I just spent about a month on the ground in the US, and I came away with a feeling of tremendous discomfort. Never before have I seen such a massive disconnect between sentiment and reality.
Everywhere I went– Dallas, Los Angeles, Reno/Lake Tahoe, Denver, New York, and San Francisco, everything appeared to be fine. Shops and restaurants were full, the mood was light, and people seemed fairly optimistic that things were OK.
There was definitely no air of doom and gloom like there is here in Europe.
And yet, the real story in the US is disastrous:
- There has been no meaningful growth in years.
- The true rate of unemployment is a postwar record high.
- Foreclosures and bankruptcies are on the rise once again.
- The average American’s income and net worth are both much lower than 4-years ago.
- The federal government is totally insolvent, as are most state and local governments.
The numbers don’t lie. They have no sentiment, they don’t feel optimistic or pessimistic. They just are what they are. And they’re terrible.
The massive disconnect between what the data tell us and people’s optimism are deeply concerning; it suggests that the majority of people are completely oblivious to what’s happening.
Just like when the housing bubble burst, most people were blindsided and totally unprepared for the pain that followed.
I’m concerned that the same thing is going to happen again… only this time, the collapse of the sovereign debt bubble is much, much bigger.
So much of what we have discussed over the past few years has already come to pass, and the next phase is playing out right now in Europe. The writing is on the wall for the US.
Read more: http://www.sovereignman.com/expat/sentiment-vs-reality-total-disconnect/#ixzz1yWaEAcWU
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