Many decades ago, I happened across Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds (the first of many editions was published in 1841). A quote from the foreword piqued my interest: “The poet/dramatist Johann von Schiller once said, ‘Anyone taken as an individual is tolerably sensible and reasonable—as a member of a crowd he at once becomes a blockhead.’” Mackay proceeds to analyze a number of historical episodes—the Mississippi Bubble, Alchemy, the Crusades—and debunk the underlying logic of each that had so fully captured the imaginations and behaviors of those who lived through them.
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A Surprising Disconnect: The Boom in Both Markets and Human Misery
The perplexing reality front and center in investors’ minds as we begin 2021 is how financial markets can be so unabashedly ebullient while the global economy is so terrible. How do we reconcile surging nominal asset prices and off-the-charts price-to-value measures with the presumed countervailing gravitational pull of economic despair, exacerbated by Covid-19, which now claims more lives daily at 4,000 than did the 9/11 terrorist attacks?
Continue reading “A Surprising Disconnect: The Boom in Both Markets and Human Misery”‘Read My Lips’: ‘We’re Rounding the Turn’
In this age of soundbite television, a pithy phrase uttered in the heat of presidential oratory can change the tide of a race. Usually carefully crafted by a cadre of political marketing experts, these snippets of powerful prose can ring eternally in the annals of history if they resonate with the electorate.
As he accepted the nomination at the 1988 Republican National Convention, George H. W. Bush proclaimed, “Read my lips: no new taxes.” That pledge had been a consistent part of Bush’s 1988 election platform and the soundbite’s prominent inclusion in his speech cemented it in the public’s consciousness. It likely contributed significantly to Bush’s victory over Democrat Michael Dukakis.
Continue reading “‘Read My Lips’: ‘We’re Rounding the Turn’”Will They Who Sow the Wind Reap the Whirlwind?
The rhetorical winds, gathering force for a long time, reached hurricane Category 5 when the novel coronavirus made landfall. With the ensuing pandemic uprooting the normality of social, economic, and political life, the knee-jerk public rhetoric and reaction were proportionately chaotic.
Our focus is on the economic uprooting while acknowledging its interdependence with the political and social, as one might visualize through the three sets in a Venn diagram.
Continue reading “Will They Who Sow the Wind Reap the Whirlwind?”Inflation to the rescue
Having the greatest respect for the work of Edward Chancellor, we appreciate the opportunity to occasionally feature him on this blog. Recently, he has been contemplating the return of inflation. While immediate losses to income are a deflationary force, the dynamics that determine price are more complex long-term. His most contemporary views are discussed in this recent interview. His more thorough perspective is below. Such swans as this define entire eras of investment.
25 June 2020, By Edward Chancellor
The massive fiscal deficits and money-printing engendered by the coronavirus pandemic should see off the threat of deflation. Rather, the spectre of inflation now beckons. While its potential horrors should not be downplayed, the return of inflation is the best way to resolve the great economic imbalances and social discontents that beset our world.
Continue reading “Inflation to the rescue”The Agony and Enlightenment of Thinking in Thoughtless Times
British philosopher Bertrand Russell commented on thinking and the slavish nature of humanity: “Most men would rather die than think. Many do.”
In 1946 Viktor Frankl’s Man’s Search for Meaning was first published in German. The book, written over the course of nine days in 1945, begins with Frankl’s autobiographical account of his experiences in a German concentration camp. Frankl, an Austrian psychiatrist, in the midst of unimaginable suffering and loss, thought deeply about the existential meaning in the insanity of it all. Through the constant trials and endless terror, he concludes that the greatest task for any person is to find meaning in his or her life. Frankl sees three possible sources for meaning: “in work (doing something significant), in love (caring for another person), and in courage during difficult times.”
Continue reading “The Agony and Enlightenment of Thinking in Thoughtless Times”Bubble Trouble
The horserace details of the current runup in tech stocks is absolutely stunning. Economist David Rosenberg summarized the action in the sector. On Wednesday, August 26, alone:
Continue reading “Bubble Trouble”Who Picks Up the Tab for the Free Lunch?
The exponential growth of the global COVID-19 pandemic steamrolled the path for a new era of unprecedented state intervention in the world’s economies and its financial markets. From its bird’s-eye perspective, the International Monetary Fund recently predicted that rich countries will borrow 17% of their combined GDP to fund a total of $4.2 trillion in spending and tax cuts, designed to keep the world’s economies afloat. The IMF, however, is woefully behind the frenetically changing news-cycle curve.
Continue reading “Who Picks Up the Tab for the Free Lunch?”Beware the Ebb Tide
With equity markets soaring, both investors and speculators must be expecting a V-shaped recovery, a resumption of earnings growth, and commensurate ongoing appreciation in stock prices. The path of least resistance is upward as the demand from speculating surfers is exceeding the supply from investors who, in the midst of perplexing mixed signals, are standing flat-footed on the shore as the wave of liquidity whipped up by the Fed obscures the ebbing of the economic tide.
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