By: Jeff Koopersmith, Editor Emeritus
WASHINGTON DC–Friday, February 8th, 2019: It is not only Americans who have the “I’m not so sure why” feeling in our guts that something is wrong with our nation. Most of the Democracies and Open for Business countries share this sense, yet it is the older and considerable players that control, or are out of control when we are looking out for signs that the 2008 Financial Collapse could recur.
The answer is a resounding Yes nearly unanimously among the most trusted analysts and economists that certainly the warning tremors are here, and worldwide, but that there are things our leadership could do to stop the likelihood of anything more than a slight recession in late 2019 or 2020.
Of course most of us are catching the similar but more guarded talk from the same people who let most of us down in 2007, with little or no warning that that “too big to fail” corporations like banks and insurance companies were about to wash out, with Bear Stearns, the first to crumble and providing a cliff for everyone to follow into a mystical abyss that few people were aware of prior, and fewer that could fix or at least ameliorate the cruelty of that financial panic.
During that “era” lasting about a decade from 1998 on, I spent much time abroad for clients and nonprofits in Europe, Central America, and Asia while living on Lake Lugano at the Italian-Swiss border. Most everything appeared normal across the Atlantic save for some smaller movements of numbers of asylum seekers from North Africa and elsewhere floating in great danger from Tunisia and Libya toward EU nations with their first stop often being the boot sole of Italy. The first asylum seekers were not people in such distress over war and tyranny that they tried crossing the Mediterranean Sea in nothing much more than Dollar Store rafts. No, these were more elite than what was to become poverty stricken and leaderless ex-patriots who, as a result of pre-911 and then post-911 floggings and flocking to different and safer homes and banks to stash their cash and make new futures for themselves.
Within a decade, beginning in 2004 – and to-date – more and more families and seekers of safety began looking North and West for quieter terrain. Today asylum seekers continue to battle the wintry Med, but now others in regions close to the USA and the equator are also moving, perhaps more slowly, but in little droves- toward the United States and Canada from South and Central America where living conditions worsen and dictatorships or worse are gaining ground such as in Venezuela, El Salvador, and Honduras.
Meanwhile, Americans, Canadians, and most E.U nations are quietly ridding themselves of the tens of thousand “annoyances” – putting immigrants into return-home boats and airplanes, shipping them, like Federal Express, to their former home countries that none wish to go back to, while the United States has moved troops to the Mexican Border until such time as border security is increased with use of President Trump’s “Wall” or Steel Curtain with Drones that will most likely use a combination of walls, fences, and barbed wire along with high tech instruments that can truly see the faces of people moving along those barriers, but also repeater names in files at ICE simply by seeing their features also stored as images in Federal and State-owned cameras and computers that rarely miss a trick, but that are now also covering only urban areas and some suburbs to catch the souls who dare enter with “papers”. Along with this will be those Buzzing Bee Drones – not the kind your children have, but the species that will be capable of defending the American border quite more heavily than we might expect.
Will this turn into annihilation rather
Much the same is happening in Taiwan, Japan, some smaller nations on the Chinese borders, in China itself, and quickly in Australia and New Zealand – perhaps a bit less so, but everyone in poverty or close is nervous, and millions even billions will soon across the globe in their planes, boats, and trains filled with dreams – and searching for longterm wellbeing and shelter.
Let me digress for a few moments and tell you a sort of under-the-tarps discovery made by the splendid Ms. Jane Goodall, who has spent over fifty years in Africa and now at her Center in Tanzania with her Chimps – someone who has followed and written about monkeys and apes for decades. The most surprising to me of late was her discovery that primates, like us, in fact, go to war without any explicable reasons.
Let me repeat that just as we human beings continue to go to war with each other (longer, more unpleasant, and not for children) for little or no gains and often massive losses. Yes, chimps do that same, and for a literally undetected cause. Goodall has observed this relatively recently in the jungle and is yet grieving over it.
Now that biologists and other experts agree that Goodall is more than correct, we now understand how, but perhaps not why, we too, go to war – and of course even more often than do the chimps of Tanzania. With this in mind let me try to tell you why we might fall, again, into financial panic soon.
I will not spend much time on inflation as I have before in other essays and columns – yet I will tell you: “Simply look around and make note of the prices of things – and especially those that take bank or worse financing to acquire, either by secured loans, or unsecured credit cards.
Then you may agree with me that any items that must rely on markets and banks to be sold can be costly in more than money – Just the want and gain of them can cause warfare of one type or another. Today our President is both trying to protect us from the several immigrants with corrupt aims while he ignores our Trillion Dollar debts and our burgeoning national budgets which are forcing the states to grow their budgets larger, as well as more and more basic health and social program financing is slashed by the Congress and the Administration.
I always point to the prices of pickup trucks and SUVs both of which – at the high end can cost families over $100 thousand. I also have a history of property investment – now no longer a great buy. New York City was the prime example of ridiculous condo prices at between $1,000 and $5,000 a square foot. On top of that are the $1,000 to $5,000 “condo fees” that make investors like the Trump Corporation wealthy.
In California. house prices are yet soaring toward a drop, with fewer buyers and owners who expected to lease these homes long term are now sitting on $2 million homes that might only earn five or six thousand dollars a month. And but not leading end neighborhoods.
In Los Angeles, where most of the best and highest value property is east of the Santa Monica Mountains, many homes that cost a few hundred thousand dollars six years ago are now priced at far more than a million. To give you an idea of home prices and rental costs: every home worth “only” a million will cost owners in California more than eight to ten thousand a month to own because of outrageous property taxes. There are homes in Beverly Hills, Bel Air and what’s left of beachfront Malibu that are priced at more than $100 million and some more than $200 million.
New York’s toniest neighborhoods along with ludicrous buyer costs in the same “going down” elevator. These two states also reflect that highest state and local property taxes conceivable as does much of the West Coast and Northeast.
You may have met or seen Diane Swonk, the chief economist for Grant Thornton, as she often appears on news programs and speaks before large audiences around the world.
Diane wrote an
All of us, and especially those who have had little or no added comforts from the robust, and non-durable economic growth in the past year. This was largely a result of the President’s massive tax cut for the richest among us and Congress saw that as a reason to splurge with budgets for social programs and very big increases for defense. The stock markets rose and now has seesawed mostly up, but then down and up again. Swonk correctly writes that this enormous Trump stimulus is now ebbing, and more problems could cause a very low tide in the 18 months
You see, corporations did not use their huge gains from tax cuts as they were “supposed to” (in whose mind I ask?) and instead tool their large profitable gifts elsewhere as we have seen hinted to in the news for a year or more now.
These tax cuts for the richest were explained to us as a method to cause investment, but corporations largely failed to do that and instead began to use these more than one trillion dollars in tax cuts as profits and began to excitedly buy back their stock from former investors in stock and like markets which of course made their companies not only more valuable because they owed far less, but also made many completely self-funded and private, allowing CEOs and CFOs to make adjustments that cannot be monitored well for private companies. Privacy is secrecy.
This increase in value and the ability for some shenanigans to become comfortable – while at the same time other changes in the law are making many people take unsupportable estimates of withholding tax returns that were supposed to pay for expensive items like new cars and homes. That new source of money for the average American will not be coming this year at the same rates, warns Diane Swonk, and many of we “norms” will find an unusual debt crisis that we cannot afford. Swonk says this will cause anger, and I believe that this anger will swell into a panic in the late Spring and Summer of 2019 when shrunken tax return checks arrive in the mail – Many by considerably lower amounts.
Pay attention my fellows, and recognize fully the last time that gut feeling was there, and not so long ago, that we lost pensions, values in our homes, and far more.
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