Tell It To Al

This is the worst economic news I’ve heard since Federal Reserve Chairman Ben Bernanke said he might tighten the tap on his bottomless barrel of money: Thousands of “sugar daddies” think we’re in a bubble.

A “sugar daddie” is some rich guy who signed up at SugarDaddie.com to be hooked up with a sweet, young thing in search of a benefactor.

The niche dating website recently surveyed more than 100,000  sugar daddies: 85% see a real estate bubble and 85% say we’re in a stock market bubble. Only 18% said they believe economic conditions will improve in 2014.

“While economists may argue for and against economic theories, citing economic models and general statistics, the Sugar Daddie Index reflects a true affluent demographic,” the website claims.

And it sounds like daddie is afraid he may be running low on sugar.

Why isn’t the economy growing? It may be because we’re flipping too much paper around.

Since the 1980s, observers have noted the “finanicialization” of the economy, a shift from actual production to things like stocks, bonds, derivatives, credit default swaps, and increasingly complex securities no one really understands.

All this paper flying around does not create growth. As the 2008 financial crisis showed, it can actually destroy growth. And right now some observers say it’s holding back growth.

Click here to read my column in The Sunday Wall Street Journal. And click here to watch me talk about this and other news with Gregg Moss of Denver’s 9News.

Oddly enough, many of the people making this observation are the very conservatives who pushed for free-markets and trickle-down economics. They may have left the market so free that some very self-dealing profiteers were able to corner it with paper.

Click here to read a great piece on this topic by Bruce Bartlett, a former policy wonk for Presidents Ronald Reagan and George H.W. Bush.

Reagan’s former budget director David Stockman pins it all on the corruption of American capitalism. Click here if you haven’t yet read his amazing rant in the New York Times, calling the U.S. “state-wrecked.”

Not a lot of people are going to compare Federal Reserve Chairman Ben Bernanke to Superman but they do have plenty of things in common.

For one thing, when the whole world is in trouble, whether it’s an asteroid on course to demolish the planet, or a global economic collapse it depends on both men to save it.

With the release of “Man of Steel” on Friday, I thought I’d count the ways these two superheroes compare, and the ways that they really don’t.

Click here to read my column on Marketwatch.

And  I’ll say this much for Mr. Bernanke: At least he doesn’t wear his underpants on the outside.

They say inflation is under control, but beer prices are not.

Restaurant Sciences reports that many popular brands – including Budweiser, Coors Light, Miller Lite, and yes, even, Pabst Blue Ribbon — have seen a 3.5% to 6.8% price jump in the nation’s bars and restaurants over the past seven months.

“Across all restaurant and bar segments, and all beverage alcohol categories, the one constant is rapidly increasing prices in the fine-dining tier,” said the firm, which closely tracks food and beverage product sales throughout the food service industry in North America.  “This segment had some of the hardest-hit establishments in the last recession, and average drink prices there are increasing with a vengeance.” Click here to read more from Restaurant Sciences.

The Federal Reserve says it is holding inflation below 2%, but if beer inflation is as high as 6.8% there may be more froth in the economy than the central bank wants to admit.

Dogs and cats didn’t cause the debt crisis, or the economic slump that followed, so why should they go hungry?

Marc Okon, a former stockbroker and entrepreneur, has founded an organization called Pet Food Stamps which distributes free pet foods to pet owners already on government assistance.

While economic headlines boast of recovery, he hears from people every day who are still feeling the pain.

More than 47 million Americans are currently on food stamps, according the the U.S. Department of Agriculture, which administers the program. That works out to nearly one out of every seven Americans.

If you are gainfully employed, it is easy not to see these people. But they are out there en masse. I  frequently hear from some who say they were formerly members of America’s middle class.

Their words are usually very grim. Here, for instance, a few lines of a reader email I received today:

“Being a human that went from a high-paying job to food stamps in less than a year, I can safely say that I’m glad I had no pets when I lost my job.  I remember an Oliphant cartoon about the disappearance of the family dog during an earlier recession.  The ghastly visions that I experienced when I fell into clinical depression didn’t include dining on the family pet—they were far worse.”

Click here to read my column in The Sunday Wall Street Journal.

Inflation is well within the Federal Reserve’s target of under 2% if the cost of a good laugh is in check.

