Realities Behind the Rhetoric Martin D. Weiss, Ph.D. | Monday, February 8, 2016 at 7:30 am
What I find remarkable about the 2016 presidential election campaign isn’t just the surge of Donald Trump and Bernie Sanders.
It’s the realities behind their rhetoric.
Don’t get me wrong. Weiss Research is 100% nonpartisan. We won’t take sides and won’t endorse candidates. Our goal is strictly to help you make more prudent investment decisions. And our method rests purely on an objective analysis of the facts …
Fact #1. Trump and Sanders have radically transformed the political landscape. No matter who takes the nominations and no matter who wins the White House, they will have forever left their imprint on history.
Fact #2. The majority of their supporters are being squeezed financially by precisely the same economic problems we’ve been writing about — the worst recession since the Great Depression, the most expensive bank bailouts of all time, the weakest recovery in modern times, the lowest labor force participation in half a century, the worst yields on savings ever.
Fact #3. These money megatrends, in turn, are paralleled by equally powerful trends in the social-political realm: The most widely despised concentration of power since colonial times, the greatest income inequality since slavery, the most corrupted political processes since Reconstruction.
What’s even more remarkable is that our Weiss Research analysts predicted this precise scenario.
Two years ago, Larry Edelson warned that cycles of war would ramp up dramatically through 2020 — not only with overseas conflicts, but also with growing social and political schisms in the United States. He foresaw the rise of non-establishment politicians. And he predicted, well ahead of time, the surging anger among average citizens.
That’s what we have right now.
Mike Larson issued dire warnings as well. He wrote that these trends would ultimately bleed the Fed’s power to sustain the economy, help create a new round of turmoil in credit markets, and gut corporate profits.
That’s also what we have right now.
Will all of this continue? Unfortunately, it’s difficult to imagine any other alternative.
But again, I want to point you to the realties behind the rhetoric. They’re not going away. They’re bound to continue driving the presidential election to unexpected places. And they could have a broad impact on the U.S. economy for years to come.
Here are just two prominent examples …
The rhetoric: America’s middle class has been squeezed between a rock and a hard place.
True? Absolutely!
The percentage of adult Americans working or actively looking for a job has plunged to 62.6%, the lowest level in over 40 years.
What most people don’t realize, however, is that this trend began long before the Great Recession and will probably continue long into the future.
Granted, some of this was no surprise. Economists knew that baby boomers would be leaving the labor force in record numbers. And they did.
Economists also weren’t particularly shocked to see Americans under 30 staying in school (and out of work) a lot longer — to get MBAs and PhDs.
What comes as a shock to the “experts” is that, after the Great Recession, a record number of workers shifted over to disability insurance and have never gone back to work.
And what’s even more shocking is that many Americans in their prime, especially men under 55, have also left the labor force, never to return — their income down, cost of living up, new job opportunities scarce, hopes for a better life dashed.
Meanwhile, debt still looms as a huge problem for U.S. households.
Just over eight years ago, on Dec. 31, 2007, households were buried in a historic debt mountain of $14.1 trillion — home mortgages, auto loans, credit card debts and other consumer loans.
Then, with the bust, many were forced to shed some of that debt in a flood of home foreclosures and personal bankruptcies. It was very painful. But at least it relieved some of the debt burden on American families.
Today, however, despite disappointing gains in income and the weakest economic recovery on record, those same households are now strangled again, with a new pile-up of debts that matches the peak debt levels of yearend 2007: $14.1 trillion.
The big difference: Years ago, they could count on inflation to continually reduce the burden. Now they can’t. In fact, if deflation continues to spread, it could make it far more difficult for the average American family to meet fixed debt payments, threatening to cause a new wave of debt delinquencies, debt defaults and personal bankruptcies.
The rhetoric: We’re suffering a head-on attack on America’s one-person-one-vote democracy.
Reality? You bet!
The decline of America’s democratic processes has multiple facets, and the one outstanding example is the rise of super PACs — a new animal that was born with a federal court case in July of 2010.
The decision: These organizations can raise unlimited amounts of money from corporations, unions, associations and individuals. They can spend the money to advocate for or against candidates. And they can do so with virtually no limitations except the requirement to report to the federal authorities.
The super PACs raise big bucks.
Like manna from heaven, they shower those bucks on politicians they want to help win. Like big guns, they aim the money at politicians they want to help defeat. And unlike any other group in history, they have often been able to make or break the best and the worst, significantly shaping America’s destiny.
What’s especially unusual in this election cycle, however, is that Trump and Sanders are making nearly every super PAC pour most of that money down a bottomless pit.
As of last week, seven individual super PACS — supporting Republican candidates Carson, Fiorina, Graham, Huckabee, Kasich, Jindal and Paul — have raised nearly $42 million and spent more than half of that money so far. Result: A long series of embarrassing failures across the board.
Meanwhile, the super PAC called America Leads, which supports Christie, has raised $16 million and somehow managed to spend over $17 million — another effort that has run into a brick wall.
And what’s particularly ironic is that the super PAC called Right to Rise USA, which supports Bush, has raised the most money of all (a whopping $118 million), has spent the most money of all (over $69 million) and has produced the most disappointing results of all (only 2.8% of the votes in the Iowa caucuses).
All told, as of last week, there were 2,194 groups organized as super PACs, reporting total receipts of nearly $513 million and expenditures of nearly $179 million. Mostly down the tubes.
What’s worse, a chart depicting other sources of campaign funding over the past half century looks a lot like charts depicting the dot.com or housing booms:
Inflation and population explain some of the growth in campaign spending. But even adjusting for those factors, it’s out of control. And this chart doesn’t include money raised or spent by Super PACs.
And I repeat: What’s especially remarkable about this election cycle is that non-establishment candidates Trump and Sanders, with far less money raised from traditional sources, have soared to the top of the charts.
One Last Word …
All of this is part and parcel of the same economic disasters we’ve written about so frequently and the same escalating cycle of conflict that we’ve harped on so forcefully.
If you ignore these changes, they could set you back many years. If you understand and harness them, you can advance far more rapidly.
So stay tuned for specific instructions from our editors.
Good luck and God bless!
Martin
Poster Comment:
Persuasive speech is what it's all about.