I began writing an article early last week, it was going to be an assessment of where we were as a country with a little world view thrown in. My intention was to just share my thoughts and give you a head’s up on what I think may be coming at us in 2016. However, when I read it I felt it was a bit on the negative side and set it aside. I wrote the “New Year” message instead.
I have had a number of folks ask me what I thought was going and on and what it all meant. I decided early this evening to do some editing, some addition, and remove a couple items but to post it for you to use as you wish. This article is the result and combination of some things I am seeing right now, some things I expect to take place, and a thought or two on how to deal with it. Let’s get this started…
Monday was a crazy day and one that we need to take serious note on. But before I talk about Monday I want to review some info from last week.
- Last week jobless claims rose by 20,000 and the 4-week moving average rose by 2%. That is a significant jump even for this time of year. The moving average suggests that unemployment will continue to get worse. Today Obama announced that by Executive Order he will increase HB1 visas by 100,000 for this year. That is a direct slam at middle-income jobs, especially the technology sector. By increasing the number of HB1 visas he will keep 100,000 American workers from middle-income jobs, thus reducing the size of the middle-class once again.
- Expected GDP (Gross Domestic Product) is expected to fall a maximum of 3% for 2016. And it may weaken well below that. If it manages to stay at 3% for 2016 that is still 25% below what all experts consider a healthy national economy. Some economists are expecting closer to 2% GDP, that is very unhealthy for our economy and represents a very weak job market, as well as weak consumer spending.
- In 2015 it was primarily car sales and home buyers that kept the economy anywhere near healthy. However, when the Fed raised interest rates that will have a ripple effect into both the automotive and housing markets. Both of those markets are heavily dependent on easy access to lending. If rates rise, that access will shrink on a national level. That will potentially hurt both car and home sales. Without the automotive and housing markets being healthy, the sectors of the economy that are dependent on those markets will suffer via a ripple effect.
- China’s stock market plunged 7% on Monday and would have fallen much more had the Chinese government not stopped trading and then poured hundreds of millions back into the market to shore it up. The Chinese stock market is very weak, and has been since last year when it plunged multiple times. Their stock market will not be able to recover without their government pouring billions of dollars into it. That will only be a short-term fix since it will be an artificial solution. The Chinese stock market problem did, and will continue to, negatively affect markets around the world.
- The US stock market was down by 400+ points during Monday’s trading session. The market did rally and end up the day losing 1.6%. However, the volatility itself is what truly worries me. The VIX (fear index) was up substantially today. While the Chinese market is recovering slightly in overnight trading, it is minimal. The combination of market issues is far from over and will get worse in the near term.
- The oil futures market dropped oil by 5% today, again swinging violently in price. Oil too recovered, only losing about 2.5% today and is recovering slightly in overnight trading. The price of oil is important because it is a good predictor of future economic conditions. Since supply is remaining relatively consistent, oil price indicates future consumption. When the price of oil falls, experts expect consumption to be low based on poor economic conditions. This is a pretty good validation indicator of the above information pointing to a weakening 2016 economy.
- All early predictions of consumer spending during the 2015 holiday season were pointing to a considerable uptick, some predicting record spending. However, the post-holiday numbers are in and the actual figures are extremely weak. The weakest since 2008 when the economy tanked.
I expect serious problems in the economy this year with extreme stock market volatility. I personally moved all my IRA and 401K funds in cash equivalent last year. Since my wife and I can afford some risk we are moving some money into high-quality mutual funds in small amounts six times per month. This takes advantage of “dollar cost averaging” but, when I see a 1% or 2% share price gain I will sell 100% and move back into cash until the share price dips once again. If we were dependent on our investments or couldn’t afford the risk, I would be 100% cash.
I will continue to buy small amounts of silver periodically throughout the year. Not in large quantities though since we don’t need to. This is just my regular long-term strategy.
I believe the economy to be extremely weak in real terms, far weaker than the government number show. I think the economy has two options –
- It will limp along in this extremely weak condition eroding purchasing power, weakening job market, and shrinking the middle-class. Any hiccup that gains national attention will drop GDP significantly. This a long-term economic collapse.
- There are a large number of reasons the economy could fall apart this year. There is the weak GDP to begin with, worsening job market, and the stock market problems to say the least. But I think that the economy is so weak that any issues with the credit markets, or some of the more complex banking and investment instruments, could send us into a recession or depression. Whichever it is, it would be much worse that 2007 – 2009.
Our international situation right now is extremely bad and getting worse by the month, if not the week. We have a major war in Syria and smaller wars in multiple locations throughout the Middles East. A single match strike could ignite the world into World War III without any problems. Here are a few things that are of concern to me –
- Saudi Arabia and Iran are virtually at war. They have been fighting a proxy war against each other for several years. Now it is open and hostile…and will get worse. Different alliances are forming between the two major countries based along religious lines, Sunni and Shia. These are two sects of Islam that have serious problems with each other…as in having fought wars over their differences. Islam is a very violent religion to begin with, this inner-Islam conflict will get very ugly if they don’t come to terms quickly.
