Monday, February 29, 2016

Latest Thoughts and Links From Credit Bubble Stocks

  • New York City "won’t become insolvent as long as the following conditions hold: (1) there is no major innovation in medicine that allows retirees to live longer, (2) Wall Street continues to be the world’s money center, and (3) markets continue to boom. That’s a lot of risk to impose on future residents and taxpayers." [Greenspun] No kidding!
  • Why the panic about Trump maybe winning? "it is all either virtue-signaling by good liberals, or genuine panic by people whose jobs or influence would be threatened due to their team losing. Both groups of people have a strong interest in making Trump look bad and scary." [Greenspun
  • Very interesting prediction from Horizon Kinetics guys: "We think the world will go to concentrated positions where, whatever risks it might have, at least you know what they happen to be. We might be very wrong in this, but we believe the way the investment world is going to develop is that people will pick a certain number of managers with heavy concentrations, and they’ll get their diversification by investing with a handful of managers with narrowly diversified or concentrated portfolios. They’ll weight them based on where they think the risks are. That’s a big change from what we’ve experienced the entirety of our investment careers, and mine dates back to 1978. In a way, I, and many other people, were spoiled by the investment world of the last three and a half decades by the fact that it almost didn’t matter what you bought since, almost for the entirety of my career, interest rates have been coming down. Valuations, as a generalization, were going up. You could even make mistakes in terms of earnings prognostications and other predictive factors and actually do reasonably well as an investor. As I said at the annual meeting, I believe that is over and done with."
  • Elite overproduction: what would all these 20-30 year old children of the elite be doing without these goofy companies to work on?
  • Sad that most people's diets are dictated (by way of nutritional recommendations and agricultural subsidies) by an insolvent annuity provider that has a direct financial incentive for their lives to be shortened. A correspondent responds: "Calorie counting is such a trap ideology. Ignoring the fact that it isn't correct even on its face, it completely ignores the source of the calories-- calories from refined sugars are far worse for you than calories from high quality fats and muscle proteins. So people fuck their hormones up without realizing it because they think 'I'll just have to run a bit harder to take care of this candy bar!' And that is why the insolvent annuity provider is mandating this information be more widespread."
  • Thinking about autonomous vehicles and electric vehicles. Seems like there will be huge winners and losers in the following areas: oil production, oil refining and gasoline marketing, vehicle manufacturing, vehicle retailing. When you add up the total enterprise values in those industries... stunning. Even some smaller things - parking garages, taxis, vehicle repair/service (EVs are mechanically much simpler).
  • Hilarious MR comment on how everything must be "terrible for young people, good for Baby Boomers. Therefore we need housing prices to be as high as possible, to keep the narcissistic amoral Boomers fat and happy. Sort of like how society desperately needed sex drugs and rock and roll when they were in their 20s, desperately needed tax cuts when they started earning good money in the 1980s, and desperately needed Medicare part D when they started to need lots of prescription drugs to stay alive."
  • Why banning high denomination currency is unworkable (again an MR comment): "You must be a yuppie. At the very least you are a city slicker. In the country lots of large transactions are done via cash. Nobody is going to trust a check from a stranger to buy a tractor, load of logs, or any other larger interpersonal transaction that is routinely done out in the sticks. Nor are they using electronic transfer systems (I transfer money electronically all the time, but I am a minority in that regards. Most people around me don’t even know how to check their bank accounts electronically. America as a whole is not as advanced as you seem to think.)"


AllanF said...

I've been thinking a lot lately about how the housing bail-out for Boomers on the backs of Millennials has to be one of, if not the biggest generational wealth theft of all time.

It's not hard to work through the money flow. You're familiar with Sailer, so I'm sure you've heard his 'Invade the World, Invite the World' quip. The Invite part is the Boomers' financial life-line. Without scumbags from the rest of the world able to buying up US real-estate with their ill-gotten lucre, whom would Boomers have to sell to?

But it's even more perverse than that. We import scabs both legal (H1B) and illegal (manual labor) with the obvious effect of hurting middle class incomes. Plus all those scabs have to live somewhere, so that drives up the cost of housing. Along side that we outsource manufacturing jobs to China, Mexico, India, etc. The money from outsourced manufacturing has to be recycled, so it too flows into housing. Specifically into the few coastal employment centers that are left, compounding the bad situation for millennials.

But hey, Boomers need their liquidity event, so everyone stays mum and looks the other way while future generations get screwed so that Boomers, having squandered the inheritance from their parent's, begin consuming their children's seed corn.

Taylor Conant said...


I am not going to defend a government-constructed immigration system here, only some of the principles touched on:

Could we agree that it's at least complicated to determine who of the legally and illegally "imported" workers are "scabs"? Could we agree that local, state and federal taxation do far more to hurt "middle class incomes" than these "scabs" ever could, and that part of why "scabs" are able to outcompete them is because they can avoid taxation or benefit from subsidies granted by the State itself?

I also take issue with the terminology of "outsourced." If it's okay for California to "outsource" the production of oranges to Florida, what does it matter if the US "outsources" manufacturing to China? For that matter, to the extent you are not a Renaissance Man doing every productive task yourself and thereby relying on the efforts and labor of others not yourself, aren't you "outsourcing" quite a bit as well?

I think there is a real social calamity underneath here, but I am not sure the way you've described it accurately portrays the mechanics nor the guilty. We need to use scientific terminology and consistent definitions, not emotionally charged euphemisms, if we're to get to the heart of the matter and really understand what's going on.

Cholla said...

Housing is the single largest expense for families. Young women with IQs above 115 won't reproduce except as part of a married couple that owns a house.

Any country being run for the benefit of posterity would therefore look to have housing be as cheap as possible.

