Tuesday, June 30, 2009

Consumer Confidence and the Second American Revolution

Proof that I'm not a pessimist, but rather a realist, comes from The Conference Board's latest Consumer Confidence reading. As it turns out, pessimism may turn out to be a new national pastime if the 5000 households surveyed are any indication.

Check out these figures:
The overall index stands at 49.3 in June, down from 54.8. That number is much worse than it would appear on the surface. Consider that the index is calibrated to conform to a 1985 reading of 100. Well, life certainly wasn't perfect in 1985, so the index being more than halved in the subsequent 24 years means what? People are only half as satisfied or confident as they were then? In any case, it's not good.

Here's the really terrifying stuff. though. The percentage of people claiming that business conditions were "good" fell to 8.0%, from 8.8%. 8 percent! Now that's what I call pessimistic. There's more: People who thought jobs were plentiful: 4.7%; people who thought their incomes would increase in the next six months: 9.8%. Less than one in ten people expect a raise by December. That's pretty gloomy, no? Or maybe, just maybe, the people in this survey, which we assume is a nice cross-section of America, are not pessimists, but realists, who have seen the government's attempts at stimulus fall flat, who maybe don't believe all the lies from the controlled media, and who may have been around long enough and been through enough to lose faith in the federal government and its promises to fix everything.

America has always been an optimistic nation, but considering the current crop of politicians (largely failures) in the power structure of Washington, it is conceivable that many people have lost their patience and are losing faith in the "system," which is clearly broken and not about to be fixed by the people who broke it.

This is not to say that Americans are becoming pessimists, it's just saying that they're fed up with the status quo, and actually have been for quite some time. Americans may also be sending a message to Washington which goes something like this:

"We don't want more debt. We don't want a $1.75 trillion deficit. We want you (the government) to tighten your belts, cut spending and trim some of the fat. We are not on board with tax-and-spend, cap-and-trade, more expensive health care and the rest of your proposed plans for us. We are not standing with you, because you don't stand for us. If you continue, we shall stand against you."

That's pretty much it, isn't it? Americans are pretty tired of the US government, their state government and their local government sticking their noses into every last aspect of their lives and taxing them into oblivion. Nobody in Washington is currently listening to the American people and there's pretty good evidence that nobody's been listening for the past 10 years. Since they're not going to listen, then why pay them tribute? We owe them nothing. In fact, they owe us plenty.

Change will come, and mostly by the actions of government. Voting obviously hasn't made an impact, so the natural progression is for people to vote with their wallets and purses, and that's already occurring. Less and less revenue is flowing into government coffers and the flow will continue to slacken until it is just a trickle. This device, known as "starving the government" will produce change because the government will be unable to fund anything but the most rudimentary programs, and maybe not even those.

Americans, realists all, will not pay taxes and government will fall. That is our history, that is our right. The second American revolution has begun.

Noting that confidence is waning, Wall Streeters quickly abandoned their "window dressing" strategy in favor of a "jump ship" approach. After the Conference Board's report, stocks turned from narrowly positive to grossly negative in a hurry and stayed down for the remainder of the session. Coupled with yesterday's gains, the Dow is up a mind-boggling 8 points this week.

Dow 8,447.00, -82.38 (0.97%)
NASDAQ 1,835.04, -9.02 (0.49%)
S&P 500 919.33, -7.90 (0.85%)
NYSE Composite 5,905.14, -57.36 (0.96%)

Internals confirmed that the turnaround was no fluke. Declining issues outpaced advancers, 3653-2712. New lows surpassed new highs, breaking a three-day trend, 64-59. Volume was very light, as has been the case for most of the past month.

NYSE Volume 1,296,750,000
NASDAQ Volume 2,064,647,000

Like stocks, oil turned around on Tuesday, shedding $1.60, to close at $69.89. Gold also beat a steady retreat, losing $13.30, to $927.40. There was some dumping of silver as well, down 38 cents, to $13.60.

Americans are neither happy nor optimistic, a fairly obvious condition after being promised change but receiving more of the same. The time for real change has been at hand for some time. Whether Americans actually have the nerve and fortitude of their forefathers, only time will tell. Unheeded citizen complaints can only take one of two paths: reformation or tyranny.

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