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Why Donald Trump Needs The Next Recession To Start As Quickly As Possible February 12, 2017

Donald Trump Accepts The Nomination - Public DomainA new recession is coming, and Donald Trump needs it to begin sooner rather than later.  As I explained last week, most American voters tend to care about their pocketbooks more than anything else.  If the next recession were to officially start during the first quarter of 2017, it would be very easy for Trump to blame it on Obama, and then he could portray himself as the one that pulled the U.S. economy out of recession in time for the 2020 election.  But if the next recession does not begin until 2018 or 2019, everybody is going to blame it on Trump even if it is not his fault.  In politics, who gets the blame for whatever goes wrong is often the most important thing, and if Trump wants to avoid blame for the next recession he needs for it to start as quickly as possible.

For most of 2016, the mainstream media was warning that a new recession was probably coming no matter who won the election.  For one example, just check out this Bloomberg article.

And for once, the mainstream media was precisely correct.  Barack Obama left us with an enormous economic mess, and it would take an economic miracle of unprecedented proportions to keep the U.S. economy from going into a recession at this point.

During the Obama years, the U.S. went on a debt binge unlike anything we have ever seen before.

The U.S. national debt almost doubled.  During Obama’s time in the White House, it increased from 10.6 trillion dollars to nearly 20 trillion dollars, and that means that over 9 trillion dollars of future consumption was brought into the present.  That incredible boost to spending would have shot U.S. economic growth into the stratosphere during normal times, but because we were struggling so much all we got out of it was eight years of economic stagnation.

In fact, Barack Obama was the only president in modern American history never to have a single year when the U.S. economy grew by at least 3 percent, and he had two terms to try to accomplish that goal.

And remember, Obama also had the benefit of doctored economic numbers.  John Williams of shadowstats.com tracks what the figures would look like if honest numbers were being used, and according to his calculations the U.S. economy has actually continually been in a recession since 2005.

In addition to government debt, other forms of debt are way out of control as well.  The total amount of consumer debt in the United States has now hit 12 trillion dollars, and corporate debt has approximately doubled since the last recession.

When levels of debt grow much, much faster than the overall economy, it is inevitable that a crash will come.

If you look back throughout history, I don’t know if you can find a single example where debt has grown this quickly and a crash has not happened afterwards.

By some miracle if we are able to avoid a major economic downturn this time, we will literally be defying the laws of economics.

The employment crisis also threatens to get a lot worse in the months ahead.  The mainstream media keeps trying to tell us that we are almost at “full employment”, but the truth is that more than 100 million Americans do not have a job right now.

Yes, there are a few areas of the country where jobs appear to be plentiful, but there are many more areas where they are not.

For example, you will never, ever be able to convince 23-year-old Tyler Moore that the job market is good

Tyler Moore’s late-December drive to Louisville, Ky., was one of desperation. He was headed four hours west on Interstate 64 to interview for a job. Even if he landed the position, filling his gas tank had left him with $8 to his name. He would have to sleep at a friend’s place until he could earn enough to pay rent.

The 23-year-old had run out of options. He’d applied for dozens of jobs within an hour and a half of his hometown of Lovely, once a coal-mining stronghold. Instead of opportunities, he had found waiting lists.

“Minimum-wage jobs, fast-food restaurants, Wal-Mart, anything like that, a lot of them has already been took,” he says in an Appalachian drawl, explaining that the backlog just to interview was as long as a year. “There are no jobs.”

If the U.S. economy is in “good shape”, then why can’t people like Moore find a job?

Yes, there is a tremendous amount of optimism in the financial markets right now and the stock market has been soaring.

But the exact same things were true in 2007, and we remember how that turned out.

There is no possible way that the S&P 500 can continue to generate an 18% annual return without corresponding economic growth.  The following comes from David Stockman

Altogether the S&P 500 now stands at 3.4X its post-crisis low, having generated an 18% annual return (including dividends) for nearly eight years running.

To be sure, in an honest free market that very fact would be a flashing red light, warning that exceptionally high gains over an extended period necessitate a regression to the mean in the period ahead.

