An Epic Folly for the Ages
Today we begin with a list. A partial list. And in no particular order…
Angela Merkel. Donald Tusk. Mario Draghi. Donald Trump. Jerome Powell. Shinzo Abe. Haruhiko Kuroda. Theresa May. Boris Johnson. Mark Carney. Xi Jinping. Emmanuel Macron. Vladimir Putin. Justin Trudeau. Juan Trump. And many, many more…
Politicians and bureaucrats of the modern age of statism and central planning… fighting a rearguard action doomed to fail. [PT]
A Loose Relationship
The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks. But, as of this writing, the index has stalled out short of this psychosomatic barrier. By our estimation, this is for the best.
Since early 2018 the DJIA has gone nowhere, albeit in interesting ways… [PT]
A Plan for Everything!
The run-up to the presidential primaries offers a funhouse reflection of American life. Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition.
A plea for clemency from Mr. 1/1024th crow. [PT]
The Ugly End of Globalization
Sometime in the fall of 2018 a lowly gofer at the New York Stock Exchange was sweating bullets. He had made an honest mistake. One that could forever tag him a buffoon.
Art Cashin the living hat-stand, going through a succession of DJIA milestone hats. He promised was going to crack a smile for the Dow 27,000 hat photo, alas, it was not to be. [PT]
A Jolly Little War
The dawn of war is a time of simple clarity and purpose. Good guys vs. bad guys. Cowboys vs. Indians. Confederates vs. Yankees. Coppers vs. robbers. It’s a time when lines are drawn, songs are sung, and drums are beaten with gaiety and confidence.
A jolly little trade war – easy to win, according to the CiC [PT]
Fake Work
Clarity. Simplicity. Elegance. These fundamentals are all in short supply. But are they in high demand? As far as we can tell, hardly a soul among us gives much of a rip about any of them. Instead, nearly everyone wants things to be more muddled, more complicated, and more crude with each passing day. That’s where the high demand is.
One can always meet the perils of overweening bureaucracy with pretend happiness… [PT]
Why a Chernobyl-like Financial Disaster is Inescapable
In the early morning hours of April 26, 1986 – roughly 33 years ago – things went horribly wrong in the town of Pripyat, in northern Soviet Ukraine. Reactor No. 4 at the V. I. Lenin Nuclear Power Plant, also known as the Chernobyl Nuclear Power Plant, was overwhelmed by an uncontrolled reaction. There was no stopping it.
Chernobyl after the explosion (left) and today (right), encased in a steel sarcophagus. [PT]
Learning From Other People’s Mistakes is Cheaper
One benefit of hindsight is that it imparts a cheap superiority over the past blunders of others. We certainly make more mistakes than we’d care to admit. Why not look down our nose and acquire some lessons learned from the mistakes of others?
Bitcoin, weekly. The late 2017 peak is completely obvious in hindsight… [PT]
Unsolicited Advice to Fed Chair Powell
American businesses over the past decade have taken a most unsettling turn. According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion [ed note: this number refers to securitized debt and business loans, other corporate liabilities would add an additional $11 trillion for a total of $20.5 trillion].
US non-financial corporate debt takes flight – the post 2008 crisis trajectory is breath-taking, to say the least [PT]
A Growing Gap
The first quarter of 2019 is over and done. But before we say good riddance. Some reflection is in order. To this we offer two discrete metrics. Gross domestic product and government debt.
US nominal GDP vs total federal debt (in millions of USD) – government debt has exceeded total economic output for the first time in Q4 2012 and since then its relative growth trajectory has increased – and it seems the gap is set to widen further. [PT]
A Gentle Nudge
The America we thought we knew – the country we learned about in grade school – vanished long ago. In truth, it was gone well before we stepped foot in our first classroom. But America’s myths and legends remain.
The Wild Bunch… where are their stetsons? Contrary to myth, cowboys rarely sported a stetson. They wore bowler hats instead. The stetson only became available in 1865 and wasn’t really considered fashionable before the turn of the century. [Myth buster PT]
Extrapolating The Recent Past Can Be Hazardous To Your Wealth
“Those who cannot remember the past are condemned to repeat it,” remarked George Santayana over 100 years ago. These words, as strung together in this sequence, certainly sound good. But how to render them to actionable advice is less certain.
