Wednesday, March 21, 2018

Terminating The Idiocracy. For Good...

Colliding level '11' fiscal and monetary policy are imploding the status quo in real-time, while even the slightest rearrangement of deck chairs on the Titanic is deleterious to record profit margins, and hence share price. We are one sadly missed bailout away from blowing this exploitation scheme sky high. 

Deja vu of 2007, they can't see it coming: There are houses to be sold, cars to be sold, junk IPOs to be sold. Even in the face of rank stupidity, you have to keep dancing until the music stops. 

Time Magazine: July 2007: 
Citgroup's CEO Wants To Ignore Subprime. Can You Blame Him?

"You have to dance while the music is playing" - Citigroup CEO, 2007

Like Japan for the past several decades, the entire world is now pretending that the abnormal is the new normal:

"Countries around the world should get used to pattern of unfamiliar inflation, growth, monetary policies and asset prices"

However, I'm here to say that the new abnormal is not as politically stable as the Idiocracy desperately needs to believe. First off, some history for those who've been checking out aliens and UFOs on the History Channel: The reason why Republicans had to go further and further to the right for the past forty years is because there was nowhere else to go that would boost share price. The "liberal" economic agenda at this latent stage consists of balanced trade, a living wage, and solvent retirement benefits - basically a return to 1950s Eisenhower-Republican policy. 

In other words any structural change to the status quo is now deleterious to stock price. For example, tariffs, trade wars, higher taxes on internet firms etc.:

And yet despite this non-stop rampage to the right for forty years, Zerohedge has no shortage of idiots on speed dial willing to explain the extreme dangers posed by a move back to the center, and the attendant risks of putting money in the hands of people who actually deserve it. Of course, if these proven dullards could remember as far back as 2008, they would recall that sans bailout, their utopian exploitation scheme consisting of socialism for the rich, would have already been obliterated.

What I'm trying to say, is that the U.S. is now Japan, but with an "Austrian" twist:

Since 1990, Japan has experienced:

Relentless deflation
Relentlessly falling bond yields, now at 0%
Over-reliance on fiscal and monetary stimulus
Serial asset bubbles
Zero structural reform
An aging Idiocracy desperate to believe "this time is different"

Sound familiar?

The key differences between the U.S. and Japan, is that the Japanese people no longer trust the stock market, because they've learned the hard way that being encouraged to go ALL IN in at the top, is a recipe for 50%+ haircut every time.

The other key difference is the fact that the U.S. practices reverse socialism, meaning bailouts for the wealthy and extreme poverty for everyone else. I would suggest that the U.S. version of Idiocracy-o-nomics will not prove to be as stable as what Japan has experienced. 

But let's give it another try.