- Obama has completely abandoned Saudi Arabia, our traditional ally in the region. That by itself is a serious problem, but it is compounded by the fact that Obama is supporting Iran 100%. That is a direct slap in the face to the Saudi’s. The change in allegiance is due to Valerie Jarret, Obama’s very close friend and official adviser, she was born in Iran.
- Russia is a direct ally of Iran which puts them at odds with the Saudi’s as well. But it doesn’t make us an ally of either Russia or Iran in real terms. Iran will take advantage of any opportunity to strike us. Iran fired a missile at one of our aircraft carriers last month missing it by less about 1500 yards. In naval terms that is a very close miss but an act of war nonetheless. Russia wants to improve its power and influence in the world, and its only clear path to do so is at the expense of the USA. They too will take advantage of any opportunity to move against the US, especially supporting Iran or the current Syrian government.
If any serious hostilities break out in the Middle East between the Saudi’s and Iran it will get ugly, and could escalate very easily if Russia gets involved. Whatever happens, any serious shots fired could send oil well above the level we saw in 2008 just before the collapse. Remember, it was the $130 – $140 oil that was the straw that broke the economic camel’s back. If oil would spike that high within a 30 – 90 day period, the US economy would tank making 2008 and 2009 look like a picnic. There could be a much broader national ripple effect should that occur.
We are in serious trouble on the domestic front, I don’t remember being on more perilous footing and on more tenuous ground than we are right now. Problems as I am seeing them –
- There is no such thing as a moderate Democrat anymore. There are the Progressive extremists that are the old liberals. The other end of the Democrat Party is the Bernie Sanders Communist wing. The Democrats have all but gone socialist/Marxist. There will be no crossover of Democrats to vote for any Republican.
- The Republicans have fractured, irreversibly so. You have the neo-con Progressive Republicans that are almost Democrats, that is the Republican establishment. Then there is the conservative right wing of the party that want nothing to do with the liberal/Progressive wing of the Republicans. And finally there are the libertarians and Constitutionalists that have forsaken the Republican party all together.
- I believe that only one candidate has any hope of trying to get America back on track, Ted Cruz. And I don’t think he can win the general election for a number of reasons. I am not sure he can win the Republican candidacy. Even if he could go on an win the Presidency I believe that the Democrats would oppose him on everything and the liberal/Progressive wing of the Republicans would join the Democrats.
- If Trump would win…let’s just say I have a bad feeling about what would happen if Trump would win the Presidency.
I am not one of the folks that believe that there won’t be an election. I also don’t believe that Obama will try to stay in as President either. Whatever happens with the election, I don’t think America has any chance of recovering without the help of God.
- The militia folks who took over the federal facility in Burns, OR have missed the timing and missed the “cause” to fight for. They picked the wrong hill to die on. The Feds will come down on them, and especially the Bundy’s that are involved. People are going to prison and may well get killed. This was the wrong time, place, and focus. But it will continue to fracture America. However, this time it will fracture folks on the right. It will draw a deeper divide among conservatives, constitutionalist, and libertarians. It might be a terminal fracture that ensures the radical Progressive extremists will rule America…for as long as America exists.
- Obama will push gun control, the Republicans will be seen as posturing against him, but the changes will be set. While the changes (via Executive Order) won’t be significant, they will continue to chip away at the Second Amendment. The Burns, OR militia folks hurt the Second Amendment at this point, rather significantly so. If a firefight breaks out, Congress will join the President in enacting much stricter gun control than he would have been able to accomplish on his own.
- Black Lives Matter is going to be an on-going problem. It will probably increase in intensity as the weather improves in the larger cities. At times it will get very violent and destructive. Should a couple more unarmed black get killed led by police we could see riots on the scale of the 1960’s…or worse.
- Based on the anti-militia campaign that the media will continue to inflame, and the violence and destruction caused by the Black Lives Matter crowd, there will be a further reduction of rights and liberties. I am just not sure what it will entail.
We are at a point right now in this country where we are one large pool of gasoline just waiting for a match to be lit. And that simple match strike could come from dozens of sources, all of which could cause an eruption of extreme violence if not open rebellion. With the military in the condition it is now, Obama would jump at the chance to use the military against US citizens “to restore order.” He would have the support of the entire government with the exception of the rare libertarian. Same would hold true for the general public. We would lose lights, liberties, and freedoms like we’ve not seen in generations. If there was a bloody massacre at the hands of the government, I could see open rebellion as the inevitable outcome.
I am going to stop now, I could continue writing but it would be simply reinforcing my existing opinions. The USA is on a perilous precipice right now. It will take very, very little for widespread violence to erupt coast to coast. And it would be extremely ugly…and very violent, especially in the bigger cities.
This is a time to keep your head about you, think clearly, don’t jump to conclusions too quickly, don’t jump into action too quickly, don’t overreact at all. Any wrong move as a country and we end up as a totalitarian regime. Any wrong move by an individual could get you classified as a domestic terrorist.
The government and the ruling class are intent on increasing their power right now, and they will do whatever they can to accomplish that. And the only way for them to increase their power is to take it away from people. Be careful, do not act too quickly. When the time comes to act, you will know it, and then act decisively.
Good luck in 2016!
“If ye are prepared ye shall not fear!”
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