There is no need to worry about the decline of the middle class in America, advises Ruchir Sharma in the Wall Street Journal:
In June, the Fed clearly signaled an end to its quantitative-easing program, spelling the end of easy money and with it the forces favoring the rich at the expense of the rest. Since June, the dollar has risen by about 17%, undermining corporate earnings and stock prices.
While there are many reasons behind the decline in the price of oil, one of them is the end of QE, which has reduced speculation in commodities and strengthened the dollar. The price of oil and the dollar have long been known to move in opposite directions. Now, the sharp decline in the price of oil and other commodities like food is putting more money in the pockets of the middle class.
The domestic side of the U.S. economy is showing signs of greater strength: Consumer spending grew at a pace of more than 4% last quarter, even as manufacturing and exports lagged and kept the economy from accelerating beyond a 2.5% rate.
It really doesn’t take long for the myrmidons of the .1% to start sprouting from the dragon’s teeth, does it? A couple of mildly favorable economic reports and it’s off to the races!
However, two can play at that game. The car and light truck sales the author touts as indicators of new middle class prosperity were largely financed with subprime loans. And we’re due for even this phlegmatic economic expansion to end. Do you think that the richest or middle income people will be more squeezed when it does? I’d bet a shiny new dime it won’t be the .1%.
So those of us taking it in the ass for the last eight years should be happy that we just go a kiss and some snuggles for a few months?
I must admit that in Q4 it looked like there were some bright spots. However, overall the news and stats coming out now (even Steve’s corporate profits picture) are looking poor indeed. Even the official Obama cheering section at JPMorgan put out a dour review this week.
As for the question posed, is it ever the .1%? How bout a good yacht tax, that’ll fix their asses……….not. We spend so much time setting up Rube Goldberg schemes to fix the real and perceived problems of a minority without considering the costs to the majority. And yet the fixes are rare but the costs real. But I’ll see Dave’s dime and raise him a quarter that Monday will bring another ill to be addressed by government. At least were not doing anything crazy like giving illegals tax refunds.