The Cost of Laughter Index has only risen 1.66% over the past year, says Malcolm Kushner, an attorney turned humor consultant who created the index in 1987.

The index is a compilation of 16 leading humor indicators, including the annual price change in admissions to comedy clubs, Groucho glasses, whoopee cushions, an issue of Mad Magazine, singing telegrams, and the fee for writing a TV sitcom.

While the overall index does not show considerable inflation, the price of rubber chickens and whoopie cushions did rise sharply. A dozen rubber chickens is up to $84, from $78 in 2012, and whoopie cushions have hit the $5 mark, up from $4.50 last year. Mr. Kushner, however, counts this a a sign of strengthening consumer confidence.

“Although rubber chickens and whoopee cushions are used with indiscretion, they are purchased with income that’s discretionary,” he explains. “So higher prices means there’s more demand for this stuff.”

Frankly, I am just glad to hear Mr. Kushner is still alive after publishing a joke book about mobsters last year. He hasn’t yet looked into funeral costs. Click here to read the column I wrote about it then on MarketWatch.

To hear Federal Reserve Chairman Ben Bernanke tell it, holding interest rates to zero and injecting trillions of dollars into the economy has been good for the whole world.

It’s not a currency war when several large economies do this same thing in tandem.  It’s all for their mutual benefit, Mr. Bernanke says. ” These policies are not ‘beggar thy neighbor’ but rather are positive-sum, ‘enrich thy neighbor’ actions,” he said.

Unfortunately, these efforts have lead to very little growth, high unemployment persists around the globe, and most of Europe is not only in a deep recession but still having to bailout some banks nearly five years after the 2008 financial crisis.

Click here to read my column on MarketWatch.

Expect frequent recessions for the West, and increased volatility for the rest.

That’s the forecast from Lakshman Achuthan, founder of the Economic Cycle Research Institute, and a member of Time magazine’s board of economists.

He says the world is in what he calls the yo-yo years, and even after five of long yo-yo years, they are not going away anytime soon. Click here to read his report “The U.S. Business Cycle in the Context of the Yo-Yo Years.” He says that historically recoveries have come very slowly following financial crises. He also points out past recessionary periods past when the stock market has climbed despite the sagging economy.

His report gets a little heavy on data and analysis, so read his opening and skip to his conclusions if your eyes grow weary. His group has called for recessions that didn’t quite happen, but the recovery has been so weak, you have to wonder what the difference is, anyway, between recession and the less technical term, yo-yo years.

A recession is not a tragedy, Mr. Achuthan writes, it’s a normal part of the business cycle. The Federal Reserve can pump trillions of dollars into the economy, but it can’t repeal the business cycle.

“We are not seeing signs of imminent growth upturn that so many claim to see,” he writes.  The yo-yo years are rooted in long-term structural issues and we are currently in a cyclical downturn. Monetary policy cannot make these hard realities go away, but central bankers attempts to counter all of this amounts to pushing on a string, and when that does not work, pushing even harder on the string.”

Economists are generally upbeat about the future, particularly after today’s report showing the economy created 236,000 jobs in February.

Robert Z. Aliber, professor emeritus from the University of Chicago, is especially upbeat.

He foresees a significant drop in oil prices this year that will mean more free cash for households, business and the global economy as a whole.

“We’re in for a massive price decline,” he said. “It will be like a tax cut for all of us.”

Click here to read my column on MarketWatch.

For all the economic problems we face, it is getting easier to find optimists about the economy.

One of them is Robert J. Shapiro, who served as undersecretary of commerce for economic affairs under President Bill Clinton, and is now chairman of a private financial consultancy, Sonecon LLC. He says households and businesses have finally shed most of their excess debts since the 2008 financial crash, setting the stage for economic growth.

Click here to read my column on Mr. Shapiro on MarketWatch.

The U.S. economy shrank in the last quarter, Europe and Japan are in recession, China’s growth is slowing, taxes just went up for most Americans and Congress is threatening a battle over the budget in the great sequester debate,

Economists, however are glomming onto the good news. Economists surveyed by the National Association for Business Economics expect the U.S.

Click here to read more from the National Association for Business Economics.

Click here to read a report from CareerCast and JobSerf showing a rise in managerial hiring in major cities across the nation.

Click here to read the latest numbers on our improving housing market from  the Associated Press.