Category Archives: Uncategorized


Recession is here. The official dating will come later, much later. But the economy is slowing quickly. Commodity prices are falling due to lack of demand. Property – real estate – is slowing. China is struggling with Covid – and trying to infect the rest of the world with whatever variants they have incubated over the last couple of years. Europe is struggling with the Ukraine war and self-inflicted wounds from sanctions and immigration.

But equity markets don’t care. The S&P 500 looks to be making a bottom at a level that was the May bottom. The Dow seems to be heading for all time highs. Only the NDX seems to be close to a new low as some hypervalued “tech” stocks have been clobbered.

Housing Collapse Redux

Take a look at this chart:


That is a collapse in process. An unprecedented collapse in modern times. Perhaps 1346-53 showed something similar. It will take 4-6 months to work its way into the hard data, but it is coming. Recall Stephanie Pomboy’s observation that in July of 2008, inflation was at 5.6%. By July of 2009, it was at -2.1%. There’s a Fed pivot of some kind. Now look at John Hussman’s pivot chart:

Bears follow pivot

Which clearly shows that the real bear market will follow the pivot. Then contemplate another of Hussman’s charts which shows the potential losses from here:

Potential Losses

Now look at the international context. China has its own housing bubble collapse going on, to say nothing of choking its economy with a stupid Covid strategy because a dictator like Xi cannot admit error. Europe is seized with political correctness, internal division over immigration from Africa and an energy catastrophe. Oh and there’s a proxy war with Russia going on and another with China waiting in the wings, to say nothing of a demented President. Just don’t choke on that turkey.

Wishful Thinking

Financial advisers are falling over themselves to roll out the bullish case for the stock market. Perhaps the Fed will get scared and resume pumping the stock market. Perhaps the Fed will engineer a “soft landing”. Perhaps the economy will grow fast enough to avoid a recession. Perhaps a recession will abolish inflation. The first is possible. The others are not.

Perhaps the reality is that we are facing a perfect storm. I’ve written about some of the issues here and specifically about energy policy here. 

Perhaps most important but unmentioned is the impact of the Biden administration’s spendthrift and socialist policies. This is an administration that is completely dominated by wishful thinking. That it can print and spend money without concern for the effects of excessive debt on growth, or the impact of inflation on households with little margin for error. That it can grow an economy already short of labor by spending money. That the US can support a level of military spending which exceeds the total military spend of the rest of the world. That pandering to racial and transgender political correctness is more important than taking care of basic necessities such as food and energy. That opening the borders to crowds of uneducated and unskilled refugees fleeing socialist regimes will not overload the US social safety net.  That the US can afford to export democracy when there is precious little left at home.

Whip Inflation Now!


Gerald Ford was a nice guy but not much of a President. His method of stopping the high inflation left by Nixon was the Whip Inflation Now! button. Seriously. Eventually, in 1979, Jimmy Carter appointed Paul Volcker as Fed Chairman. Volcker’s initial strategy in this regard was to seek to reduce the supply of money in the American economy. Soon after taking office in August 1979 he instituted a policy of monetary targeting and raised the Fed funds rate to 20%.  However, it was not until 1981, when the Fed refused to loosen monetary policy even though the economy was in a recession, that inflation began to come down. 

Inflation has come home to roost. It won’t be leaving soon and it will take drastic measures to bring it under control. Powell wanted the economy to “run hot” and he has lit a raging forest fire. It took 10% unemployment to bring it down in the 1981-2 recession. Using the same measures, inlfation now is comparable to the worst of the 1980s, and Biden is set upon even more spending.

Ivermectin vs Pfizer

“No-one is saying that information has been deliberately suppressed for years while millions of people have died”

Pharmacodynamic analysis.

And then there’s this:

The leading U.S. manufacturer of xylitol-based products says the federal government is deliberately trying to conceal a nasal spray it developed that it says has been scientifically proven to be effective in treating and preventing COVID-19.

Edit: Followup – taking apart the “fact-checkers”.

Delta Demon

The writers who opine about these things claim that the selling in the last couple of days is due to fears of new lockdowns as a result of the spread of the Delta variant.

Perhaps this is so, and perhaps there will be new lockdowns. But the lockdowns will be to exert political power only, because the data show that there is nothing to fear – except political arrogance and megalomania.  Yes, the Delta variant is more infectious and has led to an increases in cases. However, the case rates have not caused an increase in hospitalizations or deaths. This is the normal course of evolution of viruses, where they become more infectious but less dangerous. Pay no attention to governors drunk with power or to Dr. Fauci, “I am the science”, political science that is, who should long ago have been removed from office pending an investigation into his role in the funding of the research that led to the escape of the virus from the Wuhan lab.

delta weakness


Seaspiracy is the title of a movie now on Netflix which attempts to expose the damage being done to the ocean by commercial fishing. It is guilty of exaggeration in some respects, but the main point is correct. I have just fnished reading a critique of the movie by a marine biologist who is involved in the non-profits who supposedly oppose the ocean damage.

