“How can I think of romance when my bronchial tubes are collapsing?” – The Addams Family
How can I have a low credit score? The bank says I have an “outstanding” balance. (all memes today are “as found”)
Let’s talk about Michael J. Burry. Burry studied economics on his way to a pre-med decree at ULCA, and then got an M.D. at Vanderbilt. I think he got bored with medicine, and he decided investing was more fun than doing pathology, and 2000 started investing. Besides, I heard that when he did a report on a deceased patient that he put, “cause of death: autopsy” that people weren’t amused, but that joke still kills me.
By the end of 2004, he was managing $600,000,000 dollars, and had made returns of over 50% shorting the Tech Bubble when everyone still thought that Alta Vista® was worth more than a box of slightly melted Milk Duds®. In 2005, Burry started in reviewing the housing and, more importantly, the housing lending market. He saw it was all junk.
To be fair, I made the same observation at the time, but unlike Dr. Burry, I only made about $80,000 with a stop-loss on my own house from when I lived in Houston. In my case, it was a one-of-a-kind situation, worked like a charm, and it won’t happen to me again.
I made (or, in my case didn’t lose) $80,000. Burry made $100,000,000. Burry made that much personally. But, it really it took him a whole year to make that much. Burry also made his other investors more than $700,000,000 in profit at the same time Bernie Madoff was attempting to convince his investors that the money must be in his other suit. Or maybe he left it under the bed.
Burry cleaned out the market, Madoff cleaned out his investors.
Guess which one is Madoff and which one is Burry.
Also, Burry is a little ‘spergie like your ‘umble ‘ost, and also is a heavy metal fan. I think he and I would get along, except I’m sure his car costs more than my house. And The Mrs. has a shirt that she had autographed by Dimebag Darrell. I’m thinking I could convince her to sell it to Dr. Burry. For a particular car . . .
Also, like me, he has correctly predicted seven of the last three recessions.
I’ll admit, I do tend to see the cracks. There’s a reason I say, “Better a year early than an hour too late” because I understand a fundamental principle of life as first noted by the stoic philosopher Seneca (and expounded upon by Ugo Bardi – LINK): things are only built slowly, but disappear quickly. A house might take weeks or months to build, but (I was advised by a firefighter) if my house has been burning for more than a few minutes, they show up to pull me, The Mrs., and Pugsley out and make sure that other houses next to mine don’t burn.
Destruction is more powerful than creation. This is a restatement of the Second Law of Thermodynamics, and just shows what any father knows – the lawn won’t mow itself.
But, I digress. Burry sees the larger patterns in the world, and his autism is a superpower in pattern detection. And he doesn’t like what he sees. In fact, he just posted this Tweet®:
There’s a new version of music called bubble rap. It sound’s a lot like pop.
Well, I wonder what he meant by that? I’ll turn it over to the philosophers at /pol/ to explain using GrugTalk®:
Why didn’t the caveman cross the road? Because he was dead before roads were invented.
The slightly longer answer than the GrugTalk™ answer is that this is the graph that shows the relationship between the S&P 500 and the Federal funds rate. Grug is right, sometimes line go up, sometimes down. And when things start to collapse the Fed® normally cuts the interest rate. But, of course, in 2001 the inflation rate was lower than Madonna’s current attractiveness on a scale of 1 to 10.
Now? In late January, Burry had a one word Tweet©:
I sold my vacuum cleaner. It was just gathering dust.
I wonder what he meant by that? I don’t think we need Grug to translate. Sell. Burry is indicating he’s out. The first graph shows that the Fed™ rate is approaching levels not seen since before the Tech Bubble popped.
But I think it’s going to be much worse, because inflation is exploding. In 2001, life was better, and the real issue was the ludicrous level of optimism that caused money to flow into the tech sector. Of course, the solution from the Fed™ was to pump in tons of cash and free up lending. In the housing sector. So, this graph represents how Burry made a lot of money, essentially shorting the Fed™ as it poured dollars from the Tech Bubble directly into the Housing Bubble which led to the Great Recession.
Guess some folks never learn.
This made Burry hundreds of millions of dollars as he profited from the tendency of the Fed™ to treat the symptoms and not the actual problems. However, given that our debt, inflation rate, and business risk are going up faster than a Chinese balloon. And then they’ll go down faster than a Chinese balloon.
My balloon elephant wouldn’t fit in the back seat, so I had to pop the trunk.
Now, to be fair, Elon Musk has characterized Burry as a “stopped clock” who is right enough times to make him a few hundred million dollars. Elon might have a point – as Burry and I wait for the cracks to form and Seneca to be proven correct, there’s a world out there, growing and moving. You can live life, but living it always on the defensive will end up in a losing ground strategy.
