Wednesday, August 12, 2020

Could Wall Street Lose the Election?

Two simple regulations would drive a stake through Wall Street's corrupt, evil heart.
While the corporate media is focused on the presidential election, perhaps the more interesting question is: could Wall Street Lose the election? That is, could Wall Street face potentially fatal restrictions regardless of who wins?
If this seems farfetched, consider the history of abrupt social-political-financial turn-arounds that surprised the mainstream. Off the top of my head I would point to Big Tobacco and environmental controls on Big Industry.
For decades, Big Tobacco was politically invulnerable. Big Tobacco greased the political machinery with huge contributions to politicos and massive lobbying campaigns to deny the self-evident reality that smoking was hazardous to human health.
Every effort to change this political dominance was thwarted with ease--and then suddenly, Big Tobacco fell out of favor. Politicians who had collected millions of dollars in Big Tobacco bribes--oops, I mean campaign contributions--without any blowback were suddenly in the spotlight as enablers of an industry that had remorselessly killed millions of its customers while claiming that tobacco's health effects were still a matter of debate and/or choice.
Practically overnight the political walls protecting Big Tobacco crumbled as all the lies and political complicity that had long been accepted as "normal" were denormalized.
Big Industry encountered little political resistance to its decades-long dumping of industrial waste into the nation's waterways and air until 1970. Images of American rivers catching fire changed public perceptions and eventually even Big-Business-friendly Republicans supported environmental regulations that cost Big Industry tens of billions of dollars in new costs.
Turning our attention to hitherto invulnerable Wall Street: the masses are awakening to what insiders have known all along: Wall Street is nothing but a skimming machine for insiders, and this is generating a fulsome hatred of Wall Street, Big Tech monopolies and the billionaires who've added half a trillion dollars in wealth in the current stock market rally while the rest of America crumbles.
When the political winds shift decisively, both parties quickly sense the change in weather. When social-economic tides change, politicos understand they face a binary choice--either get on board or cling to the past and lose elections.
If the cultural tides have shifted against Wall Street and its politically protected skims and scams, every politico will have to get on board in one way or another, or they'll be left behind. When the social tide shifted, politicos threw Big Tobacco and Big Industry overboard without hesitation.
Two simple regulations would drive a stake through Wall Street's corrupt, evil heart:
1. A substantial tax on every single transaction of any kind, whether it's on an exchange or off-exchange, and most importantly, whether the bid for a transaction was executed or not. This would kill high-frequency trading (HFT) and various other front-running games (spoofing the system with bids that are withdrawn in milliseconds, etc.).
A transaction tax wouldn't affect Mom-and-Pop investors or mutual funds, as they trade infrequently. It would only kill the parasitic Wall Street predators.
2. A ban or even limit on corporate share buybacks would kill the stock market's primary engine of relentless insider gains: corporations buying back their own shares to goose their stocks higher even as their sales and profits stagnate. It's estimated that up to 75% of all stock market gains can be traced back to the hundreds of billions of dollars corporations have borrowed to buy back their own shares.
It's worth recalling that share buybacks were illegal not that long ago, so banning share buybacks would simply be a return to common sense limits on Wall Street's skims and scams.
Two simple regulations would end Wall Street's most blatant insider scams. These regulations have now entered the mainstream and are poised to become actionable.
When the social tides shift, politicos have to do something. To do nothing is no longer an option, and there is no creature on Earth more willing to jettison sacred cows than a politico fearful of being left behind as social trends abruptly change.
The rising hatred of Wall Street, Big Tech monopolies and insider scams is not yet visible to the mainstream, but that doesn't mean the tides aren't shifting. It just means the corporate mainstream is as clueless as the politicos basking in the billionaires' bribes.

source: Wolfstreet.com
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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Sunday, August 09, 2020

