Situational Awareness May Save You: Be On The Lookout

By Bob Christie —— Bio and Archives March 21, 2018

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Aware people never stop looking for it. "It", in this instance, is a black swan, AKA "an unpredictable or unforeseen event, typically one with extreme consequences". Of course the extreme consequence could be a good thing . . . like winning a $multi-million lottery. No ticket purchaser actually expects to win the big prize so it can legitimately be referred to as unforeseen . . . definitely an outlier. But the color black (properly an absence of color) is commonly associated with something sinister, and like that horrid creature lurking under a child's bed or in the darkened closet a black swan is legitimately something to be feared.

With a financial background, I fear the unknown thing or event that might destroy a huge portion of the nation's wealth and take a lot of folks directly to the poorhouse. I don't know if poorhouses once operated by municipal governments to tend to the unfortunate exist today (relocatable tent cities don't qualify in my mind) but they were often discussed in my formative years. I've never actually seen a poorhouse so I had to conjure up what existence within its' dank, dirty walls might have looked like. But like the unseen thing under the bed or behind the door I just knew it had to be dreadful. Given the elevated level of share prices, investors and speculators with skin in the game are contemplating the possibility (probability?) of the favorable result of Trump's election to POTUS, and implementation of his correctly conceived and instituted policies, being reversed by . . . what? The current fear in the news is a trade war that may be initiated by Trump's demand that free and fair trade, as espoused but not practiced by governments everywhere, be compelled to live up to the billing. For generations since WW2 the US has shared its bootstrapped bounty with peoples around the globe . . . a noble exercise. But should it, can it, be an endless praxis? The elephant in the room is China with which the US has a lengthy experience of trade deficits, most recently exceeding $1/2 trillion annually. Ouch! If you string a number of those deficits together it is not surprising the US federal debt just passed $21 trillion. That's an expensive bird of any color! Like the hopeful student incurring a huge debt with the expectation it will be extinguished from the earnings generated with the knowledge obtained on the way to becoming a scholar, government believes revenues it takes in from productive commerce will service the interest requirement attached to the borrowing and ultimately pay off the debt. Who's kidding who here? What if the student can't find a job? And what if US commerce fails to deliver with greater than recent growth? Imagine your annual income is inadequate to pay for your annual outgo and you must borrow almost a third of your total expenses to balance your checkbook this year. How many times in a row do you think you can do that? That's where we are right now folks. Without the sweetest sugar daddy ever conjured up it ain't gonna happen! And the taxpaying public doesn't love you like a daddy might! Foreign lenders even less! This a tough bird to be carved. Can "the Donald" do it?