.  Click on the title of either to be taken to it.  I've added a couple of short excerpts to illustrate why I found them valuable.

No Way Out

Having now spent almost six months describing the historical cycles and massive debt that surround us, I find myself looking for an “easy” exit. Maybe one exists, but I haven’t found it yet. I think we’re stuck. The building will have to collapse around us before we can leave.

This is obviously not a great situation. For one thing, if we don't plan properly, the building could easily collapse on us instead of around us. Our entrapment may also cause us to neglect other big problems and maybe miss important opportunities.

The sad fact is we have no easy way out of the debt situation. Worse, we are actually choosing this fate. It’s not about individual choices; none of us want the crisis that’s coming. But all the solutions require joint actions we are apparently unable to take. Which means we are, by default, choosing a path which for many will be catastrophe.

We face this not just because of government policy choices but the political process itself. It is a function of the two-party system. Our system has lost the ability to act decisively against big problems we all see coming. We are a nation of deer in the headlights.

. . .

As we will see below, when I suggested part of a future compromise, I got serious pushback from readers on both sides. And the irony is I understand the frustration. Viscerally. I agree that everything that I have suggested in the past few weeks and months are bad choices. But in the future, the worst choice will be doing nothing and letting the economy collapse around our ears. Some might come through it, but the vast, vast majority of us won’t ... That’s not the future I want to predict, but I see no other possibilities. I think we have a few years left but there are already mutterings of stress in the US bond markets.

Clashing Crises

“Two is better than one” is a nice saying, but it really depends on what you’re describing. Two hurricanes or earthquakes aren’t better than one. Just one disaster at a time will suffice, thank you very much.

The same holds true for man-made crises like the debt fiasco we’ve been discussing. Last week in No Way Out I said we’ve missed our chance to avoid it. We are simply not going to do what it would take to get the federal debt under control—like it was as recently as 2001—until we have no other choice. I have said it before, and I truly believe it, it will take a crisis to force us to act on the deficit and debt.

When you know a problem is coming, the normal ideal is to address it immediately. Procrastination just lets the problem grow and raises the odds you will face multiple problems at the same time.

And that, unfortunately, is what I fear will happen. The government debt crisis will be bad enough, but it’s also likely to crescendo just as we face social, geopolitical, and demographic crises, too ... A bunch of bad things are going to happen in a fairly short time.

Now is the time to begin preparing for what will come.

There's more at both links.  Highly recommended reading - and important, IMHO.  This sort of information helps you plan for an increasingly uncertain and threatening future, to the best of your ability.  Far too many of us are not yet doing that.  It's long gone time we did.



Anonymous said...

The two-party system USED to do a better job, but leaders are anathema to our political apparatchiks and they have done all they can to filter them out of the political process.

Old NFO said...

Definitely downers, but important to read/remember!

halfdar said...

Mr Grant,
I would humbly venture that this writing has been on the wall, in various fonts and contrasts, my entire adult life (I am now approaching 53). Anyone who is not preparing is someone who doesn't want to, or is in on it, or is monumentally foolish. Such people abound. Consensus is near-impossible to arrive at, due to the insistence of everyone to be right (I mean correct, not '-of-centre').
I will share with you a revelation I had recently. I am not the sharpest knife in the drawer by any means, but I can reason. It occurs to me that the problem is very simple.
We all know the difference between right and wrong. We also know what needs to be done. Where we differ is in how best to execute, that which needs to be done.
Thus, the re-emergence of the idea of 'leaderless resistance'. You don't need anyone to explain to you what to do. Since we are moral people, those of us that remain, we will as a rule choose the correct over the expedient. We always return our shopping carts, even when no-one is looking.... So, we will by definition fight the good fight because we can do nothing else. That guy in the mirror looks very stern.

I don't mean to oversimplify things, but there is a lot of chaff in this wheat. Once it gets separated out, what remains seems straightforward. The only other question now is one of timing, and there's the rub...
Mike in Canada

lynn said...

More and more stories about a financial apocalypse of the USA. I put a comment up on somebody’s page and they replied with if the USA gets a cold, the world gets pneumonia. Sorry, but if the SWIFT system is suddenly replaced with a BRICS system, that is more than a cold for the USA.

lynn said...

““So you’re telling me there’s a chance…””

“I’ve written before that the US probably only has around five years, if not less, before the government reaches the end of its financial rope. The national debt and entitlement spending are simply too high.”

“By the early 2030s, the only realistic way to ‘solve’ the fiscal problem will be full-blown default… on the national debt, on Social Security, and on just about everything else.”

“So, yes, there is a chance this problem can be fixed. But at the moment, I objectively see very little evidence that there’s any appetite to even discuss these problems, let alone make the difficult decisions to solve them.”

Me too.

Anonymous said...

It's not the US economy that will collapse, but the US government. These are entirely separate things and must not be confused.