A lot of people get caught up in trying to predict exactly when the stock market will crash, but what everybody should be able to agree on is that it will crash.

There is no possible way that stocks can stay at such ridiculously overpriced levels indefinitely.

Throughout history, stocks have always moved back in the direction of the long-term averages, and this time will be no exception.

And just like last time, the beginning of a new recession will likely be accompanied by a major financial correction.

In recent articles, I have been highlighting some of the reasons why it appears that a new recession is imminent…

-Federal tax receipts have gone negative for the first time since the last recession.

-Job growth at S&P 500 companies has gone negative for the very first time since the last recession.

-The U.S. trade deficit in 2016 was the largest in four years.

-Lending standards have tightened up for medium and large sized firms for six quarters in a row.

-Lending standard are also tightening up for consumers.

-We just saw the largest percentage decline in average weekly hours since the recession of 2008.

-Gross private domestic investment is down.

-Consumer bankruptcies are rising.

-Commercial bankruptcies are rising.

All of this is not necessarily bad news for Trump.

A horrible recession started during the early years of Ronald Reagan’s presidency, but the U.S. economy turned around later in his first term and that momentum helped propel him to an easy victory in 1984.

Similarly, Trump could actually take advantage of the coming economic downturn as long as he is able to pin all of the blame for it on the previous administration.

If there is one thing that is true about U.S. voters, it is the fact that they tend to care about their own economic well-being more than anything else.

If you doubt this, just check out the results of a recent Fox News poll

The latest Fox News Poll also asks, what defines the American Dream today? At the top, according to the national survey released Wednesday, is “retiring comfortably.” Some 88 percent feel that is extremely or very important to realizing the dream.

Next, 76 percent say “having a successful career” is important. That’s followed by “raising a family” (74 percent) and “making a valuable contribution” to their community (74 percent).

“Owning a home” is seen as a big part of achieving the dream for nearly 7 in 10 (69 percent). About 6 in 10 say “graduating college” (61 percent) and “being better off” than their parents (57 percent).

To most Americans, being “successful in life” comes down to how much money they have.

That should not be true, but it is.

And this is ultimately what Trump will be judged on.

If the economy is improving by 2020, voters will tend to evaluate him favorably.  But if the economy is faltering during the next election season, it will be more difficult for him to get a second term.

So what Trump and all those that support Trump should want is for the coming recession to begin and end as quickly as possible.

However, there is also the possibility that the next recession may be a particularly bad one.  Because we are in the midst of the biggest debt bubble in human history, any major downturn could ultimately spiral completely out of control.  In other words, we may be facing the kind of crisis from which we never quite recover.

One expert that is warning about such a scenario is legendary investor Jim Rogers

…get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime and when that happens a lot of people are going to disappear.

In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they’ve been through everything and yet they disappear.

So the next time around it’s going to be worse than anything we’ve seen and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear. I hope you get very worried.

when you start having bear markets as you I’m sure well know one bad thing happens and another bad thing happens and these things snowball just like in bull markets good news comes out then more good news comes out the next thing you know you’re five or six or seven years into a bull market.

Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven’t even gotten to war. I haven’t even gotten to trade war or anything like that but you know things do go wrong.

If it is as bad as Rogers is suggesting, it wouldn’t be too long before conditions in America would begin to resemble those portrayed in my novel.

Let’s hope that does not turn out to be the case.

Let’s hope that the next recession begins and ends as quickly as possible and that the U.S. economy is on a solid upswing by 2020.

And if you are a Trump supporter, don’t be too dismayed if the U.S. economy takes a major downturn in 2017.  As I discussed above, it could actually be just the thing that Trump needs to set the stage for another election victory in 2020.

