For an example of how far we’ve fallen from the old days
of free-range First World entitlement, consider the fact that investment
analysts are now judging companies by how well they cater to the needs of the
terrified:
(MarketWatch) – Papa John’s International
Inc. was upgraded to overweight from sector weight at KeyBanc Capital Markets
with analysts expressing the surprising view that diners, concerned about
political and civil unrest, are choosing to stay home for pizza delivery
rather than head out for a meal.
“After speaking with several large operators and industry contacts, we
believe the recent decline in casual dining restaurant segment
fundamentals—traffic down 3% to 5% the past several weeks—may be the result
of consumers eating more at home amid the current political/social backdrop,
which we believe could last through the November election,” KeyBanc analysts
wrote in a note published Tuesday.
Diners’ shift to a preference for convenience will benefit pizza delivery
businesses like Papa John’s, according to KeyBanc.
Papa John’s shares, which jumped 3.8% Wednesday, are up 23.0% over the past
three months. The S&P 500 is up 2.9% for the last three months.
This kind of micro-fear is, not surprisingly, reflected in macro trends
like defense stocks, which are now analyst favorites:
And of course gold and silver are always key parts of the
chaos story. If we can’t trust the big systems to function safely or
efficiently, and the biggest systems of all are fiat currency and fractional
reserve banking, then opting out of paper money begins to make sense. Hence
the monster run in precious metals miners during the first half of the year:
This breakdown of global civilization seems to baffle mainstream economists,
leading to more or less random predictions:
(Zero Hedge) – “The IMF has serious credibility problems.
It has been seriously wrong for years. I hope that one of the things that the
new government does is push to have some credible people running this
institution… rather than the clowns currently running it,” exclaimed UKIP MP
Douglas Carswell, pointing out Lagarde’s legion of fools flip-flop that the
British economy will grow faster than Germany and France in the next two
years – only weeks after its doom-laden warnings about Brexit.
As The Daily Mail reports, after saying that leaving the European Union could
trigger a UK recession, the International Monetary Fund now expects the
British economy to grow by 1.7 per cent this year and 1.3 per cent next year.
That is weaker than the 1.9 and 2.2 per cent growth forecasts before the
referendum, but the UK is still set to be the second-fastest growing economy
in the Group of Seven industrialised nations this year – behind the United
States – and third-fastest next year, behind the US and Canada.
Of course, this is not the first time The IMF has unleashed comedic genius on
the world…
But the new UK forecasts represent a climbdown for the global financial
watchdog after it issued a string of doom-laden warnings over the damage
Brexit would do.
Ahead of the referendum, IMF managing director Christine Lagarde, an ally of
former chancellor George Osborne, said Brexit would be ‘pretty bad, to very,
very bad’ for the UK.
But the latest forecasts – and an admission that a recession is now unlikely
– suggest the outlook is not as bleak as the watchdog claimed.
And again, as The Mail notes, it is not the first time the IMF has had to row
back from damaging comments about the UK economy. In April 2013, the fund’s
then chief economist Olivier Blanchard said Britain was ‘playing with fire’
by pressing ahead with austerity at a time of ‘very low growth’. But the IMF
was quickly forced into a dramatic volte face as the UK economy sprang into
life, forcing Mrs Lagarde to admit ‘we got it wrong’.
The IMF’s new chief economist Maury Obstfeld said yesterday there were
‘promising signs’ for the global economy in the first half of 2016, but
added: ‘Brexit has thrown a spanner in the works.’
And finally, here’s a short excerpt from a longer, must-read article
titled The world is taking its revenge against elites. When will
America’s wake up? by Thomas Frank, whose provocative work has been,
um, discussed
on DollarCollapse.com for many years.
The world of accepted ideas was coming apart, and no one
caught the new mood better than the New York Times’s David Brooks, a man who
has spent his career describing the inner lives of the nation’s prosperous
white-collar elite. Ordinarily a dealer in witty aphorisms and upper-crust
humor, Brooks now wrote a column entitled “Are We On the Path to National
Ruin?” in which he speculated darkly about the possibility of fascism in
America. “The crack of some abyss opened up for a moment by the end of last
week,” he wrote. “It’s very easy to see this country on a nightmare
trajectory.”
Brooks-in-despair is a pitiful sight, and one can’t help but sympathize. But
what’s really remarkable about the response to these shocks of people like
him has been their inability to acknowledge that their own satisfied
white-collar class might be part of the problem. On this they are utterly in
denial and whatever the disaster, the answer they give is always … more of
the same. More “innovation”. More venture capital. More sharp young global
Stanford entrepreneurs. There is no problem that more people like they
themselves can’t solve.
It’s easy to see the problems presented by a cliquish elite when they happen
elsewhere. In the countries of Old Europe, maybe, powerful politicians sell
out grotesquely to Goldman Sachs; but when an idealistic American president
announces that he wants to seek a career in venture capital, we have trouble
saying much of anything. In Britain, maybe, they have an “establishment”; but
what we have in America, we think, are talented people who deserve to be on
top. One wonders what kind of a shock it will take to shake us out of this
meritocratic complacency once and for all.
It’s important to understand that all of this, while seemingly coming out
of left field for mainstream economists and politicians, was completely
predictable for both Austrian School economists (who focus on a society’s
balance sheet rather than irrelevancies like money supply or aggregate demand,
and correctly see rising leverage as a sign of trouble) and pretty much
anyone else with basic common sense.
It’s actually fairly simple: When you borrow too much money your life
spins out of control. Individuals, families, and societies all live under the
same set of economic laws, and suffer similar penalties for violating them.
The fact that this bit of kitchen-table wisdom is lost on the people in
charge just reinforces the impression that they’re completely clueless, which
in turn elevates the fear that the average person experiences when police are
systematically killed and random assemblages are attacked with weapons
ranging from assault rifles to tractor/trailers to axes. Or when interest
rates fall to the point that retirement savings earn literally nothing while
assets with unacceptable levels of risk (junk bonds, growth stocks, leveraged
ETFs) are making fortunes for speculators.
Since the process of hyper-leveraging the world is shifting into an even
higher gear as this is written, expect elites to be surprised again – and
regular people to even more terrified — by the result. Which means our future
will include even more gold, missiles and pizza.
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John Rubino runs the popular financial website DollarCollapse.com.
He is co-author, with GoldMoney’s James Turk, of The Money Bubble
(DollarCollapse Press, 2014) and The Collapse of the Dollar and How to Profit
From It (Doubleday, 2007), and author of Clean Money: Picking Winners in
the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real
Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998).
After earning a Finance MBA from New York University, he spent the 1980s on
Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst.
During the 1990s he was a featured columnist with TheStreet.com and a
frequent contributor to Individual Investor, Online Investor, and Consumers
Digest, among many other publications. He currently writes for CFA
Magazine.
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