- David Stockman's Contra Corner

Now Comes An Election Crisis On Top Of A Fiscal And Financial Disaster…Get Informed, Focused, and Prepared. The Time of Reckoning Has Commenced!

Dear Reader,

America is tumbling from the frying pan right into the fire. An election choice that consists of Trump versus Harris is all the proof you need.

In fact, the major party offerings are so deficient as to possibly trigger a first in 200 years crisis at the ballot box next November. That is, Robert F. Kennedy’s independent insurgency is gaining so much momentum owing to the unpalatability of Trump v. Harris that he could well deprive both UniParty candidates of the 270 votes needed to win in the Electoral College.

In turn, that would throw the election into the U.S. House of Representatives for the first time since 1824, where under the 12th Amendment each state delegation gets a single vote. California and Wyoming would be on the same footing.

That changes the electoral calculus dramatically. Given that there are only 22 Blue State delegations at present (and probably fewer after November) it is possible that the only way to stop a Trump victory in the US House next January would be via an RFK-led coalition of Blue State delegations, Kennedy delegations and Red State defectors.

Such a hung jury scenario in the Electoral College—regardless of the eventual outcome in the U.S. House—would throw American governance into an unprecedented crisis. The underlying economic upheaval that is now brewing, therefore, could be compounded enormously by a political crisis that would leave a huge cloud of uncertainty hanging over the financial markets and main street economy alike.

Moreover, even in the more likely scenario that either Trump or Harris scratches out a hairline victory at the ballot box in November or the U.S. House in January, a thundering fiscal and financial crisis is most surely just around the corner.

Both UniParty candidates want to shovel even more borrowed money into the bloated Warfare State and neither wants to save a dime from the heart of the Welfare State—the $20 trillion cost of the depleted Social Security and Medicare trust funds over the next decade.

So, when the public debt crosses the $35 trillion mark in the next few weeks, it will be accurate to say that you haven’t seen nothing yet. We will be at the $40 trillion debt mark sometime in 2026 and, according to CBO’s latest optimistic budget forecast, the debt will exceed $60 trillion by the early 2030s.

Unfortunately, it is off to the races thereafter. Under the fiscal policies of the UniParty, which are fully embraced by both Trump and Harris, the public debt will reach $150 trillion and 175% of GDP by mid-century.

Needless to say, figures of those stunning magnitudes imply Roman Empire style financial ruin. Even the madcap money-printers at the Fed could not possibly buy enough bonds and monetize enough of the public debt to enable Uncle Sam to borrow another $100 trillion over the next quarter-century.

Accordingly, what lies ahead is the most difficult stretch of economic and financial turmoil that the nation has seen since the 1930s at least, and likely ever in its history. After all, with the cost of living up 30% under the Trump/Biden administrations since January 2017 and the CPI stuck in the 3-4% increase zone, the Fed can’t come to the rescue by scooping up $120 billion of bonds per month like it did during the heyday of QE.

That means, of course, that the massive flow of red ink ahead will have to be financed the honest way by tapping available private savings. Unfortunately, however, the US savings rate has plunged to rock bottom levels, meaning that Uncle Sam’s massive presence in the bond pits will force interest rates steadily higher, crowding out private investment in the process.

In turn, this will mean staggering increases in Federal debt service—the cost of which has already erupted from about $300 billion annually a few years back to $1 trillion at present. But there is now no prospect that the weighted average cost of US Treasury bills, notes and bonds could drop below the current 5% level during the balance of this decade. And if we actually get a hung jury political crisis in the Electoral College, Treasury yields could shoot the moon

So, by the early 2030s the Federal interest tab alone will reach a staggering $3 trillion per year. At a minimum. And that’s more than the current budget for defense, Social Security, Medicare, Medicaid and Food Stamps combined!

At the same time, total private debt now totals more than $61 trillion, meaning that the carry cost of the current massive household borrowings ($20 trillion), business debt ($21 trillion) and financial sector borrowings ($20 trillion) will soar in the years ahead. The cheap debt issued by these sectors during the last decade will relentlessly roll-over into the far higher interest rate borrowings, if it can be refinanced at all.

Either way, rising interest rates and over-leveraged business and household balance sheets will weigh heavily on investment, productivity, jobs and incomes in the private sector. Accoringly, America is not going to “grow” its way out of the $100 trillion of public and private debt that weighs heavily on the economy at present.

There is no mystery, of course, as to where this fiscal and economic disaster came from. Both Wall Street and Washington went off the deep end during the 2020-2021 pandemic period—spending, borrowing, printing, and speculating like never before in history.

That we are now reaping the whirlwind should not be surprising. Just recall the staggering magnitudes of the fiscal and monetary madness that erupted during the 365 days after March 2020.

