I don’t watch Sunday morning television anymore. I used to watch it and actually listen. But, I realize it’s all pre-planned and canned. Nothing happens that is out of variance or control. If there is an occasional slip-up, a spin doctor is readily available to explain it all away.
Here is a good example of misinformation except its in the Sunday paper. The meaningless headline stat will be gaslighted by local media and politicians. I had to laugh at this tweet by the Chicago Tribune, a formerly good newspaper that now is not even worthy of wrapping fish in because if you have any common sense it wouldn’t be in your house.
Do you actually think it matters that “homicides are down 14%”? Meanwhile, carjacking and robberies are up tremendously. All crime in Chicago is higher and people are leaving the city. Homicides in Chicago being down by 14% might just mean that ambulances got people to the doctor more efficiently so fewer people died. Or, it might mean that the gang people who are left from the prior murderous years can’t shoot straight.
Over at The Conservative Treehouse, they had a round-up of the Sunday shows but this one stuck out to me. It’s an interview with B of A economist Michael Gapen. I am sure Mr. Gapen is well-credentialed. I am also sure, he is well-networked in the right places and you don’t get that way unless you say and support the right things. I am also quite sure Mr. Gapen is a reliable Keynesian economist that has been given a platform.
For what it’s worth Trump was well networked and credentialed too but the Machine knew he’d pull the curtain down. He was always a loose cannon that they had to tolerate. Once he became a threat, they had to try and tear him apart.
Because Trump was in the commercial real estate business, he had to tolerate them. He had to get along to get projects done. Once he was President, the gloves were off. It was Festivus, 24/7.
The interview with Mr. Gapen only gets interesting because of the boring talking points about how policies that were passed will do great things but it also is interesting because of what’s NOT SAID. Here is a quote from the blog:
Astute readers will note the great financial and economic pretending that surrounds the Build Back Better and Green New Deal climate change agenda will not be discussed by anyone, ever. The massive price impacts, the supply side inflation pressures, are baked into the western global economic outlooks. It is strictly verboten to talk about climate change policy being stopped, modified, reversed or even, well, gasp, removed.
Layer that with Fred Wilson’s blog about what he thinks will happen next year. Fred is one of the best venture capital investors out there. Still, he is a man of the left-wing.
Climate, where USV has been actively investing for the last three years and now has two funds dedicated to the sector, has mostly been spared the carnage that has hit the other parts of USV’s portfolio. 2022 brought largely good news to the sector in the form of the oddly named Inflation Reduction Act (IRA) that will flow billions of dollars of capital into the sector over the next decade. Many leading VC firms have dedicated climate funds now and we see huge amounts of capital available for climate startups with strong teams and novel approaches.
(translation of last line: it was easy to raise a climate fund because of the free money)
Last year I predicted 2022 would be a big year for carbon credits and while we saw a lot of growth in the market for these credits, particularly among the large tech companies, I was way too optimistic about how fast the market would grow. That said, I think 2023 will bring more growth in this market which provides the underlying business model to many of the new climate startups VCs are funding right now.
Further layer that paragraph with the ESG goals that are being pursued by Blackrock ($BLK) and other similarly-minded organizations.
There is a ton of government money going into climate bullshit. It’s a total scam. If you think cryptocurrency is a scam, climate is a 100x scam larger than that. Carbon credits are one small example. They are subsidies and if you remove them from the business equation, the business will fall apart and cease to exist unless it’s a charity.
Cryptocurrency is software and actually might do something. Crypto companies can fail and go out of business no government money is at risk. Climate has no objective metrics to judge itself by and is a gigantic transfer of money from taxpayers via governments (mostly the US government) to favored individuals and organizations that can jump through the hoops to get it. Climate spending is a gigantic black hole of subsidies that will never end.
If a company doesn’t have a business model or gross margin without government subsidies, it’s not a business. It’s a hobby.
You can timestamp this blog post and take it to the bank.