The Economy Is Mortally Wounded

A fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially.
We all know the movie scene in which the character is wounded but dismisses it as no big deal, and then lurches into the closing sequence where we discover the wound was not inconsequential, it was mortal, and the character expires.
That's a fair depiction of the economy--both the U.S. and the global economy. The rapt audience is assured it's just a flesh wound and the character will soldier on, teeth nobly gritted, and that sets up our surprise when he/she tragically expires in the climatic scene.
Financial-political authorities and their paid cheerleaders are sparing no expense in assuring us the pandemic-triggered Greater Depression is a mere bump in the road and the recovery will be record-breaking, and they lavish excessive optimism on the triggers of this astounding recovery that's just waiting in the wings: a covid-19 vaccine, a covid-19 treatment, herd immunity, etc.
What the cheerleaders and authorities cannot dare acknowledge is the extreme fragility and vulnerability of the pre-pandemic economy: the unprecedentedly excessive leverage, debt, speculation, wealth and income inequality, asset bubbles, etc. that had all started to roll over as gravity finally took hold in Q4 of 2019.
Also missing from the astounding recovery that's just waiting in the wings narrative is the recognition of second-order effects as the dominoes of fragility and vulnerability continue toppling.
Even super-duper covid-curing space rays beamed at our planet by helpful Martians couldn't stop the financial conflagration that is now raging, a conflagration that was inevitable given the monetary deadwood that was piled ever higher for 12 long years, a mountain of dry tinder awaiting a random lightning strike or careless match.
As a example of second-order effects, consider a sector we are all familiar with as customers: dining out: restaurants, cafes, bistros, brew-pubs, etc. We all understand that when these establishments close, the owners, managers and employees all lose their livelihoods.
But this isn't the full extent of the losses. Behind the visible facade of any industry is a long line of dominoes behind what the customer sees.
When 50% of all dining-out establishments close, that immediately causes equivalent losses in sectors that supplied those establishments with clean linens and uniforms, meats, vegetables, culinary supplies, accounting, advertising, marketing, consulting, specialty magazines, etc., in a nearly endless profusion of businesses dependent on the dining-out sector.
And then there's all the retail real estate landlords that depended on these establishments to pay high rents on costly commercial spaces, and those nearby businesses that depended on the foot traffic generated by concentrations of dining-out establishments.
The cheerleaders don't dare acknowledge the absence of any sectors that can absorb the 32 million workers drawing unemployment, or those who aren't in the unemployment system, for example sole proprietors who closed and those in the informal cash economy.
The dining-out sector was a haven for marginalized workers seeking the higher compensation of tips, and a major entry point for new workers entering the workforce. There is no substitute sector to absorb the millions of workers who lost their livelihood in the dining-out sector and all those whose jobs were dependent on providing the dining-out sector with goods and services.
A less financialized, less debt and speculation-dependent economy would be more resilient, but a fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially.

source: Wolfstreet.com
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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Thursday, August 06, 2020

If the "Market" Never Goes Down, The System Is Doomed

The reliance on "good news" narratives dooms our financial system and economy to a death spiral once reality breaks through the induced euphoria.
"Markets" that never go down aren't markets, they're signaling mechanisms of the Powers That Be. Markets are fundamentally clearing houses of information on price, demand, sentiment, expectations and so on--factual data on supply and demand, shipping costs, cost of credit, etc.--and reflections of trader and consumer emotions and psychology.
If markets are never allowed to go down, the information clearing house has been effectively shut down. Whatever information leaks out has been edited to fit the prevailing narrative, which in this moment is "central banks will never let markets go down ever again, so jump in and ride the guaranteed Bull to easy gains."
The past 12 years offer ample evidence for this narrative: every dip draws a near-instantaneous monetary-policy response that reverse the dip and gooses markets higher.
That permanent monetary intervention distorts markets doesn't matter to participants. Who cares if markets have become "markets," simulacra of real markets that are now nothing but signaling mechanisms that all is well so buy, buy, buy? If gains are essentially guaranteed, who cares that markets are not longer information clearing houses?
Indeed. There's no reason to care until the fatal spiral downward surprises us all. Here's an analogy of what happens when real information gets edited to fit a convenient narrative.
Unfortunately, the patient has cancer which is starting to metastasize, i.e. spread to other organs in the body. But unbeknownst to the patient, this accurate information is considered "bad news," so the test results and other information is carefully edited to show the cancer is actually shrinking--the exact opposite of what the actual facts reflect.
The patient is naturally delighted with this false data because it appears he's on the mend and doesn't need any surgery or other drastic treatments.
If participants don't have information that reflects actual conditions, they cannot help but make disastrous decisions. Falsified or heavily edited information is misleading, and so all decisions made on the assumption this information is accurate will be fatally skewed.
Symptoms of the fatal spread of the disease are masked by stimulants that not only mask the spread but give the patient a sense of euphoric power and supreme confidence.
Imagine the patient's terrible dismay when symptoms break through the euphoria and he learns his cancer is now terminal. Increasing the tragedy is his awareness that had the authorities in charge of his care given him the real-world data instead of the carefully edited "happy story" version, treatments could have been undertaken that might have extended his life. Now those options have been lost forever.
That's the situation in our economy and financial system. The information cleared in markets has been suppressed, distorted and edited for 12 long years of permanent and ever-increasing monetary interventions, as the "doses" of intervention required to maintain the cocaine-like euphoria and supreme confidence in central bank manipulation of "markets" so they always signal the "good news" of guaranteed gains ratchets higher on every intrusion of reality.
The reliance on "good news" narratives dooms our financial system and economy to a death spiral once reality breaks through the induced euphoria. Our last chances to clear the financial cancers eating away at our economy are slipping away forever, masked by the "market's" cocaine-like euphoria and supreme confidence in central-bank guaranteed gains.
If the stock market is never allowed to go down, this is the equivalent of telling the cancer-riddled patient that their cancer has disappeared, even as the disease is leading inexorably to the patient's needless demise.
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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Wednesday, August 05, 2020

