Looking Forward

I have been spending a lot of time reading economic commentary for 2008 and 2009.   I think the most sobering analysis has been coming from Nouriel Roubini of RGE Monitor.  While a lot of economic analysis seems to form the consensus that things will slow down in 2008 and pick up in 2009, Roubini talks about the possibility of financial meltdown and the inability of the Fed to stop it.  I think that Roubini and Jim Grant were amongst the minority of market watchers that were pessimistic about the financial system a few years back.

My observations on the matter are not as pessimistic.   There are major stability issues of the financial markets right now.   While everyone is focused on the subprime mortgages, I think what is not seen right now are the substantial increase in delinquencies and defaults of auto loans and credit card debt.  All of this is the sign of reckless debt financed consumption by the American consumer.   Even without the defaults, the typical consumer is over-leveraged, and more and more are in negative equity situations, thanks to falling home prices.   I believe the next two years will be a period of paying off debt.   The stimulus package passed by Congress  will not stimulate anything;  for the bulk of people, it will be used to pay off debts from consumer spending that stimulated the economy a few years ago.  This definitely implies that with the consumer fixated on paying off debt versus other spending, that the economy will soften.  

What will amplify this slowdown is the precipitous fall of the value of the U.S. Dollar, which is also driving inflation.  The Federal Reserve has little choice right now but to provide liquidity to the banking system at the cost of inflation and further declines of the dollar.   Consumers will now face a lower standard of living after years of living beyond their means.  The federal government has not helped the problem with their profligate spending and deficits.  If the Democrats take over the White House in 2008, and embark on a program of tax increases, this will only exacerbate the situation.

The Subprime Mortgage Crisis in Cartoon Format

This is a classic, and a heartfelt thanks to Captain Capitalism for the link.  

Back door Sharia in Ontario

The Toronto Sun reports that Ontario muslims in polygamy are getting multiple welfare benefits, much like in the U.K.  Why is the  West slowly surrendering it's values in the name of multiculturalism, so a civilization intent on destroying the foundations of the West - freedom and pluralism.

Mark Steyn at CPAC

A great stump speech by Mark Steyn at the Conservative Political Action Conference, yesterday in D.C.

Michael Barone on the Detroit Riots

Michael writes about his first hand experience in Mayor Jerome Cavanaugh's office during the 1967 riots in The American magazine.   Barone's impart is that the primary role of local government first and foremost is to preserve order.

Immature Civilization

Check out this article in The City Journal by Kay Hymowitz, called "Child-Man in the Promised Land. It focused on the delayed adulthood of people today. A teaser for it:

Not so long ago, the average mid-twentysomething had achieved most of adulthood’s milestones—high school degree, financial independence, marriage, and children. These days, he lingers—happily—in a new hybrid state of semi-hormonal adolescence and responsible self-reliance. Decades in unfolding, this limbo may not seem like news to many, but in fact it is to the early twenty-first century what adolescence was to the early twentieth: a momentous sociological development of profound economic and cultural import. Some call this new period “emerging adulthood,” others “extended adolescence”; David Brooks recently took a stab with the “Odyssey Years,” a “decade of wandering.”

But while we grapple with the name, it’s time to state what is now obvious to legions of frustrated young women: the limbo doesn’t bring out the best in young men. With women, you could argue that adulthood is in fact emergent. Single women in their twenties and early thirties are joining an international New Girl Order, hyperachieving in both school and an increasingly female-friendly workplace, while packing leisure hours with shopping, traveling, and dining with friends [see “The New Girl Order,” Autumn 2007]. Single Young Males, or SYMs, by contrast, often seem to hang out in a playground of drinking, hooking up, playing Halo 3, and, in many cases, underachieving. With them, adulthood looks as though it’s receding.

It is a rather profound effect. Read Hymowitz's related article The New Girl Order. Diana West makes mention of it in her book "the Death of the Grown-Up". Mark Steyn makes comment about this in many of his writings. One of his prescriptions is to return to the idea of a thorough K-12 education, not the fixation on University; his point is with the decline in standards and achievement has made K-16 (public school and university) is now marginally poorer than K-12 of forty years ago.

More Primary-polooza

It now appears that, at least on the GOP side, that things are beginning to settle and that John McCain is the presumptive nominee.   What I think is the main story is two fold.    The first is that until last night, no candidate was really overwhelming the primary electorate.  Second, is the disconnect between Romney in the polls and Romney in the ballot box.   It appears that poor Mitt has a hard 35% ceiling, and for one reason or another, is not connecting with voters.