On Economy

     

 

 

Rolling Back 200 Years of Growth

BALTIMORE, Maryland – The press reported mixed financial news on Thursday. House sales, oil, unemployment figures… up, down… the news left investors puzzled.

 

trump-sanders-300x162Two of many symptoms of the much-bewailed “populist backlash”…

Image via economyincrisis.org

 

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Tesla Goes Fishing

Tesla Motors is up to something remarkable.  But what it is, exactly, is unclear.  According to the Tesla Motors website, the company’s mission is: to accelerate the world’s transition to sustainable transport.

 

tesla-model-3Tesla Model 3: the company’s first “mass market” entry so to speak, which is supposed to help the world to reach the nirvana of  “sustainable” transport. On the side, it is helping a number of Wall Street firms to increase their commission income.

Image credit: Tesla Motors

 

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Not Just Wrong, but Monumentally Wrong

Massive flaws at SUNE (Sun Edison) + VRX (Valeant) were somehow missed by both of these high profile/ well resourced hedge funds.

 

einhorn-ackman-660x330David Einhorn (Greenlight Capital) and Bill Ackman (Pershing Square) – both fund managers had a terrible year 2015 (down about 20% each), but while Mr. Einhorn has changed his way and righted his ship so far in 2016, Mr. Ackman stubbornly stuck (and at one point even doubled down) on his biggest losing bet. As of early March, the performance spread between the two managers in 2016 had widened to 2,400 basis points in favor of Mr. Einhorn.

Photo credit: Brendan McDermid, Eduardo Munoz / Reuters

 

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Who Cares What Voters Want?

BALTIMORE, Maryland –  There were two newsworthy developments last week, neither of them really important – the first because it won’t happen, the second because it won’t matter. First, the Fed let it be known that it has “normalcy” once again in its sights.

 

Moral compass and career path concept with a human head and a compass as a brain on a grunge old parchment textureIt’s all in your head…and that’s where it shall remain!

Illustration via thesurvivalchannel.com

 

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A Science Goes Astray

Human beings have a strong tendency to look for patterns. The natural sciences have shown that the universe is governed by laws, the effects of which are observable and measurable in an objective manner. Mostly, anyway — there is, after all, the interesting fact that observers are influencing measurements at the quantum level by the act of observation. (For our lives in the “macro” world, however, this is not relevant. An engineer does not need to take relativity or quantum physics into account to construct a machine that works.)

 

machineIs the Economy a Machine?

 

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Gassy Hacks and Big Quacks

Today, we recall the “commencement” at the end of four years at the University of Vermont. The university itself is imposing and a little intimidating. The rest of the world works in warehouses or common office spaces. Academia labors in hallowed “halls” and prestigious “centers.”

 

vermontThe path to the hallowed halls of the University of Vermont

Photo via hercampus.com

 

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Black-and-Blue Crash Alert Flag

Let us  begin the week “on message.” The Diary is about money. Today, we’ll stick to the subject.  Old friend Mark Hulbert has done some research on the likelihood of a crash in the stock market.

 

tattered flag bb.Ye olde tattered Crash Alert flag… should it be unfurled again?

Image by fmh

 

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Alarming News

BALTIMORE, Maryland – An alarming email came on Tuesday from our ranch in Argentina:

“Bad things going on… We thought we had the originarios problem settled. Not at all. They just invaded the ranch.”

 

pueblos-originarios-960x623Originarios on the march…

Photo credit: cta.org.ar

 

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Scratching the Surface

Problems, as people commonly perceive them, require solutions. Broken shoelaces must get fixed.  Regrettably, in today’s democracy this means the candidate who offers the most fixes – in the form of goodies – to the most people wins the election.

 

problemsThree gentlemen who need a solution real fast. “Did you bring the book?” “No, I thought you had it…”

Image credit: CreateSpace

 

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Sweet Authoritative Nothings

There is a mysterious figure making regular appearances in China’s government mouthpiece “People’s Daily”, which simply goes by the name “authoritative person” (AP). This unnamed entity always tends to show up with bad news for assorted speculators, by suggesting that various scenarios associated with monetary and/ or fiscal stimulus are actually not in China’s immediate future (the details of AP’s latest pronouncements can be found here and here).

 

people's dailyThe People’s Daily. “Authoritative Person” may be hiding somewhere in the picture to the left.

 

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Don’t Plan on Living in St. Petersburg…

GENEVA, Switzerland – When we left you last week, we were describing why neither democracy nor planning works on a large scale. Austrian School economist Friedrich Hayek described the problem with great thoroughness in his book The Fatal Conceit.

 

The_Fatal_ConceitThe Fatal Conceit: central economic planning is literally impossible – there can be no centrally planned rational economy. Individual planning is distinct from central planning, in that the many individual plans pursued by self-interested individuals mesh and create a spontaneous order. This order is far superior to anything that a central planning agency can ever hope to achieve –  in fact, as Mises has shown, central planning is even doomed to failure if the planners hypothetically had perfect knowledge of all facets of the economy at a given time. However, this hypothetical situation can can never be realized anyway, as knowledge is widely distributed and as Hayek argues, is often tacit and therefore not directly communicable. It only expresses itself in human action.

 

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Trump Is Right

PARIS – On Wednesday, brick-and-mortar retailers – such as Macy’s – led U.S. stocks lower. The Dow lost about as much as it had gained the day before. Nothing much to talk about there…

 

1-Macy'sMacy’s on the way to Zool – click to enlarge.

 

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