We see that the policy of this country is the opposite. Not only the immivasion and wage crushing tactics that AllanF describes, but also tax and mortgage policy. Mortgage interest deduction and subsidized mortgage market drive up the price of land. (It's expensive land, not expensive structures, that are making houses unaffordable.)

Also, let's not forget that there is an artificial scarcity of land in ALL major metros, caused by anti-white violence perpetrated by blacks and hispanics. How much cheaper would it be to live in Chicago or Philadelphia if there weren't "no-go zones" where whites are attacked? (By the way, "gentrification" just means whites attempting to move into areas controlled by black and hispanic milita forces.)

AllanF said...

Could we agree that it's at least complicated to determine who of the legally and illegally "imported" workers are "scabs"?

First of all, why all the scare quotes?

Second of all, it's not complicated. I'm suspicious of anyone asserting that it is complicated is pushing an agenda. It's simple: when they come here with no particularly unique skill-set and under-cut native workers on salary, they are scabs. H1B's in IT are scabs. Latin-American construction workers are scabs.

Could we agree that local, state and federal taxation do far more to hurt "middle class incomes"

First of all, why the reframe? This is a transparent either-or fallacy.

Second of all, I do not agree with "far more." There are limits to how much a state can extract via taxation. However, throw in the distraction of a multi-racial society with each group competing with the others over spoils, and they can skim a fair amount more. The first Prime Minister of Singapore knew a thing or two about it. He said, "In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion."

I also take issue with the terminology of "outsourced." If it's okay for California to "outsource" the production of oranges to Florida, what does it matter if the US "outsources" manufacturing to China?

Are you trolling me? You remind me of Tyler Cowan, and the way he regularly got himself fisked by Sailer.

AllanF said...

Young women with IQs above 115 won't reproduce except as part of a married couple that owns a house.

Yep. That's what's so egregious about the Boomers. They've done much to drive down birthrates through social policy, complain about the negative effects of low birthrates, and then enact further policies which make the situation even worse. It is a vicious cycle entirely of their own making.

Taylor Conant said...


No, I think you managed to troll yourself.

The scarequotes are due to the fact that I don't accept your terminology as descriptive as you do.

Scab is a unionist term. So you either are a believer in collective bargaining which seems foolish, or you think the same way about economics as unionists, which seems toolish.

I'm suspicious of people who find competition in principle ("under-cut native workers on salary") threatening. So I suppose the feeling is mutual at this point.

AllanF said...

Unionist? Yeah, whatever. Tell it to Tyler 'Cheap Chalupas' Cowan.

Taylor Conant said...


I don't expect a comprehensible response from you on these two points but I still think it's worth publicly asking the questions:

1.) Why do you refer to "outsourcing" when you import products from China or India, but you do not refer to "outsourcing" when you import a pizza from the pizzeria down the street, or a suit from the local Nordstroms, etc.? I don't understand why it's okay to utilize the division of labor with your neighbors but not with people across the ocean. That seems like an arbitrary distinction to make.

2.) What would be the appropriate rate of pay for a given job such that you'd stop quibbling about people "undercutting" that price, and how did you determine it was the appropriate rate? Your rhetoric sounds like you are a closet-price controller aka central planner-- like you can dictate to people when their exchanges are fair and reasonable and when they aren't. It'd be great to know the secret source of this divine economic knowledge such that you can, ex post facto, determine that a person is competing unreasonably in providing a particular service at a particular price.

Anyway, I find Tyler Cowen to be a subrate economist and social philosopher so I don't know why I should be impressed by your referencing him constantly. It seems like he really drives you bonkers. Maybe you're such a subrate thinker yourself that you find it frustrating you can't even outwit a slow-wit like him and must revert to name-calling to feel like you've stood your ground intellectually?

High Plateau Drifter said...

" Why do you refer to "outsourcing" when you import products from China or India, but you do not refer to "outsourcing" when you import a pizza from the pizzeria down the street"

Simple, the pizzeria owner and his workers are part of the community and perhaps I owe them a duty at some level that I do not owe to Chinamen living in China.

Real living people do not have the same mobility as capital. Your pizza workers cannot easily pack up and move to China and compete at lower wages once the jobs disappear from the community.

The globalist outlook is easy and sounds rational until you lose your job and the costs of personal adjustment for the job loser exceed the small savings to the consumer next door that has not yet lost his job.

David Ricardo and John Stewart Mill, the inventors of "comparative advantage" as the basis of free trade, would be horrified at your notion of "free trade."

Taylor Conant said...


Let's freeze the mobility of capital, then! If "we" owe some debt to our "community" (why I can't choose a community full of Chinamen over the ocean over the pizzamen down the street, you haven't explained... is it proximity? Then I guess the illegal Mexicans in town are part of my community as well?) then why let a business pull capital out of town in the first place? Why let a business fail?

Let's have the government protect everyone from everything.

Oops, gotcha.

Taylor Conant said...

I would imagine HPD and AllanF to be strong adherents of the false macro-micro dichotomy of the Keynesians, as they can't seem to extend the principle of free trade beyond the borders of their hometown. Somehow, it's good to let people specialize and not have everyone produce everything they need by themselves when we're talking about the neighborhood, but when we go beyond that limit it's all exploitation and dog-eat-dog.

Meanwhile, not once have I embraced or endorsed the present politically-engineered "globalist" system. I am just talking about a simple logical principle. But you don't want to think in terms of simple logical principles because then your preferred system of exploitation based on your own variety of tribalism would be called into question.

So instead, you attack a real-world strawman that I am not supporting or advocating.

Kind of weak. No, really weak.

Cholla said...

After further reflection, the real estate strategy of nonwhites (ethnic cleansing of whites using militia) is the numero uno factor driving overpriced housing.

Because it's all land prices, not structure prices. And that's what's creating the artificial scarcity of land.