Columnists John Grace Opinion

ON THE MONEY: The greatest economy ever is not happening now

Whether or not you thought a fed move on interest rates would greenlight a brilliant move or cause for some improvement on the economic dial, the accompanying graph tells the whole story.

What you see is an entrenched, self-interested, and Acela Corridor-dominated global elite that has turned the entire apparatus for its own devices. The great disruptor could well become the destroyer of this postwar world.

David Stockman, former Office of Management and Budget director under President Ronald Reagan, makes these astute observations. Is the survival of American-style free-market capitalism in question? Of course, folks on the left are screaming — literally — about inequality and the inherent evils of capitalism.

Well, there are folks on the right concerned about multiple destructive tendencies first fiscal and, now, perhaps catastrophically, monetary authorities have let fester.

It’s more than a crony here, a crony there. There’s a crony everywhere. It’s systemic, it’s established, it’s bipartisan. And this duopoly just might kill us all.

No matter which way interest rates go, a new survey shows why millions of baby boomers are unprepared to maintain their lifestyle after their last paycheck. 

“Boomer Expectations for Retirement,” a new annual study from the Insured Retirement Institute — a trade body for the annuity industry — makes shocking reading. Most boomers are unprepared for retirement, even as they approach it or enter it.

Amazingly, barely one in 10 baby boomer has enough saved up.

This is hardly the first study to report on Americans’ poor retirement savings. But the institute’s survey stands out because it focuses specifically on boomers. They interviewed 804 people ages 56 to 72.

In a nutshell, based on their numbers, about 11% have at least $500,000 saved for their retirement. That’s hardly a king’s ransom, but it may have to do.

The remainder don’t even have that. Nearly half don’t have any retirement savings at all. None. All rising tides lift all boats. The current economy reveals while some are doing better than ever, some are swimming naked as others ships are sinking.

Complacency can be costly.

When the architect of one of the biggest tax cuts in U.S. history looks across the pond, David Stockman sees menacing clouds on the horizon. As Russia and China “seek to rebalance military might in Asia-Pacific” as they conduct joint air patrol tests around neighboring Japan and South Korea, these great powers are motivated to end this era of the single super power.

Stockman asserts, “Sometimes it seems they’d like nothing more than to bury the whole idea of the American century,” in his message to subscribers on July 29.

Stockman went on to say, “We will certainly lose our status, all by ourselves, with no malign exertions from overseas, if we maintain our present heading.”

Despite the Dow’s 27,000 and the S&P 500’s 3,000, neither the equity high watermarks, nor the ballyhooed U-3 unemployment rate at 3.7% measure sustainable success, opines Stockman.

When it comes to the core fundamentals, in fact, we’ve never before seen end-of-cycle conditions this bad. Global debt markets are busted; asset allocators are mired in a mindless desperate-and-growth-retarding search for yield.

Equities are egregiously overvalued; they hang from a fragile skyhook, as corporate America’s profits are flat lining, not soaring as claimed. And Main Street — the good, old, borrowed-up American consumer — will run out of gas.

Pay no attention to the calendar or the outside temperature. Winter is coming. And investors don’t need to predict the future to be prepared for the good, the bad and the unforeseen starting in 2019.

John L. Grace is president of Investor’s Advantage Corp, a Los Angeles-area financial planning firm that has been helping investors manage wealth and prepare for a more prosperous future since 1979. His On the Money column runs monthly in The Wave.