I think Burry is right, and I wouldn’t bet against him. But I’m also not going to spend to my life living in fear. It’s a mistake, and has probably cost me additional growth on what I have squirreled away for the future. That’s on me, and I refuse to feel bad about it, though if I were 20 or 30 I would be all in online.
As we get older, we often worry far too much about the destruction part of Seneca’s lesson, and forget about the creation, which is the important part of the story. We will have failures. Economies will collapse.
The world will recover. We will abide. But we cannot live in fear, nor in regret.
Unlike Madonna’s face.
The problem with “sell” is that then you’re left with a pile of fiat currency. So, then you buy … what? Buy land, and pay property taxes. Buy gold, and wait for the thieves to show up. Throw a party, and then you’ll have no assets at all. Buy a company that provides good jobs for people making stuff that other people need? You’re back in the stock market (but less diversified).
Indeed, you’re right. Money only exists when we all agree it does.
We are coming in for a landing, and the nose is pointed straight down. After last week’s 500K+ jobs report, Powell says the Fed is gonna take Fed Funds rates up to (and over?) 5% to soak up all those new wages and tamp down on inflation…
https://cdn.statcdn.com/Infographic/images/normal/21023.jpeg
…which means that maturing Federal debt issued years ago during ZIRP on which the US Govt has been paying effectively 0% now rolls over (cuz it ain’t getting paid off by Congress) and so has to be re-borrowed at Treasury auctions paying 5%. This Is Bad…
https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F29d09ed3-4e88-4441-9c89-c3b3de999d2f_833x496.png
The situation where we are today is roughly right where those arrow heads are in the graph. And to quote the article where I found this graph, “…those two lines are in danger of crossing in the next few years. No society has ever survived that kind of fiscal crisis.”
https://rubino.substack.com/p/welcome-to-the-death-spiral
Well, I’m overstating things by saying “current situation is where the arrowheads are in the graph”. Just because the Fed Funds rate is suddenly 5% instead of 0.1% doesn’t mean that the blended interest rate of all US Govt debt is suddenly 5%. But that blended rate is gonna go up sharply in the months and years to come, and that is a HUGE problem. We gotta refinance 3.5 trillion dollars of formerly 0% debt at new rates over the next 12 months, and another 2.7 trillion dollars of it in 2024-2025…
https://static.seekingalpha.com/uploads/2022/8/6/saupload_image7-3_thumb1.jpg
So hundreds of billions per year in new interest fees we gotta pay is coming in the next 36 months. Good thing China is our buddy and buying all of our Treasury paper instead of dumping it. Oh, wait…
The Fed is shocked (shocked, I say!) that wages have gone up slightly in the face of 30% inflation, so they have to do something about it! Not the high inflation, but the middling wage increase.
I don’t think it will stop at 5%, since that doesn’t stop the inflation train. Great links.
It is quite a feat that They have kept the whole thing afloat for this long but that run is coming to an end.
“Quite a feat” is a magnificent understatement. But the higher the balloon the farther and harder the fall, when it pops.
No doubt some Marine will show up to point out terminal velocity any time now with condescending sneers to the ignorant. Matthew 7:3-5 comes to mind.
Like the Treasury saying they are using “extraordinary measures” to keep the US afloat, and we NEED the Debt Ceiling Raised NOW.
Or members of CONgress(spelling intentional) saying ON Record that a Balanced Budget is Irresponsible.
In answer to “What do we do with our fiat money?” invest in stuff you’ve used in the past TWO YEARS. 2 years stored food with the current rate of price increase and shrinkflation is proving to ab an AWESOME investment.
Worst case scenario, you get to Eat IT.
Buying Gold and Silver assumes (and we all know what that means) that some form of fiat money is still accepted, and you can trade your Gold and Silver for it.
Until Wal-Mart accepts grams of gold for your dozen eggs Gold isn’t really money. It’s a STORAGE of Wealth.
Other things to spend that fiat on, an excellent Chaos Kit so when the window gets broken by “Mostly Peaceful Rioters” you can replace the screen and plastic over the window. My house becomes a drafty mess when a snowstorm and missing windows. Down south biting bugs might be a pain. Extra points if you figure out how to get ALL those shards of glass out of your carpet WITH the Grid Down. Vacuums might not be an option, just saying.
Reevaluate what being “wealthy” is. A healthy, well fed, properly sheltered family is a good start. Having useful skills (not too much coding when the grid is crippled) TRUSTED Friends with skills, tools to USE those skills, materials like seeds and 2X4’s to use those skills. A good relationship with your Creator (as we’ll get to meet Him soon enough) and a dab of luck (as anybody who has been under enemy fire might say, luck or bad luck is real).
Those are wealth when the powerline crews stop going out to repair the grid, when EMS stays home, when a house fire is YOUR PROBLEM. (Maybe a few extra fire extinguishers and properly working smoke detectors?)