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Why Donald Trump Needs The Next Recession To Start As Quickly As Possible

Donald Trump Accepts The Nomination - Public DomainA new recession is coming, and Donald Trump needs it to begin sooner rather than later.  As I explained last week, most American voters tend to care about their pocketbooks more than anything else.  If the next recession were to officially start during the first quarter of 2017, it would be very easy for Trump to blame it on Obama, and then he could portray himself as the one that pulled the U.S. economy out of recession in time for the 2020 election.  But if the next recession does not begin until 2018 or 2019, everybody is going to blame it on Trump even if it is not his fault.  In politics, who gets the blame for whatever goes wrong is often the most important thing, and if Trump wants to avoid blame for the next recession he needs for it to start as quickly as possible.

For most of 2016, the mainstream media was warning that a new recession was probably coming no matter who won the election.  For one example, just check out this Bloomberg article.

And for once, the mainstream media was precisely correct.  Barack Obama left us with an enormous economic mess, and it would take an economic miracle of unprecedented proportions to keep the U.S. economy from going into a recession at this point.

During the Obama years, the U.S. went on a debt binge unlike anything we have ever seen before.

The U.S. national debt almost doubled.  During Obama’s time in the White House, it increased from 10.6 trillion dollars to nearly 20 trillion dollars, and that means that over 9 trillion dollars of future consumption was brought into the present.  That incredible boost to spending would have shot U.S. economic growth into the stratosphere during normal times, but because we were struggling so much all we got out of it was eight years of economic stagnation.

In fact, Barack Obama was the only president in modern American history never to have a single year when the U.S. economy grew by at least 3 percent, and he had two terms to try to accomplish that goal.

And remember, Obama also had the benefit of doctored economic numbers.  John Williams of shadowstats.com tracks what the figures would look like if honest numbers were being used, and according to his calculations the U.S. economy has actually continually been in a recession since 2005.

In addition to government debt, other forms of debt are way out of control as well.  The total amount of consumer debt in the United States has now hit 12 trillion dollars, and corporate debt has approximately doubled since the last recession.

When levels of debt grow much, much faster than the overall economy, it is inevitable that a crash will come.

If you look back throughout history, I don’t know if you can find a single example where debt has grown this quickly and a crash has not happened afterwards.

By some miracle if we are able to avoid a major economic downturn this time, we will literally be defying the laws of economics.

The employment crisis also threatens to get a lot worse in the months ahead.  The mainstream media keeps trying to tell us that we are almost at “full employment”, but the truth is that more than 100 million Americans do not have a job right now.

Yes, there are a few areas of the country where jobs appear to be plentiful, but there are many more areas where they are not.

For example, you will never, ever be able to convince 23-year-old Tyler Moore that the job market is good

Tyler Moore’s late-December drive to Louisville, Ky., was one of desperation. He was headed four hours west on Interstate 64 to interview for a job. Even if he landed the position, filling his gas tank had left him with $8 to his name. He would have to sleep at a friend’s place until he could earn enough to pay rent.

The 23-year-old had run out of options. He’d applied for dozens of jobs within an hour and a half of his hometown of Lovely, once a coal-mining stronghold. Instead of opportunities, he had found waiting lists.

“Minimum-wage jobs, fast-food restaurants, Wal-Mart, anything like that, a lot of them has already been took,” he says in an Appalachian drawl, explaining that the backlog just to interview was as long as a year. “There are no jobs.”

If the U.S. economy is in “good shape”, then why can’t people like Moore find a job?

Yes, there is a tremendous amount of optimism in the financial markets right now and the stock market has been soaring.

But the exact same things were true in 2007, and we remember how that turned out.

There is no possible way that the S&P 500 can continue to generate an 18% annual return without corresponding economic growth.  The following comes from David Stockman

Altogether the S&P 500 now stands at 3.4X its post-crisis low, having generated an 18% annual return (including dividends) for nearly eight years running.

To be sure, in an honest free market that very fact would be a flashing red light, warning that exceptionally high gains over an extended period necessitate a regression to the mean in the period ahead.

A lot of people get caught up in trying to predict exactly when the stock market will crash, but what everybody should be able to agree on is that it will crash.

There is no possible way that stocks can stay at such ridiculously overpriced levels indefinitely.