The Bogus "Recovery," Stress and Burnout

We have three basic ways to counter the destructive consequences of stress.
We have all experienced the disorientation and "brain freeze" that stress triggers. The pandemic and the responses to the pandemic have been continuous sources of stress, i.e. chronic stress, which is the pathway to burnout, the collapse of our ability to cope with the burdens pressing on us.
Authorities keep promoting a bogus "recovery" narrative. The disconnect between what the authorities are claiming and what people are actually experiencing is widening, and these unbridgeable contradictions lead to meltdown. No wonder more and more people are "losing it" as their neural circuitry melts down under the strain of synthesizing what they experience (crisis) and what they're told (the "recovery" is already glorious and getting better every day).
In Survival+ I call this process derealization as our lived experience is derealized (dismissed as not real) by official spin and propaganda.
Research has illuminated how stress disrupts the default hierarchy of the brain. In the absence of stress, the neocortex-rational-mind functions suppress the more primitive subconscious signals of aggression, hunger, etc. in order to concentrate our effort to complete some planned activity.
Everyday Stress Can Shut Down the Brain's Chief Command Center. Neural circuits responsible for conscious self-control are highly vulnerable to even mild stress. When they shut down, primal impulses go unchecked and mental paralysis sets in. (Scientific American; subscription required)
This helps explain the natural "fight or flight" response we feel when suddenly confronted with danger or potential danger, but more importantly it illuminates how we lose the ability to analyze circumstances rationally when we are "stressed out." Once our rational analytic abilities are shut down, we are prone to making a series of ill-informed and rash decisions.
This has the potential to set up a destructive positive feedback loop: the more stressed out we become, the lower the quality of our decision-making, which then generates poor results that then stress us out even more, further degrading our already-impaired rational processes. This feedback loop quickly leads to "losing it" and/or burnout.
In pondering human development over the past 20,000 years of the transition from hunter-gatherer groups to modern life, it seems self-evident that stress was likely to be resolved in relatively short order in the hunter-gatherer lifestyle: everyone was known to everyone else, conflicts had to be resolved simply because the group survival depended on it, and most threats could be fended off with vigilance, weapons or left behind by a few hours of fast walking.
Contrast the ancient environment that selected for this stress/conscious self-control feedback with modern life: in the modern urban life and work environment, stress is more or less constant and our ability to resolve stressful situations is limited because we control very little about the macro social-economic waters we're navigating.
Though this particular article focuses on short-term stress, there is growing body of evidence that chronic stress has a number of subtle and destructive consequences. In addition to the common-sense connection between chronic stress and hypertension, there is evidence that obesity is also related to stress-caused conditions such as inadequate sleep and chronic inflammation. This makes sense as the stress hormones erode the immune system's responsiveness.
Behaviorally, stress breaks down self-control, so it is no surprise that stress leads to bingeing, addictive behavior, impulse buying, etc.--all "knock-on" effects with negative consequences.
Chronic stress permanently degrades our ability to rationally analyze and plan, and so we act irrationally or erratically, as we are no longer able to stick to a conscious plan of coherent action. With the rational mind and self-control centers permanently suppressed, we are prone to withdrawal and passivity, "sleepwalking" though life. This may help explain Americans' remarkable passivity as their civil liberties are taken away and their financial insecurity increases.
Many of the features of post-traumatic stress disorder (PTSD) are now visible in "everyday Americans," and an understanding of how stress erodes rational thought and self-control helps explain why.
Even before the pandemic, over half of Americans reported that their stress level was usually high. (see chart below) We can guess that this already high percentage is now considerably higher, given that 32 million people are receiving some form of unemployment and thousands of small businesses have closed.
Medical professionals were already burning out before the pandemic. (see chart below) What the status quo must cover up is the reality that the structure of our winner-take-most socio-economic system makes it unlivable, even for professionals (or especially for professionals, in many cases).
We have three basic ways to counter the destructive consequences of stress:
1) Develop positive physical and mental responses via discipline, habit and practice (for example, regular exercise, gardening, etc.).
2) Turn off the mainstream media and social media (i.e. eliminate deranging, destructive distractions).
3) Stay focused on our plans. The simpler and more positive the plan, the more likely it is we can stay focused on it in stressful circumstances.
I laid out a context for my own planning in May.
Why Assets Will Crash May 4, 2020
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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