Today, we are witnessing a broader asset price inflation driven by a belief that central banks will engage in extraordinary monetary policy indefinitely to prop up valuations in the hope for the always “just around the corner” wealth effect. Equity markets are near all-time highs and at extreme valuations despite weak economic growth and limited earnings growth. Bond yields are near the lowest levels (highest prices) human civilization has ever seen. Commercial real estate is back at 2007 bubble valuations and real assets such as art, wine, and jewelry are enjoying record-setting bidding at auction houses.I don't pretend to have much beyond a surface understanding of economics. Bonds are a bit mysterious to me, for example. I get it that the yield of a bond will rise if an investor pays less than the face value of the bond and decline if he pays more than the face value. Presumably, I will pay less for a 3% bond if I think there is a smidgen of risk that the issuer won't pay at maturity and I will pay more for a bond if I think it offers more security in an environment when other risk-on investments seem shaky. These purchases take place at auctions, I'm thinking. where investors basically place their bets, just as they do in the stock market.These financial bubbles could not occur in an environment of weak domestic and global economic growth without the migration of debt borrowers from hedge [paying principal and interest from cash flow] to speculative [paying interest from cash flow and rolling over the debt to avoid the penalty of failure to pay the principal] to Ponzi status [inability to pay interest and principal but hoping that the value of one's investment will continue to rise enough to pay off the loan].[1]
That little detour aside, the author of the article from which the passage above is taken is making the point that relying on the central banks to kiss it better is not wise when we have "weak economic growth and limited earnings growth." Or ever, come to that.
But there we have it. Central banks, weed, and gambling are our go-to solutions for deadly serious problems. Not military retrenchment and keeping out and kicking out parasitic foreigners who steal our jobs and live high on our tax money. Nothing sensible and gutsy like that but rather demeaning reliance on airy-fairy-hail-Mary gimmicks.
'Chachos, we are a failing nation.
Notes
[1] "The Death Of The Virtuous Cycle." By Michael Lebowitz, ZeroHedge, 6/6/19.
2 comments:
The "pretentious" medical use of Marijuana follows decades of activism which has finally broken through to the greed of legislators.
These people armed with the fact that prohibition results in an illegal and gang operated production and supply business and offshoot crime, and the now washy washy acceptance of a false medical use now remove prohibition and gain tax.
I am well qualified in addictive substances both personally and by professional knowledge.
The medical use for Marijuana is to relieve withdrawal symptoms
Withdrawal symptoms take on a plethora of forms but include malaise, body aches,
nausea and so forth.
So we take the "medicine" and what do you know, we feel better.
Just as a shaky, jittery alcoholic feels better when he has another shot.
Ernest Hemingway stated that the only treatment for alcohol withdrawals was alcohol, and true enough in the short term. Then he shot himself at about 65.
I have had my own mind and spirit decay through alcoholism, then recovered to have the discomfort of watching others decay to driveling nonsense with alcohol and or Marijuana.
Marijuana is the biggest sap of ambition, go get, and reality that I know of.
Marijuana is the blue pill, slouch around, watch TV and dream.
Leaving dope is a red pill.
That is why I have so little in common with so many of my friends from the days of drugs and stupidity.
Thank you for sharing a bit of your experience. I have dated a couple of alcoholics and am very, very grateful for the exposure to AA that I got through them. It is much in contrast to the ad hominem imperative in leftist public debate which looks just diseased and rotten in comparison. Would that the nation could return to or adopt the notion that we are powerless over life and, more often than not, our own human weaknesses. AA meetings are a great pleasure to attend but our public life is rotten beyond belief. No wonder our fellows turn to drugs when the dominant culture is brimming with condemnation and lies.
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