Throughout history, stocks have always moved back in the direction of the long-term averages, and this time will be no exception.

And just like last time, the beginning of a new recession will likely be accompanied by a major financial correction.

In recent articles, I have been highlighting some of the reasons why it appears that a new recession is imminent…

-Federal tax receipts have gone negative for the first time since the last recession.

-Job growth at S&P 500 companies has gone negative for the very first time since the last recession.

-The U.S. trade deficit in 2016 was the largest in four years.

-Lending standards have tightened up for medium and large sized firms for six quarters in a row.

-Lending standard are also tightening up for consumers.

-We just saw the largest percentage decline in average weekly hours since the recession of 2008.

-Gross private domestic investment is down.

-Consumer bankruptcies are rising.

-Commercial bankruptcies are rising.

All of this is not necessarily bad news for Trump.

A horrible recession started during the early years of Ronald Reagan’s presidency, but the U.S. economy turned around later in his first term and that momentum helped propel him to an easy victory in 1984.

Similarly, Trump could actually take advantage of the coming economic downturn as long as he is able to pin all of the blame for it on the previous administration.

If there is one thing that is true about U.S. voters, it is the fact that they tend to care about their own economic well-being more than anything else.

If you doubt this, just check out the results of a recent Fox News poll

The latest Fox News Poll also asks, what defines the American Dream today? At the top, according to the national survey released Wednesday, is “retiring comfortably.” Some 88 percent feel that is extremely or very important to realizing the dream.

Next, 76 percent say “having a successful career” is important. That’s followed by “raising a family” (74 percent) and “making a valuable contribution” to their community (74 percent).

“Owning a home” is seen as a big part of achieving the dream for nearly 7 in 10 (69 percent). About 6 in 10 say “graduating college” (61 percent) and “being better off” than their parents (57 percent).

To most Americans, being “successful in life” comes down to how much money they have.

That should not be true, but it is.

And this is ultimately what Trump will be judged on.

If the economy is improving by 2020, voters will tend to evaluate him favorably.  But if the economy is faltering during the next election season, it will be more difficult for him to get a second term.

So what Trump and all those that support Trump should want is for the coming recession to begin and end as quickly as possible.

However, there is also the possibility that the next recession may be a particularly bad one.  Because we are in the midst of the biggest debt bubble in human history, any major downturn could ultimately spiral completely out of control.  In other words, we may be facing the kind of crisis from which we never quite recover.

One expert that is warning about such a scenario is legendary investor Jim Rogers

…get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime and when that happens a lot of people are going to disappear.

In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they’ve been through everything and yet they disappear.

So the next time around it’s going to be worse than anything we’ve seen and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear. I hope you get very worried.

when you start having bear markets as you I’m sure well know one bad thing happens and another bad thing happens and these things snowball just like in bull markets good news comes out then more good news comes out the next thing you know you’re five or six or seven years into a bull market.

Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven’t even gotten to war. I haven’t even gotten to trade war or anything like that but you know things do go wrong.

If it is as bad as Rogers is suggesting, it wouldn’t be too long before conditions in America would begin to resemble those portrayed in my novel.

Let’s hope that does not turn out to be the case.

Let’s hope that the next recession begins and ends as quickly as possible and that the U.S. economy is on a solid upswing by 2020.

And if you are a Trump supporter, don’t be too dismayed if the U.S. economy takes a major downturn in 2017.  As I discussed above, it could actually be just the thing that Trump needs to set the stage for another election victory in 2020.

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Are We Being Set Up For A Crash? Stocks Hit A Level Only Seen During The Bubbles Of 1929, 2000 And 2007 December 8, 2016

stock-market-overvalued-public-domainWill the financial bubble that has been rapidly growing ever since Donald Trump won the election suddenly be popped once he takes office?  Could it be possible that we are being set up for a horrible financial crash that he will ultimately be blamed for?  Yesterday, I shared my thoughts on the incredible euphoria that we have seen since Donald Trump’s surprise victory on November 8th.  The U.S. dollar has been surging, companies are announcing that they are bringing jobs back to the U.S., and we are witnessing perhaps the greatest post-election stock market rally in Wall Street history.  In fact, the Dow, the Nasdaq and the S&P 500 all set new all-time record highs again on Thursday.  What we are seeing is absolutely unprecedented, and many believe that the good times will continue to roll as we head into 2017.

