Product margins are skinny and technology has taken away the asymmetric knowledge advantage dealerships once had. So, once a customer falls in love with their new pride and joy, the hapless customer is sent to The Box.
The Fed v. Covid-19
All this weakness has something to do with coronavirus, in the eyes of socionomists. In the March issue of The Socionomist, with the cover devoted to the virus, Matt Lambert and Mark Galasiewski quote Robert Prechter, “disease sometimes plays a prominent role in major corrective periods.”
Shhhh: Repo Operation in Process
A few folks are aware of the repo tantrum which occurred last September. Overnite rates for money secured by US debt popped to ten percent, signaling at least a financial plumbing problem or a collateral crisis, due to the financial mandarins trying to sneak away from the party with $100 billion that was in the Fed’s bottomless punch bowl.
In Praise of Tanker Men
So where the state has failed, private enterprise has stepped into the breach. Profits will make that happen. High cost makes customers more careful with how much they use. Nobody is wasting water in Kathmandu. “Before, I didn’t think about how often I could shower or when I can clean the house,” said Laxmi Magar, a housewife and mother of six. “But now that water is so expensive I watch every drop.”
Housing Rollover
To refresh our memories, Jurow says, “2006 was just insane. 320 billion dollars taken out in cash just in that year, and boy, the debt helped the economy continue, even though things were showing signs of real problems.”
The Coming Ice Age
And while CO2 concentrations have increased, causing Ms. Thornberg to lose sleep, “one cannot help but notice that a large part of the warming trend over the last 120 years took place prior to 1950, a period where CO2 concentrations in the earth’s atmosphere remained relatively low,” wrote the natural resource investing pair.
Hustlers' High Time Preference Does Them In
“Hustlers” cost $20 million to make and is closing in on $100 million in box office receipts world-wide after only a couple weeks of showings. There was a healthy Friday night crowd at a local theater when I saw the film, with the audience 80-90 percent female. It was a girls' night out to see JLo and company drain the credit cards of Wall Street A-holes--pre and post 2008 financial meltdown.
More Financial Doom on the Way
His simple conclusion is “Runaway private debt and the resulting overcapacity does a better job than any other variable in explaining and predicting financial crises.” The author’s only mention of business cycle theory is to give a hat tip to Hyman Minsky’s devolution of loan quality during the boom phase from “hedge” to “speculative” to “Ponzi.”
The Creator of the Trump Presidency.
Since Ailes’s passing in 2017, Fox has still been Trump TV, but lately, the network hasn’t been Trump enough for the President, who recently tweeted “We have to start looking for a new News Outlet. Fox isn’t working for us anymore!”
Tariffs Add to China's Banking Bust
China’s banks hold $30 trillion in deposits according to Alexander Campbell, more or less double the amount of aggregated U.S. bank deposits. Campbell was pitching Alex Rosenberg on Real Vision on his thesis of buying gold in Yuan terms with the idea that bank bailouts take a flood of central bank created fiat money to paper over. So while the Chinese may want to keep the Yuan near the 7 to the dollar range, bank busts are just beginning in China and 7 may become a distant memory.
White Collar Welfare
Her account, “Washington Siren: A Woman’s journey through scathing scandals, lies, and secrets inside the FDIC, HUD, IRS and other agencies, with a love story that survives it all.” written, for some reason in the 3rd person, chronicles O’Toole’s long career of Sisyphean frustration with government bureaucracy.
Attack of the Killer BBBs
Roughly $1 trillion in BBB debt is in just five companies plus the shale industry. The five are household names: AT&T, Ford, General Motors, General Electric, and Dell.
Jerome Powell’s January hawk-to-dove pivot is now understandable. He can’t afford for the bonds of Blue Chip names to tip into junk land where buyers will be few and far between.
"Regulating" Boom and Bust
After IndyMac, Bovenzi points out over 400 banks would fail over the next four years. Why is it when one bank fails, despite FDIC insurance and other government interference, numerous other institutions often go bust?
Bookmaker With the Mind of Mencken
The Sharps, dedicated to making money, show up and bet against the line when it appears fresh and ripe for the picking. The Squares bet the picked over and massaged point spreads and odds with their hearts on their sleeves.
A Fighting Chance with Jr. Mining Shares
Parking shiny coins in a safe deposit box may not provide the excitement that FAANG investors are used to. For those with a strong stomach speculating in junior mining shares provides maximum leverage to gold’s price--up and down. For the past decade, it’s been mostly down and painful.
Society is not just for Socialists
Ludwig von Mises explained, “Society is division and association of labor. In the final analysis, there is no conflict of interest between society and the individual, as everyone can pursue his interest more efficiently in society than in isolation.
The Fed Has Lost Control
A year ago, it was tighten, tighten, tighten, now three rate cuts are expected by the market by year-end. Gromen told Harrison that Trump’s tariffs matter some, but, it’s the deficits that really matter and are forcing the Fed’s hand.
Navigating Booms and Busts
Boom times cause lenders to first make more and more speculative financing, and then graduate to Ponzi finance before it all comes crashing down. The author quotes Minsky. “Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is a large weight of units engaged in speculative and Ponzi finance.”
Financial Markets: What Could Go Wrong?
The U.S. and EU banks are enormously intertwined, particularly in terms of funding and derivatives. Corporate debt has exploded and the bond market is only liquid in one direction. Zero interest rates have pushed pension plans to the brink of insolvency, even with a bull market.
The Battle for Sound Money
Elvira’s gold buying makes me think she has read Saifedean Ammous’s “The Bitcoin Standard: The Decentralized Alternative to Central Banking.” Don’t let the title fool you. This book is not the cover-to-cover crypto cheerleading/gold bashing other authors attempt to jam down our throats. Dr. Ammous Is actually a Professor of Economics, and none other than “Black Swan” author Nassim Taleb wrote the introduction.