Thursday, July 5, 2018

The Scylla And Charybdis of Dumb And Dumber

What follows will be a Brown Swan event: the undesirable consequence of having one's head up their own ass when the world implodes. After decades of outsourcing, the irony that a labor shortage caused by mass layoffs would implode this gong show, can't be overlooked...

What Trump is attempting to accomplish is to rearrange Globalization in mid-air. It won't work. The economic benefits are lagged by years, the capital impacts are overnight. The Fed is doing their part to assist:

As I wrote in my treatise on economic failure, 50 years under a reserve currency has given rise to a dead-end economic orthodoxy predicated upon the unfounded belief in unlimited trade and fiscal deficits. Meanwhile, the real price that was paid was in jobs and industries. Modern economic theory is 100% shite. The U.S. Economics establishment will be historically lambasted for pioneering Disneyland economics. The "American way" of hiring in one door while firing out the other, has reached its inevitable failed ending.  

As I also wrote, this era witnessed the ascendancy of capital at the expense of labour. A diametric zero sum trade-off via industrial arbitrage, brokered by debt. Rebalancing this fiasco in the other direction, is now fraught with "re-pricing" risk:

Supply Side economics effectively destroyed the U.S. labor market, now featuring a surfeit of low paying part-time McJobs. Labor participation rates are at generational lows across EVERY demographic. Which is a function of jobs and careers being serially terminated long before retirement, over and over again. This was attended by the rise of the underground subsistence economy, as the long-term unemployed abandoned the formal workplace.

Now of course, employers are complaining that they can't find workers with the right skills. There is a colossal pool of long-term unemployed workers who are mismatched with today's skill requirements. Worse yet, those who attempt to make their way back into the job market are often considered "over-qualified" to take a humbling step down in position, since many were in managerial roles previously. Employers won't hire them because they assume the new hires won't stay in their jobs very long before seeking a better one.

The solution is clearly more immigration. It's worked great so far. 

Only a true idiot would post this kind of crap:

"The economy has "bumped against the proverbial labor wall," David Rosenberg, chief economist and strategist at Gluskin Sheff, said in his morning note Thursday. "Inflation pressures will intensify and the Fed will be forced to act more aggressively"

Activity Rate: 
"a measure of the degree of success of the economy in engaging the population in some form of production"

One part they got right:

In summary, the level of economic ignorance at this juncture is staggering. Today's EconoDunces are watching in real-time as Trump repudiates every aspect of Supply Side orthodoxy this side of his asinine tax cut. The tax cut itself merely serves to pour gasoline on an end-of-cycle bonfire as the "tight labor supply" - consisting of half the available workforce - keeps the Fed's pedal to the metal path of double tightening. Global capital markets are getting double teamed by trade wars and rising interest rates. All the consequence of long-term Voodoo Economic failure. Whether the Fed lets inflation rise unchecked or keeps tightening, the outcome they alluded to is the exact same. 

Only sheer ignorance and arrogance prevents today's thought dealers from comprehending what is happening to capital markets in real-time. Everything they've believed for decades is now burning in effigy.    

“This is the greatest number of months with outflows for a year since 2008, and we are only halfway through 2018”

International IPO ETF (red)