He asserts that:

Ultimately, this is a movie that forces the problems of global fisheries through a small, privileged lens to make the Europeans and North Americans who can give up fish feel guilty enough to do so. Unfortunately, much of the other 85 percent of the planet will continue to eat fish because many will not even know about, nor be able to afford, a wholesome vegan diet.

That’s not what it says. I watched it, it recommends simply reducing fish consumption, although it briefly offers a plant-based option that is just coming on the market.

He also accuses it of “Anti-Asian tropes.” Perhaps, but there’s a reason. Hordes of Chinese and other Asian-based fishing ships are roaming the planet because they have stripped their home waters of fish. The reality is that these countries will be reducing their fish consumption whether they want to or not. Reason: no more fish to be caught. We know that fish populations crash when they reach a critical level. We just don’t know where that level is until after the fact. Many Asian countries depend on fish for a major portion of their population’s caloric intake and have no alternative plan. If they do not diversify away from fish, catastrophe awaits.

One For The Books

From zero hedge. This is a keeper.


Are The Bulls Right?

“In particular, a theory of depression must account for the mammoth cluster of errors which appears swiftly and suddenly at a moment of economic crisis, and lingers through the depression period until recovery,”

Murray Rothbard, Economic Depressions: Their Cause and Cure

I Want To Be An Investor

The following was the second post on this blog (in 2004):

We often hear the terms “Investment” and “Speculation” used interchangeably and casually. “Speculation” is often used as a derogatory term for activities considered somehow wrong or extreme. But both these words have relatively well-defined meanings. An “Investment” is a transaction which is entered into primarily to yield an ongoing income stream. While in many cases capital gains may also be a hoped-for result, they are secondary. A “Speculation” is a transaction which is entered into for the primary purpose of a capital gain on sale. Income, if it exists at all, is a secondary consideration and often will be negative, a “carrying cost”.

So if I buy an apartment building for rental income, believing that the rents will yield a net return on my capital after expenses, then that is an investment. If I buy a house with the intention of “flipping” for a higher price as soon as possible, then that is a speculation.

It is important to define the terms because they will be used frequently, but carefully, for their particular meanings.

I would add for clarification that stocks that don’t pay dividends may be investments so long as they make profits that are re-invested in the company.

I have nothing against speculation, I myself am a professional speculator at this point. I decided to change from buy-and-hold investment to speculation in 1997 as a matter of fact. After some beginner’s luck there was quite a learning curve, but it was the right thing to do.

The financial gurus, writers and commentators glibly refer to people who buy stocks as investors. Generally speaking, they are not. Available income streams yield so little as to be far outweighed by the risks to their capital, and anyway most are careless of income and profits, seduced by the Pied Piper of the ever-rising market, courtesy of government support. They are speculators without the tools and experience necessary for long-term success. If you want to be an investor today, some form of Treasury ladder is probably your only realistic choice.

This is a rich environment, however, for speculation. Sentiment is lopsidedly bullish and valuation is unprecedentedly high. The market is cruising for a bruising, the only question is when. The downside is that, unlike investing, speculation requires constant attention and I’m tired of it. But there is no choice so I soldier on. I do look forward to the day when I feel I can return to an investment style, when John Hussman’s model shows 20+% returns available and he is bursting with bullishness. Of course, the “investors” of today will not listen to him because they will have long since given up their gains and more to the wolves of Wall Street.

Trees swayin’ in the summer breeze
Showin’ off their silver leaves
As we walked by

Soft kisses on a summer’s day
Laughing all our cares away
Just you and I

Sweet sleepy warmth of summer nights
Gazing at the distant lights
In the starry sky

They say that all good things must end some day
Autumn leaves must fall
But don’t you know that it hurts me so
To say goodbye to you
Wish you didn’t have to go
No, no, no, no

And when the rain
Beats against my windowpane
I’ll think of summer days again
And dream of you

They say that all good things must end some day
Autumn leaves must fall
But don’t you know that it hurts me so
To say goodbye to you
Wish you didn’t have to go
No no no no

And when the rain
Beats against my windowpane
I’ll think of summer days again
And dream of you
And dream of you

— Chad & Jeremy