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2021-12-06 07:00 by Karl Denninger
in Market Musings , 491 references
[Comments enabled]  

It's coming folks.

The market has been running on hope for a long time.  It's often said (and its true) that greed and fear are what drives the stock market.  Greed makes you buy, fear makes you sell.  Unfortunately both tend to peak at the exact wrong time; you have maximum fear at the bottom, and maximum greed at the top.  If you listen to the little demon screaming in your ear at either time you will be ruined.

It's very, very hard not to listen to the demon, which is why for most people the advice is don't trade.  You'll lose.  Not because you can't analyze what's going on, but because the demon will get you.

We've had an unprecedented run over the last 30 or so years.  The late 1980s up through today have had their fits and starts, but the ramp job from the pandemic "sell off" in early 2020 is just flat-out crazy.  It rivals that of the late 1990s, and we know how that ended.

Chief got into that a bit on Stocks-n-Jocks Friday before my segment, pointing out that he did a bit of analysis looking at valuations of a handful of companies in the late 1990s and deduced that GDP would have to double to make them reasonable.  Part of the reason I got out of the markets entirely in early 1999 was that by then it was clear from my work in the tech sector, which I had specialized and personal knowledge of as I was a part of it, had claimed on a reasonable valuation basis the entire GDP of the world ten times over.  That was obviously going to end in tears -- and it did.

People always claim "nobody saw it coming", as they tried to claim in 2007.  Baloney.  Anyone who wasn't hitting the crack pipe on a daily basis saw it coming and knew damn well it would blow.  They just didn't know when and greed -- that demon on their shoulder -- kept them in the game.

And, by the way, they kept the public in the game too despite the absurdity of it all, but it didn't end there.

They kept the public in because that was necessary for the insanity to continue.  In other words they deliberately lied in the media knowing damn well that the purpose of their lie was to suck ordinary people into their intentional charade so they could make the "next dollar", fully aware that the game would fail and when it did the outcome would be horrific.  You see, without the next sucker, eh, "buyer", the game ends.

They're doing the same thing now.

And so, in all probability, are you.

Corporate America has ruined the work ethic in this country over the last 18 months.  First it was calling people essential.  Then it was abusing them by demanding they work in what the employers called dangerous conditions (e.g. a viral pandemic) without proper PPE and/or wildly-elevated pay to cover the risk.  At the same time the neighbor next door who was not deemed "essential" was given $600/wk to sit at home and get stoned, an equivalent of $30,000 a year, all tax free where the worker had to pay taxes on every penny they earned during that time!

Then Corporate went even further, as I documented recently, and in many cases was given authorization to take what were payroll tax funds the employee actually earned and keep them for themselves.  I remind you that's about 15% of every dollar for most employees and applies from the first dollar, even for those who pay no income tax at the end of the year as they don't make enough.

And finally said corporations, having ridiculously abused employees for the last 18 months then turned that abuse into literal assault and battery by demanding employees take an experimental drug in the name of "safety" despite a complete lack of knowledge of the intermediate and long-term risks -- or be fired.

Many complied due to their financial situation, not because they believed the medication was safe and effective, only to find that (as I expected and pointed out) the courts would eventually rule that such mandates from the government were illegal and, further, that the courts would note that even if the employer could do it they're still on the hook for liability including potential punitive damages.

But the courts and Biden aren't the issue here.  The issue is abuse of employees that has been going on for a long time.  Many firms "offshored" their IT departments over the last 20 years and in several cases forced employees to train their replacements if they wanted any sort of severance.  In other words "train this dude to do your job at half your salary" -- and then get fired.

That's not abuse?  Excuse me?

Yet it went on dozens of times all over the country.

Today employers use all manner of ruse to get around labor laws.  For example they will "outsource" customer service to contract houses that then, in turn, have contract workers.  These "contract houses" set the terms of employment yet are somehow not held to be employers and thus forced to provide all the benefits of one, including federal wage and hour protections, tax withholding and similar, along with (under Obamacare) the PPACA health insurance requirements.  Technology has made this all possible; you call "customer service" and the odds are very high the person you're talking to is not actually employed by the firm at all; they're a contract worker for some shop set up somewhere.

You can push this crap too far, and corporate America has.  The backlash, when it blows, is going to be ridiculous.

The Government, in concert with The Fed, has run this scheme where "let's print up some more credit!" is the answer to everything.  Both sides of the political aisle are involved up their necks.  Fully one dollar in five goes to the medical monopolists in this country today and so anything that helps them passes and is left alone.  Moscow Mitch refused to shut that crap down with the most-recent "debt ceiling" charade and its not surprising why: Forcing an end to the abuse on a "sudden stop" basis would crash the stock market.

Well, the market is going to crash anyway folks, because the abuse is so rank and outrageous that it will not be maintained -- because it can't be.

I would not be even slightly surprised if the plates stay in the air through Christmas.  Seasonally, that's rather likely.  But come 2022 all bets are off.  The courts are headed in the "wrong" direction to give license to this crap in the private sector and the number of pissed-off employees who will now slow-walk everything, doing just enough to not be fired on a permanent basis, is likely in excess of a quarter of the workforce.