Be right with God, have at least one trusted (and tested) friend, find a water source, and keep chickens. The nasty little devils will keep you in eggs and alive, and where I live they range free, need no feed just a night-hutch.
Good comment. I’m thinking small enough rural land footprint that is enough to farm for yourself without being too expensive to purchase and with a low property tax rate. If it does not look like a large commercial operation and you do not go to great pains to generate income from your produce, you should avoid most scrutiny from government anti-farming agencies like the epa and the revenuers. Tiny towns like this are composed of neighbors who are accountable and in reach off everyone in town. getting the tax rates lowered to take the economic collapse into consideration should be possible.
Medium and large scale equipment for keeping such a place running could include a tractor, a sawmill, pickup truck, agricultural tools, welding and metalwork tools, forestry tools, general mechanical tools, woodworking (shop) tools, mechanical advantage and manual tools of all types of actual antique or traditional manufacture that have been mostly replaced by electric tools in the modern era (cordage, blocks/tackles, snatch blocks, chains, come alongs, winches), the list is almost endless.
Good location selection, ongoing situational awareness, and a willingness to interdict threats should keep the window glass from being broken and your gold safe in the gun vault.
Amen, brother Art. And, as I’ve said before, violence is the only thing that will make them see sense. If that even works… well, ok, it works for “us
It cannot continue forever, so it has to end.
“It cannot go on forever…”
Ahhhhh, channeling Herbert Stein.
Nailed it in one.
You gotta break some omelettes to make West South Africa.
Banksters and Bolsheviks have always been comrades and always will be.
Madonna, Puffy Smith and Brandon?
Ol’ Scratch is scraping the bottom of the barrel.
Enjoy what you can while you can the transformation will be even worse.
Make South Africa Undeveloped Again!
Why is the x axis in his graph for years 2001 and 2002? In December 2022 it was reported that he had deleted his twitter account. Was that tweet really from his account or a fake. Sure the economy and markets are probably in for a heap of trouble. We don’t need real or fake twitter accounts to tell us that. The best advice always is the same, get out of and stay out of debt, live simply, store up for bad times, strengthen your relationships here on earth and with God.
It’s real:
https://mobile.twitter.com/michaeljburry
My comment on TBP on “Zero Down” was this –
“I have no problem with that, as long as Pedro & LeRoy get to move in next door to Brian Moynihan or Hugh McColl. Let Pedro feed his goats & LeRoy smoke crack in their front yards of their $3MM+ residences. The Eastover Neighborhood HOA would just love that.”
Yes, they have a right to live next to the elite in gated communities!
. . . “And I feel fine!”
Indeed! There’s enough gloom, we will win.
Buy a company that provides good jobs for people making stuff that other people need? You’re back in the stock market (but less diversified).
— no you’re not in the stock market at all. The stock market has become a giant casino, where prices for companies fluctuate based on computer algorithms reading twitter feeds and headlines. The ownership of stock, and the value of that stock has very little to do with the companies that issue the stock or whatever they nominally do.
Buying a company that actually makes things people want or need, especially locally, provides jobs in your area, which promotes spending in your area, which leads to more jobs and spending, etc. It also provides the thing it was incorporated to provide. That is very different from holding paper tokens with constantly changing values, determined by gamblers and computers.
The classic move that turns fiat into income and wealth is owning income producing properties, whether that means companies or rental properties. They aren’t called the rentier class for nothing. What did monarchies own? Land. The Church? Land. Bill Gates? Land, and MS (which has moved from a sale to a rent model) What did they collect? Rent- either in labor or in some other form of exchange.
Who makes the long term money, the people who own the warehouse or the people that run a business out of it? The plantation owner, or the slaves? Landowners or sharecroppers? Retail investors or the company making the transactions and providing the marketplace?
Building something real, owning something real, has risks in the real world, sure. But owning tokens that have only a relationship to something real doubles the risk, as the value of the tokens can change, and the value of the real thing they relate to can change.
For me, local and concrete beats out distant and abstract. Especially when I have at least SOME control over the thing I own. (yeah, I can’t keep my local tax assessor away, nor can I keep .gov from passing rent controls, but I CAN pick tenants, decide what to spend on the properties, buy insurance to mitigate other physical risks, etc.)
There are other things to spend fiat on besides land and food. What about the tools of your trade? Or the tools of a trade you’d LIKE to pursue? Milling machines, 3D printers, workshops, machine shops, garage shops, maker spaces, equip yourself to make or fix things that you think people will exchange value for.
Or stock up on things you expect to be valuable later. If I had the space, I’d put aside a couple pallets of 3/4 ply, couple pallets of lumber, couple pallets of roofing shingles and paper… Don’t forget a couple cases of nails and screws. Or a portable lumber mill… or a log splitter… there are plenty of physical things that can produce value for you, or reduce your need to give value over to someone else.
you just have to look around and see them.
n
(well pumps, septic system pumps and aerators, water filters- those are a few more that leap to mind…)
Exactly – seek things that are so common that people cannot live without them.
