The ‘affordability’ issue percolated to the top of the news last week, but in a peculiar way. On the right, the debate was not about whether things in general are becoming less affordable for most Americans, as they unmistakably are, but whether the left has blown the issue far out of proportion to create a wave of discontent ahead of next November’s general election. The discussion was catalyzed by abysmal consumer sentiment numbers that registered lows not seen since the Great Depression. Trump courted controversy over this in an interview with Fox’s Laura Ingraham. The economy is going great guns, he declaimed, and what’s the problem? He then stepped into quicksand by owning an issue far more real than political. Although he didn’t say these words exactly, what America heard was: “I’m going to give you affordability like you won’t believe.” This is a promise he cannot possibly keep, and his stumble on this key issue eventually will be seen as the beginning of the end for boom times on Wall Street and the Everything Bubble.
In stark actuality, for fully half of America, the Second Great Depression has already begun. As my colleague Charles Hugh-Smith notes, the rich have grown increasingly wealthy from a price bubble in real estate and financial assets while barely noticing the descent of the bottom 50% into penury. “While the top 10% busy themselves with using AI to improve work flow, obsessing over geopolitics and the decay of their perks of their Titanium credit card, other Americans are concerned with finding a second or third side-hustle as the soaring costs of utilities, rent, auto insurance and repairs, childcare and healthcare are forcing choices nobody wants to make: What [necessities to forgo.]”
The Best of Times?
Trump risks failure by amping up his spiel about living in the best of times. Although some of his MAGA ambitions are achievable, this cannot happen until America has paid down debts that will suck the oxygen from any real or lasting recovery. The President seems to think that stoking credit will enable us to grow our way out of mountainous debts. This is an absurdity, and the stock market appears to have caught the pungent scent of snake oil. Even as benighted media hacks were loudly proclaiming the Dow Average’s climb to new record highs last week, the Nasdaq and S&P 500 were conspicuous laggards. The divergence suggests the stock market has either topped or is very close to doing so, a possibility that I headlined here a few weeks ago. Most investors will not believe it until the Dow plunges 2,000 points in a single day. That day is coming, likely no later than January, and it will mark only the beginning of a historical downturn.