What has been most surprising to me is how well the stocks of the big Wall Street banks have been doing.  It is no secret that those banks poured a tremendous amount of money into Hillary Clinton’s campaign, and Donald Trump had some tough things to say about them leading up to election day.

So you wouldn’t think that it would be particularly good news for those banks that Trump won the election.  However, we seem to be living in “Bizarro World” at the moment, and in so many ways things are happening exactly the opposite of what we would expect.  Since Trump’s victory, all of the big banking stocks have been skyrocketing

Financial stocks in particular have been on fire. Citigroup (C) and JPMorgan Chase (JPM) are up about 20% since Donald Trump defeated Hillary Clinton — and that makes them laggards!

Morgan Stanley (MS) has gained more than 25%. So has troubled Wells Fargo (WFC), despite the lingering fallout from its fake account scandal. Bank of America (BAC) is up more than 30%.

And so is Goldman Sachs (GS) — the former employer of both Treasury Secretary nominee Steven Mnuchin and Trump chief strategist Steve Bannon.

But are these stock prices justified by the fundamentals?

Of course not, but during times of euphoria the fundamentals never seem to matter much.  Stocks were incredibly overvalued before the election, and now they are ridiculously overvalued.

Earlier today, a CNBC article pointed out that the cyclically-adjusted price to earnings ratio has only been higher than it is today at three points in our history…

“The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble,” Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.

Newman said even if the market’s earnings increase by 10 percent under Trump’s policies “we’re still dealing with the same picture, overvaluation on a very grand scale.”

And of course a historic stock market crash immediately followed each of those three bubbles.

So are we being set up for a huge crash in early 2017?

There are some out there that believe that this is purposely being orchestrated.  For example, Mike Adams of Natural News believes that the markets “will be deliberately and destructively imploded under President Trump”

Right now, the U.S. stock market is surging, with the Dow leaping toward 20,000, a number rooted in fiscal insanity and delusional expectations. There are no fundamentals that support a 20,000 Dow, but fundamentals have long since ceased to matter in a financial world hyperventilating on debt fumes while hallucinating about utopian economic models that will soon prove to generate fools instead of real wealth.

Today I’m going on the record with a prediction that I’ll offer with near absolute certainty: The rigged markets that now seem to defy gravity will be deliberately and destructively imploded under President Trump for all the obvious reasons. There will be financial chaos like we’ve never seen before: Investors leaping off tall buildings, banks declaring extended “holidays” that freeze transactions, and California pensioners slitting their wrists after they discover their promised pension funds were just vaporized by incompetent bureaucrats.

On the other hand, there are others that believe that Trump is just walking into a very bad situation and that a crash would be inevitable no matter who was president.

History tells us that there is no possible way that stock prices can stay at this irrational level indefinitely.  But for now a wave of optimism is sweeping the nation, and many of those that are caught up in it will get seriously angry with you if you try to inject a dose of reality into the conversation.

But like I said yesterday, let’s hope that the optimists are correct.  A survey that was just taken of 600 business executives found that 62 percent of them were optimistic about the U.S. economy over the next 12 months.

Incredibly, that number was sitting at just 38 percent the previous quarter.

For the moment, business leaders seem to be quite thrilled that we have a business executive in the White House.

Hopefully Donald Trump’s business experience will translate well to his new position.  And it is certainly my hope that he is as successful as possible.

But even during the campaign Trump talked about how stocks were in a giant bubble, and the euphoria that we have seen since his election victory has just made that bubble even larger.

Throughout U.S. history, every giant financial bubble has always ended very badly, and this time around will not be any exception.

Trump may get the blame for it when it bursts, but the truth is that the conditions for the coming crisis have been building for a very, very long time.

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