Danger Ahead: Will We Have a ‘V-Shaped’ Recovery or a ‘K-Disaster’?

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

In Tuesday’s political debate, an issue came up. Will we have a “V-shaped” recovery or a “K-disaster”?

President Donald Trump said that he expects the economy to continue to recover, and for the stock market to head higher, resulting in his reelection. It may be wishful thinking.

His opponent, former Vice President Joe Biden, compared the economy to the letter K. He means that some have benefited and prospered from the Trump economy, and others have done poorly.

I’d rather think of the “K-economy” as a “Kaos” disaster. That’s what we can expect if Biden and the radical Democrats take over the government in 2021.

In the “new normal” economy, technology companies that focus on e-commerce, online education and biotech breakthroughs are hiring more workers and expanding. That’s the good news.

But, there’s also bad news. Transportation, including airlines, as well as sports and entertainment, cruise lines and restaurants are in BIG trouble. Many companies have declared bankruptcy. It may get worse.

In the latest second-quarter gross output (GO) and gross domestic product (GDP) data, the federal government reported that health care expenditures (visits to doctors, dentists and hospitals) were down 12%, an annualized decline of 48% — and are only slowly coming back. For the latest press release on GO-Day, go to www.grossoutput.com.

The other day, I saw that Disney has laid off thousands of workers. Airlines are doing the same.

A landmark family restaurant, the Sunset Restaurant in Glen Burnie, Maryland, had to close its doors this week after 60 years of operations, due to the severe lockdown. The announcement made the front page of the Washington Post.

The Mermaid Inn in Lower Manhattan opened six weeks after the Twin Towers came down in 2001. It had been a popular dining and socializing spot for nearly twenty years. But the owners aren’t going to survive the pandemic. In announcing their sad decision to close permanently, co-owner Danny Abrams estimated that the Mermaid Inn had:

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– Welcomed over 850,000 guests

– Paid over $15 million in wages to our more than 2,000 employees who have spent time with us

– Contributed more than $2.1 million in taxes to the city, the state, Medicare, Social Security, Unemployment Insurance, etc.

– Sent in excess of $4 million in sales tax to New York State

– Paid over $15 million to our hundreds of hard-working vendors

– Gave hundreds of thousands of dollars to the city and state for permits, licenses

But, it was a “non-essential” business, according to New York Governor Andrew Cuomo.

We also see K troubles on Wall Street. Most tech stocks and real estate investment trusts are booming, but many financials and blue-chip stocks are in a bear market as they are down 25-30% for the year.

We’ve had to make significant adjustments to our portfolio in Forecasts & Strategies, and I’m prepared to make additional changes due to the ever-changing geopolitical landscape. Know the signs of the times!

The Potential K Disaster in 2021

Based on the www.electionbettingodds.com website, Biden and the Democrats are likely to take over in November, barring a miraculous comeback by Mr. Trump and the Republicans. After Tuesday’s brawling debate, the site now gives Biden a 60% chance of winning the White House, compared to only 39% for Trump. The Democrats could also win control of the presidency and both houses of Congress.

If that’s the case, the K economy will look very different from 2020. Government will get a lot bigger, and free enterprise will struggle mightily. Wall Street is likely to see a major bear market.

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The Biden agenda favors higher taxes, regulation and inflation. It’s really scary. The Democrats may pack the Supreme Court to push through their socialist agenda. In Tuesday’s debate, Biden refused to rule it out.

The radical Democrats may impose a costly New Green Deal on America. Deficits are likely to get much worse, and they are already out of control.

Investors may be forced to pay 40% or more on the sale of stocks, bonds, gold and real estate. Biden wants to eliminate the traditional tax break for long-term capital gains. Soak the rich is their motto, even though their tax increases apply to average Americans.

Live Event Tonight: ‘Prepare for a Major Financial Crisis in Five Weeks’

Tonight (Thursday, Oct. 1) at 6 p.m. PT (9 p.m. ET), I will be interviewed by Mike Lathigee, president of the Investment Club of America, for half an hour on the new geopolitical threat that is building, and what it means for your investments. The half hour live “virtual” event is free to watch. I urge you to register here: https://globalfinancialsummit.easywebinar.live/event-registration

Good investing, AEIOU,

Mark Skousen

You Blew It!

Scientific American Goes Woke, Endorses Joe Biden!

I have been a subscriber to Scientific American for probably 40 years and never missed an issue. Even though some of the articles were over my head, I always got something useful out of it. I firmly believe in a liberal arts education, including the need to keep up on the latest findings in science and technology.

I also enjoyed reading Michael Shermer’s always provocative columns.

But then something changed. Laura Helmuth became the editor and made everything political. She fired Michael Shermer, the only libertarian columnist there.

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Then, she politicized the oldest magazine in America with divisive articles on global warming and “anti-science” bias by Republicans.

The last straw came in the October issue when the editors of the magazine decided to do something for the first time in its 175-year history: Endorse a presidential candidate, in this case, Joe Biden.

I’d had enough. I read science magazines and go to sporting events and concerts to learn more and to be entertained — not to be hit over the head with politics.

I canceled my subscription and grieved. If anyone can suggest an objective, non-political alternative to Scientific American, please email me at mskousen@chapman.edu.

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