Not Only is the Next Recession Here, We Never Left the Last One

…we just haven’t noticed yet, because what greases the cogs of our economy is not really interest rates or taxation levels (though both are enormously important), but ultimately confidence.

The Powers That Be need to lie to you for your own sake, because if they told you the truth, confidence would crumble and those gears become jammed. Banks and countries would not lend with each other, least of all to us proles. Commerce would collapse and whatever shitty jobs we do have that are tied to it would shrivel away.

But if you’re like me, you want to know the truth regardless. When I worked in equities, one of the first charts we’d pull up to gauge the health of the economy was the Baltic Dry Index. And is it ever crashing! It is reaching lows last seen at the nadir of The Great Recession of 2008. Here is a good primer on the BDI.

balticdry2015recession

Simply put, the BDI is telling us that demand worldwide for products has, well, almost completely dried up. The BDI is a leading indicator of real global economic health. It has diverged completely from the stock market and asset prices.

The reason for this is that corporate insiders, via Quantitative Easing policy, have access to nearly free money which they are using to buy back their company’s stocks. Other bigwigs with similar access are falling over each other to buy tangible assets, which is why real estate and rent prices are soaring. Wall Street has money so they’re buying expensive things. The raw materials used by businesses to sell everyday products to everyday people is what is measured by the Baltic Dry. It’s saying Main Street is broke.

So the next time you hear a politician or stock market pumper telling you everything is just swell, bear in mind their confidence motive. The next big dip in the economy is straight ahead and this time confidence in the market, in the dollar, in EVERYTHING will be put to the test.

 

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