I read somewhere that this was all Trump’s plan or something like that, make US debt unpayable and somehow we just don’t pay it? Not sure that’s how it works.
We can always make money out of gold, and then it will be the most valuable currency in the world . . .
Right about the otties, they’re Pros from Dover with pattern-recognition. They have to be. A lot of them don’t speak.
Far as the world recovering, it won’t, because at some point the curtain must fall and the theater must be demolished for foundational errors. Bible sez that time is now or I wouldn’t be here.
There will be a global physical rejuvenation after Christ sits down, initiating at His Throne in Jerusalem, but that likewise will be temporary — only one day, by heavenly clock. After that whoever remains in God will be relieved of all memories of this world — praise Father for that mercy! — and the righteous will inherit a new heaven and a new Earth. I am not sure what name Earth will be called by that time but maybe God is open to suggestions? You don’t wanna know what I would call it.
Speaking of memories please go easy on the Milk Duds as I retain fond childhood recalls, crisp mornings of Sugar Frosted Flakes, Lucky Charms, Sugar Pops, Sugar Smacks, Cocoa Puffs, Frosted Mini-Wheats, and Trix (little sugar bombs in festive colors). To this repast I dumped half-a-pack of Milk Duds, to add body. ‘Splains a lot don’t it.
I once bit into a Milk Dud and extracted a molar (baby tooth). Most painless one ever.
So there ya go. Turns out Milk Duds is a health-multiplier. Next up: the Wonders of PEZ.
Yo, Chief!
Kind of wiped out the entire title to your earlier WWIII post, didn’t ya?
Makes this one look like one long run-on forever post.
Your English teacher is not amused.
As for the rest:
Everyone who’s anyone has been yelling “SELL!” for months and months.
IOW, “Here Be Dragons”. YOYO.
So long, and thanks for all the fish.
Arable real estate.
With potable water.
Canned goods: both #10, and olive drab.
Medical and functional household necessities.
A means to power, heat and light your digs.
Precious metals.
The means to defend it all.
A like-minded tribe.
Those things last.
The rest are luxuries.
Or vanities.
And in Uncomfortably Close Future, profit and loss statements will be graven on tombstones.
Best Wishes in Uncomfortably Close Future
And in Uncomfortably Close Future, profit and loss statements will be graven on tombstones.
Best Wishes in Uncomfortably Close Future
Very close future RTWT
https://voxday.net/2023/02/09/russias-new-red-lines/
Looks like the DC clown world has succeeded in forcing Putin’s hand.
I’d take a good look at the prime nuclear targets nearby and up wind of your Bug Out place.
Aesop doesn’t have too, he lives in a prime nuclear strike zone. You might be the lucky one.
Ecclesiastes 4: 1Again I looked, and I considered all the oppression taking place under the sun. I saw the tears of the oppressed, and they had no comforter; the power lay in the hands of their oppressors, and there was no comforter. 2So I admired the dead, who had already died, above the living, who are still alive. 3But better than both is he who has not yet existed, who has not seen the evil that is done under the sun.…
Relax, Michael. No one gets out of this life alive.
Unless you already live south of the Equator, dealing with the prospect of nuclear war is a lot like being an EOD tech:
“If something goes wrong, it’s not your problem anymore.” – Master EOD tech
Some of us have families we treasure Aesop.
And that changes what part of the equation when a nuke – or a thousand, give or take – start popping off…?
I have family I treasure.
Machts nix.
Last time I checked, their nuclear shielding value was still zero.
And in no war in human history has the conflict consulted the participants to ask them what was important to them.
Elijah got out alive. So did Enoch. Those are precedents and foreshadows.
In the near future, harpazo will remove the remnant from Earth before the Big Thumping begins.
Ever think of moving your treasured family OFF the X Aesop?
Nurses can work ANYWHERE with a little effort.
Fallout is something to plan for and perhaps give them a chance to survive.
It is coming, and coming soon. I assure you she is amused, though, since she reads these occasionally!
The current situation reminds me of the Carter years. Doom, gloom, double digit interest rates, outrageous home costs, expensive fuel and feckless government officials. Unfortunately, all that needed to be learned about that time is stored in the minds of old people, and the young are too busy wondering about their social media account. To make matters worse, those that are supposed to have the ability to rectify the situation have fiat degrees and an education that wouldn’t have allowed them to pass high school 100 years ago.
Fiat degrees – love it. And you’re right, our civil servants have no idea what they’re doing.
John, I will comment that concerns about the economy seem to be entering more and more of the “normal space” of my acquaintances. That in itself is telling to me that the cracks are indeed widening to the point things can no longer be concealed.
But unreasonable can live for a long time before things break down . . .