On the fiscal front, Congress enacted $6.6 trillion of Covid-Lockdown bailouts and stimmies virtually sight unseen. That figure was 7.5X the actual $800 billion loss of GDP during the same period. It was also equivalent to $49,000 for every single household in America.

Likewise, the Fed’s balance sheet soared from an already bloated $3.8 trillion in the fall of 2019 to a peak of $9.0 trillion a few months ago.
Yet, how do you even comprehend that $5.2 trillion of central bank balance sheet expansion? After all, what it actually measures is the cumulative gobs of new fiat credits being printed day-in-and-day-out.

106 Years of Money-Printing Replicated In Mere Months…

Still, here’s one powerful metric that our mad-money pumpers in Washington surely didn’t notice as they ran the Fed’s printing presses red hot. To wit, the Fed’s balance sheet crossed the $5.2 trillion mark for the very first time in history on March 25, 2020.

That’s right. It took the Fed 106 years from the day it opened its doors for business in 1914 to reach the $5.2 trillion mark. And then it nearly replicated that figure in a matter of months.

Inflation should be no shock to anyone!

Is it any wonder, then, that we have had rampant inflation? That is massive bubbles in the stock, bond, real estate, crypto, and other risk asset markets, followed by the highest consumer inflation rates in 40 years.

And that these inflationary forces have now become deeply embedded in the economy, with unit labor costs up nearly 16% in the last four years. That’s the highest rate of gain since the early 1980s.

Needless to say, this is what happens when you monetize nearly 100% of Washington’s explosion of borrowing and spending. But the laws of sound money, fiscal rectitude, and economic gravity can’t be defied indefinitely.

50 years of experience is ready to guide you through this mess…

Inside the Contra Corner newsletter, we dissect the headlines and hot spots of the day from a fiercely independent vantage point based on 50 years of experience on both ends of the Acela Corridor: As a US Congressman, President Reagan’s budget director, Wall Street investment banker, original partner of the Blackstone Group, private equity investor and best-selling author.

1/30/1981 President Reagan and David Stockman meeting on the economy in the Oval Office

In short, it is more urgent than ever before to get informed, focused, and prepared. And that’s the mission of David Stockman’s Contra Corner.

Introducing David Stockman’s Contra Corner

Five days per week, we provide facts, charts, history, analysis, assessments, and warnings about the madness at loose on both ends of the Acela Corridor connecting Washington and New York.

We don’t buy the mainstream narrative about almost everything. We think the US economy is weak and debt-ridden, not awesome, and that the Fed is destructive, not beneficent.

As Low As $1 Per Day To Maintain Your Sanity

Likewise, we put little credence in the related stories about stocks that never go down or correct. We also dispute the COVID lockdowns & Mandates, the Forever Wars, the Climate Crisis, the Woke Awakening, and the rest of the Fake Narrative promulgated by the liberal elites.

And we also think that the only candidate in this election who might reverse the UniParty disasters now brewing is Robert F. Kennedy Jr.

Our vision in creating David Stockman’s Contra Corner was that it would be “the place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked.”

Toward that aim, Stockman also assembles other contrarian thinkers on politics, the economy, and the financial markets in the Recommended Reads section, in addition to featuring his own analysis and musings about the current state of the world in Stockman’s Corner.

Here’s how the new and improved Contra Corner will work…

We will post his best take on salient developments five days per week (save for occasional travel or brief vacations). Each missive will aim to rip, refute, and rebuke the false mainstream narratives about a whole range of topics.

These topics will include the Wall Street Casino, Bubble Stocks like NVIDIA, the Global Central Bankers’ cartel, the worldwide credit bubble and its deflationary aftermath, Imperial Washington’s foreign policy follies and the rip-offs, bailouts, and racketeering escapades of the nation’s beltway politicians, apparatchiks and plain old bandits.

And now, with the most crucial election in 200 years upon us, we will also show no mercy as we slice and dice the humbug and lies dispensed by both UniParty candidates. At bottom, they are in a race to the bottom—to see who can come up with proposals to make the current fiscal and foreign policy disaster even worse.

Most especially, we will keep a sharp eye on the nation’s soaring public debt, which is now at $35 trillion but heading to the aforementioned $60 trillion by the end of the decade and $150 trillion by mid-century.

Similarly, we take with a grain of salt the phony bickering among the bipartisan duopoly on Capitol Hill. Both sides are overwhelmingly in the business of perpetuating their tenure in office and assiduously milking the Washington gravy train of lobbies, PACs, and organized racketeering to do so.

Protecting personal liberty is our top priority…

Instead, we dissect the headlines and hot spots of the day from a fiercely independent vantage point based on 50 years of experience on both ends of the Acela Corridor: As a US Congressman, President Reagan’s budget director, Wall Street investment banker, original partner of the Blackstone Group, private equity investor and best-selling author.

