From my friend Michael Hayes According to the Congressional Budget Office, the federal government is going to extract from the economy the greatest amount of money ever this year. Meanwhile, wages have fallen to a record low as a share of America’s GDP, and employee compensation (including health and retirement benefits) has fallen to its lowest percentage of national income in over 50 years. How anyone expects the economy to recover in any meaningful way under these circumstances is beyond me. While the Fed, as Stan Druckenmiller so eloquently put it last week, has refilled the punch bowl, the fact that it felt compelled to do so does not give one much confidence in the condition of the economy. Three QEs and a Twist later, and the economy is barely growing. The next thing the media is going to hype is the possibility of a government “shutdown.” First of all, there’s no such thing. In a government “shutdown”, only nonessentials shut down. The rest of the government carries on as usual. What happened to the stock market during the 28-day government “shutdown” between November 11, 1995 and January 6, 1996? The market rose 6.7%. There was a minor pullback in December of 3.5% and another minor pullback of 3.2% for two days in January after the “shutdown” ended.
Posted on: Thu, 26 Sep 2013 00:03:02 +0000
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