Gold News

Cassandra Bails Out

Who dares call the end of the Great Recovery...?

AT LAST, writes Bill Bonner in his Diary of a Rogue Economist...

A genuine improvement from Washington!

In the panic after the 2008 financial crisis, Congress created the Office of Financial Research (OFR).

The idea was that this group would sound an alarm if the financial system were ever in danger.

It's about time. Now, we have nothing to fear. The feds will tell us when it is safe to buy...and when we should run for the hills.

But what's this?

Now, 10 years later, stocks are three times as expensive. Debt is far higher, too.

The feds alone have borrowed an additional $10 trillion. And the OFR was specifically charged with warning us about coming volatility spikes.

But here we are...And no warning.

What gives? The Wall Street Journal reports:

"Almost a decade and nearly $500 million later, the agency has struggled to establish a place for itself in Washington. Major projects have been delayed or scaled back. Morale has suffered amid turf battles with other regulators and opposition from Republicans. And one of its most ambitious initiatives – developing a database for recording financial contracts – has progressed no further than a 16-page paper calling for "information gathering sessions" among constituents."

But now, the Great Disruptor, Donald J.Trump, seems to have the OFR in his sights. The Wall Street Journal again:

"The OFR's record of underachievement has made it an easy target. In November, Treasury Department officials told OFR employees that the agency's budget would be cut by one-quarter and its staff by more than one-third."

What? Only a quarter? Why not cut the whole thing?

Setting up the OFR in the first place suggests a naiveté about markets that is breathtaking.

It is so preposterous it calls out for ridicule. And euthanasia. Its director should have been given a loaded pistol a long time ago.

Really, what are those 1,000 PhD economists said to be working for the Fed doing?

Wouldn't it be reasonable to expect they might check the pressure in the boiler from time to time...and give us a heads up before the whole thing explodes?

And if you could put together a team of government hacks to tell you when markets were about to blow a fuse, why not also ask them which stocks are going up...for how long...and how high?

And then, why not ask them to put you in touch with your dead grandmother?

If they really could tell when a bubble was about to burst, wouldn't you expect that word might leak out...perhaps from the brokers handling their personal accounts? And that they might thereby let the hot air out, so that the explosion never comes?

Oh, Dear Reader...what dunderhead in Congress voted for such an absurd thing?

If you could see disaster coming, it would never arrive.

Bought a ticket on the Titanic?

Change it!

And who would stay invested in stocks if he knew they were going down?

Oh...and that the Vegas showgirl with expensive tastes.

Never would have happened!

There are thousands of full-time market analysts and researchers already. Plus millions of amateurs.

Every day, these people – geniuses and morons alike – study the numbers and the skies, looking for clues. Surely, if there were a storm coming, these cloud watchers would see it, wouldn't they?

And yet, the mist rolls in...the clouds are obscured...the newspapers say unemployment is down. The Fed says a "worldwide synchronized growth spurt" is just getting under way. The president says everything is swell..."beautiful"...and getting sweller.

Surely these patriots and poltroons wouldn't let us down?

And imagine the poor number crunchers and cloud gazers.

What are they to think?

They are human, too.

They might be looking at some pretty scary numbers. But...heck...the GOP tax cut is coming on line! And huge increases for the military ought to be good for Raytheon and GE, right?

"Hey, I'm just a GS-11 here. Am I gonna stick my neck out and tell the president that he is full of sh*t?

"Am I gonna contradict the greatest geniuses who ever lived over at the Fed? Am I gonna risk my cushy job? I've got my kids in St.Albans, for Pete's sake! I've gotta think of my family!

"Besides, you never know about these things. Greenspan said bubbles were undetectable. Maybe he's right. Whatever.

"And if I go public with a Bubble Alert...what do I get? Probably fired. The end of my career. Even if the thing does blow sky high, nobody is gonna appreciate that I warned them.

"They'll accuse me of being 'negative'...and an 'alarmist.' Harvard won't touch me. I'll be viewed as a crackpot.

"Cause everybody knows the engineers at the Fed and the Treasury can handle this job. Everybody knows they're watching the incoming data -heh-heh – and that they'll make sure there's never a big blow-up...or a depression...or a credit crisis.

"I mean, if there's a big bubble blow-up now, it means they're all a bunch of incompetent poseurs, right?

"It means they were all wrong. Nobody's gonna wanna hear that. I'll be treated like a a Holocaust denier...or a climate-change skeptic.

"I'll have to get a job teaching Econ 101 at a community college. My kids will have to go to public school...

"And I'll end up like that Greek woman who cried wolf. You know, Alessandra or something. And nobody believed her. And I'll probably get raped in the temple...and then murdered by a jealous lover.

"No thanks..."

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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