“Oooh! Ahhh! That’s how it always starts. Then later there’s running and screaming.” – Lost World: Jurassic Park
What do you call a swimsuit a girl wears to an animal park? A Zookini.
One time, Pa Wilder told me he had been interested in buying Sears® stock in the early 1980s. In addition to growing, it also paid a nice dividend. He’d calculated that the dividend from the stock would have paid for the stock, and he could have sold it in the 1990s and been dollars ahead. He didn’t. Ma Wilder flatly refused. She didn’t like stocks during the day, and I know she would have hated bitcoin in the evening. I’m sure it would have been her crypto-night.
Ma’s philosophy was that hope isn’t your friend when it comes to most things in life. And especially the stock market. The stock market is really built on hope. Many stocks have projected growth “priced-in”. This means that they sometimes sell for many times their projected earnings.
Since 2008, the Federal Reserve® and the Treasury have done absolutely everything that they can to keep the prices of stocks up. The biggest thing they did was to cut interest rates to zero, on everything but dirt. On dirt, the Fed™ charges high-interest rates – I guess you could call them loam sharks.
In one sense, interest rates serve as an alternative to buying stocks. If I can park my money in Treasury bonds and make a few percent (essentially keeping up with inflation) then that’s a stable investment. Horses hate that as well – they often can’t invest because they don’t have a stable income.
I named my horse Mayo. Sometimes, Mayo neighs.
But when the interest rate is zero, the government is printing cash as fast as it can, investments are pushed toward stocks, and more and more cash piles in.
This makes the investments silly, as more and more cash chases revenues. In a world filled with eternal hyper-growth, this works. But that world doesn’t exist, so essentially the stock market becomes a Ponzi scheme or a cargo cult of prosperity.
It’s good if you get out on time. You get the upside of growth. You can get dollars out of the market that you can buy things with. Like me, I blew all my stock market gains on a limo without a driver. Spent is all and nothing to chauffeur it.
But eventually? The market falls.
Sorry if that joke didn’t land well.
Normally, that’s healthy. Falling markets weed out weak and bad companies. Falling markets are actually healthy since they clear out the junk. On top of that, CEOs will never be worthless, since there is a pretty healthy market for slightly used internal organs.
We live in a world, however, where the markets have been aggressively managed. The idea of a recession is scarier to a politician in office than almost anything. People without jobs look for someone to blame, and politicians will do anything to avoid blame. Heck, Joe Biden would do whatever he could to set Hunter up for life, that is if Joe was ever tried for murder.
The result is that the economic policy is aggressively tied to growth, regardless of the consequences. It’s like trying to keep a party going long after everyone should have gone home. The best way to do that? Switch from beer to wine. When people start to lag? Swap out to vodka. Then, for a final shot? Pure grain alcohol. Sure, that sounds like Nancy Pelosi’s breakfast routine, but when you’re trying to run an economy like Pelosi’s daily frat party, eventually it has to stop.
And the longer you’ve been drinking? The worse the inevitable hangover.
Did you know Helen Keller had a cat? Neither did she.
That’s where we are. The booze has been pulled away from the table. At some point, I’m certain, that the Fed® will run out of tricks to keep the party going – even they have a limited supply of cocaine, especially since Johnny Depp found the spare key they keep under the mat.
I’ve been wrong before. Perhaps the party isn’t over at this point. Perhaps there’s some adrenaline that they can inject in the eye socket of the economy to keep it dancing a few more years. Biden would love to kick the can down the road and have it keep going until at least 2024. I mean, he’d love that if he knew what day of the week it was.
But every party has an ending. And as long as this one has been going, it will be bad.
We never really paid for the party in 2008. Sure, the Great Recession was bad, but the housing bubble never really cleared. How can I tell? It happened again.
Right now the average rent in the country (I read in some disreputable source) is $1,800 a month. I’d say housing prices were so high that NASA put them there, but NASA can’t put anything nearly that high. If people didn’t learn the housing bubble lesson, the housing bubble never really popped.
I hear NASA wants the next person on the Moon to be a woman – so dinner will be ready when the men get back there.
The housing bubble pops when people start buying houses again – not as investments, but as places to live. The stock market bubble pops the same way – when most people don’t want to buy stocks.
And from May, 2022, there’s a lot of pain left before that happens. The way the stock bubble ends is with utter capitulation, with people being so disgusted that they ever thought that stocks were the road to riches.
Only when people stop thinking that houses and stocks are magic money machines, will it be over.
The reason Ma Wilder wouldn’t let Pa buy the Sears© stock is that she had seen the aftermath of the Great Depression, and had seen stock speculation ruin the lives of many, many people.
When we get there, we’ll know it’s over. Will it be this year? In five years? In ten?
Being a waiter might not be a glamorous job, but at least it puts food on the table.
I don’t know. But I feel the combination of debt, inflation, and the generally fragmented nature of society will bring crisis. The good news?
It’s still a beautiful night, and I think someone left a beer in the cooler.
A wise friend of mine would often reply to folks at work expressing hope with the following: “Hope is just the postponement of disappointment.” and then walk away. He works for the State Gov’t now.
Ha! That’s a great line. I’ll have to steal it.
We are used to better swimsuit photos than that from you.
Personally, I am 100% OK with seeing any real woman. Here’s where I draw the line.
https://www.vogue.com/article/sports-illustrated-swim-2021-leyna-bloom-history-making-cover-star
Ah, clownworld:
It just felt so seminal yet sexy,”
Rule of maximum hilarity strikes again.
