Tag Archives: 5) Global Macro

The vast majority of market participants are about as ready for a semi-random “volatility event” as the dinosaurs were for the meteor strike that doomed them to oblivion. Judging by euphoric gambler–oops I mean “investor”–sentiment and measures of volatility, risk of a market drop has been near-zero for the past 18 months. But risk was never actually low, it was only hidden. When it emerges, it’s a surprise only to those who mistakenly thought risk had vanished. As...

The banquet of consequences is being served, and risk-off crashes are, like revenge, best served cold. The ideal setup for a crash is a consensus that a crash is impossible–in other words, just like the present: sure, there are carefully measured murmurings about a “correction” but nobody with anything to lose in the way of public credibility is calling for an honest-to-goodness crash, a real crash, not a wimpy, limp-wristed dip that will immediately be bought. What...

Losses will be taken and sacrifices enforced on those who don’t understand the Chinese state will no longer absorb the losses of speculative excess. Let’s start by stipulating that no one outside President Xi’s inner circle really knows what’s going on in China, and so my comments here are systemic observations, not claims of insider knowledge.Many western observers have noted the centrality of Marxist-Leninist-Maoist doctrine in President Xi’s writings. This is...

This complete capture of all avenues of regulation and governance can only end one way, a kind of hyper-stagflation. Zeus Y. and I go way back, and he has always had a knack for summarizing just how insane, disconnected from reality, manipulative and exploitive the status quo narrative has become. I’ve occasionally published his commentaries and essays here since 2008 Imaginary Worth, Empire of Debt: How Modern Finance Created Its Own Downfall (October 15, 2008),...

The already-wealthy and their minions are unprepared for the Smart Crowd opting out. Clueless economists are wringing their hands about the labor shortage without looking at the underlying causes, one of which is painfully obvious: the American economy now only works for the top 10%; the American Dream of turning labor into capital is now reserved for the already-wealthy. As a result the Smart Crowd is opting out of the conventional workforce’s...

Now that every financial game in America has been rigged to benefit the few at the expense of the many, trust and credibility has evaporated like an ice cube on a summer day in Death Valley. Here is America in a nutshell: we no longer solve problems, we manipulate the narrative and then declare the problem has been solved. Actually solving problems is difficult and generally requires sacrifices that are proportionate to one’s wealth and power. But since America’s...

Now that every financial game in America has been rigged to benefit the few at the expense of the many, trust and credibility has evaporated like an ice cube on a summer day in Death Valley. Here is America in a nutshell: we no longer solve problems, we manipulate the narrative and then declare the problem has been solved. Actually solving problems is difficult and generally requires sacrifices that are proportionate to one’s wealth and power. But since America’s...

By incentivizing speculation and corruption, reducing the rewards for productive work and sucking wages dry with inflation, America has greased the skids to collapse.Of all the mass delusions running rampant in the culture, none is more spectacularly delusional than the conviction that we can all get fabulously rich from speculation while producing nothing. The key characteristic of speculation is that it produces nothing: it doesn’t generate any new goods or...

By incentivizing speculation and corruption, reducing the rewards for productive work and sucking wages dry with inflation, America has greased the skids to collapse.Of all the mass delusions running rampant in the culture, none is more spectacularly delusional than the conviction that we can all get fabulously rich from speculation while producing nothing. The key characteristic of speculation is that it produces nothing: it doesn’t generate any new goods or...

A great many essential components in America are on ‘indefinite back order’, including the lifestyle of endless globally sourced goodies at low, low prices.Setting aside the “transitory inflation” parlor game for a moment, let’s look at what happens when critical parts are unavailable for whatever reason, for example, they’re on back order or indefinite back order, i.e. the supplier has no visibility on when the parts will be available. If the part that blew out is...