FROM THE TOP DOWN

 
Here's a quote from Pete Atwater's, "America's Unprecedented Confidence Gap," on today's Minyanville.

Over the past twenty-five years, the confidence gap between the top and the bottom has never been greater. Given the nature of the post-banking crisis recovery, that record is hardly surprising. As Ruchir Sharma of Morgan Stanley Investment Management points out in an op-ed in this morning's Wall Street Journal, loose monetary policy has benefited owners of financial and commodity assets far more than Main Street. While the stock market is up by more than 135% from its lows, "prices for commodities from oil to coffee to eggs are up 40% since 2009, double the typical commodity-price rebound in post-war recoveries. Though rising prices for staples such as these are inconsequential expenses to the rich, they are burdens for the poor, who spend 10% of their income on energy and a third of it on food."

Even more, the post-banking crisis recovery has been notable for its lack of wage inflation. Between excess labor capacity globally and corporations need to extract more and more from their expense base in a revenue-anemic recovery, most lower and many middle class Americans have found themselves squeezed by weak wage growth and rising food, energy and rental costs. Not surprisingly this financial pressure is showing up in weak economic confidence measures like the one that the Conference Board reported this week.

Though we would take exception with Atwater's premise these are "inconsequential expenses to the rich." This is a knee-jerk, blatant assumption that people of his caliber shouldn't fall prey to. He needs to define inconsequential and rich. 

Rich is in the eye of the definer. Being middle class today, if there is even such a category, is rich in the eyes of the poor. That's what makes this whole argument so knotty. Politicians in their missionary 
zeal to vilify the wealthy as if they're all dishonest and corrupt and stole their wealth ensnares many in the middle class. See AMT tax for just one of numerous examples.

By the time these elected Neanderthals get around to correcting this travesty, if they ever do, they will have impoverished tons more. Stupidity hurts everyone, rich, middle class or poor. Stupidity is like health; it's difficult to put a price on it. 

See our recent post about "Clunker Dunkers" if you want to see another example of stupidity and its effects on confidence. We only mentioned two former Fed members, the author of the MarketWatch mentions another. That might want to tell you something about bureaucrats, academics and politicians alike.

Just whom did Atwater expect loose monetary policy to impact? One of the big reasons for the logjam of illegals at the southern border of this nation has to do with the hope for a better way of life. It has to do with middle class not gold-paved roads.

There is always collateral damage. It's a fact not an artifact of governments everywhere who stupidly punish the many in their pathetic clumsiness to capture the few.

Confidence starts at the top not the bottom. The whole message of the Fed since 2008 has been to restore confidence. Are you feeling confident yet?