Ever wonder why climate alarmists don’t get choked up about cold weather even though cold weather kills scads more people than hot weather does? We actually benefit from a little warmer climate than we do a colder one. No one spends en masse for vacations at the North Pole. But, millions of people will travel from cold climates in the winter to warm climates just so they can sit by the pool in a swimsuit and have a daiquiri. I noticed there were no electric-powered snowplows in Buffalo over Christmas. No one I know is traveling to Churchill, Canada and it is not because of Covid travel restrictions. They are all going to Hawaii and Mexico.
People with Mr. Gapen’s view of the world value highly government inputs into the economy. “You didn’t build that” resonates with them. The reality is the multiplier effect of government spending on gross domestic product growth is close to zero. ZERO. Please Keynsians, tell me where you got that dollar to spend. (Hint: It’s either the taxpayer’s current income or debt. Debt is a future claim on taxpayer income)
Governments cannot “invest”. They are consumers. Only private industry creates and participates in the multiplier effect of growing GDP.
Ignore the “in the next year we might go into a recession and let’s hope we can have a soft landing” chatter. We have been in and are in a recession. When the market drops by 20% as the S+P did, or by 30+% as the NASDAQ did this past year, that landing is sort of hard don’t you think? If you don’t, check your retirement account.
Markets price in all information from the past, present, and future and publish it today. Do you think the stock market might be looking ahead and predicting what might happen with a reasonable probability?
When the Fed acts, it moves rates up or down, but that action takes months to work its way through the entire economy. You might say the Fed is in arrears.
Looking at Fed action uses what you learn in business school as “accounting numbers” to make decisions. Accounting numbers are always backward-looking. It’s like standing on the bow of a boat and looking at the wake.
Accounting numbers can be informative. They can help you guide decision making but they are poor numbers to base decisions on. For that, you need economic numbers and probability.
Let me put it plainly. If this B of A guy is on television saying we might go into a recession what I am actually hearing is we are already in one and it gets a lot deeper. I am also hearing that housing hasn’t seen the lows yet. I am also hearing that inflation isn’t going to let up because of the supply side of the economy, it’s going to ease up because the demand side of the economy is driving it.
Stuff that you don’t need will get cheaper. Stuff you need will get more expensive or stay stubbornly high in price. I am seeing that businesses are increasing pay and bonuses to employees. Labor is the highest cost input to production. Energy is second.
When you hear the words “demand destruction” it means you all got poorer. The Joe Biden Economy reaches into your pocket and takes out a little each day.
Supply chains take a long time to rebuild so they are efficient. Companies haven’t pulled the plug on China and Asia as a source of all commodity manufacturing but they are talking about it. Ten years from now hopefully we will look back and see that they have accomplished it.
The Sunday shows are so full of BS that they ought to have compost piles as their logo symbol.
-->"Climate spending is a gigantic black hole of subsidies that will never end." Bingo!
Remember Reagan's citation of the most dangerous words: I'm from the government and I'm here to help.
What's changed from Reagan's time is the political risk. It infects everything, especially markets. The markets for money (interest rates) and other prices by means of deficit spending sloshing money through the economy distorting the supply and demand for goods. And of course, the regulatory state is awash with political/partisan policies never enacted by Congress that distorts the business climate generally. (Perhaps I mean to say the nature of that political risk has changed from Reagan's time.)
Just take the unprecedented Covid shutdowns as political risk realized, and ask yourself where else will the political risk make an appearance...
And now there is even more indoctrination. Over the past few years I'm meeting and hearing of more and more kids getting degrees in "Environmental Science." Even someone from Harvard Business School I met in France is getting a minor in "the Environment." I'm not quite sure what that even means? I wasn't in a place I could have a deep and meaningful conversation about what this means without it turning spiteful. But from one's friend daughter, it seems to involve traveling all over the world attending conferences. Can you imagine if you actually put some mild suffering behind this? OK kids, great, how only take three hot showers a month and no more use of plastic for the rest of your life?