I’m used to better swimsuit photos from Sports Illustrated . . . 🙂
“The housing bubble pops when people start buying houses again – not as investments, but as places to live.”
The boat of “home ownership” has sailed. There are deeper levels of housing hell yet to come. Behold the future.
https://www.moving.com/tips/pod-living-what-it-is-and-why-its-booming/
https://www.waff.com/2022/05/03/pod-living-sees-14-people-living-one-home-cheaper-rent/
Forget apartment renting. It’s getting harder and harder to find good, clean apartments. Just check out the latest episode of Better Call Saul and you’ll see what I mean.
Yeah, that hardwood is gonna be tough to clean. Did you see that the picture was still in Saul’s home when the FBI was cleaning it out?
Boarding houses used to be a thing
The mammoth in the room is who you’re sharing that pod with and how likely they are not to set fire to the place when you’re asleep, because everyone in it is too [fill in the ISM] or Allah or Satan or the voices in their head told them to.
Because we all know that discrimination is not allowed…
John, the only way out of this mess is a good old fashioned replay of the late 70s-early 80s. This time we won’t see 18% rates; 3-4% will do the trick. And I’ll slide back into the REO maintenance biz like I did in 2007.
BTW, the SI cover shows true inflation when compared to ones from 20 years ago.
Coming soon to a country near you – or there won’t be a country . . .
One of the worst things that happened was that in the prior housing bubble and banking crisis the government bailed them out. That created two problems, one it taught financial firms that if they eff up again, there will be more bailouts and two, it meant that people didn’t feel the sting as badly as they should have so they didn’t learn any lessons. People like my grandparents who lived through the stock market crash, Depression and World War II? They understood what people today don’t seem to get. Now everyone thinks the ride never ends and that cheap credit will always be there. When this crash comes? It is going to be ugly. Anyone who has seen a spoiled child suddenly denied something knows what happens next, but when it is 300 million people instead of a 4 year old in Walmart? Bad things man. Bad things.
Yup, more booze to the party. And that’s where the hangover gets really bad.
As I seen posted elsewhere: “Buy more ammo.”
To make things worse, the inflated prices allowed inflated tax roles. Of course, the taxing entities will find it hard to continue appraising at the higher prices and will raise taxes as high as law allows. That will be a hard pill to swallow for someone that tied up their money in property that won’t sell. To increase the downhill slide, if they’re too far underwater, they may find auction prices with the tax bill removed, don’t satisfy the debt.
Yup, a bubble in revenue, followed by a fall. Same with sales tax.
The biggest lesson I learned from the movie “The Big Short” (I HIGHLY recommend it)?
Forget normal indicators that the bubble is over. It won’t end until the Big Boys – the guys that started and regulated the bubble – get THEIR money out.
So, don’t delay unnecessarily in getting your money out, but also, don’t panic. You should be good selling your investments this summer. The Crooked Elite will make things LOOK good that long, so they can quietly sell their holdings.
After that, all bets are off.
Yup. Makes me wonder about Black Rock and the houses they’re buying – harder to monetize.
We loved the Sears lingerie section as little guys and grammaw knew what was up when we went to the bathroom with the catalog.
Mexican trannys, dementia dotards and chimpy Kenyans just don’t scare me.
Keep those Moriarity waves off of your surf.
The Grand Old Politburo/CPUSA Üniparty uber Alles cannot create anything so they get busy destroying.
They laugh at CivNat horseshit and will carpetbag on over to some other looting platform after they burn it all down better.
Cold steel for an Iron Age as it is the only thing that you can trust.
Yup – that’s all commies do. Had a conversation with a Lefty – Me: “Since commies can’t create anything, should you guys wait to take over until the capitalists solve the problems you don’t like?:
Him: “Probably.”
Is it just coincidence, or my imagination, or did the stock market slide begin when ethics regulators stopped Fed board members from trading?
Must be a coincidence . . . 🙂
In the early days of my enlightenment, I believed that “bad guys” drove stock markets up and the “good guys” were trying to bring it back down to reality. Of course I later realized it was the same people doing both. Since they control the markets, essentially a price rigging scheme, they make money on the trip up, sell at the top they created, drive it down by selling, buy at the bottom, and drive it back up. Rinse and repeat, make money on both trips. What keeps the bubble afloat is Normie believing their 401k manager is doing the same. Hint: They’re not.
The question I use in an attempt to awaken Normie is this one: You have $100 in 20 dollar bills and you lose it on Friday. On the following Tuesday, you find $40 in the dryer after laundry. Are you up $40 or down $60? You wouldn’t believe the number of people that say “Up $40!” Found money is always seen as a gain even after obvious losses. Personally, I believe the cities will be in flames, bread will be $200 a loaf, but the machines will be driving the markets to new daily highs
I think that *probably* that there’s enough normie participation to swing the market, but when you look at the games the Fed has been playing . . . maybe not.
Really like your blog. Don’t like seeing fat chicks wearing ANYTHING, but especially, bikinis. They’re all over the tv now, and you see these hippos cavorting around in skin tight whatever constantly, supposedly demonstrating that they’re “ok”. They’re about as attractive as a train wreck in a leper colony, and I ain’t changing my mind. So, please, save the whale photos.
If it was a dude, it would be a shave the whale photo?