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What's the Real Meaning of the Stock Market Swoon? October 29, 2018 Nobody dares discuss it openly for fear of triggering a panic, but there aren't enough lifeboats for everyone.
There's no shortage of explanations on the whys and wherefores of the US stock market's recent swoon / swan-dive / plummet. Here's a few of the many credible explanations: -- the economy has reached peak earnings so there's no fundamentals-driven upside left; -- bond yields are now high enough to dampen enthusiasm for inherently risky stocks; -- central banks curtailing / ending their quantitative easing programs have reduced liquidity in the financial system; -- US markets are catching up to the rest of the world's market slump; -- the US market is overvalued by just about any measure; -- uncertainty about the mid-term election; -- corporations had to limit their stock buy-backs in the pre-earnings season blackout; -- smart money has been selling all year, and this finally overwhelmed dumb money buying the dips; -- low volatility begets high volatility; -- key technical supports were broken like toothpicks; -- the increasing probability that trade wars will actually start impacting corporate bottom lines; -- market punters peering into the future saw higher rates, and decided to dump stocks now rather than later; -- the market is discounting the coming recession; -- complicated currency / FX reserves dynamics, mostly involving China's attempts to control its currency while propping up its domestic credit bubble and tightening the screws on capital flows. Whew. Got all that?
My explanation is much more simple: the status quo is fragile, and everyone's grip on the crumbling cliff-edge of "prosperity" is precarious--and we all sense it. The security we all took for granted is turning to sand as the system breaks down. Job security--you're joking, right? Pension security--you take us for chumps? Sure, your bank account is guaranteed by the FDIC, but nobody's guaranteeing your income, your purchasing power or the security of your grasp on the good life. Everyone knows the markets are as precarious as the rest of the status quo, and the rational response is to limit exposure to risk by selling at the first signs that the herd is nervous. Switching metaphors, we all know the global economy scraped alongside an iceberg in 2008, and those who look beneath the reassuring rah-rah know that the hull of the global economy was sliced open just like the Titanic's. Central banks have created the illusion that the damage was limited by printing money and using the freshly created currency to buy bonds and stocks to prop up the markets. But even the passengers who accept the authorities' reassurances sense something is wrong with the ship. The bow is slowly sinking, the engines are straining to power the pumps, the First Class passengers are either already in lifeboats or huddling nervously by the davits, and the ship's officers are openly wielding pistols to control panic. Nobody dares discuss it openly for fear of triggering a panic, but there aren't enough lifeboats for everyone. A great many passengers are going to find themselves in the icy waters when the great global economic ship finally founders, and humanity's finely tuned instinct is alerting us to the restless nervousness of the herd. This particular near-stampede may well be calmed down, and naysayers punished by a monumental rip-your-face-off rally to new highs, just to settle any doubts that the great ship isn't sinking. Rather, the party on the first class deck is just getting started, and a few bottles of champagne might make it down to the 2nd class deck or even to a lucky few in steerage. But despite all the reassurances and rallies, we all sense the fragility and precariousness. No wonder the first hint of trouble triggers a stampede.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.
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This is the most important book I have written. It started when I asked myself a question: when we dream of the future of our society, are we hoping for the right things? The current conventional-wisdom view of our soon-to-be future is rose-tinted: automation will free millions of people from the drudgery of work, then by taxing the robots doing all the work, we can pay everyone Universal Basic Income (UBI), enabling a life of leisure and artistic pursuit for all. The result: A future of Universal Happiness. But is this accurate? Is this what UBI is actually capable of doing? More importantly, is this what we want? And even more importantly: will this “future” be our best future? Will it account for and manage the practicalities of work, money and automation, given the limits of endless growth on a finite planet? Money and Work Unchained drags the now-popular concept of Universal Basic Income (UBI) from the shadows of Pundit blather into a harsh, illuminating light, and in doing so presents an entirely new view of the future that upends our conventional, foundational, understanding of work and money. This book lays out a practical pathway that realigns work, money and human fulfillment into a sustainable system that sheds the inequalities and injustices of the status quo in favor of a human-scale way of living. And – it gives us a future to truly hope for. Kindle ebook $9.95, print $20)
Recent entries: What's the Real Meaning of the Stock Market Swoon? October 29, 2018 Shadow Banning Is Just the Tip of the Iceberg: We're All Digital Ghosts Now October 27, 2018 Globalization Has Hollowed Out Rural America October 26, 2018 America's Social Depression Is Accelerating October 24, 2018 The Coming Inflation Threat October 22, 2018 Mutiny, Class, Authority and Respect October 21, 2018 China's Next Revolution Is on the Horizon October 19, 2018 Is the Greatest Bull Market Ever Finally Ending? (Hint: Follow the Money) October 17, 2018 How Many Households Qualify as Middle Class? October 15, 2018 Here's Why the Next Recession Will Spiral Into a Depression October 12, 2018 The Distortions of Doom Part 2: The Fatal Flaws of Reserve Currencies October 10, 2018 The Global Distortions of Doom Part 1: Hyper-Indebted Zombie Corporations October 8, 2018 The Dynamics of Decadence October 5, 2018 Pensions Now Depend on Bubbles Never Popping (But All Bubbles Pop) October 3, 2018
The Labor Shortage Is Real
October 1, 2018
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"There is no security on this earth; there is only opportunity." (Douglas MacArthur) "We are what we repeatedly do." (Aristotle) "Do the thing and you shall have the power." (Ralph Waldo Emerson) "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction." (E.F. Schumacher, via Tom R.) "He who will not risk cannot win." (John Paul Jones) "When we drink coffee, ideas march in like the army." (Honore de Balzac) "Progress is not possible without deviation." (Frank Zappa, via Richard Metzger) "Victory favors those who take pains." (amat victoria curam) "The man who has a garden and a library has everything." (Cicero, via Lee Bentley) "A healthy homecooked family meal and a home garden are revolutionary acts." (CHS) "Do you know what amazes me more than anything else? The impotence of force to organize anything." (Napoleon Bonaparte) "The way of the Tao is reversal" Or "Reversal is the movement of Tao." (Lao Tzu) "Chance favours the prepared mind." (Louis Pasteur) "Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill) "Where there is ruin, there is hope for treasures." (Rumi) "The realm of gratitude is boundless." (CHS, 11/25/15) "History doesn't have a reverse gear." (CHS, 12/22/15) Smith's Law of Conservation of Risk: Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some consequences will be intended, some will not. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences. (July 8, 2014)(thanks to Lew G. for retitling the idea.) Smith's Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only. The Smith Corollary to Metcalfe's Law (The Network Effect): the value of the network is created not just by the number of connected devices/users but by the value of the information and knowledge shared by users in sub-networks and in the entire network. (CHS, 4/6/16) My Credo of Liberation: I no longer care if the power centers of our society--the distant, fortified castles of our financial feudal system--are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests. (Thank you, Klaus-Peter L., for reminding me) "We've become a culture of excuses rather than solutions: solutions always require sustained effort and discipline." (CHS 4/9/16) "Fraud as a way of life caters an extravagant banquet of consequences." (CHS 4/14/16) "Creativity = problem solving = value creation." (CHS 6/4/16) "Truth is powerful because it is the core dynamic of solving problems." (CHS 7/21/17) "We live in a system of human emotions that masquerades as a science (economics)." (CHS 1/1/18) "Always remember, your focus determines your reality." George Lucas "Diversity is for poor people. Sameness is for the successful." GFB |
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