Unlike the MSM megaphones and groupthink transmitters, we have a filter.

It’s rooted in a firm belief in personal liberty, free market capitalism, sound money, non-intervention abroad, and very limited-scope, constitutionally- shackled government at home.

When the current headlines, incoming data, longer-term trends, and relevant history are strained through these filters, you get an unvarnished picture of reality that the mainstream media and partisan hucksters from both sides of the aisle do their level best to bury.

…….read more below or Start Your Membership Here

So Buckle-Up Real Tight!

Unprecedented Political and Financial Shocks, Spills, and Booby-Traps Lie Dead Ahead.

America’s Decades-Long Folly Has Reached the Breaking Point Owing To—

- - • Massive Fed Money-Printing;
    • Reckless Borrowing by Government, Business and Households alike;
    • Unhinged Wall Street Leverage, Speculation and Financial Engineering;
    • Corrupt Bipartisan Racketeering and Incumbency Protection Schemes;

Needless to say, The Blame Has Many Financial Authors—

- - •Greenspan, Bernanke, Yellen, Powell…. Plus legions of Wall Street Cheerleaders and Keynesian Economists. All Have Fueled The Folly Of Rampant Monetary Stimulus
    
    •It Also Includes a Long-String of Elected Politicians Who Recklessly Courted Disaster—The Bush’s, Clinton, Obama, Trump, Pelosi, Schumer, Sleepy Joe Biden and Kamala Harris too.

The Desperate Money-Pumping by the Fed and Fiscal Incontinence of the Politicians Fueled False Prosperity on Main Street and Rampant Speculation and Immense Financial Bubbles on Wall Street.

It Also Generated Hideous Windfalls to the 1.0%, 0.1%, and Billionaires Who Own Nearly 90% of the Stock—Even As Real Wages and Living Standards Stagnated In Flyover America

And we do mean stagnate. The inflation-adjusted hourly wage rate for manufacturing workers is no higher today than it was back in 1970 when Joe Biden abandoned his ballyhooed working-class roots and first got elected to the public payroll instead.

The fiscal and monetary excesses of recent years were bad enough, but then Wanna Be Medical Dictators, Hysterical Media, and Power Hungry Politicians concocted Lockdown & Mandate Nation…..Sending the US Economy into the Tank, and middle-class living standards are plummeting yet again.

Like Always, Main Street Has Been Left High & Dry, Ensnared In the Lies, Scams, and Self-Serving Mendacity of the Washington-Wall Street Axis

But Contra Corner’s Got You Covered

We give the Fools & Clowns who pretend to rule us no quarter

We Lay Out the Evidence and issue the indictments Exactly Five Days Per Week…

And For As Low As $1 Per Day!

Your framework for interpreting and assessing the flow of everything thrown at us!

Perspective, Perspective, Perspective!

That’s what Contra Corner provides. A framework for interpreting and assessing the flow of mainstream events and news, which are usually not what they are cracked up to be.

That’s because they are rooted in a poisonous foundation of easy money, cheap debt, sweeping financialization, and unbridled speculation that has been injected into the American economy by the Fed and Washington politicians over the last three decades.

This has—

Turned Wall Street into a dangerous gambling casino that has siphoned trillions of cash from corporate America to fund stock buybacks, M&A deals, and other forms of unproductive financial engineering

At the same time, it has left Main Street buried under $100 trillion of public and private debts and faltering investment in growth and productivity

- - The result was a society addicted to the hand-to-mouth economics of spending more than you earn
  - It has also left the American economy exceedingly vulnerable to external shocks like the thundering blow of Lockdown Nation and now the virtual partisan civil war brought on by a divided Congress and executive branch in thrall to its Dem interest group pay-masters.

America is dangerously fragile economically…

America’s dangerous economic fragility stems in part from the fact that—

80% of households have no appreciable liquid savings or rainy-day funds
Businesses have piled their balance sheets sky-high with $21 trillion of debt and artificially extended their supply chains to the four corners of the earth in order to goose short-run profits and share prices—the risks be damned.

So, both a renewed financial and economic crisis and an abrupt change of course lie dead ahead.

The 30-year party of False Prosperity is over!

The 2020s will be a decade when the chickens come home to roost–regardless of how the fraught election of 2024 finally plays out.

Indeed, America’s economic and political fantasies will soon be overtaken and crushed by its accumulated due bills.

Bubbles will burst.
Speculators will get carried out on their shields.
Easy money and wealth will evaporate.

So that’s why you need to get prepared now. And one good way to start is with a subscription to David Stockman’s Contra Corner.