By David Glenn Cox
Call it the double whammy. First, the Trump Administration removes close to half a trillion dollars from the consumer economy. This, by itself, will cause a Recession/Depression. But a unique one in that this one will strike at the top of the economy first. Doctors, Hospital Administrators, nurses and pharmaceutical representatives. The Doge layoff of department heads and NASA scientists and experts.
State governments in all 50 states are in conference right now, trying to figure out what to do next. Wall Street hits new highs and cheers in much the same way buzzards celebrate an overturned chicken truck. There’s never been a better time to invest in mortuary stocks. Caskets are hot!
But then comes phase two, 30% tariffs on goods from the EU and Mexico, 35% on Canada. Take half a trillion dollars out of the economy and then raise prices by 30%. Gee, I never went to Wharton school of business, but I wonder what will happen? GMC offering 20% below MSRP and zero percent interest…why? Real estate in Phoenix, once a hot market (no pun intended) are stalling. The stall which comes just before the crash. The Floriduh condo market has also stalled. Investors are getting out! Fears over incredible uncontrolled insurance prices. And the demise of FEMA. Landlords will suffer and fail, unable to unload their Section eight properties in a collapsing market.
The Floriduh insurance market is also a double whammy. The state government might not believe in climate change, but the actuary tables do. So, home insurance rates in Floriduh for a month are what most Americans pay in a year. And still, it isn’t enough. You insure your condo for $350,000 and when it gets wiped out the replacement cost is $500,000. And now with the increased cost of Canadian lumber and Mexican nails and hardware, not to mention labor, $600,000.
Because 40% of nursing home recipients in Iowa are on Medicaid. You can expect nursing homes to close. You can expect their prices to rise with the mad dash to find a new place for grandma. But even paying grandma’s won’t be able to afford the new prices either. She won’t like the new prices on pharmaceutical drugs from overseas with a new 30% price increase.
Average list price on a new car $48,749 with new tariffs coming. Close to 3 million new cars in stock or a 90-day supply. And sales incentives are rising trying to offset the tariffs. Wait until the other shoe drops. When the economy is thrown into complete turmoil.
Restaurants are offering deals and specials, trying to pump life into a declining optional expense. I think my favorite advertisements are 7-11 and Quick Trip. Offering convenience store lunch specials for those priced out of the premium hamburger market. Food we once joked about is now a first choice. And soon even those will become too expensive.
In California, farm workers’ no shows were 75%. You want a hundred workers, and you get 25. And that was BEFORE the ICE raid in Los Angeles. Now you’ll be lucky to get 25%. And the crops can be expected to either pick themselves or rot in the field. Corn prices are down from five dollars a bushel to Friday’s $4.12 and the crop won’t be ready for another month yet. Nearly 15% price drop and the future doesn’t look good. Farm implement dealers report a sharp sales decline.
So, across the board manufacturing, construction, pharmaceuticals, farm prices, and service industry are all in decline. I’ve always said, when the bottom drops out. Your best investment is to fill your basement with handguns and hard liquor. There will always be a market in America for handguns and hard liquor. You could even make your own hard liquor in your basement and save!
I remember during the last Depression. The one we dare not speak its name in 2008. Seeing whole streets with for sale signs on the front lawns. A clean out crew was putting furniture on the lawn and a woman was wailing in the street as police supervised “Law and Order.” I never thought I’d see that again, let alone worse.
The old saying goes, “You break it, and you’ve bought it” and you can’t put Humpty Dumpty back together again. You can’t pick the crops without the workers. You can’t build cars or sell houses no one can afford to buy. Market experts say you need $17,000 to buy a home. To quote George Bailey. “do you know how long it takes a working man to save $17,000?” You can’t save the multitude with overcrowded emergency rooms.
It’s estimated 3,000 hospitals, nursing homes and clinics will close. And because of that, Americans will suffer and die. Farmers will fail. Farm implement dealers will fail. Grocery store chains will close unprofitable locations once the SNAP money goes away. Car Dealerships will go under while everyone is waiting for the good times to return. Much in the same way Mr. Hoover once told us. “Prosperity is just around the corner!” Half a political plea and half wishful thinking it himself. The way a child prays for a snow day when they haven’t studied for a test.
When I was homeless living in a garage in 2009, I used to walk through this shopping center on my way to the Library. And out of over thirty or so business locations. All but three were empty, and I could relate and feel sorry for them all. I lost my business, just as they lost their businesses. All their hard work and money was gone, replaced by debt and worry. Bankruptcy and divorce, repossession and foreclosure. And forced to watch their own destruction and dismemberment while watching Banks and Car companies being bailed out.
It’s the most predictable human disaster of all time. Taking massive amounts of money out of the consumer economy while at the same time raising prices dramatically. Just to give Billionaires another tax cut.
“Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision, the people perish.” – Franklin Delano Roosevelt March 4, 1933
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