What went wrong? That's the question archaeologists will ask. It's a question that is assiduously avoided by today's de facto Idiocracy. This inherited belief in God given exceptionalism has made this society fat, dumb, and lazy. Denialist ignorance is the path of least resistance, bounding down the continual descent into squalor.
The 100 year storm flooded our basement this week so I spent the past several days fixing the damage and improving the drainage before Noah starts loading the animals onto the Ark for the next round. I am under no illusion that this was a "one time event". Half this country is currently under extreme drought and the other half is under water. Large tracts of housing are now blighted and permanently uninsurable. The square footage per person of U.S. homes doubled in the past fifty years while the population doubled as well. Third grade math indicates the unsustainability of this mass consumption orgy. You don't have to be a genius to figure out "what changed".
Afghanistan is another major example of never ending denialism. Biden should have never attempted to pull out of that country which collapsed like a cheap tent. Held up all these years only by a continuous flow of foreign aid and the permanent U.S. presence. What was he thinking? There was no upside to decisive action. Talk constantly and do nothing, that is the new American way. Now he is receiving the full wrath of two decades of collapsed hubris. He made all of today's "experts" look like the idiots they've been all along. His presidency blighted by honesty.
Which gets me to this ongoing COVID debacle which is being managed in the worst way possible. Half the country that is vaccinated is in a constant state of hysteria over the virus. The other half of the country is unvaccinated and pretending the virus doesn't exist. One side is racing into the virtual reality of the future and the other side is clinging to the blighted past.
One wonders, would so many of these yuppies be enthralled by night after night of COVID hysteria on CNN if it wasn't conducive to a permanent work from home situation? As we got closer to the end of the summer and the dreaded return to the office, back came the masks and the calls for "responsibility". Make no mistake, this is a yuppy paradise - untold numbers of marginally attached gig workers are now attending their every whim while they get rich in the markets sitting at home. We don't need arrays of tall downtown skyscrapers anymore, the iPhone is the new office.
To date, the 100 year storm has yet to reach the placid shores of these central bank managed Disney markets, but it's only a matter of time before the cars are floating down Wall Street as well.
Going into the Labor Day long weekend, the Nasdaq is six months overbought (lower pane), and the beloved virtual economy is tracing out an identical pattern to the February top:
Cyclicals are getting monkey hammered this week, while positioning (lower pane) remains at extremes. JP Morgan put out a note this week saying that retail investor inflows remain at a record high in August.
Chinese stocks have enjoyed a nice bounce, but now we learn that the most leveraged company on the planet is on the verge of default. Investors are assuming the Chinese government will organize a bailout, but given the theme of "Common Prosperity", it's far from a sure bet.
It appears that unlike the U.S. where inequality is the new beloved business model, the Chinese are getting serious about the problem.
"Common prosperity" as an idea is not new in China, but a sharp escalation in official rhetoric and a crackdown on excesses in industries including technology and private tuition has rattled investors in the world's second-largest economy"
Does common prosperity include bailouts for the rich? If it doesn't, then inequality is going to get fixed sooner rather than later.
Ironically, due to the implosion of the real estate sector, Chinese speculators are now speculating in stocks at volumes not seen since the crash of 2015.
"On Wednesday, trading volume in the Shanghai composite was the highest since July 2015, the summer China’s stock market crashed amid high speculation."
Markets should be prepared for what could be a much worse-than-expected growth slowdown, more loan and bond defaults, and potential stock market turmoil"
Or not.
Conversely, the U.S. approach to fixing inequality is to continue to dump insane amount of junk stocks into an extreme overbought market, thus allowing insiders to cash out at public expense.
"The IPO market has already had its busiest year since the internet bubble in 2000"
"After-market performance (the performance after the first day of trading) for IPOs was negative for most of this year. An investor who put money into an IPO after the first day of trading, on average, lost money"
In summary, the question on the table is will human history's biggest pump and dump continue into this Fall and therefore keep the yuppy dream alive?
Or will inconvenient reality burst their bubble?
My prediction is that the inequality reduction will begin overnight in a widely ignored time zone.