That will hammer productivity and costs and there's no more to offshore, really, when you get down to it as we already did that, just like we already used pushing the second adult (usually the woman) in a household into the workforce in the first place.

Buckle up folks: This ride is going to get a little rough.

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2021-12-04 08:29 by Karl Denninger
in Corruption , 523 references
[Comments enabled]  

The parents have been charged with involuntary manslaughter, after, it is alleged, they were called to the school where drawn images of their son shooting people were shown to them.

This, plus easy access to the weapon (and I presume having target practice in the back yard) was enough.

Ok.  I can buy that.  You have a kid with a history of issues, you just bought a gun and the kid gets caught drawing pictures of him slaughtering other people.  You do nothing, kid takes gun and .... slaughters people.

We'll see if the facts actually are as alleged.  But let's assume they are.

Why isn't everyone working in the school who was aware of this and involved in said meeting with the parents also charged?

They knew about it.  They refused to act.  They did not remove the kid from the school despite having the authority to do so.  They knew he was at least fantasizing about shooting other kids and might obtain access to the weapons to do it with.

They did nothing.

If, by the standard of "did nothing" and knowledge that access was possible to said weapon, which is always possible then can you explain to me why the school officials weren't charged?

And incidentally, the argument is the kid was "bullied."  Ok, what was the bullying?

Did any of it cross the line into felony conduct?  Not just calling people names (which isn't a crime) but things like assault -- particularly assault with a weapon?  Did school officials also know about that and do nothing?

The kid has been charged as an adult, and, from what appears to be known in public at this point, perhaps justly so.  We'll see.  The kid decided and he's going to pay for it at trial.  Now the prosecutor is looking for people who directly knew of what was likely to happen and put in place the environment to allow it to happen when it was trivially easy to prevent it, arguing there was a duty to do so.  Under this argument the prosecutor's office charged the parents.

Fair enough.

But by that very same standard several of the school officials should be under indictment as well.

Where is that indictment?

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2021-12-04 07:00 by Karl Denninger
in Macro Factors , 641 references
[Comments enabled]  

There's good news and bad news in the latest jobs report.

The good news is that the non-institutional population growth rate, which had been collapsing, has stabilized.

The bad news is that it has stabilized, not returned to its baseline.

In other words the data strongly suggests that we have upshifted the mortality figures in the population by roughly 20-25% on a durable basis.

US Mortality provides a reasonable approximate confirmation with one exception: 85+ year old people.

That is not surprising, since so many of the 85+ people died in the first year of Covid, and (obviously) you can only die once.  Therefore, until that bucket "refills" with people getting older once again you should expect to see below-baseline mortality there, and you did -- for a bit.  Now its back, however, although not wildly elevated.  That's not good either -- but its not a catastrophe, all things considered.  Why not?  Because once you make 85 you're well beyond your "use by" date, so every day you get there is an unearned gift.

But that's at a personal level.

From a societal level this is extremely bad in the intermediate term.  Not tomorrow, but down the road.  The reason is quite-simple: In order to provide the tax revenue to cover even the interest on the national debt people must continue to be born and grow to adulthood, and once there survive and earn wages.  If that stops the entire house of cards collapses.  Unlike events such as the Black Plague, however, it doesn't happen all at once.

It does happen with certainty though, and no, you can't import a bunch of unskilled third-world people who are unable to produce at the level of native-born and educated persons to fix it either.

The potential for severe societal and political upheaval is very real here folks.  This is not a "today" problem but it is one down the road, and probably not very far down the road either -- in the next few years.  Add in the "built-in" inflationary pressures the government has already applied and you have very bad juju inbound a couple of years from now and forward.

Buckle up.

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2021-12-03 11:11 by Karl Denninger
in POTD , 253 references

... and support local artists at the same time....


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2021-12-02 07:00 by Karl Denninger
in Social Issues , 640 references
[Comments enabled]  

Of course the oral arguments yesterday were basically all anyone wanted to talk about.

And while I generally not only avoid (intentionally) writing on abortion -- on purpose -- but also strongly frown upon it on my system in general this is an exception, simply because the USSC heard the case.

So here's my perspective on it.

(Incidentally, if you haven't read the original decision -- the whole thing -- don't comment on this post.  Go look up the decision and read it first, because if you don't you're risking a banhammer if you cannot square your point of view against the existing precedent and historical record contained therein, which is extraordinarily wide-ranging.  Indeed, I doubt there is a USSC decision that comes anywhere near it in terms of historical and analytical context within the pages.  Consider yourself fairly warned.)

Roe itself divided abortion about the same way medicine and human development divides it -- into three portions.

In the first (trimester), abortion was ruled a matter of personal conscience -- period.

In the second (trimester) abortion was ruled a divided case; arguments could be made either way, but the balance tilted toward choice.

In the third (trimester) this was no longer true and the balance tilted the other way.

The only absolute prohibition found in Roe was that all-circumstance bans on the procedure were per-se unconstitutional.

Of course people have tried to move those goalposts in both directions ever since -- but the above is what the court actually held.  Go read it for yourself; don't take my word for it.  You cannot hold an informed opinion on Roe without knowing what the decision actually says.

