News & Views from 465 California Street

Hello Again

Clint Reilly

After a brief respite, I’m back. I intend to periodically record my thoughts on matters of public interest. My column in Bay Area Media News papers has run the agreed upon three years and now I will record my thoughts for a vastly reduced readership. No matter. I learned a powerful lesson from having a deadline every Tuesday. The benefits to self from writing – apart from whether or not anyone ever reads your content – are awesome.

When I was a student, my seminary English professor made us write a daily essay. I remember the grueling nights spent dissecting Shakespeare’s poetry. But the forced regimen, learned long ago, to condense ideas into one clear message, has served me well throughout the rest of my life. Also, there is a certain value in the simple discipline of articulating your own thoughts and impressions only to yourself. We sometimes don’t know what we think until we reflect and organize our precise thinking.

But writers write to be read. So let us begin…

The stock market is down another 150 points today. Looking back on the financial meltdown of 2008 and the subsequent massive government intervention that staved off much of the collateral damage that befell Americans of the 1930s, I fear a day of reckoning ahead. Like a horse rearing up, the market is refusing to move. Can it be that the stock market hears a rumble deep down in the economic numbers forecasting worse employment, poorer housing numbers and anemic to negative GDP?

The developed nations have built prosperity on the back of debt that will be hard to repay. Think about your own household. When your interest payments are so high that you can only stay even, investment is impossible. College tuition, home improvement and saving become luxuries you just can’t afford.

I am a big Paul Krugman fan – New York Times Columnist and author of Conscience of a Liberal. However, Krugman is constantly beating the drum for more stimulus dollars out of Washington. Yesterday, he attacked the famous stinginess of German Fiscal Policy. But I think Krugman’s ideology is blurring him from seeing the obvious. America is getting perilously close to a debt -paralysis that will kill economic growth and blow up the Obama Presidency. Further, the crisis in Europe – where social programs have over extended Greece, Portugal, Spain, Ireland – threatens to globalize economic turmoil and stagnation.

Over the years, I have often read the newsletters of Richard Russell on the stock market. At 85, Russell is pessimistic. He warns that too much debt will force governments to manufacture money – debasing their currencies and inflicting untold damage.

Congress may even agree with Russell’s assessment of our dire fiscal condition. Last night, the Senate shelved a new jobless bill over growing consternation about deficits in Washington.

But Russell’s warnings are in direct contrast to the screaming financial pundits on business cable like Jim Cramer, Larry Kudlow or their highly conflicted guests who have rosy prognostications about the future.

We may unfortunately be heading into a bleak winter for capitalism that will test the fortitude of the average American in the way that our forefathers were challenged by the Great Depression.

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