Sentiment vs. Reality: Total Disconnect

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by Simon Black: It
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Exactly
three years
ago, we launched this daily e-letter… and needless
to say, it’s been eventful.

It should be
clear by now that the topics we routinely discuss in our daily conversations
are actually happening:

  • The grand
    fiat experiment is unraveling.
  • Governments
    are, in fact, going bankrupt.
  • And they’re
    turning the heat up against their own citizens in a desperate
    attempt to maintain the status quo.

Here in Europe,
bank runs are becoming commonplace, and depositors are being frozen
out of their accounts without warning. Politicians in many countries
have seized private pensions and are once again touting capital
controls as the panacea.

Meanwhile,
privacy continues to be stomped out in the worst possible way. Western
governments have made coordinated assaults on everything ranging
from banking privacy to Internet usage. It never stops.

To boot, Google
just reported an alarming increase in government requests to block,
censor, or obtain user data; this year’s requests are on course
to quadruple last year’s 3.3 million requests.

And then there’s
the printing… the endless expansion of sovereign debt and silly
pieces of paper that are being passed off as money by handful of
morally bankrupt individuals who control the whole game.

These politicians
and bureaucrats still haven’t figured out that nations don’t
become wealthy by printing paper currency… or by raising taxes,
or through big entitlement programs, or by going into debt.

Going into
debt and consuming does not create wealth. It temporarily creates
the illusion of wealth… until the house of cards collapses.

Just like individuals,
nations become wealthy by being productive and saving.

None of
this is rocket science.
And yet, the guys controlling the system
don’t seem to get it. They’re doing all the wrong things,
worrying much more about their own electability rather than getting
the hell out of the way.

In Europe,
a lot of people have finally started waking up to this reality;
they at least understand that they’re dealing with serious
problems that aren’t going away.

In the United
States, I’m not so sure.

I just spent
about a month on the ground in the US, and I came away with a feeling
of tremendous discomfort. Never before have I seen such a massive
disconnect between sentiment and reality.

Everywhere
I went – Dallas, Los Angeles, Reno/Lake Tahoe, Denver, New York,
and San Francisco, everything appeared to be fine. Shops and restaurants
were full, the mood was light, and people seemed fairly optimistic
that things were OK.

There was definitely
no air of doom and gloom like there is here in Europe.

And yet, the
real story in the US is disastrous:

  • There has
    been no meaningful growth in years.
  • The true
    rate of unemployment is a postwar record high.
  • Foreclosures
    and bankruptcies are on the rise once again.
  • The average
    American’s income and net worth are both much lower than
    4-years ago.
  • The federal
    government is totally insolvent, as are most state and
    local governments.

The numbers
don’t lie. They have no sentiment, they don’t feel optimistic
or pessimistic. They just are what they are. And they’re terrible.

Read
the rest of the article

June
21, 2012

The
Best of Simon Black

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