Medical art and science has come a long way since then.  There were no $1 drug-store pregnancy tests in 1969.  Yes, they really are a dollar today; WalMart sells them for a literal 88 cents.  Of course you can pay a lot more but you don't have to and all of the at-home, private and early ones work the same way; linear paper chromatography, which is extremely accurate and cheap.  There is zero argument that any woman cannot determine in less than five minutes if she is pregnant at any point in time for approximately the price of a candy bar and there is no place in this nation that access to said technology is not trivially available.  Simply put nobody can make an argument that "access" to this fact -- pregnant or not -- is "difficult" or "expensive" for any woman in the United States today.

This was not true in 1969; extraordinarily cheap at-home tests that could be bought anywhere for pennies did not exist.

There are also medical abortifacients today as well.  They too are readily available.  As with all medical devices and drugs there are risks and if it goes badly you may wind up in the hospital or worse, but that is true of a procedural abortion as well.  There were no approved options of this sort in 1969 either; the only option was procedural which is effectively a surgery.  Leave aside the unsafe drug/supplement/procedural options; we are talking about approved and demonstrably safe things here, not back-alley coat-hanger jam-fests.

Between these two facts no woman of menstruating age has any argument whatsoever that at any time they (1) cannot determine if they're pregnant and (2) cannot do anything about it if they are for weeks or months.  This is a radical change from the state of medical science in 1969.

Corner cases make bad law in the general sense.  Those people screaming about a right to "abort" a child that has its head sticking out of the vagina are in the position of trying to make such an argument.  The other extreme would force a 15 year old who has been raped to carry and bear the child of her rapist.

I cannot support either of those extreme positions; from any sort of analytical point of view they're both wrong.

I can reasonably debate pretty much any position inside of the two corners, but if you're on either of those two extremes then you and I have no common ground to find.  I will no more support infanticide than I will support forcing a women who is raped to be effectively raped again every day of her life from that point forward.

I suspect what we're likely to see, given the argument put forward in the court and the questions from the Justices is a redefinition of Roe rather than striking it entirely.

In short what I expect is a returning of the precedent to its original boundaries with an underline on them.

I could be wrong, and second-guessing the Supremes from their questions is a losing bet far more than you'd think but that's my read of it from the questioning and the arguments presented.

In other words: In the first fifteen weeks, have at it.

Beyond that point it is a State's right issue and the various states may put in place whatever regulatory environment they wish, up to and including a complete ban.

That doesn't trash Roe; it in fact restates it comporting with the advances in medical science over the last 50 years, specifically the trivial capacity for any woman to know if she's pregnant at any time at essentially zero cost and the capacity to pharmaceutically terminate a pregnancy in those first few weeks.  Not much is different in terms of cost between a medication and surgical abortion -- much of this is simply due to the manufacturers of the pills charging what they can, and what they can is right about what it costs to have the same thing done in a clinic by other means.  Thank our monopolist medical system for that; I penned a very long article, and part of a book ten years ago, outlining how to fix that problem.

I'm sure there will be jurists on both corners of the debate among the nine but you need five votes for an opinion to carry, and I suspect that the above is how you find them.  I doubt you can get five votes to kill Roe entirely.  Perhaps, but I doubt it.  When push comes to shove I don't think you can find five votes to condemn a raped teen to carry and bear her rapist's child -- nor should we permit that sort of insanity to become law as a society.  I'm equally sure you can't get five votes for allowing a pregnant woman to abort a child that has its head sticking out of her vagina.

But I bet you can find five votes, from the questions asked, to draw a double underline that abortion prior to 15 weeks is none of the government's damn business and return everything beyond that point to State jurisdiction.

That would not actually prevent any woman from obtaining an abortion who wanted to but would place the responsibility for (1) determining she is pregnant prior to expiration of that time on her and (2) slam the door on the fingers of everyone on both extreme ends of the spectrum.  We'd still have states with "abort at any time" laws -- but you'd have to travel there.  That's Federalism; the good ideas flourish and the bad ones -- and those employing them -- rot.

Reproduction is arguably the most-adult thing someone can do.  We expect adults to be competent to contract, to manage their own personal affairs and to choose their lifestyle, education and upkeep as they see fit.  Producing another human being is arguably a more-serious decision than any of those others, and should come with the same expectation of sober contemplation. 

Certainly, more than two months after a woman's last period is sufficient time to (1) contemplate such and (2) obtain whatever remedy one might choose, if she wishes to.

That sort of decision is going to make everyone unhappy -- except for people like me, who will find that there are no really good answers to this question on either extreme end of the argument and thus, that everyone will be to some degree unhappy means you pretty-much got it right.

That's what I think we're going to get.

If we do get that a beneficial side effect is that it might also force both extreme ends to bring the political pressure to bear required to destroy the medical monopolists, such that any woman who is even a day late and has had sex in the previous two months can spend $5 on two pills over the counter without a prescription and, if it turns out she really is pregnant rectify what she deems "undesired" with no more muss and fuss than a slightly-heavy period -- exactly the same outcome, in fact, that happens if a defective zygote gets implanted and, in the first week or so, the body rejects it.

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