Monday, July 30, 2018

A Jedi Mind Trick For Weak Minded Fools

The housing market is cracking again. Fortunately, more rate hikes are "on the way". This is "reflation" after all. There is nothing an old age home won't believe. Except the truth...

Markets don't crash when "everyone" takes their money out of the casino, they crash when everyone puts all of their money INTO the casino. This is all a demographic time bomb. Over the past decades, prognosticators predicted that when the demographic bulge aka. "The Baby Boomers" reached full retirement age and began removing their money from the stock market, it would crash. Unfortunately, there is no need to wait that long, because what is required is not a surfeit of sellers, but an absence of buyers...

2008 and the accompanying eight years of 0% interest rates should have been the warning call that the entire developed world had become Japan: Too much supply chasing too little demand, amid non-stop deflation.

What "reflation" abides now is merely a serial Jedi Mind Trick meant to con the old age home into believing everything is going to be "great again". Propagated with cheap government debt. Getting past the 24x7 sound and fury signifying Trump, all #MAGA represents is a fiscal vacation from responsibility at the end of the cycle. A willingness to expand the deficit to asinine proportions, by way of proving that we are now successfully borrowing our way to prosperity.  

Japan's debt as a % of GDP has grown 500% in the past 25 years. From 40% of GDP, to 200% of GDP - the largest in the entire world on a relative basis, without any comparison:

Here we see the damaged inflicted on the U.S. debt by the last round of Supply Side Ponzinomics under George W. Bush. From 2000 to 2009, the debt more than doubled on an absolute basis and almost doubled even on a relative basis, as % of GDP:

Now we see under Trump, that capture by an old age home has become the major political issue facing the entire developed world. 

The only real question on the table, is do we remain locked in an insane asylum run by aging idiots? Young voters didn't skip this past election because of Trump - they didn't show up because of Clinton. Neither party represents anyone under the age of 65 anymore.

I read one article recently whereby an aging cynic accidentally told the truth - he said that by skipping this past election, the youth gave the elderly a green light to bankrupt them with tax cuts paid for with inter-generational plundering. In other words, it was their fault for not showing up to pull the slot machine handle to vote for geriatric party #1 of status quo, or geriatric party #2 of level '11' status quo. Wow, hard to argue with that logic.

The problem is that you can't vote for a revolution at the polling booth.   

All we have on "our" side is a ticking time bomb and an Idiocracy that bought this latest Jedi Mind Trick with both hands. Let's hope it's enough. 

I am betting it will go a long way towards shedding complacency.

Speaking of which, it appears that amid non-stop bickering, that the cyclical rot has spread back into the housing market. I would like to see how bidding up Go Daddy is going to fix that problem. 

"Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch."

Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months. Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values"

"Realtors blame it squarely on a lack of homes for sale"

The bar keeps getting lower, and lower, and lower...

"Then the U.S. ran out of land"