George Santayana – purveyor of eminently quotable wise words by the wagon-load, but what shall one do with them in practice? [PT]
Most read in the last 20 days:
The Hollow Promise of a Statist Economy
Brainwashed by Academe Not a day goes by that doesn’t supply a new specimen of inane disclarity. Muddy ideas are dredged up from tainted minds like lumps of odorous pond muck. We do our part to clean up the mess, whether we want to or not. No longer in demand: famous Enlightenment philosopher John Locke (1632–1704), who is widely considered the “Father of Liberalism” (classical liberalism, that is). [PT] These days, individuals, who like John...
The Great Debasement - Precious Metals Supply and Demand
Fiat Money Woes Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week. Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT] So, naturally, what is getting play is a story that Bank of England governor Mark Carney said the dollar’s influence...
Hong Kong - Never the Same Again
Freedom Rock Hong Kong ranks among the freest societies in the world. Not only economically, but socially it is a very liberal place. It was marinated in British ways until 1997, much longer than Singapore and other colonies. Then China took it over as a special administered region, which according to the agreement with the UK meant that it was only nominally to be under Chinese control for the next 50 years. It was possibly the only colony in which a vast majority of citizens did not...
Suffering the Profanity of Plentiful Cheap Money
A Case of Highway Robbery What if the savings in your bank account lost 55 percent of its value over the last 12 months? Would you be somewhat peeved? Would you transfer some of your savings to another currency? USD-ARS, weekly. For several years the Argentine Peso has followed a certain pattern: it declines mildly, but steadily, with little volatility for long time periods, and then spikes in crash waves whenever a crisis situation comes to a head. In early 2011, it...
Don’t Be Another Wall Street Chump
The Future and the Past Securities and Exchange Commission Rule 156 requires financial institutions to advise investors to not be idiots. Hence, the disclosure pages of nearly every financial instrument in the U.S. are embedded with the following admission or variant thereof: “Past Performance Is Not Indicative of Future Results” “Buy and hold”... “The market goes always up”... “No-one can time the market”... “Buy the dip” “With what? You...
A Wild Week - Precious Metals Supply and Demand
Paying a Premium for a Lack of Default Risk The price action got pretty intense last week! The prices of the metals were up Monday, Tuesday, and Wednesday. But Thursday and Friday, there was a sharp reversal and the silver price ended the week below its close of the previous week. The net speculative position in gold futures has become very large recently – the market was more than ripe for a shake-out. [PT] Silver made a round trip down from $18.35 to...
Will the Nikkei Win the Next Olympic Games?
Listless Nikkei On 24 July 2020 the Olympic Summer Games will begin in Tokyo, the capital of Japan. Olympic Games and Soccer World Cups are among the largest sporting events in the world. Do you perhaps also think that these events may affect the performance of local stock markets? Olympic Summer Games 2020 – official logo (left), and a fan-made logo (right) by designer Daren Newman [PT] Let us examine whether and in what way such major sporting events impact...
The Weird Obsessions of Central Bankers, Part 3
Inflation and “Price Stability” We still remember when sometime in the mid 1980s, the German Bundesbank proudly pointed to the fact that Germany's y/y consumer price inflation rate had declined to zero. It was considered a “mission accomplished” moment. No-one mentioned that economic nirvana would remain out of sight unless price inflation was pushed to 2% per year. CPI, annual rate of change. During the “stagflation” period of the 1970s, Congress enacted the...
The Weird Obsessions of Central Bankers, Part 1
How to Hang on to Greenland Jim Bianco, head of the eponymous research firm, handily won the internet last Thursday with the following tweet: Jim Bianco has an excellent idea as to how Denmark might after all be able to hang on to Greenland, a territory coveted by His Eminence, POTUS GEESG Donald Trump (GEESG= God Emperor & Exceedingly Stable Genius). Evidently the mad Danes running the central bank of this Northern European socialist paradise were...
The Weird Obsessions of Central Bankers, Part 2
The Negative Interest Rates Abomination Our readers are probably aware that assorted central bankers and the economic advisors orbiting them occasionally mention the “natural interest rate” (a.k.a. “originary interest rate”) in speeches and papers. It is generally assumed that it has declined, which is to say, time preferences are assumed to have decreased. This is actually an understatement... Although interest is generally associated with money, the...
Why Are People Now Selling Their Silver? Precious Metals Supply and Demand
Big Moves in Silver Last week, the prices of the metals fell further, with gold -$18 and silver -$0.73. On May 28, the price of silver hit its nadir, of $14.30. From the last three days of May through Sep 4, the price rose to $19.65. This was a gain of $5.35, or +37%. Congratulations to everyone who bought silver on May 28 and who sold it on September 4. The recent move in silver [PT] To those who believe gold and silver are money (as we do) the rising price...
Austrian Theory and Investment
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